Klueter v. Joseph Schlitz Brewing Co.

128 N.W. 43, 143 Wis. 347, 1910 Wisc. LEXIS 304

• Court: Wisconsin Supreme Court
• Decided: October 4, 1910
• Status: Published

Opinions

Maeshall, J.

Tbe first error assigned is that tbe contract was in writing, therefore parol evidence thereof was improperly admitted.

It may well be admitted, for tbe purposes of this case, that tbe contract was in writing. • Tbe trial court, as we understand tbe record, so held and admitted evidence to aid in construing tbe language used in tbe paper.

It is argued at considerable length that tbe agreement is: unambiguous, looking at tbe words thereof only, and that there is no room for operation of rules for construction. It seems to be thought that, unless ambiguity can be discovered in tbe language of tbe paper, looking at that only, it must,, regardless of circumstances, be taken in its literal sense as expressing what tbe parties agreed to. There is no such rule,, though it may be there is room for one to be misled in respect to tbe matter as be reads tbe numerous discussions found in tbe books on tbe subject, unless be carefully notes differences in situations treated.

Tbe very familiar rule is often stated and applied tbat oral testimony is not admissible to contradict or vary a written contract. It is perfectly consistent with tbat other rule, likewise often stated and applied, tbat oral testimony is admissible for tbe purpose of applying tbe contract to tbe subject with which it deals, and, in case of ambiguity then .appearing, to establish tbe facts and circumstances under which tbe agreement was made in order tbat tbe language thereof may be read in tbe light of tbe environment at tbe time tbe parties chose such language to express their intention.

It is said tbat, when tbe language of a contract is plain, it is not open to construction. Tbat is true in tbe general sense, but, unless viewed broadly, it does not convey accurately tbe full scope of tbe field where rules for construction are applicable. Tbe words of a contract, in themselves, may be plain, yet when applied to tbe situation with which it deals, not plain, tbe literal sense leading to such unreasonableness as to suggest tbat tbe parties probably did not so intend. In so applying tbe contract oral testimony is generally necessary and permissible to tbe end tbat tbe full scope of tbe situation dealt with may be observed. As to when tbe language of a contract, in its literal sense, is to be taken as expressing tbe intention of tbe parties, is correctly indicated by Vattel’s rule which has been often cited by this and other courts: “When tbe meaning is evident, and loads to no absurd conclusions, there can be no reason for refusing to admit tbe meaning which tbe words naturally present.” Note tbe language “when tbe meaning is evident.” Tbe meaning is not evident when, if looking at tbe subject matter, it is so unreasonable as to appear unlikely tbat tbe parties so intended. To enable one to read tbe contract in tbe light of tbe subject matter and tbe effects and consequences, obviously evidence of facts and circumstances, not mere conversations, leading up to and concurrent with the making of the contract, is often necessary. One of the elementary rules found in 1 Greenl. Ev. (15th ed.) § 286, and often cited by this and other courts, covers this subject. It is phrased thus:

“As it is a leading rule, in regard to written instruments, that they are to be interpreted according to their subject matter, it is obvious that parol or verbal testimony must be resorted to, in order to ascertain the nature and qualities of the subject, to which the instrument refers. Evidence which is calculated to explain the subject of an instrument is essentially different in its character from evidence of verbal communications respecting it. Whatever, therefore, indicates the nature of the subject, is a just medium of interpretation of the language and meaning of the parties in relation to it, and is also a just foundation for giving the instrument an interpretation, when considered relatively, different from that which it would receive if considered in the abstract.”

In view of the elementary rule stated this court has said many times — and in perfect harmony with the idea that contracts which are plain are not open to construction, and in harmony with the idea that parol evidence is not admissible to contradict or vary a written contract, and in like harmony with the idea that mere conversations between parties respecting the contract leading up to and inclusive of the making thereof, are not admissible either to vary or explain it; Steele v. Schricker, 55 Wis. 134, 143, 12 N. W. 396, — ambiguity calling for construction may as well appear from language clear in itself, but leading to some absurd result when applied literally to the situation with which it deals, as from uncertainty of meaning upon its face. Corbett v. Joannes, 125 Wis. 370, 104 N. W. 69. When it is said, — • where there is ambiguity in a contract, either in its literal sense, or when it is applied to the subject thereof, evidence of the circumstances under which the contract was made is proper to enable the court, in the light thereof, to read the instrument in the sense the parties intended, if that can be ■done without violence to the rules of language or of law, as in Johnson v. Pugh, 110 Wis. 167, 170, 85 N. W. 641, and, in effect, in many other cases decided by this court, and in Nash v. Towne, 5 Wall. 689; Merriam v. U. S. 107 U. S. 437, 2 Sup. Ct. 536, and many of the federal cases, and likewise in the books quite generally, — we see only the logical application of the rule that “when a contract is plain and leads to no absurd consequences, it must speak for itself, but when otherwise, it may .spealc in the light of the circumstances under which it was made. Evidence of such circumstances is in no sense, under such rule, received to contradict or vary'the contract, but rather to enable the court to say' what the language of the agreement means according to the intention of the parties. In that respect such language cannot be twisted out of its ordinary meaning to the extent of going beyond the reasonable scope of the words. The meaning, in the ultimate, must be found in the language the parties used. To that extent their intention can be effectuated however much the literal or plain ordinary sense of the words may be departed from.

