Bailey v. Sutton

• Decision Date: 12 February 1945
• Docket Number: 4-7520
• Parties: Bailey v. Sutton
• Court: Arkansas Supreme Court

185 S.W.2d 276

208 Ark. 184

Bailey v. Sutton

No. 4-7520

Supreme Court of Arkansas

February 12, 1945

Appeal from Sebastian Circuit Court, Fort Smith District; J. Sam Wood, Judge.

Reversed.

Joseph R. Brown and Heartsill Ragon, for appellant.

Hardin Barton & Shaw and Warner & Warner, for appellee.

McFaddin J. Holt, J., dissenting.

OPINION

McFaddin J.

Appellant was the plaintiff in the lower court. He sued appellee (defendant below) for insurance commissions lost because the appellee refused to buy insurance from appellant on the Southern Hotel building in Fort Smith. At the conclusion of the evidence for the plaintiff the circuit court directed a verdict for the defendant; and this appeal challenges the correctness of that order.

The plaintiff was engaged in the real estate and insurance business in Fort Smith, and negotiated the sale of the Southern Hotel building from the owner to the Fort Smith Realty Company, in which the defendant was interested, and for whose obligations it is claimed that the defendant is liable. The Fort Smith Realty Co. made a written proposal to the owner to buy the property for a stated consideration, with part to be cash and "the balance of twenty-six thousand ($ 26,000) dollars by purchase money note or notes secured by deed of trust or mortgage on above-described property, in form satisfactory to the seller, with interest from date of settlement at the rate of 4 1/4 per cent., payable semi-annually. The said note or notes to be paid as follows: In equal semi-annual principal installments plus 4 1/4 per cent. interest amortized over a period of fifteen years. Purchaser to have the privilege of paying any or all of balance at any interest paying period by giving sixty (60) days' notice."

The Fort Smith Realty Company, as a part of the transaction, wrote the plaintiff a letter, agreeing that if the owner sold the property to the Fort Smith Realty Company, then it would pay Bailey "as a commission, $ 500"; and, furthermore, agreed in the letter: "We also agree for you to write all insurance during the period of the 15-year term." It is this last quoted sentence that caused the lawsuit and this appeal.

The owner sold the property to the Fort Smith Realty Company in July, 1941, and that company paid Bailey the $ 500 commission, and accepted the insurance policies from him for one year as written by him, and paid the premiums thereon. Some time before July, 1942, the mortgage for $ 26,000, for the balance of the purchase price as hereinbefore referred to, was paid in full by the Fort Smith Realty Company; and in July, 1942, the defendant (acting for and as the realty company) refused to accept any further insurance policies from the plaintiff when they were tendered. Thereupon the plaintiff filed this action for his commissions on the insurance policies tendered, and also his commissions on policies that might be tendered for the remaining thirteen years.

Many interesting questions are argued in the briefs, such as mutuality, extent of disclosure of agent to principal, and liability of persons who subsequently incorporate. We find it unnecessary to discuss these matters in detail, because of the views hereinafter expressed. There is sufficient mutuality in this case under the law as announced in Wilkes v. Stacy, 113 Ark. 556, 169 S.W. 796, and cases there cited. Moreover, the facts herein show disclosure of agent to the principal, if (1) we view the evidence in the light most favorable to the plaintiff and consider the evidence which the court excluded (and which we think should have been admitted); and, (2) if we place on this evidence the construction appellant seeks to give it. Furthermore, when the contract here sued on was signed, no articles of incorporation involving the realty company had been filed with either the Secretary of State or the county clerk. The parties were merely partners at that time; and therefore the defendant may be sued as a partner. We pass to other questions.

I. The Contract was Ambiguous. The trial court should have submitted the case to the jury to determine the meaning of the contract between the parties. When a contract is definitely shown, and the language therein contains no latent ambiguity, it is the duty of the court to construe the contract. But, when the contract has a latent ambiguity, the question of the meaning of the contract should be submitted to the jury. Dorr v. School District, 40 Ark. 237; Wilkes v. Stacy, 113 Ark. 556, 169 S.W. 769; Wisconsin & Arkansas Lumber Co. v. Fitzhugh, 151 Ark. 81, 235 S.W. 1001; Agey v. Pederson, 191 Ark. 497, 86 S.W.2d 930. In the case of Agey v. Pederson the language of the contract was "also agree to lease above rig for $ 50 per day to complete said well. . . ." The quoted language caused a lawsuit. One party contended that the language meant $ 50 for every day the rig was used to complete the well. The other party contended that the language meant $ 50 for every day until the rig was returned. The trial court submitted to the jury the question of the intention of the parties and the meaning of the language; and this court held that the trial court was correct, saying:

"The rule of law is that where a written contract is ambiguous in whole or in part, the meaning thereof should be left to the jury. Jones v. Lewis, 89 Ark. 368, 117 S.W. 561; Yale Automobile Company v. Walker, 145 Ark. 344, 224 S.W. 632; Wisconsin & Arkansas Lumber Company v. Fitzhugh, 151 Ark. 81, 235 S.W. 1001.

"The lower court's construction of the instant contract was that it is ambiguous in that it failed to state whether appellees should pay $ 50 per day for each day they kept the drilling rig or $ 50 per day for the days they actually used the outfit in completing the well. This ambiguity existed in the writing, and the court correctly submitted to the jury the question of the meaning of the language employed in this particular."

There is no distinction between the case of Agey v. Pederson, supra, and the case at bar. Here the contract said: "we also agree for you to write the insurance during the period of the 15-year term." To what did the language, "period of the 15-year term," refer? The appellee contends that it referred to the period of the life of the mortgage, which was 15 years, with the right of payment at any time; and that when the mortgage was paid within the year, then the appellant lost his right to any further insurance. The appellant contends that the language was intended to mean 15 years at all events, regardless of the payment of the mortgage. The contract thus contained a latent ambiguity, and the question of the intention and the meaning should have been submitted to a jury under the proper instructions of the court.

II. Res Judicata. Since the cause is to be remanded for new trial under the instructions herein contained, we think it fitting that we consider the matters in this section and in § III, infra. We point out that the judgment, on the jury's verdict on the question of the meaning and intention of the contract, will be res judicata on that question in any successive action for damages based on the same contract. Nat'l Surety Co. v. Coates, 83 Ark. 545, 104 S.W. 219; same case on second appeal 89 Ark. 542, 117 S.W. 595.

III. Recovery, if any, in this Present Case is Limited to the Damages Caused by Defendant's Refusal to Accept Policies Tendered in July, 1942. The case at bar comes within the rule set forth in Mfrs. Furn. Co. v. Read, 172 Ark. 642, 290 S.W. 353, which is in point here. For several reasons, the rule of anticipatory breach as allowing action for damages on the entire contract (see Roehm v. Horst, 178 U.S. 1, 20 S.Ct. 780, 44 L.Ed. 953; and Annotation in 105 A. L. R. 460) cannot be extended to a case like the one at bar, where the ability of the plaintiff to deliver insurance policies over a period of years is problematical and speculative. No one can be sure that any insurance will be written for any year...