Interior Warehouse Co. v. Dunn

Mr. Justice Bean delivered the opinion of the court. The issue for determination upon this appeal arises on the overruling of the demurrer. By way of pre — 534 — liminary statement it may be said that the further and separate answers present allegations of a local custom, where crops are sold, to reserve the feed and seed for the ensuing year; of fraud on the part of the plaintiff’s agent in reducing the contract to writing; of a representation made to the defendant before the writing was signed that the terms thereof would not be enforced against him, and of a subsequent waiver by agents of the plaintiff. 1, 2. The provisions of the contract set out in the complaint are definite and certain as to what was to be delivered in fulfillment thereof, and the instrument is free from ambiguity. It is therefore to be construed according to the plain, common meaning of the words used, and a custom or usage inconsistent with its terms cannot be interposed to contradict or qualify its provisions; for in such case the terms of the contract are evidence of the intentions of the parties to avoid the effect of such usage or custom. To admit proof of such a custom would be to contradict the plain stipulations of the writing: Holmes v. Whitaker, 23 Or. 319, 323 (31 Pac. 705); Willis v. Lance, 28 Or. 371, 374 (43 Pac. 384, 487); Barnard v. Houser, 68 Or. 240 (137 Pac. 227). 3,4. It is for the court to determine to what extent, if any, the custom or usage relied upon shall modify or control the contract involved: Standard Ency. Procedure, pp. 334, 335. All oral negotiations or stipulations made between the agent of the plaintiff and Dunn, preceding or accompanying the execution of the written agreement, are merged in it, and no contradiction of its legal effect by parol stipulation preceding or accompanying its execution can be admitted. It is not alleged that there was an agreement that the plaintiff would not enforce the contract, but merely — 535 — that there was a false representation by the agent that it would not exact the delivery: Edgar v. Golden, 36 Or. 448 (48 Pac. 1118, 60 Pac. 2); Tallmadge v. Hooper, 37 Or. 503, 512 (61 Pac. 349, 1127); Sutherlin v. Bloomer, 50 Or. 398 (93 Pac. 135). 5, 6. The answer affirmatively admits the execution of the instrument set forth in the complaint, which is the basis of the action. This is not a mere admission of the signing of the paper, but that such an agreement as the plaintiff alleges to have been made was in fact executed. A written agreement, based on a consideration, cannot be questioned in a law action for alleged fraud or deceit affecting its execution, except upon a denial of its execution amounting to a plea of non est factum, or if it is an unsealed instrument non assumpsit. Where the defendant admits the execution of the agreement, the admission will bind him: Capital Lumbering Co. v. Learned, 36 Or 544 (59 Pac. 454, 78 Am. St. rep. 792); Baines v. Coos Bay Nav. Co., 41 Or. 135 (68 Pac. 397); Brown v. Feldwert, 46 Or. 363 (80 Pac. 414). This, however, may be a matter of phraseology, and possibly under certain circumstances might be corrected by amendment. We, therefore, pass to the gist of the allegation of fraud. 7, 8. It seems to us that the answer' seeks to effect a reformation of the written instrument. At common law, according to the general rule, it is not competent for a defendant, in an action at law on a specialty, to plead that the instrument was obtained by false representations. Such.a defense must be made in equity. It is otherwise where his signature is obtained to an instrument he did not intend to sign, and the fraud or deceit affects the execution thereof. In such a case the fraud can be alleged at law. There are difficulties in adjusting the rights and equities of the parties in — 536 — a court of law, and in states where, as in onrs, the two distinct systems of jurisprudence, equity and law prevail, a law court usually refuses to open the question of fraud in the consideration or in the transaction out of which the consideration arises, but turns the party over to a court of equity. A court of law can hold no middle course: Hartshorn v. Day, 19 How. 211 (15 L. Ed. 605); 1 Bigelow on Fraud, p. 326; Olston v. Oregon Water P. & Ry. Co., 52 Or. 343, 350 (96 Pac. 1095, 97 Pac. 538, 20 L. R. A. (N. S.) 915). 9. In the present case the purport of the answer is that the contract is valid as to about one half of the amount of wheat mentioned. The defendant in effect pleads in paragraph 6 that prior to the signing of the alleged agreement, plaintiff’s agent, A. B. Bobertson, falsely and fraudulently represented to the defendant that, in the event the said Dunn did not raise the 3,000 sacks on the premises aforesaid, the plaintiff would not exact the delivery thereof. This statement tends to show that the defendant knew that the contract provided for the sale of 3,000 sacks of wheat, at least upon certain conditions, and that he did not rely solely upon the fact that the contract was drawn in conformity with the agreement as set forth by defendant. He claims that he relied upon a representation from the agent that the terms of the writing would not be enforced. This amounts to an admission that he knew the provision binding him to deliver 3,000 sacks was embraced in the contract. To express the matter in a common phrase, this admission takes all the ‘ ‘ sting ’ ’ out of the allegations of fraud on the part of the defendant. 10,11. In construing a pleading in case of doubt, when considered on demurrer, that construction should be given to the language which is most favorable to — 537 — the opposite party and against the pleader: Graham v. Merchant, 43 Or. 294 (72 Pac. 1088); Darr v. Guaranty Loan Assn., 47 Or. 88 (81 Pac. 565); Fishburn v. Londershausen, 50 Or. 363 (92 Pac. 1060). Where fraud is relied upon, facts showing it must be clearly alleged: Hansel v. Norblad, 78 Or. 38 (151 Pac. 964). 12,13. This leaves the answer with a suggestion that possibly there was a mistake in the integration of the instrument. Let us be plain. We do not refer to this for the purpose of intimating that the defendant has a remedy by a suit in equity in the nature of a cross-bill to reform the agreement, similar to Smith v. Interior Warehouse Co., 51 Or. 578 (94 Pac. 508, 95 Pac. 499), where the same form of a contract was involved. That question is not for us to determine, and depends upon facts not shown by this pleading. We mention this phase of the case to illustrate that in its present condition the answer does not. contain sufficient facts to constitute a defense to the action at law or justify a conclusion of fraud on the part of the plaintiff. Where a mutual mistake is made in the framing of a contract and no fraud appears, the remedy, if any, is by a suit to reform the written instrument. In fine, if the same facts, as presented by the separate answers, were shown by evidence and nothing more was proven, we should not be able to say that the defendant had a defense to the action. 14-16. The second further and separate answer of defendant sets up a release or modification of the contract made by certain persons alleged to have been agents of the plaintiff. There is no allegation that these individuals were general agents of plaintiff, or that they had authority to make such a release or modification, or that plaintiff knew of the proceeding. In actions by or against a principal, on contracts — 538 — executed by his agent, the contract may be declared on, either as having been made by the principal or by him through an agent. Neither of these requirements was observed by the defendant: 16 Ency. PL & Pr. 899. As we understand the answer, this allegation is in the nature of an accentuation of the claim that the contract was other than as written. It is not sufficient as a defense in itself. Many valuable suggestions are made in the brief of counsel for defendant, such as that: “Managing agents or superintendents having general authority over the entire business usually have very comprehensive powers, and may do such acts as are appropriate and usual in carrying on the business” (citing Elliott on Contracts, § 2895). Neither of the agents named is the one who executed the contract in question on the part of the plaintiff, and defendant’s pleading does not show that they are either managing agents or superintendents. The demurrer to the answer should have been sustained. The judgment of the lower court is therefore reversed, and the cause remanded for such further proceedings as may be deemed proper, not inconsistent herewith. Reversed and Remanded. Mr. Justice Eakin absent.