stating that it is a “well-established principle[] of contract law” that a court “must consider the sense and meaning of the words used by the parties . . . in their plain, ordinary meaning” (citation omitted)
How later courts described this case
- stating that it is a “well-established principle[] of contract law” that a court “must consider the sense and meaning of the words used by the parties . . . in their plain, ordinary meaning” (citation omitted)
- recognizing that the parol evidence rule does not prohibit the court's acquainting itself with the circumstances surrounding the making of the contract
- “[T]he first rule of interpretation of a contract is to give the language employed the meaning which the parties intended.”
- “It is a well settled rule in construing a contract that the intention of the parties is to be gathered . . . from the whole context of the agreement.”
Written by the judges who cited it.
The opinion
Jerry D. Pinson, Special Justice, dissenting. The real issue in this case is whether the trial court abused its discretion and committed error in finding the Griffin guaranty to be ambiguous and therefore allowing parol evidence to be admitted. The majority construed the guaranty agreement as a whole and found it clear and unambiguous. In coming to this conclusion, the majority found the term “outstanding debt” as used in the Griffin guaranty meant the same as “total indebtedness”, as used in the other three guaranties. The majority court gave a tremendous amount of weight to the fine print boiler plate provisions of the form guaranty.
This court has stated on numerous occasions that the initial determination of the existence of an ambiguity rests with the court and if ambiguity exists, then parol evidence is admissible and the meaning of the term becomes a question for the fact finder. C. & A. Construction Company v. Benning Construction Company, 256 Ark. 621 , 509 S.W.2d 302 (1974). All four guaranty agreements were prepared from the same form. All four guaranties were signed within one day of each other. Why was the typed portion of Griffin’s guaranty different than the other three if they all meant the same? Edward L. Holt, President of First National Bank of Crossett, the appellant, testified that a representative of the bank delivered the guaranty to Griffin to execute. There was also testimony to indicate that the bank prepared all four guaranties. There is absolutely no evidence that Griffin prepared the guaranty. It is a well established rule of contract law that documents that contain ambiguities will be construed against the party who drafted them. Barton v. Perryman, 265 Ark. 228 , 577 S.W.2d 596 (1979). The Court of Appeals stated in B.F. Shamburger v. The Union Bank of Benton, 8 Ark. App. 259 , 650 S.W.2d 596 (1983) that the rule in Arkansas with respect to an interpretation of a guaranty agreement is that the guarantor is entitled to have his undertaking strictly construed and he cannot be held liable beyond the strict terms of his contract.
The majority’s rationale in the instant case that the fact that Griffin was at the time, and had been for over 20 years, Chairman of the Board of another bank and a respected attorney is much more supportive of the fact that Griffin would discern the difference in the terms “outstanding debt” and “total indebtedness”. Also, it was very rational for the Griffin guaranty to be less than the other three guarantors in that Griffin was the only one of the four guarantors that wasn’t a full time employee of the company.
The record clearly reflects that an ambiguity was created by the appellant in using the term “outstanding indebtedness” in appellee’s guaranty and the term “total indebtedness” for the other guarantors in the same transaction. Parol evidence is admissible to resolve an ambiguity in a contract to determine that particular meaning the parties intended the ambiguous provision to have. Shamburger v. The Union Bank of Benton, supra.
I am of the opinion that the trial court did not abuse its discretion and commit error in finding the Griffin guaranty to be ambiguous and therefore allowing parol evidence to be admitted. I respectfully dissent.
Glaze, J. joins in this dissent.