DAVID v. ROBERT DOLLAR CO., 2 F.2d 803

RUDKIN, Circuit Judge (after stating the facts as above). We will first consider the sufficiency of the counterclaim, as a decision of that question will have a material bearing upon the sufficiency of the affirmative defense.

Was oral testimony competent to prove the agreement on the part of the plaintiff to advance the sum of $140,000 to enable the defendant to take up and pay off the claims and liens against the mill property? “There may be instances in which a contract is partly in writing and partly oral, and the two together constitute the contract; so there may be a question of fact as to whether the written agreement is or is not the entire agreement. Illustrations of such eases are afforded by the cases of Railway Co. v. Jurey, 111 U. S. 584, 4 Sup. Ct. 566, 28 L. Ed. 527, and Bank v. Cooper, 137 U. S. 473, 11 Sup.

Ct. 160, 34 L. Ed. 759, where the question was whether a bill of lading’ constituted the entire contract. But here both parties have signed the contract of March 10, 1899. It purports to he the agreement between the parties, and speaks conclusively tho conclusion to which the parties to it have arrived. The oral promise related to a subject upon which the written contract spoke, and varied the terms of the writing in a most important particular. It was therefore upon a very elementary principle, not competent to contradict the writing by an oral agreement contemporaneous with or antecedent to it.

All of the negotiations prior to the execution of the writing are, in tho absence of fraud, accident, or mistake, merged into the written agreement, and it is not competent to prove such negotiations for the purpose of adding a term which would vary or contradict the conclusion arrived at as shown by the writing.” Dennis v. Slyfield, 117 F. 474, 478, 54 C. C.

A. 520, 524. “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 ease it may properly be inferred that tho parties did not intend tho written paper to he a complete and final statement of the whole of the transaction between them.

But such an agreement must not only be collateral, but must relate to a subject distinct from that to which tho written contract applies; that is, it must not be so closely connected with the principal transaction as to form part and parcel of it. And when the writing itself upon its face is couched in such terms'as import a complete legal obligation without any uncertainty as to the object or extent of the engagement, it is conclusively presumed that the whole engagement of the parties, and the extent and manner of their undertaking, were reduced to writing.” Seitz v. Brewers’ Refrigerating Co., 141 U.

S. 510, 517, 12 S. Ct. 40, 47 (35 L. Ed. 837). “The second class embraces those cases which recognize the written instrument as existing and valid, but regard it as incomplete, either obviously, or at least possibly, and admit parol evidence, not to contradict or vary, but to complete the entire agreement of which the writing was only a part. Receipts, bills of parcels and writings that evidently express only some parts of the agreement are examples of this class which leaves the written contract unchanged, but treats it as part of an entire oral agreement, the remainder of which was not reduced to writing.

Two things, however, are essential to bring a case within this class:

(1) The writing must not appear upon inspection to be a complete contract, embracing all the particulars necessary to make a perfect agreement and designed to express the whole arrangement between the parties, for in such a case it is conclusively presumed to embrace the entire contract.

(2) The parol evidence must be consistent with and not contradictory of the written instrument.” Thomas v. Seutt, 127 N. Y. 133, 138, 27 N. E. 961, 962. Upon inspection, the written memorandum would seem to be a complete contract in itself, embracing all the particulars necessary to make a perfect agreement and designed to express the whole arrangement between the parties.

But in any event, the oral agreement on the part of the plaintiff to advance money to enable the defendant to lease the mill property free and clear of incumbrances was so closely connected with the principal transaction as to become part and parcel of it. Furthermore, whether tho written memorandum is complete in itself or not, the oral agreement is inconsistent with and contradictory of its terms and conditions. It must be remembered that the plaintiff is not here seeking to recover damages for breach of the written contract, or for breach of an independent oral contract.

On the contrary, he is seeking to incorporate the oral contract into the written memorandum, as a basis for the" recovery, thereby varying tho terms of the written contract and changing entirely the covenants and obligations of the parties. Tho rule is elementary that this cannot be done, and inasmuch as the defendant admits his inability to perform the contract as written, the counter claim does not state facts sufficient to constitute a cause of action.

Tho affirmative defense is likewise deficient, for two reasons: First, because of the admitted inability of the defendant to lease the mill property, the rentals have failed and the failure of the rentals did not relieve the defendant from tho obligation to repay the advances. Second, the oral testimony clearly tends to vary and contradict the terms of tho promissory notes. We are not unmindful of the rule that permits a party to show that what purports fco be a contract is not in fact so, because of delivery upon an unperformed condition, or the like; but such is not this case.

The defendant is here attempting to prove that he promised to repay the money from a special fund whenever the fund was available, not unconditionally on or before a fixed date, as provided in the promissory notes. That such testimony would vary the terms and conditions of the written instruments does not admit of question. It is said that a motion for judgment on the pleadings is not favored by the courts, and this is true, if the motion is permitted to cut off the right to amend, thus preventing a hearing on the merits.

But if the motion for judgment is treated as a demurrer to the defective pleading with leave to amend in a proper case, as was done here, the practice is sanctioned by usage and free from objection. We find no error in the record, and the judgment is affirmed.