Kelley v. Baisch
| Decision Date | 15 November 1938 |
| Docket Number | 6420 |
| Citation | 87 P.2d 465,59 Idaho 789 |
| Parties | M. A. KELLEY and V. A. KELLEY, Copartners Doing Business Under the Firm Name and Style of KELLEY MOTOR COMPANY, Appellants, v. JOHN A. BAISCH, Jr., Respondent |
| Court | Idaho Supreme Court |
CONTRACTS-INTERPRETATION.
(Syllabus by author of opinion.)
I. In construing an indefinite or ambiguous contract, the interpretation placed on it by the parties thereto is to be considered by the court and should be given great weight in ascertaining their understanding of its terms.
II. In a contract entered into between appellants and their wives as first parties, and respondent and his wife, as second parties, wherein respondent leased to appellants a gasoline service station, it was recited: "That second parties agree to give the first parties the same margin of profit that they receive between the wholesale and retail prices of products as received by them at their own gas stations." Held that the term "margin of profit," as used in the contract, includes sums of money paid to respondent, by oil companies, per gallon, because of gasoline sold to appellants at said station by said companies, and that appellants are entitled to judgment against respondent therefor.
APPEAL from the District Court of the Eleventh Judicial District for Twin Falls County. Hon. Adam B. Barclay, Judge.
Action to recover money due on contract. Judgment for plaintiffs from which, being dissatisfied with the amount thereof, they appeal. Remanded with instruction to modify judgment.
Case remanded with direction. Costs awarded to appellants.
Chapman & Chapman, for Appellants.
When the contract is ambiguous the court must take into consideration, in ascertaining the intention of the parties the situation of the parties at the time of the execution of the agreement, the circumstances surrounding the execution of the agreement, and the motives of the contracting parties, as shown by the recitals of the agreement, or by outside evidence. (Wood River Power Co. v. Arkoosh, 37 Idaho 348, 215 P. 975; Mark P. Miller Milling Co. v Butterfield-Elder Co., 32 Idaho 265, 181 P. 703; State v. Twin Falls Canal Co., 21 Idaho 410, 121 P 1039; Twin Falls etc. Fruit Co. v. Salsbury, 20 Idaho 110, 117 P. 118.)
In construing the terms of a written agreement where the grammatical and ordinary sense of the words will lead to some absurdity it may be modified to avoid such absurdity or inconsistency. (Sec. 489, 13 C. J. 531; Thompson v. Trenton Water Power Co., 77 N.J.L. 672, 73 A. 410; sec. 236, Comment on clause (b), vol. 1, Restatement of the Law of Contracts; Union Cent. Life Ins. Co. v. Jensen, 74 Mont. 70, 237 P. 518.)
Frank L. Stephan and J. H. Blandford, for Respondent.
Parties to a contract are held to have intended what is clearly expressed by the language used therein. In construing a written instrument to determine what is intended by it the court must examine the whole instrument, and if the meaning is clear and unambiguous and involves no absurdity of contradiction, the contract must be enforced according to the plain import of the language used. (Molyneaux v. Twin Falls Canal Co., 54 Idaho 619, 35 P.2d 651, 94 A. L. R. 1264; Farm Credit Corp. v. Meierotto, 50 Idaho 538, 298 P. 378; Ehlinger v. Washburn-Wilson Seed Co., 51 Idaho 17, 1 P.2d 188.)
The rule that the court may look to the surrounding circumstances, or evidence of conduct of a party under a contract, in aid of interpretation thereof, as constituting the interpretation placed thereon by such party, to arrive at the intent of the parties, is not applicable unless the terms employed are susceptible of more than one meaning, and the contract is thus uncertain or ambiguous and calls for interpretation. When there is no uncertainty or ambiguity, there is no room for interpretation based upon matters outside of the contract, or for importing extraneous matters in aid of interpretation. (Utah Const. Co. v. McIlwee, 45 Idaho 707, 266 P. 1094.)
Where parties have entered into an agreement which has been reduced to writing, if that writing is complete upon its face and unambiguous, no fraud or mistake being alleged or shown, parol evidence is not admissable to contradict, vary, alter, add to or detract from the terms of the contract. ( Gramkow v. Farmers Cooperative Irr. Co., 47 Idaho 578, 277 P. 431; Hurt v. Monumental Mercury Min. Co., 35 Idaho 295, 206 P. 184; Schmershall v. Foster, 37 Idaho 247, 215 P. 979.)
Prior to May 6, 1929, appellants owned and operated a garage in the village of Hazelton, whereat they conducted the business of selling gasoline and other petroleum products. On that date they and their wives, as parties of the first part, entered into a contract with respondent and his wife, as parties of the second part, wherein it was agreed that first parties should (and thereafter they did) convey to second parties certain lots in the village of Hazelton, and that second parties should (and thereafter they did) erect on a portion of said lots a gasoline service station. The parties of the second part, in the first paragraph of said contract, leased to the parties of the first part the portion of the lots on which the service station was erected, and other real estate adjacent thereto, belonging to second parties, together with all buildings and improvements situated, or thereafter to be erected, on said property. It is stated in said fifth paragraph:
The sixth paragraph is as follows:
"Sixth: That the second parties agree to give the first parties the same margin of profit that they receive between the wholesale and retail prices of products as is received by them at their own gas stations."
The seventh paragraph provides:
"Seventh: That the term of lease agreement under paragraph five (5) of this agreement shall continue and remain in effect as long as the first parties reside in Hazelton and continue in the gas and oil business at their garage and the service station specified herein."
This action grows out of disagreement between the parties as to the proper interpretation of the sixth paragraph of the contract.
Trial was commenced to a jury. After considerable evidence was introduced it was stipulated the jury be dismissed and the case be submitted, for decision, to the trial judge on the evidence taken and on a stipulation of facts entered into between the parties litigant.
The record shows that at the time the contract was entered into respondent and his wife owned several gasoline service stations, in addition to the one thereafter operated by appellants; that from May 6, 1929, to on or about May 15, 1930, respondent had a distributor's bulk plant agreement, for the territory in and about Twin Falls, including the service station at Hazelton in charge of appellants, with Southern Idaho Oil Company, pursuant to which he was paid a distributor's commission, on sales of petroleum sold for it by him; that on or about May 15, 1930, Shell Oil Company purchased Southern Idaho Oil Company and respondent entered into a selling agency contract with the former, effective on or about that date; that he continued to act as distributing agent for Shell Oil Company until February, 1933, when he entered the employ of Standard Oil Company of California to act as its distributing agent in the said territory, and continued in such employment with the last-named company during the remainder of the time involved in this litigation.
At the time of purchasing Southern Idaho Oil Company, Shell Oil Company entered into contracts with respondent and his wife, entitled "Service Station Lease" whereby it purported to lease from them their service stations. What is referred to as "a representative copy" of the contract relating to a station known as "the Five Point Service Station" was introduced in evidence. We understand from the record the other contracts between Shell Oil Company and respondent and his wife, with respect to other stations, were of like import to the copy introduced. Paragraph 14 of said copy is as follows:
There was offered in evidence, and erroneously rejected, a like contract, dated December 20, 1930,...
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