Perillo, Joseph

English

Fordham University School of Law

Fordham Law SchoolFLASH: The Fordham Law Archive of Scholarship and HistoryFaculty Scholarship2001Comments on William Whitford's Paper on theRole of the Jury (and the Fact/Law Distinction) inthe Interpretation of Written ContractsJoseph PerilloFordham University School of LawFollow this and additional works at: https://ir.lawnet.fordham.edu/faculty_scholarshipPart of the Law CommonsThis Article is brought to you for free and open access by FLASH: The Fordham Law Archive of Scholarship and History. It has been accepted forinclusion in Faculty Scholarship by an authorized administrator of FLASH: The Fordham Law Archive of Scholarship and History. For moreinformation, please contact tmelnick@law.fordham.edu.Recommended CitationJoseph Perillo, Comments on William Whitford's Paper on the Role of the Jury (and the Fact/Law Distinction) in the Interpretation of WrittenContracts, 2001 Wis. L. Rev. 965 (2001)Available at: https://ir.lawnet.fordham.edu/faculty_scholarship/782COMMENTARYCOMMENTS ON WILLIAM WHITFORD'S PAPERON THE ROLE OF THE JURY (AND THE FACT/LAWDISTINCTION) IN THE INTERPRETATION OFWRITTEN CONTRACTS'JOSEPH M. PERILLO*Bill Whitford has some valuable insights into the relatively unknownprocess of deliberation in the jury room when a jury is charged with theinterpretation of a contract. Juries are charged with the power ofinterpretation in what roughly may be called a dichotomy between twokinds of jurisdictions. Courts which follow the more traditional approachpermit the jury to determine the proper interpretation of a contract only ifthe judge without the aid of parol evidence deems the contract to beambiguous and parol evidence is then admitted to clarify the parties'intentions. A wider role is permitted by courts that follow the Pacific Gas& Electric Co. v. G. W. Thomas Drayage & Rigging Co.,' approach,which essentially allows the court to hear parol evidence to determinewhether the writing is susceptible to more than one interpretation. If thecourt finds that the writing is susceptible to more than one interpretation,and parol evidence is admitted in the hearing of the jury, the jury ischarged with determining the meaning of the writing.Despite the simple wording of the rules I have just stated, Whitfordfinds the case law on the admission of parol evidence to be confused andrife with exceptions, qualifications, and contradictions-not muchdifferent from the chaos John Calamari and I discussed in 1967.2 Twoyears ago Eric Posner used the tools of economic analysis to examine thearea. He also found chaos and noted that the tools of economic analysisdid not dissipate the confusion because too many variables wereinvolved.Whitford conclusively shows that if the rules of logic were applied,the interpretation of a contract would be a factual question. If that logicwere followed, the jury would always be the interpreter of the contractand would be allowed to hear all relevant evidence to aid the process ofinterpretation. But much law is not the product of logic. During the* Distinguished Professor of Law, Fordham University School of Law.1. 442 P.2d 641 (Cal. 1968) (Traynor, C.J.).2. John Calamari & Joseph M. Perillo, A Plea for a Uniform Parol EvidenceRule and Principles of Contract Interpretation, 42 IND. L.J. 333 (1967).3. See Eric A. Posner, The Parol Evidence Rule, the Plain Meaning Rule, and thePrinciples of Contractual Interpretation, 146 U. PA. L. REv. 533 (1998).WISCONSIN LAW REVIEWEnlightenment, legal scholars and philosophers, such as Hugo Grotius andSamuel Pufendorf, spun out theories of law based on pure logic. Theirtheories had a significant impact on the law in the European Continent.At the same time, the lawyers who practiced the common law in Englandand its American colonies recognized the common law to be a humanartifact in which logic played only a subsidiary role.4In the early days of jury trials, juries had broad autonomy todetermine questions of fact and also many of the questions that weconsider today to be questions of law.5 Why have the courts curtailed thisautonomy, thus allowing juries to interpret contracts only in exceptionalcases? Why do we have a parol evidence rule at all? Whitfordconcentrates on the judicial fear that the jury will favor the little guy overthe big guy. Some observers, instead, favor juries for the same reason.They cherish the idea that juries can serve as agents of redistribution,albeit on a haphazard basis.If we step back for a better perspective on Why we have rulesexcluding parol evidence, let us remember that the parol evidence rule(broadly understood to include the plain meaning rule) also applies tobench trials. Therefore, the rule can not have its only foundation in thedistrust of juries.6 The deeper distrust is the distrust of witnesses.We must remember that parties were not allowed to testify in theirown cases until the second half of the nineteenth century. The general4. In a 1797 Maryland case, William Pinkney successfully argued for theappellant. Among the arguments he made, none of which would likely be made by alawyer today, were the following. Pinkney