Opinion ID: 1134187
Heading Depth: 1
Heading Rank: 1

Heading: the admittance of parol evidence

Text: When two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing. Corbin, Contracts § 573, p. 357. This substantive rule of contract law, better known as the parol evidence rule is statutory in Montana, as are its exceptions. Section 93-401-13, R.C.M. 1947, now section 70-20-202 MCA provides: XX-XXX-XX. An agreement reduced to writing deemed the whole. When the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms, and therefore there can be between the parties and their representatives, or successors in interest, no evidence of the terms of the agreement other than the contents of the writing, except in the following cases: 1. Where a mistake or imperfection of the writing is put in issue by the pleadings. 2. Where the validity of the agreement is the fact in dispute. But this section does not exclude other evidence of the circumstances under which the agreement was made, or to which it relates, as defined in section 93-401-17, or to explain an extrinsic ambiguity, or to establish illegality or fraud. The term agreement includes deeds and wills, as well as contracts between parties. This Court has held that where the terms of a contract are clear and unambiguous, parol evidence will not be allowed. However, we have also held that where the terms of the contract are ambiguous and uncertain, then evidence of attending circumstances is admissible. Kielmann v. Mogan (1970), 156 Mont. 230, 478 P.2d 275 (citing cases). ... [T]he question of whether an ambiguity exists is one of law for the court. But, where there is a conflict of testimony as to what were the intentions of the parties toward the use of the ambiguous word, determination of the true meaning is one of fact for the jury. McNussen v. Graybeal (1965), 146 Mont. 173, 186, 405 P.2d 447, 454. As for count II of plaintiffs' complaint, fraud in the inducement has always been held to be provable by parol, not withstanding the parol evidence rule. Goggans v. Winkley (1970), 154 Mont. 451, 459, 465 P.2d 326, 330; appeal after remand, (1972), 159 Mont. 85, 495 P.2d 594. Defendant's argument ignores the exceptions to the parol evidence rule. At trial, plaintiffs testified that, in their understanding of the contract, defendant had breached the warranty provision by failing to file a formal petition for an S.I.D. by not having an adequate and potable water supply, and by failing to provide suitable subsurface conditions for the operation of the septic tank system. Secondly, plaintiffs alleged that defendant's spokesman, Carl McAfee, had made statements and concealed information with the intent of fraudulently inducing plaintiffs to buy the land. Defendant denied the allegations. Since plaintiffs' complaint had alleged that a formal petition was not filed until July 31, 1973 (some five months after the execution of the contract, which warranted that application had been made) and further alleged that plaintiffs had to construct a water well and install a sewage holding tank, the District Court determined that ambiguities existed and admitted parol evidence thereby permitting the jury to determine the contract's true meaning. Likewise, since plaintiffs alleged fraud in the inducement, it was incumbent upon the court to admit parol evidence. We conclude the District Court properly admitted parol evidence to resolve the ambiguities and determine whether the plaintiffs were fraudulently induced to enter into the contract. Defendant's proposed instructions were insufficient because they explained the general rule, but failed to note the applicable exceptions. The District Court, having determined the case involved exceptions to the rule, properly gave plaintiffs' proposed instructions to the jury.