Court Opinion

ID: 9727762
Source: CourtListenerOpinion
Date Created: 2023-08-26 13:49:46.986973+00
Date Added: 2024-06-11T18:25:42.569104
License: Public Domain

SAUFLEY, C.J.,
dissenting.
[¶ 15] In defending against the Rogers’s action to collect on the promissory note, Jackson asserts that the note he signed and delivered to the Rogers was not intended to be binding unless he was able to pay. The Court concludes that this assertion, based entirely on Jackson’s proposed testimony of an oral agreement, raises the factual issue of whether a condition precedent was a part of the contract, thereby precluding summary judgment. Because this conclusion represents a misapplication of contract principles, I must respectfully dissent.
[¶ 16] A promissory note is a contract to which basic principles of contract law apply. QAD Investors, Inc. v. Kelly, 2001 ME 116, ¶ 13, 776 A.2d 1244, 1248; Briggs v. Briggs, 1998 ME 120, ¶ 6, 711 A.2d 1286, 1288. A promissory note may also qualify as a negotiable instrument pursuant to 11 M.R.S.A. § 3-1104 (1995). When interpreting a contract, courts effectuate “ ‘the parties’ intentions as reflected in the written instrument, construed with regard for the subject matter, motive, and purpose of the agreement, as well as the object to be *383accomplished.” ’ V.I.P., Inc. v. First Tree Dev., LLC, 2001 ME 73, ¶ 3, 770 A.2d 95, 96 (quoting Handy Boat Serv. Inc. v. Prof'l Servs., Inc., 1998 ME 134, ¶ 7, 711 A.2d 1306, 1308). When an agreement is reduced to writing, extrinsic evidence maybe considered only in limited circumstances. See Gagne v. Stevens, 1997 ME 88, ¶ 9 n. 5, 696 A.2d 411, 415 n.5 (indicating that, once it is determined that the statute of frauds is satisfied, “parol evidence may be employed for limited purposes”).
[¶ 17] If, for example, there is an ambiguity in the written agreement, the court may consider extrinsic evidence in order to ascertain the intent of the parties. Villas by the Sea Owners Ass’n v. Garrity, 2000 ME 48, ¶ 10, 748 A.2d 457, 461; Hilltop Cmty. Sports Ctr., Inc. v. Hoffman, 2000 ME 130, ¶ 21, 755 A.2d 1058, 1063. A contract term is ambiguous if it is reasonably susceptible to more than one interpretation. Villas by the Sea, 2000 ME 48, ¶ 9, 748 A.2d at 461; Hilltop Cmty. Sports Ctr., 2000 ME 130, ¶ 19, 755 A.2d at 1063. When the language of an agreement is unambiguous, however, it must be given its plain meaning. Villas by the Sea, 2000 ME 48, ¶ 9, 748 A.2d at 461; Bangor Publ’g Co. v. Union St. Mkt., 1998 ME 37, ¶ 5, 706 A.2d 595, 597. The interpretation of an unambiguous contract is a question of law. QAD Investors, 2001 ME 116, ¶ 13, 776 A.2d at 1248; Villas by the Sea, 2000 ME 48, ¶ 9, 748 A.2d at 461; Handy Boat Serv., 1998 ME 134, ¶ 7, 711 A.2d at 1308.
[¶ 18] If the parties allege that the unambiguous written instrument reflects only part of their agreement, extrinsic evidence may be presented to assist the court in determining the extent to which the written document represents an integration of them agreement. Handy Boat Serv., 1998 ME 134, ¶ 11, 711 A.2d at 1309; see also RESTATEMENT (SECOND) OF CONTRACTS § 214 (1981). A writing is integrated if it represents the final expression of any term of the agreement. Id. § 209(1) (“An integrated agreement is a writing or writings constituting a final expression of one or more terms of an agreement.”). The extent to which an agreement is integrated is also a question of law. Gagne, 1997 ME 88, ¶ 8, 696 A.2d at 414.
