Ferguson v. Reed

• Decision Date: 31 December 1991
• Docket Number: No. 91-127,91-127
• Citation: 822 P.2d 1287
• Parties: Gary L. FERGUSON, Appellant (Defendant), v. Ronald A. REED, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 1287

822 P.2d 1287

Gary L. FERGUSON, Appellant (Defendant), v. Ronald A. REED, Appellee (Plaintiff).

No. 91-127.

Supreme Court of Wyoming.

Dec. 31, 1991.

James R. McCarty, Casper, for appellant.

Donald E. Chapin of Crowell and Chapin, P.C., Casper, for appellee.

Before URBIGKIT, C.J., and THOMAS, CARDINE, MACY and GOLDEN, JJ.

MACY, Justice.

Appellant Gary Ferguson appeals from the lower court's findings that Appellee Ronald Reed substantially complied with the parties' 1981 agreement and that Ferguson breached their 1983 agreement by failing to make the required payments.

We affirm.

Ferguson raises the following issues:

1. Whether the Trial Court erred in refusing to permit the introduction of extrinsic evidence concerning the meaning of the June 5, 1981, Contract between the parties.

2. Whether the Trial Court erred in finding that the Appellee Reed was in substantial compliance with his obligations under the agreements between the parties.

3. Whether the Trial Court erred in finding that the parties modified the June 5, 1981, Agreement in November, 1983.

4. Whether the Court erred in rejecting Ferguson's contention that the November, 1983, Note had been paid and settled when Reed assumed ownership of Ferguson's interest in Middle Forty Partnership in 1986.

This dispute stems from two agreements entered into by Reed and Ferguson in the early 1980's. In a 1981 agreement, Reed agreed to convey to Ferguson Reed's one-fourth interest in Prime Partners, a partnership, and a one-half undivided interest in some undeveloped land west of Casper. Upon receiving Reed's interest in the land, Ferguson executed and delivered a $240,000 promissory note to Reed which was secured by a mortgage on the property. Ferguson then transferred his interest in the property to Prime Partners. Apparently, Ferguson mortgaged the property before he transferred it to Prime Partners so the promissory note would not become a partnership debt.

Other pertinent provisions of the 1981 agreement required: (1) Ferguson to convey his interest in Red Barns of Casper, a general partnership, to Reed, and Reed to assume any debts or liabilities which were derived from Ferguson's interest in the partnership; (2) Ferguson to convey his one hundred shares of Peaches Inc. stock to Reed; and (3) Reed to release his mortgage on 16.5 acres of land when Ferguson requested the release and provided a legal description of the specific acres he wanted released.

In 1983, after some dispute over the 1981 agreement, the parties orally agreed that Reed would release Ferguson's $240,000 promissory note and mortgage. In exchange for Reed's release, Ferguson executed a $75,000 promissory note which was secured by a conditional assignment to Reed of Ferguson's undivided one-eighth interest in the Middle Forty Partnership, a general partnership. Ferguson also conveyed his interest in various other receivables and real estate to Reed.

Ferguson failed to make any payments on the $75,000 promissory note, prompting Reed to initiate this suit. As a defense, Ferguson claimed that Reed took Ferguson's one-eighth interest in the Middle Forty Partnership to satisfy the $75,000 promissory note and also counterclaimed that Reed breached their 1981 agreement. The trial court found that Reed substantially complied with both agreements and that Ferguson breached their 1983 agreement by failing to make payments on the $75,000 promissory note.

Extrinsic Evidence

Ferguson contends that the lower court erred in not permitting the admission of extrinsic evidence to interpret paragraph 1 of the 1981 agreement. Paragraph 1 read as follows:

1. Reed is the owner of a one-fourth interest in Prime Partners, a partnership consisting of Keith Spencer, Gary L. Ferguson, and Ronald A. Reed, owning certain real property, a one-half undivided interest to which is to be conveyed to Ferguson and then to Prime Partners, said real estate is described on Exhibit "A", attached which is included herein by reference as though set forth in full. During the time that Ferguson has title, free of all liens and encumb[ ]rances thereto, except for the mortgages to the First Wyoming Bank of Casper, dated in March, 1980, Ferguson promises and agrees to execute a promis[s]ory note secured by a mortgage to Reed in the face amount of Two hundred and fo[ ]rty thousand dollars, ($240,000.00) with interest thereon at the rate of 10% per annum on the unpaid balance, computed from June 1st, 1981, until paid. The principal and interest shall be paid to Reed, at the rate of Two thousand three hundred and sixteen dollars and five cents, ($2,316.05) per month, beginning July 1st, 1981, until all of the principal and interest shall have been paid and if not completely paid by June 1st, 2001, the unpaid balance shall become due and payable. Ferguson takes title to the land and the partnership of Prime Partners from Reed, subject to all debts and obligations after the aforesaid mortgage has been filed, Ferguson agrees to convey the one-half undivided interest that has vested in him, to Prime Partners.

When reviewing Ferguson's contention, we are governed by our familiar rules of contract construction. Extrinsic evidence will not be admitted to contradict the plain meaning of an unambiguous agreement. Klutznick v. Thulin, 814 P.2d 1267 (Wyo.1991). If a contract is ambiguous, the parties' intent may be determined by the use of extrinsic evidence. Cliff & Co., Ltd. v. Anderson, 777 P.2d 595 (Wyo.1989). An ambiguous contract is one which is obscure in its meaning because of indefiniteness of expression or because it contains a double meaning. Id. Whether a contract is ambiguous is a question of law; thus, this Court is at liberty to make an independent determination as to the existence of an ambiguity. Amoco Production Company v. Stauffer Chemical Company of Wyoming, 612 P.2d 463 (Wyo.1980).

Ferguson lists five clauses ¹ from paragraph 1 of the 1981 agreement and merely asserts the language was ambiguous. That mere assertion does not make the agreement ambiguous, and we are unable to detect any ambiguity. We, therefore, hold the trial court was correct in excluding extrinsic evidence to explain the terms of the agreement.

Substantial Performance

Ferguson next disputes the trial court's finding that Reed substantially complied ² with his obligations under the agreements. Ferguson lists three duties which he alleges Reed failed to substantially perform. First, Ferguson argues that Reed failed to discharge Ferguson's debts and liabilities relating to Red Barns of Casper. As was pointed out at trial, however, the 1981 agreement required Reed only to assume, not to discharge, the liabilities. Ferguson also testified that he had never been contacted to pay any of the debts nor had he been told any of the debts were delinquent. Second, Reed never released 16.5 acres of land when Ferguson requested that he do so. Reed testified that he did not release the land because Ferguson defaulted on the $240,000 promissory note and the requested acres were not within the acreage he transferred to Ferguson. Finally,...