Cadigan v. American Trust Co.

• Decision Date: 25 March 1955
• Docket Number: No. 16257,16257
• Citation: 131 Cal.App.2d 780,281 P.2d 332
• Court: California Court of Appeals Court of Appeals
• Parties: Myrtle CADIGAN, Plaintiff and Respondent, v. AMERICAN TRUST COMPANY, Executor of the Estate of Margaret Grant, Deceased, Defendant and Appellant.

Page 332

281 P.2d 332

131 Cal.App.2d 780

Myrtle CADIGAN, Plaintiff and Respondent, v. AMERICAN TRUST COMPANY, Executor of the Estate of Margaret Grant, Deceased, Defendant and Appellant.

No. 16257.

District Court of Appeal, First District, Division 1, California.

March 25, 1955.

As Modified on Denial of Rehearing April 22, 1955.

Cushing, Cullinan, Duniway & Gorrill, Vincent Cullinan, San Francisco, for appellant.

Jarvis, Miller & Decker, Charles W. Decker, San Francisco, for respondent.

FRED B. WOOD, Justice.

April 12, 1944, Margaret Grant executed and delivered to James and Myrtle Cadigan a deed conveying certain real property to the Cadigans and received from them their promissory note in the principal sum of $6,150 bearing interest at 6 percent (payable at the rate of $42.50 a month) and deed of trust securing the note.

August 10, 1944, Margaret Grant wrote, signed and mailed the following letter to the Cadigans: 'You have bought from me a parcel of property (known as Number 2207-19th Ave) upon which I hold a Trust Deed for $6150.00. Your payments interest and principal is $42.50 per month. I agree to leave a release upon my death leaving you the balance of the unpaid principal free of my mortgage providing your payments are lived up to, as per our agreement, each month. $42.50 Principal and interest.'

Margaret Grant died May 14, 1953. She left no 'release' by will or otherwise. The Cadigans had made all the installment payments which had accrued on the note and were not in default at the time of decedent's death. There was still unpaid upon the note, according to its terms, the sum of $4,478.48.

Myrtle Cadigan ¹ brought this action against the executor of Grant for cancellation of the note, reconveyance of the trust estate, and recovery of monthly installments, totalling $297.50, which plaintiff had paid to the executor since the death of the decedent.

The trial court found that the deed, the note, the deed of trust, and the letter were executed and delivered in accordance with and pursuant to the terms of an oral agreement between the parties thereto, and gave judgment for the plaintiff.

The parties are agreed that the sole question upon this appeal is whether the admission and consideration of evidence of the oral agreement and of Grant's letter of August 10, 1944, was a violation of the parol evidence rule. Defendant views the note and deed of trust as the final integration in writing of the agreement of the parties, one which upon its face purports to be a complete expression of the whole agreement and thus does not permit the use of extrinsic evidence to vary its terms. Plaintiff, upon the other hand, claims that the note, the deed of trust, and the letter must be read and construed together as a single integrated contract.

The inquiry starts with the scrutiny of two writings: The promissory note of April 12th, an absolute and unqualified commitment to pay $42.50 per month until $6,150 and interest thereon shall have been paid; and the letter of August 10th, a firm commitment that if the monthly installments are punctually paid as they fall due the amount which remains unpaid upon the death of the payee shall be cancelled. It appears from the letter that these two writings bear a potential legal relationship, each to the other.

Our first inquiry is whether each of these writings was given for a consideration. The answer is 'yes.' The recital of consideration in the promissory note ('for value received') is noncontractual in nature. In that type of case the 'true consideration may always be shown by parol.' Wells v. Wells, 74 Cal.App.2d 449, 457, 169 P.2d 23, 27; see also cases collected in 18 Cal.Jur.2d 754-756, § 270) as well as such matters as execution and delivery (18 Cal.Jur.2d 756-758, § 271). The promissory note represented the major portion of the purchase price of the property deeded to the makers by the payee. The promise to remit the unpaid portion of the principal upon the death of the payee was an integral part of the bargain, the major inducement to the Cadigans to buy.

We thus seemingly have two 'contracts [instruments] relating to the some matters, between the same parties, and made as parts of substantially one transaction,' which 'are to be taken together.' Civil Code, § 1642. The questioned parol evidence demonstrates that such is the case. It consists principally of the testimony of Mr. and Mrs. Cadigan. It shows that they had been tenants of this property for some time when Mrs. Grant suggested that they buy the place, offering to let them have it for a small down payment ($350), the balance to be paid at the same rate as their rent ($42.50 monthly), and, upon her death, the amount of the principal then remaining unpaid would be cancelled if meanwhile they kept up the monthly payments. She told them she was making similar arrangements with others of her tenants, to reduce her tax burden and to be relieved of the task of employing people to take care of her properties, adding that she had no relatives and would rather have her property go to her tenants than to the state.

