Wilburn v. Stewart
| Decision Date | 17 April 1990 |
| Docket Number | No. 18500,18500 |
| Citation | 1990 NMSC 39,794 P.2d 1197,110 N.M. 268 |
| Parties | Shirley WILBURN, Individually, and as Personal Representative of the Estate of Charles Wilburn, Plaintiff-Appellee, v. Jack Keith STEWART and Marjorie Stewart, Defendants-Appellants. |
| Court | New Mexico Supreme Court |
Plaintiff-Appellee Wilburn brought this action for breach of contract seeking to recover $127,126.10 plus interest, costs, attorney fees, and fifteen percent interest per annum on the judgment amount, alleging that defendants-appellants Stewarts failed to pay installments due on a note and were in default. Appellee also sought a declaration that she has a superior right, title, and interest in 547 shares of common stock of Manta Corporation. The Stewarts counterclaimed, seeking rescission of the contract based on alleged material misrepresentations made regarding the value of the assets of the business. The court excluded evidence of the alleged misrepresentations, basing its decision on the parol evidence rule. It also refused appellants' jury request to hear the claim of compensatory damages. The court ruled in favor of Mrs. Wilburn, granting her the relief requested and a deficiency judgment for any amount not covered by sale of the assets. We affirm the judgment below.
In September 1983, the Stewarts entered into a contract to purchase Manta Corporation, a New Mexico corporation located in Deming and engaged in recreational vehicle (RV) repair, from the Wilburns. At the time, Mr. Wilburn was terminally ill; he is now deceased. Mr. Stewart was an experienced mechanic, although he apparently had no experience in RV repair specifically, and Mrs. Stewart was an attorney licensed in California, with experience in commercial transactions.
Prior to execution of the contract, the parties engaged in extensive negotiations involving discussion of the terms of payment, but not the purchase price. Mr. Wilburn had set the sale price at $180,000; this covered the stock in Manta, and the assets of the corporation including the land, building, tools, equipment, and inventory, as well as any good will and value as a going concern of the RV business. The value of the corporation was not independently appraised, although the opportunity for appraisal was available; the price represented Mr. Wilburn's own sense of what the business was worth.
The books and records of the business were made available to the Stewarts, and they reviewed them. The Stewarts, after their review, offered to buy the corporation's stock for $180,000, but rather than accepting the Wilburns' original terms, offered a smaller down payment, part of which was to be used to pay off two outstanding notes. The Wilburns accepted and agreed to carry a note for the balance due.
Prior to consummation, the Stewarts availed themselves of the opportunity to learn the business, working at the shop for six weeks. All in all, negotiations had continued for about three months.
At the closing, Mrs. Stewart represented the purchasers. There is every indication that she fully understood the details of the transaction.
Two years later, in 1985, Mrs. Stewart apparently sensed that misrepresentations had been made regarding the value of the business; nevertheless, appellants continued paying on the note. In July 1986, the Stewarts notified Mrs. Wilburn regarding the alleged misrepresentations and indicated that they would stop payment on the note. They did not offer to return the business to Mrs. Wilburn and, in fact, continued operating the business, subsequently took out a business loan for improvements, and transferred personal assets to the corporation.
The parties have raised several issues on appeal. We address the following: (1) Did the trial court correctly exclude evidence of the representations Wilburn made to the Stewarts to induce them to purchase the stock of Manta Corporation? (2) Did the Stewarts meet the conditions for rescission? (3) Did the trial court err in entering judgment in excess of the relief requested by the plaintiff?
The Stewarts argue that the parol evidence rule was improperly invoked to exclude evidence relevant to the alleged negligent misrepresentation. In Bell v. Lammon, 51 N.M. 113, 118, 179 P.2d 757, 760 (1947), we explained the parol evidence rule as follows: " '[A] complete, valid, written contract merges all prior and contemporaneous negotiations and agreements within its purview, and if the oral agreement is not really collateral, but is an element of the written contract, or tends to vary or contradict the same, either in its express provisions or legal import, it is inadmissible.' " (quoting Locke v. Murdoch, 20 N.M. 522, 528, 151 P. 298, 300 (1915)). We further explained that the issue is really one of intent: Did the parties intend to include the points at issue within the scope of the document? Thus, parol evidence will not be allowed to vary the terms of an integrated agreement; the parties are presumed to have intended the terms of the document that they signed. In Bell, we also referred to an exception to the parol evidence rule: " " Id. at 119, 179 P.2d at 761 (quoting Alford v. Rowell, 44 N.M. 392, 397, 103 P.2d 119, 122 (1940)).
