No. 84-400
IN THE SUPREME COURT OF THE STATE OF MONTANA
1985
JAMES W. MARTIN,
Plaintiff and Appellant,
LAUREL CABLE TV, INC.,
a corporation,
Defendant and Respondent.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Charles Luedke, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Christopher P. Thimsen, Billings, Montana
For Respondent :
James P. P;lurphy,Billings, Montana
Submitted on Briefs: Dec. 20, 1984
Decided: March 13, 1985
Clerk
Mr. Chief Justice J. A. Turnage del-ivered the Opinion of the
Court.
Plaintiff appeals from a judgment of the District Court
of the Thirteenth Judicial. District, Yellowstone County,
following bench trial. The court dismissed Count I which
claimed rent due on a one-year holdover lease, provided that
defendant honor or replace two rent checks for a two-month
period previously delivered to but not negotiated. by plain-
t.iff. The court granted judgment for the plaintiff on Count
I1 for $280 for heating costs owed during a five-year lease
and the holdover period. we affirm.
Plaintiff appeals only the judgment on Count 11, asking
for a greater sum due as an equitable pro rata share of total
heat costs. Plaintiff claims error in permitting par01
evidence as basis for the judgment.
Issues:
I. Did the trial court violate the parol evidence rule
in a-dmitting a November 9, 1971, letter from plaintiff's
uncle to defendant's predecessor into evidence and oral
testimony regarding the effect of the letter?
2. Was the letter "material" to the case?
3. Without the letter, is there substantial credible
evidence to support the judgment?
In holding that the admission of the letter and testi-
mony did not violate the parol evidence rule, we affirm the
trial court's judgment. Because there was no error, the
remaining issues become moot.
Martin had inherited from his uncle, Paul Wold, a part
interest in commercial property in Laurel, Montana, and
bousht out remaining interests in 1972. In the summer of
1977, Hilliard, operator of Laurel Cable TV, Inc., assumed
the obligations on a lease agreement between his predecessor
and Martin's uncle for office and ground space for the cable
television operation.
Hill-iard and Martin negotiated for and entered into a
lease agreement on July 21, 1977, to become effective on
October 1 , 1977, which would run for five years to September
30, 1982. Martin's attorney prepared the lease and included
the same boilerplate "fa.ir and equitable pro rata share of
the total heat costs" language contained in the prior lease
agreement. The lease agreement for $100 a month under the
old lease ran to October 1, 1977, at which time the lease
agreement required $200 a month for the office. A separate
iease agreement to rent ground space for $50 monthly is not
part of this contest.
At issue in this appeal is Paragraph VI of the lease
agreement:
"The Lessee covenants and agrees it will
pay all its utility expenses, including
but not limited. to heat, electric power
and telephone; it being understood that
water shall be furnished by the Lessor;
however, heat on the building being
furnished from a central boiler, the
Lessee shall pay to the Lessor a fair and
equitable pro rata share of the total
heat cost."
At the trial Hilliard testified that he had pa-id the
heating bills according to the schedule of a letter from
Martin's uncle, dated November 9, 1971, to the prior cable
television company. Over a.n objection based on the par01
evidence rule, Hill.iard was permitted to testify that he and
Martin had a.greed to pay according to schedule. For whatever
reason, Hilliard did not pay for the period of September 1977
through September 1979 and admits owing for those years. he
record is clear that he made payments on a set schedule from
October 1979 through February 1982. Martin wrote a letter
dated February 28, 1982, noting the history of the payments
and demanding increased payment for ret-rospective and pro-
spective heat costs. Hilliard denies owing the add-itional
amounts set out according to Martin's formula.
Appellant contends that the District Court erred in
considering the letter and testimony which allegedly varied
the terms of the written lease agreement as it related to the
paragraph requiring payment of "a fair and equitable pro rata
share of the total heat cost." Appellant further contends
that the letter was "immaterial" to the case i l., irrele-
vant), and that without the letter, there is no substantial
credible evidence to support the judgment of the trial court.
