Bestway Equipment Services, Inc. v. Berwind Lines, Inc.

Decision Date17 July 1981
Docket NumberNo. 80-1788,80-1788
Parties8 Fed. R. Evid. Serv. 964 BESTWAY EQUIPMENT SERVICES, INC., Plaintiff, Appellant, v. BERWIND LINES, INC., Defendant, Third Party Plaintiff, Appellee, v. CARIBE TUG CORPORATION, Third Party Defendant, Appellee.
CourtU.S. Court of Appeals — First Circuit

Henry R. Stoinski, Woodbury, N.J., for plaintiff, appellant.

Jose A. Fernandez Paoli, Santurce, P. R., for third party defendant, appellee Caribe Tug Corp.

Andres R. Nevares Gonzalez, San Juan, P. R., for defendant, third party plaintiff, appellee Berwind Lines, Inc.

Before COFFIN, Chief Judge, CAMPBELL and BREYER, Circuit Judges.

BREYER, Circuit Judge.

In this diversity action, appellant, Bestway Equipment Services, Inc., sued Berwind Lines, Inc. in the federal district court for Puerto Rico alleging: (1) that Berwind kept fifty trailers that belonged to Bestway; (2) that Berwind had not paid Bestway rent that it owed for the lease of fifteen other trailers; and (3) that Berwind had not paid Bestway for trailer repairs that were Berwind's responsibility. Berwind, in turn, sued Caribe Tug Corporation as a third party defendant on the second claim, for Caribe Tug had taken over Berwind's lease and had assumed any resulting liability. A jury found against Bestway on all claims. Bestway appeals. After reviewing the record, we find no appealable error and affirm the judgment of the district court.

I.

Bestway sold, leased and repaired truck trailers commercial trailers pulled by a truck tractor used to haul goods. Berwind, a trucker, needed equipment and approached Bestway in 1972. It is undisputed that in September 1972 Berwind and Bestway entered into a written lease. Under the lease Bestway rented fifty "dry" (non-refrigerated) trailers for thirty-six months at a rental of $70 per month per trailer. The lease specifically states that Berwind "acknowledges that at all times during the term of this lease, the title to and ownership of the vehicles ... shall remain" in Bestway and that Berwind "does not by these presents acquire any title or proprietary rights therein." The lease adds that at its termination Berwind is to return all the trailers to Bestway in the same condition as when leased subject to ordinary wear. And, the lease states that "there are no agreements, understandings or representations between the parties hereto not embraced herein." Despite this language, Berwind did not return the trailers to Bestway. Rather, it kept them while offering Bestway $1 per trailer.

Berwind's defense is that there existed a separate oral agreement that at the termination of the lease, Bestway would sell the trailers to Berwind for $1 each. The evidence of this separate agreement consisted, first, of the testimony of Hugh McComas, a former Berwind executive, who said that it was his intention to create a "lease-purchase" arrangement with Bestway. He said that the "$1 purchase" part of the agreement was deliberately not put in the lease so that Berwind's auditors would not capitalize the lease's value. He added that he instructed his vice-president, Mr. Robeson, to negotiate a lease purchase in this form. This evidence was followed by the testimony of another Berwind executive, John Forsythe, who said that he saw Robeson hand a specific document to Harold Burger, the president of Bestway. The document, which was admitted into evidence, is a Berwind purchase order, which states:

                Quantity              Description
                --------              -----------
                 50 ea.   Dry Highway Van Trailers on
                          Rental/Purchase for a period of
                          36 months, commencing when
                          delivered, at the rate of $70.00
                          per Van, per month.  At the end
                          of the 36 months period, in each
                          case, title will pass to Berwind
                          Lines, Inc. with payment of $1.00
                          per Van.  Price specified above
                          includes one ea. paint job per Van
                          during the life of ea.  Van while on
                          rental
                

Although Burger denied the existence of a separate oral agreement to sell the trailers at the end of the lease term, this evidence would ordinarily be sufficient to leave the question to the jury. On appeal, however, for the first time Bestway argues that Puerto Rico's parol evidence rule forbids the jury to consider Berwind's evidence of the oral sale agreement. 1 Bestway adds that without this evidence of an oral agreement, the jury must, as a matter of law, conclude, given the terms of the written lease, that Bestway owns the trailers.

