NO. 88-46
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
PIPE INDUSTRY INSURANCE FUND
TRUST OF LOCAL 41,
Plaintiff and Respondent,
-vs-
CONSOLIDATED PIPE TRADES TRUST
OF MONTANA,
Defendant and Appellant.
APPEAL FROM: District Court of the Second Judicial District,
In and for the County of Silver Bow,
The Honorable Arnold Olsen, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Anderson, Brown, Gerbase, Cebull, Fulton, Harman and
Ross; Michael P. Heringer, Billings, Montana
For Respondent:
Burgess, Joyce & Whelan; Thomas F. Joyce, Butte,
Montana
Submitted on Briefs: May 19, 1988
Decided: August 8, 1988
Filed: R G 8 1988'
U
Clerk
Mr. Justice R. C. McDonough delivered the Opinion of the
Court.
Consolidated Pipe Trades Trust of Montana
,
(Consolidated) appeals the Second Judicial District Court's
decision in favor of Pipe Industry Insurance Fund Trust of
Local 41, (Pipe Industry). We affirm.
Consolidated presents the following issues for review:
(1) Whether the Court erred when it instructed the jury
that it could not consider any evidence outside the terms of
the agreement?
(2) Whether the Court erred when it refused testimony
concerning the negotiations of the reciprocity agreement?
(3) Whether the Court erred when it instructed the jury
on the legal principal of waiver?
(4) Whether the verdict is supported by substantial
evidence?
(5) Whether the Court erred when it awarded prejudgment
interest?
(6) Whether the prejudgment interest was calculated
properly?
The relevant facts are as follows: Both parties collect
funds from employers of union members under the jurisdiction
of their respective locals. The funds finance trusts used to
provide insurance plans for union members.
In 1980, members of the Butte local working under the
jurisdiction of the Billings local faced ineligibility under
both the Butte local's insurance and the Billings local's
insurance. To solve this problem, Consolidated, representing
the Billings local, agreed to collect funds for members of
the Butte local working under the Billings local's
jurisdiction. The funds collected by Consolidated were to be
remitted to Pipe Industry for the trust fund. administered by
Pipe Industry. Pipe Industry agreed to do the same for
members of the Billings local working under the jurisdiction
of the Butte local.
To effectuate this agreement, the parties executed a
written document. The pertinent parts of this document read
as follows:
2. Each Trust Fund party hereto shall collect
and receive the Employer contributions due for the
work of each Temporary Members who has signed and
deposited a transfer authorization card with the
transferring fund, and shall keep separate accounts
of these collections.
3 . No party shall be liable to any other
party for any sums whatsoever except to the extent
of contributions made on Temporary Members that are
in fact received. Each party shall bear all
expenses of collection, administration or
accounting which it shall incur hereunder, and
shall charge no part thereof to any other party.
4. Each Trust Fund party hereto shall make an
accounting monthly of the monies received by it
during the period just ended on behalf of any
Temporary Members and shall remit to the Temporary
Members' Home Fund all Employer contributions
received by it on behalf of its Temporary Members.
Said remittance must be made within thirty ( 3 0 )
days after the close of the calendar month and
within thirty ( 3 0 ) days of termination of this
Agreement as provided in Sections 11 and 12 hereof.
However, any Temporary Member may direct the
Transferring Fund in writing, with 30 days notice,
that contributions on his behalf not be returned to
his Home Fund.
10. This Agreement may be modified or amended
at any time by an instrument in writing executed by
the parties hereto. Any party hereto may at any
time withdraw from this Agreement by serving by
Certified Mail on the other party hereto (at the
address listed on the last page hereof) a notice of
its intention to withdraw, not less than sixty (60)
days prior to such date of withdrawal. Upon the
effective date of withdrawal by any party hereto,
this Agreement shall be terminated.
In 1981, the parties began performance under the
agreement. Consolidated collected funds from employers of
Butte workers at the rate of $1 per hour of work. This rate
equaled the rate Consolidated collected for the Billings
local's members. However, Consolidated remitted only 85e of
each dollar collected for Butte workers to Pipe Industry
because this was the amount needed to maintain coverage under
the trust administered by Pipe Industry. Clause four of the
written contract, however, provides that all funds collected
shall be remitted.
