Routh v. Snap-On Tools Corp.

423 S.E.2d 791 (1992) 108 N.C. App. 268

Donald Ray ROUTH and Penny C. Routh, Plaintiffs-Appellees,
v.
SNAP-ON TOOLS CORPORATION, Trace S. Dengler, III individually and as a Branch Manager of Snap-On Tools Corporation; Mark Trombley, individually and as a Field Manager of Snap-On Tools Corporation; and Ed Bonge, Jr., individually and as a Sales Manager of Snap-On Tools Corporation, Defendants-Appellants.

No. 9121SC695.

Court of Appeals of North Carolina.

December 15, 1992.

Blanchard, Twiggs, Abrams & Strickland, P.A. by Donald R. Strickland and Howard F. Twiggs, Raleigh, for plaintiffs-appellees.

Petree Stockton & Robinson by Rodrick J. Enns, Thomas E. Graham and Denise M. Jennings, Winston-Salem, for defendants-appellants.

WALKER, Judge.

In this appeal, defendants question the validity of the trial court's order which concluded there was no agreement to arbitrate. According to defendants, their motion to arbitrate should have been granted since plaintiff Donald Routh's signature appears on page two (2) of the Termination Agreement wherein there is contained an agreement to arbitrate all controversies. Furthermore, defendants contend that plaintiffs cannot now maintain an action (by arbitration or otherwise) since plaintiffs failed to comply with the one year limitations period contained in paragraph six (6) of the Termination Agreement.

Initially, we note that public policy favors settling disputes by means of arbitration. Prime South Homes, Inc. v. Byrd, 102 N.C.App. 255, 401 S.E.2d 822 (1991). However, before a dispute can be settled in this manner, there must first exist a valid agreement to arbitrate. G.S. § 1-567.2. The law of contracts governs the issue of whether there exists an agreement to arbitrate. Southern Spindle and Flyer Co., Inc. v. Milliken & Co., 53 N.C.App. 785, 281 S.E.2d 734 (1981), disc. review denied, 304 N.C. 729, 288 S.E.2d 381 (1982). Accordingly, the party seeking arbitration must show that the parties mutually agreed to arbitrate their disputes. Id. This Court has even suggested that an agreement to arbitrate, if contained in a contract covering other topics, must be independently negotiated. Blow v. Shaughnessy, 68 N.C.App. 1, 16, 313 S.E.2d 868, 876-877, disc. review denied, 311 N.C. 751, 321 S.E.2d 127 (1984). This apparent requirement for independent negotiation underscores the importance of an arbitration provision and "militates against its inclusion in contracts of adhesion." Id. at 16, 313 S.E.2d at 877.

In the case at bar, the trial court's conclusion that the arbitration agreement was unenforceable was based upon its finding of fact that:

(12) At the time Don Routh signed the agreement agreeing to repay Snap-On One Thousand ($1,000.00) Dollars a month until his balance was paid, he did not realize he was signing a Termination Agreement that contained an arbitration provision and Plaintiff Don Routh had no intention to be bound by the terms of the Termination Agreement.

Findings of fact made by the trial court in a non-jury trial have the force and effect of a jury verdict and are conclusive on appeal if there is competent evidence to support them, although the evidence might have supported findings to the contrary. Henderson County v. Osteen, 297 N.C. 113, 254 S.E.2d 160 (1979). Accordingly, in reviewing the decision of the trial court, we must determine whether there is evidence in the record which supports the trial court's findings of fact and if so, whether these findings of fact in turn support the conclusion that there was no agreement to arbitrate. Prime South Homes, Inc. v. Byrd, supra.

The trial court considered plaintiff Don Routh's 23 April 1991 affidavit which was filed four days before reargument of the motion to compel arbitration. On appeal, defendants contend this document should not have been admitted into evidence since it contradicted plaintiff's earlier deposition. After reviewing the evidence, we find no merit in defendants' argument. Plaintiff's affidavit only conflicted with his prior deposition in regards to the date in November 1987 when the Termination Agreement was signed. In his affidavit and deposition, plaintiff maintains that defendants did not review the Termination Agreement with him, that he never read this document, and that the only reason he signed the document was to acknowledge he owed Snap-On $5,900. We further note from the record that defendants failed to object to plaintiff's affidavit being received into evidence. Where no objection or exception is made at trial to the introduction of evidence, the appellant may not challenge the item on appeal. Rule 10(b)(1), N.C. Rules of Appellate Procedure; Catoe v. Helms Construction & Concrete Co., 91 N.C.App. 492, 372 S.E.2d 331 (1988).

