Opinion
No. 65.
Argued March 29, 1971. —
Decided May 4, 1971.
APPEAL from a judgment of the county court of Walworth county: ERWIN C. ZASTROW, Judge. Reversed and cause remanded.
For the appellant there was a brief by Braden English of Lake Geneva, and oral argument by James L. English.
For the respondent there was a brief by Kenney, Korf Pfeil of Elkhorn, and oral argument by Richard H. Pfeil.
This is an action for breach of contract. The proof offered by plaintiff revealed that both the plaintiff and defendant were Czechoslovakians and members of the Czech Free Forces during World War II; they became acquainted while stationed in England in 1940. After the war, defendant came to the United States and plaintiff remained in England where he married and acquired a farm which he operated until 1964. Their acquaintance was renewed by correspondence in 1962.
Plaintiff and his wife visited defendant in this country for three weeks in March, 1964, with a view toward possibly settling here, and during the visit plaintiff investigated various business opportunities.
In 1965 plaintiff liquidated his holdings in England and moved his family to Fontana, Wisconsin, in part upon assurances from the defendant that he would help establish the plaintiff in a business. Upon plaintiff's arrival, however, the defendant was not able to locate plaintiff in a business as he intended, but instead persuaded plaintiff to operate a restaurant to be known as the Colonial Kitchen, which defendant desired to open at Fontana, but could not because of a noncompetitive agreement with a third party. Plaintiff was inexperienced in the restaurant business and his reluctance to undertake this venture was overcome by the defendant's oral promise to make up any losses incurred by plaintiff and to further pay him $5,000 as a service fee for commencing the business.
According to plaintiff's proof, on April 30, 1965, the parties executed a written agreement whereby the plaintiff leased the defendant's restaurant premises and purchased the restaurant equipment thereon. The lease term was for one year with an option for renewal, and the agreement further provided that the defendant would repurchase the equipment then on the premises for $15,000, should the plaintiff leave the business. Plaintiff and his wife also testified that defendant orally promised to purchase any additional equipment which plaintiff acquired during the time he operated the business; and that defendant told plaintiff he could move out at any time he desired.
The Colonial Kitchen was opened in May, 1965, and at the end of June the business was already losing money. When plaintiff reported the matter to defendant, defendant assured him he would stand behind him. Meanwhile plaintiff began looking for another business and in July purchased a restaurant and hotel operation in Walworth known as the Wayside Inn. On July 31st plaintiff informed defendant of his new business venture, and advised defendant that plaintiff would leave the Colonial Kitchen at the end of August. The plaintiff requested his money back.
On September 2, 1965, defendant paid plaintiff $14,300 for the original equipment, which figure was arrived at by deducting $700 for rent allegedly owed defendant which had not been paid. Plaintiff testified that defendant also agreed to pay another $5,000 for additional equipment and fixtures which the plaintiff left on the premises, and that defendant promised to pay him the $5,000 service fee and compensate him for his losses as soon as defendant could sell the business. In addition, another witness present at a meeting of plaintiff, plaintiff's wife, and defendant testified that defendant told plaintiff he would compensate plaintiff for business losses incurred while plaintiff operated the Colonial Kitchen.
In December, 1965, defendant paid an additional $4,000 to plaintiff for the additional fixtures and a release was executed by plaintiff with respect to the claim for fixtures. On December 30, 1965, plaintiff, by his attorney, notified defendant that defendant still owed plaintiff approximately $2,000: $100 for overassessment of rent due ($700 when it should have been $600); $275 for a kitchen fixture expressly excluded on the release; $500 for meals furnished defendant and his family at the Colonial Kitchen; and $850 in wages for services rendered by plaintiff as a bartender.
On April 1, 1966, defendant's attorney notified plaintiffs attorney that defendant felt plaintiff was entitled to only $375 and would pay no more. On April 22d, plaintiff's attorney wrote defendant's attorney that he had discussed the matter with plaintiff and that if defendant would pay the $375 plus $350.32 for two antique lamps which plaintiff purchased and had renovated at defendant's direction in England in 1964, then "we can, for once and for all, dispose of the differences between these people." Plaintiff's attorney further expressly stated that plaintiff and his wife were giving up their claims for the meals and bartending wages.
