Union Elec. Co. v. Fundways, Ltd., 65038

• Citation: 886 S.W.2d 169
• Decision Date: 25 October 1994
• Docket Number: No. 65038,65038
• Parties: UNION ELECTRIC COMPANY, Appellant, v. FUNDWAYS, LTD., Respondent.
• Court: Court of Appeal of Missouri (US)

Page 169

886 S.W.2d 169

UNION ELECTRIC COMPANY, Appellant, v. FUNDWAYS, LTD., Respondent.

No. 65038.

Missouri Court of Appeals,

Eastern District,

Division Two.

Oct. 25, 1994.

Steven R. Sullivan, St. Louis, for appellant.

Lawrence Wittells, St. Louis, for respondent.

WHITE, Judge.

Appellant, Union Electric Company, brought a breach of contract action against respondent, Fundways, Limited. The jury found for respondent and this appeal followed. In points one and two, appellant argues the trial court erred in admitting Exhibits A and B respectively. Appellant contends, among other things, the two exhibits constituted parol evidence which varied the terms of the written contract and, therefore, were inadmissible. In its third point, appellant claims the trial court erred in admitting Exhibit G because it was not relevant. In point four, appellant argues the trial court erred in not granting its motion for a mistrial following certain statements made by respondent during closing argument. Because we find the trial court erred in admitting Exhibits A and B, we need not address the remaining points on appeal. We reverse and remand.

The facts are as follows. On March 1, 1988, appellant and respondent entered into a written contract in which appellant agreed to sell and respondent agreed to buy a used IBM mainframe computer and several pieces of related peripheral equipment. The contract required respondent to pay the purchase price of $250,000 and remove the equipment on or about March 15, 1988.

Respondent failed to pay for or remove the equipment prior to March 15, 1988. On April 13, 1988, appellant sent respondent a letter stating it considered respondent in breach of the contract and intended to resell the equipment. By May 4, 1988, appellant had resold the equipment to different parties for a total of $155,000. Appellant brought an action against respondent seeking $95,000 in damages, representing the difference between the contract price, $250,000, and the resale price, $155,000.

At trial, appellant offered the written contract into evidence and it was admitted, without objection. During respondent's case-in-chief, the trial court received respondent's Exhibits A and B. Exhibits A and B were correspondence between appellant and respondent which preceded the written contract. Exhibit A, a mailgram from respondent to appellant, dated February 26, 1988, contained several alternative contract terms for consideration. One of these terms provided respondent with a right of cancellation if its third party purchaser did not agree to subsequently buy the equipment. The final contract did not contain this provision. Exhibit B, dated February 29, 1988, was appellant's acceptance of respondent's offer contained in Exhibit A. Appellant timely objected to the admission of this evidence on the grounds the exhibits were not relevant and violated the parol evidence rule.

Appellant argues in point one, the trial court erred in admitting Exhibit A because it constituted extrinsic evidence which varied and contradicted the parties' written contract and, thus, violated the parol evidence rule. In point two, appellant makes an identical argument in regards to Exhibit B.

Extrinsic evidence of a prior or contemporaneous agreement is generally not admissible to vary, add to, or contradict the terms of an unambiguous and complete written document, nor may such parol evidence be used to create ambiguity in an otherwise unambiguous document. Sedalia Mer. Bank & Tr. v. Loges Farms, 740 S.W.2d 188, 193 (Mo.App.W.D.1987). The parol evidence rule is a rule of substantive law and not a mere rule of evidence. W.E. Koehler Const. Co. v. Medical Ctr., etc., 670 S.W.2d 558, 562 (Mo.App.W.D.1984). Evidence offered in violation of it must be ignored. Id. The law conclusively presumes all prior and contemporaneous agreements have been merged into an unambiguous written contract, which becomes the final memorial of the agreement. Central Production Credit Association v. Reed, 805 S.W.2d 300, 302 (Mo.App.S.D.1991). The issue is whether the parties here intended the written contract to be a final and complete integration of their agreement.

Appellant contends the written contract contained the full expression of the parties' understanding and, thus, admitting Exhibits A and B into evidence violated the parol evidence rule. We agree.

The contract is a straightforward, four-page, double-spaced document in which the parties' intent to memorialize their entire agreement is discernible from the document's face. Any doubts to the contrary are resolved by the contract's integration clause. It stipulates the contract not only supersedes any prior representations or communications between the parties respecting the subject matter, but also may not be modified except in writing, signed by the parties. The parol evidence rule is particularly applicable in situations like this...