I am of opinion that the order of his Honor Judge Shipp for new trials in these cases was based upon an erroneous conception of the law, and should be reversed. I therefore dissent from the opposite conclusion announced in the opinion of Mr. Justice Stabler, for the reasons which follow.
These two cases, identical in all respects, were tried together on circuit, and were heard together in this Court.
Each is an action for the recovery of an amount equal to one-third of the proceeds of two policies of fire insurance, collected by the defendant. The policies were upon a stock of goods which belonged to the Keistler Company; it was destroyed by fire on January 26, 1921. See the case ofKeistler v. Ins. Co., 124 S.C. 32; 117 S.E., 70, the opinion in which was filed February 1, 1923. The net amount collected by the defendant as a result of that litigation was $4,229.72. The plaintiffs contend that, under the facts following, they are entitled to an amount equal to two-thirds of that sum, $1,409.90 each, with interest from the date of its collection by the defendant, May 4, 1923. The contest is whether, in a sale by the plaintiffs of their stock in the Keistler Company to the defendant, he agreed as a part of the consideration, in addition to other items, to pay them an amount equal to two-thirds of what might be realized on said policies.
The cases were tried before his Honor Judge Shipp and a jury, and resulted in verdicts in favor of the plaintiffs for the amounts claimed, without interest. Thereafter the defendant moved for new trials, which motions were granted by Judge Shipp, in an order which will be incorporated in the report of the case. From that order the plaintiffs have appealed. *Page 545
The evidence tended to establish these facts: In May, 1921, the Keistler Company, a corporation, was conducting a mercantile business, and had been so engaged for some time, at Great Falls, in Chester County. The capital stock of the corporation was owned by the two plaintiffs, brothers, and the defendant, each owning one-third thereof, and holding certificates of stock to that extent, with the exception of 40 shares standing in the name of one Bankhead, but which in fact belonged to the three, not having been transferred on the books to them. The store building with the stock of goods had been destroyed by fire in January preceding, and litigation was pending between the company and the insurance companies on the policies.
In May, 1921, the plaintiffs and the defendant opened negotiations looking to a sale and transfer by the plaintiffs of their stock in the corporation to the defendant, and on May 24th the terms of the sale were verbally agreed upon. On that day the plaintiff W.B. Gladden, acting for himself and his brother, C.B. Gladden, met with the defendant Keistler in the directors' room of the bank at Great Falls. They called in two outsiders, McCrorey and Mullican, to witness the terms of their verbal agreement. The parties do not agree entirely as to the terms of the agreement. The plaintiffs assert that they agreed to sell their stock for $7,000 cash, or its equivalent, a conveyance of a half interest in certain lots at Great Falls, and two-thirds of what might berealized from the insurance litigation. The defendant concedes the first two items of the consideration, but denies that anything at all was agreed to in reference to the insurance. The contention of the plaintiffs was sustained by the testimony of W.B. Gladden and of McCrorey, the outsider, and by that of R.B. Caldwell, president of the Commercial Bank, as will be seen — all of whom testify positively to the item of insurance entering into the agreement. The contention of the defendant is sustained only by his flat denial; *Page 546 his main defense is that the verbal agreement was merged in a written contract later, which contains no reference to the insurance.
After the verbal agreement of May 24, 1921, had been made at Great Falls, the parties by agreement met at the Commercial Bank in the City of Chester on June 3d, to consummate the trade. The stock certificates which the Gladdens proposed to transfer to Keistler were in that bank, and the meeting was held there for the purpose of having the stock transferred and the cash payment made by Keistler. Mr. Caldwell assisted them in closing the matter up. The stock certificates were transferred by the Gladdens to Keistler. He paid to the Gladdens $4,000 in cash, and gave them two notes of $1,500 each, payable respectively in 30 and 60 days. For some reason not explained the execution to the conveyance of a half-interest in the real estate was deferred. After the above matters had been concluded, C.B. Gladden left the bank; Keistler and W.B. Gladden remaining.
At this stage of the proceedings, after the stock had been transferred and delivered, the cash money paid, the notes executed and delivered, and C.B. Gladden had left the bank, this occurred (in the language of Mr. Caldwell):
"Mr. Banks Gladden, I think it was, asked me if I didn't think he ought to have some sort of a little paper, as he expressed it, with reference to the division of those lots theyhad there."
In response to this suggestion, Mr. Caldwell went into his private office, and dictated to his stenographer the receipt, the storm center of this controversy, which is set forth in the opinion of Mr. Justice Stabler, and brought it back into the room where Keistler and W.B. Gladden were. What occurred then is best explained in the testimony of Mr. Caldwell: *Page 547
"I don't recall whether up to that time anything was said about the insurance or not. I knew about the suit they hadpending for the insurance. I asked them what was to bedone about the insurance. Mr. Banks Gladden I think was the one that answered me. He said: `If we get that, it will be in money; we have an understanding that is to be divided among us in accordance with our holdings in the Keistler Company.' I asked them if that was to be put in this paperI had drawn. * * * I reminded them `we are not dividing up partnership assets, but were transferring stock in a corporation,'and asked them if I should put in the agreementwith reference to the insurance. I said I had already drawn the paper (and manifestly wished to know whether it should be redrawn and the agreement with reference to the insurance inserted). Mr. Banks Gladden said: `Well it doesn't makeany difference; we all understand one another; and we havenever had any trouble; if we get that, it will be in money,and it will be divided.'"
