*1 involved, requires holding This affects the ten drafts Appeals judgment wherein reversal of the of the of Civil Court to the draft judgment it trial court relative affirmed cause September $1,642.90, dated 25th in the sum of trial. must remanded the trial court for new retrial, necessary that we must we feel it Since there be a ap his give points raised consideration to the Saunders 1, 2, all plication and 8 concern for writ of error. Points testimony admissibility offered question certain testimony Tyler by way The Bank of a Bill of Execution. Stringer, Tyler Bank in witness, Harold was offered negligence guilty support of its defense testimony admissible handling question. the drafts in negligence. oh the issue of affirming Appeals judgment the Court Civil $1,642.90 re- as to the draft for of the trial court affirmed, respects and the entire cause In all it is
versed. other a new trial consistent is remanded to the trial court for opinion. respondent, adjudged All costs are Saunders. Opinion May delivered 1958.
Rehearing 12, 1958. overruled November
F. A. Hubacek Bank v. Ennis State 8, 1958. No. A-6679. Decided October
Rehearing overruled November (317 30) Series *2 Lumpkins Lumpkins, & B. Stuart all of Waxa- Griffith hachie, petitioner. Appeals holding The Court of erred in Civil evidence car dealer used and the of a bank between rule on the parol as a was inadmissible violation of en of- the' ground varied the terms 228; Daggett, Gal 257 S.W. not sued on. v. dorsed notes Chalk Co. v. 805; Motor loway Floyd, John v. Robert & St. Bumpass, error dismissed. 65 S.W. Wáxahachie, Ralph Hartman,
George Hines, Ennis, P. respondent. opinion the Court. delivered Mr. Justice Calvert A. Bank F. Hubacek This is a suit the Ennis State . promissory interest, attorney’s principal, fees on five for the *3 mortgages securing same. chattel notes and for foreclosure of other by and the two Three were executed Hubacek notes rate by provide interest at the All were endorsed him. notes per per of ten cent annum. liability for the entire
Hubacek admitted his to the bank attorney’s -principal, fees on claimed as interest and amount sought notes, by way offset the claim to of counter he agree- alleged under a sum of to be due him $912.43 he, whereby a dealer in ment between himself and the bank automobiles, cars,. sold and and when cars were used would sell taken, they would be endorsed acceptable *4 .upon fees the and interest. The court further found that the bank was indebted to in the Hubacek amount of $912.43 which should a notes, be allowed as credit the and sub- tracting $1562.84, judgment amount from rendered in favor of plus the bank for filing interest from date ox $650.41 the of attorney’s fees, the suit and with foreclosure the of chattel mort- gages. judgment Ap- reversed of That Court Civil peals judgment and rendered $1562.84, favor of the bank for for, the full amount with sued foreclosure chattel mort- gages. 308 2d 60.. the trial court’s or Whether that of the Court of Appeals proper application is correct turns Civil on a parol general evidence rule to the facts case. The inci- consequences open of that question dents rule are not understood. are well parol rule is not a evidence rule of all, evidence at but law; Ray, of substantive- McCormick and .rule Texas Law 1100;
Evidence, Ed., 1601; Evidence, Jur., Sec. 2nd 20 Am. Sec. C.J.S., Evidence, Section 851. integrated agreement When have concluded valid matter, precludes respect particular subject with to a the rule contemporaneous prior the enforcement of inconsistent or ments, 352, 353; Jur., Evidence, 17 Texas Sections McCormick Ray, supra, Section 1601. hand, preclude enforcement
On the other rule does not agreements prior contemporaneous or which are collateral integrated agreement to an and which not inconsistent are vary implied or express and obligations or or terms do not contradict 1631; Ray, supra,
thereof. Section McCormick Jur., Contracts, Evidence, 370; 17 Texas Section on Williston Wigmore 3, Ed., Ed., 642; Evidence, on 3rd Rev. Vol. Section IX, Page Contracts, 4, 2430; Ed., 2nd Vol. on Vol. Sec- Section Contracts, 2191; 3, tion 594. Corbin on Vol. Section argument respondent counsel for In oral before Court jury might en- found indicated that than oral. evi- if it been written rather forceable distinction; precludes it en- countenances no such dence rule agreements, oral. written or forcement of inconsistent whether Wigmore ‘parol phrase “Now, far as states: so conveys impression rule’ is excluded is excluded what somebody spoke or other than it is acted because oral —because offering orally writing, testify impression is or now —that * * * ‘parol’ radically the term is incorrect. So necessary excluded, is even affords clue to material no Wigmore Evidence, Ed., IX, positively misleading.” 3rd on Vol. “a refers to Parol Evidence Rule as 2400.' Corbin Section rule that truly applicable as to written evidence as to Contracts, 576, p. Section on Vol. evidence.” Corbin Contracts, p. Page take Vol. Section 3717 we From usually the written contract sub- this statement: acts “While contemporaneous nego- merger prior or stantially as merger negotia- operates tiations, it also merges prior parties, tions, letters between the as where *5 part subsequent not of the instrument made con- ** evidence, therefore, objection to real the *. The not tract written, distinguished as from but that it is ex- oral that it is — is, prove tends to what is not a that it term of that trinsic the contract.” due, principal. court the full amount into tendered
