Fed. Deposit Ins. Corp. v. Hadid - 947 F.2d 1153 (4th Cir. 1991)

Rule:

Whether an agreement is integrated is a factual question that depends on the intent of the parties as revealed by the writing itself, the conduct and language of the parties, and the surrounding circumstances. The application of the parol evidence rule, however, is a question for resolution by the court, not the jury, and, as is the case with any question for the court, it is the court and not the jury which resolves disputed facts on the point. If, after resolving disputed facts, the court finds that the transaction is intended to be covered by the writing, only the writing is considered by the jury in resolving liability. The court does not, and need not, decide that the oral agreement was not made. Rather, it decides only that the oral agreement is irrelevant to liability on the writing. Similarly, if the court concludes that the writing is not integrated, it does not decide that the oral agreement was made. It commits that issue to the jury.

Facts:

The bank extended several loans with a guarantee by the guarantor. The loans were not paid by either the principals or guarantors and the bank filed suit against the guarantor to enforce the notes. The guarantor defended alleging that he should have been released from the guarantee because an oral agreement was reached that he was to be given control of certain stock by the principal and, if he was not, that his guarantee was null and void. He was not given control of said stock. The district court granted the bank's motion for a judgment notwithstanding the verdict finding that the alleged oral agreement violated the parol evidence rule and entered judgment against the guarantor on two promissory notes. The Federal Deposit Insurance Company succeeded judgment when it declared the bank insolvent. The guarantor contended that the facts surrounding the parol evidence rule should have been left for the jury to determine.

Issue:

Were the facts surrounding the parol evidence rule a matter that should have been left for the jury to determine? 

Answer:

No.

Conclusion:

The court held that the application of the parol evidence rule was a question for resolution by the court, not the jury, and, as with any question for the court, it was the court and not the jury which resolved disputed facts on the point. If, after resolving disputed facts, the court found that the transaction was intended to be covered by the writing, only the writing was considered by the jury in resolving liability. The court need not decide that the oral agreement was not made. Rather, it would decide only that the oral agreement was irrelevant to liability on the writing. Following this, the Court held that the trial court’s findings were not erroneous, as it found, on the basis of all the evidence presented at trial, that all prior understandings between the parties, including the promissory notes, the pledge agreements, and the guarantees, were reduced to formal written agreements, and no evidence suggested that any understanding was governed by oral agreements. Accordingly, the Court affirmed the judgment of the district court.