He testified further that Keistler was sitting on the opposite side of the table; that he laid the receipt down on the table, and asked Keistler if it was satisfactory to him. He replied that it was, and signed it. In answer to the question: "Did any of these gentlemen ever ask you to draw a contract, or did you undertake to draw a contract between them?" Mr. Caldwell replied:
"Mr. Gladden just said he wanted some little paper withreference to this real estate, and, when I drew this paper, I set out the facts that had been mentioned, to show a considerationfor Mr. Keistler to convey the lot. Q. Are you positive that insurance was mentioned? A. Yes; I am positive, for I mentioned it myself. Q. Are you positive that Mr. Gladden stated they were going to divide that themselves; that was in money, and it wasn't necessary to put itin that receipt? A. Yes, sir. * * * Q. But it was mentioned, and Mr. Keistler didn't object? A. Yes, sir; I mentioned *Page 548 it and asked about it, because I had set out the other things in this paper; and, if I had thought about it beforehand,I probably would have put it in there, and it didn't occur to me until after I drew the paper, and I asked about it,and that is what they told me. * * * I don't recall a single thing Mr. Keistler said. Mr. Keistler is not a man that talks much; I don't know that he said anything; I don't recall. I certainly understood that he accepted Mr. Gladden'sstatement about the insurance, when I asked if they wanted me to put it in this paper I had drawn; that was after I had drawn the paper I asked them if they wanted it to go in there. Mr. Gladden made his statement, and Mr. Keistler sat right opposite him in the directors' room. * * * Icertainly understood he was agreeing to what we were doing."
The evidence tending to show that the oral agreement at Great Falls included an agreement to divide the insurance money, in the event of a favorable result of the litigation with the insurance companies and the circumstances attending the execution of the receipt at the meeting in the bank at Chester, tending to show that that was a part of the oral agreement, and was by agreement omitted from the written receipt, was admitted by the presiding Judge, over the objection of the defendant that it tended to contradict, alter, or vary the terms of the written receipt.
Upon the defendant's motion for a new trial, his Honor Judge Shipp signed an order granting it, upon the ground that he had committed error in admitting the evidence referred to; that it was a violation of the so-called "parol evidence rule." The exceptions of the plaintiffs raise the single question of the correctness of that position.
To say that the evidence of what transpired at the Great Falls meeting, and what transpired at the bank meeting in Chester, tended to show that the item of a division of the insurance money was a part of the oral agreement, is a mild *Page 549 expression of the conclusion which any unprejudiced mind would arrive at. It, at the least, was sufficient to convince the jury, which found a verdict in favor of the plaintiffs upon that issue, squarely presented to them in the Judge's charge. Unless, therefore, there was error on the part of the Circuit Judge, in the admission of this evidence, the verdict should be allowed to stand, and that is the issue presented by this appeal.
There is no question as to the general rule that parol evidence which tends to contradict, vary, or alter the terms of a written instrument cannot be received; but to this general rule there are many exceptions: (1) It may be received when it appears upon the face of the writing that it does not purport to cover all of the terms of the oral agreement; (2) it may be received when, outside of the writing, it is made to appear that it was not intended by the parties to cover all the terms of the oral agreement; (3) it may be received when it is made to appear that the writing was intended by the parties to cover a particular feature of the oral agreement alone, especially when this is made to appear by the specific agreement or understanding of the parties; (4) it may be received for the purpose of establishing a verbal agreement independent of the writing.
None of these exceptions will permit the admission of the parol evidence, where it appears that it will tend to contradict, vary, or alter the terms set forth in the writing.
I think that the evidence was admissible in this case upon either of the second or third exceptions above noted: (2) It may be received when, outside of the writing, it is made to appear that it was not intended by the parties to cover all the terms of the oral agreement; or (3) it may be received when it is made to appear that the writing was intended to cover a particular feature of the oral agreement, especially when this is made to appear by the specific agreement or understanding of the parties. *Page 550
I. The facts of this case so clearly demonstrate that they tend to establish the exception last referred to, which is conclusive of the question at issue, that I will discuss it first. As a matter of course, this Court cannot decide the issue of fact thus suggested; but, upon the issue of the admissibility of the evidence, all that may be required to be shown is thetendency of the evidence in that direction.
The situation here is quite different from that presented by the usual circumstances attending the making of an oral agreement and the swiftly following effort of the parties to incorporate the terms of that agreement in a writing signed by both of the contracting parties. It is under these circumstances that the question ordinarily arises, as to the admission of parol evidence in reference to some of the terms of the writing, or to some element of the oral agreement which has been for some reason or other omitted from the writing.
I may be permitted to suggest with great deference and respect, what to my mind is quite apparent, that the opinion of Mr. Justice Stabler proceeds upon the theory that the ordinary situation above referred to has been presented by the facts; as if the parties, soon after the oral agreement at Great Falls had been entered into, met at the bank in Chester for the purpose of reducing to writing the termsof that agreement, and that the writing had been executed for that purpose. Nothing seems further from a legitimate conclusion from the facts than this.
