IN THE SUPREME COURT OF MISSISSIPPI
NO. 92-CA-01172-SCT
IN THE MATTER OF THE ESTATE OF THOMAS A. PARKER, DECEASED: CAROL
NORMAN FONTENOT, EXECUTRIX OF THE LAST WILL AND TESTAMENT OF
THOMAS A. PARKER, DECEASED
v.
JOHN DAVID DORCHAK AND DONNA RITTENER DORCHAK
DATE OF JUDGMENT: 10/14/92
TRIAL JUDGE: HON. WILLIAM L. STEWART
COURT FROM WHICH APPEALED: HARRISON COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT: ROBERT C. GALLOWAY
ERNEST G. MARTIN, JR.
ATTORNEY FOR APPELLEES: FRANK P. WITTMANN, III
NATURE OF THE CASE: CIVIL - CONTRACT
DISPOSITION: AFFIRMED - 5/9/96
MOTION FOR REHEARING FILED:
MANDATE ISSUED: 5/30/96
BEFORE PRATHER, P.J., ROBERTS AND MILLS, JJ.
PRATHER, PRESIDING JUSTICE, FOR THE COURT:
I. INTRODUCTION
¶1. Carol Fontenot, Executrix of the estate of Thomas A. Parker, appeals the ruling of the Chancellor of
Harrison County, Mississippi that interest payments due under a promissory note executed between the
deceased Parker and John Dorchak on July 13, 1989 should not begin accruing from the date of the
execution of said note, but rather beginning in October of 1993, the date set by the Chancellor for Dorchak
to begin possession of the real property securing said note. For the following reasons, this Court affirms.
II. STATEMENT OF THE FACTS
¶2. Thomas Parker died on October 25, 1990 at age 93. Parker's will left his estate in three equal shares to
Sally Norman, T. Rutledge Parker, and the children of his deceased daughter. In his later years, Tom
Parker had increasingly become beset by financial problems, and on May 11, 1988 Parker sold to his step-
son John Dorchak an option to purchase his residence, known as "Windy Acres", for $10,000 immediate
cash payment and $20,000 to be paid over time. This arrangement provided benefits to both parties, in that
it gave Tom Parker some much needed funds for his remaining years, and it gave John Dorchak an option
to purchase a residence once his stint with the Navy was up in 3 years.
¶3. The option contract, like all the documents relating to the land transaction, was drafted by Dorchak's
attorney, and the evidence at trial indicated that Tom Parker never told his children that he had made this
deal with John Dorchak. The option contract provided that the sales price of the house, once Dorchak
chose to enforce said option, was to be $225,000, of which, as noted above, Dorchak was to pay $10,
000 up front and an additional $20,000 regardless of when and if he chose to enforce the option.
¶4. On July 13, 1989, John Dorchak did in fact exercise the option to buy Windy Acres, executing a
promissory note for $215,000, which was secured by a deed of trust on the property. The warranty deed
gave title to John Dorchak and his wife subject to a life estate in the "cottage" of the property in favor of
Tom Parker. The promissory note, which is the central document in this appeal, contained language
obligating Dorchak to pay interest on the $215,000 indebtedness "from date", and, as will be seen, this
language has given rise to the main issue in the appeal; namely, on which date the Dorchaks were obligated
to begin making payments of interest on the note. The Executrix contends that the term "from date" indicates
that the interest on the indebtedness was to begin accruing on the date of the promissory note, but
Appellees point to the language further down on the promissory note, which provides that $195,000 of the
indebtedness and interest thereupon is to be paid by the Dorchaks in monthly installments beginning "thirty
days after the commencement of occupancy of the main residence by the undersigned promissors."
¶5. This language referring to the beginning of occupancy by the Dorchaks illustrates another feature of this
rather intricate land transaction: the Dorchaks were not obligated to begin making payments on $195,000
of the indebtedness until they chose to take possession of the property. Moreover, the documents
surrounding the transaction did not obligate the Dorchaks to begin occupancy at any given time. The trial
court remedied this omission by obligating the Dorchaks to begin occupancy and thus begin making
payments on the $195,000 on October 14, 1993. The Executrix was pleased with this ruling by the trial
judge but was not pleased with his ruling that the Dorchaks were not required to make payments of interest
on the $195,000 until they took occupancy of the property that same month.
¶6. The Executrix filed a Notice of Appeal on November 12, 1992 from the chancellor's ruling with regard
to the interest payments. The Executrix argues on appeal that the Dorchaks should be required to pay the 9
% interest on the $ 195,000 indebtedness which, she argues, should have been accruing between the date
of the promissory note in July, 1989, and the date set by the trial court for the beginning of payments-
October, 1993.
