
    Abram B. Lawrence, Respondent, v. Maria Sullivan and William F. Sullivan, Appellants.
    
      Evidence of oral negotiations—it is competent to modify a written escrow agreement where the latter is incomplete—effect of an indorsement of full settlement on the escrow agreement.
    
    The rule which excludes evidence of parol negotiations offered to contradict, vary or modify the stipulations of a written agreement as regards prior oral negotiations merged therein, does not apply where upon the face of the instrument it does not appear that it embodies the entire oral agreement, or where circumstances would make the use of the written agreement for any purpose inconsistent with the oral agreement, dishonest or fraudulent, nor does the rule apply to a collateral undertaking.
    In 1895, William F. Sullivan and Maria Sullivan, his wife, entered into negotiations with Abram B. Lawrence to exchange certain real estate belonging to Mrs. Sullivan for a farm belonging to Lawrence, the title to which was in one Otto. It was orally agreed that the real estate of Mrs. Sullivan should be conveyed free from incumbrances, part to Otto and part to Lawrence, and that the farm should be conveyed by Otto to Mrs. Sullivan subject to a 82,400 mortgage and that Lawrence should pay to Mrs. Sullivan 81,600 in cash.
    Pursuant to the oral agreement, conveyances were executed by Mr. and Mrs. Sullivan to Otto and Lawrence and by Otto to Mrs. Sullivan. At the request of Lawrence, Mrs. Sullivan executed a mortgage to one Humphrey for 8600 upon that part of the real estate conveyed to Otto. All of the papers were deposited, for safekeeping, with one McClure, pending the consummation of the contract by, the payment of 81,600 to Mrs. Sullivan. Thereafter Lawrence applied to Mr. and Mrs. Sullivan to. further assist him in raising the money to perform his part of the agreement, and on his request and for his accommodation they executed another mortgage for 8600 to Humphrey upon other lands belonging to Mrs. Sullivan.
    This mortgage contained a personal covenant on the part of Mr. and Mrs. Sullivan to pay the amount secured thereby, and Lawrence agreed that he would take care of the mortgage.
    
      The papers were then deposited in escrow with one Heyward under an agreement which recited the deposit of the various instruments and provided, “All to he delivered by said Hayward to said second party upon the delivery by said second party of a deed from John M. Otto to Maria Sullivan of a certain farm of 119 acres known as the Lawrence farm in Wethersfield, N. Y., now owned by John M. Otto, said deed to bear date January 1st, 1895, and subject to an incumbrance of $2,400 and interest thereon paid to- January 1st, 1895, an acknowledgment of release by the Wayne Building, Loan and Accumulating Fund Association for payment of $900 by second party to apply upon a certain mortgage of $4,000 owned and held by said Wayne Association upon the aforementioned premises, deeded and mortgaged1 and a satisfactory provision of settlement by second party with first party for $100 and for the $600 on account of the last mentioned $600 mortgage.”
    Subsequently Mr. Sullivan made the following indorsement upon the escrow agreement: “$32.00. Beceived for and on account of Mrs. Maria Sullivan, named hereon, and myself, Thirty-two dollars, in full settlement of all claims and demand against A. B. Lawrence — party hereto—under this contract.” Thereafter Lawrence procured an assignment to himself of the mortgage exe- • cuted by Mrs. Sullivan to Humphrey for his accommodation, and subsequently brought an action against Mr. and Mrs. Sullivan upon their covenant to pay the amount secured by the mortgage.
    
      Held, that the written escrow agreement did not preclude the defendants from showing that they made the second mortgage to Humphrey at the request of the plaintiff for his accommodation and úpon his promise to take care of it; That the written agreement was not contradictory of the parol agreement sought - to be established, and that the writing was incomplete in that it did not state what provision of settlement on account of the “ last mentioned $600 mortgage ” should be made;
    That the indorsement upon the escrow agreement acknowledging the receipt of thirty-two dollars “in full settlement of all claims and demand against A. B. Lawrence—party hereto—under this contract,” was not conclusive evidence that the defendants had received full consideration for the mortgage in suit.
    Appeal by the defendants, Maria Sullivan and another, from a judgment of the Supreme Court in favor of the- plaintiff, entered in the office of the clerk of the county of Wyoming on the 21st day of December, 1901, upon the verdict of a jury for $810.50 rendered by direction of the court.
    
      E. E. Charles, for the appellants.
    
      Irving G. Botsford, for the respondent.
   Nash, J.:

In and prior to January, 1895, the defendants entered into negotiations with the plaintiff for the exchange of real. properties in which the defendant William F. Sullivan, for his. wife, agreed with the plaintiff to exchange certain real estate of the wife for a farm of the plaintiff, the title to which was in John M. Otto.