It appears beyond doubt that the parties met at Chester for the purpose of consummating the oral agreement that had been entered into at Great Falls; not of memorializing in writing the terms of that agreement. The execution and delivery of the receipt occurred after the major portion ofthe oral agreement had been consummated; the certificates of stock had been transferred and delivered; the cash payment of $4,000 had been made; the two notes of $1,500 each had been executed and delivered; and one of the parties, C.B. *Page 551 Gladden, satisfied with the consummation as far as it had proceeded, and leaving the matter of the execution of the deed to an interest in the real estate (admittedly a part of the oral agreement) resting in the oral agreement, had left the conference. There was no necessity or occasion, therefore, to crystalize the entire oral agreement in writing after so much of it had been consummated; and what followed I think conclusively shows that the sole purpose of the receipt was to secure the written acknowledgment and promise of Keistler, binding him to the single feature of the oral agreement relating to the real estate. After so much of the oral agreement, as stated, had been completed, C.B. Gladden was satisfied to leave the other two elements, the real estate and the insurance, under the oral agreement, and left. W.B. Gladden, however, suggested the execution of a memorandum relatingto the real estate solely. Mr. Caldwell understood that a conveyance of a half interest in the lots was all that the "little paper" was intended to cover, and the paper wasdrawn covering that feature alone. If there could be the remotest doubt of that purpose in executing the paper, it is removed by the testimony of Mr. Caldwell that the agreement as to a division of the insurance money, if collected, was brought up by him; that the agreement as to the insurance was distinctly stated by Gladden in the presence of Keistler, who said not a word in opposition; that he asked if it should be incorporated in the paper; and that it was stated by Gladden, and tacitly assented to by Keistler, that it being thoroughly understood by them that the insurance money was to be divided, it was not at all necessary to redraft the paper and have the agreement as to it inserted; and, as Mr. Caldwell further testified: "I set out the facts that had been mentioned to show a consideration for Mr.Keistler to convey the lots." Gladden was willing, and Keistler was willing, that the matter of a division of the insurance money should continue to rest in parol, as all the *Page 552 other elements of the oral agreement at Great Falls had up to that time rested; and, what makes the case for the plaintiffs absolutely impregnable, it was agreed that that elementshould not be included in the writing, completely settling the question that it was intended simply to memorialize onesingle feature of the oral agreement, the division of the lots.
I think, therefore, that it is absolutely clear that the receipt was not intended as a full memorial of the verbal agreement which was entered into on May 24th, and had been practically consummated; that it was intended only as a memorandum limited to one feature of that agreement; and that it was expressly agreed by the parties that the feature of a division of the insurance money, admitted by Keistler as a part of the verbal agreement, need not be incorporated inthe receipt.
If that be true, there can be no question as to the admissibility of the evidence. It can be excluded only upon the theory that the written instrument in question was intendedby the parties to crystalize all of the elements of the precedingoral agreement. How is it possible to come to this conclusion, in the face of the evidence, at least, tending to show that the parties expressly agreed and understood that the element of the oral agreement relating to the division of the insurance money should be omitted from the writing? In other words, that the writing should not memorialize all of the elements of the oral agreement.
"The rule excluding parol evidence of a consideration different from a contractual one recited in the written instrument has no application when it is evident that the instruments were executed in pursuance of a more comprehensive agreement which the parties did not undertake to express in writing." 22 C.J., 1172.
In Stahelin v. Sowle, 87 Mich., 124; 49 N.W., 529, it was held that, where the declarations of both parties showed *Page 553 that the written contract was treated as incomplete, parol evidence is admissible of extrinsic facts or agreements.
In Rines v. Ferrell, 107 Minn., 251; 119 N.W., 1055, it was held that:
"* * * a written agreement given in part performance of an oral one, which includes the subject-matter of the written one and other matters not intended to be embracedin the written one, does not exclude evidence as to the oral agreement in respect to such other matters."
A decision which aptly fits the question here at issue.
"Where a writing, although embodying an agreement, is manifestly incomplete, and not intended by the parties to exhibit the whole agreement, but only to define some of its terms, the writing is conclusive as far as it goes; but such parts of the actual contract as are not embraced within its scope, may be established by parol evidence." The Alida, Fed. Cas. No. 200.
"When a written contract is confined to one undertaking by one party, although a presumption arises, in the absence of proof to the contrary, that the parties expressed the whole of their intention in respect to the subject-matter yet that presumption may be rebutted by express evidence that what was so written was intended as a mere memorandum of onepart or branch only of a mere general agreement." Lafittev. Shawcross (C.C.), 12 F., 519.
When parts only of a transaction in litigation between parties have been evidenced by an instrument in writing, parol evidence is admissible to prove the remainder of the transaction, in order that the Court may view the transaction from the viewpoint of the parties. Miller v. Fichthorn,31 Pa., 252.
"When the writing does not purport to disclose the complete contract, or if, when read in the light of attendant facts and circumstances, it is apparent that it contains onlya part of the agreement entered into by the parties, parol *Page 554 evidence is admissible to show what the rest of the agreement was; but such parol evidence must not be inconsistent with or repugnant to the intention of the parties as shown by the written instrument." Stone v. Spencer, 79 Okla. 85;191 P., 197.
"Where a written contract was made in pursuance of a prior verbal contract between the parties broader in its scope, and as a means of carrying out a portion only of suchverbal contract, the rule that a verbal agreement is conclusively presumed to be merged in a subsequent written contract does not apply, and the verbal agreement may be shown in a suit to determine the respective rights of the parties."National Wire Bound Co. v. Healy (C.C.A.), 189 F., 49.
