Art Knight v. Interco Incorporation, Formerly International Hat Company

873 F.2d 1125, 1989 U.S. App. LEXIS 6181, 1989 WL 42589
CourtCourt of Appeals for the Eighth Circuit
DecidedMay 2, 1989
Docket88-1778
StatusPublished
Cited by2 cases

This text of 873 F.2d 1125 (Art Knight v. Interco Incorporation, Formerly International Hat Company) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Art Knight v. Interco Incorporation, Formerly International Hat Company, 873 F.2d 1125, 1989 U.S. App. LEXIS 6181, 1989 WL 42589 (8th Cir. 1989).

Opinion

MAGILL, Circuit Judge.

In the district court, 1 appellant Art Knight sued Interco Incorporation for breach of contract. Knight claimed that Interco terminated him as its manufacturer’s representative in New Mexico without giving the thirty days written notice required by their contract. The jury re *1126 turned a verdict for Knight and awarded Knight $200 in damages. On appeal, Knight argues that the judgment should be reversed and remanded for a new trial. He contends that the district court erred (1) by-applying the parol evidence rule to his testimony concerning alleged oral modifications of the contract, and (2) by failing to give two jury instructions he requested concerning the appropriate measure of damages. We affirm the judgment of the district court.

I.

In 1978, Art Knight purchased a manufacturer’s sales representative’s business. For $21,000, he received a list of clients, the commercial goodwill accumulated by his predecessor and the right to sell the products of the American Hat and Mexican-American Hat companies (both were later acquired by Interco) in New Mexico. During the next seven years, Knight sold Western hats to retailers in New Mexico and was paid on commission.

In early 1985, Knight left Interco and joined Lambert Hat Company, one of its competitors. Several months later, Knight was asked to return to Interco. An agent of Interco told him that his position would be the same as it had been before he left and allegedly agreed orally that if Knight chose again to leave Interco, he could sell his business, just as he had acquired it in 1978.

On April 11, 1985, Knight and Interco signed a three-page written agreement. The contract essentially formalized the terms of Knight’s previous dealings with Interco. However, paragraph 21 of the agreement indicated that “[ejither party may terminate this contract by giving thirty (30) days notice in writing to the other party * * ■*.” Despite Interco’s alleged oral promises, the contract was silent on the issue of Knight’s right to sell his business.

A year later, Knight searched for a buyer to take over his accounts. When he informed Interco that he was negotiating with a prospective buyer, the company insisted on the right to approve Knight’s replacement. The attempted sale fell through and Knight continued to sell Inter-co products in New Mexico. In 1986, Knight moved to Arkansas, but he planned to continue working the New Mexico territory. Knight alleges that Interco gave him oral permission to do so. However, the Vice President of Sales and Marketing for Interco testified that he “absolutely” never gave such assent. Tr. at 146. In fact, Interco insists that it “informed Knight that if he moved to Arkansas, the company would have to find someone else to work the New Mexico territory.” Appellee’s brief at 4.

While he was relocating to Arkansas, Knight negotiated with a second would-be buyer. Interco refused to approve the buyer and informed Knight on November 26, 1986 that he was no longer their New Mexico sales representative and that his accounts were no longer his to sell. Knight protested that he had been informed that he had permission to sell his business and move to Arkansas. Nevertheless, Interco awarded his territory to a new sales representative.

On June 5, 1987, Knight filed suit for breach of contract in the United States District Court for the Western District of Arkansas. Federal jurisdiction was based on diversity of citizenship under 28 U.S.C. § 1332. During the trial, Knight testified that Interco told him that when he retired, he could sell his accounts. Tr. at 54. Counsel for Interco objected that such testimony was impermissible. The court ruled that Knight’s testimony concerning Inter-co’s alleged agreement that he could sell his business was barred by the parol evidence rule.

As for the measure of damages, the court instructed the jury to award no damages in excess of the net commissions 2 Knight would have earned during the thirty days notice period if Interco had not breached the contract. Despite Knight’s *1127 requests, the court refused to instruct the jury (1) that Knight could be awarded damages for the loss of his right to sell his business, and (2) that Interco could be es-topped from relying on the thirty days notice clause to limit Knight’s damages. The jury concluded that Interco breached the April 11, 1985 contract because it did not give Knight the required thirty days written notice and awarded damages for Knight’s lost net commissions.

II.

Knight's first contention on appeal is that the district court erred in ruling that the parol evidence rule barred him from testifying that Interco orally promised that he could sell his business. Knight claims that on numerous occasions (before and after the signing of his contract), Interco reassured him that he could sell his business, provided that Interco approved his replacement. The court deemed all testimony to that effect inadmissible under the parol evidence rule.

The parol evidence rule states that “[w]hen two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing.” Corbin on Contracts, Ch. 26, § 573, p. 357. See generally Faver v. Faver, 266 Ark. 262, 583 S.W.2d 44 (1979); Sterling v. Landis, 9 Ark.App. 290, 658 S.W.2d 429 (1983). Arkansas courts have consistently held that “where a contract is plain, unambiguous and complete in its terms, parol evidence is not admissible to contradict or add to the written document.” Brown v. Aquilino, 271 Ark. 273, 608 S.W.2d 35, 36 (1980) (citing Carolina Casualty Insurance Co. v. Helms, 248 F.2d 268 (8th Cir.1957)); see also City of Crossett v. Riles, 549 S.W.2d 800 (1977). The purpose of the parol evidence rule is to enhance the stability of written contracts. See Hoffman v. Late, 222 Ark. 395, 260 S.W.2d 446, 447 (1953) (quoting Wigmore on Evidence). Knight insists that the district court was incorrect to apply the parol evidence rule (which is inaptly named since it is a substantive, not evidentiary, rule that applies to both parol and written proof, see Corbin at 358). Specifically, he asserts that his testimony concerning Interco’s alleged oral promises should not have been barred because:

(1) he wished to testify concerning a subsequent, not prior or contemporaneous, oral agreement;

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Bluebook (online)
873 F.2d 1125, 1989 U.S. App. LEXIS 6181, 1989 WL 42589, Counsel Stack Legal Research, https://law.counselstack.com/opinion/art-knight-v-interco-incorporation-formerly-international-hat-company-ca8-1989.