Shannon Copper Co. v. Potter

• Decision Date: 02 April 1910
• Docket Number: Civil 1150
• Citation: 108 P. 486,13 Ariz. 245
• Parties: SHANNON COPPER COMPANY, a Corporation, Defendant and Appellant, v. DELL M. POTTER, Plaintiff and Appellee
• Court: Arizona Supreme Court

108 P. 486

13 Ariz. 245

SHANNON COPPER COMPANY, a Corporation, Defendant and Appellant, v. DELL M. POTTER, Plaintiff and Appellee

Civil No. 1150

Supreme Court of Arizona

April 2, 1910

APPEAL from a judgment of the District Court of the Fifth Judicial District, in and for Graham County. E. W. Lewis, Judge. Affirmed

A written contract was entered into in which the Clifton Northern Railroad Company, a corporation, and Dell M. Potter were recited to be the parties of the first part, and Shannon Copper Company the party of the second part. By the terms of the contract, among other matters, the party of the first part agreed to sell the Shannon Copper Company fifty-one per cent of the capital stock of the railroad company, the entire capitalization being $50,000, divided into 500 shares of the par value of $100 each. And the Shannon Copper Company agreed to pay therefor the sum of $10,000 in specified installments through a specified bank. A further provision of the contract is as follows: "And the party of the second part, for and in consideration of the faithful performance of the covenants herein contained by the parties of the first part hereby agrees to pay an amount equal to ten per cent (10%) per annum from January 1, 1909, on the capital stock of the aforementioned Clifton Northern Railroad Company, i. e., five thousand dollars ($5,000.00) per annum, for a period of ten (10) years; such interest to be paid semiannually." The $10,000 was paid and received by Potter, and the fifty-one per cent of the capital stock of the railroad company delivered to the copper company. The first two semi-annual interest charges were paid into the treasury of the railroad company, instead of to Potter, and were expended in betterments and maintenance of the road.

Potter brought suit against the corporations, alleging among other things: "That in fact the words 'parties of the first part' are frequently used in said contract where they refer to and mean plaintiff only; that the said contract recites 'that the parties of the first part are owners of the majority of the capital stock of the Clifton Northern Railroad Company,' whereas, in truth, as was well known prior to and at the time of the execution of the said contract to all the parties thereto and was intended by them to be expressed therein, the plaintiff was then the legal owner of all but four shares of the capital stock of the Clifton Northern Railroad Company, to wit, of 496 shares thereof, and was the equitable owner of the remaining four shares thereof, while the Clifton Northern Railroad Company was not the owner, legal or equitable, of any of the capital stock of the said company; that the said contract recites 'that the said parties of the first part hereby agree to sell, assign and transfer to the said party of the second part, fifty-one per cent (51%) of the capital stock of the said Clifton Northern Railroad Company, whereas, in truth that was the agreement only of the plaintiff, as was then and theretofore well known to all the parties to the said contract" -- and recovered judgment for the amount of the said interest installments so paid into the treasury of the railroad company, this appeal being from such judgment.

M. J Egan and Ben Goodrich, for Appellant.

The terms of the contract are fully set out in the complaint, and the court erred in admitting parol testimony which contradicted, varied, altered and added to the contract. The intention of the contracting parties is to control, and this must be deduced from the entire agreement, and from all its provisions considered together. It must be considered as a whole so as to give effect, if possible, to all parts of it. Far West Oil Co. v. Witmer Bros., 143 Cal. 306, 77 P. 61; Stockton S. & L. Co. v. Purvis, 112 Cal. 236, 53 Am. St. Rep. 210, 44 P. 561; Mickle v. Sanchez, 1 Cal. 200; Wilson v. Alcatraz Asphalt Co., 142 Cal. 182, 75 P. 787; O'Brien v. Miller, 168 U.S. 287, 18 S.Ct. 140, 42 L.Ed. 469. The object of construction is to ascertain, if possible, the intention of the parties from the language used in the contract. Racouillat v. Sansevain, 32 Cal. 377. And parol testimony is inadmissible to alter the operation of the instrument by evidence of intention not expressed in the instrument. Van Slyke v. Broadway Ins. Co., 115 Cal. 644, 47 P. 689, 928; San Jose Savings Bank v. Stone, 59 Cal. 183. Where no omission or mistake in writing, parol is not competent. Harrison v. McCormick, 89 Cal. 327, 23 Am. St. Rep. 469, 26 P. 830.

