
    146 F. 48
    NORTH AMERICAN TRANSPORTATION & TRADING CO. v. SAMUELS.
    No. 1,273.
    Circuit Court of Appeals, Ninth Circuit.
    June 20, 1906.
    
      Dudley Du Bose and J. K. Wood (Campbell, Metson & Campbell and S. D. Woods, of counsel), for plaintiff in error.
    James E. Fenton, W. M. Madden, Albert Fink, M. J. Cochran, and T. M. Reed, for defendant in error.
    Before GILBERT and ROSS, Circuit Judges, and HAWLEY, District Judge.
   HAWLEY, District Judge,

after making the foregoing-statement, delivered the opinion of the court.

The contention of the plaintiff in error is that the defendant in error should have been confined to the “written contract”; that the court erred (1) in permitting oral testimony to vary or add to the terms of the contract; (2) as to the particular kind and quality of the goods, and the respective proportions thereof, as well as of the value thereof; and (3) by admitting oral evidence to,add to the contract a warranty as to the kind, proportion, qualitjq quantity, value of the goods, etc., and upon these points refers the court to numerous authorities.

The general principle for which the plaintiff in error contends, that “where a written contract is plain and unambiguous on its face parol evidence is not admissible to explain or alter its meaning,” is one of universal application. In Bast v. Bank, 101 U.S. 93, 96, 25 L.Ed. 794, the court said: “No principle of evidence is better settled at the common law than that, when persons put their contracts in writing, it is, in the absence of fraud, accident, or mistake, ‘conclusively presumed that the whole engagement, and the extent and manner of their undertaking, was reduced to writing.’ 1 Greenl.Evid. § 275. * * * In Martin v. Berens, 67 Pa. 463, the court say: ‘Where parties, without any fraud or mistake, have deliberately put their engagements in writing, the law declares the writing to be not only the best, but the only evidence of their agreement, and we are not disposed to relax the rule. It has been found to be a wholesome one, and, now that parties are allowed to testify in their own behalf, the necessity of adhering strictly to it is all the more imperative.’ ”

See-17 Cyc. 596-598, and authorities there cited.

The general rule is well defined, with exceptions and modifications, and broadly and clearly delineated in all the text-books and illustrated by numerous decisions.

In Chandler v. Thompson (C.C.) 30 F. 38, 43, cited and relied upon by the plaintiff in error, the court, after quoting from Bast v. Banks, as above, and remarking that this general rule was subject to some modifications, said: “Parol evidence of surrounding circumstances is admissible to show the subject-matter of the contract, when ambiguous or indefinite; but the express terms cannot be varied by proof of the negotiations and transactions out of which it grew, and the circumstances which surrounded its adoption. In construing the terms of a written contract, such evidence is allowable for the purpose of ascertaining the real intention of the parties, but no new obligation or duty can be imposed on a party which is not warranted by a fair and reasonable construction of the words of the instrument.”

The question presented in this case is not as to the correctness of the principles of the general rule, but whether it is, under the facts of this case, applicable. The contention of the defendant in error is that the action is founded upon a breach of contract which was originally verbal and entire, and a part only of this contract was reduced to writing; that the defendant in error does not rely upon the written contract alone, but upon the whole contract; that the purpose and effect of the oral testimony produced at the trial was not to vary the terms of the portions of the contract which were reduced to writing, but to show the entire contract.

Keeping in view these contentions of counsel, it is deemed proper to state that the testimony on behalf of the defendant in error tended to sustain the averments of his complaint. It is strong, direct, positive, and clear. Among other matters it shows that on the day after the written contract was executed, W. H. Isom, manager of the plaintiff in error, sent a telegram to its agent at Nome, Alaska, as follows:

“Chicago, Ills., April 20-22, 1904.
“J. E. Ramar, Care N. A. T. & T. Co., Nome, Alaska: Arrangements made sell all stock remaining opening navigation discount below cost, therefore make every effort dispose all possible before that time for cash or little below if necessary, particularly lumber; reduce expenses; confidential.
“W. H. Isom.”

When the defendant in error arrived at Nome about the middle of June, 1904, he asked Ramar what he did with the dry goods, clothing, and shoes, and Ramar replied that he had sold them. Several witnesses testified that during the latter part of April, and in the month of May, 1904, they had bought from the plaintiff in error at its store in Nome, bales of carpets, bales of dry goods, mining hose, and different things of that kind, and loads and cases of hardware, out of the warehouses. Authority to act in such a way is surely not to be found even in the written part of the contract. Is it not apparent that in making a contract of this magnitude and character there must have been some understanding and agreement concerning this matter ? The sixth clause of the written contract, “All merchandise owned by the seller, now in the warehouses at Nome, Alaska, shall be delivered to the buyer, free of storage charges,” taken literally, according to its terms, would seem to prohibit the plaintiff in error from making any sale of goods whatever. In the very nature of the transaction, is it not reasonable to believe, as testified to by the defendant in error, that the plaintiff in error would have under the contract, the right to sell “from the said stock of merchandise in the ordinary and usual course of trade and business”? The written contract is certainly not clear or unambiguous upon this subject. It is incomplete and indefinite. The written contract is silent upon other matters. It does not specify the particular character, quality, or extent of the goods that were sold, to be delivered to the buyer on the opening of navigation in 1904.

