Elcare, Inc. v. Gocio

593 S.W.2d 159, 267 Ark. 605, 1980 Ark. LEXIS 1371

• Court: Supreme Court of Arkansas
• Decided: January 28, 1980
• Docket: 79-253
• Status: Published

Opinions

Frank Holt, Justice.

Appellee’s decedent, 68 years of age, entered into two contracts with the appellant for the purpose of securing lifetime housing and medical services at the Concordia Life Care Center owned by the appellant. One contract was entitled ‘ ‘ Care Agreement’ ’ and the other, “Contract for the Sale of Life Estate in Living Unit.” Approximately six weeks prior to his death, the decedent delivered to appellant a written notice of cancellation of the Contract for Sale specifically citing Paragraph 5. The notice of cancellation and termination of occupancy was to be effective on the date of delivery. Following the decedent’s death, appellant refused to comply with appellee’s request on behalf of the decedent’s estate for a refund of a percentage of the original purchase price in accordance with the notice and the terms of the contract. In refusing the request, appellant cited Paragraph 16 (d) of the Care Agreement which required a resident to give 120 days’ notice of cancellation of that contract. Appellant took the position that this cancellation provision also governed by reference the cancellation of the Contract for Sale. Therefore, the effective date of the termination was 120 days from the date of the written notice to cancel the Contract for Sale. Further, since the decedent died prior to the expiration of the 120 days’ notice, the contract was terminated by his death and no refund was due according to the provisions of the Contract for Sale. Upon a review of the evidence, including the two contracts, the trial court, sitting as a jury, ruled that the cancellation notice of the sale contract was effective upon delivery and the appellant was obligated to repurchase the life estate as provided in the contract.

The only issue presented by this appeal is whether the 120 days’ notice provision in the Care Agreement also governed the cancellation of the Contract for Sale. Appellant argues that the contracts should be treated as a single agreement; that Paragraph 5 (A) of the Contract for Sale merely sets out the formula for the repurchase price in the event the contract is cancelled pursuant to Paragraph 16 (d) of the Care Agreement; and that the Contract for Sale can be unilaterally terminated only upon 120 days’ written notice by the resident. Therefore since the notice to cancel was not effective when given, there was no substantial evidence to support the trial court’s ruling. Appellee responds that the provisions in the contracts governing cancellation are confusing and ambiguous and, consequently, should be construed most strongly against the drafter, namely, the appellant. The lower court, therefore, correctly ruled that the Contract for Sale was cancelled upon delivery of the written cancellation notice.

The Care Agreement provides in pertinent part:

16. TERMINATION OF AGREEMENT. This agreement shall be terminated as follows:

(a) Upon death of Resident. . . .

(d) By Resident, by serving on Corporation one hundred twenty (120) days written notice of his desire to do so; but in such case, Resident’s contract shall not terminate until the end of 120 days except by mutual agreement in writing of Corporation and Resident. The Resident will be charged with such amounts as will cover other expenses incurred in connection with any repairs or replacement of the property of Corporation caused by the Resident. The Resident shall be obliged to sell his Life Estate in said Living Unit to the Seller at the price as set forth in Paragraph 5 (A) of the Contract for the Sale of Life Estate in Living Unit, referred to in Paragraph 1 hereof. Payment of the repurchase price shall be made within 120 days of the termination date.

In the event this contract is terminated, Corporation shall be entitled to all unearned portions of the Maintenance Fee.

The Contract for Sale Agreement reads in pertinent part:

5. (A) In the event Buyer desires to terminate his occupancy, Care Agreement or his interest in said Living Unit, Seller shall be obliged to repurchase the Life Estate in said Living Unit and Buyer shall be obliged to sell his Life Estate in said Living Unit to Seller as follows:

(1) On the day which the premises are made available to the Buyer for his occupancy and during the remaining days of that same calendar month, the repurchase and sales price shall be eighty (80) percent of the original sales price.

(2) Each calendar month thereafter, the repurchase and sales price shall decrease by three-fourths (3/4) of one (1) percent for the next one hundred (100) months.

(3) Thereafter, the repurchase and sales price shall be five (5) percent of the original sales price.

(B) In the event the Seller (other than for reasons stated in Paragraph 4 hereof) terminates Buyer’s Care Agreement, Seller shall be obliged to repurchase the Life Estate in said Living Unit and Buyer shall be obliged to. sell his Life Estate in said Living Unit to Seller in the same manner as setforth in subparagraph 5 (A) above.

(C) In the event of the death of one of the holders of the Life Estate, the monthly maintenance fee will be adjusted to the current single rate for a comparable unit for the surviving occupant. Upon the death of either a single occupant or of the surviving occupant, as the case may be, both this Contract and the Cafe Agreement shall automatically be terminated, and the Living Unit shall revert to the Seller.

The contracts were executed on the same day, were part of the same transaction, and were designed to provide an integrated program of housing and medical care.for the decedent and other residents. Paragraph 1 of the Care Agreement provides that no legal obligations are created pursuant to the agreement until the parties sign the separate Contract for Sale, and that the Contract for Sale is incorporated by reference. Similarly, Paragraph 8 of the Contract for Sale provides that if the parties do not enter into the Care Agreement, the Contract for Sale is cancelled. In view of these provisions, we agree with the finding of the trial court that the contracts were incorporated by reference. However, when there is uncertainty or ambiguity in a contfact or contracts and they are susceptible to more than one reasonable construction, then we must construe them most strongly against the party who drafted them, the appellant here. Barton v. Perryman, 265 Ark. 228, 577 S.W. 2d 596 (1979); Christmas v. Raley, 260 Ark. 150, 539 S.W. 2d 405 (1976); Prepakt Concrete Co. v. Whitehurst Bros., Inc., 261 Ark. 814, 552 S.W. 2d 212 (1977). Further the drafter of a document is in a better position to convey a clarity in meaning by its choice of phraseology and words, and if there are any uncertainties, they will be construed against the drafter of the form if the language bears more than one reasonable meaning in its interpretation. Hall v. Weeks, 214 Ark. 703, 217 S.W. 2d 828 (1949); and Pate v. Goyne, 212 Ark. 51, 204 S.W. 2d 900 (1947).

Here, tested by these standards, we hold there is substantial evidence to support the court’s findings that if a buyer were required to give 120 days’ notice of his desire to terminate the Contract for Sale, Paragraph 5 (A) (1) and part of 5 (A) (2) would be “meaningless”, and that if the 120 days’ notice governed termination of both contracts, the third sentence of Paragraph 16 (d) would be “totally unnecessary”. This is a reasonable construction even though we treat the contracts as a single instrument. The appellant, the proponent of the contracts, was in a better position to prevent any ambiguities by easily expressing its intent in plain English by reiterating the 120 days’ cancellation notice in the cancellation provision of the Contract for Sale. The written notice of cancellation submitted by the decedent effectively cancelled the Contract for Sale on the date of delivery.

Since there was no notice of cross-appeal by the appellee, we do not consider the issues presented therein.

Affirmed on direct and cross-appeal.

Fogleman, C.J., dissents.