In this case the Court made the following observation quite pertinent to the case at bar:
"There is no ground, therefore, for applying the rule * * * that verbal conversations are merged in a subsequent written agreement; for these subsequent written agreementswere not accepted or acted upon * * * as a written embodimentof the verbal agreement."
"Where the parties do not intend to embody their entire oral agreement in the writing, the rule invoked by the plaintiffs does not apply." Brosty v. Thompson,79 Conn., 133; 64 A., 1; 12 L.R.A. (N.S.), 793; 118 Am. St. Rep., 178.
It is a very significant fact, as bearing upon the question whether the parties intended that the receipt should memorialize all the terms of the oral agreement, that it was signed only by Keistler; a fact entirely consistent with the contention of the Gladdens that it was executed for the purpose of binding him in reference to the real estate, and for none other.
That under the evidence a jury would be justified in finding that Keistler agreed that the matter of insurance need not be incorporated in the receipt I think cannot be denied. *Page 555 If he did so agree, and had Gladden to accept the receipt as it stands, it would be a monstrous fraud on his part now to insist that the agreement to divide the insurance cannot be enforced because it was not incorporated in the receipt.
"The existence of a contemporaneous parol agreement between the parties under the influence of which a note or contract has been signed, which is violated as soon as it has accomplished its purpose in securing the execution of the paper may always be shown when the enforcement of the paper is attempted. It is a plain fraud to secure the execution of an instrument by representations differing in important particulars from those contained in the paper and after the paper has been signed, attempt to compel literal compliance with its terms, regardless of the contemporaneous agreement without which it would never have been signed at all." 10 R.C.L., 340.
We have this situation: There is evidence from Gladden and McCrorey (the outsider called in to witness the oral agreement at Great Falls), and Caldwell, tending to show that the agreement did contain the stipulation that the insurance money should be divided; there is evidence from Gladden and from Caldwell tending to show that it was agreed, when the receipt was executed, that the stipulation as to insurance should be omitted from the receipt. A finding upon both of these matters in favor of the Gladdens was at least justified, if not demanded. Under these circumstances, should Keistler be permitted to repudiate both his original agreement as to the insurance and his agreement that it needed not to be incorporated in the receipt? I most assuredly do not think so.
II. There is another interesting view of this case. I will assume for the argument's sake that the theory upon which the opinion of Mr. Justice Stabler has proceeded is correct; that the issue of the admissibility of the parol evidence under *Page 556 the facts of this case is the same as if the parties had met soon after the meeting at Great Falls and proceeded to formulate in writing the previous oral agreement (an hypothesis which I have endeavored to show is not at all borne out by the evidence); in other words, that the written instrument was executed pursuant to the prior oral agreement for the purpose of memorializing the terms of that agreement.
Assuming that to be true, the established rule is that parol evidence outside of the writing is admissible to show that it was not intended by the parties that the writing should cover all of the terms of the oral agreement.
It is said in the opinion of Mr. Justice Stabler:
"The authorities are divided on the question as to how the incompleteness of the written agreement may be shown; some cases holding that, in the absence of fraud or mistake, parol evidence can be admitted only when the contract or writing shows on its face that it does not express the entire agreement of the parties, and others holding that the omission of a portion of the agreement may be shown by parol. As to this point we express no opinion. * * *"
From the following quotations from 22 C.J., 1283, supported by the decisions of 44 states, including South Carolina, there does not appear to be a very serious division as to the proposition.
In 22 C.J., 1283, it is said:
"Where a written instrument, executed pursuant to a prior verbal agreement or negotiation, does not express the entire agreement or understanding of the parties, the parol evidence rule does not apply to prevent the introduction of extrinsic evidence with reference to the matters not provided for in the writing, and under such circumstances it is not necessary that there should be any allegations of fraud, accident or mistake, in order to render parol evidence as to the real contract between the parties admissible," *Page 557 — citing in support of this proposition a myriad of cases from the Courts of United States, Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin (44 states), England, and Ontario.
The South Carolina cases cited are: Midland Co. v.Furman, 111 S.C. 287; 97 S.E., 831; Harris v. Harris,104 S.C. 33; 88 S.E., 276; Midland Co. v. Pickens, 96 S.C. 286;80 S.E., 484; Herlong v. Southern Co., 93 S.C. 529;77 S.E., 219; Ashe v. Carolina N.W.R. Co., 65 S.C. 134;43 S.E., 393; Sloan v. Courtenay, 54 S.C. 314;32 S.E., 431; Willis v. Hammond, 41 S.C. 153;19 S.E., 310; Holly v. Blackman, 32 S.C. 584; 10 S.E., 774;Bulwinkle v. Cramer, 27 S.C. 376; 3 S.E., 776; 13 Am. St. Rep., 654; Moffatt v. Hardin, 22 S.C. 9; Kaphan v.Ryan, 16 S.C. 352; Hatcher v. Hatcher, McMul. Eq., 311.
