Court Opinion

ID: 9566219
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:35:08.920939+00
Date Added: 2024-06-11T09:33:20.570244
License: Public Domain

BISTLINE, Justice,
specially concurring.
The majority opinion correctly notes that parol evidence may not be used to contradict the terms of a valid agreement between the parties. However, the parol evidence rule does permit the admission of *500evidence concerning conditions that must be satisfied before the agreement, which has been executed, may be enforced:
If the parol evidence rule rests on the rationale that a later agreement has supplanted prior negotiations, it follows that the rule does not come into play until the existence of an enforceable written agreement has been shown. Evidence of the negotiations between the parties should therefore be admissible to show that no agreement was reached or that the agreement reached was invalid.
On a similar reasoning, evidence is admissible to show an oral agreement that the written agreement is to take effect only if a stated condition occurs____
However, extrinsic evidence is admissible under this qualification only if the condition is one that must occur before the written agreement takes effect, that is, before any duty of performance arises on either side. It is not admissible to show that the duty to one party under an agreement already in effect is conditional rather than absolute, since this would be an attempt to vary the terms of the writing, rather than to show that the written agreement never took effect.
E. Allan Farnsworth, Contracts § 7.4, at 461-463 (1982).
Here, the jury found that there was an oral condition precedent, requiring the bank to secure an interest in the potato crop that would be grown with the use of the fertilizer purchased from Christensen. But even if this condition were satisfied, the plain language of the agreement between Christensen and the bank allows the bank to proceed directly against Christensen should the farmer default on the note. Nothing would prevent the bank from disregarding the security interest in the crop. Furthermore, evidence of the alleged oral condition precedent could not be used to argue that the terms of the executed agreement had been modified to require the bank to first exhaust their security interest in the crop before proceeding against Christensen. This use of parol evidence would violate the parol evidence rule.
The evidence of the oral agreement strongly suggests that Christensen did not want, and the bank so understood, to be completely exposed to the potential liability which the agreement’s terms plainly provide. Instead, he was “banking” on a tacit understanding that the written agreement would not be enforced against him until the condition precedent was first satisfied and exhausted. In other words, Christensen proceeded on the basis that under the agreement the bank was required to look first to the potato crop for satisfaction, and only then to him. However, the agreement by its terms had no such provision. Just as the Websters in First Security Bank v. Webster, 119 Idaho 262, 805 P.2d 468 (1991), could not successfully argue their understanding arising out of a discussion with bank personnel which took place before they executed a guaranty agreement, Christensen is by the parol evidence rule precluded from relying upon his own understanding, with which he probably had no previous experience.
Perhaps this Court should, if the legislature does not, require of such guarantee agreements a separate place for a disclaimer paragraph which would provide in bold letters that “the foregoing provisions of this guarantee are controlling and binding, notwithstanding any and all previous discussions, advice, and negotiations which may vary from the printed provisions of this writing, in regard to which the guarantors are advised to seek advice from persons or entities having no employment or affiliation with this bank.”