Denman v. Hall

After giving further consideration to this case on motion for rehearing, I find myself unable to agree with the views set forth in the majority opinion.

"The parol evidence rule presupposes the existence of a valid contract, and its application is involved only where the existence of a written agreement between the parties is shown." 17 Tex.Jur., p. 833. It is for this reason that, in a proper case, it may be shown by parol that the written contract never came into existence. It may be shown by parol, for instance, that the contract was delivered subject to a condition that it should become effective only upon the happening of some event not mentioned in the contract. But the rule last stated is not without its limitations. The alleged condition precedent to the existence of the contract, which it is sought to prove by parol, must not be inconsistent with the written instrument itself. If the alleged condition is inconsistent with the terms of the written instrument itself, then the practical result is that the written terms are varied by parol, a result within the inhibition of the parol evidence rule. As is well said in Frischkorn Real Estate Co. v. Hoskins, 226 Mich. 30, 196 N.W. 888, 889: "* * * the rule is well established, that, to permit evidence of a preliminary or contemporaneous oral agreement, it must appear that it is consistent with the terms of the writing, not negatived by the writing itself, that it does not tend to vary or contradict the written instrument, and that its terms are independent of those which the writing purports to express. 22 C.J. 1245; 10 R.C.L. 1035. If the writing deals with the particular element of the negotiation sought to be proven, evidence thereof is not admissible."

For opinions in which similar views are expressed, see Pleasant v. Arizona Storage Distributing Co., 34 Ariz. 68, 267 P. 794; Chicago Title Trust Co. v. Cohen, 284 Ill. App. 181, 1 N.E.2d 717; United States Fidelity Guaranty Co. v. Grabske, 111 Kan. 271, 207 P. 322; Hanrahan-Wilcox Corp. v. Jenison Machinery Co., 23 Cal. App. 2d 642,73 P.2d 1241.

The rule is thus stated in Restatement of the Law of Contracts, Sec. 241: "Where parties to a writing which purports to be an integration of a contract between them orally agree, before or contemporaneously with the making of the writing, that it shall not become binding until a future day or until the happening of a future event, the oral agreement is operative if there is nothing in the writing inconsistent therewith."

Williston says that "evidence of an oral condition that is repugnant to the condition stated in the writing, or is offered in substitution for it, is inadmissible." Williston on Contracts, Revised Edition, Sec. 634. Vol. 3, page 1826.

In Travers-Newton Chautauqua System v. Naab, 196 Iowa 1313, 196 N.W. 36, 37, 32 A.L.R. 780, the court, after noting the rule that parol evidence may be offered to show that there was a condition precedent to the delivery of a written contract, says: "This rule is of necessity applied in cases where the written instrument itself is silent on the subject-matter of the condition precedent which it is sought to establish by parol. But, where the written instrument speaks on the very subject-matter of the condition precedent which it is sought to establish by parol, then a different rule must obtain. In such an instance, the writing itself is sought to be obviated or modified by proof of a contemporaneous parol agreement, and this cannot be done."

It is in the application of the above-stated rules to the situation before us that I reach a conclusion different to that expressed in the majority opinion.

Appellee Hall owned a residence. Appellant Denman, doing business under the trade name indicated, was a real estate broker. Under the terms of the Real Estate Dealers License Act, Article 6573a, Sec. 22, Vernon's Ann.Tex.St., Acts 1939, 46th Leg., p. 560, he could not recover a commission for selling appellee's real estate in the absence of a written agreement or some memorandum thereof between appellant and appellee. Appellee signed a writing bearing the style of "Exclusive Agency Contract With Option to Purchase." In such writing appellee appoints appellant exclusive agent for the sale of appellee's said real estate, giving the legal description thereof. The price is stipulated at $7,000 cash. Abstracts certified to date will be furnished. Conveyance will be by general warranty deed. Provision is made concerning the brokerage commission. The agreement is signed by appellee, and by an agent for appellant.

Appellant found a purchaser willing and able to buy the property for $7,000 cash. Appellee refused to sell, and appellant claims his commission. Appellee seeks to avoid payment of the commission by showing that, at the time the agreement was signed and put into the hands of appellant's said agent, it was delivered to said agent, to quote from the findings of fact of the trial court, "upon condition that the same was to be effected only in the event the defendant, as owner, could negotiate for and obtain a lease upon the garage apartment, and that said Exclusive Listing Contract was not to become effective except upon the condition made at the time of the execution and delivery thereof."

That there is an irreconcilable conflict between the terms of the condition sought to be shown by parol, and the terms of the written agreement, is apparent. Under the written agreement appellee is to sell the property for $7,000 cash, and convey by general warranty deed. Under the terms of the so-called condition of delivery, he is bound to sell only in the event he can obtain a lease from the purchaser on the garage apartment. Appellee testified that he instructed appellant's agent to notify appellant of the condition, and to tell appellant to call appellee on the telephone if the condition was unsatisfactory. Suppose appellant had called appellee on the telephone, and had agreed to terms different from those contained in the written contract. We would then clearly have a case of an attempt to vary a written contract by parol. No court would hear the appellee say that he and appellant had a contemporaneous oral contract different from that expressed in the writing. But the result reached in this case is for all practical purposes the same. Appellant, complying with the statute, entered into a written agreement with appellee. Now he is denied the benefit of his written contract by proof of an alleged contemporaneous oral agreement which is inconsistent with the terms of the writing. Let us see how the rule contended for by appellee would work if the situation were reversed. Suppose the written contract had provided that appellee would sell the property only if he could obtain a lease on the garage apartment from the purchaser. Suppose appellant had found a purchaser willing to buy the property only if he could obtain possession of the entire premises. Then suppose appellant had sued for his commission, claiming that the written agreement was delivered to appellee on condition based upon oral agreement that appellee would not insist on the written provision respecting the lease of the garage apartment. It would be an unusual construction of the statute to allow recovery of a commission under such circumstances, and contrary, I believe, to the purposes for which the statute was enacted.

The condition which appellee seeks to prove by parol is not, as I see it, in its essence a condition precedent to delivery, but it is a condition pertaining to performance of the contract. There is no way in which the written contract can be performed according to its terms, and effect also be given to the terms of the so-called condition. The written contract calls for sale of the property with no strings attached, to employ a common expression. But under the alleged parol agreement of the parties appellee was bound to sell, and to pay the commission, only in the event the purchaser would agree to lease the garage apartment to appellee on some acceptable basis. When, it may be asked, would the written contract signed by appellant ever go into effect in such manner that all of its terms would become effective? The rule pertaining to conditions precedent to delivery contemplates that upon the performance of the condition precedent the written contract will then become effective according to all of its terms and provisions. That could never happen under the theory presented by appellee.

I have written at some length, because I believe that the theory reflected in the majority opinion goes a long way toward defeating the purposes of Section 22 of the statute above cited.

This is not a case, under the pleadings and findings of the court, where the execution of the contract was obtained by fraud or duress, nor it is one where it was understood between the parties that still other provisions were to be embodied in the written contract before delivery.