International Engineering Co. v. Daum Industries, Inc.

630 P.2d 155, 102 Idaho 363, 1981 Ida. LEXIS 354
CourtIdaho Supreme Court
DecidedJune 15, 1981
Docket13377
StatusPublished
Cited by45 cases

This text of 630 P.2d 155 (International Engineering Co. v. Daum Industries, Inc.) is published on Counsel Stack Legal Research, covering Idaho Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
International Engineering Co. v. Daum Industries, Inc., 630 P.2d 155, 102 Idaho 363, 1981 Ida. LEXIS 354 (Idaho 1981).

Opinion

SHEPARD, Justice.

This is an appeal from a judgment entered following a trial to the court. The appeal primarily concerns conflicting claims by joint venturers to a promissory note upon dissolution of the joint venture. We affirm.

In 1970 Morrison-Knudsen and Daum Industries became joint venturers in Makad, Inc. a corporation organized for the purpose of developing and operating retail shopping centers. Each owned 50% of Makad’s capital stock. Daum acted as the leasing and managing agent for the venture. One of those shopping centers was the Country Club Center in Idaho Falls, Idaho. In 1974 management disagreements resulted in the parties’ decision to terminate the venture. Two agreements executed in July of that year purported to formalize the terms of that dissolution. The basic agreement was that Daum would redeem all of its stock in Makad in exchange for its receipt of all interest in the Idaho Falls shopping center.

In August of 1971 Carroll’s, Inc., a women’s clothing retailer, leased space in the Idaho Falls center for a term of ten years. The rental fee and the possibility of a fixturing allowance were the subject of substantial negotiation prior to the execution of the Carroll’s lease. Carroll’s initially offered to pay $4.30 per square foot ($12,040 annually), plus five per cent of their gross annual sales exceeding $240,800, provided they were given a $20,000 fixture allowance. Ultimately, the parties agreed to a lease based on $3.50 per square foot ($9,800 annually), plus five per cent of their gross annual sales exceeding $196,000. Makad advanced $20,000 to be used for the purchase and installation of trade fixtures and Carroll’s so used that money. Carroll’s executed a ten year promissory note payable to Makad in the face amount of $20,000, which was secured by the trade fixtures, pursuant to article 9 of the Uniform Commercial Code. Daum held that note as collection agent and received payments from Carroll’s on behalf of Makad.

Following dissolution of the joint venture, Daum retained possession of the note and Carroll’s began making payments thereon to Daum. Some months later Makad (now known at Emkay and consisting only of Morrison-Knudsen) demanded the note and when Daum refused to deliver the note, Emkay commenced suit.

At trial defendant-respondent Daum argued that in the July dissolution agreements Makad transferred “all of its interests” in the Idaho Falls center and that “all of its interests” included the Carroll’s note. Plaintiff-appellant Emkay conversely contended that “all of Makad’s interests” meant only its operating assets in the center and did not include the note. Daum asserted that the promissory note, taken together with the lower rental rates, was simply another form of fixturing allowance, that the note obligation was essentially the equivalent of rent and thus the note was an incident of and an interest in the Idaho Falls shopping center. Emkay replied that the note was merely a loan to Carroll’s, had no substantial relation to rent and thus was *365 not an interest in that specific Idaho Falls shopping center.

In an effort to ascertain the intent of the parties regarding ownership of the note, testimonial and documentary evidence outside the written dissolution contracts was offered by both parties. There is no claim here that any of such extrinsic evidence was improperly admitted. The trial court held that the phrase “all interests in the Idaho Falls center” was intended to include the Carroll’s note in the transfer to Daum and required Emkay to execute an assignment of the note to Daum.

Where the language of a written agreement is clear and unambiguous, the trial court will give effect to the language employed according to its ordinary meaning, J. R. Simplot Co. v. Chambers, 82 Idaho 104, 350 P.2d 211 (1960); Durant v. Snyder, 65 Idaho 678, 151 P.2d 776 (1944), determination of its meaning and legal effect being a question of law. Beal v. Mars Larson Ranch Corp., Inc., 99 Idaho 662, 586 P.2d 1378 (1978); Parks v. City of Pocatello, 91 Idaho 241, 419 P.2d 683 (1966).

