Court Opinion

ID: 6477124
Source: CourtListenerOpinion
Date Created: 2022-06-26 22:44:07.253056+00
Date Added: 2024-06-11T15:54:00.163545
License: Public Domain

OPINION
HATHAWAY, Judge.
The issue in this appeal is the proper interpretation of a contract for the purchase of realty.
Appellants (the Smiths) negotiated to buy a ranch from Lazy V-P Ranches, Inc. About 600 acres of this ranch was the subject of negotiations for a land exchange between Lazy V-P and the state land department. The Smiths were told of this proposed exchange but offered to buy the ranch nevertheless. The sale was dealt with in two separate agreements. The first was for the purchase of the bulk of the ranch and is not in dispute. The second, labeled “Range and Pasturing Agreement,” provided pasturing and watering rights for the Smiths’ cattle while the Smiths were paying off the note and mortgage on the ranch. The disputed provisions of this *136Range and Pasturing Agreement1 are: (1) A recital that Lazy V-P intended to dispose of the 600-acre tract; (2) the provision, “If Title is acquired to these 600 acres by the State of Arizona,” then Lazy V-P would ensure that the Smiths obtained a grazing lease from the state on the 600 acres and (3) the provision, “If the Exchange with the State of Arizona for the 600 acres, more or less, of Patented land is not approved, or for any reason fails or is withdrawn, then Lazy V-P Ranches, Inc., agrees to sell to Mr. and Mrs. Smith and Mr. and Mrs. Smith agree to purchase said 600 acres of land, more or less, at a price of $24,000 .... ” The price in the original document was $240,000 and the terminology merely gave the Smiths a “first right of refusal.” Smith himself requested the changes, which were agreed to because an exchange was contemplated “some way or another,” according to an officer of Melson, Inc. (Lazy V-P’s successor in interest).
At the time of these negotiations, there was a proposal before the land department for a transfer of fee simple title to the 600 acres in exchange for fee simple title to certain state lands. This proposal, designated “application 61-14,” was amended twice and finally rejected by the state. A petition for rehearing was denied and Mel-son, Inc. filed an appeal. At this point, the Smiths demanded performance of the agreement. The land commissioner then granted a rehearing, Melson, Inc. withdrew its appeal and a “Decision and Order of Exchange” was issued in which Melson, Inc. gave the 600 acres to the state and the state gave Melson, Inc. a one-year grazing lease.
The Smiths sued for specific performance, claiming that the exchange had failed because application 61-14 was rejected and that this failure satisfied the condition precedent to the Smiths’ right to purchase the 600 acres. They also took an appeal to the superior court from the land department’s order of exchange. These actions were consolidated, but the parties stipulated to a dismissal of the administrative review action. The remaining contract action was decided against the Smiths on findings of fact.
The trial court’s express legal conclusions included the following:
1. The contract was not ambiguous;
2. The term “the Exchange” referred to any exchange between Melson, Inc. and the state involving the 600 acres;
3. The express purpose of the agreement was to provide the Smiths with grazing rights; and
4. The order of exchange eliminated the Smiths’ “option right” to buy the acreage.
The Smiths believe these conclusions ignore the circumstances of the formation of the contract, give effect only to a portion of the contract and define “the Exchange” incorrectly.
The argument that the findings “give no meaning at all” to the term “the Exchange with the State of Arizona” is without merit in light of the conclusions, paraphrased above, that address this term and give it the logical meaning of any exchange with the state involving the described acreage.
The argument that the court ignored the circumstances of the agreement and therefore failed to find that it contemplated a purchase by the Smiths is also without merit. Although the court found that the “express purpose of the Range and Pasturing Agreement is to provide grazing rights,” it also found that the exchange with the state “eliminated plaintiffs’ option right under the ... Agreement.” This is an obvious recognition that the Smiths had a right to buy the property but that the exchange defeated this right.
The real issue in this appeal is the interpretation of the phrase “the Exchange.” The Smiths contend that parol evidence proved that the term was meant to refer only to the proposals contained in application 61-14 and its amendments. The appellees claim that no parol evidence should be considered to define the term because it is unambiguous and that the proper definition is any exchange with the state involving the 600 acres.