On May 9th, Mr. and Mrs. Pokorny executed the following release:
"For and in consideration of the sum of Seven Hundred Twenty Five and 32/100 ($725.32) Dollars, receipt of which is hereby acknowledged by the undersigned, said undersigned parties, for themselves, their heirs, executors and assigns, do hereby release and wholly discharge Joseph G. Stastny and Marie M. Stastny, his wife, their heirs, executors and assigns, from any and all claims of any kind and nature in tort or in equity from the beginning of time to date hereof, including without limiting the generality of the foregoing, any matters relating to the undersigned's rental, operation, maintenance and use of the `Colonial kitchen.'"
The instant action was commenced on January 27, 1967, the plaintiff alleging damages in the amount of $12,500, which included business losses, the alleged service fee, and bartending wages. Defendant denied having any contract with plaintiff as alleged, and affirmatively pleaded the release of May 9, 1966, as a defense. Plaintiff then amended his complaint by dropping his claim for bartending wages. At trial the parties stipulated the amount of the business losses to be $2,900.
At trial, in addition to the above facts, plaintiff's attorney at the time of the above collections and settlement, Attorney Frank Hammett of Delavan, testified with respect to the letter of April 22, 1966. He stated that there was no reservation in his mind that the settlement proposed was a "settlement of all damages of any nature that those parties had against each other." He further testified that he explained the effect of this release to plaintiff and plaintiff's wife, but that he had no recollection of the details of this explanation. He did testify that had plaintiff expressed any reservation with respect to any claim he felt he had against defendant, he would not have allowed plaintiff to sign the release. However, he stated that he was never directed by plaintiff to make a claim for the business losses, nor was there any specific reference to the business losses during the negotiations on the settlement. He stated he was never informed by plaintiff of the $5,000 service fee claim.
Plaintiff testified that he did mention the business loss agreement to Attorney Hammett, but never authorized him to attempt to collect it because plaintiff did not feel he had it coming until defendant sold the Colonial Kitchen. Plaintiff further testified that at the conference on the release of May 9th, he specifically asked Attorney Hammett if the release had anything to do with the business losses and was told it did not; that Hammett told him the release covered those items he had been authorized to collect. Plaintiff also testified that at the time he signed the release he was aware that someone was operating the Colonial Kitchen, but he was not aware that the defendant had actually sold the business.
Plaintiff's wife testified that she and plaintiff discussed with Attorney Hammett claims against defendant in the amount of $20,000 (original fixtures and the fixtures they later supplied) and also mentioned that they had business losses but that defendant had agreed to pay them as soon as the business was sold. She also testified that she was at all conferences between plaintiff and Attorney Hammett and that she never heard plaintiff authorize Attorney Hammett to collect for these business losses; she was aware of no authority given to Attorney Hammett to release these claims. She further testified that at the conference on the release of May 9th, plaintiff still maintained he had a claim for the business losses and so told Attorney Hammett. She stated she was not aware of the contents of any of the correspondence between Attorney Hammett and defendant's attorney, but she was sure that Attorney Hammett was concerned only with "claims" which he was authorized to collect for plaintiff, and that plaintiff did not feel there was a "claim" for the business losses or the service fee until the business was sold by defendant.
After the presentation of plaintiff's case, defendant moved for a nonsuit on the basis of the release of May 9th. The motion was granted by the court, concluding that the release was clear and unambiguous, thereby presenting no jury issue. The court concluded that the claims sued upon came within the "clear and unambiguous" language of the release and were covered by that release.
When judgment was granted dismissing plaintiff's complaint, he appealed.
The only real issue presented is whether the trial court erred in nonsuiting the plaintiff. More specifically, the question is whether the determination of the intent of the language of the release presented a jury question as to defendant's alleged liability for plaintiffs claims for a $5,000 service fee and for $2,900 business losses. It did.
The trial court perceived the issue to be whether the release was a complete integration of all the previous negotiations and agreements between the parties. In such a case the intent of the parties is the critical inquiry. The trial court specifically considered Danielson v. Bank of Scandinavia, in which case the court noted that in determining the intent of the parties in this respect the search is not limited to the writing itself but is extended to "the subject matter and surrounding circumstances."
(1930), 201 Wis. 392, 230 N.W. 83.
Id. at page 398.
