Bauer v. Monroe , 117 Mont. 306 ( 1945 )

The majority opinion seems to rest upon the proposition that the trial court erred in not finding that the oral agreement relied upon by plaintiff constituted a modification of the written contract and that it was not sufficiently performed by the parties to meet the requirements of Sec. 7569, Revised Codes. I think it is fallacious to say that the oral agreement constituted but a modification of the written contract. According to the evidence offered by and in behalf of plaintiff the written contract was completely abandoned and a new agreement made which superseded and took the place of the written agreement. The proof shows that the deceased before his death stated that it was his intention to destroy the original contract and give plaintiff a deed to the property. If the oral contract is given consideration, then it was the desire of the deceased to completely terminate the written agreement and make a new one in its stead. The new contract did not depend at all upon any of the provisions of the written contract. In no sense can it be said that the oral agreement was a modification of the written agreement.

This case on this point is controlled by that of Kester v. Nelson, 92 Mont. 69, 10 P.2d 379, 380, in which case this court said: "`Persons competent to contract can as validly agree to rescind a contract already made as they could agree to make it originally. However, as a contract is made by the joint will of two parties, it can be rescinded only by the joint will of the two parties. It is obvious that one of the parties can no more rescind the contract, without the other's express or implied assent, than he alone can make it. But if the parties agree to rescind the contract, and each one gives up the provisions for his benefit, the mutual assent is complete, and the parties are then competent to make any new contract that may suit them.' 6 R.C.L., Sec. 304, p. 992. `Again, a contract need not be rescinded by an express agreement to that effect. If the parties to a contract make a new and independent agreement concerning the same matter, and the terms of the latter are so inconsistent with those of the former that they cannot stand together, the latter may be construed to discharge the former.' Id., Sec. 307, p. 923."

Hence, as I view it, all that is said in the majority opinion with reference to the statutory requirements for the modification of a written contract has no application to this case. It is enough here that there was sufficient partial performance of the oral contract to meet the requirements of the statute of frauds. That the court was warranted in finding there was sufficient compliance with the oral contract to take it without the statute of frauds, I think, cannot be questioned. Plaintiff and his wife, pursuant to the agreement, took Mr. Tetrault into their home and treated him as one of their family. Mrs. Bauer mended and washed his clothes, provided his meals, furnished him with a feather bed, and otherwise administered to his comfort. It is well settled that an oral agreement to convey real estate will be specifically enforced where there is partial performance by the donee or intended grantee, or where acts have been done by him in reliance upon the promise which will place him in a situation where he will be prejudiced unless the promise is performed. 101 A.L.R. 985. This is the rule in this state. Shaw v. McNamara Marlow, 85 Mont. 389, 278 P. 836. This principle was applied in the following cases: Rowe v. Eggum, 107 Mont. 378,87 P.2d 189; Erwin v. Mark, 105 Mont. 361, 73 P.2d 537, 113 A.L.R. 1064.

Furthermore, if in spite of the record to the contrary we treat the oral contract as a modification merely of the written contract and not a new agreement, I still believe there was sufficient compliance with the oral agreement to entitle plaintiff to the relief demanded. The case is no different than if we had before us a case where the written contract called for installment payments and prohibited the grantee from making full payment prior to the time when the installments were due. Let us say that a subsequent oral agreement modified the contract, giving the grantee the right to make full payment at any time, and let us say that he did so and that the payment was accepted by the grantor, and then the grantor refused to surrender the deed. Would a court of equity say that it was powerless to compel the surrender of the deed simply because the subsequent oral contract had not been fully executed? I think not.

The statutes prescribing when and how a written contract may be modified were designed merely to guard against fabrication. Parties may, by a meeting of the minds, contract orally to modify a written contract just as effectively as they could contract originally by oral agreement, excepting of course that the statute of frauds would have to be met. But, if there is sufficient performance to meet the statute of frauds, the purpose of the statute is complied with.

This conclusion does not conflict with the majority opinion in the case of Ikovich v. Silver Bow Motor Car Company, Mont.157 P.2d 785. The author of the majority opinion in this case said in his dissenting opinion in the Ikovich case that the parties may abrogate a written contract by subsequent oral agreement, or may waive its terms without writing. There can be no doubt about that rule. The difficulty in the Ikovich case was that the majority could not find any evidence showing a waiver. The majority opinion in that case pointed out that there was nothing in the record to show any act on the part of the Silver Bow Motor Car Company in recognition of the alleged subsequent oral agreement, and for that reason the doctrine of waiver or estoppel had no application. The only difference between that case and this is that here there is evidence of acts on the part of the deceased in recognition of the oral agreement. There is evidence that he moved into the home of the plaintiff and accepted the benefits of the oral agreement by having his meals provided for and his clothes mended and washed. Likewise he permitted plaintiff and his wife to occupy the farm in question for four years after the last payment of principal or interest without taking any measures to enforce the written contract, and this, I think, is a circumstance tending strongly to support the conclusion of the trial judge that the agreement as alleged was made and carried out by the parties excepting only as to the bare matter of executing the deed.

