S. H. Kress & Co. v. Evans , 21 Ariz. 442 ( 1920 )

BAKER, J.

(After Stating the Facts as Above.)— The appeal in this case presents a contest over the application of the parol evidence rule. During the course of the trial the court, over the objections of the defendant, admitted testimony on the part of the plaintiff to the effect that plaintiff met Mr. O. W, Kress, a member of the defendant company, in his room at the Adams Hotel in the month of February, 1917, and there discussed the business being done by the defendant’s store at Phoenix. Mr. Kress produced the arrangement sheet for the signature of plaintiff. Plaintiff read the instrument, and stated that the arrangement sheet did not specify what his percentage for the year 1917 was to be. Whereupon, Mr. Kress replied: “Oh, that will be just the same as it was last year; you can trust S. H. Kress & Co. for that.” Whereupon, plaintiff said: “All right, with that consideration, I will sign it.” Further testimony was admitted tending to prove that defendant’s store, under plaintiff’s management in the year 1917, and prior to the conversation referred to, had done some $80,000 worth of business. It was also testified that the plaintiff was paid $1,836, being one and one-half per cent of the business of $125,000, done by the store for the year 1916. The defendant contends that proof of the oral contract was inadmissible because it tended to alter and change the terms of the written contract between the parties. The plaintiff contends that the oral contract was collateral and independent of the written contract, and constituted the inducement for the execution of the written contract, and, being such, was not violative of the parol evidence rule.

We are not favorably impressed with the argument advanced by the plaintiff that the arrangement sheet was of secondary importance and bearing, and was intended primarily as a letter of instruction to the plaintiff as manager of defendant’s store, and as further confining and limiting the amount of money which the plaintiff would be entitled to draw weekly on account of his employment with the defendant. A close analysis of the instrument will show that it has every essential of a contract upon its face — parties, time, consideration, subject matter and mutual assent.

The law is very firmly settled that when parties have put their engagements into writing in such terms as import a legal obligation without any uncertainty as to the object or extent of such engagement, it is conclusively presumed that the whole engagement of the parties, and the extent and manner of the undertaking was reduced to writing, and all oral testimony of a previous colloquium between the parties, or of conversations or declarations at the time it is completed, or afterwards, is rejected.

Mr. Wigmore, in his admirable work on Evidence (volume 4, page 3409), puts the proposition thus:

“When a legal act is reduced into a single memorial, all other utterances of the parties on that topic are legally immaterial for the purpose of determining what are the terms of their acts.”

The same author, speaking further to the subject and stating the rule to determine whether the matter being debated is or is not already in legal effect, written into the memorial, says (page 3426):

“The inquiry is whether the writing was intended to cover a certain subject of negotiation; for, if it was not, then the writing does not embody the transaction on that subject; and one of the circumstances of decision will be whether the one subject is so associated with the others that they are in effect ‘parts’ of the same transaction, and therefore, if reduced to writing at all, they must be governed by the same writing.”

The subject matter in the written contract and the oral contract is the same, to wit, the employment of the plaintiff by the defendant as manager of the defendant’s store at Phoenix. The time is the same in both contracts; the parties are the same, and the consideration is dealt with and considered in each contract. The written contract provides that plaintiff should receive $18 per week for his services, and further provides that if he was retained in his position as manager of the store continuously until December 31, 1917 (his retention being an express condition precedent), he was to receive, on or about March 1st of the following year, that part of the net profits derived from said store to which he, in the defendant’s judgment, might be entitled by reason of his individual efficiency in managing and developing the business of the store and increasing its net earnings over and above the usual normal sales. The oral contract purports to fix plaintiff’s compensation absolute at the same rate he was paid for like services in the year 1916, to wit, one and one-half per cent of $80,000, the estimated amount of the business done by the Phoenix store in the year 1917. It is plain to. be seen that the elements of the subject matter touching the plaintiff’s employment dealt- with in both of the contracts are so associated and correlated as to be, in effect, parts of the same transaction, and hence, under the rule laid down by Mr. Wigmore, it must be presumed as a matter of law that the parties intended to incorporate all their negotiations relative to the subject matter into one memorial or contract, which must be held to be evidenced by the written contract. It follows that the oral contract cannot be held to constitute the consideration or inducement for entering into the written contract; nor can the oral contract be held to be collateral to the written contract.

We shall not discuss the authorities upon which the plaintiff relies, except to state that they are cases where the written contract was incomplete, or where the oral contract was consistent with the written contract, and not contradictory thereof. It is true that evidence of a prior or contemporaneous parol agreement or understanding is frequently received where it is consistent with the writing in question, and it is apparent that the instrument was not intended as a complete embodiment of the undertaking. 5 Chamberlayne on Modern Law of Evidence, § 3553, and cases cited in note. In the case at bar, however, the written contract in our opinion, is clear, unequivocal, definite and complete.

The plaintiff could not be heard to testify to the effect that he was to receive compensation for his services at the rate of one and one-half per cent on a basis of $80,000, the estimated amount of the sales in the store for the year 1917, because the testimony would tend directly to contradict the express stipulation in the written contract that defendant might discharge plaintiff from his employment at any time prior to December 31,1917, in which event he was not to participate at all in the profits arising from the sales. The undisputed evidence shows as a matter of fact that plaintiff was discharged as manager of the defendant’s store in October, 1917.

It is well established that in the absence of fraud, accident or mistake of fact, parol evidence is inadmissible to vary the terms of a written agreement. 17 Cyc. 596. Neither fraud nor mistake of fact is claimed by the plaintiff. Indeed, we do not see how any such contention could be made in view of the •fact.that the writing itself shows upon its face that it was freely signed with admitted knowledge of its entire contents and meaning.

Some complaint is made of the harshness of the terms of the written contract, but parties have the legal right to make such contracts as they desire to make, provided only that the contract shall not be for illegal purposes or against public policy.

It is our conclusion that the trial court erred in admitting the evidence touching the oral contract, and for that reason the judgment will be reversed and a new trial ordered.

CUNNINGHAM, C. J., and ROSS, J., concur.