III. LEGAL ANALYSIS
A. WHETHER THE TRIAL COURT ERRED IN HOLDING THAT THE APPELLEES,
JOHN DORCHAK AND DONNA DORCHAK, ARE NOT LIABLE FOR INTEREST ON
THE PRINCIPAL BALANCE OF THE PROMISSORY NOTE DATED JULY 13, 1989,
FROM THE DATE OF THE NOTE UNTIL THE BEGINNING OF AMORTIZATION OF
THE NOTE IN OCTOBER, 1993.
¶7. In deciding what evidence may properly be considered in determining the date on which interest
payments should begin, it is crucial to determine whether or not the promissory note in question is
incomplete or ambiguous and thus whether under the Parol Evidence Rule extrinsic evidence may come in
to supplement said note. In Busching v. Griffin, 542 So.2d 860, 865 (Miss. 1989), this Court stated that
"That point implicates our Parol Evidence Rule. That rule provides that where a document is incomplete,
parol evidence is admissible to explain the terms but, in no event, to contradict them."
¶8. The promissory note provides as follows (with emphasis added to particularly relevant parts):
FOR VALUE RECEIVED, WE, the undersigned do promise to pay unto THOMAS PARKER, his
heirs, successors or assigns, at his place of residence, or at any other place as may be designated in
writing by the holder hereof, the sum TWO HUNDRED AND FIFTEEN THOUSAND AND
NO/100'S ($215,000.00) DOLLARS with interest at the rate of 9% per annum from date until
paid in the following manner:
$20,000.00 to be paid in 12 equal quarterly installments of $ 450.00 per quarter beginning on
October 1, 1989 and continuing on the 1st day of each quarter thereafter with the final payment of
principal and all accrued interest, if any to be paid on of before July 1, 1992, if not sooner paid.
$195,000.00 to be paid in 240 monthly installments of principal and interest in the amount of $1,
754.48 beginning thirty days after the commencement of occupancy of the main residence by
the undersigned promisors and continuing on the like day of each month thereafter until fully paid.
¶9. The Executrix asserts that the promissory note dated July 13, 1989 provides that there shall be interest
on the remaining $215,000 indebtedness "from date". The Executrix contends that this is clear and
unambiguous language which the trial judge should not have allowed to be contradicted by extrinsic
evidence. However, the Dorchaks note that, within the same promissory note, there is language which
provides that the they are not required to begin payments on $195,000 of the debt until thirty days after
they choose to begin occupancy thereof and on $20,000 until on or before June, 1992.
¶10. On first blush, this language may appear to be dispositive in favor of the Dorchak's position, given that
said language does not contemplate interest on $195,000 of the debt being paid until 30 days after the
beginning of occupancy, with an additional $20,000 being payable before July, 1992. However, one
possible interpretation of the language, urged by the Executrix, is that the "from date" language indicates that
the interest is to begin accruing on the date of the note, and is to be paid at some later date, in a manner
which the note failed to specify.
¶11. Problematic for the Executrix, however, is that fact that the specific amounts set out in the payment
provision are not consistent with interest accruing from the date of the note. The Executrix claims that this is
merely an omission rather than an ambiguity, and that this Court should set a manner and time for the
payment of accrued interest. This argument, however, is unconvincing. The payment provision of the
contract clearly purports to set out the manner for the payment of the entire debt, and, as such, an
ambiguity is created between the "9% per annum from date" language in the initial provision of the note and
the later, more specific, payment provision.
¶12. In his Supplemental Opinion and Ruling, the Chancellor made brief note of this provision in the note,
but he then looked to extrinsic evidence as to the parties intent, most notably with regard to an option
contract which was drafted over one year prior to the date of the note. The Chancellor was without
discretion to so consider extrinsic evidence, unless he first found that the promissory note was ambiguous
under the Parol Evidence Rule. The Chancellor's ruling makes no mention of a finding of ambiguity in the
note prior to looking at extrinsic evidence, and as such, although well-reasoned, does not employ the
proper legal analysis. Accordingly, it is for this Court to conduct a de novo review of the facts, taking into
consideration the applicable considerations under the Parol Evidence Rule.
¶13. In conducting a de novo review, this Court must also be cognizant of the well-known canon of
contract construction that ambiguities in a contract are to be construed against the party who drafted said
contract. Pursue Energy Corp. v. Perkins, 558 So.2d 349 (Miss. 1990). This canon of contract
construction is probably the Executrix's strongest point of argument in this case, given that this Court should
be hesitant to grant the Dorchaks relief from a provision which was of their own making.
