Matherly v. Hanson

CARTER, Justice

(dissenting).

I dissent.

Ordinarily, the legislature uses words in statutes in the same sense that they have been applied by the courts. Farmer’s Drainage District v. Monona-Harrison Drainage District, 246 Iowa 285, 289-90 , 67 N.W.2d 445, 448 (1954); Anderson v. Jester, 206 Iowa 452, 462 , 221 N.W. 354, 359 (1928). Particularly, where words and phrases have acquired an established meaning in a particular area of the common law, they are to be accorded that meaning when employed in a statute dealing with the same subject matter. Farmer’s Drainage District, 246 Iowa at 289-90 , 67 N.W.2d at 448 . The context within which the terms “unwritten contracts” and “written contracts” are used in Iowa Code section 614.1 relates to the commencement of civil actions founded, on contract. Within that context, these words have an established meaning which, if resorted to, would recognize the present action as one founded on a written contract.

Under the standard which the court applies in the present case, the availability of the ten-year statute of limitations, applicable to written contracts, is made to depend not only on whether the parties have adopted a particular writing as the memorial of their agreement, but also upon whether that writing attains a certain artificial level of completeness far beyond that which the law requires for recovery on the instrument. I submit that the degree of completeness and detail which is required of a written contract is best determined in the consideration of the merits of the claim rather than upon a preliminary issue concerning the statute of limitations.

In order for a contract to fall within the ten-year statute of limitations, the court appears to require a degree of completeness sufficient to permit recovery without any resort to parol evidence. This is an unworkable standard which will not *459 achieve the protections which the court suggests are the basis for its decision. No written agreement, regardless of how descriptive or complete it may be, can be assured of preventing the use of parol evidence with respect to substantial elements of the claim.

Parol evidence to establish the elements of breach and damages will not be affected by the requirements which the majority establishes for proving the obligations imposed on the parties. Moreover, even the most formal, complete, and detailed agreement may be made the subject of parol evidence in order to show what it was intended to mean by the parties who adopted it. In an introductory note to section 209 of the Restatement (Second) of Contracts (1981), the American Law Institute makes the following assessment as to the effect of the adoption of a writing in the formulation of a contract:

The parties to an agreement often reduce all or part of it to writing. Their purpose in so doing is commonly to provide reliable evidence of its making and its terms and to avoid trusting to uncertain memory. Such a purpose is so common that it is often not discussed; it may not even be conscious. In the interest of certainty and security of transactions, the law gives special effect to a writing adopted as a final expression of an agreement. Such a writing is here referred to as an “integrated agreement.”

Whether an agreement is “integrated” is a question of fact. In the present case, there has been presented a genuine issue of fact as to whether the agreement sued on is the completely integrated agreement of the parties.

An “integrated agreement” is the most complete type of agreement recognized by the Restatement with respect to barring parol evidence as to its terms. Yet, even an integrated agreement is subject to having its terms explained by parol evidence. Interpretation of contracts deals with the meaning given to the language by the parties rather than any peculiar meaning established by the law. Both the Restatement (see Restatement (Second) of Contracts § 220) and our cases {see, e.g., Kitchen v. Stockman National Life Insurance Co., 192 N.W.2d 796, 801 (Iowa 1971); Hamilton v. Wosepka, 261 Iowa 299, 305-14 , 154 N.W.2d 164, 167-72 (1967)), permit the use of parol evidence to establish the true meaning of the agreement. Such pa-rol evidence may be the most significant and determinative evidence in the case with respect to establishing what are the obligations of the parties. As provided in section 220 of the Restatement:

(1) An agreement is interpreted in accordance with a relevant usage if each party knew or had reason to know of the usage and neither party knew or had reason to know that the meaning attached by the other was inconsistent with the usage.

(2) When the meaning attached by one party accorded with a relevant usage and the other knew or had reason to know of the usage, the other is treated as having known or had reason to know the meaning attached by the first party.

The foregoing rule of interpretation is in accord with that which is provided by statute in Iowa Code section 622.22 (1983).

The significance of the foregoing rules of substantive law in determining a proper resolution in the present case is that such rules demonstrate that the use of parol evidence, together with the extent and significance of such evidence, in any individual case cannot be regulated by the precision of the draftsman. The parties are always free to claim the words used have a special meaning and offer parol evidence in support of such claims. These rules of substantive law also indicate that the sufficiency of written contracts is to be determined by resort to the meaning which the words convey to the parties to the agreement rather than their generally accepted meaning.

In the present case, the plaintiff, in resisting the motion for summary judgment, has offered affidavits of several persons, purportedly based on personal knowledge, that the words employed in the written *460 memorandum signed by plaintiff and initialed by defendant convey a particular meaning which was known to the defendant and which forms the basis for plaintiffs claims in the present action. It is also shown by these affidavits that it was defendant who prepared the memorandum upon which suit is brought as the memorial of the parties’ understanding when requested to do so by the plaintiff.

Under the theory upon which plaintiff seeks to recover, he is not seeking to expand upon the terms of the writing but only to explain what those terms meant to the parties. Given this circumstance, the court, in labeling the present action as founded on an unwritten rather than a written contract, completely blurs the distinction between the two.

Corbin, in discussing the meaning of a written memorandum, in an analogous context, states as follows:

Not much thought has been, or need be, given to the question of what constitutes a “writing.” Our education and habits are such that the word “writing” conveys the idea of paper with ink-constructed words thereon.... The words used need not be English words. Indeed, it can not be said that the symbols used must be “words” in any known language. Words are only symbols that are often of very doubtful signification.... A stenographic shorthand symbol is hardly to be regarded as a word; and yet a memorandum written in such symbols, like other short abbreviations, should not be held insufficient for the reason that it is not “written.” ... [T]he same is true if the memorandum consists of words in the Russian language or of Chinese ideographs. Hentracks are not “writing” for the reason that they are not symbols of thought in any man’s mind. It is quite otherwise with the symbols once used by the Phoenicians (all of whom are dead) or by Samuel Pepys alone (who was dead before anyone “deciphered” his “writing”). If Samuel Pepys had signed a memorandum written by him in his personal hieroglyphic and was the party to be charged thereon, the ... requirements [of a writing] would be satisfied if the other party could obtain in almost any way Pepys’ own private key to his private system of symbols.

2 A. Corbin, Contracts § 498 (1950).

The results, as opposed to the language, in most of the cases cited by the court in support of its decision are not inconsistent with recognizing the present action as one founded on a written contract. Most of these cases involve situations where the theory of recovery has not been integrated into the writing upon which the claim is made. In such situations, there is, of course, no limitation on the use of parol evidence to establish the terms and conditions of the unintegrated portion of the contract. These, I submit, are precisely the types of actions which are properly characterized as being founded on unwritten agreements. 1 But, in the present case, plaintiff has grounded his action on a written agreement, a circumstance which subjects him to all of the limitations which the parol evidence rule provides in the proof of written agreements. He properly should be subjected to such limitations, but he should not be subjected to an additional layer of parol evidence restrictions in connection with determining the applicable statute of limitations.

I would reverse the judgment of the district court.

HARRIS, LARSON and WOLLE, JJ„ join this dissent.

. Lamb v. Withrow, 31 Iowa 164 (1871), relied upon by the majority in support of its decision is such a case. The only writing in that case was a promissory note signed by two persons. One of these persons, after paying off the note, brought an action to have it established that he was only a surety and the other party was the principal obligor. The entire basis for this claim was an oral agreement between the parties. No claim was made that the writing or any of the words used therein, conveyed a meaning from which the principal and surety relationship could be derived.