McCormack v. Cockburn

PER CURIAM. The majority of the court is now of the opinion that parol evidence was not admissible to establish ■ the facts on which appellee Cockburn was released from his liability on the notes in issue. McCormick & Ray in their Texas Law of Evidence, Sec. 725, say: “The Parol Evidence Rule is the rule which, upon the establishment of the existence of a writing intended as a completed memorial of a legal transaction, denies efficacy to any prior or contemporary expressions of the parties relating to the same subject-matter as that to which the written memorial relates.” The deed from appellants to Cockburn, and his notes to them, were offered and received in evidence. These instruments constituted writings intended by the parties as completed memorials of the sale of the land by appellants; on their face, they evidence a complete contract. By parol evidence, that appellee was not to be bound on these notes, the judgment of the lower court relieved him of liability. The evidence was not that the deed and notes were executed as a mere matter of form; appellee plead the simple issue that the written contract, as executed and delivered, represented the true contract and intent of the parties except that he was not to be held liable as the payor of the notes. This evidence varies the terms of the written contract by substituting for appellee, the payor named on the face of the notes, parties who were not named in the writings. Quoting again from McCormick & Ray, page 950, in further explanation of' the Parol Evidence Rule: “The rule, however, is not merely one which seeks for and effectuates the final intention. 'It goes further and makes the writing, when apparently and on its face a complete one, the sole criterion.” No point can be made against the conclusion that appellants’ deed to appellee, and his notes to them on their face, evidence a complete contract. Again, on page 951, they say: “* * * where there has been an apparent integration in writing, as gathered from the writing and the surrounding situation, b'ut in fact as appears from the other expressions of the parties it was not so intended, and other agreements or dispositions were intended also to be effective, these other intentions and expressions will nevertheless be disregarded provided they were such as in the judge’s opinion would normally have been incorporated in the writing.” Under the. following proposition of law, quoted by our Supreme Court in Sanger v. Warren, 91 Tex. 472, 44 S.W. 477, 478, 66 Am.St.Rep. 913, the parol evidence was not *696 admissible: “But, on the other hand, to allow evidence to be given that the party who appears on the face of the instrument to be personally a contracting party is not such, would be to allow parol evidence to contradict the written agreement, which cannot be done.” Beckham v. Drake, 9 Mees. & W. 79; Cattle Co. v. Carroll, 63 Tex. 48; Heffron v. Pollard, 73 Tex. 96, 11 S.W. 16S, 15 Am.St.Rep. 764. In Watson v. Miller, 82 Tex. 279, 17 S. W. 1053, our Supreme Court held, quoting second syllabus, “Where a vendee gives a lien note for the purchase money, it is proper, in an action on the note, to refuse to submit to the jury the question whether the land was bought by the vendee for himself and others under a parol agreement that his share of the land, should not be subject to a vendor’s lien, except for a proportionate share of the purchase money, since such agreement would vary the written contract.” Again, in Dolson v. DeGanahl, 70 Tex. 620, 621, 8 S.W. 321, our Supreme Court held, quoting fourth syllabus: “The written terms of an absolute promise to pay contained in a promissory note, are conclusive of the contract, and can not be changed by parol evidence that the note was executed with an understanding between the parties that it was never to be paid, and was not to be transferred or assigned.” It was our original conclusion that the parol evidence to the effect that appel-lee was not to be held liable on his notes was admissible under the rule announced by the Commission of Appeals in Bell v. Mulky, 16 S.W.2d 287 — that the parties to the written contract never intended it to become effective as a contract, but that it was executed and delivered as a mere matter of form; that is, where the contract between the parties, on their mutual understanding and agreement, rested entirely in parol, and by mutual agreement the writing was not intended by the parties to evidence the contract. This court followed the Bell-Mulky case in Standard Motor Co. v. Miller, 45 S.W.2d 786; we quote from Texas Law Review, Vol. XVI, No. 4, page 563, June Issue, 1938, from the note reviewing the Miller case: “Where the offer is to show by parol evidence that the note was a mere memorandum or receipt, never to be effective as a contract, the cases are in conflict. In accord with the principal case: Randle v. Overland Texarkana Co. 182 Ark. 877, 32 S.W.2d 1064, 75 A. L.R. 1516 (1930); (1931) 44 Harv.L.Rev. 1299; Weinstein v. Sprintz, 234 Ill.App. 492 (1914); Dickson v. Harris, 60 Iowa 727, 13 N.W. 335 (1882) ; Billings v. Billings, 10 Cush. 178 (Mass. 1852). Contra: Standard Motor Co. v. Miller, 45 S.W.2d 786 (Tex.Civ.App.1932); Storey v. Storey, 7 Cir., 214 F. 973 (1914); Cooper v. Cooper, 3 Cal.App.2d 154, 39 P.2d 820 (1934); Norman v. Norman, Adm’x, 11 Ind. 288 (1858) ; Galloway v. Thrash, 207 N.C. 165, 176 S.E. 303 (1934). These authorities supporting the principal case may be criticized, as was done in Storey v. Storey, supra, at 977, on the ground they assume a legal-delivery of the instrument as a binding contract, the very point in issue. This is the view of the well-considered