Sund & Co. v. Flagg & Standifer Co.

168 P. 300 | Or. | 1917

Mr. Justice Harris

delivered the opinion of the court.

It will not be necessary to determine whether the cross-examination of the two witnesses, J. Sund and Carl Ness, developed the fact that both partnerships agreed to be bound by the estimates of the chief engineer, although we note in passing that Sund stated in unequivocal terms, on direct examination, that the writing was like the oral agreement, that they never had any contract except the written one, and that they never at any time agreed to be bound by the estimates of the chief engineer, and, on redirect examination, J. Sund who appears to have conducted the negotiations for the. plaintiffs, again testified in unmistakable language that they never agreed to be bound by the estimates of the chief engineer. Carl Lundberg said that the written contract was like the oral agreement, and in response to questions by counsel for plaintiffs Carl Ness swore that there was no understanding as to who was to make the classification for the purpose of final settlement. If it was incompetent for the defendant to add to the terms of the writing by showing that the oral agreement embraced some stipulation not found in the writing, then it is immaterial whether the cross-examination does or does not have the effect claimed by the defendant. The competency of the oral evidence relied upon by the defendant depends upon whether the writing is to be taken as the only evidence of the contract between the parties.

Throughout the investigation of the question for decision we must bear in mind that Section 713, L. O. L. provides that:

“When the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms, and therefore there can be, between the parties and their representatives or successors in interest, no evidence of the terms of the agreement, other than the contents of the writing, except in the following cases:

“1. Where a mistake or imperfection of the writing is put in issue by the pleadings;

‘ ‘ 2. Where the validity of the agreement is the fact in dispute. But this section does not exclude other evidence of the circumstances under which the agreement was made, or to which it relates, as defined in Section 717, or to explain an ambiguity, intrinsic or extrinsic, or to establish illegality or fraud. * * ”

1. However, the mere fact that a writing has been signed by contracting parties does not always preclude extrinsic evidence of additional terms not found in the writing; and, indeed, it is sometimes said to be the rule, although it is a loose generalization, that where a written instrument, executed pursuant to a prior verbal agreement or negotiation, does not express the entire agreement or understanding of the parties, it is competent to offer extrinsic evidence with reference to matters not provided for in the writing: 17 Cyc. 741. It is a nearer approach to accuracy to say that if by proper and competent means it is made to appear that a writing contains only a part of the agreement entered into, parol evidence may be received to prove the entire contract; but if the writing contains all that is necessary to constitute a contract and purports to be a complete expression of the whole agreement, it is presumed that the parties have introduced into it every material item and term, and parol evidence is not admissible to add another term to the agreement, although the writing does not mention the particular item to which the parol evidence is directed: 10 E. C. L., p. 1030.

The authorities are not agreed upon the test to be employed in determining whether a writing is incomplete so as to permit the introduction of evidence to show an additional term in an agreement, and it would be useless to attempt to reconcile the variant expressions found in the books, although an analysis of many of the adjudications will disclose that as between a considerable number and perhaps a majority of the courts there is more of harmony and less of difference than might at first appear: 9 Ency. of Ev. 347; 17 Cyc. 746; 10 R. C. L. 1030; 1 Elliott on Ev., § 576; 4 Wigmore on Ev., §§ 2430, 2431. Obviously, the mere fact that the parties did in truth agree upon an additional term not found in the writing, is not of itself enough to open the door for extrinsic evidence, for if such were the doctrine but little would remain of the rule against varying written contracts by parol. More than a quarter of a century ago this court held in Looney v. Rankin, 15 Or. 617, 622 (16 Pac. 660), that the writing “must be in such a shape that it may be fairly inferred from the face of it that something has been omitted therefrom”; and while this case is frequently referred to as an authority for holding that the incompleteness of the writing must appear on the face of the document from mere inspection unaided by the circumstances under which it was made, the situation of the subject of the contract or of the parties to it, the opinion must nevertheless be read in the light of Section 717, L. O. L., which was enacted in 1862 and was in force when the case of Looney v. Rankin was decided in 1888. Section 717, L. 0. L., reads thus:

“For the proper construction of an instrument, the circumstances under which it was made, including the situation of the subject of the instrument, and of the parties to it, may also be shown, so that the judge be placed in the position of those whose language he is to interpret.”