Petitioner suit, interest, the sum of and notes in less $912.43. on all five $45,621.85 represents per there- of cent of The sum two $912.43 discharge due, endorsed paid, of notes tofore or then the bank in agree- by the the oral him and sold to bank. He contends by collateral is a ment which he to enforce counter claim seeks agreement terms or way or contradicts the which in no varies obligations mortgages the basis of of the notes or chattel made discharged. paid previously the bank’s suit of or those agreement testimony peti- The oral established finding jury tioner and the related and affected of the to by petitioner. put notes made To it others and endorsed way, proceeds by peti- part any another no of the note made therefore, placed tioner If, was to be in the reserve account. precludes evidence rule enforcement of ment, it is because the or varies contradicts terms obligations requires it endorsed notes. Whether does so testimony more supporting jury’s detailed statement finding. respondent, agreed Bank, purchase Ennis State to petitioner automobile notes they from on the same basis purchased theretofore been Bank, the Citizens National is, per two cent on the amount of each endorsed purchased would, note interest, up out of the set in a petitioner’s reserve account in liqui- name when the was per dated. payment As consideration for the two cent into petitioner the reserve account was to make collections from the makers of necessary the notes and all repossessions handle fund, of automobiles in cases of default. The reserve account although subject withdrawal, to property to be petitioner, fund, necessary, such or so much thereof pay any default, was to be used to note in with surrender of the security petitioner, note and its to at the termination of the pay unpaid, balance, to endorsed notes then any, paid petitioner. if to be obligation petitioner as endorser of two of the notes in suit notes endorsed theretofore they was that paid according presented, would be tenor and, their when dishonor, upon pay that he would them. Article sec. 66, Vernon’s Annotated Statutes. His pay *6 agreements is in the of the Law thus stated Restatement Con- - tracts, 1, Vol. sec. 240: agreement
“(1) superseded An or oral is not invalidated integration, subsequent contemporaneous nor a a written or agreement by integration relating subsequent same to the sub- ject-matter, agreement with in- if the is not inconsistent tegrated contract, .
(a) separate consideration, is made for might (b) agrément naturally is made such an as as be agreement separate by parties situated as were contract.” agreement jury sup- collateral oral found sep- ported by petitioner’s testimony obviously supported is — undertaking payments arate consideration collect when makers attend to due from essary of the endorsed notes and to all nec- repossessions Conceivably, in the event default. we approve in could the rule of the Restatement found Section 240(1) (a), judgment that rule rest our of reversal on alone petition- not with if the terms of the inconsistent unnecessary, however, er’s an endorser. That is bring the facts also this case within the rule announced 240(1) (b). Section discussing (b) points sub-paragraph Restatement that there in which it is so natural
out are situations' make agreements in such situations the collateral preclude enforcement, their if not inconsistent. rule does even, agreements contemplated though is of such Enforcement following separate example no consideration. The there be given: integrated agreements “A and B contract is such buy promise and to Blackacre for to sell respectively $3000.00. contemporaneous price between them A discharge partly by B has shall operative.” against A evidence, although field of contracts and in the writers Text support question, approaches to the using rule of different singular unanimity. on See Corbin Con- Restatement 594; 584, 583, 3, Contracts, on tracts, Williston secs. Rev. Vol. 642; Contracts, Elliott 2, on Vol. Ed., secs. sec. Vol. Ed., IX, Evidence, 2430, 2443; 3rd sec. Wigmore Vol. 1633; Evidence, Ed., Law of Ray, 2nd Vol. McCormick 1631, 1632, and the writers secs. 1643. Both the Restatement agreements
recognize normally natural that it is more than negotiable instru- collaterally execution of will be made to the *7 negotiability. destroy to include them ments because would by courts support The rule finds in cases decided also 42, Hammond, Hansen v. this state. Texas See Thomas v. 47 Yturria, no writ App., Texas 48 48 Civ. S.W. S.W. history, App., Dooley Gray, 54 v. Texas Civ.
