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INTERPACE CORP. v. PENBROOK HAULING CO.

February 18, 1975

INTERPACE CORPORATION, Plaintiff
v.
PENBROOK HAULING COMPANY, INC., and DAILY EXPRESS, INC., Defendants


This matter is before the court on defendants' motion for partial summary judgment. The motion was argued to the court on September 19, 1974.

Plaintiff, a manufacturer of reinforced concrete pipe, entered into an agreement with defendant Penbrook Hauling Company, Inc. *fn1" (hereinafter "Penbrook") on July 29, 1970. A copy of the agreement is attached as a supplement hereto. Plaintiff contends that on June 6, 1971 Penbrook breached the contract by refusing to transport plaintiff's product, in violation of the provision in paragraph 9 which requires written notice 60 days prior to terminating the contract. Plaintiff claims that substitute carriers during the period June 7, 1971 to July 27, 1971 charged $28,082.24 more than would have been due the defendants had they continued performance until July 27, 1971. Jurisdiction is alleged under 28 U.S.C.A. ยง 1332.

 Penbrook seeks summary judgment on plaintiff's claim for breach of contract *fn2" and on its counterclaim for the sum of $20,300.00 for services rendered under the contract.

 Penbrook's position is that the written agreement fails as a contract because it lacks mutuality of obligation and is unenforceable due to indefiniteness. It argues that the writing should be construed as merely an arrangement as to terms which would apply to a contemplated series of future contracts.

 Plaintiff resists summary judgment on the grounds that defendants have not demonstrated the absence of a genuine issue of material fact, and that, notwithstanding the parol evidence rule, certain unspecified evidence would be admissible to explain the intentions of the parties and the meaning of the written agreement.

 The first issue which requires the court's scrutiny is the applicability of the parol evidence rule. If Penbrook is right that based on New York law *fn3" the written agreement is unambiguous yet fatally deficient, and that parol evidence is inadmissible to remedy its deficiencies, then it is entitled to summary judgment. See, 6 Moore, Federal Practice P 56.17[43]. On the other hand, if parol evidence is admissible as plaintiff contends, then summary judgment would be inappropriate since an issue of fact may arise therefrom. The same would be true if the court, as plaintiff advocates, interprets the writing so as to cure its alleged deficiencies.

 A general statement of the parol evidence rule is that where parties have reduced their agreement to writing, the rule operates to exclude evidence of prior or contemporaneous agreements when offered to contradict, vary or subtract from the terms of the writing. ARATARI v. CHRYSLER CORP., 316 N.Y.S. 2d 680, 35 App.Div.2d 1077 (1970). Where there exists an ambiguity or the language of the instrument is doubtful, extrinsic parol evidence is admissible. Re SILBERMAN'S WILL, 23 N.Y.2d 98, 242 N.E.2d 736, 295 N.Y.S.2d 478 (1968). The parol evidence rule is essentially a rule of law which defines the limits of the contract to be construed by the court. MITCHELL v. LATH, 247 N.Y. 377, 160 N.E. 646 (1923).

 In resolving the various assertions made by the parties to the instant case, the court looks to the writing in its entirety. Of particular significance, however, is paragraph 2 of the contract which provides as follows:

 
"Shipper shall tender to Carrier each year during the term of this Contract for transportation by motor vehicle between points set forth in Item 1 above, not less than 100 tons of products described in Item 1 of this Contract."

 The above paragraph is the sole provision in the writing which contains a quantity term.

 Plaintiff's position is that prior negotiations are admissible to show that the parties to the writing intended it to be an output contract whereby plaintiff was obligated to tender the entire output of its Greenport plant to Penbrook and that Penbrook promised to transport the entire output. Such a position presumes that the meaning of the only quantity term in the writing -- "not less than 100 tons" -- is doubtful or ambiguous. Otherwise, parol evidence is inadmissible.

 This interpretation finds no support within the four corners of the writing. In fact, such an interpretation would contradict the term which clearly limits plaintiff's obligation to tender "not less than 100 tons." Moreover, the court, in construing the agreement, looks to the intent of the parties as expressed in the writing, not to the so-called "real" intent. HUTCHISON v. ROSS, 262 N.Y. 381, 187 N.E. 65 (1933). *fn4"

 Plaintiff is in an anomalous position. On the one hand, it asserts that the writing is a valid contract yet denies that the writing embodies the actual contractual rights and obligations which the parties intended to make. Such a position, except for the purpose of reforming a contract, is untenable. HUTCHISON, supra. Therefore, plaintiff cannot assert the validity of the writing as a binding contract and simultaneously claim that an essential contractual term; to wit, an ascertainable quantity, should be added on the basis of prior negotiations.

 In support of its position that parol evidence is inadmissible in this action, Penbrook directs the court's attention to paragraph 10 of the July 29, 1970 writing which states that "this contract supersedes all prior agreements between the parties hereto, whether oral or written and all such prior agreements are thereby cancelled." Clearly, this provision demonstrates the all-inclusive nature of the writing. FOGELSON, Et al. v. RACKFAY CONSTR. CO., INC., 300 N.Y. 334, 90 N.E. 2d 881 (1950). Plaintiff's assertion that an "output" quantity term was agreed upon by the parties is in direct contradiction of the above-quoted merger clause and paragraph 2 of the writing.

 In the face of the clear provisions of the contract which would be contradicted by the evidence which plaintiff seeks to offer, the court concludes that under the law of New York State the parol evidence rule precludes plaintiff's presentation of parol evidence.

 We turn to plaintiff's contention that the court may imply a promise by Penbrook to haul the entire output of plaintiff's factory in Greenport, New York, and thereby fulfill the requirement of mutuality of obligation. The seminal case in this area is WOOD v. LUCY, LADY DUFF-GORDON, 222 N.Y. 88, 118 N.E. 214 (1917). In that case the court found an implied promise on the part of the exclusive agent of LUCY, LADY DUFF-GORDON to exercise his best efforts to promote the sale of goods endorsed by her. As Justice Cardoza said, "The law has outgrown its primitive stage of formalism when the precise word was the sovereign talisman, and every slip was fatal. . . . The defendant gave an exclusive privilege. She was to have no right for at least a year to place her own endorsements or market her own designs except through the agency of the plaintiff. The acceptance of the exclusive agency was an assumption of its duties." (Emphasis supplied) 222 N.Y., at 89.

 That holding is inapplicable to the instant case for the reason that nowhere in the contract is Penbrook given the exclusive right to haul the product of plaintiff's Greenport factory. There was no express agreement that plaintiff would utilize the services of Penbrook to the exclusion of all others, or that plaintiff would tender its entire output to Penbrook. To imply a promise on Penbrook's part to transport the entire output of plaintiff's Greenport plant would have the effect of rewriting the contract. It is well settled that a court may not under the guise of interpretation, make a new contract for the parties. RODOLITZ v. NEPTUNE PAPER PRODUCTS, INC., 22 N.Y. 2d 383, 239 N.E. 2d 628, 292 N.Y.S.2d 878 (1968).


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