Instead, appellant would have the court fol1.0~his formula to
determine the equitable pro rata share for the entire
five-year period.
RELEVANCY. Evidence is relevant if it has "any tenden-
cy to make the existence of any fact that is of consequence
to the determination of t.he action more probable or less
probable than it wou1.d have been without the evidence." Rule
401, Mont.R.Evid. Evidence is generally admissible if it is
relevant. Rule 402, Mont.R.Evid.
Here, the letter and testimony had the tendency to make
the reason for the payment schedule more or less probable.
Credibility of the witness is a matter for the fact finder,
but the relevant evidence is generally admissible, with some
exceptions such as the par01 evidence rule. Appellant al-
ludes to the remoteness in time from the November 9, 1971 ,
letter to the October 1, 1977, ]..ease agreement. The nature
of the evidence and the circumstances of the particular case
must control. Determination of remcteness is left to the
court's discretion, subject to review only if there is mani-
fest abuse. Preston v. McDonnell (Mont. 1983), 659 P.2d 276,
40 St.Rep. 297.
SUBSTANTIAL CREDIBLE EVIDENCE. Without the letter,
there is evidence that plartin accepted payment on a schedule
from October 1979 to February 1982 for set amounts during
specific cooler months according to appellant's own letter to
Eilliard of February 28, 1982. Appellant's bookkeeping
records corroborate the amounts paid. With testimony as to
the payment and acceptance, there is substantial cred-ible
evidence of a two and a half year course of conduct to sup-
port the judgment. There is also substantial credible evi-
dence that appellant never, from the commencement of the
lease agreement on October 1, 1977, until February 28, 1382,
submitted to respondent any bill, statement or demand. for
increased payments for heat from which respondent could
'
determine appel-lant s specific dema-nds.
PAROL EVIDENCE. The parol evidence rule is codified in
Montana under 5 28-2-905, MCA. In essence, when the terms of
parties' agreement are reduced to writing, the writing is
considered to contain all the terms, thus representing the
entire transaction. No evidence can be admitted of the terms
other than the writing itself. The rule, however, j s a rule
of exceptions: (1) when pleadings put in issue an alleged
mistake; (2) when parties dispute the validity of th.e agree-
ment itself; (3) when circumstances under which the agreement
was made or to which it relates or other evidence explain an
extrinsic ambiguity; or (4) when circumstances establish
ill-egality or fraud, then the trial court may deem parol
evidence admissible. Section 28-2-905, MCA .
The role of the judge is to construe an instrument
according t.o its terms or its substance, not to insert or
omit terms. Section 1-4-101, MCA. The judge, however, may
consider circumstances surrounding the execution, including
the situation of the subject of the instrument and of the
parties, to place himself in a position to interpret the
language. Sections 1-4-102 and 28-2-905 ( 2 ) , MCA. In con-
struing terms, evidence is admissible to show a local, tech-
nical, or otherwise peculiar signification used a.nd
understood by the parties. Section 1-4-10?, MCA.
The lower court properly considered the evidence of
circumstances under which the agreement was made to determine
what the parties meant by the language "fair and equitable
pro rata share of the total heat cost." The terms are sub-
ject to interpretation and may be proved by parol testimony.
Brown v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1982),
197 Mont. 1, 9, 640 P.2d 453, 457.
Anbiguity arises when a contract's wording or phraseol-
ogy is subject to two interpretations. The parol testimony
can be used to determine what the parties meant by use of
particular terms or phrases. Souders v. Montana Power (~ont.
1983), 662 P.2d 289, 290, 40 St.Rep. 583, 585. The court
properly accepted parol testimony to explain circumstances
surrounding the lease agreement, thus resol-ving the ambiguity
existing in the instrument as permitted by S 28-2-905(2),
MCA . Dussault v. Hjelm (Mont. 1981), 627 ~ . 2 d 1237,
We concur: