Mangini v. Wolfschmidt, Limited

• Decision Date: 17 November 1958
• Citation: 331 P.2d 728,165 Cal.App.2d 192
• Court: California Court of Appeals Court of Appeals
• Parties: Norman J. MANGINI, Plaintiff and Appellant, v. WOLFSCHMIDT, Limited, a corporation, Defendant and Respondent. Civ. 23198.

Page 728

331 P.2d 728

165 Cal.App.2d 192

Norman J. MANGINI, Plaintiff and Appellant, v. WOLFSCHMIDT, Limited, a corporation, Defendant and Respondent.

Civ. 23198.

District Court of Appeal, Second District, Division 2, California.

Nov. 17, 1958.

J. Albert Hutchinson, San Francisco, for appellant.

Lawler, Felix & Hall, and John M. Hall, Los Angeles, for respondent.

HERNDON, Justice.

Plaintiff appeals from certain portions of the judgment rendered in a non-jury trial in which he sought recovery of damages for alleged breaches of a contract.

Plaintiff is a licensed liquor manufacturer's agent and defendant is a liquor manufacturer and importer. In his complaint plaintiff alleged: that in July, 1954, he and the defendant '* * * entered into an oral contract by the terms of which defendant undertook and agreed to employ and did employ, plaintiff as its exclusive selling agent * * *' within a described territory in the southern portion of California, and to pay plaintiff as compensation a specified commission; that by the terms of the contract it was further agreed '* * * that plaintiff should become and remain the sole and exclusive selling agent and should have and retain the exclusive right of sale of defendant's said products in said territory as long as plaintiff should continue to use his best efforts to promote and solicit the sale of defendant's products therein; that said oral contract was duly confirmed by defendant in its certain writing dated July 19, 1954 * * *' a copy of which was appended as an exhibit to the complaint and is set out in full in the margin. ¹

The complaint further alleged that plaintiff fully and faithfully performed the contract until May 31, 1955, but that on May 23, 1955, defendant wrongfully and without excuse or justification breached and repudiated the contract by writing him a letter reading as follows: 'This is to confirm our advice to you that we are discontinuing you as as broker for the sale of our products effective May 31st, 1955.'

By the first cause of action of his complaint, plaintiff seeks recovery of the sum of $15,000 as damages for the 'breaches and repudiation of said contract' and the further sum of $1,675 for unpaid commissions on orders accepted by defendant prior to May 31, 1955. By his second cause of action, plaintiff seeks an accounting from defendant with respect to sales made by defendant on or after May 31, 1955, in 'plaintiff's exclusive territory.' The third cause of action may be disregarded since the portion of the judgment allowing plaintiff compensation for the special services therein alleged is not questioned on this appeal.

It is to be specially noted that the letter of July 19, 1954, the writing by which, according to the complaint, the oral contract was 'confirmed'--is entirely silent as to the term or duration of plaintiff's employment. Defendant's answer admitted '* * * a contract which was evidenced by the letter * * *' and the trial court found that the parties '* * * entered into a written contract, a true copy of which is annexed to the complaint. * * *'

At the trial, for the avowed purpose of proving an agreement concerning the duration of the agency, plaintiff sought to testify to certain conversations between himself and Mr. Morrell, defendant's president, which preceded delivery of the writing. After reference had been made to one of these conversations, the direct examination of plaintiff proceeded as follows: 'Q. Now, in your discussion at that time with Mr. Morrill did you and he discuss the terms or conditions of the relationship you had in mind before this was delivered? A. Yes, we did.

'Q. Would you state what it was in regard, first as to the question of the duration of the relationship.

'Mr. Hall: That is objected to as calling for that which would vary or add to the terms of an unambiguous written document and as being incompetent, irrelevant and immaterial.'

