Clements v. Gabriel
| Decision Date | 27 November 1990 |
| Docket Number | No. 17025,17025 |
| Citation | 472 N.W.2d 480 |
| Parties | Steven J. CLEMENTS and Pamela D. Clements, Plaintiffs and Appellees, v. Erma R. GABRIEL and Raymond E. Gabriel, Defendants and Appellants. . Considered on Briefs |
| Court | South Dakota Supreme Court |
Patricia A. Meyers of Costello, Porter, Hill, Heisterkamp & Bushnell, Rapid City, for plaintiffs and appellees.
Wayne F. Gilbert of Bangs, Johnson, Johnson, Colbath & Huffman, Rapid City, for defendants and appellants.
Defendants appeal from a judgment entered against them in a jury verdict in a suit for breach of contract. We affirm.
On August 5, 1985, the Clements and Gabriels entered into a contract whereby the Clements agreed to manage the real property, livestock, equipment and personal property owned by Gabriels. In exchange, the Clements were authorized to run forty-five head of cattle they owned along with four hundred head of cattle to be provided by Gabriels upon Gabriels' ranch. Furthermore, the parties agreed to split the proceeds from the sale of the combined herd on a sixty/forty basis after the expenses of operation were deducted. The agreement was drafted by Gabriels' attorney, Louis Freiberg, after a meeting at Gabriels' residence.
A dispute developed between the parties culminating in this suit wherein the Clements allege that Gabriels breached the agreement by retaining more calves than they were entitled to, by paying for goods which were not ranch expenses, and by refusing to pay the Clements their share of the receipts from calves sold in October, 1988. Gabriels denied that they breached the agreement and further counterclaimed for moneys they claimed the Clements owed them.
The jury awarded the Clements damages of $50,853.00. (It also ruled against Gabriels on their counterclaim.) The trial court adjusted the amount and entered judgment for $48,562.00, prejudgment interest in the amount of $5,940.84, and costs. This appeal followed.
WHETHER THE TRIAL COURT ERRED IN INSTRUCTING THE JURY THAT A PORTION OF THE AGREEMENT WAS AMBIGUOUS.
The trial court determined that the contract was ambiguous with respect to the division of replacement heifers, and so instructed the jury. 1
6L The agreement, inter alia, provided:
Notwithstanding any other provision in this Agreement, no replacement heifers shall be provided for original stock cows sold by either party belongin[g] to them without the agreement of all parties hereto. It is the understanding between the parties that stock cows sold because they are no longer desirable or fit for stock cows will be replaced with replacement heifers from calves raised but these replacement heifers will only replace stock cows sold upon agreement of the parties hereto during the term of this Agreement.
Furthermore:
After the payment of all expenses for the ranch as herein provided, funds remaining from the sale of livestock of calves each year shall be divided 60% to Gabriels and 40% to Clements. Clements shall at all times provide one bull. If any of the initial cows of Clements are sold they will be replaced by one heifer, from the ranch herd and if any of the original cows of Gabriel's (sic) are sold they shall be replaced by [a] replacement heifer from the ranch herd.
The Clements argue that under the agreement any replacement heifer retained to replace a stock cow could be retained only by the agreement of the parties. The Clements assert that under Gabriels' interpretation of the agreement Gabriels could have sold all of the stock cows and retained every single heifer to replace them with or without the consent of the Clements.
"The question of whether a contract is ambiguous is a question of law for the court." Buhl v. Bak, 400 N.W.2d 903, 906 (S.D.1987). "A writing is ambiguous when it is reasonably capable of being understood in more than one sense." Carr v. Benike, Inc., 365 N.W.2d 4, 6 (S.D.1985); City of Sioux Falls v. Henry Carlson Co., 258 N.W.2d 676 (S.D.1977).
The provisions requiring the division of replacement heifers on a sixty/forty basis are unclear. What the parties intended is subject to debate. Here, the trial court concluded that the agreement was ambiguous with respect to the division of the retained heifer calves and so instructed the jury. We agree. In our view, the agreement is patently ambiguous and confusing on this issue.
WHETHER THE COURT ERRED IN INSTRUCTING THE JURY THAT AN AMBIGUOUS AGREEMENT IS CONSTRUED AGAINST THE PARTY DRAFTING THE AGREEMENT.