¶14. There are, however, also canons of contract construction which favor the Dorchaks, most notably the
canon that specific clauses in a contract are to be given greater weight than general ones. See: Nicholas
Acoustics & Specialty Co. v. H & M Const. Co. Inc., 695 F. 2d 839 (C.A. Miss. 1983). In addition,
there is a substantial amount of extrinsic evidence in this case which leads to the conclusion that the parties
did not contemplate the accrual of interest payments in the manner urged by the Executrix.
¶15. After conducting said de novo review, and considering the competing canons of contract construction,
it is apparent that the judgment reached by the trial judge was correct, although his legal analysis may have
been incomplete. The language of the promissory note is in fact ambiguous, and a consideration of the
extrinsic evidence, as well as of the note itself, leads inescapably to the conclusion that the "from date"
language, which forms the basis of this entire appeal, should not be interpreted in the manner which the
Executrix asserts.
¶16. Of paramount importance in reaching this decision is the clear inference from the promissory note that
the payments of the $20,000 plus interest, and of the $195,000 plus interest, were contemplated by the
parties as being all of the payments due under said note. There is no evidence anywhere in the note, nor in
any other extrinsic evidence in this case, that there were any additional payments contemplated between the
parties beyond the very specific amounts set out in the note.
¶17. In negotiating a business transaction of this nature, the parties will inevitably place special importance
on the clause which sets out the specific amounts to be paid. There is nothing in the language of the note to
indicate that the specific payment clause was intended to be only a partial statement of the amounts to be
paid. The Executrix would have us conclude that the parties somehow forgot to include a provision
whereby the Dorchaks would have to pay tens of thousands of dollars in accruing interest. However, this is
not a reasonable inference from the language of the note, even considering said note, as we must, in the light
most favorable to the non-drafting party.
¶18. In addition to the language of the note itself, there is compelling extrinsic evidence that the payments
set out in the specific payment clause of the note represent the true intent of the parties, as the Dorchaks
claim. In his Supplemental Opinion and Ruling, the Chancellor gave very substantial weight to the fact that
on May 19, 1988, the parties had executed an option contract which provided that:
"1. The purchase price for the property shall be . . . $ 225,000, which shall be paid on the exercise of
this option as follows:
a. During the first three years purchasers will pay all taxes and insurance on dwelling and also assign
to the seller a life insurance policy in the amount of $ 225,000. During the first three years, these will
be the only payments due on said real property."
¶19. This extrinsic evidence, which the Chancellor cites in support of his ruling, is very convincing evidence
in favor of the Dorchaks. The option contract is somewhat inconsistent with the promissory note drafted
over a year later, indicating that the promissory note was probably intended to supersede, rather than
supplement, the option contract.
¶20. In spite of the differences between the option contract and the note, however, the option contract is
nevertheless an important indicator of the parties' intent, given that said contract contemplated a three-year
period in which only small, maintenance-type expenses would be paid. The option contract illustrates that
the parties very likely did not contemplate that Dorchak would be liable for interest accruing on the note for
the period in which he was serving in the Navy and thus unable to live on the property. This is logical, given
that one would ordinarily place a lesser value on real property during a period in which one was unable to
make use of it.
¶21. Taking into consideration all relevant factors, it is clear that the trial judge reached the correct
conclusion in determining that interest payments on the note in question should not begin accruing on the
date of the note. Accordingly, the judgment should be affirmed with regard to this point of error.
B. WHETHER THE TRIAL COURT ERRED IN ALLOWING AND CONSIDERING
THE TESTIMONY OF JOHN DORCHAK CONCERNING INTERPRETATION OF THE
PROMISSORY NOTE, AND IN EFFECT OVERRULING APPELLANT'S OBJECTION
AND MOTION TO STRIKE THAT TESTIMONY, AS BEING IN VIOLATION OF THE
PAROL EVIDENCE RULE.
¶22. A second issue on appeal is whether the trial court erred in allowing John Dorchak to testify as to the
intention of the parties with regard to the time at which interest payments on the note were to begin
accruing. In making his ruling, the Chancellor considered the testimony of Dorchak, in which he testified that
it was the intention of the parties that no interest payments were to accrue on the $195,000 portion of the
note for three years, that is, until Dorchak was released from active duty service in the Navy. The Executrix
argues on appeal that this testimony should have been excluded under the Parol Evidence Rule, given that
the promissory note in question was clear and unambiguous and thus no extrinsic evidence, especially
personal testimony of an interested party, should have been allowed to add to or contradict the writing.