On September 1, 1982, the amount needed to maintain
coverage under Pipe Industry's trust increased to $1 per wage
hour. Consolidated continued to collect $1, and increased
the amount remitted to Pipe Industry from 85C to $1. Thus,
during this period, Consolidated complied with clause four of
the contract.
On September 1, 1983, Consolidated's rate rose to $1.45,
and employers of Butte workers under Consolidated's
jurisdiction began to pay this rate. However, Consolidated
continued to remit only $1 to Pipe Industry.
On August 1, 1984, Pipe Industry's rate increased to
$1.15, and Consolidated began to remit that amount from the
$1.45 it continued to collect for Butte workers. After
September 30, 1984, no members of the Butte local worked
under the jurisdiction of the Billings local. Thus, no funds
are disputed after that time.
On March 28, 1986, Pipe Industry filed suit against
Consolidated claiming that Consolidated breached the parties'
agreement by not remitting the full amount it collected for
Butte workers. The claim went to trial before a jury in
Butte, and the jury verdict held Consolidated liable for the
difference between the amounts collected and the amounts
remitted. Consolidated unsuccessfully claimed that Pipe
Industry had waived its right to the funds awarded by the
jury. Consolidated also unsuccessfully claimed that an
addendum to the agreement modified the contract to allow its
collection procedures. An award of interest accompanied the
judgment for Pipe Industry.
I.
Consolidated claims that the lower court erred by giving
the following instruction:
Whenever the terms of an agreement have been
reduced to writing by the parties, it is to be
considered as containing all those terms.
Therefore there can be between the parties no
evidence - - terms - - agreement other than
of the of the
the contents of the writing except that other
evidence may be offered to explain an extrinsic
ambiguity in the written agreement. It is for the
judge to construe a written agreement giving effect
to all of its terms and to determine if an
extrinsic ambiguity exists. I have concluded that
there is no extrinsic ambiguity in Exhibit 3, the
original reciprocity agreement made by the parties,
and that agreement required that all monies
received from employers by the defendant trust were
to be remitted within 30 calendar days after the
close of each calendar month to the plaintiff
trust. (Emphasis added. )
Consolidated argues that this instruction erroneously
precluded the iury from considering extrinsic evidence
regardless of its source. More specifically, Consolidated
claims prejudice because the instruction prohibited the jury
from considering extrinsic evidence of its waiver theory.
Thus, according to Consolidated, the above instruction
mislead the jury and prejudiced its case. Pipe Industry
responds that evidence offered in the lower court on waiver
was properly admitted to show waiver, and properly excluded
to show variation of the contract terms. We agree.
The instruction set out above paraphrases parts of S
28-2-905, MCA. This Court's decisions interpreting §
28-2-905, MCA, and the language of the statute itself,
demonstrate that par01 evidence may be admitted for one
purpose, but not for another. See, e .g., Martin v. Laurel
Cable T.V., Inc. (Mont. 1985), 696 P.2d 454, 42 St.Rep. 314;
Rase v. Castle Mountain Ranch, Inc. (Mont. 1981), 631 P.2d
680, 38 St.Rep. 992. In this case, despite ~onsolidated's
contentions to the contrary, extrinsic evidence was taken and
argued at trial. During defendant's closing, Consolidated's
counsel summarized this evidence:
Billings has submitted evidence that shortly
after the reciprocity began between these two
people -- two trusts in 1981, it sent an addendum
to the reciprocity agreement. And Butte maintains
that out of the large volume of mail that it
receives, including correspondence and numerous
checks, that it did not receive this addendum. The
evidence shows that Billings Trust sent this
addendum, at the same time it sent it to 15 other
Trusts who it had reciprocity agreements with at
the same time. This is the only piece of mail that
has been claimed to have never been received. The
addendum clearly showed how much Billings planned
to transfer to Butte. But even without the
addendum, Billing's conduct showed that it was
always going to pay the lower amount which Butte
was fully aware and for which they accepted without
complaint.