As noted earlier, Attorney Freiberg, who was present at the meeting between the Clements and Gabriels when the agreement was discussed, drafted the agreement. Mr. Freiberg represented Gabriels. (In fact, he testified that before he arrived, Mrs. Gabriel had written an outline of the agreement.) Later, the Clements had the agreement reviewed by their attorney Thomas C. Adam, who proposed changes to the Clements, including eliminating a section on the costs of prairie dog eradication and a hold-harmless clause. Freiberg testified that he was not aware of Adam's involvement until in the third year of the contract, when he first became aware of the parties' trouble in interpreting it.
The trial court instructed the jury as follows:
Where a contract is ambiguous, it is interpreted most strongly against the party who drafted the contract and caused the uncertainty to exist.
Gabriels assert that this rule has no application to this case. They argue that the rule allowing construction of an ambiguous agreement against the drafter is intended to adjust for an inequality in bargaining power which existed between the parties. Atwater Creamery Co. v. Western Nat'l. Mut. Ins. Co., 366 N.W.2d 271, 277 (Minn.1985). They suggest that neither party had any advantage in bargaining power over the other (especially since Adam reviewed the document for the Clements) and thus the rule construing ambiguities against the party who drafted them has no application. We disagree. 2
"Ambiguities arising in a contract should be interpreted and construed against the scrivener." Forester v. Weber, 298 N.W.2d 96, 97 (S.D.1980) (emphasis added), (citing Henry Carlson Co., supra). This is a rule of construction to be applied against one who drafted an ambiguous contract. Weisser v. Kropuenske, 55 S.D. 558, 561, 226 N.W. 760, 761 (1929). The rule of construction does not change because the Clements' attorney reviewed the document.
Any doubts arising from an ambiguity of language in a contract should be resolved against the speaker or writer, because they can by exactness of expression more easily prevent mistakes in meaning than the one with whom they are dealing. Enchanted World Doll Museum v. Buskohl, 398 N.W.2d 149, 152 (S.D.1986); Henry Carlson Co., supra. The trial court correctly instructed the jury.
WHETHER PREJUDGMENT INTEREST WAS PROPERLY AWARDED TO THE CLEMENTS.
Gabriels argue that prejudgment interest was improper in this case. They note that the Clements' amended complaint did not even seek a sum certain in money damages.
The Clements' claim during the trial was $69,236.75. That claim can be summarized as follows:
Amount owing on Agreement, 1988 $25,448.53
Interest 5,277.97
Ranch expenses/ASCS 1,258.39
Disputed expenses 10,371.86
Calf shortage 10,400.00
Retained calves 16,480.00
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Total $69,236.75
The jury returned a verdict in the amount of $50,853.00, and judgment was ultimately entered in the amount of $48,562.00. The record is silent as to why the trial court reduced this amount. The trial court then calculated the prejudgment interest to be $5,940.87.
Gabriels argue that the damages had no way of being calculated or determined until the jury determined them. They claim that Clements' damages were based on estimates and approximations. The Clements respond, asserting that they submitted specific claims for the breach. They further allege that the books and records reflecting the amounts owed to the Clements were in possession of Gabriels and only after discovery and request for production of documents were these records available to the Clements in order to enable them to calculate their damages.
SDCL 21-1-11 provides:
Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor, from paying the debt.
In Beka v. Lithium Corp. of America, 77 S.D. 370, 92 N.W.2d 156 (1958), wherein we upheld the award of prejudgment interest, we stated:
The reason for denying interest on a claim is that where the person liable does not know what sum he owes, he cannot be in default for not paying. When the exact sum of the indebtedness is known or can be readily ascertained the reason for the denial of interest does not exist.
77 S.D. at 375, 92 N.W.2d at 159-60. Furthermore, "[i]t seems clear from these cases that the instances in which interest will be denied have been progressively restricted by a liberal application of the rule." 77 S.D. at 376, 92 N.W.2d at 160.
The prevailing party is entitled to prejudgment interest only if damages are certain or capable of being made certain by calculation; prejudgment interest is not to be awarded if the damages are uncertain until determined by the trier of fact. First Nat. Bank of Minneapolis v. Kehn Ranch, Inc., 394 N.W.2d 709 (S.D.1986); Twin City Testing & Eng'g Lab., Inc. v. Smith, 393 N.W.2d 456 (S.D.1986).
In Heer v. State, 432 N.W.2d 559, 568-69 (S.D.1988), Justice Sabers (concurring in part and dissenting in part) noted "[t]he right to prejudgment interest under SDCL 21-1-11 is not determined by...
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