In reference to the cases apparently creating a division upon this question the author states:
"This discrepancy is, however, more apparent than real, and probably results more from a loose use of terms than a confusion of ideas, as both lines of cases may be reconciled with what appears to be the most satisfactory general rule that can be announced in respect to this matter; which is, that while the writing itself is the only criterion by which the intention of the parties is to be ascertained, yet it is not necessary that the incompleteness thereof should appear on its face from a mere inspection of it, for it is to be construed in the light of its subject-matter and the circumstances under *Page 558 which and the purposes for which it was executed. Indeed some of the cases, which state flatly that the instrument must appear on inspection to be incomplete, contain expressions showing a recognition of the modification that the surrounding circumstances may also be considered."
Mr. Wigmore employs a term which is exceedingly expressive: The "Integration" of legal acts, which he defines to be "the formation from scattered parts into an integral documentary unit," and announces this proposition:
"When a legal act is reduced into a single memorial, all other utterances of the parties on that topic are legally immaterial for the purpose of determining what are the terms of the act." 4 Wig. Evd. (1st Ed.) § 2425.
It seems clear that, if a material element of a verbal agreement is omitted from a written memorial, and particularlywhere it is omitted by express agreement, the written memorial cannot be deemed the "integration" of the agreement which preceded it; the proof of this omitted element by parol, therefore, does not impinge upon the parol evidence rule.
As Mr. Wigmore says, in Section 2430:
"The most usual controversy arises in cases of partial integration, i. e., where a certain part of a transaction has been embodied in a single writing, but another part has beenleft in some other form. Here obviously the rule against disputing the terms of the document will be applicable to so much of the transaction as is so embodied, but not to theremainder."
The parties are not obliged to embody their transaction in a single document; they may do so if they choose; hence it becomes merely a question whether they have intended to do so. Section 2930. This question of intention is determined by the conduct and declarations of the parties.
As a preliminary to the application of the law, the Judge hears the evidence of the previous negotiations and the circumstances *Page 559 attending the execution of the written instrument. If the evidence, taken to be true, does not combat the presumption that the writing was intended to cover the entire transaction, the Judge so rules, and directs the jury to disregard it; if, on the contrary, if taken to be true, it overthrows that presumption, its truth is submitted to the determination of the jury.
As Mr. Wigmore says (Section 2430):
"(1) Whether a particular subject of negotiation is embodied in the writing depends wholly upon the intent of the parties thereto. * * * Here the parties are not obliged to embody their transactions in a single document; yet they may if they choose. Hence it becomes merely a question whether they have intended to do so. (2) This intent must be sought where always intent must be sought; * * * namely, in the conduct and language of the parties and the surrounding circumstances. The document alone will not suffice. * * * The question being whether subjects of negotiation were intended to be covered, we must compare the writing and the negotiations before we can determine whether they were in fact covered. * * * There is a preliminary question for the Judge to decide as to the intent of the parties, and upon this he hears evidence on both sides; his decision here, pro or con, concerns merely this question preliminary to the ruling of law. If he decides that the transaction was covered by the writing, he does not decide that the excluded negotiations did not take place, but merely that if they did take place they are nevertheless legally immaterial. If he decides that the transaction was not intended to be covered by the writing, he does not decide that the negotiations did take place, but merely that if they did, they are legally effective, and he then leaves to the jury the determination of fact whether they did take place."
That is exactly the course pursued by the able and experienced Circuit Judge in this case; he allowed all of the *Page 560 circumstances connected with the original verbal agreement of May 24th, and with the consummation of the trade at the bank, followed by the execution and delivery of the receipt, and submitted the truth of the disputed facts to the jury, holding that, if those facts, as contended for by the plaintiffs, were so found by the jury, the plaintiffs were entitled to recover; otherwise not. His order granting a new trial was a reversal of the proper course which he had adopted, and a holding that all of such evidence was inadmissible as violative of the parol evidence rule. I think that his holding was erroneous for two reasons: (1) The evidence was admissible upon the preliminary question for him to decide whether the evidence, if true, overthrew the presumption that the writing contained the entire contract between the parties; (2) that, as a matter of law if the evidence on behalf of the plaintiffs be true, the conclusion is irresistible that the intention of the parties was that the writing should not embody the entire terms of their previous oral agreement, but that the matter of a division of the insurance money should rest outside of the written receipt in the conscience and spirit of fair dealing of the parties, upon the previous verbal agreement.
In the case of Moffatt v. Hardin, 22 S.C. 9, the action was to foreclose a mortgage which had been given by acestui que trust to her trustee, and assigned by him to the plaintiff. A witness was offered to prove that, at the time the beneficiary executed the bond and mortgage, the trustee, mortgagee, stated that, upon the happening of a certain contingency, he would cancel the bond and mortgage which he was taking simply for his protection. The testimony was objected to as violating the so-called parol evidence rule. The objection was not sustained; the Court holding:
"Nor do we regard this testimony as inadmissible on the ground that it tended to vary the terms of written instruments. The purpose manifestly was not to vary the terms *Page 561 of the papers, but to explain the uses to be made of themand the conditions of their existence; as stated in the case of Kaphan v. Ryan, 16 S.C. 357, `to show the whole agreement in which they originated and of which they constitutedonly a part.' It is said in 1 Greenleaf's Evidence, * * * that the rule does not apply to the admission of parol evidence in cases where the original contract was verbal andentire, and a part only was reduced to writing."
