Opinion ID: 458929
Heading Depth: 3
Heading Rank: 2

Heading: Did the 1979 Settlement Agreement settle Bone's claim for interest on commissions?

Text: 38 After Bone and several of his customers sustained substantial trading losses in the live cattle futures market in late 1979, Refco instituted a suit against Bone to collect then existing deficit balances in several accounts, which Bone had undertaken in the 1978 agreement to guarantee. Refco and Bone subsequently entered into a settlement agreement on December 1, 1979. In exchange for Refco's agreement to dismiss its pending suit, Bone agreed to pay Refco a total of $1,709,915.61, $209,915.61 of which the parties agreed reflected the amount held by Refco in Bone's unpaid commissions account. 39 Refco asserts that Bone's claim for interest is barred as a matter of law by the doctrines of settlement and account stated. Refco contends that Bone's agreement to pay Refco $209,915.61 constitutes an account stated 13 of the balance in the reserve commission account which binds both Refco and Bone. Refco argues that because the law favors settlements, they must be construed to resolve all the issues that may fairly be determined to have been within the contemplation of the parties making the settlement. See Burke v. Downing Co., 198 Ark. 405, 129 S.W.2d 946 (1939). Consequently, Refco argues that the settlement agreement should be construed as settling the entire prior course of dealings between Refco and Bone, thereby precluding Bone from recovering interest on the reserve commissions 14 as a matter of law. 40 We disagree. In interpreting a contract, a court must give effect to the intent of the parties. See Les-Bil, Inc. v. General Waterworks Corp., 256 Ark. 905, 511 S.W.2d 166, 170 (1974). In a written contract, this means that a court must give effect to the intent manifested by the plain meaning of the language used by the parties. Id. However, extrinsic or parol evidence is admissible to explain or help ascertain the intent of the parties when ambiguity, either patent or latent, exists in the written agreement. C. & A. Construction Co. v. Benning Construction Co., 256 Ark. 621, 509 S.W.2d 302, 303 (1974); accord Press Machinery Corp. v. Smith R.P.M. Corp., 727 F.2d 781, 784 (8th Cir.1984) (applying Missouri law); United States v. Haas & Haynie Corp., 577 F.2d 568, 572 (9th Cir.1978) (applying general contract principles). Whether an ambiguity exists is a question of law for the court. C. & A. Construction Co., 509 S.W.2d at 303; accord Press Machinery Corp., 727 F.2d at 784. In determining whether an agreement is ambiguous, it is proper to examine the disputed language in the context of the entire agreement. [citations omitted] And evidence relating to prior negotiations and other circumstances surrounding the making of the contract are [sic] to be considered   . Sun Oil Co. v. Vickers Refining Co., 414 F.2d 383, 387 (8th Cir.1969); accord Press Machinery Corp., 727 F.2d at 784-85. 41 The magistrate determined that the settlement agreement, in particular the provision stating that the $209,915.61 figure constitut[ed] the amounts presently held by Refco for the account of Bone for unpaid commissions, contained a latent ambiguity as to the scope of what the parties intended to settle. Consequently, he permitted extrinsic evidence in the form of testimony by the parties as to what they intended to settle by this agreement. 42 We see no error in the determination that the agreement was ambiguous on this question. Bone and Bruce Strange, who was also a party to the settlement agreement and who conducted negotiations on behalf of Bone, both testified that the parties intended to settle only Bone's claim for commissions owing to him at that time, and that the settlement agreement did not relate to the interest owed on the commissions. Although this testimony was self-serving, it is supported by a reading of the entire settlement agreement. We note that the language in the disputed clause does not, by its own terms, purport to include the interest that Refco had agreed to pay on the reserve commissions. Furthermore, the introductory whereas clauses in the settlement agreement reciting the history and nature of the disputes at the core of the agreement indicate that the parties intended to settle only the claims they had against each other arising from the substantial trading losses sustained by Bone and various Refco customers in the live cattle futures market and Refco's losses caused by the debit balances in the accounts controlled by Bone. The agreement explicitly referred to Bone's employment as a commodities broker, but it contained no reference to his status as office manager under the terms of the 1977 agreement, and it is under that agreement that his claim for interest on the reserve commissions arises. 43 When the court determines that ambiguity exists, resolution of the ambiguity presents a question of fact for the jury. Press Machinery Corp., 727 F.2d at 784; Fitch v. Doke, 532 F.2d 115, 117 (8th Cir.1976). Although another jury might determine that the parties did intend to settle Bone's claim for interest on reserve commissions, the point remains that this is a jury question; we simply cannot say, on the basis of the record before us, 15 that Refco is entitled to judgment as a matter of law on this claim on the ground that the parties have previously settled it. 44 3. Was Bone the branch office manager to whom the interest on reserve commissions was owed? 45 Next, Refco notes that the 1977 letter agreement provides that the interest on reserve commissions was to be paid to the branch office manager. Refco concedes that Bone was the branch office manager from the time he commenced his association with Refco in March 1977 until December 1977 when the Chicago Board of Trade required Refco to remove Bone from any supervisory capacity as part of certain disciplinary measures taken against Bone. At trial, Bone testified that Bruce Strange and Steve Johns served in the position of office manager from December 1977 until the office closed in July 1981. Refco asserts that in light of Bone's own testimony that other personnel had acted as and assumed the title of office manager from December 1977 on, Bone has no claim, as a matter of law, to any interest on the reserve commissions earned after December 1977, because the agreement expressly stated that the interest was to be paid to the branch office manager. 46 We disagree. Under the terms of the 1977 agreement, Bone was entitled to receive interest on the reserve commissions held by Refco as long as he was branch office manager. Because the agreement referred to the position branch office manager but did not define the duties and functions of the position, a factual question arose as to what the parties intended that position to entail. Accord Coulson Oil Co. v. Wilcox, 12 Ark.App. 111, 671 S.W.2d 198, 199 (1984). That situation permits a court to admit parol testimony of the parties' understanding of the term and it is then left to the jury to make a determination on that question of fact. See Press Machinery Corp., supra; Fitch v. Doke, supra. The testimony on this issue at trial was split. Although another jury might accept Refco's position and reject Bone's, we cannot say, on the record and evidence before us, 16 that no jury could find for Bone on this issue. Accordingly, we hold that Refco is not entitled to judgment on Bone's claim for interest on reserve commissions on this ground. 47 Because we reject each of Refco's arguments that it is entitled to judgment on Bone's claim for interest on reserve commissions as a matter of law, Bone may present this claim again on retrial. 48