Coffman v. Malone
| Decision Date | 30 October 1915 |
| Docket Number | 18286 |
| Citation | 154 N.W. 726,98 Neb. 819 |
| Parties | SAMUEL J. COFFMAN ET AL., APPELLEES, v. MATT MALONE, APPELLANT |
| Court | Nebraska Supreme Court |
APPEAL from the district court for Douglas county: GEORGE A. DAY JUDGE. Reversed.
Murphy & Winters, for appellant.
Smyth Smith & Schall, contra.
Amos Snyder, Matt Malone and Samuel J. Coffman owned all of the capital stock in a corporation called the Snyder-Malone-Coffman Company, which was doing a live stock commission business in South Omaha. During the fall of 1912, slight differences as to the conduct of the business arose, and December 12 the following writing was drawn up and signed by the parties:
December 31, 1912, Snyder delivered his stock, tendered his resignation as president of the corporation, and received from Malone the balance due. Four or five days thereafter the articles of incorporation were redrafted and Coffman and Malone signed the same. Coffman made no assignment of his stock, and neither made nor tendered his resignation as an officer of the corporation until January 15, 1913, when he made an assignment of his stock and tendered the same, together with his resignation, to Malone, and demanded the amount stipulated in this writing. Malone refused to receive the stock or resignation or to pay over the money, and Coffman brought suit upon the contract.
Malone by answer alleged that the writing was executed for the sole purpose of purchasing the interest of Amos Snyder, but it was drawn in the form set out because they wanted Snyder to believe that Coffman was also retiring from the business; that there was a contemporaneous oral agreement between him and Coffman that, as between them, it was not to be performed; that there was no delivery of the writing to Coffman; and that the check which was delivered was not to be cashed, but was to be returned again by Coffman to Malone. There is an allegation, also, that after Snyder retired from the business, and after the expiration of the time fixed by this writing for the transfer of Coffman's stock, Coffman participated in the election of himself as secretary of the company, and that he continued to act for and in behalf of the company until January 15, 1913; that under their oral agreement Malone was to transfer certain of Snyder's shares of stock to Coffman, which Malone was ready and willing to do, but Coffman did not have the money to pay therefor, and, upon Malone's refusal to accept Coffman's note in lieu of cash, Coffman attempted to repudiate the oral agreement and to enforce this writing.
A jury was waived and the cause tried to the court. Oral testimony was admitted in support of the allegations of the answer. But at the conclusion of the trial, on motion of the plaintiff, the court struck from the record the testimony which had been received in proof of the oral agreement, and entered judgment for plaintiff for the amount due under the writing. There are three assignments of error; but, as the one directed against the ruling of the court in striking this evidence goes to the merits of the whole controversy, it is the only one we will consider. If the ruling in that regard is correct, the judgment is warranted by the pleadings and the proof. No doubt the court relied upon the general rule laid down in Mattison v. Chicago, R. I. & P. R. Co., 42 Neb. 545, 60 N.W. 925, and quoted as authority in Nebraska Land & Feeding Co. v. Trauerman, 70 Neb. 795, 98 N.W. 37, wherein it is held: "Parol evidence is incompetent to prove a contemporaneous oral agreement by which it is sought to change or alter the terms of a written contract and the result of which would be to change the effect of the written contract in a material portion and to insert or read into it a condition or reservation not contained in it, or implied by its terms"--while the appellant contends that the rule invoked does not apply, and that a party who has been induced to sign a written contract for a certain purpose is entitled to offer oral testimony, not for the purpose of varying its terms, but for the purpose of showing that it was never intended to be a contract or to be of binding force between the parties. It is not contended that the contract is ambiguous or incomplete, but that plaintiff and defendant were working together for a common purpose; that, in furtherance of this common purpose, it was executed in its present form; that they were not dealing one with the other, but were jointly dealing with Snyder; that, in the very nature of things, the writing could not contain the agreement between Coffman and Malone, because that would defeat its purpose. If there was no intention on the part of either party to observe the terms of this writing, as between them, this writing was not the contract.
This evidence was not offered with the view of contradicting, varying, or explaining the language employed in the written instrument, but to establish a fact or circumstance collateral to the original writing which would control its effect or operation as a binding engagement. On either theory the writing is precisely what both parties intended it to be. If there was an express agreement between Coffman and Malone that it was not to be carried out, Malone in signing was acting, not alone for himself, but also for the plaintiff, and in that event it never became a binding obligation. "The existence of a written contract or instrument, duly executed between the parties to an action and delivered, does not prevent the party apparently bound thereby from pleading and proving that contemporaneously with the execution and delivery of such contract or instrument the parties had entered into a distinct oral agreement which constitutes a condition on which the performance of the written contract or agreement is to depend." Norman v. Waite, 30 Neb. 302, 46 N.W. 639.
In Barnett v. Pratt, 37 Neb. 349, 55 N.W. 1050, in discussing a somewhat similar question, the court said: "It is settled by a considerable line of authority that where the execution of a written agreement has been induced upon the faith of an oral stipulation made at the time, but omitted from the written agreement, though not by accident or mistake, parol evidence of the oral stipulation is admissible, although it may add to or contradict the terms of the written instrument."
The doctrine laid down in Norman v. Waite, supra, has been reiterated in Davis v. Sterns, 85 Neb. 121, 122 N.W. 672, First Nat. Bank v. Burmey, 91 Neb. 269, 136 N.W. 37, and Exchange Bank v. Clay Center State Bank, 91 Neb. 835, 137 N.W. 845, and is the settled rule in this state.
This evidence having been erroneously stricken from the record, it follows that the judgment of the district court must be reversed and the cause remanded.
REVERSED.
The question presented by the record seems to be: Is parol evidence admissible to show that the parties to the suit had mutually agreed that a written contract which plaintiff is seeking to enforce was never to be performed, but was a mere sham executed for the purpose of influencing the conduct of a third person? The question is a sensitive one, because an error in its solution may result either in a departure from the rule which forbids the use of parol evidence to vary a written instrument or in rewarding a wrong by closing the door to judicial scrutiny. The supreme court of Vermont has answered the question in the negative. Conner v. Carpenter, 28 Vt. 237; Town of Grand Isle v. Kinney, 70 Vt. 381, 41 A. 130. The better reasoning, however, and the weight of authority seem to be to the contrary.
In 4 Wigmore, Evidence, sec. 2406, it is said: ...
To continue reading
Request your trial