But when the terms of a written contract are ambiguous, its interpretation and meaning become a question of fact and extrinsic evidence may be considered by the trier of fact in an attempt to arrive at the true intent of the contracting parties. Roberts v. Hollandsworth, 582 F.2d 496 (9th Cir. 1978); Bergkamp v. Carrico, 101 Idaho 365, 613 P.2d 376 (1980); Puchner v. Allatt, 101 Idaho 37, 607 P.2d 1091 (1980); Werry v. Phillips Petroleum Co., 97 Idaho 130, 540 P.2d 792 (1975); Rudeen v. Howell, 76 Idaho 365, 283 P.2d 587 (1955). In so doing the trier of fact may consider the objective and purpose of the particular provision and may also scrutinize the circumstances surrounding formation of the contract. Id.

If a contract is reasonably subject to conflicting interpretations, it is ambiguous. Rutter v. McLaughlin, 101 Idaho 292, 612 P.2d 135 (1980). Where interpretation of the parties’ agreement becomes a question of fact, this Court will not set aside the trial court’s finding unless it is clearly erroneous. Id.; I.R.C.P. 52(a). See Torix v. Allred, 100 Idaho 905, 606 P.2d 1334 (1980).

Here the provisions of the dissolution contract are ambiguous and unclear as to whether the Carroll’s note is an interest in and to “property and assets” of the Idaho Falls shopping center and thereby intended to be transferred to Daum or whether the Carroll’s note is an obligation to the overall Makad joint venture. The contracts themselves neither specifically include the note with nor exclude it from the Daum transfer and the general language of the contracts is reasonably susceptible to both interpretations. For example, the July 30 dissolution agreement provides in pertinent part:

“Consideration: In consideration for the surrender by Daum of all of its said shares of stock in Makad, Makad shall, subject to provisions of paragraph 12 below, transfer and distribute to Daum all of Makad’s right, title, and interest in and to all the property and assets now owned and used by Makad in the conduct of that certain shopping center located in Idaho Falls, Idaho known as ‘Country Club Center’ (herein called the ‘Center’) and which are now located at the Center, including:
“(a) [the real property and real property interests]

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Alsco v. Fatty's Bar
461 P.3d 798 (Idaho Supreme Court, 2020)
Bret and Marti Kunz v. Nield, Inc.
398 P.3d 165 (Idaho Supreme Court, 2017)
Hardenbrook v. United Parcel Service, Inc.
490 F. App'x 42 (Ninth Circuit, 2012)
J.R. Simplot Co. v. Bosen
167 P.3d 748 (Idaho Supreme Court, 2006)
State v. Allen
141 P.3d 1136 (Idaho Court of Appeals, 2006)
Rockefeller v. Grabow
82 P.3d 450 (Idaho Supreme Court, 2003)
Willie v. Board of Trustees
59 P.3d 302 (Idaho Supreme Court, 2002)
Bilow v. Preco, Inc.
966 P.2d 23 (Idaho Supreme Court, 1998)
Hines v. Hines
934 P.2d 20 (Idaho Supreme Court, 1997)
Brooks v. Gigray Ranches, Inc.
910 P.2d 744 (Idaho Supreme Court, 1996)
Holmes v. Holmes
874 P.2d 595 (Idaho Court of Appeals, 1994)
Dille v. Doerr Distributing Co.
867 P.2d 997 (Idaho Court of Appeals, 1993)
Sullivan v. Bullock
864 P.2d 184 (Idaho Court of Appeals, 1993)
Ervin Construction Co. v. Van Orden
874 P.2d 506 (Idaho Supreme Court, 1993)
Ada County Assessor v. Taylor
861 P.2d 1215 (Idaho Supreme Court, 1993)
Adams v. Krueger
856 P.2d 864 (Idaho Supreme Court, 1993)
Mountain Restaurant Corp. v. Parkcenter Mall Associates
833 P.2d 119 (Idaho Court of Appeals, 1992)
Beitzel v. City of Coeur D'Alene
827 P.2d 1160 (Idaho Supreme Court, 1992)

Cite This Page — Counsel Stack

Bluebook (online)
630 P.2d 155, 102 Idaho 363, 1981 Ida. LEXIS 354, Counsel Stack Legal Research, https://law.counselstack.com/opinion/international-engineering-co-v-daum-industries-inc-idaho-1981.