writ dismissed. a Thomas v. suit on vendor’s lien Hammond
given purchase money By as acres land. for 400 reconventiori sought damages recovery the defendant for breach of col- lateral oral contract made at the time the note was executed. The substance of the
agreement was that holders of the note discharge outstanding payments would use the first liens, made to one of which was vendor’s lien held one Coleman Payménts applied on 67.6 acres. had not been so and Coleman by paramount had recovered the defendant 67.6 acres from the agreement title. The jury was found to have made. been plaintiffs prohibited The contended that the evidence rule agreement. not, enforcement of the oral This court held did pointing surrounding out that facts and circumstances agreement pointed probability transaction to the and con- cluding: alleged agreement “The in the case before uS is so part far distinct from and collateral that to the contract writing, reduced to allow of its establishment evidence.” 54. As us the oral case before portion proceeds ment dealt with the manner in > payee. of the note be would used agreement might collateral The this case one which naturally by parties petitioner have been made situated as were respondent. proof shows National Citizens agreements Bank had similar with six other automobile dealers. remaining agreement question pay is whether the petitioner his interest collected services out of is inconsistent obligations, express implied, the terms and of the en notes. think not. dorsed We agreement would not result in a
Enforcement of rebate petitioner principal either or interest so as to relieve of his obligation provided pay in and interest full notés, the case in Life Ins. in the as was Guarantee Co. v. David- son, App., required He still be Texas Com. would 834 S.W. agreed obligations perform his but would be awarded made,
compensation payments subject for his out of services right respondent compensation, necessary, if to the to use his of. agreement security as further for his endorsed notes. If the contemplated performance by petitioner of a different kind — personal janitorial services the bank for services about — example petitioner’s it would not have been inconsistent with endorser, hardly as an and it can be doubted agreement would held and that whatever enforceable petitioner amount had in the account termination of the against any recovery could set off the notes. There is no essential distinction between the one in issue here. *8 Appeals Court of Civil cited number of Texas cases in holding agreement
support of its that the collateral was so in- petitioner’s obliga- consistent with the terms of the and *9 Opinion delivered October Norvell,
Mr. joined Justice and Chief Justice Smith dissenting. Hickman, Justice one dispute
No will when final version of contract agreed prior negotiations upon, has been and even ments become immaterial. And this is true whether the final writing. However, in be oral or evidence comprehends something rule in addition to this familiar doc- merger evidence, greater or in that written its trine because of reliability, given controlling determining in is effect the terms judicially of the contract which will enforced in those be instances provision where there is a conflict between written contractual alleged stipulation. part an an The rule is in based favoring policy public sanctity considerations written agreements. recognized, text au- by quotations, from clear This is made n .
thorities: reasonable, salutary and is a rule most “The is ex- strictly adhered to. It founded on one, and it should be give designed necessity, cer- it is and perience and created writing by reduced to tainty a transaction which has been against veracity inter- parties the doubtful protecting the disinterested, memory ested, witnesses: uncertain and long experience that is written evidence oh the rule founded in than that which rests certain and accurate much more so unsafe,' when fleeting memory only, be it would writing, in to admit expressed terms their contract have stronger vary and to show and to control weaker evidence expressed from parties intended a different contract that the writing signed by that written instru- them. It is obvious in explicit pro- their of-little value if would soon come ments controlled, superseded by parol varied, or evi- visions could greatly dence, plain that a rule would is also different and it perjury; temptations to commit have increase courts anxiety possible injustice regret avoid expressed that in their construing away gradually cases, they been particular have in greatest always has considered one .of principle which been * * * perjury. fraud and barriers on, analogous to, depend it is and the rule does not “While principle, substantially as the statute the same rests Evidence, 787-8, sec. 851. frauds.” C.J.S. (a) has two effects where there has been an rule then “The integration transaction, ap apparent focusing negotiation in instrument was ac óf thé one parent actor, actors, or this intention is tually effectu intended ignoring previous expressions were thus ated parties, finally rejected by (b) where there has been gathered integration writing, apparent from writ the. an ing surrounding situation, as-appears fact from and the intended, parties it expressions of the was not so the other agreements dispositions intended were also to be ef other expressions will fective, intentions nevertheless these other *10 judge’s1opinion they such as in disrgarded provided were the be incorporated writing. normally in the This have been would only effect, part the rule is the which could which latter -justifiable, all, obviously if at as- a question, must in drawn apparently complete and effectuate written to stabilize device expres general by preventing the use of other in transactions
