Court Opinion

ID: 9535473
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:49:56.411156+00
Date Added: 2024-06-11T13:33:15.848704
License: Public Domain

STRUCKMEYER, Justice
(dissenting).
I had thought it indisputable that a contract could be partly oral and partly written if the parties chose to contract in that fashion. See Crone v. Amado, 69 Ariz. 389, 214 P.2d 518. Here the defendants said they did and the jury found they did. But the majority say they may not. The simple facts of this case yield readily, upon analysis, to well-understood principles of law and point to an affirmance of the judgment.
The General Indemnity Agreement was on a printed form furnished by the plaintiff company and brought 200 miles from Phoenix to Winslow by W. W. Ridout, its bond superintendent, for signature by defendants. It was indefinite as to duration, having no clause or language fixing a time limit, but it provided, “Any of the undersigned shall have the right to request cancellation of this agreement, * * It was the defendants’ evidence, the exclusion of which the trial judge first passed upon and which the jury accepted as true, that Ridout “said he would call us each and every time before putting us on the bond and seek our approval.” This collateral oral promise was obviously for the benefit of the defendants in that it would give them an opportunity to terminate the agreement by invoking the cancellation clause if Reeder, dba Reeder Construction Company, became financially shaky or ceased doing business with defendants. It was in reliance on the collateral promise that the written agreement was executed.
It should immediately be emphasized that the oral promise deals with a matter which was not dealt with at all in the written agreement. In this situation, the parol evidence rule has no application. The language used in Williston on Contracts, 3rd ed., 1961, § 636, is a lucid statement of the principle applicable.
“The parol evidence rule assumes agreement upon the writing in question as a complete statement of the bargain, that is, as an integration. If the parties never adopted the writing as a statement of the whole agreement, the rule does not exclude parol evidence of additional promises.” Id. at p. 1033.
In discussing the test for determining whether an oral agreement is separate and collateral so as to be admissible, Williston further states, in § 638, at page 1039 et seq.:
“Two suggestions may be made to serve as a guide to the many decisions apparently often contradicting one another, before considering the subject in detail. First, that the test of admissibility is much affected by the inherent probability of parties who contract under the circumstances in question, simultaneously making both the agreement in writing which is before the court, and also the alleged parol agreement. The point is not merely whether the court is convinced that the parties before it did in fact do this, but whether parties so situated generally would or might do so. If that is true, the parole agreement is so far collateral and separate from the writing as to make it admissible.”
*372This is in accord with Professor Wig-more who, in discussing “Partial Integration; General Test for Applying the Rule; ‘Collateral Agreements,’ ” Evidence, 3rd ed., § 2430, says:
“In searching for a general test for this inquiry, three propositions at least are capable of being generally laid down:
“(1) Whether a particular subject of negotiation is embodied by the writing depends wholly upon the intent of the parties thereto. In this respect the contract is between voluntary integration and intergration by law (post, § 2450). Here the parties are not obliged to embody their transaction in a single document; yet they may, if they choose. Hence it becomes merely a question whether they have intended to do so.
“(2) This intent must be sought where always intent must be sought (ante, §§ 42, 1714, 1790), namely, in the conduct and language of the parties and the surrounding circumstances. The document alone will not suffice. What it was intended to cover cannot be known till we know what there was to cover. The question being whether certain subjects of negotiation were intended to be covered, we must compare the writing and the negotiations before we can determine whether they were in fact covered. Thus the apparent paradox is committed of receiving proof of certain negotiations in order to determine whether to exclude them; and this doubtless has sometimes seemed to lower the rule to a quibble. But the paradox is apparent only. The explanation is that these alleged negotiations are received only provisionally. Although in form the witnesses may he allowed to recite the facts, yet in truth the facts will be afterwards treated as immaterial and legally void, if the rule is held applicable. There is a preliminary question for the judge to decide as to the intent of the parties, and upon this he hears evidence on both sides; his decision here, pro or con, concerns merely this question preliminary to the ruling of law. If he decides that the transaction was covered by the writing, he does not decide that the excluded negotiations did not take place, hut merely that if they did take place they are nevertheless legally immaterial. If he decides that the transaction was not intended to be covered by the writing, he does not decide that the negotiations did take place, but merely that if they did, they are legally effective, and he then leaves to the jury the determination of fact whether they did take place.
