Opinion
McKelvey & McKelvey, R. Franklin McKelvey, Durango, for plaintiff in error.
Robert C. Duthie, Durango, for defendant in error.
PIERCE, Judge.
This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.
The parties appear here in reverse order of their appearances at trial and will be referred to hereinafter by their trial court designations. The matter on appeal is the trial court's judgment in favor of plaintiff in an action arising under a partnership dissolution agreement in which plaintiff sued defendant for the balance of the purchase price of his interest in their partnership.
In August of 1965, the parties leased certain mining claims near Silverton, Colorado, from 2-Bit, Inc., a Colorado corporation. Consideration for this lease was their agreement to pay an annual royalty of ten percent of the net return on ores extracted from the leasehold, or $10,000, whichever was greater, and to pay all Advalorem property taxes on the claims. For a short period thereafter, the parties mined the leased claims in partnership. However, when certain disagreements arose, they decided to terminate their partnership.
Accordingly, on November 15, 1965, the parties executed a document entitled 'Agreement and Release,' by which plaintiff agreed to sell his interest in the partnership to defendant for $25,000, of which $1,000 was paid prior to execution of the document, $4,000 was paid upon execution thereof, with the balance ($20,000), without interest, to be paid thereafter in equal monthly installments of $500, with provision for suspension of such monthly payments under certain specified circumstances.
This partnership dissolution agreement also provided for the establishment of an escrow account, by separate escrow agreement keyed to the dissolution agreement, into which defendant placed an assignment of his interest in the 2-Bit lease in plaintiff's favor. The escrow agreement stated:
'1. The purpose of this Escrow is to secure the payment by James R. David of the sum of Twenty Thousand * * * Dollars to Frank Hitti in installments of Five hundred * * * Dollars per month beginning December 8, 1965 with interest.
'2. If the payments are not made as provided in the AGREEMENT AND RELEASE * * * the Escrow Agent is to deliver (defendant's assignment) to Frank Hitti * * * thus terminating the Escrow.
'3. If the payments are made as provided in the AGREEMENT AND RELEASE when James R. David * * * (has) delivered into the hands of the Escrow Agent the total sum of Twenty thousand * * * Dollars due under said agreement the Escrow Agent is to deliver (his lease assignment to him).'
Both the dissolution and escrow agreements provided that upon defendant's failure to make monthly payments as required, the escrow agent was to deliver defendant's assignment to plaintiff, thereby terminating the escrow account. However, neither agreement covered the consequences of such delivery with reference to any other legal remedies available to plaintiff under the dissolution agreement, nor stated in any way that such delivery was plaintiff's sole remedy to the exclusion of suing for the balance due under the dissolution agreement or pursuing some other remedy.
In December of 1966, plaintiff received written notice that 2-Bit, Inc., was cancelling the lease on the several mining claims effective December 31, 1966, for failure to abide by its royalty and Ad valorem tax provisions. (We note, however, that even after cancellation of the 2-Bit lease, defendant remained on the leased claims, which he continued to operate as sole lessee by virtue of some form of subsequent lease obtained from 2-Bit). Thereafter, in February of 1967, defendant having become delinquent without excuse in his payments to plaintiff, the latter, who was paying the escrow fees, claimed the assignment (now worthless because of cancellation of the underlying lease) from the escrow, which then automatically terminated.
On April 3, 1967, plaintiff sued defendant in the District Court of San Juan County for the balance due him under the partnership dissolution agreement ($15,500 at the time of the complaint), and received judgment in the amount of $1,500 (apparently on the basis that the court considered only installments then past due recoverable).
Plaintiff brings no appeal; defendant does, however, asserting that the trial court erred (1) in refusing to admit certain testimony as to the intention of the parties when they executed the partnership dissolution and escrow agreements; (2) in refusing to rule that plaintiff had only one exclusive remedy in the event of defendant's default under these agreements--namely, to take defendant's lease assignment; and (3) in refusing to rule that even if plaintiff were not originally limited by the agreement to the exclusive remedy of taking up the lease assignment, he was when he elected to do so, and could not thereafter pursue an action for the balance of purchase price owed.
Before discussing defendant's individual assignments of error, we note that defendant, without specifically saying so, basically argues that the dissolution agreement above mentioned was, in fact, an Installment Purchase Contract for the sale of a leasehold interest. He assumes a contract complete with a Mandatory 'forfeiture clause' giving plaintiff the sole and exclusive remedy, in the event of defendant's default, of taking defendant's assignment from escrow (thereby divesting defendant of all interest in the leased claims, and vesting the same in plaintiff), and retaining installments previously paid as liquidated damages.