177 ifect, parties only of cases, by their not in sions the to alter.or extend numerous, actually when so those intended, far the most was exceptional parties’ in cases even .where form, intentions,, writing, despite was otherwise.” of their (2d Ray, Ed.) 447, sec. McCormick & Texas Law Evidence point may is a one fol- here narrow be stated as : lows agreement alleged Does the contradict Hubacek unqualified evidenced his endorsement of
the notes which his cross action is based? This is promissory not a case in en- notes have been dorsed, handled and collected in con- accordance with a written parties. case, tract problem In such a we would have the arriving integrated agreement at the ultimate by considering recog- the written instruments with in accordance nized rules Perhaps of construction and evidence. in certain instances, necessary it would be to consider evidence to ambiguities, resolve contradicting but this not the is same as by parol written record of' the which we have, namely, unqualified promissory endorsement of note. says Hubacek in effect that he delivered to the a note bank signed (for example) Doe, payable John $100 to Hubacek bearing per peT interest at the rate of ten cent He annum. qualification thereby endorsed the note without became pay according 66, Nego- bound the same to its tenor. Section Acts, tiable Instruments Article sec. Vernon’s Texas Stats., Civ. sec. C.J.S. 852. Then when at end of one year together full, paid interest, $10.00 Hubacek asserts that is entitled he of the interest so $2.00 paid. Doe, maker, paid Had maturity, John not the note on have owed the Hubacek would bank sum of He could $110. discharge obligation by .paying or; not the bank what $108 thing, by paying amounts to the same the bank and re- $110 ceiving as a rebate. $2.00 than one note The fact more was involved and the rebate payable until after all the notes were does not change saying than the situation more that Hubacek en- collecting compensation legally a note which he was titled , pay, bound
178 410, Kerns, 447, the directors 17 v. S.E. Godwin Va. capi- good impairment notes to the were bank charged him;- per by ten cent would be interest rate of by paid notes; him was all when a note endorsed on by per held in full cent thereof would be bank (2%) two applied any loss in reserve and credited to his account any notes, placed account to the on the difference to be terminate their- con- if and when the should of Hubacek alleged was ever made was tract. or not the contract Whether jury disputed sharply which was determined issue n of Hubacek. favor issues, special jury on The case submitted to the two which, together thereto; were as follows: with the answers “SPECIAL ISSUE NO. preponderance you of the evidence that “Do find from agents, through Bank, servants or plaintiff, its' Ennis State ah employees, made and entered into and F. A. Hubacek Hubacek, said bank ment that from notes endorsed to equal an amount hold in reserve Hubacek said bank -would notes, per out of said to two cent of the amount of the interest, reserve, any, used if could of the Hubacek, which said any bank, pay any the notes loss on and the Hubacek, excess over said endorsed to the bank losses, any, if Hubacek? would be Answer ‘Yes’ or-‘No.’ ANSWER: Yes. you preceding If ‘Yes’ have answered the issue then answer following issue; otherwise, not answer do it. SPECIAL NO. 2 ISSUE preponderance evidence, you From what find do reserve, the amount any, created for such if under the terms agreement, you of such agreement? if have found there was such Answer, stating dollars, any, cents, the amount of if if figures. any, in ANSWER: $912.43.” . Upon that verdict the court rendered in favor of aggregate bank the five notes in the $1562.84, amount of interest per at the plus attorney’s rate ten included cent
Notes
notes default of the makers was absolute and not contin gent. proof respect rule enforcement of collateral
notes
precluded
an
tions as
endorser that
the
evidence rule
by petitioner.
its
Many
enforcement.
more are cited
All of them
analyzed. Principal
Daggett,
cannot be
reliance is on Chalk v.
App.,
Texas Com.
257
228 and Robert &
John Motor
S.W.
St.
Bumpass,
App.,
Texas
Co. v.
65
Civ.
writ dismissed.
apposite.
of
Neither
those cases is
against
Daggett,
promis-
Chalk v.
suit was
the maker of
sory
sought
recovery
notes.
He
defeat
amount
proving
grew
that the notes
out
partnership
of the settlement of
agreed
affairs and that the
had
that the notes were not
accounting
to be
until an
partnership
of the
was had and
accounting
then
an amount
such
as the
showed to be due.
Quite obviously proof
agreement
and enforcement of the
would
obligations
have varied and contradicted the
of the maker to
pay
stipulated
stipulated.
the amount
in the notes on the dates
agreement
rejected
The collateral
for those reasons. See
hold,
opinion
257
The court
S.W. 231.
did not
nor
imply,
does the
accounting
showing
if an
had been made
a balance due to
the maker
have
he could not
recovered the balance
counter
against
recovery
claim and had it set
off
on the notes. As a
fact,
specifically recognized
matter of
the court
that non-incon-
agreements may
sistent collateral oral
be enforced
cross-
action, citing
Yturria, supra.
Hansen v.
notes
of the bank executed
to make
sued, they
an oral
pleaded
tal stock. When
taken from
upon
amounts collected
capital
notes which
been
should be
by order
bank examiners
accounts
Ap-
upon
Supreme Court
directors’
credited
peals
notes.
offset, holding
Virginia
that:
rejected
attempted
by parol
allow
“To
it to be shown
from
by payments
the holder
to be
reduced
made to
holder,
paid or reduced
or to
other securities held
any subsequent
happening
event
mentioned
value
alter, vary,
itself,
the ex-
and contradict
the note
would be to
press
of a
contract.”
terms
holdings
Kelley