Although the trial court here received evidence of the circumstances leading up to and surrounding the execution of the release, the trial court nonsuited the plaintiff and concluded that a jury issue was not presented on this question of intent, at least as far as the evidence had been concluded through plaintiff's case. The trial court reasoned:
". . . Where the facts are undisputed as far as the words and the terms of the contract, or the release itself, then the court must make the determination as a matter of law as to whether or not the claim, or claims in this case, are incorporated or integrated within the prime meaning of the release. So it seems to me that the feelings of the Pokornys, and their understanding of the agreement, or alleged agreement, of the defendant with regard to these two items only becomes a jury issue in the event that the court as a matter of law decides or concludes that either this release is ambiguous in its terms, or that it is susceptible to various interpretations in its entire meaning, and then, and in that event only, would the matter be a jury issue. . . . As I read this release, plaintiff's exhibit one, and I have read it many times, I always come back to the conclusion that if the words are clear in their meaning, the subject matter that we are talking about falls squarely in the provision of the lease, `rental, operation, maintenance and use of the Colonial Kitchen.' It seems to: me that if the court concludes, and I am forced to conclude, and I do conclude, that these two claims fall squarely within the terms of the release, and specifically in the quoted portion that I just read, then there is no possible jury issue."
The May 9th release is unclear and ambiguous. That release is couched in terms of a general release yet it speaks only of satisfying all claims in tort and equity. The presently asserted claims are based on contract; the release makes no mention of them. Although the release states that it includes any matters relating to the "rental, operation, maintenance and use of the `Colonial Kitchen'" this description is ambiguous in terms of these two claims and does not point as a matter of law to the trial court's conclusion that the claims come squarely within the terms of the release.
In Danielson, the court cites Wigmore to the following effect:
". . . Difficulty arises when an attempt is made to determine what constitutes the part of the transaction which was in fact reduced to writing. Dean Wigmore has laid down three tests: (1st) whether a particular subject of negotiation is embodied in the writing depends wholly upon the intent of the parties thereto; 2d this intent must be sought in the conduct and language of the parties and in the surrounding circumstances; 3d in deciding upon this intent, the chief and most satisfactory index for the judge is found in the: circumstance whether or not the particular element of the alleged extrinsic negotiation is dealt with at all in the writing. If it is mentioned, covered, or dealt with in the writing, then presumably the writing was meant to represent all of the transaction on that element; if it is not, then probably the writing was not intended to embody that element of the negotiation. 5 Wigmore, Evidence (2d ed.), sec. 2430." (Emphasis supplied.)
Id. at pages 398, 399.
Here, in addition to the fact that the release makes no mention of the two claims now asserted by the plaintiff, the parol evidence presented indicates (1) that plaintiff's attorney never specifically mentioned the business-loss claim when negotiating this settlement and in fact was not even aware of the service fee claim; (2) the letter of April 22, 1966, from plaintiff's attorney to defendant's attorney, which immediately preceded the drafting of the release by defendant's attorney, makes no mention of these claims, but does specifically mention that plaintiff is giving up his claims for meals and bartending wages. The only reference in any of the correspondence to either of the claims here asserted by plaintiff is in the letter from plaintiff's attorney to defendant's attorney, dated October 27, 1965, eighteen months before the release was executed, in which letter plaintiff's attorney attempts to sort out the situation as it exists. Plaintiff's attorney merely states that plaintiff had told him defendant had promised to pay him for the business losses.
This parol evidence clearly raises the question of intent and the jury should have been afforded an opportunity to consider the question.
Plummer v. Leonhard is a recent case which involved two employment contracts, each of which purported to integrate all other agreements, and serve as a release of all prior claims. Plaintiff sought, however, to recover $4,320 he paid to an insurance agency. At the time the money was so paid, defendant was the sole proprietor of the agency and plaintiff was his employee. Plaintiff alleged the money was a loan; defendant alleged it was the return of an overdraw and in addition, pleaded the two employment contracts as a defense, contending they were releases of any prior claims, including the one sued on. The trial court sent the question to the jury which found for the plaintiff.
(1969), 44 Wis.2d 686, 172 N.W.2d 1.
On appeal, the defendant argued that it was error for the trial court to submit the question to the jury since the language of the "release" was "clear and unambiguous." This court reviewed the language of the agreements, most notably the following:
"`1. All former contracts and agreements both written and oral are abrogated and the parties hereto mutually release each other from any claim arising out of any previous contracts and this contract shall supersede and release any and all previous contracts.'"