It was orally agreed that the real estate of Mrs. Sullivan, free of incumbrance, should be conveyed, part to Otto and the remainder to the plaintiff, and that the farm should be conveyed by Otto to Mrs. Sullivan subject to a $2,400 mortgage, and that the plaintiff should pay to Mrs. Sullivan $1,600 in cash.

The real estate which Mrs. Sullivan was to convey being subject with other of her lands to a-mortgage of $4,000, the consent of the mortgagee to release the lien thereof upon the lands to be conveyed by Mrs. Sullivan for the sum of $900 was obtained.

Pursuant to their oral agreement the parties met and made their conveyances. Two deeds from the defendants to Otto and the plaintiff and the deed of the farm by Otto to Mrs. Sullivan were executed and acknowledged, and at the request of the plaintiff Mrs. Sullivan made a mortgage to F. J. Humphrey for $600 upon that part of Mrs. Sullivan’s real estate conveyed to Otto, and all of these papers were deposited for safekeeping in the safe of one McClure pending the consummation of the contract by the payment of the $1,600 to Mrs. Sullivan. Thereafter, without making such payment, and without the knowledge or consent of the defendants, the plaintiff obtained possession of the papers and took them to the clerk’s office for record, which fact having become known to Sullivan, he objected to the recording of the papers until the agreement should have been fully performed and the parties severally regained possession of their papers.

Things remained in this condition several days, when the plaintiff applied to the defendants to further assist him in raising money to perform his part of the agreement, and upon his request and for his accommodation, according to the testimony adduced upon the trial, the defendants made a mortgage upon other lands of Mrs. Sullivan for $600 to Humphrey, which mortgage contained the personal covenant of the defendants to pay the amount secured by the mortgage, according to its terms, the plaintiff agreeing with the defendants that he would take care of the mortgage. Pursuant to this last arrangement the parties met at the office of L. A. Hayward, the last-mentioned mortgage was executed and acknowledged by the defendants, and the parties executed and acknowledged an agreement in writing, as follows:

“Memoranda of agreement made and entered into at Warsaw, N. Y., this 30th .day of January, 1895, between Maria Sullivan and William F. Sullivan, her husband of Gainesville, N. Y., first party, and Abram B. Lawrence of Warsaw, N. Y., second party.

“ 1. First party deposit in escrow with L. A. Hayward of Warsaw, N. Y. the following duly executed and acknowledged instruments in writing, viz: Mortgage for $600 dated January 1st, 1895, from first party to F. J. Humphrey on premises conveyed to John M. Otto, January 1st, 1895. Deed of premises near ErieR. R. Station, Warsaw, N. Y., from first party to John M. Otto, January 1st, 1895. Deed of premises near said Erie R. R. Station from Said first party to said Abram B. Lawrence, dated said January 1st, 1895.

“Mortgage on premises adjoining said premises deeded to said John M. Otto and A. B. Lawrence for $600, payable to said F. J. Humphrey and dated January 1st, 1895. All to be delivered by said Hayward to said second party Upon the delivery by said second party of a deed from John M. Otto to Maria Sullivan of a certain farm of 119 acres known as the Lawrence farm in Wethersfield, N. Y., now owned by John M. Otto, said deed to bear date January 1st, 1895 and subject to an incumbrance of $2400 and interest thereon paid to January 1st, 1895, an acknowledgment of release by the Wayne Building Loan and Accumulating Fund Association for payment of $900 by second party to apply upon a certain mortgage of $4000 owned and held by said Wayne Association upon the aforementioned premises, deeded and mortgaged, and a satisfactory provision of settlement by second' party with first party for $100 and for the. $600 on account of the last mentioned $600 mortgage.”

The agreement contained certain other provisions not pertinent to or affecting the issue here, and further provided that “ all the aforementioned papers and evidence of payments and transfers are to be deposited with said L. A. Hayward in escrow to be by him delivered to the respective parties to. whom the same are intended to go upon the completion of all papers herein specified and evidences of payment and transfer, and said L. A. Hayward is hereby authorized and empowered by both parties hereto to deliver all such papers to the respective parties who should possess the same when all conditions hereinbefore mentioned are complied with without revocation or recourse, subject however to the possibility of not being able to obtain said Wayne Association release upon the portion of mortgaged premises aforementioned by April 1st, a. d., 1895,” in which case it was further provided that the entire agreement for the exchange of properties should be annulled.

“ Possession of premises to be given by and to the respective parties April 1st, 1895.

“ Witness our hands and seals and the delivery in escrow to the said L. A. Hayward, date and place first above written.