After stating the general parol evidence rule, the Court, in Bulwinkle v. Cramer, 27 S.C. 376; 3 S.E., 776; 13 Am. St. Rep., 645, says:
"This seems very plain, but the application of the rule is not always free from difficulty. In the infinite combination of circumstances, cases arise, which seem exceptions, but, when clearly examined, are found not to fall within the principle. As for example, it may happen that the writteninstrument does not purport to cover the whole field of contract,and is not intended to be the `depository' of the wholeagreement, but only one branch of it."
Exactly the idea intended to be conveyed by the term used by Mr. Wigmore "the integration of the contract." The Court continues:
"In such case, the whole contract may be proved by parol without touching the principle, the object being not to add to or alter the written instrument, but to show the whole agreement, of which the writing is only a part."
"It is said in 1 Greenl. Evid. § 284a, that the rule does not apply to the admission of parol evidence `in cases where the original contract was verbal and entire, and a part only was reduced to writing.'" Kaphan v. Ryan, 16 S.C. 352.
In Willis v. Hammond, 41 S.C. 153; 19 S.E., 310, the Court said:
"While it is a general rule that a contract in writing, complete in all its terms, draws into it all parol contracts [that is to say, I interpolate, all the elements of the parol *Page 562 contract], preceding it, yet if it fails to state the consideration; if it uses terms that need explanation to be understood and applied; or if it is only a part of a general whole, it isperfectly competent to supply all these missing qualities bytestimony giving all the precedent agreements of the parties."
How is it possible to prove that the written contract was "only a part of the general whole," unless one be allowed to prove by parol what was the "general whole?"
In the case of Chemical Co. v. Moore, 61 S.C. 166;39 S.E., 346, the parties had entered into a written contract for the sale and purchase of a quantity of fertilizers. The contract sued upon, for the goods sold, was admitted by the defendants, who set up a counterclaim for damages resulting from the breach of a parol agreement, entered into simultaneously with, and as an inducement to, the execution of the written contract of sale, with the plaintiff's agent, that the defendants should be the sole agents for the sale of he plaintiff's goods for the year at Duncans, S.C. and vicinity, and that none of its goods should be sold or shipped to any other person at that point or in the vicinity. The defendants offered parol evidence of the alleged agreement, which upon objection was excluded by the Circuit Judge. Upon appeal the judgment in favor of the plaintiff was reversed, the Court holding:
"The testimony ruled out was offered — not for the purpose of impairing, altering or in any way, otherwise, interfering, with the written contract upon which the plaintiff based its claim — but solely for the purpose of showing that by reason of the breach by the plaintiff of another, distinct and independent agreement, the plaintiff had become liable to pay the defendants the damages alleged in the answer." (It does not appear strictly accurate to refer to the parol agreement as an independent one, for the allegation was that it was an inducement to the written contract.) *Page 563 In Ashe v. Carolina N.W.R. Co., 65 S.C. 134;43 S.E., 393, the Court said:
"When the written evidence of the contract does not contain all the terms of the transaction between the parties, parol evidence (not contradicting or varying the writing) is admissible for the purpose of showing a contemporaneous, independent agreement entered into between the parties."
"It is a well-established general rule that if the parties reduce their entire contract or agreement to writing, whether under seal or not, the Court will not hear parol evidence to vary or change it, unless for fraud, mistake, or the like; butif it appears that the entire agreement was not reduced towriting, or if the writing itself leaves it doubtful or uncertain as to what the agreement was, parol evidence is competent, not to contradict, but to show and make certain what was the real agreement of the parties; and in such a case what was meant, is for the jury, under proper instructions from the Court." Cumming v. Barber, 99 N.C. 332;5 S.E., 903, reaffirmed as late as September, 1926, in the case of Hite v. Aydlett, 192 N.C. 166; 134 S.E., 419.
"It is not uncommon to speak of the present rule as a rule against `varying the terms of the writing.' No doubt that is precisely the effect of applying the rule. But it can never serve as a test to determine in the first instance whether the rule is applicable. The applicability and the effect of the rule are distinct things. To employ this phrase as a test is to reason in a circle; for it is to attempt to decide whether something conceded to be different from the writing ought to be excluded by showing that it is different. All the phrases about transactions that `vary' or `contradict,' or are `inconsistent,' involve the same futility. The fundamentalquestion is as to the intent of the parties to restrict thewriting to specific elements or subjects of negotiation, * * * and if that intent existed, then the other subjects of negotiation *Page 564 can be established even though they be (as they always are) different from the writing." 4 Wig. Ev. § 2431.
In Fullwood v. Blanding, 26 S.C. 312; 2 S.E., 565, the Court said:
"It is well established, as a general rule, that parol testimony is inadmissible to contradict, vary, or alter a written instrument. * * * If so, it should have been rejected as violative of the rule suggested. If, however, its purpose was simply to explain the object and intent of the assignment, and not to contradict, alter, or vary its terms, then the rule above would not exclude it."
"Whether the written contract expresses the entire agreement of the parties," and thereby renders parol evidence of its terms inadmissible, "must be determined from the contract itself in the light of the subject-matter" and of the attending circumstances. Meland v. Youngberg,124 Minn., 446; 145 N.W., 167, Ann. Cas., 1915-B, 775.
The case of Harris v. Dinkins, 4 Desaus. 60, is not in point. There an heir at law had given to the administrator a receipt for a small sum of money "in full for my share of the estate. * * *" Parol evidence offered to show that the parties intended "the estate" to include both real as well as personal property was excluded upon two main grounds: That the administrator had nothing to do with real estate and the presumption was that the receipt referred only to that class of property within his control; and that the sum received was entirely disproportioned to the heir's interest in the real estate.
