W. B. BROWN v. EARL D. BACKER

Minnesota Supreme Court1926-01-22No. No. 25,018

166 Minn. 50

Summary · law.co

Holding. The court affirmed the judgment for the plaintiff, holding that parol evidence of an alleged oral agreement regarding the price at which a tractor should have been sold is inadmissible to contradict or vary the terms of a written promissory note.

A defendant purchased a tractor in 1920, financing part of the purchase price through a promissory note for $696 (later reduced to $584 after a conceded allowance). The defendant sought to introduce evidence of an oral agreement allegedly made at the time of sale, claiming he was promised the tractor at the 1921 price rather than the 1920 price, which would have reduced the note amount by $425. The court examined whether such parol evidence could be used to contradict the terms of the written promissory note.

The court applied the established rule that written instruments, including promissory notes, cannot be modified by evidence of prior or contemporaneous oral agreements. While the defendant attempted to invoke an exception allowing parol evidence in cases involving partial performance, the court determined this exception does not permit oral testimony that directly contradicts what has been reduced to writing. The court rejected the defendant's argument that he was merely showing partial failure of consideration, finding instead that his claim amounted to an impermissible attempt to alter the note's express terms through parol evidence.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether parol evidence can modify a written promissory note
Application of the partial performance exception to the parol evidence rule
Whether claimed failure of consideration permits contradiction of written contract terms
Treatment of price negotiations as absorbed into written note

Procedural posture

The plaintiff obtained judgment notwithstanding the verdict for the defendant, and the defendant appealed.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Wilson, 0. J.

This is an appeal from a judgment entered pursuant to an order for judgment in favor of plaintiff notwithstanding the verdict for defendant.

In 1920 defendant bought a tractor from plaintiff’s assignor for which he paid part cash and gave two notes for $300 each and the note here involved for $696. He was entitled to a conceded allowance on this note reducing it to $584, for which plaintiff sought judgment. In 1920 the price of the tractor was $1,450 and in 1921 it was $1,025. Defendant paid the first two notes. This action is to recover $584 on the third note.

The record presents the inquiry whether defendant may prove by parol an oral agreement to the effect that he was to have the tractor at the 1921 price. The result of proof of such an agreement would be that defendant was to pay $425 less than specified in the note.

The general rule is that a written instrument, including promissory notes, cannot be varied by parol evidence as to a prior or contemporaneous oral agreement. Dun. Dig. § 3368. Recent decisions include Shinners v. Ford, 151 Minn. 328, 186 N. W. 704; Independent H. Co. v. Malzohn, 147 Minn. 145, 179 N. W. 727; Samuel H. Chute Co. v. Latta, 123 Minn. 69, 142 N. W. 1048; Silliman v. Dobner, 165 Minn. 87, 205 N. W. 696; Thiem v. Eckert, 165 Minn. 379, 206 N. W. 721; Merchants Nat. Bank v. Bryngelson, 160 Minn. 205, 199 N. W. 905; Stevens Corp. v. Farmers Equip. Co. 162 Minn. 465, 203 N. W. 213; Dakota State Bank v. Winona Wagon Co. 162 Minn. 445, 203 N. W. 212; Skelton v. Grimm, 156 Minn. 419, 195 N. W. 139; Ryan v. Security Sav. & Com. Bank, 50 App. D. C. 292, 271 F. 336; Security Nat. Bank v. Pulver, 131 Minn. 454, 155 N. W. 641.

Defendant attempts to escape the general rule by bringing himself within an exception which permits evidence of a verbal agreement to be given, although contracts or other writings have been excluded in pursuance of such agreement by way of partial performance. Independent H. Co. v. Malzohn, supra; Merchants Nat. Bank v. Bryngelson, supra; 10 R. C. L. 1019; Bennett v. Belt’s Adm. (22 Mo. 154) 64 Am. Dec. 260. This exception, however, does not permit oral evidence to contradict the provisions reduced to writing. Shinners v. Ford, supra; Independent H. Co. v. Malzohn, supra; Merchants Nat. Bank v. Bryngelson, supra.

Defendant claims that it is his purpose to show a partial failure of consideration to the extent of $425. But the tractor was the consideration, regardless of the amount of the note. It is conceded that the price of the tractor was a part of the terms of the alleged parol sale. We think that the talk at the time of the sale as to price was absorbed in the writings constituting the notes. The purpose of the general rule is to exclude all defenses except fraud and mistake. Defendant’s claim as to partial consideration is inconsistent with the terms of the note. This theory of defendant is in substance an attempt to vary the terms of the note by proving by parol that the amount of the note should have been less. This cannot be sustained. Atherton v. Dearmond, 33 Iowa, 353; Mosnat v. Uchytil, 129 Iowa, 274, 105 N. W. 519.

Defendant also claims that the recital in the written instrument as to consideration is not conclusive. It is not in all cases. The rule however that permits inquiry as to the consideration usually applies to contracts wherein the consideration is expressed in general terms, as the acknowledgment of the payment of a definite amount of money, and then only where the oral promise is in no way inconsistent with the written promise. In such cases the true consideration may be shown. But in a case like this, where a promissory note expresses a promise to pay a certain amount of money, the agreement is contractual in character and is protected by the parol rule. Nor can it be refuted by an inconsistent parol agreement as here contemplated. Kramer v. Gardner, 104 Minn. 370, 116 N. W. 925, 22 L. R. A. (N. S.) 492; Thiem v. Eckert, 165 Minn. 379, 206 N. W. 721.

Affirmed.