Summary 2007 WY 68

Summary of Decision issued April 26, 2007

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Case Name: Belden and Fish Creek Design, LLC v. Thorkildsen and Thorkildsen

Citation: 2007 WY 68

Docket Number: 06-112

Appeal from the District Court of Teton County, the Honorable Nancy J. Guthrie, Judge

Representing Appellants (Plaintiffs): Richard J. Mulligan of Mulligan & Owens, LLC, Jackson, Wyoming; Heather Noble, Jackson, Wyoming. Argument by Ms. Noble.

Representing Appellees (Defendants): David G. Lewis, Jackson, Wyoming.

Issue: Whether the district court erred by refusing to consider evidence of an agreement between Ms. Belden and Mr. Thorkildsen concerning the indebtedness for the purchase of Mr. Thorkildsen’s partnership interest.

Facts/Discussion: Belden and Fish Creek Design, LLC appealed a judgment entered in favor of Thorkildsen claiming the district court erred when it concluded that Thorkildsen was not liable to Belden for debt incurred when he purchased his interest in the business.
Standard of Review: Following a bench trial, the Court reviews a district court’s findings and conclusions using a clearly erroneous standard for the factual findings and a de novo standard for the conclusions of law.
In reliance upon the parol evidence rule, the district court disregarded Belden’s testimony concerning a separate agreement for repayment of the debt and did not determine whether the partnership interest was a gift. The parol evidence rule generally states the intent of the parties to a contract or instrument is to be determined solely from the language of the instrument and extrinsic evidence may be examined only when the language is ambiguous. The Court agreed with Belden that the separate agreement was independent of the two notes, only relating to the same subject matter in that it required reimbursement to the business and Belden for repayment of the notes. The evidence of the separate agreement did not vary the terms of the notes and was consistent with the notes. The dispute between the parties concerned whether there was a separate, shared intent that Thorkildsen be ultimately responsible for the financed debt. The district court erred in refusing to consider evidence regarding the separate agreement.
The Court commented upon Thorkildsen’s request for the district court to find Belden was not an accommodated party stating the existence of an agreement between Belden and Thorkildsen may impact her status as an accommodation party.

Holding: Evidence of the parties’ agreement regarding repayment of the debt incurred for Thorkildsen’s partnership interest should have been considered by the district court. The evidence fit squarely within the exceptions to the parol evidence rule allowing examination of evidence of oral agreements that are collateral to and independent of the written contracts and which allow examination of the parties’ intentions as to accommodation party status.

Reversed and remanded.

J. Kite delivered the decision.

J. Hill, dissenting: J. Hill did not agree the resolution of the case should be decided on how, or if, the parol evidence rule should be applied to the circumstances of the case. Because the parties mutually adopted a mode of performing their contract that differed almost in its entirety from the terms of that contract, he would affirm the basic findings of the district court and its conclusions of law.

Link: http://tinyurl.com/3e5jnc .