While generally speaking an agreement by one person to discharge another from the obligations of a written contract has no validity as an executory agreement but to be effectual must be executed by surrender of the written contract, "there is a class of cases, however, where a written contract may be modified by a mere oral agreement which, at its inception or as a mere executory agreement, would have no binding effect, yet by being acted upon by the parties until it would work a fraud or injury to refuse to carry it out, becomes binding and effectual as a contract." 12 Am. Jur., "Contracts" Sec. 407, p. 987, note 15.

The rule was stated in Moses v. Woodward, 109 Fla. 348,140 So. 651, 141 So. 117, 147 So. 690, and followed in Carter Realty Co. v. Carlisle, 113 Fla. 143, 151 So. 498, 499, as follows: "As against the contention of appellants, appellees contended that the agreement brought in question cannot have attributed to it the importance claimed because it was in parol and to do so would modify the mortgage, a written instrument. The rule is well settled that an executory or parol agreement will not be permitted to abrogate or modify a written or sealed instrument, but this rule is not without its exceptions. A written contract or agreement may be altered or modified by an oral agreement if the latter has been accepted and acted upon by the parties in such manner as would work a fraud on either party to refuse to enforce it. 6 R.C.L. 917; Bishop v. Busse, 69 Ill. 403; Pratt v. Morrow, 45 Mo. 404, 100 Am. Dec. 381; American Food Co. v. Halstead, 165 Ind. 633, 76 N.E. 251; Munroe v. Perkins, 9 Pick, Mass., 298, 20. Am. Dec. 475; Beach v. Covillard, 4 Cal. 315; Siebert v. Leonard, 17 Minn. 433, 17 Gil. 410; Bassini v. Brockner, 10 N.J.L.J. 105." And see to the same effect, Thurston v. Ludwig, 6 Ohio St. 1, 67 Am. Dec. 328.

Likewise, treating the oral agreement as simply a modification of the written contract, I think the action of the trial court should be sustained for this additional reason; evidence of the oral agreement was admitted without objection. Counsel for the defendant did not raise the point in the lower court, and, in fact, has not raised the point in this court. This court is taking cognizance of the legal question of its own motion. It is putting the trial court in error on a point not raised in the trial court. It is changing the theory upon which the case was tried in the lower court.

In the lower court all parties considered the evidence of the subsequent agreement as properly before the court. The majority opinion holds that the parol evidence rule is one of substantive law and not one of evidence. There are cases that support that view. Most of the cases relied upon in the majority opinion are cases dealing with the question of antecedent oral statements which the law declares are merged in the subsequent writing. Even on that point the overwhelming weight of authority is to the contrary. See exhaustive note in 92 A.L.R. 812, where it is stated as a general rule that whether it was error to admit parol evidence to contradict or vary a valid written instrument, when admitted without objection, will not be considered for the first time on appeal.

The reason for the rule is that the parties to an action have the right to make a rule of evidence for their own case and are presumed to have done so when testimony, otherwise incompetent, is received without objection and no effort is made to have it stricken or disregarded by the court. That is the situation here. Moreover, there is a wide difference between the rule that prior oral negotiations may not alter a subsequent written agreement covering the subject matter and the subsequent modification by parol of a prior written agreement. The writing does not preclude the parties from making a subsequent contract, if the statute is complied with, but a written contract does preclude evidence of prior oral stipulation touching the subject matter of the writing. It is my view that there is substantial evidence in the record to sustain the finding and decree of the trial court and this being so it is our duty to affirm the judgment. Sanders v. Lucas, 111 Mont. 599, 111 P.2d 1041.

The majority opinion makes reference to Sec. 10535, Revised Codes, and holds that there was no justification for allowing plaintiff to testify as to facts of direct transactions and oral communications between him and deceased. The statute allows such testimony "when it appears to the court that, without the testimony of the witnesses, injustice will be done."

I think the determination of this question rested in the discretion of the trial court and that there was no abuse of discretion here. Rowe v. Eggum, 107 Mont. 378, 87 P.2d 189, and cases therein cited.

The majority opinion also quotes some of the testimony of plaintiff given on his cross-examination which is evidently intended to show that a part of the services of plaintiff could be measured in dollars and cents and, hence, specific performance of the contract should be withheld. This evidence does not show that all of the services had a definite, ascertainable pecuniary value. This part of the majority opinion, like that relating to Sec. 10535, does not prop or bolster the opinion on the main point as they are evidently intended, for these questions if erroneously decided by the trial court (but this I do not admit) would simply lead to a new trial or to a modification of the judgment and not to a dismissal of the action. I think this court is not warranted in disturbing the trial court's conclusion. The effect of the majority opinion is to say that Mr. Tetrault made a mistake when he planned to have his property diverted from distant relatives, none of whom he had seen for forty years, and applied in fulfillment of his contract to plaintiff who had cared for him in his declining years as if he were one of plaintiff's own family.