I. G. L. Racquet Club v. Midstates Builders, Inc.

• Decision Date: 25 August 1982
• Docket Number: No. 66495,66495
• Citation: 323 N.W.2d 214
• Parties: I. G. L. RACQUET CLUB, Plaintiff-Appellant, v. MIDSTATES BUILDERS, INC., Defendant-Appellee, MIDSTATES BUILDERS, INC., Counterclaimant-Appellee, v. I. G. L. RACQUET CLUB, Defendant to Counterclaimant-Appellant, MIDSTATES BUILDERS, INC., Cross-Petition Plaintiff-Appellee, v. BROOKS MOTEL and Brooks Country Club, Cross-Petition Defendants-Appellants.
• Court: Iowa Supreme Court

Page 214

323 N.W.2d 214

I. G. L. RACQUET CLUB, Plaintiff-Appellant, v. MIDSTATES BUILDERS, INC., Defendant-Appellee, MIDSTATES BUILDERS, INC., Counterclaimant-Appellee, v. I. G. L. RACQUET CLUB, Defendant to Counterclaimant-Appellant, MIDSTATES BUILDERS, INC., Cross-Petition Plaintiff-Appellee, v. BROOKS MOTEL and Brooks Country Club, Cross-Petition Defendants-Appellants.

No. 66495.

Supreme Court of Iowa.

Aug. 25, 1982.

Larry A. Stoller of Stoller & Larson, Spirit Lake, for appellants.

Richard Meyer of Fitzgibbons Brothers, Estherville, for appellee.

Considered by REYNOLDSON, C. J., and LeGRAND, UHLENHOPP, HARRIS, and LARSON, JJ.

HARRIS, Justice.

By a series of pretrial and trial rulings a litigant was prevented from presenting a claim in a dispute which arose from a contract to build a recreational facility. The owner (plaintiff) sought damages by reason of a delay in completion of construction.

Plaintiff ¹ asserted the contract was "partly written and partly oral." The writing made no mention of completion date. Plaintiff sought to show that, under the oral part of the agreement, it was understood construction would be completed about October 15, 1979. The contractor (defendant) completed its portion of the building on January 25, 1980. The building was to be used as an indoor tennis club or racquet facility. The plaintiff alleged the delay resulted in substantial financial harm.

Prior to trial the defendant moved for partial summary judgment on the ground that evidence of a specific completion date was barred by the parol evidence rule. Salsbury v. Northwestern Bell Telephone Company, 221 N.W.2d 609, 611 (Iowa 1974). On the same theory defendant moved in limine for an order prohibiting plaintiff from mentioning a specific completion date before the jury. Both these motions were sustained and the rulings are assigned as error in this appeal.

I. The written contract contained two clauses which recite that the writing constitutes the entire agreement and could be modified only by a writing signed by both parties. But this could not preclude plaintiff from attempting to show the parties orally agreed otherwise. Restatement (Second) of Contracts § 216 comment e (1981). And plaintiff claimed, and offered evidence to show, that the clauses were contrary to fact, that the writing fell far short of completely describing all the parties agreed to. Testifying on cross-examination the contractor's president was asked about the written contract. He preferred to call the writing a purchase agreement. Though he insisted there were no oral agreements he did concede that a letter of proposed specifications became a part of the understanding between the parties and did so by oral agreement between them.

An agent of the contractor, also on cross-examination, conceded that oral understandings were reached between him and the owner's agent on how the construction site would be prepared. The same agent conceded that, under an oral understanding, the owner's agent would have a right to review and approve the plans and specifications.

Under these circumstances the parol evidence rule would not ordinarily preclude evidence of the parties' further agreement on a completion date.

The parol evidence rule forbids use of extrinsic evidence to vary, add to, or subtract from a written agreement. Pappas v. Hauser, 197 N.W.2d 607, 611 (Iowa 1972). But the rule does not come into play until by interpretation the meaning of the writing is ascertained, and, as an aid to interpretation, extrinsic evidence is admissible which sheds light on the situation of the parties, antecedent negotiations, attendant circumstances, and the objects the parties were striving to attain. Hamilton v. Wosepka, 261 Iowa 299, 306, 154 N.W.2d 164, 168 (1967).

Egan v. Egan, 212 N.W.2d 461, 464-65 (Iowa 1973).

We note and approve the following:

There is ample judicial authority showing that, in determining the issue of completeness of the integration in writing, evidence extrinsic to the writing itself is admissible. The oral admissions of the plaintiff that the agreement included matters not contained in the writing may be proved to show that it was not assented to as a complete integration, however complete it may look on its face. On this issue, parol testimony is certainly admissible to show the circumstances under which the agreement was made and the purposes for which the instrument was executed.

3 Corbin on Contracts, § 582, at p. 451. See 13 Am.Jur.2d, Building, Etc. Contracts, § 124 (1964).

The parol evidence rule should not be invoked to prevent a litigant the chance to prove a writing does not in fact describe what the parties understood to be their agreement. The rule should not have been employed here to preclude plaintiff from attempting to show the writing was induced in part by an agreement about a completion date.

Defendant offered evidence to show there was no such further agreement. According to the general contractor (not a party) a completion date, with penalty clause, was omitted from...