True, the distinction sometimes is so shadowy between application of the rule, that “oral conversations had between the parties to a written contract” before and at the time of the making thereof “cannot be received as explanatory of the writing,” and the rule that the contract may be applied to its subject matter by oral evidence, as.in Nilson v. Morse, 52 Wis. 240, 9 N. W. 1, and many other cases, and any ambiguity thus disclosed explained by resort to such evidence of the facts and circumstances characterizing the making of the agreement — that one is liable, at least without careful analysis, to think there is a conflict,' — as in case of some term having been used in the contract, reasonably susceptible of either of two meanings, and proof was held proper to show, — by what the parties said when the agreement was made, — that they attributed thereto a particular meaning. Ganson v. Madi-gan, 15 Wis. 144; Weber v. Illing, 66 Wis. 79, 27 N. W. 834; Wenger v. Marly, 135 Wis. 408, 116 N. W. 7; Burton v. Douglass, 141 Wis. 110, 123 N. W. 631. But in each instance the fact that the parties contracted with reference to the particular meaning, was treated as a circumstance, within the rule that the circumstances characterizing the making of a contract may be shown to aid in construing it, that other rule being fully appreciated, that mere verbal communications respecting a contract had at the time of, or prior to the making thereof, are no such characterizing circumstances of such making as to render proof thereof proper for purposes of construction. It is believed that the ideas in mind in the numerous cases which might be referred to, making, in one view, seemingly two lines, as suggested in Burton v. Douglass, supra, substantially all harmonize.

The subject treated was reviewed at some length by this court in Boden v. Maher, 105 Wis. 539, 81 N. W. 661, and, thinking to minimize seeming difficulties in the application of rules for construction, the court said:

“Parol evidence to vary the terms of a written contract is one thing; such evidence to enable the court to see what the parties to a contract intended to express by the language adopted in making it, is quite another thing. The former is not permissible. . . . The latter is permissible and is often absolutely essential to show the real nature of the agreement. . . . Both rules are elementary and do not conflict in the slightest degree with each other. One prevents a written contract from being varied by parol evidence either in regard to what was said at the time it was'made or prior thereto; the other aids in determining what the contract is when its language, either in its literal sense or as applied to the facts, is obscure. The one is a rule to preserve the contract as expressed in the writing; the other is a rule of construction to determine what the contract, as expressed, is, it being kept in mind that the mutual intention of the parties, so far as the same can be ascertained, governs within the reasonable meanings of the language they chose to express it; and that rules of ■construction to discover it are not to be resorted to unless there is some ambiguity to be cleared up. A failure to keep in mind the wide distinction between varying a contract by parol evidence and resorting to such evidence in aid of its construction often leads to error.”

We might well add to the foregoing, as a conclusion evolved from the logic of Yattel’s rule, so often referred to, and the general application of it: Since a contract may be uncertain in the words themselves when, applied to the subject matter thereof though not otherwise uncertain, parol evidence to aid in making such application is proper. Such evidence for that direct purpose is one thing, while evidence merely to create ambiguity is quite another. The former is admissible; the latter is not. That does not militate against the rule that if the legitimate effect of the application is to disclose ambiguity, it opens the door for construction, including in •aid thereof, introduction of evidence of the circumstances characterizing the contract and in view of which it was made. Thus it is said: Courts may ignore the literal sense of words wheré there is no uncertainty of expression (in the words by themselves) to clear up obscurities and avoid absurd consequences. State v. Railway Cos. 128 Wis. 449, 108 N. W. 594. It is only where the words are “plain, both in them•selves and when applied to the subject with which they deal,” that they “must be taken according to their ordinary import,” no other meaning being added thereto or taken therefrom. Huber v. Martin, 127 Wis. 412, 429, 105 N. W. 1031, 1135. Otherwise, “The contract may be read very ■different from its literal sense” “so long as its reasonable scope is not departed from, if necessary to give effect to what the minds of the parties really met upon. That does not involve any modification of the contract,” but, as said in Zimmer v. Settle, 124 N. Y. 37, 42, 26 N. E. 341, “has relation to the application of the language used to the subject within the contemplation of the parties as represented by the situation then existing and the surrounding circumstances, which it may be assumed they then had in view.”