¶23. The Executrix, however, did not object to the testimony of Dorchak on the grounds that it violated the
Parol Evidence Rule at the time it was given, though she did object at the trial court level on a later date.
This brings us to an issue which has not been squarely addressed by this Court, at least under a set of facts
similar to these. Namely, the issue arises as to whether evidence which was not objected to originally may
be later disregarded at the trial court level via a motion to exclude testimony if found to be in violation of the
Parol Evidence Rule. The Executrix cites 81 A.L.R. 3d 249, 257 (1977) for the proposition that:
It is widely held or recognized in the modern cases, frequently on the ground that the parol evidence
rule is one of substantive law rather than of evidence, that any evidence violative of the parol evidence
rule, even though admitted without objection, must be disregarded.
¶24. The Dorchaks, on the other hand, cite the Mississippi case of Service Fire Ins. Co. v. Craft, 67
So.2d 874 (Miss. 1953), for the proposition that the Executrix's failure to object to Dorchak's testimony
during trial should preclude the raising of the issue on appeal. A closer reading of Craft, however, indicates
that said case held that a party could not "successfully urge for the first time on appeal (emphasis added)
that the oral testimony contradicted the written instrument and the amount recited therein." Craft, 67 So.2d
at 874. This holding in Craft is not applicable to the present case, given that the Executrix filed with the trial
court on September 10, 1992 a motion to exclude the testimony of John Dorchak, and thus raised the
objection prior to the beginning of the appellate process.
¶25. In the motion to exclude testimony, the Executrix objected to Dorchak's testimony on the grounds that
consideration thereof would be violative of the Parol Evidence Rule. This objection was made subsequent
to the Chancellor's original Findings and Rulings of the Court, which were issued in February of 1992, but it
was made more than one month prior to the Chancellor's Supplemental Opinion and Ruling, which was
issued on October 14, 1992. Thus, the Chancellor had notice of the objection of the Executrix to the
testimony of Dorchak on grounds of the Parol Evidence Rule prior to making the ruling from which this
appeal is taken.
¶26. On these facts, we distinguish the present case from Craft, given that Craft prohibits a party from
raising for the first time on appeal an objection to evidence on grounds that it is in violation of the Parol
Evidence Rule. This Court is thus left to decide the issue of whether or not evidence admitted without
objection may later be contested at the trial court level, and, if found to be in violation thereof, disregarded
upon proper motion. We are further left to decide whether the raising of said objection prior to the ruling
from which the appeal as taken preserves said issue for appeal. We answer both questions in the
affirmative.
¶27. Given that the Parol Evidence Rule is a rule of substantive law, a party should not lose the right to
claim the benefit of said law merely because he failed to make a contemporaneous objection at the time the
evidence was offered. We thus hold that, so long as evidence violative of the Parol Evidence Rule is
properly objected to prior to the consideration of said evidence by the trier of fact, such evidence should
properly be disregarded by said trier of fact in accordance with the law. In the case of a trial by jury, a
limiting instruction instructing the jury to disregard said evidence should be granted by the trial judge on
proper motion prior to the submission of the case to the jury. In the context of the present case, the
objection to the testimony of Dorchak was made prior to the consideration of such testimony by the
Chancellor as trier of fact in his Supplemental Opinion and Ruling and was thus timely.
¶28. At the same time, however, we let stand the holding in Craft that a party may not raise an objection to
evidence on the grounds that it is violative of the Parol Evidence Rule for the first time on appeal. This Court
also holds that the Executrix validly preserved the objection to the testimony of Dorchak for appeal by
moving to exclude said testimony prior to the trial judge's ruling from which this appeal is taken.
IV. CONCLUSION
¶29. Having held that the Chancellor should have considered the objections of the Executrix in his
Supplemental Opinion and Ruling, this Court finds, as discussed earlier, that the promissory note in question
is nevertheless ambiguous. As such, the Parol Evidence Rule does not preclude the consideration of
extrinsic evidence such as the testimony of Dorchak to explain, but not contradict, the promissory note. The
testimony of Dorchak was not in conflict with the promissory note, but rather served to explain the
ambiguities therein. This Court thus finds that, although the Chancellor used an improper analysis in
considering the testimony of Dorchak without first having found that the promissory note in question was
ambiguous, his eventual consideration of the testimony of Dorchak was nevertheless proper.
¶30. Accordingly, the judgment of the chancellor is affirmed.
¶31. JUDGMENT IS AFFIRMED.
LEE, C.J., SULLIVAN, P.J., PITTMAN, BANKS, ROBERTS, SMITH AND MILLS, JJ.,
CONCUR. McRAE, J., CONCURS IN RESULT ONLY.