Becker v. Lagerquist Bros., Inc., 34535

• Decision Date: 14 January 1960
• Docket Number: No. 34535,34535
• Citation: 348 P.2d 423,55 Wn.2d 425
• Parties: Rodney A. BECKER and Jane Becker, his wife; Martin Burkland and Marion K. Burkland, his wife; Allan J. Harlin and Vivian K. Harlin, his wife; Henry G. Schimpf and Vange R. Schimpf, his wife; Zachary J. Loussac and Ada N. Loussac, his wife; Richard Spelger and Ann Spelger, his wife; and Robert G. Beach and Marie Beach, his wife, Respondents, v. LAGERQUIST BROTHERS, INC., a corporation, Appellant.
• Court: Washington Supreme Court

Page 425

55 Wn.2d 425

348 P.2d 423

Rodney A. BECKER and Jane Becker, his wife; Martin Burkland and Marion K. Burkland, his wife; Allan J. Harlin and Vivian K. Harlin, his wife; Henry G. Schimpf and Vange R. Schimpf his wife; Zachary J. Loussac and Ada N. Loussac, his wife Richard Spelger and Ann Spelger, his wife; and Robert G Beach and Marie Beach, his wife, Respondents, v. LAGERQUIST BROTHERS, INC., a corporation, Appellant.

No. 34535.

Supreme Court of Washington, En Banc.

Jan. 14, 1960.

McCann, Barnett & Towne, Vernon W. Towne, Seattle, for appellant.

MacDonald, Hoague & Bayless, Seattle, for respondents.

FOSTER, Judge.

Appellant corporation, defendant below, appeals from a judgment requiring specific performance of an oral agreement to pave a street or, in the alternative, to pay the cost thereof.

The gravamen of appellant's contention is that, under the parol evidence rule, the earnest-money receipt precluded extrinsic proof of an oral agreement to pave the street. Quite recently, in Barber v. Rochester, 52 Wash.2d 691, 328 P.2d 711, we reviewed the subject and concluded that the so-called parol evidence rule was not an exclusionary device but, on the contrary, was a basic tenet of substantive law and the trial court's duty was to consider all relevant extrinsic evidence, either oral or written, in order to determine if the writing embraced the entire agreement of the parties. If it does, the writing is the sole memorial of the agreement, otherwise it is not.

A detailed statement of the evidence is not required to understand the claimed errors.

The appellant corporation acquired a tract of land adjacent to the city of Seattle. Thereafter, it subdivided said tract into building lots and offered the same for sale. To promote the sale of the lots, appellant advertised that it would pave the streets. It employed, for this purpose, display advertising and an elaborate illustrated brochure. Moreover, the court found that respondents' purchases were made in response to direct oral promises to them by appellant's agent that the street in question would be paved.

Sales of the property were made by agents or brokers who gave earnest-money receipts which, while varying in form, all contained a recital that there were no agreements not contained in the receipt.

The trial court further found that neither party contemplated that the earnest-money receipt covered the entire agreement between them. ¹

It is fitting to say that the primary function of an earnest-money receipt is to satisfy the statute of frauds. In Gronlund v. Anderson, 38 Wash.2d 60, 227 P.2d 741, 743, although an action for fraud, the court was dealing with an earnest-money receipt which contained the precise words relied upon here, and held that such words had nothing to do with the application of the parol evidence rule to an oral contract relating to improvements. We there said:

'* * * There seems to be some suggestion that, since the earnest money receipt given by the sellers to the buyers contains the words: 'There are no verbal or other agreements which modify or affect this agreement,' it was a violation of the parol evidence rule to introduce evidence concerning the statements of the real-estate agent as to the sufficiency of the water supply. Even were the quoted clause contained in the contract of sale, this contention would be quite without merit; for, where the issue is whether a contract was procured by fraud, the doctrine that parol or other extrinsic evidence is inadmissible to contradict, vary, or explain the terms of a written contract is inapplicable. See Annotation, 56 A.L.R. 13. Parol evidence of false and fraudulent representations inducing one to enter into a written contract is admissible notwithstanding the contract contains an express recital that there have been no representations, or that all oral representations shall be inoperative. Dieterich v. Rich, 115 Wash. 365, 197 P. 1. But, in the present instance, the clause in question was not in the contract of sale at all, but in the earnest money receipt, a document which, for our purposes, was no more than a contract to enter into a contract of sale within a specified time. An agreement concerning the adequacy of the water supply would not vary or modify such a contract in any sense, and in fact would have nothing whatever to do with it.' (Additional italics ours.)

A similar view was expressed in Whaley v. Milton Const. & Supply Co., Mo.App., 241 S.W.2d 23, 27:

'It is next urged that the execution of the earnest money receipt was the final act of the parties expressing the terms of their agreement, and that all prior negotiations and agreements were merged therein, and for that reason the contract sued on could not be established without violating the parol evidence rule.