III. Another view of the case sustains the admissibility of the evidence. The so-called receipt contains as engagement of Keistler in reference to the real estate; no other engagement by any of the parties appears in that paper. The recital portion of the receipt simply states the consideration which was intended to support the engagement of Keistler. As Mr. Caldwell testified: "I set out the facts that had been *Page 565 mentioned to show a consideration for Mr. Keistler toconvey the lot"; that the matter of insurance which might have been inserted as an additional consideration and would have been "if I had thought of it beforehand," was called to their attention, when it was agreed that it need not be incorporated. The case presented then is one where a part of the consideration for the engagement of Keistler has been omitted by agreement; and the admissibility of parol evidence to establish this omitted portion of the oral agreement seems beyond question.
It seems to me that the case of Knighton v. Desportes,119 S.C. 340; 112 S.E., 343, is conclusive of the question. There the plaintiff sued for the penalty under the usury statute. The defendant claimed that in the sale of a certain piece of land, although the consideration expressed in the deed was $1,000, the oral agreement which preceded the execution of the deed, contained as a further consideration for the conveyance, that the plaintiff would release his claim on account of usury. The plaintiff objected to parol evidence to establish this additional consideration upon the ground that it was violative of the parol evidence rule. The evidence was received and the defendant had judgment from which the plaintiff appealed. The Court, in an elaborate opinion by Hon. I.H. Hunt, Acting Associate Justice, concurred in by the late Chief Justice Gary, and Associate Justices Fraser and Cothran (Watts, A.J., dissenting) affirmed the rule of the Circuit Judge. The case is so full to the point that it would be a work of supererogation to quote from it or to endeavor to elaborate it. It is sufficient to state that the decision is based upon the principle that the full consideration of a deed may be inquired into by parol evidence, even though the additional consideration sought tobe established is contractual in its nature, provided that there is nothing contractual in the consideration stated in the deed, *Page 566 and the additional consideration does not contradict, vary, or alter the granting part of the deed.
In the particular document under review in the case at bar, it will be seen that the consideration upon which is based the defendant's agreement to convey an interest in the real estate is not at all contractual; that is, executory, in its nature. It contains a recital of what had been done, not what was to be done, as the consideration for the promise which followed it. If, instead of an agreement to make a deed for the interest in the real estate, the defendant had at the time executed and delivered a deed, and had stated in it the consideration which is recited in the paper, under theKnighton case there could be no doubt of the admissibility of parol evidence to establish, as an additional consideration, the oral agreement as to a division of the insurance money. Is an agreement to make a deed to possess a sacred character not accorded to a deed? I hardly think so.
I think that there is much force in the point suggested to my mind by the case of Collins v. Tillou's Adm'r,26 Conn., 368; 68 Am. Dec., 398, that the language of the receipt is that of Keistler, and that the first part of it is a statement by him of the consideration for his promise in regard to the real estate; a matter that is always open to parol evidence. In that case it was held that a deed absolute in terms was open to parol evidence to show a special oral contract which was the consideration for the deed. The Court said:
"We regard parol evidence as clearly admissible to show the circumstances under which a contract was made, and the relation of the plaintiffs and defendants to it, and to each other in respect to it."
In Clarke v. Tappin, 32 Conn., 69, it was held that the insertion of a consideration in a deed is considered as made merely for the purpose of giving full effect to the instrument. *Page 567
In Baldwin v. Carter, 17 Conn., 201; 42 Am. Dec., 735, it was held that parol evidence is admissible to show the situation of the parties, the object in view, and the consideration of a written contract.
In Hall v. Solomon, 61 Conn., 476; 23 A., 876; 29 Am. St. Rep., 218, it is said:
"It will be remembered that it is not the office of a deed to express the terms of the contract of sale, but to pass the title pursuant to the contract. Therefore, a parol agreement, being a part of the consideration for the sale, restricting the use of the premises in one particular, for a limited period, is not merged in the deed, and does not qualify or in any way effect the title to the land; and the admission of parol evidence to prove such an agreement is no infringement of the rule that parol evidence is not admissible to contradict, vary, or explain a written instrument."
Paraphrasing this statement: Therefore, a parol agreement, being a part of the consideration of an agreement to make a deed, is not merged in the deed, and does not qualify, or in any way affect, the agreement to make the deed, and the admission of parol evidence to prove such an agreement, is no infringement of the rule that parol evidence is not admissible to contradict, vary, or explain a written instrument.
In 10 R.C.L., 1044, it is said:
"The rule permitting the true consideration of written contracts to be enquired into by parol evidence, does not apply where the statement in the contract as to the consideration, is more than a mere recital or acknowledgment of payment, and is of a contractual nature. If the consideration is expressed merely as a recital of a precedent or contemporaneousfact, parol evidence is receivable to prove that the recited fact is untrue, and that the recited consideration has not been paid at all, or has been paid on a different account; but if the instrument states a contractual consideration, *Page 568 parol evidence is not admissible to vary or contradict the consideration expressed."