*137We begin our consideration of the question by first comparing Richards Development Company v. Sligh, 89 Ariz. 100, 102, 358 P.2d 329, 330 (1961) (“parol evidence is not admissible to aid in the interpretation of the parties’ intentions until the four corners of the writing itself have been searched to determine whether the document itself affords a reasonably clear understanding of what the parties have agreed to do.”) with McCormack v. Kirtley, 115 Ariz. 25, 29, 563 P.2d 280, 284 (1977) (“[t]he circumstances under which a writing was made may always be shown,” quoting Williston). The intricacies of the parol evidence rule are considered generally in 9 Wigmore, Evidence, § 2400 (Chadbourn rev. 1981). It is unnecessary to inquire into the niceties of the rule here, however, because the instant case deals with the interpretation of the language of a contract, a situation in which parol evidence is universally allowed. See 9 Wigmore, supra, § 2472; J. Murray, Contracts, § 108 (1974); 3 Corbin, Contracts, § 579 at 412-21 (1960):
“The ‘parol evidence rule’ is not, and does not purport to be, a rule of interpretation or a rule as to the admission of evidence for the purpose of interpretation. Even if a written document has been assented to as the complete and accurate integration of the terms of a contract, it must still be interpreted; and all those factors that are of assistance in this process may be proved by oral testimony.
It is true that the language of some agreements has been believed to be so plain and clear that the court needs no assistance in interpreting. Even in these cases, however, it will be found that the court has had the aid of parol evidence of the surrounding circumstances. The meaning to be discovered and applied is that which each party had reason to know would be given to the words by the other party. Antecedent and surrounding factors that throw light upon this question may be proved by any kind of relevant evidence.
The more bizarre and unusual an asserted interpretation is, the more convincing must be the testimony that supports it. Just when the court should quit listening to testimony that white is black and that a dollar is fifty cents is a matter for sound judicial discretion and common sense. Even these things may be true for some purposes. As long as the court is aware that there may be doubt and ambiguity and uncertainty in the meaning and application of agreed language, it will welcome testimony as to antecedent agreements, communications, and other factors that may help to decide the issue.”
In the instant case, the trial court received extrinsic evidence to prove that “the Exchange” referred to the exact proposals found in application 61-14 but the court disbelieved the suggested inference.
“A question of interpretation of an integrated agreement is to be determined by the trier of fact if it depends on the credibility of extrinsic evidence or on a choice among reasonable inferences to be drawn from extrinsic evidence.” Restatement (Second) Contracts, § 212.
The writing itself is the most important evidence of intention. Id., comment b. Application 61-14 is never mentioned in the agreement. The only reference is to “the Exchange with the State of Arizona for the 600 acres, more or less, of Patented land.” In addition, the contract states, “Lazy V-P Ranches, Inc. contemplates disposing of this 600 acres, more or less, of Patented lands before the said note and mortgage are fully paid and/or satisfied.” We believe this language clearly supports the trial court’s conclusion that “the Exchange” means any exchange with the state involving the 600 acres and that the contract does not deprive Melson of the right to negotiate an exchange with the state with terms different than those contained in application 61-14. It is not outweighed as a matter of law by .the mere existence of application 61-14.
The Smiths also contend that their interpretation is correct because the transaction involving the acreage was not an exchange of any sort. They argue that it was not a statutory exchange because it *138was not made pursuant to A.R.S. §§ 37-601 to -611, the article entitled, “Exchange of Public Lands.” These statutes deal only with exchanges of land for land and therefore do not apply here. The transaction was made pursuant to A.R.S. § 37-104, which allows the land department to accept conveyances “by gift, in trust, or otherwise.” Furthermore, the Range and Pasturing Agreement did not require an exchange specifically under A.R.S. §§ 37-601 to —611. The final argument on this point is that an exchange at common law is a transfer of equal interests only — a fee simple for a fee simple, for example. Two cases are cited.2 We agree with the more modern definition of “exchange” as “a reciprocal transfer of property for other property of value, rather than for a money consideration,” 30 Am.Jur.2d, Exchange of Property, § 1, and believe that this transaction qualifies as an “exchange.”
Because of our holding, it is unnecessary to consider the other issues raised in the briefs.
Affirmed.
BIRDSALL, J., concurs.

. The agreement is set out in its entirety in the dissent.

. Finke v. Boyer, 331 Mo. 1242, 56 S.W.2d 372 (1932); Liberto v. Sanders, 248 S.W. 120 (Tex. Civ.App.1922), rev., 259 S.W. 1080 (1924).