Valley Bank v. Christensen

808 P.2d 415, 119 Idaho 496, 1991 Ida. LEXIS 47
CourtIdaho Supreme Court
DecidedApril 1, 1991
Docket18014
StatusPublished
Cited by27 cases

This text of 808 P.2d 415 (Valley Bank v. Christensen) 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
Valley Bank v. Christensen, 808 P.2d 415, 119 Idaho 496, 1991 Ida. LEXIS 47 (Idaho 1991).

Opinions

BOYLE, Justice.

In this dispute concerning a loan guaranty agreement, we are called upon to determine whether the parol evidence rule prevents the admission of oral testimony regarding alleged express conditions precedent.

Defendant Christensen signed a written loan guaranty agreement on a loan made by Valley Bank to a third party. When that individual defaulted on the loan, the bank offset Christensen’s checking account in the amount of $9,000.00 and brought this [497]*497action. Christensen counterclaimed against the bank for wrongful offset alleging that his duty to pay had been discharged because the bank failed to fulfill two conditions precedent to payment. The jury found in favor of Christensen and Valley Bank moved for a judgment notwithstanding the verdict which was denied by the trial court.

The bank appeals the judgment entered on the jury verdict asserting that the parol evidence rule prevents the admission of oral testimony relating to the alleged express conditions precedent. After reviewing the record we reverse and remand for a new trial.

I.

Factual Background

In June of 1985, appellant, Valley Bank, and respondent, Thomas Christensen, executed a written loan guaranty agreement whereby Christensen agreed to guaranty a $15,000.00 loan made by Valley Bank to Kevin Seamons, a local farmer. The purpose of the loan was to enable Seamons to purchase fertilizer from Christensen. Seamons defaulted on the loan with Valley Bank and eventually filed bankruptcy. Valley Bank commenced this lawsuit against Christensen in May, 1986, seeking enforcement of the guaranty agreement and proceeded to offset Christensen’s bank account in the amount of $9,000.00. Christensen responded to the claim by asserting that Valley Bank breached the parties’ oral agreement by failing to obtain a crop lien from Seamons, the primary borrower. Christensen also asserted by way of defense that Valley Bank failed to designate him as a joint payee on the loan proceeds which resulted in Christensen not receiving payment for the fertilizer. These two defenses relate to terms of an alleged agreement which Christensen claims were made orally to him by Valley Bank agents prior to the signing of the agreement, but which were not stated in the written guaranty agreement.

Christensen filed a counterclaim against Valley Bank for reimbursement of the $9,000.00 taken in the offset against his checking account, and prayed for an award of punitive damages. Christensen thereafter obtained leave of court to amend his answer to include the affirmative defense of failure of consideration.

A jury trial was held on January 24 and 25, 1989, wherein Valley Bank introduced the testimony of its branch manager, Steve Williams, and a loan officer, Kevin Christensen (no relation to plaintiff-appellant), as to the transaction. During defendant Christensen’s cross-examination of loan officer Kevin Christensen, Valley Bank objected and moved to exclude any evidence of the terms of a crop lien or naming Christensen as a co-payee on the Seamons’ loan proceeds. The court allowed Christensen to amend his pleadings to assert the two alleged conditions precedent as defenses to Valley Bank’s action. Thereafter, over the objection of Valley Bank, Christensen presented testimony and evidence regarding the alleged promise made to him by bank employees to obtain a lien on Seamons’ crops and to name Christensen as payee on the Seamons’ loan proceeds. Christensen was allowed by the trial court to argue to the jury that both of these representations allegedly made by officers of the bank were conditions precedent to his duty to pay the loan he guaranteed for Seamons.

The court instructed the jury that the alleged condition precedent of obtaining a lien on Seamons’ crop cannot be a part of the written guaranty but must be part of a separate agreement. The jury was instructed that Valley Bank had the burden of proof to show by a preponderance of the evidence that there was a guaranty agreement, failure of performance and damages. The trial court instructed the jury that Christensen had the burden of proving the alleged conditions precedent by clear and convincing evidence.

The jury returned a special verdict finding that Christensen failed to perform according to the agreement but that Valley Bank was not damaged by Christensen’s failure to perform. The jury also found that Valley Bank had agreed to take a lien against Seamons’ crop which was a condi[498]*498tion precedent to enforcing the guaranty. Judgment was entered awarding Christensen $10,000.00 plus an award of costs and attorney fees.

Valley Bank appeals and argues that the parol evidence rule prevents the admission of oral testimony regarding the alleged conditions precedent. In addition, Valley Bank contends that during the course of the trial, the trial court should not have allowed Christensen to amend his pleadings to include the two condition precedent defenses and that the trial court erred in failing to grant its motion for judgment notwithstanding the verdict.

Upon review of the record, we reverse on the first issue, and therefore need not address the remaining issues raised by the parties.

The Parol Evidence Rule

Over the objection of Valley Bank, the trial court admitted testimony of loan officer Kevin Christensen regarding discussions pertaining to an alleged oral agreement to obtain a crop lien. Valley Bank contends on appeal that testimony of these alleged promises not contained in the written document was inadmissible and violated the parol evidence rule. We agree.

The parol evidence rule provides, “[w]here preliminary negotiations are consummated by written agreement, the writing supercedes all previous understandings and the intent of the parties must be ascertained from the writing.” Nysingh v. Warren, 94 Idaho 384, 385, 488 P.2d 355, 356 (1971); Nuquist v. Bauscher, 71 Idaho 89, 94, 227 P.2d 83, 86 (1951). If the written agreement is complete upon its face and unambiguous, no fraud or mistake being alleged, extrinsic evidence of prior or contemporaneous negotiations or conversations is not admissible to contradict, vary, alter, add to or detract from the terms of the written contract. Green v. K.S. Webster & Sons, 77 Idaho 281, 291 P.2d 864 (1955); Milner v. Earl Fruit Co., 40 Idaho 339, 232 P. 581 (1925). It is well established in Idaho that “[ojral stipulations, agreements, and negotiations preliminary to a written contract are presumed merged therein and will not be admitted to contradict the plain terms of the contract.” Ringer v. Rice, 97 Idaho 105, 108, 540 P.2d 290, 293 (1975). This rule, however, applies only when the integrated character of the writing is established. Whether a particular subject of negotiations is embodied in the writing depends on the intent of the parties, revealed by their conduct and language, and by the surrounding circumstances. Nysingh v. Warren, 94 Idaho 384, 385, 488 P.2d 355, 356 (1971). The mere existence of a written document, however, does not establish integration. Id. at 94 Idaho 384,

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Bluebook (online)
808 P.2d 415, 119 Idaho 496, 1991 Ida. LEXIS 47, Counsel Stack Legal Research, https://law.counselstack.com/opinion/valley-bank-v-christensen-idaho-1991.