Upon examination of the authorities bearing upon the legal principles applicable to this case, we find that the courts have held that where, in the application of a contract to its subject-matter, an ambiguity or uncertainty arises which cannot be removed by an examination of the agreement alone, parol evidence of the circumstances under which it was made and of statements made in the negotiations which preceded it may be admitted to' resolve the ambiguity, and to prove the real intention of the parties (Kilby Mfg. Co. v. Hinchman-Renton F. P. Co., 132 F. 957, 961, 66 C.C.A. 67; Davies v. Bierce [La.] 38 So. 488, 492) ; that it is also competent to show all the transactions at the same time between the parties, only a part of which is in writing (Chemical Company v. Moore, 61 S.C. 166, 169, 39 S.E. 346; Graffam v. Pierce, 143 Mass. 386, 9 N.E. 819; Sutton v. Griebel, 118 Iowa, 78, 91 N.W. 825, and authorities there cited; Schoen v. Sunderland, 39 Kan. 758, 761, 18 P. 913; Juilliard v. Chaffee, 92 N.Y. 529, 535; Harman v. Harman, 70 F. 894, 897, 17 C.C.A. 479; Patek v. Waples, 114 Mich. 669, 671, 72 N.W. 995); that where a written instrument, executed pursuant to a prior verbal agreement, does not express the entire agreement or understanding of the parties, it is competent to show by parol testimony what' the real contract was (Barcus v. Gates [C.C.] 130 F. 364, 367; De St. Aubin v. Marshall Field & Co., 27 Colo. 414, 419, 62 P. 199; Neal v. Flint, 88 Me. 72, 82, 33 A. 669; Terry v. Railroad Co., 91 N.C. 236, 241; Moore v. Barber A. P. Co., 118 Ala. 563, 572, 23 So. 798; Niles v. Sire [Sup.] 94 N.Y.S. 586; Mt. Vernon Stone Co. v. Sheeley, 114 Iowa, 313, 316, 86 N.W. 301; Anderson v. National Surety Co., 196 Pa. 288, 46 A. 306) ; that, where the written memorandum of a contract of sale is incomplete, parol evidence is admissible to prove there was a verbal understanding at the time, and conditions upon which the seller would have the right to sell at retail until the completion of the sale and delivery of the property (Quick v. Glass, 128 Mo.’321, 30 S.W. 1031) ; that parol evidence is admissible where it tends to prove an independent, collateral fact about which the written contract is silent. (Fusting v. Sullivan, 41 Md. 162, 179; Hines v. Willcox, 96 Tenn. 148, 153, 33 S.W. 914, 34 L.R.A. 824, 832, 54 Am.St.Rep. 823; Hardwood Log Co. v. Coffin, 130 N.C. 432, 435, 41 S.E. 931; Windsor v. Railway Co. [Wash.] 79 P. 613).

The general rule as to the admissibility.of parol evidence in connection with a written contract (covering a great variety of cases) has been stated as follows: “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 matter not provided for in Lhe writing.” 17 Cyc. 741, 742.

In Clinch Valley Coal & Iron Co. v. Willing, 180 Pa. 165, 167, 36 A. 737, 57 Am.St.Rep. 626, the court said: “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 as to the manner in which payment shall be made, 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.”

There is no conflict in the authorities upon the matters we have discussed. In a previous portion of this opinion we pointed out this fact by a reference to the case of Chandler v. Thompson, where the respective rules were recognized. In Seitz v. Brewers’ R. M. Co., 141 U.S. 510, 517, 12 S. Ct. 46, 35 L.Ed. 837, which is cited and relied upon by the plaintiff in error to prove that the court below erred in giving the instruction complained of in relation to the silence of the written contract, the language of the opinion relied upon is as follows: “Whether the written contract fully expressed the terms of the agreement was a question for the court, and since it was in this instance complete and perfect on its face, without ambiguity, and embracing the whole subject-matter, it obviously could not be determined to be less comprehensive than it was. And this conclusion is unaffected by the fact that it did not allude to the capacity of the particular machine. To hold that mere silence opened the door to parol evidence in that regard would be to beg the whole question.”

We have italicized certain portions to show that the contract in that case was directly opposite in its character from the one under consideration in this case, and the change in the facts controlled the decision. In the course of the opinion, it is said: “Undoubtedly the existence of a separate oral agreement as to any matter on which a written contract is silent, and which is not inconsistent with its terms, may be proven by parol, if under the circumstances of the particular case it may properly be inferred that the parties did not intend the written paper to be a complete and final statement of the whole of the transaction between them.”

In Fire Ins. Association v. Wickham, 141 U.S. 564, 576, 12 S.Ct. 84, 87, 35 L.Ed. 860, the court said: “We have no disposition to overrule or qualify in any way the general and familiar doctrine enforced by this court in repeated decisions, from.the case of Hunt v. Rousmanier, 8 Wheat. 174, 5 L.Ed. 589, decided in 1823, to that of Seitz v. Brewers’ Refrigerating Company, 141 U.S. 510, 12 S.Ct. 46, 35 L.Ed. 837, decided at the present term, that parol testimony is not admissible to vary, contradict, add to or qualify the terms of a written instrument. The rule, however, is subject to numerous qualifications, as well established as the general principle itself, among which are that such testimony is admissible to show the circumstances under which the instrument was executed.”

Further comment is unnecessary. An examination of the whole record discloses no error.

The judgment of the District Court is affirmed, with costs.  