Mayers v. Loew's, Inc

In Mayers v. Loew's, Inc. (1950) 35 Cal. 2d 822, the plaintiffs sued under a collective bargaining agreement to recover a retroactive bonus due to union members for the period July 1, 1941, to August 30, 1942. The contract identified July 1, 1941, as the retroactive date, but a contemporaneously executed letter and bulletin established that date as August 30, 1942. The trial court refused to consider the letter and bulletin or evidence of the parties' negotiations, finding that July 1, 1941, was the retroactive date. On appeal, the defendant argued that the excluded evidence would establish that August 30, 1942, was the agreed-upon retroactive date. The Supreme Court reversed, concluding that the letter and bulletin were part of the formal contract and that because of the inconsistent retroactive dates, the contract was not clear on its face. "It is thus apparent that the contract is not clear on its face, and under the theory of the parol evidence rule that has been accepted by the majority of this court, evidence of the negotiations of the parties and of surrounding circumstances was admissible for the purpose of determining the meaning of the contractual provisions. That evidence would have supported a construction of the contract favorable to defendant and it should have been considered by the trial court in its interpretation of the terms of the contract. Exclusion of that evidence was therefore prejudicial error." ( Mayers, supra, 35 Cal. 2d at p. 829.)