Therefore, by its conduct, Butte assented to
the change of the terms of the reciprocity
agreement, and agreed to accept those terms.
In summary, from day one, the Billings Trust
paid the Butte Trust sufficient funds to provide
insurance coverage for its members of local 41 in
Butte when they worked within the jurisdiction of
Local 30 in Billings. These payments almost
amounted to $91,000 over a three-year period.
And because the Plaintiff continued to accept
these numerous payments without protest, they
either waived their right to claim a higher
contribution rate at the time, or they agreed to
accept the change in the reciprocity agreement and,
therefore, Billings was only required to remit the
amount that it did.
For these reasons, the Defendant, Consoldiated
Pipe Trades Trust respectfully requests that you
return a verdict in its favor and award no money to
the Plaintiff.
The foregoing shows that the dispute hinged not on parol
evidence going to prove the effect of the agreement's terms.
Rather, the dispute concerned whether the parol evidence,
-
which was admitted, showed either waiver on the part of Pipe
Industry in enforcing the undisputed terms of the contract,
or subsequent amendment of clause four by the addendum.
This Court must review jury instructions keeping in mind
the evidence offered. Baker National Bank v. Lestar (1969),
153 Mont. 45, 52, 453 P.2d 774, 777. Our review must also
insure that the lower court provided instructions adaptable
to the objecting party's theory on the case when credible
evidence supports the theory. Rix v. General Motors Corp.
(Mont. 1986), 723 P.2d 195, 198, 43 St.Rep. 1296, 1298.
Jury instructions on appeal are to viewed in their
entirety, and in light of the evidence in the case. Rushnell
v. Cook (Mont. 1986), 718 P.2d 665, 669, 43 St.Rep. 825, 830.
Viewing the instructions in this case in their entirety, we
hold that: the lower court's instruction was compatible with
the evidence in the case; that the arguments of counsel and
the addition of instructions on waiver consistently presented
the waiver issue apart from the prohibition on altering the
terms of the contract by parol evidence; and that allowance
of an instruction on waiver, and allowance of evidence on
waiver, provided Consolidated with an adequate means to
present its theory on waiver. More succinctly, our
conclusion on this issue is that an instruction prohibiting
consideration of parol evidence on what the contract language
required for performance may coexist with an instruction and
evidence on waiver. The closing argument of defense counsel
demonstrates that this fact was not lost to appellant, and we
must presume it was also not lost to the jury. See, e.g.,
Bass v. Barksdale (Tenn. App. 1984), 671 S.W.2d 476, 489
(reviewing court presumes jury understood instructions).
Thus, we affirm on this issue.
Consolidated's argument on issue two is largely settled
by issue one. The argument assigned by appellant as issue
two is that the lower court erred in not allowing evidence on
negotiations of the contract. Consolidated argues that the
testimony of witness Cliff Powell should have been allowed as
relevant to waiver.
Consolidated's faulty logic fails to support this
argument. Section 28-2-905, MCA, prohibits evidence of the
terms of an agreement:
except in the following cases:
(a) when a mistake or imperfection of the
writing is put in issue by the pleadings;
(b) when the validity of the agreement is the
fact in dispute.
(2) This section does not exclude other
evidence of the circumstances under which the
agreement was made or to which it relates, as
described in 1-4-102, or other evidence to explain
an extrinsic ambiguity or to establish illegality
or fraud.
The objection in the lower court concerned a question
solicitting information on contract negotiations. Defense
counsel stated in the defense's offer of proof that:
MR. HERINGER: Your Honor, in pre-trial
agreement I provided the Court with the case law
that parole evidence is admissible when there is a
question of waiver before the Court. And this goes
to the fact of what was waived and why it was
possibly waived by them.
That question simply asks what were the terms
of the agreement as to what Mr. Powell understood
of them.