[¶ 19] When an agreement is integrated, the parol evidence rule applies. Handy Boat Serv., 1998 ME 134, ¶ 11, 711 A.2d at 1308-09 (citing Clarke v. DiPietro, 525 A.2d 623, 625 (Me.1987); Astor v. Boulos Co., Inc., 451 A.2d 903, 905 (Me.1982)). If the written document embodies all the terms of the agreement, it is completely integrated and parol evidence may not be introduced. RESTATEMENT (SECOND) OF CONTRACTS § 213 (1981). If, however, there is a supplemental term not contained in the writing, the agreement is only partially integrated. See Astor, 451 A.2d at 905-06. In a partially integrated agreement, extrinsic evidence can be offered to support the existence of a supplemental term if it does not contradict the written terms of the agreement. Loe v. Town of Thomaston, 600 A.2d 1090, 1092 (Me.1991) (“Under the parol evidence rule a binding partially integrated agreement discharges prior agreements to the extent that it is inconsistent with them.”); Karnofsky v. Elliott, 570 A.2d 1223, 1224 (Me. 1990) (“Consistent with the Restatement analysis, we conclude that the ... letter superseded the prior oral agreement to the extent they were inconsistent because the letter need not be a completely integrated agreement to be binding .... ”); see also RESTATEMENT (SECOND) OF CONTRACTS § 213. Therefore, evidence of a condition precedent may be considered, but only if the condition is not inconsistent with the language in the written agree*384ment. Burrowes Corp. v. Read, 151 Me. 92, 96-97, 116 A.2d 127, 129 (1955) (quoting 3 WILLISTON ON CONTRACTS § 634 (rev. ed. 1936)) (“ ‘[I]t may be shown ... that the parties agreed by parol that the writing in question should not become effective until some future day or the happening of some contingency, if this is not inconsistent with the express terms of the writing.’ ”).
[¶ 20] The parol evidence rule equally applies to negotiable instruments subject to the Uniform Commercial Code.
Subject to applicable la%v regarding exclusion of proof of contemporaneous or previous agreements, the obligation of a party to an instrument to pay the instrument may be modified, supplemented or nullified by a separate agreement of the obligor and a person entitled to enforce the instrument if the instrument is issued or the obligation is incurred in rebanee on the agreement or as part of the same transaction giving rise to the agreement. To the extent an obligation is modified, supplemented or nullified by an agreement under this section, the agreement is a defense to the obligation.
11 M.R.S.A. § 3-1117 (1995) (emphasis added). The U.C.C., therefore, specifically anticipates the application of the parol evidence rule to negotiable instruments.
[¶21] Here, the promissory note is an unambiguous written agreement. Jackson does not dispute the existence or validity of the promissory note, but rather argues that there is a supplemental term. He concedes, therefore, that the promissory note represents at least a partial integration of their agreement. Because the agreement is partially integrated, the par-ol evidence rule appbes and permits the introduction of an orally agreed upon supplemental term only if it does not contradict the written terms of the promissory note.
[¶ 22] The supplemental term proffered by Jackson directly contradicts the specifics of his written payment obligation. Jackson alleges that the parties agreed that he was not required to honor the promissory note unless he was “able” to do so. Jackson stated in the affidavit he submitted to the District Court: “Part of our oral agreement was that [the Rogers] pay any attorney fees and that I would issue them a note for $3,000 to be paid if and when I was able.” The terms of the promissory note, however, explicitly state not only that Jackson agrees to pay the Rogers, but also how much he will pay, when he will pay, and the consequences of faibng to pay. The promissory note states, in relevant part:
FOR VALUABLE CONSIDERATION RECEIVED, I, Glenn L. Jackson ... promise to pay to the order of Paul E. Rogers and Pamela J. Rogers ... the principal sum of THREE THOUSAND DOLLARS ($3,000.00) with interest at the rate of SEVEN PER CENT (7%) per annum, one half the principal amount due and payable one year from the date of this promissory note; the remaining one-half of the principal and interest due and payable on or before two years from the date of this promissory note.
Failure to pay principal and interest as aforesaid, shall constitute a default which shall render the full amount of the unpaid balance, both principal and interest, immediately due and payable at the option of the holder.
Jackson’s alleged oral condition thus contradicts the express language in the agreement and the District Court, therefore, properly disregarded it. By its holding today, the Court risks opening every contract, except those whose drafters are sav*385vy enough to include an ironclad integration clause, to a factual dispute over the agreement to pay, even when that agreement is specifically and unambiguously included in the written contract. This holding represents an error of law.
[¶ 23] Because the proffered evidence is barred by the parol evidence rule, and there are no disputed issues of material fact, the District Court properly granted a summary judgment in favor of the Rogers. I would affirm the judgment.