If this argument should prevail, plaintiff is left with nothing, since defendant has allowed the underlying leasehold to become non-existent because of his failure to abide by the terms of the lease, and plaintiff cannot maintain a suit for the balance of the purchase price; yet defendant remains in possession of the leased premises by virtue of the subsequent lease he obtained as sole lessee.
Plaintiff's counter-argument is that the dissolution agreement simply established defendant's lease assignment as security for his performance under that agreement, and in no way provided for a Mandatory forfeiture, to the exclusion of all other remedies, and did not otherwise bar plaintiff from pursuing any other remedy.
In light of these respective arguments we now discuss each of defendant's individual assignments of error.
I.
Defendant first contends that the trial court erred in refusing to admit certain testimony of the attorney who drafted both the dissolution and escrow agreements to the effect that the parties intended plaintiff's sole and exclusive remedy upon defendant's default to be a forfeiture as outlined above. The court's refusal was based upon the parol evidence rule.
Parol evidence is not admissible to vary, explain or contradict the meaning of an unambiguous written document. Hickman-Lunbeck Grocery Co. v. Hager, 75 Colo. 554, 227 P. 829; C. McCormick, Law of Evidence, s 219. Both documents in the instant case are unambiguous and require no clarification by parol evidence: they clearly provide that upon default plaintiff could take up defendant's assignment; but they in no way infer that such was mandatory, nor his sole and exclusive remedy. The agreements, instead, provide only for security, and state what plaintiff may do with it upon defendant's default, without addressing themselves to the consequences of his doing it.
We, therefore, rule that the court properly refused to admit such evidence, which, we find, would have served only to create ambiguity where none otherwise existed.
II.
Defendant next asserts that the court erred in refusing to rule that the two aforementioned documents specifically limited plaintiff to the sole remedy outlined above.
As we have already stated, however, the documents neither state nor infer any such thing; therefore, the court's refusal to construe them as if they did was clearly correct.
III.
Defendant's final argument for reversal is that if the dissolution agreement did not limit plaintiff to the sole and exclusive remedy outlined above, his election to take that 'remedy' precluded him, as a matter of law, from pursuing any other remedy. Thus, defendant attempts to make this an 'election of remedies' case in which, he asserts, plaintiff has, by his act of taking the 'security,' elected to follow one course of action inconsistent with another which he now seeks to pursue.
While it is axiomatic that a party may not adopt one course of action and thereafter proceed to pursue another which is mutually inconsistent (See, E.g., Holscher v. Ferry, 131 Colo. 190, 280 P.2d 655, wherein plaintiff sought to rescind a contract and, thereafter, to recover the benefits thereunder), before this rule comes into play there must be a binding election. However, there is nothing in the dissolution agreement, as we have already stated, which infers that plaintiff was limited to taking defendant's assignment as his sole and exclusive remedy; nor is there anything giving him that option to the exclusion (if he should take it) of pursuing some other remedy. Therefore, the dissolution agreement, itself, does not make this an 'election of remedies' case.
Nor have we found any case law in Colorado which requires the conclusion that plaintiff has made a binding election of remedies. To the contrary, most jurisdictions, including Colorado, hold that there is no binding election of a remedy until the electing party chooses by some decisive act, a course of action inconsistent with an alternative then available to him, which choice has generally been exercised by bringing a legal action on the basis of one alternative theory (see, E.g., Holscher, supra), thereby precluding a later change in theory in the same, or a new suit. Further, such choices usually result in an immediate benefit to the electing party, or detriment to the adverse party. 28 C.J.S. Election of Remedies s 11.
In the instant case, where the evidence lacks a sufficient showing of a contractually-provided mandatory remedy, or of a contractually-provided election between mutually inconsistent remedies (which was thereafter made); and where plaintiff has filed only one action on one theory, and has not thereafter attempted to pursue an inconsistent theory; and where no detriment attached to defendant, nor benefit to plaintiff, by plaintiff's actions (in fact the contrary occurred); we hold that there was no election of remedies--let alone one that was binding.
For the reasons above, we find defendant's assertions of error without merit and, accordingly, affirm judgment.
DWYER and ENOCH, JJ., concur.