* * * # *
“(3) In deciding upon this intent, the chief and most satisfactory index for the judge is found in the circumstance whether or not the particular element of the alleged extrinsic negotiation is dealt with at all in the writing. If it is mentioned, covered, or dealt with in the writing, then presumably the writing was meant to represent all of the transaction on that element; if it is not, then probably the writing was not intended to embody that element of the negotiation. This test is the one used by most careful judges, and is in contrast with the looser and incorrect inquiry (post, § 2431) whether the alleged extrinsic negotiation contradicts the terms of the writing: * * (Emphases in original.)
Corbin puts it this way:
“The question whether the parties have assented to a specific writing as a complete and accurate integration of the terms of their contract is always' a question of fact. Generally, it seems to have been determined, or an affirmative answer assumed, by the court. Probably it is wise, in most cases, for the court to assume the burden of determining this issue of fact, although it is never wise to assume an affirmative answer. 'There must be many cases, however, in which the evidence of what the parties said and did, before and at the time of preparing or delivering a writing, is so *373nearly equal in weight and credibility that the court will desire the aid of a jury’s verdict. If so there is no law against getting such aid.” 3 Corbin on Contracts, § 595, p. 571.
A few more facts place this litigation in its proper perspective. Jack Reeder, doing business as the Reeder Construction Company, used defendants as suppliers of his material. Defendants had previously entered into a number of special indemnity agreements on his behalf with the United States Fidelity and Guaranty Company. The General Indemnity. Agreement was executed at the suggestion of the plaintiff, the United States Fidelity and Guaranty Company, as a convenience because, as James Olds testified:
“When a contractor is going to bid on a job, most all of these have to be ready by a certain time or a certain date, that the price has to be in with the bid and most of them don’t get the prices before the last hour, * * *. Then they would put this package together with the bond and price and give it to whoever it was calling for the bid.”
It is, therefore, to use Williston’s language, inherently probable that, after Rid-out brought the printed form of the contract to Winslow and a question as to the duration of the contract arose, Ridout would agree to call the defendants “before putting” them “on the bond.” This is exactly the type of promise the defendants would accept, as small-businessmen, dealing in good faith and without the advice of attorneys.
As Wigmore says, the test used by.the careful judge is whether the particular element of the alleged extrinsic, negotiation is dealt with at all in the writing. It must be again emphasized: There is here no provisions or reference made in the printed contract for termination by lapse of time or any provisions whatsoever for notification as to defendants’, assumption of liability. The subject matter of the oral promise was not dealt with in the writing. I am, therefore, of the opinion that the trial judge properly left it for the jury’s determination as a question of fact as to whether the promise was made.
It is at this point that I am in most violent disagreement with the majority, for it is here that they launch into a discussion of conditional delivery, a theory of the case, with which I am wholly unable to agree. First, this continuing agreement is plainly severable and divisible. Shadron v. Cole, 101 Ariz. 341, 419 P.2d 520. It was, in fact, executed to obviate the inconvenience of making separate agreements as the occasions arose. While there was continuing liability under the written agreement, each new bond written pursuant to it was separate and distinct and not dependent on any other act for its viability. The oral promise supplementing the written agreement to notify the defendants before writing each new bond is so obviously a condition precedent to liability on each divisible portion that it is ridiculous to labor the matter further.
Second, the simple resolution of this case is to acknowledge that which is obvious and which the jury found to be true, namely, that the General Indemnity Agreement was signed by the parties with the intention of being a binding contract but with a further intention that the oral promise would be part of the contract.
The contractiiral promises, including the oral promise, áre mutual and dependent. (There is no other consideration except a recited consideration of one dollar.) As to mutual and dependent promises, the failure of one party to perform authorizes •the' other to rescind the contract, American Emigrant Co. v. Adams County, 100 U.S. 61, 25 L.Ed. 563, or he may treat the breach as terminating the contract.
“Upon the breach of a contract, the party not at fault, ordinarily, has the choice of three remedies. (1) He may rescind, with the usual rights and duties of such an action. (2) He may refuse to recognize the breach and compel its performance. (3) He may treat the breach as terminating the contract and *374sue for damages.” Weatherford v. Adams, 31 Ariz. 187, 195-196, 251 P. 453, 455.
In this instance the defendants treated the contract as terminated and resisted the plaintiff’s suit for damages.
Since the jury found the facts in favor of defendants as to this aspect of the case, it is apparent from what has been said that the judgment of the court below should be affirmed, and it is for this reason I dissent. It is to he recognized, however, that plaintiff-appellant has raised other asserted errors. As to these, since the majority did not enter into an examination of their merits, I find it unnecessary to express an opinion.
McFARLAND, V. C. J., concurs in this dissent.