Court Opinion

ID: 9769320
Source: CourtListenerOpinion
Date Created: 2023-08-29 14:45:21.096066+00
Date Added: 2024-06-11T15:36:55.810251
License: Public Domain

Frank Holt, Justice. The appellant and appellee are subcontractors who entered into an agreement involving the installation of sewer lines. Paragraph 7 of the agreement between these parties provided: It is further agreed that the 2nd subco tractor will receive $20,000 for supervision which will be added to the actual cost figure. It is further agreed that the difference between actual cost and bid price will be divided as follows: 33 1/3% to 2nd contractor; 66 2/3% to 1st subcontractor. Appellee was paid $517,451.11 and appellee brought suit for an alleged payment deficit of $55,243.20 on the contract. The trial court, sitting as a jury, after hearing parol evidence, awarded appellee judgment for $40,349.11. Appellant questions only that part of the judgment which awarded $18,-600 (in addition to $20,000 for supervision) for the salary and living expenses of appellee’s president and sole stockholder during the time he was personally engaged in the supervision of the construction. Appellant contends that the extra award of $18,600 is double recovery in that it is contrary to the terms of the contract which designates a specific sum of $20,000 for supervision. When contracting parties express their intention in a written instrument in clear and unambiguous language, it is our duty to construe the written agreement according to the plain meaning of the language employed. Miller v. Dyer, 243 Ark. 981, 423 S.W. 2d 275 (1968). However, where the meaning of a written contract is ambiguous, parol evidence is admissible to explain the writing, Brown and Hackney v. Daubs, 139 Ark. 53, 213 S.W. 4 (1919). Ambiguities are both patent and latent. When, on its face, the reader can tell that something must be added to the written contract to determine the parties’ intent, the ambiguity is patent; a latent ambiguity arises from undisclosed facts or uncertainty of the written instrument. Dorr v. School District No. 26 &c, 40 Ark. 237 (1882); Johnson v. Mo. Pac. R. R. Co., 139 Ark. 507, 214 S.W. 17 (1919); and Taylor v. Union Sawmill Co., 105 Ark. 518, 152 S.W. 150 (1912). However, the initial determination of the existence of an ambiguity rests with the court and if ambiguity exists, then parol evidence is admissible and the meaning of the term becomes a question for the factfinder. Fort Smith Appliance and Service Co. v. Smith, 218 Ark. 411, 236 S.W. 2d 583 (1951); Brown and Hackney v. Daubs, supra; and Easton v. Washington County Insurance Co., 391 Pa. 28, 137 A. 2d 332 (1957), cited in 4 Williston on Contracts, § 627 (3d. Ed. 1961). For example, in Taylor v. Union Sawmill Co., supra, our court made an initial determination of the ambiguous nature of the term “white oak” before justifying the introduction of testimony of custom and usage in order to determine the sense in which the term was employed. In the case at bar, we cannot strain the plain, obvious, and unambiguous language of the contract. Appellee agreed to a definite amount for supervision. Had appellee’s president and sole owner of the corporation desired that the sum of $20,000 represent a guaranteed profit, as he and his witnesses so understood from their verbal agreement during negotiations, the wording of the contract should have so indicated. Had appellee’s president and owner intended, as he now contends was their verbal understanding, that his salary should be in addition to the $20,000 for supervision, the written contract could easily have so reflected. The lower court’s award for salary ($15,500) is contrary to the plain and unambiguous terms of their written agreement and the judgment should be adjusted accordingly". In Hoffman v. Late, 222 Ark. 395, 260 S.W. 2d 446 (1953), we said: It is the accepted present-day view that the parol evidence rule is not really a rule of evidence but is instead a rule of substantive law. Wigmore on Evidence (3d. Ed.), § 2400; Williston on Contracts (Rev. Ed.), § 631; Rest., Contracts, § 237; 4 Ark. L. Rev. 168. As Wigmore puts it, supra: ‘What the rule does is to declare that certain kinds of facts are legally ineffective in the substantive law; and this of course (like any other ruling of substantive law) results in forbidding the fact to be proved at all.’ The practical justification for the rule lies in the stability that it gives to written contracts; for otherwise either party might avoid his obligation by testifying that a contemporaneous oral agreement released him from the duties that he had simultaneously assumed in writing. Hence in the case at bar it makes no difference whether Late’s version of the oral negotiations is true or false. . . . Likewise, in the case at bar, even though the verbal evidence and tentative drafts attending the negotiations be true, it cannot alter the terms of the clearly unambiguous written agreement as to his compensation for supervisory services. The contracting parties were knowledgeable and certainly capable of reducing their negotiations to unambiguous written terms. In such situations, we cannot interfere. The court found that appellee was entitled to $3,100 for its owner’s expenses during the time he actually was “on the job.” The contract clearly provides for recovery of actual costs. In the circumstances, the court was justified in this award. We deem it unnecessary to discuss appellant’s other contentions. The judgment is modified to exclude the salary allowance. Affirmed as modified. Fogleman and Brown, JJ., dissent.