The right to offer evidence, when necessary, to show the circumstances under which a contract was made including the situation of the subject of the writing and of the parties to it does not mean that a clear and unambiguous writing can be made ambiguous or that an obviously complete document can be made incomplete by extraneous evidence. The sole purpose of an inspection is to construe the instrument and to ascertain whether the writing is complete, and that question must be decided by an interpretation of the very language used in the writing; and in this case, as in other cases where it becomes necessary to interpret the language employed by contracting parties, evidence may be offered showing the circumstances under which the contract was made, the situation of the subject of the contract and the parties to it, so that the judge may be placed in the position of the parties and when so placed can interpret the language used by the parties and from that language determine whether" the' writing is complete. A statement found in Wheaton Roller Mill Co. v. John T. Noye Mfg. Co., 66 Minn. 156 (68 N. W. 854), is so apt that we here quote it:

“In short the true rule is that the only criterion of the completeness of the written contract as a full expression of the agreement of the parties is the writing itself, but, in determining whether it is thus complete, it is to be construed, as in any other case, according to the subject matter, and the circumstances under which and the purposes for which it was executed”: See also: 17 Cyc. 746; 4 Wigmore on Ev., § 2431 (b).

The rule under discussion is well illustrated in American Bridge & Contract Co. v. Bullen Bridge Co., 29 Or. 549 (46 Pac. 138), where it appeared from the writings that one party agreed to deliver crushed rock on scows at a bridge site for a certain sum per cubic yard, but an inspection of the writings showed that the documents were silent as to the quantity of crushed rock, to be delivered by one and received, by the other party, and it was held that the writings did not constitute a complete contract and that therefore it was competent to offer parol evidence to show the amount of crushed rock contracted for. The rule is not enlarged by anything' said in Williams v. Mount Hood Ry. & Power Co., 57 Or. 251, 256 (110 Pac. 490, 111 Pac. 17, Ann. Cas. 1913A, 177), although the general doctrine is referred to in comprehensive language. If Holmboe v. Morgan, 69 Or. 395, 400 (138 Pac. 1084), is to be construed as holding that parol evidence is always admissible to show that an additional term contained in a prior oral agreement provided only the contract is not one required to be in writing by the statute of frauds, it is stating the rule too broadly. In Stuart v. University Lumber Co., 66 Or. 546 (132 Pac. 1, 135 Pac. 165), attention is called to the fact that the writing is incomplete since “it makes no provisions as to the manner of delivery. ’ ’

2. There is a rule which permits the use of parol evidence to prove a collateral agreement which does not interfere with the terms of the written contract although it may relate to the same subject matter and ■have occurred prior to or even contemporaneously with, the principal contract in writing. This principle is recognized in Looney v. Rankin, 15 Or. 617, 622 (16 Pac. 660), and is exemplified in Lewis v. First Nat. Bank, 46 Or. 182, 193 (78 Pac. 990). This rule, however, does not apply in the instant case because the oral stipulation averred by the defendant is so closely connected with the principal transaction as to be a part of it and is not merely a collateral and independent transaction: Naumberg v. Young, 44 N. J. Law, 331 (43 Am. Rep. 380); Armington v. Stelle, 27 Mont. 13 (69 Pac. 115, 94 Am. St. Rep. 811).

3. Having concluded that parol evidence cannot be employed to add a term to a written contract unless it appears from an inspection of the writing interpreted in the light of the circumstances under which it was made, the situation of the subject of the instrument and the parties to it, that the writing is incomplete, it yet remains to determine whether the documents presented here are complete contracts. Turning to the writing signed by the plaintiffs, it will be seen that the Sund partners agree to do the construction work between certain stations and the defendant agrees to pay certain prices for certain kinds of work. It is true that the first paragraph refers to a profile, directions of the defendant, and rules, specifications and instructions given by the chief engineer of the Silver Palls Timber Company, but these provisions relate to the manner of performing the work and are no longer of any moment for the reason that the work has been completed in the manner agreed upon. Every element necessary for a complete contract is found in the writing. Not a word can be found in the instrument which contains the slightest suggestion that the parties agreed that they would be bound by the final estimates of the chief engineer. The writing is utterly silent upon that subject. It may be true that contracts with stationmen usually contain the stipulation contended for by the defendant but the answer is that this instrument does not contain such h stipulation. The parties chose to reduce their oral agreement to writing and upon inspection the document appears to contain a complete contract. The prior oral agreement made in September, 1912, may have included the stipulation that the parties would be bound by the estimates of the chief engineer; but if the oral agreement did embrace such a stipulation the parties left it out when they reduced the agreement to writing and since the writing now appears to contain a complete contract, the party claiming to be prejudiced is without remedy in this proceeding: Vogt v. Schienebeck, 122 Wis. 491 (100 N. W. 820, 106 Am. St. Rep. 989, 2 Ann. Cas. 814, 67 L. R. A. 756).

The record as now presented to us does not involve any questions arising out of any asserted custom. The only question we have undertaken to discuss is whether or not the defendant was entitled to show by parol evidence that the parties orally agreed to be bound by the final estimates of the chief engineer; and having found that such parol evidence was incompetent it follows that the defendant was not entitled to a judgment of .nonsuit, and consequently the judgment is reversed and the cause is remanded for a new trial.

Reversed and Remanded.

Mr. Chief Justice McBride, Mr. Justice Benson and Mr. Justice Burnett concur.