Brown v. Lang, 54656

• Decision Date: 13 January 1984
• Docket Number: No. 54656,54656
• Citation: 675 P.2d 842,234 Kan. 610
• Parties: John BROWN and Barbara Brown and K & L Tank Truck Service, Inc., Appellants, v. Herman LANG and Elizabeth Lang, Husband and wife, Appellees.
• Court: Kansas Supreme Court

Page 842

675 P.2d 842

234 Kan. 610

John BROWN and Barbara Brown and K & L Tank Truck Service, Inc., Appellants, v. Herman LANG and Elizabeth Lang, Husband and wife, Appellees.

No. 54656.

Supreme Court of Kansas.

Jan. 13, 1984.

Syllabus by the Court

1. Prior to a resort to extrinsic evidence, a contract is to be interpreted from its "four corners." That is to say, all the language used anywhere in the contract should be taken into consideration and construed in harmony with other portions of the contract.

2. When the intent of the parties to a contract is clearly ascertainable by construing the document from its four corners, it is not considered ambiguous; although some terms may be conflicting, extrinsic evidence is inadmissible and rules of construction applicable to ambiguous contracts do not apply.

3. A mere mathematical or typographical error in a contract, which does not create such an inconsistency that the overall intent of the parties cannot be determined from the four corners of the instrument, does not result in an ambiguous contract.

4. The remedy in cases of mutually mistaken computation in a contract is not to bind the parties to the erroneous figure, whereby one party inevitably profits at the expense of the other, but to enforce the contract according to its true intent.

5. The effect of a negative finding by a trial court is that the party upon whom the burden of proof is cast did not sustain the requisite burden. Absent arbitrary disregard of undisputed evidence or some extrinsic consideration such as bias, passion or prejudice the finding of the trial judge cannot be disturbed. An appellate court cannot nullify a trial judge's disbelief of evidence nor can it determine the persuasiveness of evidence which the trial judge may have believed.

6. The allowance of costs lies within the sound discretion of the trial court.

Lelyn J. Braun of Lelyn J. Braun, Chartered, Garden City, argued the cause and was on the brief for appellants.

Casey R. Law of Turner & Boisseau, Chartered, Great Bend, argued the cause and Hal Meltzer, Great Bend, of the same firm, was with him on the brief for appellees.

HOLMES, Justice:

Plaintiffs, John Brown, Barbara Brown, and K & L Tank Truck Service, Inc., (plaintiffs), appeal from a judgment rendered in a trial to the court for breach of a written contract. While numerous issues were presented to and decided by the trial court, only two are on appeal: (1) Whether the trial court erred in its construction of the terms of the contract, and (2) whether the trial court erred in its determination of the amount of damages awarded plaintiffs. We find no error in the trial court's determination of either issue and affirm the judgment.

From 1966 to 1977, defendants Herman and Elizabeth Lang owned K & L Tank Truck Service (K & L), which provided fluid hauling services for the oil industry in and around Garden City. Plaintiffs John and Barbara Brown were friends of the defendants.

Along with Leroy Valentine, defendants Lang also owned Vala Construction and Supplies, Inc. (Vala), a roustabout construction company which sold oil equipment and provided contracting services to area drillers. Vala was incorporated in 1974 and its capital stock was owned 50% by Valentine and 50% by Herman Lang. The articles of incorporation provided each man with a right of first refusal to purchase the other's stock. If either decided to sell his stock he was required to offer it to the other before selling to an outside party. Lang owned the land occupied by Vala and K & L, which shared offices and used the same yard facilities. Vala paid K & L $750.00 per month for rent and for some bookkeeping services.

In 1976, defendants offered to sell to the Browns the entire K & L operation and their 50% of Vala. On March 24, 1977, the parties signed a contract. The contract conveyed equipment and vehicles used to haul crude oil, fresh water and salt water, other related equipment, a lease for a salt water disposal well, and all of the physical assets of K & L as itemized in the agreement, along with 50% of the capital stock in Vala. The contract ascribed values to each item, placing the value of the Vala stock at $32,500.00. The total purchase price was $300,000.00. After executing this contract, Lang delivered to the designated escrow agent the Vala capital stock. The Browns assumed operation of K & L, which they incorporated, in July, 1977, and began making the specified monthly payments of $2,492.90, which were accepted by the Langs. The Langs ceased participation in the management of K & L and Vala.