Id. at pages 689, 690.
(Admittedly, this language is as "clear and unambiguous" as that involved in the present case.)
This court then stated:
". . . `As otherwise stated the rule is that, if an intent to limit the scope of the release appears, it will be restricted to conform to such intent. The foregoing general rule has been said to be merely a rule of construction and not a strict rule of law, and to be inefficacious to control a court as against the obvious intention of the parties.' 76 C.J.S., Release, p. 671, sec. 38. While great liberality is allowed in construing releases, the operation will be limited to those things within the contemplation of the parties at the time of execution of the release. See Rensink v. Wallenfang (1959), 8 Wis.2d 206, 213, 99 N.W.2d 196. The determination of intent of the parties to a release, and the scope of a release, is a question of fact for the jury.
"`The scope of a release, and the intention of the parties that the release shall cover particular claims, are for the jury or other triers of the facts; but where the facts are undisputed, the scope has been held to be for the court.' 76 C.J.S., Release, p. 721, sec. 72.
"Therefore, the issue is whether the trial court should have taken the question from the jury and ruled as a matter of law that the 1965 and 1966 agreements extinguished plaintiff's claim. We conclude the trial court properly decided the question should be determined by the jury."
Id. at page 692.
In addition, the consideration given for the release is an element that is properly considered. In this case, plaintiff expressly asserted (at least) claims totaling approximately $2,000 (bartending wages, $850; unpaid for meals, $500; kitchen fixture, $275; rent adjustment, $100; lamps, $350.32). Defendant paid a total of $725.32, the amount allegedly due on three of these five claims ( i.e., kitchen fixture, rent adjustment, and lamps). The correspondence expressly states plaintiff was giving up the bartending wages and unpaid meals ($1,350). The consideration, then, covers the precise amount allegedly due on three claims expressly mentioned, and plaintiff expressly gives up two claims. The consideration does not contain any allowance for the $11,000 in claims originally asserted by plaintiff in the instant action (the business losses were subsequently stipulated at $2,900).
Doyle v. Teasdale (1953), 263 Wis. 328, 57 N.W.2d 381; Jandrt v. Milwaukee Auto Ins. Co. (1949), 255 Wis. 618, 39 N.W.2d 698. While these cases dealt with mistake, and the opinion indicates inadequate consideration is strong evidence of mistake or fraud, there appears no good reason why the consideration given, while not controlling, should not be considered when attempting to determine the intent of the parties as to the scope of the release.
Given these circumstances, and viewing them in the light of plaintiff's attorney's testimony that he was never authorized to collect the specific claim for business losses (he was not even aware of the service fee claim) and his further inability to remember either the details of the negotiations (but he was aware these claims were never expressly mentioned therein) or the details of his conference with plaintiff and plaintiff's wife at the time the release was executed, it would not have been unreasonable for the trial court to have concluded that the release was not intended to cover these claims.
Therefore, we conclude that the trial court erroneously nonsuited the plaintiff. The trial court must be reversed and the defendant, who has not yet been heard from, allowed to present his case.
In reaching this conclusion we have considered the additional issue raised by defendant-respondent that the plaintiff's attorney had apparent authority to compromise the instant claim when negotiating the release here involved. We find this argument has no merit because (1) the release was executed by the plaintiff, not his attorney, and therefore plaintiff's intent, not his attorney's, is controlling; (2) there is no evidence that plaintiff's attorney even orally compromised the instant claims during any of the negotiations preceding the execution of the release; (3) there is no evidence of apparent authority to compromise such claims bottomed on some act of the principal (the plaintiff). In this case the plaintiff's testimony is that he merely mentioned the business-loss claim to his attorney, and his attorney testified he was never specifically authorized to collect it, and he was not aware of the business-loss claim. (4) There is no evidence of justifiable reliance by defendant to his detriment.
Even assuming defendant had established a compromise in fact, and apparent authority as a matter of law, it would be of no avail, since the defendant must establish that plaintiff's attorney had express authority to compromise his client's claim. There is no evidence of express authority here.
Fosha v. O'Donnell (1904), 120 Wis. 336, 97 N.W. 924.
By the Court. — Judgment reversed and cause remanded for further proceedings not inconsistent with this opinion.