'The rule referred to has no application to the facts in this case. The original contract between the parties was oral, and it does not appear that the execution of the earnest money receipt was intended as a reduction of that entire contract to writing. The purpose of the earnest money receipt was to bind the bargain, and its terms were limited to the terms of the sale. It contained nothing in relation to that part of the agreement that had to do with the construction of the house. Its purpose was merely to acknowledge receipt of the earnest money, identify the property to be conveyed, and specify the terms of the sale and the time and place of closing. Nor were the terms of the contract with reference to the character of the building to be constructed so related to the subject matter of the sale and conveyance of the property as to require, under the parol evidence, their inclusion in the earnest money contract before they could be enforced. Oral proof of the terms of the contract with respect to the kind of house contracted for in no way tended to vary, add to, or contradict the earnest money contract. Scott v. Asbury, Mo.App., 198 S.W. 1131; Corn v. McDowell, Mo.App., 185 S.W. 235; Bowers v. Bell, 193 Mo.App. 210, 182 S.W. 1068; Hart v. Riedel, Mo.App., 51 S.W.2d 891; Eggimann v. Houck, Mo.App., 240 S.W. 478; Meyer v. Dubinsky Realty Co., Mo.App., 133 S.W.2d 1106; Morris v. Mahn, 208 Mo.App., 575, 235 S.W. 827; Heath v. Beck, Mo.App., 231 S.W. 657.'

Indeed, the objection was that the matter was not dealt with in the earnest-money receipt. Counsel's objection is: 'Mr. Towne: I object, Your Honor, to any testimony regarding other things that were to be done in addition to the matters incorporated in the earnest money agreement.' ²

It would be strange indeed if all of the terms of sale were required to be in an earnest-money receipt. The entire method of selling real estate would have to be revised.

'* * * The parol evidence rule does not exclude evidence of an oral agreement which the parties could not reasonably be expected to embody in the written agreement.' 55 Am.Jur. 573, 574, § 98.

Where a contract required to be in writing is in writing, an independent collateral agreement with reference to the same subject matter may be in parol where the statute does not require it to be in writing. Brumley v. Miller, 1877, 2 Shan. Cas., Tenn., 454; Lewis v. Turnley, 1896, 97 Tenn. 197, 36 S.W. 872; McGannon v. Farrell, 141 Tenn. 631, 214 S.W. 432; Haynes v. Morton, 32 Tenn.App. 251, 222 S.W.2d 389. ³

The so-called parol evidence rule is not an exclusionary device to prevent the introduction of oral testimony. The primary test for applying it was stated in Gaffney v. O'Leary, 155 Wash. 171, 283 P. 1091, 1092, as follows:

'The first question is whether the entire contract of the parties was embodied in the order referred to and therefore was not subject to be supplemented by oral testimony. The well-settled rule is that, where it appears that only a part of a contract is in writing, the part not in writing may be proved by oral testimony in so far as it is not inconsistent with the written portion. Interstate Engineering Co. v. Archer, 64 Wash. 629, 117 P. 470. * * *' The situation is reminiscent of Judge Robinson's words in Bond v. Wiegardt, 36 Wash.2d 41, 216 P.2d 196, 199:

'We are here concerned with the mysterious parol evidence rule, the recondite character of which has traditionally provided a sore trial for even such eminent authorities as Thayer, who wrote of it that, 'Few things are darker than this, or fuller of subtle difficulties' (Thayer, A Preliminary Treatise on Evidence at the Common Law, chapter 10, p. 390), and Wigmore, who described it as 'the most discouraging subject in the whole field of Evidence'. 9 Wigmore on Evidence, 3d Ed., 3, § 2400. * * *'

At the time of the execution of the earnest-money receipts, the contract was partly, if not wholly, executory on both sides, so that our decision in Nielsen v. Northern Equity Corp., 47 Wash.2d 171, 286 P.2d 1031, 1034, controls:

'Since the earnest money agreement was executory on both sides, no new or additional consideration was necessary to make the modification agreement enforcible. La Plante v. Hubbard, 125 Wash. 621, 217 P. 20; Hunters Cattle Co. v. Carstens Packing Co., 129 Wash. 377, 225 P. 68; Meyer v. Strom, 37 Wash.2d 818, 226 P.2d 218.' ⁴

But we need not rest our decision on that ground alone for at least in the case of respondents Beach, the earnest-money receipt was never signed by the seller, so that in the Beaches' case the parol evidence rule could not possibly apply because there was no written contract.

Appellant's argument is that, because the matter of paving the street in question was not mentioned in the earnest-money receipt, the parol evidence rule precludes proof of a collateral oral agreement to pave the street. Such is contrary to the main current of decisional law both in this country and in England. ⁵ The law is summarized in the following quotation from 27 R.C.L. 533, § 265:

'* * * Evidence of an oral promise to grade and build a street and to cause city water to be put into it may be...