We now turn to the primary issue in this case which is whether the trial court properly concluded as a matter of law that plaintiff and defendants did not have a meeting of the minds regarding an agreement to arbitrate and thus no enforceable agreement.

Before a valid contract can exist, there must be mutual agreement between the parties as to the terms of the contract. Normile v. Miller and Segal v. Miller, 313 N.C. 98, 326 S.E.2d 11 (1985). Where there is no mutual agreement, there is no contract. If a question arises concerning a party's assent to a written instrument, the court must first examine the written instrument to ascertain the intention of the parties. See Corbin v. Langdon, 23 N.C.App. 21, 208 S.E.2d 251 (1974). When the language of the contract is clear and unambiguous, the court must interpret the contract as written. Robbins v. C.W. Myers Trading Post, Inc., 253 N.C. 474, 117 S.E.2d 438 (1960). However, where an agreement is ambiguous, interpretation of the contract is a question for the fact-finder to resolve, Thompson-Arthur Paving Co. v. Lincoln Battleground Associates, Ltd., 95 N.C.App. 270, 382 S.E.2d 817 (1989), and parol or extrinsic evidence is admissible to explain or qualify the written instrument. Root v. Allstate Insurance Co., 272 N.C. 580, 158 S.E.2d 829 (1968).

As previously noted, plaintiff's signature appears only after the language added to the Termination Agreement and not on the line designated for his signature. Both parties agree that the sentence immediately preceding plaintiff's signature is an addition to the original standard Termination Agreement. Since plaintiff signed below only the added language whereby he agreed to repay Snap-On $1000 per month and not on the applicable signature line, an ambiguity results as to whether plaintiff agreed to all the terms contained in the Termination Agreement or merely those terms in the added sentence immediately preceding his signature. Since this instrument is susceptible to more than one meaning, the trial court properly admitted extrinsic evidence to explain this ambiguity. Root v. Allstate Insurance Co., supra.

Upon reviewing the evidence it becomes apparent that plaintiff Donald Routh's only concern on the date the agreement was signed was to arrive at an agreement to pay the balance he owed Snap-On. According to plaintiff, no negotiations regarding arbitration ever took place and "[b]y signing this document the only agreement I was entering into with Snap-On was to pay them One Thousand ($1,000.00) Dollars a month until I paid off the Fifty-nine Hundred ($5,900.00) Dollars Snap-On claimed I owed them." According to plaintiffs' evidence, defendant Dengler never discussed arbitration or the waiver or release of any legal claims. In Blow v. Shaughnessy, 68 N.C.App. 1, 313 S.E.2d 868, disc. review denied, 311 N.C. 751, 321 S.E.2d 127 (1984), it was noted:

[R]ather than simply presuming the validity of an arbitration provision from the validity of the underlying agreement, the Court seemed to require some showing that the agreement to arbitrate, whether a separate agreement or a provision of the same agreement, ... was made in an arm's-length negotiation by experienced and sophisticated businessmen.... This apparent requirement for independent negotiation underscores the importance of such a provision and militates against its inclusion in contracts of adhesion."

Id. at 16, 313 S.E.2d at 876-877.

Although not necessary to our decision today, we also note that an arbitration clause, such as the one at issue in the present case, is ordinarily negotiated at the outset of a contractual relationship in an "arms-length negotiation". The fact that an arbitration agreement was attempted in a contract of adhesion at the close of the relationship further indicates a lack of mutuality of interest between these parties.

Whether defendants met their burden of establishing an agreement to arbitrate was a matter for the trial court's determination. The trial court's findings of fact are binding upon this Court unless there was no competent evidence to support them. Blow v. Shaughnessy, supra. Here, the evidence supports the trial court's findings and conclusion that the Termination Agreement was invalid and unenforceable.

Affirmed.

LEWIS and WYNN, JJ., concur.