Applying the foregoing to the contract in question, ambiguity is readily observed. The language: “To be shipped at once to,” etc., “Via Ill. Oent. R. R.,” by itself would indicate that shipments from the seller’s loading point to the named destination were contemplated. But the situation dealt with by the writing, as disclosed by legitimate evidence, is that the Illinois Central Railroad did not reach the loading place at all, so the transit, necessarily, had to commence on the Chicago & Northwestern Railway, which, only, reached such loading place. Again, though not indicated in the statement of facts, the calls for shipments to various points “Via. Ill. Cent. R. R.” were associated with calls for shipments “Via Wabash R. R.” and shipments “Via A., T. & S. F. R. R.,” neither of which roads reached anywhere near the contemplated loading place, showing, quite clearly, that “via” any particular road, where such road did not reach the loading point, was not used in the literal sense. That situation could only be made to appear by evidence aliunde the writing. When disclosed, ambiguity in the contract appeared at once. So it became necessary to learn the meaning of the language in view of the situation.

If there were nothing suggesting ambiguity but the circumstance mentioned, “Via Ill. Cent. R. R.” might mean by way of that railroad so far as practicable, and otherwise by way of the only road reaching the loading point, to wit, the Northwestern road. But the obscure words refer back to and are characterized by the opening words of the writing, “As per your conversation with Mr. Campbell to supply ice' at the rate of thirty cents per ton,” etc., “we herewith send you the following orders,” etc. On the face the term “As per your conversation,” etc., might refer to the mere price for the ice, suggesting that the whole conversation was embodied in the writing, or quite as well refer to stated conditions in the conversation upon which ice would be furnished at thirty cents per ton, not incorporated in the writing. In that there is ambiguity solvable only by proof of what the conversation in fact related to, and if to conditions of the price being as stated, further proof of such condition. In that sense the subject matter of the conversation is a characterizing fact or circumstance, and the stipulated condition likewise. Such facts or circumstances being a part of the environment in which the parties acted, were subjects of proof by parol evidence, within the rule above stated, and consistent with the other rule that parol evidence of conversations between parties respecting the contract had at the time of the making thereof are not admissible. "When such conversations result in some matter of fact with reference to which the contract is made, either as evidenced in the' writing, as in this case, or by the use of some term of double meaning pursuant to an agreement as to the particular one in mind, as in Burton v. Douglass, 141 Wis. 110, 123 N. W. 631; Ganson v. Madigan, 15 Wis. 144, and similar cases, then, necessarily, evidence to prove the conversation as a fact is permissible, not to show the meaning of the contract directly, and not at all to vary or contradict, but to establish the fact or circumstance, in the light of which the contract was made.. Here the parties, in the writing itself, made the conversation referred to and the condition, as the jury in effect found, upon which the ice would be furnished at thirty cents per ton, circumstances necessarily referable to in order to determine what meaning the language of the writing was intended by both parties to express.

It follows that errors assigned on the admission of evidence to prove the conversation referred to in the writing must be overruled. The evidence tended to show that, in such conversation, the price of thirty cents per ton .was made on condition of the ice being forwarded out of Madison over the Chicago & Northwestern Eailway, and that reference to such conversation was made to thereby make snob condition a part of tbe contract, which it might well do without contradicting the term “Via Ill. Cent. R. R.” or enlarging it beyond its reasonable scope and that of similar terms several times used in the paper.

The disputed questions of fact involved in construing the contract being found in respondent’s favor, upon evidence which was competent, as we have seen, the conclusion which resulted in the judgment followed necessarily.

The treatment of this case has been quite general, since substantially all appellant’s complaints turn on whether the contract is ambiguous, and whether ambiguity in an agreement calling for construction can be legitimately disclosed by applying the writing by aid of evidence aliunde to the situation with which it deals, when, looking at the particular vital words themselves, there is no ambiguity, and whether a conversation had prior to, or at the time of making the writing, may be so referred to therein as to make stipulations and conditions thereby made and in the light of which the writing was drawn, fall within the field of circumstances provable in aid of construction. We have been constrained, in the light of familiar principles, to resolve such propositions in respondent’s favor.

By the Oowrf. — The judgment is affirmed.