Opinion
October 4, 1962 —
October 30, 1962.
APPEAL from a judgment of the circuit court for Waukesha county: CLAIR H. VOSS, Circuit Judge. Affirmed.
For the appellant there was a brief by Schroeder, Gedlen Leonard, attorneys, and Leo J. Landry of counsel, all of Milwaukee, and oral argument by Mr. Landry.
For the respondents there was a brief by Lowry, Hunter Tikalsky of Waukesha, and oral argument by Richard N. Hunter.
On November 20, 1950, Louis Schlieper and Viola Schlieper, his wife, entered into a lease with George Normington and Claude J. James, copartners, doing business as Central Contractors, whereby the Schliepers agreed to lease to Normington and James the right to remove sand, gravel, and crushed stone from property owned by the Schliepers in return for a payment of 15 cents for each cubic yard of material removed from the Schlieper property. The term of the lease was a period of five years, commencing November 1, 1950. The lease also gave the lessee the option of extending the term for a period of five years commencing November 1, 1955, upon the same terms and conditions except as to the price per cubic yard. Shortly thereafter, this lease was assigned, with the Schliepers' approval, to the plaintiff, Northwest Sand Gravel Company.
On August 29, 1955, the plaintiff Northwest Sand Gravel Company elected to exercise its option to extend the lease commencing November 1, 1955. By this extension agreement the price paid by the plaintiff-lessee for each cubic yard of sand, gravel, and crushed stone removed from the defendants' property was raised from 15 cents per cubic yard to 25 cents per cubic yard.
On September 1, 1959, the plaintiff and the defendants entered into the following agreement (Exhibit 3):
"Please take notice that the undersigned, Northwest Sand Gravel Company, a Wisconsin corporation, assignee of George Normington and Claude J. James, copartners doing business as Central Contractors, does hereby elect to exercise lessee's option to extend that certain written lease executed on the 20th day of November, 1950, by Louis Schlieper and Viola Schlieper, his wife, as lessors, and George Normington and Claude J. James, copartners doing business as Central Contractors, as lessees, for an additional term of five (5) years commencing November 1, 1955, upon the same terms and conditions as contained in said lease, including lessees' right of prior termination, and as of November 1, 1955, with the royalties at Fifteen cents ($0.15) per cubic yard of sand, gravel, and crushed stone and bank run to be removed from the premises covered by said lease during said extended term; all in accordance with the terms and provisions of said written lease. This notice of extension shall be deemed to be effective November 1, 1955. Further, the Northwest Sand Gravel Company as assignee, shall have the option of extending the lease herein referred to for an additional term of five (5) years at the expiration of the first extension of the lease, all in accordance with the terms and provisions of said written lease, and extensions thereof.
"This lease is nontransferable.
"Termination date of lease will be November 1, 1965.
"Any taxes levied against lessors by town, county, or state in regard to cubic yards sold are to be paid by lessees.
"Dated, September 1, 1959.
"Northwest Sand Gravel Company "by /s/ Ed Schwerm "Receipt of the foregoing notice of extension of lease is hereby acknowledged and provisions thereof accepted and approved this 8th day of September, 1959. "/s/ Louis Schlieper /s/ Alfred Karkut "Witness "/s/ Viola Schlieper /s/ James Schwerm "Witness." Previous to the Schliepers' approval of the above agreement, James Schwerm brought to Mr. Schlieper a document for his approval (Exhibit 7). This document was the same in all material respects as Exhibit 3, except that the second sentence of said agreement read: "This notice of extension shall supersede and replace in its entirety the previous notice so given and shall be deemed to be effective November 1, 1955." The italicized portion of this sentence was objected to by Mr. Schlieper, and it was therefore stricken out of Exhibit 7 and was omitted from the final agreement (Exhibit 3) which is set forth in full above.The plaintiff bases its action upon Exhibit 3, dated September 1, 1959, alleging that this agreement provided that as of November 1, 1955, the royalty to be paid by the plaintiff to the defendants was to be 15 cents per cubic yard of sand and gravel; that from November 1, 1955, to September 1, 1959, the plaintiff had paid the defendants 25 cents per cubic yard and that the defendants therefore owed the plaintiff a rebate of 10 cents per cubic yard for that period, amounting to $29,075.66. The defendants refused to pay the claimed rebate.
Mr. Schlieper testified that it was his understanding that the September 1, 1959, agreement cut the royalty from 25 cents to 15 cents from that day forward. Mr. Schlieper was asked what representations were made by the plaintiff's agents in obtaining his signature on Exhibits 3 and 7. He replied, ". . . they told me they just wanted the royalties reduced from that date on, not in the past . . ."
The trial judge instructed the jury that it was their duty to determine what the intent of the parties was. The jury found that the defendants did not agree to repay the plaintiff 10 cents per cubic yard for sand and gravel removed by the plaintiff from the defendants' land between November 1, 1955, and September 1, 1959.
The appellant's main argument is that the agreement dated September 1, 1959, is unambiguous and not properly susceptible to interpretation via parol evidence. We consider that the agreement is beset with ambiguity and that the taking of parol evidence was in order.
The instrument in question is dated September 1, 1959, and purports to exercise an option for a term of five years commencing November 1, 1955; it further provides that "This notice of extension shall be deemed to be effective November 1, 1955." The royalty rate is set at 15 cents per cubic yard. It is upon this agreement that the plaintiff claims a refund in royalties totaling $29,075.66. The instrument is silent regarding a refund.
In our opinion, it is unclear from the face of the instrument whether a refund was contemplated in reducing the royalty rate to 15 cents from 25 cents for the period between November 1, 1955, and September 1, 1959. If the parties intended to embody their expressions in a single memorandum, they did not succeed. It was appropriate to examine the related instruments (particularly the extension agreement dated August 29, 1955, and the agreement marked Exhibit 7) and to take parol evidence in order to determine the intentions of the parties. This is consistent with the rule set forth in Wheelwright v. Pure Milk Asso. (1932), 208 Wis. 40, 44, 240 N.W. 769:
"The rule in Wisconsin with respect to the admissibility of parol evidence for the purposes of interpretation has been set forth in numerous cases. If the contract is ambiguous, evidence of the surrounding circumstances, practical construction by the parties, and even the declarations of the parties constituting the negotiations may be resorted to in aid of construction."
See also Kasten v. Markham (1957), 1 Wis.2d 352, 356, 83 N.W.2d 885.
The respondents contend that the result of literal interpretation would be so absurd that parol evidence was required. The payment of a refund on past royalties is not, in our opinion, so bizarre a result as to warrant the application of the rule considered in Corbett v. Joannes (1905), 125 Wis. 370, 387, 104 N.W. 69:
". . . 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 by reason of uncertainty of meaning upon its face."
It would appear that the Schliepers reduced the royalty rate in order to accommodate their tenant. It is at least plausible that the agreement contemplated a refund. Conceivably the parties may have intended that the tenant receive a 10-cent credit against future gravel removals. The jury's answer to question numbered one of the special verdict resolved that issue in favor of the respondents. That determination properly resulted in judgment for the respondents.
The construction reflected in the judgment is consistent with the standard set forth in Bitker Gerner Co. v. Green Investment Co. (1956), 273 Wis. 116, 120, 76 N.W.2d 549, wherein we said that a contract "should be given a construction which will make it a rational business instrument and will effectuate what appears to have been the intention of the parties." While parol evidence was not required in that case to accomplish that end, we consider that it was necessary in the instant case in order to determine the true meaning of an ambiguous instrument.
By the Court. — Judgment affirmed.