Ryan v. Ald, Inc.

• Decision Date: 26 April 1967
• Docket Number: No. 11196,11196
• Citation: 427 P.2d 53,149 Mont. 367
• Parties: Clarence A. RYAN, Plaintiff and Respondent, v. ALD, INC., a corporation, Defendant and Appellant.
• Court: Montana Supreme Court

Page 53

427 P.2d 53

149 Mont. 367

Clarence A. RYAN, Plaintiff and Respondent, v. ALD, INC., a corporation, Defendant and Appellant.

No. 11196.

Supreme Court of Montana.

April 26, 1967.

Weir, Gough, & Booth, and Ward A. Shanahan, Helena, Edwin S. Booth and Ward A. Shanahan (argued), Helena, for appellant.

C. W. Leaphart, Jr. (argued), Helena, for appellee.

DOYLE, Justice.

This is an appeal from a judgment of $3,696.28 against the defendant, ALD, Inc., for actual damages arising out of a contract for the sale of lanudry equipment.

Respondent, Clarence A. Ryan (hereinafter called plaintiff) entered into a sales agreement with the appellant, ALD, Inc. (hereinafter called defendant) on August 28, 1959, wherein defendant agreed to sell and plaintiff agreed to buy two Westinghouse washing machines and two Westinghouse dryers for the purpose of establishing a 'Laundromat'. The equipment was delivered in the manufacturer's containers and the plaintiff paid the balance of the full purchase price on receipt from the carrier. Plaintiff undertook to install the equipment himself but was unable to get it functioning properly. There was considerable communication between the plaintiff and defendant concerning the malfunctioning machines including some new parts and instructions. Finally plaintiff attempted to rescind the sale and have his money returned. The rescission was not accepted and plaintiff filed a complaint against the defendant on October 28, 1963, asking for damages. Plaintiff had judgment which the defendant appealed and was granted a reversal and new trial in Ryan v. ALD, Inc., 146 Mont. 299, 406 P.2d 373.

Ryan v. ALD, Inc., supra, decided the following: 1. That this was an action for damages for breach of a written contract; 2. That the terms of the contract were clear and therefore parol evidence was not admissible; 3. That punitive damages were not recoverable in this action; and 4. That the trial judge made remarks which were prejudicial to the defendant. This is an appeal from a judgment for the plaintiff resulting from the second trial.

During the pre-trial conference that preceded the second trial, the presiding judge announced that the case would be retried on the theory that the sales contract carried with it an implied warranty of fitness for use. Defendant objected to this theory on the grounds that implied warranties were expressly disclaimed by the sales contract and that even in the absence of a disclaimer no warranty could be implied under the facts of this case. At the end of all of the evidence presented at the trial the verdict was directed in favor of the plaintiff on the question of liability and the jury was instructed to determine the amount of damages, if any, that were proximately caused by the breach of the sales agreement.

The trial judge ruled that the reverse side of the sales agreement would be excluded from the evidence because the terms printed therein were in difficult to read, small, dim, blue type. While responding to questions asked by counsel, the court indicated that it would change this ruling if a foundation was laid by showing that the plaintiff's attention had been directed to the reverse side of the sales agreement and that he understood what was printed there.

In ruling that the reverse side of the sales agreement was not admissible, the district court ignored the opinion rendered in the former appeal of this case. Ryan v. ALD, Inc., supra, at 146 Mont. 300, 406 P.2d 374 included the following statement: '* * * The agreement contained, among others, the following provisions: that the seller makes no warranties with respect to the equipment; that ordinary manufacturer's warranties as to repair and replacement parts apply * * *.' These were all terms from the reverse side of the sales agreement. In this manner it was impliedly, if not expressly, held that the terms on the reverse side of the sales agreement were part of the contract. This holding became the law of the case and was binding upon the district judge. O'Brien v. Great Northern R. Co., Mont., 421 P.2d 710.

The observations of the trial judge concerning the readability of the contract terms were pertinent, but it is not the law that a person who seeks to enforce the terms of a contract must first show that the person sought to be charged had both read and understood the contract before signing it. The correct rule is exactly the opposite. A party to a contract cannot avoid its terms merely by saying that he has not read or understood the obligations contained therein. Guthrie v. Hallorna, 90 Mont. 373, 3 P.2d 406. The exception to this rule is that a party to a contract may as a matter of defense show that he was prevented from ascertaining the contents and meaning of a written contract by means of deceit or fraud. Hjermstad v. Barkuloo, 128 Mont. 88, 270 P.2d 1112. If this issue had been allowed to proceed normally, evidence of an express disclaimer would have shifted the burden of going forward with the evidence to the plaintiff who then might have offered evidence that the disclaimer was ineffective. No issue of fraud or deceit was raised at either trial or by the former appeal. Consequently, the former appeal does not prevent consideration of this issue in any subsequent proceedings by reason of the doctrine of the law of the case. O'Brien v. Great Northern R. Co., supra.

The sales agreement does not of itself show that the plaintiff should be excused from knowledge of the terms on the reverse side and therefore it was error to rule that the reverse side shoudl be excluded as a matter of law. The large print at the bottom of the face of the sales agreement, near the place where the plaintiff signed his name, stated the following: 'THIS IS AN OFFER TO PURCHASE SUBJECT TO DISTRICT APPROVAL AND CONDITIONS ON THE REVERSE SIDE HEREOF WHICH ARE A PART OF THIS AGREEMENT.' In the absence of other evidence, the plain statement just...