"Parol evidence is not admissible to show what was the consideration of a contract and the understanding of the parties thereto, if the object of such evidence is to contradict a written obligation, and to give it an effect inconsistent with its terms." Sandage v. Studabaker, 142 Ind., 148;41 N.E., 380; 34 L.R.A., 363; 51 Am. St. Rep., 165.
It manifestly is not intended by the parol evidence in question to contradict the written obligation of Keistler to execute the deed or have it executed.
It is insisted, however, that the recital in the receipt is not a mere recital, but is contractual in its nature, and that on that account parol evidence was inadmissible. The only part of it which has the semblance of contractuality is the statement, as a part of Keistler's engagement under the oral contract to make a deed to the real estate. It is strange to hold that tha was contractual in the recital when it was followed by his express engagement. The latter would have been unnecessary if the former had been contractual. But, assume that it was contractual, it is not proposed by the evidence to alter or contradict that engagement. There appears to be no sound reason why the statement of one contractual element in the consideration may not be supplemented by another which does not purport in the slightest degree to contradict, vary, or alter the contractual element which appears in the writing.
In the case of In re Cridge's Estate, 289 Pa., 331;137 A., 455, decided April II, 1927, the Court said:
"It is urged that there is a legal bar to a recovery in the present case, since the promise to limit payments to the lifetime of Cridge is a contradiction of the written agreement, which alone controls, since it is the expression of the final result of the negotiations of the parties and the best evidence of the transaction. It has long been held in Pennsylvania *Page 569 that parol evidence, if sufficient, may be used to show fraud, accident, or mistake in the making of a contract, or a failure of consideration (Murray v. Flesher,88 Pa. Super., 592), and may be offered to show a contemporaneous parol agreement which induced the signing (Neville v. Kretzschmar,271 Pa., 222; 114 A., 625; Danish Products Co. v.Marcus, 272 Pa., 340; 116 A., 303). The rule has been generally recognized that the agreement set up must not be inconsistent with the express provisions of the writing.Stull v. Thompson, 154 Pa., 43; 25 A., 890. And the more recent decisions have enforced even more strictly this principle, holding that if the matter proposed to be shown by parol is the subject of a covenant in the agreement, which is complete, such evidence to alter the terms cannot be received, and we have no intention of weakening the position taken in Gianni v. Russell, 281 Pa., 320; 126 A., 791, andMurphy v. Pinney, 86 Pa. Super., 458.
"A distinction has, however, been drawn in the decisions, where the effort is made to show by parol the true purchase price.
"`The amount of the consideration in a contract, whether large or small, does not usually affect the covenants of the parties, and therefore the fact that there was some other or different consideration than that expressed in the writing may be orally shown, the consideration mentioned being held only presumptive evidence that it is the real one.' Henry on Trial Ev., 383.
"Thus it has been held permissible to prove that the sum named was more than that stipulated for in the deed, and that additional amounts were to be paid (Piper v. Queeney,282 Pa., 135; 127 A., 474; Croyle v. Cambria L. I. Co.,233 Pa., 310; 82 A., 360; Potter v. Grimm., 248 Pa., 440;94 A., 185; 12 A.L.R., 349; Faux v. Fitler, 223 Pa., 568;72 A., 891; 132 Am. St. Rep., 742; Henry v. Zurflieh,203 Pa., 440; 53 A., 243; Patterson's Estate, 86 Pa. Super. 299 *Page 570 ), that other obligations not named have been assumed (Buckley's Appeal, 48 Pa., 491; 88 Am. Dec. 468), or that there was no money consideration, though one is named, the transaction constituting a mere gift (Audenreid's Appeal,89 Pa., 114; 33 Am. Rep., 731; Lewis v. Brewster, 57 Pa. 410), or that there was a limitation on seeming liability.Humbert v. Meyers, 279 Pa., 171; 123 A., 733.
"In discussing this question in an early case, subsequently cited with approval, it was said:
"It is plain from all the cases on this point, that any discrepancy which may appear to exist in the decision of them arose entirely from a difference of opinion among Judges as to what was, or [what] was not inconsistent with the terms of the deed; some Judges thinking that the insertion of any particular consideration in a deed, without more, expressly negatived the fact of its being founded upon any other or greater consideration; while others, conceiving that, as the law did not always require the true or the whole of the true consideration to be inserted in order to give the deed validity, and that therefore it frequently happened that but little regard was paid by the parties to the consideration set forth in the deed, whether it was the whole consideration or not, leaving it perhaps to the scrivener to put in such of it as in law he might deem sufficient to make the deed operative, thought it unreasonable to make the consideration so introduced into the deed conclusive upon the parties, so as to preclude them from showing the true, or the whole consideration whenever the ends of justice might seem to require it. The considerations being thus inserted, rather to meet the exigency of the law than the whole truth of the case, it was held not to be inconsistent with the intention of the parties, which ought always to give force and meaning to the terms of the deed, to admit parol evidence to show what the true consideration of it was.' Jack v.Dougherty, 3 Watts, 152, 158." *Page 571
In Williams v. Pittsfield Co. (Mass.), 154 N.E., 572, decided January 3, 1927, the Court said:
"It is permissible to show by oral testimony that a memorandum of agreement does not contain all the stipulations made by the parties in the oral contract. * * * It frequently has been held that an independent and collateral element of a contract may be shown by parol evidence, even though the rest of the contract is in writing."
See, also, upon this point the numerous cases, particularly those from this State, referred to in the Knighton case.
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