We reject Bestway's argument because it was not raised in the district court. Bestway did not object to any testimony or exhibits on grounds of "parol evidence". It did not object to McComas' testimony. It objected to Forsythe's testimony on grounds of hearsay and lack of qualification to identify the purchase order (which Mr. Forsythe saw Mr. Robeson hand to Mr. Burger). The district court correctly overruled these objections. If the issue is one of the admission of evidence, any objection now is barred Rule 103(a)(1) Federal Rules of Evidence. Chalamidas v. Sierra Life Ins. Co., 632 F.2d 1381, 1384-85 n.2 (10th Cir. 1980). 2

Bestway also claims that the district court's instruction on this subject was inadequate. The court instructed:

Whenever the parties to a contract reduce their agreement to writing and the writing is apparently complete, a presumption arises that that is the whole of that agreement. When parties accept a document, which is a contract, there arises a presumption that all of the parties intended to be bound by its terms. You are instructed further, that an oral contract has the same validity in law as a written contract. That an oral contract is binding among the parties to such a contract and that the standard of evidence that is required to prove another contract is a preponderance of the evidence and that no higher standard of proof is required in such a case. In other words, the standard of proof in reference to a written contract and/or an oral contract is the same. A party in a contract, whether it be written or oral, is obliged to comply with all of the terms and conditions that are stipulated in that contract.

There is no record of any objection to this instruction. In fact, after the court gave it, Bestway's counsel was asked whether he had "any further record to make on the Court's instructions," to which he replied, "No, sir." Thus, no parol evidence objection based upon the jury instruction has been preserved. Fed.R.Civ.P. 46, 51; Monomoy Fisheries, Inc. v. Bruno & Stillman Yacht Co., 625 F.2d 1034, 1036 (1st Cir. 1980).

Bestway also argues that it can raise the parol evidence point now because it is a rule of substantive law, not a rule of evidence. Hence, it claims, failure to object below is not fatal. See United States v. Croft-Mullins Electric Co., 333 F.2d 772 (5th Cir. 1964), cert. denied, 379 U.S. 968, 85 S.Ct. 664, 13 L.Ed.2d 561 (1965) (appellate court may properly find that prior or contemporaneous oral conversations and negotiations, though admitted without objection in a judge-tried case, are simply immaterial and irrelevant to the question of what the agreement was); 4 Williston on Contracts § 631 (3d ed. 1961). Even were we to follow this authority, however, Bestway could not prevail. If its claim is that the remaining competent evidence was insufficient to support the jury's verdict, it should have asked the district court for a directed verdict. It did not do so and that failure bars consideration of any such issue of contract law on appeal. See Martinez Moll v. Levitt & Sons of Puerto Rico, Inc., 583 F.2d 565, 568 (1st Cir. 1978); LaForest v. Autoridad de Las Fuentes Fluviales, 536 F.2d 443, 445 (1st Cir. 1976); Gillentine v. McKeand, 426 F.2d 717, 722-23 (1st Cir. 1970); 5A Moore's Federal Practice P 50.08 (2d ed. 1980). Even if Bestway were to claim that the mere presence of this parol evidence both is forbidden by substantive contract law and led the jury to an improper outcome, it would still have had to protest any instruction allowing the jury to consider the evidence at a time when corrective measures could have been taken.

Finally, this is not a case where, despite lack of objection, this court should reverse the judgment, under the plain error rule, Sibbach v. Wilson & Co., 312 U.S. 1, 16, 61 S.Ct. 422, 427, 85 L.Ed. 479 (1941). No miscarriage of justice would occur if the jury verdict stands. The parol evidence rule of Puerto Rico, as...

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