King v. Fordice

• Decision Date: 22 June 1989
• Docket Number: No. 05-88-00654-CV,05-88-00654-CV
• Citation: 776 S.W.2d 608
• Parties: 10 UCC Rep.Serv.2d 65 Randall KING, D/B/A King Air Service, Appellant, v. Kirk FORDICE, Appellee.
• Court: Texas Court of Appeals

Page 608

776 S.W.2d 608

10 UCC Rep.Serv.2d 65

Randall KING, D/B/A King Air Service, Appellant, v. Kirk FORDICE, Appellee.

No. 05-88-00654-CV.

Court of Appeals of Texas Dallas.

June 22, 1989.

Rehearing Denied Sept. 25, 1989.

Calvin C. Otte, Dallas, for appellant.

D. Ronald Reneker, Dallas, for appellee.

Before ENOCH, C.J., and ONION ¹ and BISSETT ², JJ.

ONION, Justice.

This is a suit for breach of contract involving the sale of an airplane. Appellant-plaintiff Randall King, d/b/a King Air Service, appeals from a take-nothing judgment following a jury trial.

In his initial point of error, King urges the "trial court erred by allowing parol evidence concerning additional terms and conditions of a written contract over the objections of the plaintiff, in violation of the parol evidence rule."

FACTS

The record reflects that appellee-defendant Fordice lived in Vicksburg, Mississippi, where he was president of and operated a large construction company. King operated King Air Services in Dallas, buying and selling airplanes. In the fall of 1982, Fordice advertised for sale a Cessna 340 aircraft. Some time before November 9, 1982, King telephoned Fordice about the Cessna 340. In one of their telephone conversations, Fordice indicated to King his interest in purchasing a Cessna 414 with certain equipment, and possibly trading in the Cessna 340 on such purchase. During one of the telephone communications, King described to Fordice a Cessna 414 available It was King's testimony that by mailgram on November 9, 1982, he forwarded to Fordice an offer to sell the Cessna 414 for $400,000 and to accept as a trade in for $150,000 Fordice's Cessna 340 if it was "in good condition." He related that on the same date Fordice, by mailgram, accepted the offer.

for purchase, but admitted he did not reveal the airplane's location because he did not want Fordice to "go around him" and acquire the plane.

Fordice presented a different version of the events, while Fordice agreed that he expressed an interest in seeing the Cessna 414 described to him by King, he testified over objection that on November 9, 1982, King called him and told him that the airplane in question was "located far away" and that in order for King to get the airplane to Dallas for inspection there needed to be an exchange of mailgrams. Fordice further testified that King dictated the wording of the mailgram that Fordice was to send back to King in response to King's mailgram. Fordice related he agreed to the exchange of mailgrams so that the plane would be brought to Dallas for his inspection; that there was no intention that the mailgrams would constitute a binding contract to purchase for $400,000.00 a plane sight unseen; that as a business man dealing with contracts he would have never agreed to the contract claimed by King. Fordice related that in accordance with the understanding that the exchange of mailgrams was an inspection ticket and not a binding contract he did not send the $25,000.00 deposit as mentioned in the mailgrams.

When notified by King the Cessna 414 would be at Dallas Love Field on November 12, 1982, Fordice flew there in his Cessna 340. The Cessna 414 was late in arriving. Without King being present, Fordice began an inspection of the plane. His first impression was that the plane was a "dope runner." He found that it carried a Canadian registration and that its temporary registration numbers were taped to the fuselage rather than painted on. No registration establishing ownership was available, and there was no evidence that a factory warranty was available. It was observed that the engines had logged one hundred hours of flight, which indicated to Fordice that the plane had been flown from 20,000 to 21,000 miles. He had been led to believe the plane was new. The plane had no co-pilot's instruments, no air conditioning, and no RNAV (a navigation aid).

Finishing his inspection and being unable to locate King, Fordice sent King a telex informing him that after inspection he (Fordice) was not satisfied with the plane, setting forth some of the reasons, and that he would not purchase it.

King acknowledged that at the time of his dealings with Fordice that Kenneth Jalbert of Canada was the owner of the airplane. King did not apply for a certificate of registration until November 30, 1982. He testified as to his damages as a result of the breach of the contract by Fordice.

During pretrial, King filed a motion to suppress evidence and in limine to prevent the admission of any parol evidence to vary and expand the terms of the written contract between the parties evidenced by the exchange of mailgrams. The trial court overruled the motion and, as mentioned, during trial, overruled King's trial objections to Fordice's oral testimony concerning the mailgrams and his conversations with King.

