Magnetic Copy Services, Inc. v. Seismic Specialists, Inc.

805 P.2d 1161, 14 Brief Times Rptr. 1300, 1990 Colo. App. LEXIS 289, 1990 WL 152244
CourtColorado Court of Appeals
DecidedOctober 11, 1990
Docket88CA1788
StatusPublished
Cited by19 cases

This text of 805 P.2d 1161 (Magnetic Copy Services, Inc. v. Seismic Specialists, Inc.) is published on Counsel Stack Legal Research, covering Colorado Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Magnetic Copy Services, Inc. v. Seismic Specialists, Inc., 805 P.2d 1161, 14 Brief Times Rptr. 1300, 1990 Colo. App. LEXIS 289, 1990 WL 152244 (Colo. Ct. App. 1990).

Opinions

Opinion by

Judge DUBOFSKY.

Plaintiff, Magnetic Copy Services, Inc. (MCS), appeals dismissal of its complaint for breach of contract against defendant, Seismic Specialists, Inc. (SSI), and the trial court’s judgment for SSI on its counterclaim. We reverse.

MCS is a Colorado corporation that engages in the business of copying magnetic tapes. SSI is a Colorado corporation that conducts seismic surveys in areas of potential oil and gas exploration. SSI collects seismic data by generating sound waves through a dynamite blast or other vibration equipment. Sound waves are then recorded on magnetic tapes which are duplicated by companies such as MCS for sale to SSI customers.

In 1986, MCS and SSI were both new companies. Jeff West, a principal of MCS, and Paul Schillmoller, a principal of SSI, had both previously been involved in the oil and gas exploration industry and had known each other and worked together since approximately 1983.

On October 22, 1986, MCS and SSI signed a contract, prepared by MCS, which [1163]*1163dealt with MCS’ copying of SSI’s field tapes. The contract stated:

“SSI agrees to provide MCS 3,000 field tapes to be copied for its clients within one year of this agreement. Any changes in this agreement must be submitted in written form to MCS and meet with their approval 30 days in advance.
“MCS agrees to copy the above mentioned field tapes and all support documents at $40.00 per tape. MCS will handle all billing of clients and shipping of merchandise. MCS will pay SSI a commission of $10.00 per tape upon being invoiced and receipt of payment from client. Any changes in this agreement must be submitted in writing to SSI and meet with their approval 30 days in advance.” (emphasis added)

Within a year after the contract was executed, SSI had provided only 1,399 tapes to MCS for copying. Nevertheless, in the fall of 1987, SSI continued to provide tapes to MCS for copying.

MCS claims that SSI’s failure to produce 3,000 tapes within one year of the contract constituted a breach of the contract and that SSI was, therefore, not entitled to its commission on certain tapes, including the last 43 tapes which were provided before October 22, 1987, the anniversary date of the signing of the contract. Furthermore, MCS argues it need not pay a commission to SSI for the 538 tapes copied during the months of November and December of 1987.

The evidence indicated that, in 1986, after some preliminary discussions, SSI reviewed its situation and determined it could provide 3,000 tapes during the next year. It was on the basis of this representation that the number 3,000 was placed in the written contract by MCS.

During this one-year period several events pertinent to the parties’ agreement occurred. SSI lost one or two of its primary customers. This loss reduced the number of tapes SSI could produce to provide for copying to MCS. Also, during this one-year period SSI had several hundred tapes copied by companies other than MCS because its customers either wanted a shorter turnaround time on the copying than MCS provided or they wanted another copying method used. Moreover, during this one-year contract period, MCS had cash flow difficulties, and at times it de-. layed making payments to SSI after it (MCS) had received payment from customers. SSI allowed MCS significant flexibility in making its payments.

SSI employees testified that the reference in the contract to 3,000 tapes was a goal and not a guarantee. The employees, however, also testified that SSI always intended to provide 3,000 tapes, but it was not able to do so within the year. MCS employees testified that they considered that SSI had promised or committed to provide 3,000 tapes within one year.

I.

MCS argues that the terms of the contract are clear and unambiguous and that, therefore, it was improper for the trial court to vary its terms by the use of parol evidence. We agree.

The trial court recognized that the critical part of the contract is the provision specifying that 3,000 tapes would be provided by SSI to MCS. The trial court findings do not state whether this provision is ambiguous. However, since the trial court used defendant’s witnesses’ testimony to ascertain the intent of the parties, it must have determined the contract was ambiguous.

In the absence of an ambiguity, a written contract cannot be varied by extrinsic evidence. Union Rural Electric Ass’n v. Public Utilities Commission, 661 P.2d 247 (Colo.1983). And, an unambiguous agreement must be enforced according to its express terms. Murray Equipment Co. v. Curtis, Inc., 725 P.2d 35 (Colo.App.1986).

The determination of whether a contract is ambiguous is a question of law for the court. Mashburn v. Wilson, 701 P.2d 67 (Colo.App.1984). And, since the issue is one solely of law, an appellate court will not be bound by the trial court’s [1164]*1164conclusion. Radke v. Union Pacific R.R. Co., 138 Colo. 189, 334 P.2d 1077 (1959).

A mere disagreement between the parties regarding the proper interpretation of a contract does not, in itself, create an ambiguity. Union Rural Electric Ass’n v. Public Utilities Commission, supra.

Here, SSI argues the contract is ambiguous because the term “guarantee” was not included, and the testimony that SSI’s promise to provide 3,000 tapes was merely a goal is admissible to confirm the ambiguity and to explain the intent of the parties. We disagree and construe the phrase “agrees to provide” as constituting, an unambiguous promise by SSI to provide MCS with 3,000 tapes within a year of the contract.

The contract does not state that SSI’s performance was conditioned upon any set of circumstances. Furthermore, the contract does not state or imply that providing 3,000 tapes within a year is merely a goal or objective. Hence, we will not read the contract as so stating. See Griffin v. United Bank of Denver, 198 Colo. 239, 599 P.2d 866 (1979).

The trial court used testimony from SSI regarding the 3,000 tape “goal,” admitted without objection, as a basis for modifying the contract. SSI implicitly argues that because there was no objection to this parol evidence, we should uphold the trial court’s determination. We disagree.

The parol evidence rule is one of substantive law, not merely one of evidence. Therefore, if, as here, a contract is unambiguous, then parol evidence, even if received without objection, must be ignored by the trial court. Commerce Trust Co. v. Watts, 360 Mo. 971, 231 S.W.2d 817 (1950); Fogelson v. Rackfay Construction Co., 300 N.Y. 334, 90 N.E.2d 881 (1950); National Surety Corp. v. University of Missouri, 268 F.2d 525 (8th Cir.1959); O’Brien v. O’Brien, 362 Pa. 66, 66 A.2d 309 (1949); J.

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Magnetic Copy Services, Inc. v. Seismic Specialists, Inc.
805 P.2d 1161 (Colorado Court of Appeals, 1990)

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Bluebook (online)
805 P.2d 1161, 14 Brief Times Rptr. 1300, 1990 Colo. App. LEXIS 289, 1990 WL 152244, Counsel Stack Legal Research, https://law.counselstack.com/opinion/magnetic-copy-services-inc-v-seismic-specialists-inc-coloctapp-1990.