told the court, "[a]bsurdity is no argumentagainst [a rule] if it is law, nor its inconvenience." He points out the lack of the courts'authority to rectify absurdities, stating "[a] man of plain sense would be shocked at theabsurdity of one third of the old common law, which has been since changed by acts ofparliament, or acts of assembly; yet it was law till it was altered." He then explains hisview of the philosophical foundations of law stating that "[t]he law is an artificial system,which must not be judged of by the ordinary rules of reason. It is a technical science; anyknown system is better than none. It is of importance to society that the rules of justiceshould not be fluctuating; that they should be fixed, and settled, and permanent." I havelifted this quotation from an article of mine: Joseph M. Perillo, The Origins of theObjective Theory of Contract Formation and Interpretation, 69 FORDHAM L. REv. 427,442 (2000) (emphasis in original) (citing Beane v. Middleton, 4 H. & McH. 74, 78 (Md.1797)).5. See David Millon, The Ideology of Jury Autonomy in the Early Common Law,at http://www.ssm.com (Nov. 14, 2000).6. There is evidence that the distrust of juries is one of the pillars of the parolevidence rule. The parol evidence rule is not applicable in equitable actions thattraditionally were tried to the chancellor without a jury. Nonetheless, chancery had manymathematical rules for the evaluation of evidence that minimized witness testimony. Forexample, the defendant's answer was deemed evidence that had to be rebutted by twowitnesses or one witness and circumstantial evidence. But the defendant's statements inan affirmative defense were not evidence. 2 JOSEPH STORY, COMMENTARIES ON EQUITYJURISPRUDENCE AS ADMINISTERED IN ENGLAND AND AMERICA §§ 1528-30 (1 1th ed. 1873);Denton v. M'Kenzie, 1 S.C. Eq. (1 Des.) 289 (1792); Thornton v. Gordon, 41 Va. 719(1844).966Commentarythought was that a party's temptation to lie under oath was too great to betrusted. Indeed, some regarded it as immoral to tempt parties in this way.The same creators of the bar on party testimony-the judiciary--createdthe parol evidence rule. When legislation ultimately allowed partytestimony, the courts, still suspicious of such testimony, created theobjective theory of contract that Holmes and Williston propagated sosuccessfully.But other reasons for a hard parol evidence rule exist. The fear ofperjury is not its only pillar. Whitford has examined the clash between ahard parol evidence rule and the channeling or earmarking function ofcontract formalities. For example, suppose a contract states that "time isof the essence, and we really mean it." Should one party be able to testifythat the drafting party gave oral assurance that "we will never make timean issue?" Doubts concerning whether this would be admissibleinterferes with the ability of parties to predict the outcome of theirdispute.Whitford also brings out the disturbing fact that we have little idea ofhow juries decide interpretative issues. It seems unlikely that one couldformulate an answer to the questions he raises by analyzing appellatecases. I thought that maybe I could by following a widely used standardform contract that contained a recognized ambiguity and then tally theresult from various jurisdictions,. I tried this approach with one suchstandard form with disappointing results. Because the standard terms ofthese contracts were not negotiated, little relevant parol evidence wasavailable to clarify the parties' intentions; thus, the issue was decided byappellate courts as a matter of law. Not surprisingly, the jurisdictionssplit on the matter.Another line of cases may prove more fruitful. Clearly, the issue of"foreseeability" of an event is logically a question of fact. Foreseeabilityis relevant in determining whether a contract is discharged or reshaped bya supervening event making performance impossible or frustrating itspurpose. There is a division of authority on whether the court or the juryshould decide the foreseeability of such an event. A federal court,applying Kansas law, held that the issue is one of law.8 It then gave abrief description of the leading Kansas case:7. The ambiguous phrase I followed involved royalties promised in natural gasleases based on the "market value" or "market price" of natural gas. The ambiguity stemsfrom the possibility of calculating the value or price either (1) at the time of capture, or (2)at the value or price at the time a long term contract for sale of the gas was entered into.One of many such cases discussing the split of authority is Tara Petroleum Corp. v.Hughey, 630 P.2d 1269, 1273 (Okla. 1981). But see Piney Woods Country Life Sch. v.Shell Oil Co., 905 F.2d 840, 848 (5th Cir. 1990) (holding question of fact was for districtjudge as trier of fact).8. The RESTATEMENT (SECOND) OF CONTRACTS states that the question of excusefor impracticability "is generally considered to be one of law rather than fact."RESTATEMENT (SECOND) OF CONTRACTS, § 261 (1981) (introductory note to Chapter 11).2001:965 967WISCONSIN LAW REVIEWThe plaintiff argued that since, pursuant to the