As shown by resolution of issue one, the distinction
between waiver and par01 evidence allowed to establish a
variance from the contract's terms explains and justifies the
lower court's decision to sustain the objection to Mr.
Powell's testimony on the contract negotiations. Thus, we
affirm on issue two.
Consolidated contends that the lower court erred by
refusing to give one of the instructions on waiver offered by
Consolidated, and by giving an instruction offered by Pipe
Industry on waiver. The specific contention is that the two
waiver instructions confused and mislead the jury.
Pipe Industry's instruction on waiver reads as follows:
You are instructed a party may waive a right
afforded to him by contract. The party asserting a
waiver, the defendant in this case, has the burden
of proving waiver.
A waiver is defined by law as a voluntary and
intentional relinquishment of a known right.
Waiver must be based on the words or conduct of the
party against whom waiver is claimed, in this case,
the plaintiff. The defendant must prove language
or conduct by the plaintiff showing in an
unequivocal manner that the plaintiff voluntarily
and intentionally relinquished its right to receive
the full payments as provided by the contract.
Mere failure to take steps to enforce a legal right
under a contract in a timely manner is not, by
itself, sufficient to constitute proof of waiver.
Consolidated objected to the above instruction
contending that the last sentence inaccurately stated the law
and effectively negated its waiver theory. The same
assertions are made on appeal. Pipe Industry answers that
the last sentence served the purpose of distinguishing
between waiver and other defenses which preclude suits based
on failure to bring them in a timely manner, i.e., laches or
statute of limitations.
The last sentence constitutes a correct statement on the
law of waiver. See,e.g., Boles v. Ler (Mont. 1986), 719 P.2d
793, 43 St.Rep. 1035 (vendor's mere failure to return late
payments did not preclude vendor from enforcing foreclosure
rights). Pipe Industry, as well as Consolidated, has the
right to instructions supporting its theory of the case.
Pipe Industry's theory was that Consolidated failed to prove
waiver. Evidence supported this contention, and
distinguishing waiver from other prohibitions on bringing
causes of action furthered understanding of this theory.
Thus, under the circumstances of this case, the lower court
acted within its discretion in giving the instruction.
Consolidated argues that the lower court erred by
failing to give the instruction on waiver it offered. The
offered instruction was set out in Thiel v. Johnson (Mont.
Industry responds that the instruction in Thiel was not
approved by this Court because the issue in Thiel on this
instruction was settled by the appellant's failure in Thiel
to object to the instruction in the lower court. See Thiel.
711 P.2d at 8 3 2 . We agree that a variation from the
instruction set out in Thiel is not a violation of any rule
from Thiel. This Court in Thiel specifically refused to
review the validity of part of the instruction. Thus, Thiel
does not control.
The refused instruction reads as follows:
You are instructed that when a payment for a sum
certain is due pursuant to a contract, that payment
may be waived by one who is to receive the payment.
The waiver may be either express or implied.
An implied waiver occurs when a contract payment is
received and the amount paid is less than contract
terms call for and the person who is to receive the
payment makes no attempt to collect the full amount
within the [sic] reasonable time. A reasonable
time is presumable a short time after payment is
due, and before the next payment is due.
An express waiver occurs when one who is to receive
payment tells the one who is to make the payment
either orally or in writing, that the full amount
of the payment need not be made. An express waiver
must continue for the period of time specified by
the one who is to receive the payment.
The District Court gave two instructions on waiver which
adequately covered the applicable law. The District Court
refused the instruction offered by appellant holding it
inapplicable to the case.
No error may be predicated on the trial court's failure
to give an instruction when other instructions adequately
cover the applicable law, or where the pleadings and evidence
show that the offered instruction is inapplicable. Doble v.
Lincoln County Title Co. (Mont. 1985), 692 P.2d 1267, 1271,
42 St.Rep. 128, 132. We refuse to pass on the sufficiency of
the Thiel instruction offered in this case because the two
waiver instructions given by the Court adequately address the
law on waiver in light of the evidence presented at trial.
A further contention on this issue concerns the giving
of two waiver instructions. Consolidated claims that the
lower court erred because the two instructions conflict and
confuse on a material issue. Consolidated also claims they
are repetitive.
