Opinion ID: 701799
Heading Depth: 4
Heading Rank: 2

Heading: The NWL Agreement

Text: 25 Michigan law governs the construction of the NWL agreement. Michigan allows the admission of parol evidence to indicate the parties' intent when a contract is ambiguous. American Anodco, Inc., 743 F.2d at 422. Furthermore, Michigan, unlike Ohio, also allows parol evidence to be used to prove that the contract is ambiguous. Id. In Goodwin, Inc. v. Coe, the Michigan Supreme Court allowed the admission of parol evidence to show that the term property owned by Seller was ambiguous. 392 Mich. 195, 220 N.W.2d 664, 675 (1974). The court noted that [i]f ambiguous terms are used, the preliminary negotiations may be considered, not to vary or contradict the plain terms of the instrument, but to aid the court in determining the intent with which such words were used. Id. 220 N.W.2d at 671 (internal quotation and citation omitted). In Petovello v. Murray, an agreement provided for the payment of commission for the original term of the lease. 139 Mich.App. 639, 362 N.W.2d 857, 858 (1984). The court admitted parol evidence, finding the term original term of the lease was ambiguous because there was no reference to original term within the lease. Id. 362 N.W.2d at 859. 26 If anything, Michigan is more likely to find a contract term ambiguous and admit parol evidence than is Ohio. Consequently, paragraph 11 of the NWL agreement is ambiguous for the same reasons that paragraph 11 of the CPC agreement is ambiguous, which we need not reiterate. We now turn to Pneumo's argument that even if paragraph 11 is ambiguous, the admission of certain testimony violated the parol evidence rule. 27 When a contract term is ambiguous, Ohio admits parol evidence to explain the understanding of the parties at the time of the execution of the agreement. Yoder, 316 N.E.2d at 480. Ohio also allows the admission of evidence to show the sense in which the words were used by the parties to the agreement, to show the meaning ordinarily given the ambiguous term by persons in that trade or business, and of the actions of the parties which manifest their understanding of the agreement. Construction Advancement Program of N. Cent. & E. Cent. Ohio v. A. Bentley & Sons Co., 45 Ohio App.2d 13, 340 N.E.2d 849, 853 (1975). Michigan allows introduction of extrinsic evidence to show what was in the minds of the parties at the time of making the contract or executing the instrument, and to determine the object for or on which it was designed to operate. Glenwood Shopping Ctr. Ltd. v. K Mart Corp., 136 Mich.App. 90, 356 N.W.2d 281, 286 (1984). Michigan also admits subsequent acts or declarations of the parties that show the practical construction placed upon the terms in order to ascertain the parties' intentions. Id. Furthermore, Michigan will hold a party to its interpretation of an ambiguous contract term. City of Mt. Pleasant v. Michigan Consol. Gas Co., 325 Mich. 501, 39 N.W.2d 49, 52 (1949). 28 Pneumo objects to the testimony of Ronald Tuchschmidt, 4 Jerome Tuchschmidt, 5 Philip Greco 6 and James A. Wood, Sr., 7 as violating the parol evidence rule. Wood, Sr., testified that he negotiated the NWL agreement with Aerotronics. Appellant's App. at A159. Accordingly, Wood, Sr.'s testimony as to his understanding of the meaning of paragraph 11 is admissible because it is probative of Pneumo's intended meaning of paragraph 11. Greco's and the Tuchschmidts' testimony concerning their understandings of paragraph 11 is also admissible because it shows the practical construction of the contract term by the parties; this testimony is also admissible to show the sense in which the words in paragraph 11 were used. 29 Therefore, the district court did not err in finding that paragraph 11 of the NWL and the CPC agreements was ambiguous and in admitting parol evidence to determine the intent of the parties with respect to paragraph 11.