Farmers Cooperative Ass'n v. Garrison

454 S.W.2d 644, 248 Ark. 948, 1970 Ark. LEXIS 1320
CourtSupreme Court of Arkansas
DecidedJune 8, 1970
Docket5-5243
StatusPublished
Cited by28 cases

This text of 454 S.W.2d 644 (Farmers Cooperative Ass'n v. Garrison) is published on Counsel Stack Legal Research, covering Supreme Court of Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Farmers Cooperative Ass'n v. Garrison, 454 S.W.2d 644, 248 Ark. 948, 1970 Ark. LEXIS 1320 (Ark. 1970).

Opinion

Frank Holt, Justice.

This is an action by appellant to collect on two notes. Appellees, Randall Garrison and his wife, are in the poultry business. Julian Hendren is the general manager of appellant corporation, Farmers Cooperative Association. Inc., a chicken feed retailer. In the early part of 1967, Hendren, along with Kenneth Handy, a representative of Farmland Industries, Inc. (a regional supplier in which appellant has an ownership interest), approached appellees to solicit their participation in a layer-feeder program. This program was a joint project of Farmers Cooperative and Farmland Industries. On April 5, 1967, a “Feeder Contract” was consummated between appellees and appellant.

The contract provided that appellant would sell to appellees, and appellees would purchase from appellant their entire requirements of mixed feed and concentrates at appellant’s “regular retail price or prices in effect on date of delivery* * *” Appellant also agreed to furnish appellees with 21,000 layer hens together with sufficient financing for the program. In this contract the appellees agreed to execute a promissory note to appellant for $34,650.00, covering the price of the hens and 29,800 pounds of feed, which sum plus interest was payable on demand. Without limiting the right of appellant to demand payment in full or in part at any time, the contract specified that all indebtedness evidenced by appellees’ note “shall be paid in full on or before May 1, 1968.” Appellant also retained by this contract the sole option to make advances to appellees, not to exceed at any one time the original sum of the note. The final provision of this contract provided that the appellees have read and presently understand the agreements and that by signing the contract they agreed to be bound by all of its terms. About a month later, or on May 9, 1967, both appellees executed to appellant a promissory note for $34,650.00. On August 2, 1967, appellee Randall Garrison executed a second note, payable on November 1, 1967, for the sum of $12,000.00.

Appellant brought suit against appellees on November 18, 1968, on the two promissory notes. The unpaid principal balances were then $34,603.93 on the initial note and $3,325.41 on the second note. Appellees answered and denied liability on the notes because of a partial failure of consideration. They asserted that it had been agreed upon between the parties that the notes would be repaid only from the proceeds of the egg, production; that appellant would continue to refinance appellees with successive layer hens until such time as the egg proceeds paid the appellees’ indebtedness in full; and that appellant breached the contract by refusing to so refinance. Appellees also counterclaimed for: (1) $35,155.02 loss of income because of the partial premature molt of their hens resulting from appellant’s failure to promptly deliver feed; and (2) $5,299.99 as an overcharge on feed, in that appellant breached its agreement to supply feed at competitive market prices.

Both Hendren and Handy testified, each denying that they ever made any representations or promises to refinance appellees with successive layer hens or to sell feed at competitive market prices. Over the objections of appellant, appellee Randall Garrison testified, and adduced testimony from other farmers who had been approached regarding the layer-feeder program, that Hendren and Handy persuasively represented such refinancing provisions and competitive prices as a part of the program. Garrison and his brother, who was present during part of the negotiations leading to the contractual agreement, testified that Hendren and Handy specifically promised to refinance appellees if necessary and to furnish feed at competitive prices. Garrison further testified that appellant, on occasions subsequent to the signing of the contract, reassured appellees that adjustments for feed prices would be made and that refinancing would, if necessary, be provided. There also was evidence presented that some price adjustments were in fact made between the parties.

At the conclusion of the testimony, appellant moved for a directed verdict on the two notes by reason of appellees’ admission that the notes were genuine and the balances correct. This motion being denied by the trial court, appellant then requested that the jury be instructed to return a verdict for appellant on appellees’ counterclaims. These instructions were refused. Other instructions were then tendered by appellant. By these instructions and others given by the court, the existence of any agreements regarding refinancing and competitive market prices for feed was presented as questions of fact. Thus the issues of appellees’ liability on the two notes and of appellant’s liability on the counterclaims were submitted to the jury. The jury found that appellant was entitled to recover nothing on the note [$84,650.00] dated May 9, 1967; denied appellees’ claim for damages for loss of income [$35,-155.02] alleged to have resulted from a delay in the delivery of feed; awarded appellant $3,797.54 on the note dated August 2, 1967; and found that appellees were entitled to recover $5,299.99 on their counterclaim alleging overcharge in feed prices. Appellant moved for a judgment notwithstanding the verdict on the note dated May 9, 1967. The motion was denied. From the judgment on the verdict comes this appeal.

One of appellant’s contentions for reversal is: “Any testimony regarding prior or contemporaneous oral modification of the written feeder contract should not have been admitted into evidence under the doctrine of merger.” We must agree.

It is a general proposition of the common law that in the absence of fraud, accident or mistake, a written contract merges, and thereby extinguishes, all prior and contemporaneous negotiations, understandings and verbal agreements on the same subject. See 17 Am. Jur. 2d, Contracts, § 483; 17A C. J. S. Contracts § 381. This is simply the affirmative expression of the parol evience rule. In analyzing the present case, it is helpful to refer initially to 3 Corbin on Contracts, § 573 (1960), which begins:

“When 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. This is in substance what is called the ‘parol evidence rule,’ a rule that scarcely deserves to be called a rule of evidence of any kind, * * *. The use of such a name for this rule has had unfortunate consequences, principally by distracting the attention from the real issues that are involved. These issues may be any one or more of the following: (1) Flave the parties made a contract? (2) Is that contract void or voidable because of illegality, fraud, mistake, or any other reason? (3) Did the parties assent to a particular writing as the complete and accurate ‘integration’ of that contract?
In determining these issues, or any one of them, there is no ‘parol evidence rule’ to be applied. On these issues, no relevant evidence, whether parol or otherwise, is excluded.”

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Bluebook (online)
454 S.W.2d 644, 248 Ark. 948, 1970 Ark. LEXIS 1320, Counsel Stack Legal Research, https://law.counselstack.com/opinion/farmers-cooperative-assn-v-garrison-ark-1970.