The decision of the learned trial court was manifestly made to rest upon the assumption that the verbal agreement established by the evidence, if given any force or effect, would conflict, with the rule which prohibits paroi evidence to explain, vary or contradict a written instrument, and if such was the necessary result of investing that agreement with validity, the court was undoubtedly correct in .its conclusion.
The rule adverted to is one which, while subject to modification in cases where fraud or injustice are attempted, as where it may be shown by paroi that an instrument is not what it purports to be, or in another class of cases, where an instrument obviously incomplete in itself, may be rendered complete and efficient by resort to paroi proof, is, nevertheless, one which, in its essential features, has been long applied and is still preserved in its integrity by the courts of this State.
The opinions in the case of Thomas v. Scutt (52 Hun, 343; S. C. affd., 127 N.Y. 133) may be referred to as containing an exhaustive and instructive statement of the principle "which lies at the foundation of this rule, as well as of the circumstances which will warrant any departure from its strict enforcement; and a careful examination of that case will also, as we think, make it perfectly •clear that the rule adopted by the trial court has really no application to the case now under consideration; for the covenant to insure, which is written into the mortgage in suit, is one which, upon its face, leaves nothing to be supplied in order to render it complete and entire; nor can it be claimed that it is not precisely what it purports to be; and, in our view of the matter, its terms and requirements will be .in no sense varied or contradicted if full effect be given to the agreement which was not reduced to writing.
If, then, the verbal agreement does not conflict with, and is not merged into, the written one, obviously the principle upon which it must be sustained, if at all, is that it constitutes a collateral contract, separate and distinct from the one which is contained in the mortgage, it being well settled that proof of an independent, contemporaneous oral contract, even though it relates to the same subject-matter, in no manner violates the rule we have been considering. (Tayl. Ev. §§ 1038-1040; Batterman v. Pierce, 3 Hill, 171; Lewis v. Seabury, 74 N. Y. 409; Thomas v. Scutt, supra.)
*596■ Let us endeavor, therefore, to determine from the established facts of this case whether these-two agreements are to be treated as dependent or independent contracts.
When the defendants purchased the premises in question of the plaintiff, they also, it seems, purchased something else of value, which was a policy of insurance for $700, having nearly two years to run. And the plaintiff agreed that if the defendants would pay him his price for the land he would let them have this policy, and would, moreover, see that it was properly transferred to them, so that they could have the full benefit thereof. Here, then, were all the essentials of a valid contract, and in-reliance thereon, the defendants made their purchase, - paid a portion of the purchase price in cash, and secured the remainder by their bond and mortgage, in which they agreed, by way of additional security, to keep the buildings upon the premises insured in the amount of $700.
This contract of insurance does not provide how the insurance indemnity is to be furnished, whether by means of a separate policy or the one already existing, which' the plaintiff was to retain in his hands until the mortgage was paid. In either event the condition would have been fulfilled, and had the defendants procured another policy in a different company for the like amount, they would unquestionably have had the right to avail themselves of whatever benefit might accrue to them-from the ownership of the policy which the plaintiff sold to them: They could have retained it for what it was worth by way of additional insurance, or they could have surrendered it and obtained whatever rebate they were entitled to receive thereunder.
.This fact alone would seem to furnish a complete demonstration of the correctness of the idea we are seeking to develop, which is that the verbal contract was not only supported by an adequate consideration, but it was one which was also capable of absolute fulfillment, without interfering with the obligation under which the defendants rested to make good the covenant contained in their mortgage. It follows, therefore, that it was a distinct and independent agreement for the'breach of which some redress should be afforded, and when we come to consider the remedy available to the defendants, we are furnished with still another test by which the principal question in this case may possibly be. determined:
*597The plaintiff seeks by this action to foreclose his mortgage, claiming a certain amount to be due thereon, and this is not denied by . the defendants. That is, they do not claim to have paid anything upon the mortgage beyond what the plaintiff concedes has been jiaid, but they do insist that they have been damaged by the plaintiff’s breach of the contract made contemporaneously with then-mortgage and growing out of the same transaction, in consequence of which they ask to recoup such damage and to have the same applied in liquidation of the amount due upon the mortgage.
If' we are correct in the view which we take of this case, the plaintiff’s failure to secure to the defendants the benefits of the policy which he had sold to them constituted a breach of his contract, for which a separate action would lie. And this being the case, we fail to see why the damage occasioned by such breach, whatever it may prove to be, is not the proper subject of recoupment in this action. (Batterman v. Pierce, supra; Van Brunt v. Day, 81 N. Y. 251; Acer v. Hotchkiss, 97 id. 395.)
The judgment appealed from should be reversed and a new trial granted, with costs to abide the event
All concurred, except Gbeen, J., dissenting.