At this point a dispute arose between Herman Lang and Leroy Valentine over the transfer of Langs' stock to the Browns. Valentine thereafter filed suit against the Langs, the Browns, and the escrow agent, seeking to void the sale and transfer of Langs' Vala stock to the Browns because Valentine had neither waived his right of first option to purchase the stock nor acquiesced in the sale. (Valentine v. Lang, et al, No. 77-C-250 [D.C.Finney County, April 16, 1979].) The trial court agreed with Valentine and voided the transfer of Vala stock. The escrow agent returned the stock certificates to defendant Herman Lang. Vala later went into receivership and was dissolved by court order in December, 1979.

On May 31, 1979, plaintiffs filed this suit against the defendants seeking damages for breach of contract. Plaintiffs also sought a judgment construing the purchase price and payment terms defined in the contract which were patently inconsistent.

One of the pretrial issues raised by the parties was the admissibility of parol evidence concerning events and circumstances between the parties leading to execution of the contract in question. Plaintiffs asserted that the contract was clear and unambiguous requiring no parol evidence for interpretation. Defendants asserted a number of alleged ambiguities which appeared on the face of the agreement, warranting consideration of parol evidence to clarify the parties' intentions. Paragraphs 6 and 7 of the contract state:

"6. Second party agrees to pay to the first party, and the first party agrees to accept as full payment for the sale and transfer of said permit, and for the purchase price of all personal property and the business hereinbefore described as well as the 50% of the capital stock of Vala Construction and Supplies, Inc., the sum of THREE HUNDRED THOUSAND DOLLARS ($300,000.00) which shall be paid in the following manner:

The sum of FIVE THOUSAND DOLLARS ($5,000.00), cash, as earnest money, simultaneously with the execution of this agreement;

The sum of FORTY-FIVE THOUSAND DOLLARS ($45,000.00) on or before the 1st day of July, 1977;

"7. The deferred balance of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00), shall be paid in ONE HUNDRED TWENTY (120) equal monthly installments, with interest included at the rate of 7 1/2% per annum, in the monthly amount of TWENTY-FOUR HUNDRED NINETY-TWO DOLLARS and 90/100 ($2,492.90) and with the first payment thereof being due and payable on the 1st day of September, 1977, with a like installment on the 1st day of each month thereafter until fully paid. The party of the second part shall have full prepayment privileges of any part of the unpaid deferred balance at any prior time without penalty."

The first alleged ambiguity arises due to the conflict between the stated principal, interest, and installment terms, and the specified monthly payment amount. Monthly payments of $2,492.90 for a term of 120 months would amount to $299,148.00, yielding an effective annual interest rate of only 3.67%, contrary to the rate of 7.5% specified by the contract. By contrast, interest of 7.5% per annum on the deferred balance of $250,000.00 would require either 120 monthly payments of $2,967.54, or payments of $2,492.90 for 158.19 months. Plaintiffs contended that the contract when read from the four corners of the instrument was clear and unambiguous, that the stated monthly payment of $2,492.90 should control and that traditional rules of construction of ambiguous documents did not apply.

The trial court agreed with plaintiffs that the contract needed no parol evidence for interpretation stating:

"[T]he contract, when considered from the four corners of the instrument, is sufficiently clear and unambiguous as to indicate the intent of the parties.... The alleged ambiguities pointed out in the brief of the Defendants are not sufficient, taken in light of the contract read as a whole, to necessitate the use of parol evidence to determine the agreement of the parties."

After this decision, defendants then moved the court to determine as a matter of law its interpretation of the monetary provisions of the contract. The court found:

"It is the finding of this Court that the Contract of Sale and Assignment, between the parties, executed March 24, 1977, provides for a purchase price of Three hundred thousand dollars ($300,000.00) with the sum of Five thousand dollars ($5,000.00) paid as Earnest Money at the time of the execution of the agreement, the further sum of Forty-five Thousand dollars ($45,000.00) to be paid on or before the first day of July, 1977, and the balance of the purchase price, that being the sum of Two hundred fifty thousand dollars ($250,000.00), to be...