wartimeregulations, it became unlawful to drill an oil well on the landcovered by the mineral deed, the application of the equitableprinciples of the doctrine of commercial frustration required thecourt to suspend the operation of the contract and extend theperiod of time for plaintiff to develop the mineral rights until atime when the government regulations were rescinded. Thecourt found that the doctrine was inapplicable due to theforeseeability of the regulatory event which caused plaintiff'scontractual bargain to be frustrated. Basically, the court foundthat even though at the time the deed was executed on May 27,1939 the war in Europe had not even begun, the plaintiff shouldhave had the foresight to see that the nations of Europe wouldsoon be engaged in war, that the United States would inevitablybe drawn into the conflict, and that the federal governmentwould use its regulatory powers to preserve natural resources insuch a manner as to prevent plaintiff from developing oil wellson the land subject to his mineral deed. 9In short, the lessee should have been gifted with omniscience or, atleast, greater foresight than was possessed by the admirals at PearlHarbor. It seems hard to believe that the court was making a finding offoreseeability rather than covertly adopting a policy of refusing to unravelcontracts that had been indirectly disrupted by America's entry intoWorld War II. A jury focusing on whether the lessee should havebargained in peacetime for a clause with respect to wartime regulatoryconditions affecting mineral leases would likely have found that it wouldhave been extremely unlikely that anyone in the position of the lessee tohave bargained for such a clause.A contrary line of cases finds the issue of foreseeability to be a juryquestion.' One of these cases involved a widespread failure of the peanutcrop." The jury found that the crop failure was unforeseeable. 12 InThis quotation does not separate the various elements, such as "foreseeability," of theexcuse.9. Butler Mfg. Co. v. Americold Corp., 850 F. Supp. 952, 957-58 (D. Kan. 1994)(discussing Berline v. Waldschmidt, 159 P.2d 865 (Kan. 1945) (citation omitted)).10. See Alimenta (U.S.A.), Inc. v. Cargill, Inc., 861 F.2d 650 (11 th Cir. 1988); seealso Mishara Constr. Co. v. Transit-Mixed Concrete Corp. 310 N.E.2d 363 (Mass. 1974);Hous. Auth. of Bristol v. E. Tenn. Light & Power Co. 31 S.E.2d 273 (Va. 1944); cf.Oosten v. Hay Haulers Dairy Employees & Helper Union, 291 P.2d 17 (Cal. 1955)(question of fact); Mitchell v. Ceazan Tires, Ltd., 153 P.2d 53 (Cal. 1944) (question oflaw).11. See Alimenta, 861 F.2d at 652.12. See id. at 652, 654.Commentaryupholding the jury finding of excusable nonperformance, the courtsummarized the evidence on foreseeability as follows:[Plaintiff] first argues that the issue of foreseeability ofcrop failure should not have gone to the jury. We find that therewas sufficient evidence to submit this case to the jury. First, theevidence demonstrated that for the twenty years preceding the1980 crop there had been a surplusage of domestic peanuts.Secondly, there was evidence that pre-harvest forward salescontracts are customary in the peanut industry. This contractingpractice reflects the need to sufficiently schedule production tocomport with the capacity of peanut shelling plants ....Thirdly, improved agronomic and irrigation methodscontributed to the industry's expectations of a continuedsurplusage of peanuts. There was evidence that the shortage ofpeanuts in 1980 was unprecedented and unforeseen by many ifnot all experts. The unforeseeability was also demonstrated bythe effect of the drought on the peanut market prices: price ofpeanuts increase often exceeded one dollar per pound. In viewof the evidence introduced during trial, it was proper for the trialcourt to submit the issue of the foreseeability of the crop failureto the jury for its determination. 3I suspect that if a thorough review were made of cases where thedoctrine of impracticability, impossibility, or frustration was raised, onewould find that juries were more likely to accept the excuse than courts.My intuition (which could be wrong) tells me that juries would bereluctant to find an unexcused breach where the nonperforming party wasclearly a victim of circumstances out of its control.My final thought is based on Wisconsin Law School's tradition ofempirical studies. Surely, someone at Wisconsin could design anempirical study to determine if jurors determine issues of fact differentlythan judges who often, by legal alchemy, transmute questions of fact intoquestions of law.13. Id. at 653-54.2001:965 969* * *

Comments on William Whitford\u27s Paper on the Role of the Jury (and the Fact/Law Distinction) in the Interpretation of Written Contracts

bepress Legal Repository

https://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=1781&amp;context=faculty_scholarship

Comments on William Whitford\u27s Paper on the Role of the Jury (and the Fact/Law Distinction) in the Interpretation of Written Contracts

Abstract

Similar works

Full text

Available Versions

Fordham University School of Law

bepress Legal Repository