It appears that the trial court found that parol evidence is admissible to show misrepresentation only if allegations of fraud are at issue and if the evidence does not relate to the express terms of the contract. We disagree and hold that parol evidence is admissible to show any misrepresentations that induced the parties to contract, whether they are fraudulent, negligent, or innocent. Maine v. Garvin, 76 N.M. 546, 550-51, 417 P.2d 40, 43 (1966).
The confusion on this point at trial had its genesis in part on a misstatement of the parol evidence rule that first appears in Alford and was accepted in Bell and the line of cases descending therefrom. Alford intimates that the exception to the parol evidence rule allowing extrinsic evidence for the purpose of showing misrepresentations inducing contract does not apply if the evidence relates directly to the terms of the written contract. 44 N.M. at 397, 103 P.2d at 122. This interpretation is contrary to the parol evidence rule. See Levenson v. Mobley, 106 N.M. 399, 403, 744 P.2d 174, 178 (1987) (); 3 A. Corbin, Corbin on Contracts Sec. 580 (1960) (). Accordingly, to the extent that Alford, Bell, and their progeny can be interpreted for the proposition that parol evidence offered for the purpose of showing misrepresentation that also conflicts with the terms of the contract should be excluded, they are overruled. We do not, however, alter in any way the rule that parol evidence offered for the purpose of varying the terms of the agreement as memorialized should be excluded,1 nor do we preclude exclusion of evidence of fraud or misrepresentation offered without proper predicate.
The Stewarts sought to introduce evidence that, for the purpose of inducing the contract, Mr. Wilburn represented the value of the assets of the corporation as $5,000 for inventory; $35,000 for equipment; $80,000 for the building; and $5,000 for office equipment. The contract, by its express terms, states the value of these assets as $18,000; $31,735.40; $36,446.87 (building and improvements); and $2,350 respectively. The Stewarts also sought to introduce evidence to show that Mr. Wilburn made representations, not memorialized in the document, that induced them to enter into the contract. This evidence does not fall within the ambit of the parol evidence rule and was improperly excluded on those grounds; however, as the remainder of this opinion demonstrates, it may well have been excludable on relevancy grounds because the proper predicate for misrepresentation could not have been shown.
The Stewarts based their cause of action on a theory of innocent misrepresentation. They argue that the Wilburns had a duty to disclose the true value of the assets of the corporation because the Stewarts had no knowledge of the RV business.
In Ledbetter v. Webb, 103 N.M. 597, 600, 711 P.2d 874, 877 (1985), we stated that the...
To continue reading
Request your trial
-
Elane Photography, LLC v. Willock
...Elane Photography has failed to cite any precedent in its brief to support this interpretation. See Wilburn v. Stewart, 110 N.M. 268, 272, 794 P.2d 1197, 1201 (1990) (“Issues raised in appellate briefs that are unsupported by cited authority will not be reviewed by [this Court] on appeal.”)......
-
State v. Wilson
...legal authority in their briefing on this issue, so we do not consider their arguments. Wilburn v. Stewart , 1990-NMSC-039, ¶ 18, 110 N.M. 268, 794 P.2d 1197 ("Issues raised in appellate briefs that are unsupported by cited authority will not be reviewed by us on appeal."); Adoption of Doe ......
-
Parker v. Columbia Bank
...in the inducement of a contract are admissible regardless of whether they contradict" its written terms); Wilburn v. Stewart, 110 N.M. 268, 270, 794 P.2d 1197, 1199 (N.M.1990). Although this precise question has never been addressed in Maryland, both the Court of Appeals and this court have......
-
Guest v. Allstate Ins. Co.
...833 P.2d 1199, 1203 (Ct.App.1992) (stating that it is the appellant's burden to demonstrate error); see also Wilburn v. Stewart, 110 N.M. 268, 272, 794 P.2d 1197, 1201 (1990) ("Issues raised in appellate briefs that are unsupported by cited authority will not be reviewed ... on B. Admission......