case of Standard Motor Co. v. Miller, supra, in which P sold three automobiles to D, agreeing to take memberships in an automobile club as payment. D gave P a promissory note for the amount due which note was intended to be used as a memorandum for bookkeeping purposes only. In a suit on the note, it was held that evidence of the parol agreement was admissible to show that the note did not set forth the real contract of the parties.” McCormick & Ray, page 998, state that the Parol Evidence Rule does not apply to evidence “which tends to show that the writing was never intended to be operative at all.” We do not doubt the soundness of our construction and application of this rule in Standard Motor Co. v. Miller, but we recognize that the point thus decided by us was denied by the Austin Court of Civil Appeals in Mitcham v. London, Tex. Civ. App., 110 S.W.2d 140. But the conflict is not in point on the facts of this case, for the simple reason that appellants and ap-pellee did not execute the deed and notes as a mere matter of form, but with the intention that they were to be effective as a contract; it was their intent, as plead by appellee in his answer, that the title to the land was to be divested out of appellants by the deed and invested in him, and that the notes were to be delivered as a part of the sale price of the land. By his pleadings and evidence appellee sought to show that though the deed vested in him a fee simple title to the land, subject to the'vendor’s lien, the parties intended that he was to be “a mere conduit”; and though on the face of the notes he was the payor, that the parties intended that third parties should be the payors. Under the authorities cited above, parol evidence to establish these defenses was not admissible. *697 Nor was parol evidence admissible to show that the execution of the deed and notes was induced by fraud; that appellants, acting through their agent, Phil Tharp, fraudulently induced appellee to execute the notes on the promise that he would not be held liable thereon. On this point, directly supporting our conclusion, it was held by our Supreme Court in Lanius v. Shuber, 77 Tex. 24, 13 S.W. 614, quoting first syllabus: “In an action on a note, •answers alleging that defendants were induced to sign it as sureties by false representations, made by the payee’s agent, that the note was given for money to be borrowed by the maker to purchase cattle, and that the money should not be delivered to him until he had purchased the cattle, and •executed a mortgage thereon to defendants, are not allowable, as they would destroy the written contract by parol evidence.” In Houghton v. American Trust & Savings Bank, Tex.Civ.App., 247 S.W. 904, it was held, quoting second syllabus: “A parol agreement by the payee of a promissory note that if the shares of stock for which it was given were not sold before the maturity of the note he would pay it, made before the execution and delivery of the note, was not fraud on the maker, and, under the parol evidence rule, could not prevail against the written agreement evidenced by the note.” The following proposition from Mitcham' v. London, supra, in which we concur, is decisive against appellee on the issue of fraud: “As we understand appellee’s contention upon this issue, it is that the fraud •consisted in making the agreement not to hold the note as ■ a personal obligation against him with the then present intention not to perform that agreement. There are situations in which an intention at the time a contract is made not to perform its obligation will authorize a rescission and recovery of the consideration or advantage received under it. But that is not the situation here. The promise here complained of as being intended not to be performed was a collateral one in parol at variance with the written contract entered into, and one proof of which the law does not admit. If fraud could be predicated upon such promise and intention, then any collateral parol agreement might be asserted to contradict, vary, or even abrogate any written contract, under the guise of a fraudulent intent not to perform such collateral parol agreement. The practical effect would be to destroy the parol evidence rule altogether.” [110 S.W.2d 142.] On the conclusion of the majority of the court that' the court erred in receiving parol evidence to the effect that appellee was not to be held liable on the notes in issue, the judgment of the lower court must be reversed. Appellants ask that we render judgment in their favor; we cannot give them that relief. Though, under the evidence, appel-lee was absolutely liable on his notes, as and when they were executed and delivered by him to appellants, he plead that subsequent to their delivery appellants had accepted third parties as payors of the notes and, by their conduct in relation to the notes, had relieved him of liability. This issue, as made- by the pleadings, is stated in our original opinion. The record does not foreclose appellee from establishing that defense. Appellants assign error against our conclusion that Phil Tharp was their general agent. We overrule the assignment, but on the issues that must arise on the remand and retrial of this case, the nature of Phil Tharp’s agency is immaterial. Clearly, he had charge of these notes as agent for appellants, and was duly authorized by them to handle the notes in all‘respects as shown by the evidence. The rehearing is granted, and the judgment of the lower court is reversed and the cause remanded for a new trial. Judge O’Quinn asks that the court’s original opinion be filed and considered as his dissenting opinion. Reversed and remanded.