“MARIA SULLIVAN . [seal]

..“WILLIAM F. SULLIVAN [seal]

“A. B. LAWRENCE [seal].”

The agreement was acknowledged by the parties January 31, 1895. On the 26th of April, 1895, Sullivan made an indorsement upon the agreement as follows :

“ $32.00. Received for and on account of Mrs. Maria Sullivan, named hereon, and myself, Thirty-two dollars, in full settlement of all claims and demand against A. B. Lawrence — party hereto — under this contract.

“ Waesaw, N. Y., April 26, 1895. W. F. SULLIVAN.”

On the 8th of March, 1895, the plaintiff procured an assignment to himself of the mortgage to Humphréy secondly described in the agreement, being the one made for his accommodation, and on April 14, 1899, brought this action against the defendants upon their covenant in the mortgage, there not-having been any action brought or proceeding taken to foreclose the mortgage.

The defendants at the trial gave evidence under objection of the oral negotiations preceding the written agreement, and of plaintiff’s request to make the second mortgage to Humphrey, and of his promise to take care of it. The plaintiff introduced in evidence the written agreement, whereupon the court struck out all of the defendants’ evidence of the oral negotiations and agreements which preceded the execution of the contract or memorandum of agreement in writing, and directed a verdict for the plaintiff for the amount of the indebtedness secured by the mortgage less a small payment of thirty-seven dollars and forty cents acknowledged by the plaintiff to have been made thereon.

The sole question here is whether the writing precluded the defendants from showing that they made the second mortgage to Humphrey upon the promise of the plaintiff, for his accommodation and upon his request to take care of it.

The rule which excludes evidence of parol negotiations offered to contradict, vary or modify the stipulations of a written agreement or regards prior oral negotiations merged therein, does not apply where upon the face of the instrument it does not appear that it embodies the entire oral agreement, or where circumstances would make the use of the written agreement for any purpose inconsistent with the oral agreement, dishonest or fraudulent, nor does the rule apply to a collateral undertaking. (Chapin v. Dobson, 78 N. Y. 74; Juilliard v. Chaffee, 92 id. 529; Emmett v. Penoyer, 151 id. 564.)

The making of this second mortgage to Humphrey was a matter entirely ontside of the original agreement, not in any manner involved in the exchange of the properties as originally agreed. The lands of Mrs. Sullivan covered by this mortgage did not enter into the transactions of the parties until the original parol agreement to exchange the real estate of Mrs. Sullivan for the plaintiff’s farm had been performed by the execution and acknowledgment of the several conveyances ready for delivery upon payment by the plaintiff of the boot money.

The writing is not contradictory of the alleged agreement of the defendants to make the mortgage to Humphrey upon other lands of Mrs. Sullivan for the accommodation of the plaintiff. It provided for the deposit of the papers in escrow to be delivered- to the respective parties upon the completion of all papers herein specified and evidences of payment and transfer,” and when all the com ditions mentioned in writing were complied with. It described two mortgages of $600 each to Humphrey and provided for the delivery thereof with the other papers upon the making of, among other things, “ a satisfactory provision of settlement by second party with first party for $100 and for the $600 on account of the last mentioned $600 mortgage.” The writing was incomplete in that it did not state what provision of settlement on account of the last mentioned $600 mortgage ” should be made, although it expressly provided that such, a settlement should be made as a condition for its delivery. The writing, therefore, within the case of Chapin v. Dobson, and the cases following it, does not preclude parol evidence of the provisions of settlement that were made on account of that mortgage, and hence it was error to strike out the evidence.

It is urged that the indorsement upon the margin of the writing acknowledging the receipt of thirty-two- dollars “ in full settlement of- all claims and demand against A. B. Lawrence—party hereto — under this contract,” signed by Sullivan, is conclusive evidence that the defendants received full consideration for the mortgage in suit.

The case does not show that this indorsement which has found its way into the printed case was offered in evidence, nor does it appear that it was considered by the court in disposing of the question raised upon the trial. But the terms of the indorsement upon the writing, of the receipt of thirty-two dollars in full settlement of all claims and demands upon the contract, cannot be deemed to be any. broader in its application to the provisions of the contract than the terms and conditions of the contract itself. That provided that a satisfactory provision of settlement should be made on account of the six-hundred-dollar-mortgage. The most, therefore, which can be claimed for the provisions of the indorsement is that it acknowledges that such a satisfactory provision' of settlement on account of that mortgage has been made.

Judgment reversed and a new trial granted, with costs to the appellants to abide the event.

Adams, P. J., McLennan, Seeing and Hiscock, JJ., concurred.

Judgment reversed upon questions of law only, the facts having been examined and no error found therein, and new trial ordered, with costs to the appellant to abide event.  