Kelley v. Baisch, 6420

• Court: United States State Supreme Court of Idaho
• Writing for the Court: MORGAN, J.
• Citation: 87 P.2d 465,59 Idaho 789
• Decision Date: 15 November 1938
• Docket Number: 6420
• 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

87 P.2d 465

59 Idaho 789

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

No. 6420

Supreme Court of Idaho

November 15, 1938

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.)

MORGAN, J. Holden, C. J., and Givens, J., concur. Ailshie and Budge, JJ., dissent.

OPINION

[59 Idaho 791] MORGAN, J.

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 consideration as rental for the use and possession of the said property and buildings is hereby understood and agreed to be as follows: The first parties will and must purchase from the second parties the products (gasoline, oil, etc.) which he has the disposal of during the continuance of this agreement. In the event the second parties should handle some other brand of products than that now handled then the first parties shall make the exchange accordingly, . . . ."

[59 Idaho 792] 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...