Frederick S. Nave, for Appellee.

Inasmuch as the trial was before the court without a jury, it will be presumed that the court ignored the improper matter if any was admitted, and these improvident rulings do not constitute reversible error. This is true whether the matter is merely immaterial (Abernathy v. Reynolds, 8 Ariz. 173, 71 P. 914; Miller v. Green, 3 Ariz. 207, 73 P. 399), or entirely incompetent (California Dev. Co. v. Yuma Val. Co., 9 Ariz. 366, 84 P. 88; Seaverns v. Costello, 8 Ariz. 308, 71 P. 930; United States v. Marks, 5 Ariz. 405, 52 P. 773; Boston Co. v. Lewis, 3 Ariz. 5, 20 P. 310). "If the meaning of a writing by itself is affected with uncertainty, the intention of the parties may be ascertained by extrinsic evidence." Ripon College v. Brown, 66 Minn. 179, 68 N.W. 837. "Where the language of a written instrument is ambiguous and uncertain, so that it cannot be clearly ascertained therefrom which of two interpretations was intended by the parties, the circumstances surrounding the execution of such instrument should be received in evidence as an aid to the ascertainment of such intent." Brown v. Shields, 78 Kan. 305, 96 P. 351. "Even a patent ambiguity may be explained by parol." Gentile v. Crossan, 7 N.M. 589, 38 P. 247; Powers v. World's Fair Mining Co., 10 Ariz. 5, 86 P. 15; Clark v. Liberty Mining & Smelting Co., 11 Ariz. 322, 94 P. 1134; Reed v. Merchants' Mut. Ins. Co., 5 Otto (U.S.), 23, 24 L.Ed. 348; Laclede v. Moss Tie Co., 185 Mo. 25, 84 S.W. 76; Skaggs v. Simpson, 33 Ky. Law Rep. 410, 110 S.W. 251; Fearnley v. Fearnley, 44 Colo. 417, 98 P. 819; Westervelt v. Mohrenstecher, 76 F. 121, 22 C.C.A. 93, 34 L.R.A. 477; McKay v. Barnett, 21 Utah 239, 60 P. 1100, 50 L.R. A. 371; Salmon Falls Mfg. Co. v. Goddard, 14 How. (U.S.) 447, 14 L.Ed. 493; United States v. Peck, 12 Otto (U.S.), 64, 26 L.Ed. 46. "Where the language of an agreement is contradictory, obscure, or ambiguous, or where its meaning is doubtful, so that the contract is fairly susceptible of two constructions, one of which makes it fair, customary, and such as prudent men would naturally execute, while the other makes it inequitable, unusual, or such as reasonable men would not be likely to enter into, the interpretation which makes it a rational and probable agreement must be preferred to that which makes it an unusual, unfair, or improbable contract." Pressed Steel Car Co. v. Eastern Ry. Co., 121 F. 609, 611, 57 C.C.A. 635. "A party who takes an agreement prepared by another, and upon its faith . . . parts with his property, should have a construction given to the instrument favorable to him." Noonan v. Bradley, 76 U.S. 394, 407, 19 L.Ed. 757.

OPINION

DOE, J.

-- The contract expressly provided that the first payment should be made to a specified bank, and, at the conclusion of the recitals providing for the payment of the several installments to be made before the delivery of the stock, they are expressly required to be made to the same bank, yet that portion of the contract providing for the payment of the semi-annual interest installments is silent as to whom they shall be paid, and is, to that extent, ambiguous.

Assuming the correctness of the finding of the lower court that at the time of the execution of the contract Potter was the legal owner of most of the stock of the railroad company and...