Farmers Cooperative Ass'n v. Garrison

Rule of Law:

The parol evidence rule, as a matter of substantive law, generally prohibits the admission of evidence of prior or contemporaneous oral agreements that contradict, vary, or add to the terms of a written contract that the parties intended as a complete and accurate integration of their agreement, absent claims of fraud, accident, or mistake.

Facts:

• In early 1967, Julian Hendren, general manager of Farmers Cooperative Association, Inc., and Kenneth Handy, a representative of Farmland Industries, Inc., approached Randall Garrison and his wife to solicit their participation in a layer-feeder program.
• On April 5, 1967, Farmers Cooperative Association, Inc. and the Garrisons consummated a “Feeder Contract” stating that Farmers Cooperative would sell the Garrisons their entire requirements of mixed feed and concentrates at appellant’s “regular retail price or prices in effect on date of delivery.”
• The contract also provided that Farmers Cooperative would furnish the Garrisons with 21,000 layer hens and sufficient financing for the program, for which the Garrisons agreed to execute a promissory note for $34,650.00, payable on demand but “on or before May 1, 1968.”
• About a month later, on May 9, 1967, Randall Garrison and his wife both executed a promissory note to Farmers Cooperative for $34,650.00.
• On August 2, 1967, Randall Garrison executed a second note, payable on November 1, 1967, for $12,000.00.
• The Garrisons asserted that during negotiations, Hendren and Handy had represented that Farmers Cooperative would refinance them with successive layer hens until the egg proceeds paid their indebtedness in full, and would supply feed at competitive market prices.
• Farmers Cooperative did not continue to refinance the Garrisons as they allegedly expected, and the Garrisons believed they were overcharged for feed.
• The unpaid principal balances on the notes were $34,603.93 on the initial note and $3,325.41 on the second note when Farmers Cooperative initiated legal action.

Procedural Posture:

• Farmers Cooperative Association, Inc. (appellant) sued Randall and Mrs. Garrison (appellees) in an unspecified trial court on November 18, 1968, seeking to collect on two promissory notes.
• The Garrisons answered, denying liability on the notes due to a partial failure of consideration and asserting that prior oral agreements regarding refinancing and competitive feed prices were breached, and counterclaimed for lost income and feed overcharges.
• At the conclusion of testimony, Farmers Cooperative moved for a directed verdict on the two notes, which the trial court denied.
• Farmers Cooperative requested that the jury be instructed to return a verdict for it on the Garrisons' counterclaims, but these instructions were refused.
• The trial court submitted the issues of the Garrisons' liability on the notes and Farmers Cooperative's liability on the counterclaims to the jury.
• The jury found that Farmers Cooperative was entitled to recover nothing on the May 9, 1967 note, denied the Garrisons' claim for damages for lost income, awarded Farmers Cooperative $3,797.54 on the August 2, 1967 note, and found the Garrisons were entitled to recover $5,299.99 on their feed overcharge counterclaim.
• Farmers Cooperative moved for a judgment notwithstanding the verdict on the May 9, 1967 note, which the trial court denied.
• Farmers Cooperative appealed the judgment on the verdict to the Arkansas Supreme Court (this court).