Brief Fact Summary. G.W. Thomas Drayage & Rigging Co. (Defendant) appeals from a judgment for Pacific Gas and Electric Co. (Plaintiff) in an action for damages for injury to property under an indemnity clause in the contract.
Synopsis of Rule of Law. A party may offer parol evidence to show the meaning of terms of a contract when the language of the contract is susceptible to the interpretation argued by the party.
A rule that would limit the determination of the meaning of a written instrument to its four-corners merely because it seems to the court to be clear and unambiguous, would either deny the relevance of the intention of the parties or presuppose a degree of verbal precision and stability our language has not attained.View Full Point of Law
Issue. Whether extrinsic evidence may be admitted on the basis of the plain language meaning?
Held. No. Judgment is reversed.
• The test of admissibility of extrinsic evidence to explain the meaning of a written instrument is not whether it appears to the court to be plain and ambiguous on its face but whether the offered evidence is relevant to prove a meaning to which the language of the instrument is reasonably susceptible. In other words, extrinsic evidence to show intent is admissible in almost every case. To limit the meaning of a contract based on the plain meaning would deny the relevance of the intention of the parties. The meaning of a writing can only be found by interpretation in the light of all the circumstances that reveal the sense in which the writer used the words.
• Here, the trial court was wrong to not consider extrinsic evidence offered to show that the indemnity clause in the contract was not intended to cover injuries to Plaintiff’s property. Defendant was allowed to offer his evidence.
Discussion. Interpretation addresses how the parties may show the meaning of the terms contained in the writing. This court adopts the Corbin view, which is the subjective approach, which allows parties to introduce extrinsic evidence to aid in the interpretation of a contract even if the writing is an integration.