These two contentions by Consolidated appear to be
mutually exclusive, i.e., the presence of facts supporting
the one appears to exclude facts supporting the other. We
have reviewed both contentions and find merit in neither.
We have already set out the instruction on waiver
offered by Pipe Industry, and given by the trial court. The
second instruction on waiver, offered by Consolidated, and
given by the lower court, reads as follows:
A party may waive the benefit of a contract.
Waiver means that a person is precluded from
asserting a right, a claim or privilege because he
has previously knowingly, voluntarily and
intentionally given up that right, claim or
privilege.
Waiver must be a voluntary act and implies a
knowing choice by a person to give up something of
value or forego a right or advantage which he might
have demanded and insisted upon. It only involves
the conduct of the party against whom the waiver is
asserted and consideration is not necessary for the
doctrine to apply, nor need there be a detriment or
harm to the party claiming the waiver.
A person may waive a right, claim or privilege only
if he has knowledge of the facts which are material
or important to his decision. This knowledge may
either be actual or constructive. Constructive
knowledge is knowledge which one has the
opportunity to acquire by the exercise of ordinary
care and diligence, whether or not such knowledge
is, in fact, acquired. If a person is ignorant of
a material or important fact, that is, if he lacks
actual or constructive knowledge, a waiver is not
possible.
This instruction properly covers areas left out of the
instruction offered by Pipe Industry. Conversely, the
instruction offered by Pipe Industry covers areas left out of
this instruction. As pointed out by Consolidated, other
portions are simply repetitive, not conflicting. See,e.g.,
Pizza v. Wolf Creek Ski Development Corp. (Colo. 1986), 711
P.2d 671, 681 (instructions not essentially identical are not
unduly repetitive). Thus, this contention fails, and we
affirm on this issue.
IV.
Consolidated contends that substantial evidence does not
support the jury's verdict. In particular, Consolidated
contends that evidence it presented conclusively demonstrates
that Pipe Industry waived its rights under the contract.
We disagree. To counter Consolidated's argument that
Pipe Industry knowingly and intentionally relinquished the
right to a portion of payments guaranteed under the contract,
Pipe Industry presented evidence showing that other
considerations influenced its decision to forestall
prosecution for payment. The verdict demonstrates that the
jury rejected Consolidated's argument on the basis of this
evidence. Inasmuch as substantial credible evidence supports
the verdict, we must affirm on this issue. Clark v. Norris
(Mont. 1987), 734 P.2d 182, 184-85, 44 St.Rep. 444, 445.
v.
Consolidated claims that the lower court erred by
awarding prejudgment interest. To support this contention,
Consolidated cites portions of § 28-1-1202(2), MCA, and
§ 27-1-114, MCA.
Section 28-1-1202(2), MCA, reads as follows:
An offer of payment or other performance duly made
stops the running of interest on the obligation and
has the same effect upon all incidents of the
obligation as a performance thereof, whether or not
the title to anything offered is transferred to the
creditor.
Consolidated contends this statute avails it of a defense to
interest on the difference between the amount due under the
contract, and the amount actually paid under the contract.
The specific contention is that:
Consolidated offered and Pipe Industry accepted
these payments as payments in full.
This thinly disguised repetition of Consolidated's faulty
waiver argument fails to persuade this Court to reverse on
this issue.
Consolidated makes the same argument in regard to 5
27-1-214, MCA, which reads:
Accepting payment of the whole principal, as such,
waives all claim to interest.
This assertion also fails because the jurv verdict found that
Consolidated did not pay the whole principal.
We hold interest was properly awarded under § 27-1-211,
MCA . See Price Building Services, Inc. v. Holms (Mont.
1985), 693 P.2d 553, 42 St.Rep. 84. Thus, we affirm on this
issue.
VI .
Consolidated contends that the lower court improperly
calculated the interest, and Pipe Industry concedes the
point. Thus, we remand only for the purpose of a proper
calculation as agreed by the parties.
Justice