The court submitted the case to the jury on eleven special issues. Appellant made no objection to the charge. Special issue number one was:

"Do you find from a preponderance of the evidence that the terms and conditions contained in the mailgram exchanged by King and Fordice on November 9, 1982 constituted an agreement between King and Fordice relative to the purchase and sale of the Cessna 414 airplane?"

All the other special issues were conditioned directly or indirectly on an affirmative answer to special issue number one. The jury answered "No" to special issue number one and in accordance with the court's instructions did not answer any of the other special issues. Based on the verdict

the court entered a take nothing judgment.

PAROL EVIDENCE

Apparently relying upon the common law parol evidence rule appellant King argues that the trial court erred in admitting the testimony of Fordice on the issue of the existence and validity of the contract when the contract was final and complete on its face without the right to reject the aircraft upon examination. One expression of the common law rule of parol evidence is found in 36 Tex.Jur.3rd, Evidence, § 315 at 13.

"As a general rule, in the absence of fraud, accident, or mistake, extrinsic evidence is inadmissible to vary, add to, or contradict the terms of a valid written instrument that on its face is complete and unambiguous and that has been adopted as the final integration of a legal transcript." See also Rincones v. Windberg, 705 S.W.2d 846, 847 (Tex.App.--Austin 1986, no writ); Wilkins, et al. v. Bain, 615 S.W.2d 314 (Tex.Civ.App.--Dallas 1981, no writ); Davis v. Andrews, 361 S.W.2d 419 (Tex.Civ.App.--Dallas 1962, writ ref'd n.r.e.); 2 R. Ray, Texas Law of Evidence, § 1601 (3d ed. 1980).

In Baker v. Baker, 143 Tex. 191, 183 S.W.2d 724, 728 (1944), the Supreme Court of Texas made clear that:

The rule that parol evidence is inadmissible to contradict or vary the terms of a written contract applies only to a written contract in force as a binding obligation. Parole evidence is always competent to show the nonexistence of a contract or the condition upon which it may become effective.

More recently in Bill Shannon, Inc. v. San Clemente, 724 S.W.2d 941 (Tex.App.--San Antonio 1987, no writ), it was held that testimony that purported to show that a promissory note was delivered by one party to assist another party in establishing losses for tax purposes and not to evidence a debt was admissible to show that the note was not a contract and enforceable. See also Merbitz v. Great National Life Ins. Co., 599 S.W.2d 655 (Tex.Civ.App.--Texarkana 1980, writ ref'd n.r.e.); Ferguson v. Yorfino, 570 S.W.2d 422 (Tex.Civ.App.--San Antonio 1978, writ ref'd n.r.e.); Our Fair Lady Health Resort v. Miller, 564 S.W.2d 410 (Tex.Civ.App.--Austin 1978, no writ); Taggart v. Crews, 543 S.W.2d 422 (Tex.Civ.App.--Waco 1976, writ ref'd n.r.e.); W.K. Ewing Co., Inc. v. Krueger, 152 S.W.2d 488 (Tex.Civ.App.--San Antonio 1941, writ ref'd w.o.m.); Simpson v. Milne, 677 P.2d 365 (Colo.App.1983).

The basic and general common law rule discussed in Baker, supra, has traditionally operated outside the scope of the common law parol evidence rule. Evidence is admissible, at least in equity, to show that a writing which apparently constituted a contract was never intended or understood by either party to be binding as such, "or that the writing was a sham and never intended to constitute an enforceable agreement." Sweet, Contract Making and Parol Evidence: Diagnosis and Treatment of a Sick Rule, 53 CORNELL L.REV. 1036, 1039 (1968). See also W.K. Ewing Co., Inc. v. Krueger, 152 S.W.2d at 490; 36 TEX.JUR.3d, Evidence, § 340 (1984); 2 R. Ray, LAW OF EVIDENCE (Texas Practice 3d ed.) § 1661 (1980).

Oral testimony in such a case does not vary the terms of the writing but shows that it was never intended to be a contract or to be of binding force between the parties. 30 AM.JUR.2nd, Evidence, § 1034; Burke v. Dulaney, 153 U.S. 228, 14 S.Ct. 816, 38 L.Ed. 698 (1894).

As has been seen, the general rule discussed above operates outside the ambit of the common law parol evidence rule. The Texas Rules of Evidence do not directly deal with the parol evidence rule and do not change that conclusion. The question remains whether Texas Business and Commerce Code, section 2.202, ³ calls for a different interpretation. Section 2.202 codified a parol evidence rule, at least for

                transactions in goods.  TEX.BUS. & COM.CODE, § 2.102 (Vernon 1968). 4  Since the instant case involved the sale of an airplane, the sale of goods, section 2.202, clearly must be considered
                

UNIFORM COMMERCIAL CODE

Section 2.202 provides:

Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented (1) by course of dealing or usage of trade (section 1.205) or by...