Mr. Cadigan testified fully concerning the oral agreements. As to the cancellation of the unpaid residue of the note upon the death of the payee, he testified that Mrs. Grant 'said if I would buy the property that she would fix in writing, yes, fix in writing the property would revert to us, title clear and no further payments on--in the event of her death. And I says: 'Well, that's just an oral statement right now,' I says, 'Will you actually do that for us?' and she said, 'I certainly will." Continuing, he testified that he accepted this proposal and made an appointment to meet her at the title company the next day, when she executed the deed and the Cadigans executed the note and the deed of trust. Upon that occasion he asked Mrs. Grant if she was going to 'fix up this writing for us that she said she would, and she said: 'Well, I'll put that in the mail for you.'' He did not receive that writing from her right away; 'I believe it was at least three or four months elapsed and I spoke to Mrs. Cadigan, I says: 'Why don't you call Mrs. Grant and get that letter she promised us?' which she did'; and in a day or two Mrs. Grant mailed them the letter of August 10, 1944.

Mrs. Cadigan testified that when she phoned Mrs. Grant to remind her about the agreement to cancel the note on her death 'she said she was sorry she hadn't sent it before and she would send it.' Mrs. Cadigan had not asked Mrs. Grant for it before that time, after the note was executed. About August 10th was the first time she asked for it, and Mrs. Grant sent it.

The evidence amply supports the trial court's finding that not all of the terms of the oral agreement were reduced to the writings contained in the promissory note and the deed of trust. An important part of them was reduced to writing in the form of the letter of August 10, 1944, from the payee to the makers of the note. In short, these writings were made as parts of one transaction and therefore are to be taken together. Thus viewed, they constitute one written contract, the final written memorial of the parties.

Mrs. Grant's letter is like the letter penned by the payee of one of the promissory notes involved in Symonds v. Sherman, 219 Cal. 249, 251-253, 26 P.2d 293, 294. That letter was found pinned to the note, among the effects of the payee, after her death. In it the payee declared that the note "is to be given back to" the maker of the note "at the time of my death". It was shown by extrinsic evidence that cancellation upon the death of the payee was an integral part of the loan transaction which the note in part expressed; hence the note and the letter must be read together. 'It is a general rule that several papers relating to the same subject-matter, and executed as parts of substantially one transaction, are to be construed together as one contract. 6 Cal.Jur. 298; 19 Cal.Jur. 832; Civ.Code, § 1642; Goodwin v. Nickerson, 51 Cal. 166. We think this rule applies under the circumstances here shown, and that these findings and judgment, in so far as this particular note is concerned, are supported by the evidence, which shows an agreement, on ample consideration and evidenced by a written memorandum, that the principal sum of the note is not to be paid.' 219 Cal. at page 253, 26 P.2d at page 295.

This principle was similarly applied by our Supreme Court as recently as 1950 in Mayers v. Loew's, Inc., 35 Cal.2d 822, 221 P.2d 26. There, also, two writings were involved, a formal contract and a letter which fixed for certain working conditions commencement dates different from those fixed in the formal contract. The court held, all the justices concurring, that the 'consideration of the letter of February 1st in the interpretation of the formal contract is not objectionable on the ground that it tends to vary, modify, or contradict the terms of that contract. Those terms are established by the contract and the letter and not by one to the exclusion of the other.' 35 Cal.2d at page 828, 221 P.2d at page 29. The rationale of the decision is indicated by the following excerpts: "Where two or more written instruments are executed contemporaneously, with reference to the other, for the purpose of attaining a preconceived object, they must all be construed together, and effect given, if possible, to the purpose intended to be accomplished.' [Citations.] Since the purpose of the agreements may be ascertained only by reference to each of the documents executed to accomplish that purpose, it was error to exclude any of those documents from consideration.' 35 Cal.2d at pages 827-828, 221 P.2d at page 29. 'The agreements in the present case are ambiguous and internally inconsistent. * * * [Here the court describes the ambiguities and inconsistencies.] The terms of the agreement furnish no clear answer to these questions. It is thus apparent that the contract is not...