Defendant's objection that the admission of such testimony would violate the parol evidence rule was sustained. Plaintiff made rather extensive offers of proof relative to the substance of said antecedent conversations and the circumstances attending the negotiation of the contract. Among other things, plaintiff offered to prove the following: (1) Plaintiff's statement to Mr. Morrell to the effect that plaintiff would not be interested in the agency '* * * unless it were on a basis in which he would have an exclusive territory and be assured of a continuation as long as he performed his function adequately; that the product had been on the market and had been mistreated and it would take a minimum of three years to put it on a paying basis from the plaintiff's point of view; * * *.' (2) That both plaintiff and Mr. Morrell '* * * stated in the affirmative that it would take a long time to establish what was then not an unknown but a product that had been badly treated in the market, as they expressed it, there having been five preceding agents who attempted to put it over in the California market. * * * [T]hat it would take a minimum of three years to reach the point where sales would be compensatory, * * * that the contemplated gross sales would be between ten and twenty thousand cases per month by the end of that three-year period, and that only thereafter would the plaintiff have a chance to secure any real reimbursement. * * *' (3) That it was agreed between Mr. Morrell and plaintiff '* * * that a so-called promotion man, named Jetel, would be employed by the defendant for the purpose of assisting the plaintiff in pioneering this vodka group of products; that it was suggested by Mr. Morrill that Mr. Jetel be hired six months or later after the time of the conversation and the plaintiff suggested that it be done earlier and offered to Mr. Morrill the suggestion that he would forego one-half of his commission on the first 500 cases per month, which might be paid over to Mr. Jetel by the defendant and at all times that Mr. Jetel would be under the supervision of the plaintiff, though an employee of the defendant, * * *.'

The essence of plaintiff's position on this appeal is stated as follows in his opening brief: 'Substantively, it was and is plaintiff's submission that he had alleged and could prove, first, that the contract should endure and continue as long as he used his best efforts to promote the sale and solicit sales of defendant's products in his exclusive territories; and, alternatively, the contract in the circumstances in contemplation was to endure for a reasonable time and could be unilaterally terminated only upon reasonable notice, such reasonable time and notice exceeding the ten months' duration and the seven days' notice herein.' Thus, the controlling question on this aspect of the case is whether it properly can be declared as a matter of law that the instant writing imports on its face to be such a complete expression of the whole agreement as to require exclusion of parol evidence offered to prove an additional contractual provision covering a matter as to which the writing is silent. See 3 Williston, Contracts, p. 1821, § 633 (rev. ed. 1936).

The parol evidence rule is a principle of substantive law that when the parties have embodied the terms of an agreement in a writing, that writing becomes the contract of the parties and it may not be varied or supplemented by evidence of prior or contemporaneous negotiations of the parties. In re Estate of Gaines, 15 Cal.2d 255, 264-265, 100 P.2d 1055; Hale v. Bohannon, 38 Cal.2d 458, 465, 241 P.2d 4. 'The rule comes into operation when there is a single and final memorial of the understanding of the parties. When that takes place, prior and contemporaneous negotiations * * * are excluded; or, as it is sometimes said, the written memorial supersedes these prior or contemporaneous negotiations.' In re Estate of Gaines, supra, 15 Cal.2d 255, 265, 100 P.2d 1055, 1060; Dillon v. Summer, 153 Cal.App.2d 639, 643, 315 P.2d 84. The parol evidence rule has been incorporated into our Codes. Code of Civil Procedure, § 1856; Civil Code, § 1625.

However, certain limitations upon the application of the parol evidence rule are well recognized. As stated in Ellis v. Klaff, 96 Cal.App.2d 471, 476, 216 P.2d 15, 19: 'The parol evidence rule is a principle of substantive law, premised upon the hypothesis that when the parties have voluntarily expressed their agreement in written form, the writing represents a complete integration of their understanding. Wigmore on Evidence, vol. 9, sec. 2425, p. 76. It is not calculated to, nor does it in practice, exert any compulsion upon the parties to put their entire understanding in writing. Lande v. Southern California Freight Lines, 85 Cal.App.2d 416, 420, 193 P.2d 144. It does not, therefore, render inadmissible proof of contemporaneous oral agreements collateral to, and not inconsistent with, a written contract where the latter is either incomplete or silent on the subject, and the circumstances justify an inference that it was not intended to constitute a final inclusive statement of the transaction. Crawford v. France, 219 Cal. 439, 443-445, 27 P.2d 645; Weil v. California Bank, 219 Cal. 538, 27 P.2d 904; Van Slyke v. Broadway Ins. Co., 115 Cal. 644, 647, 47 P. 689, 928.'

As recently stated by our Supreme Court in American Industrial Sales Corp. v. Airscope, Inc., 44 Cal.2d 393, 397, 282 P.2d 504, 506, 49 A.L.R.2d 1344: 'It has long been the rule that when the parties have not incorporated into an instrument all of the terms of their contract evidence is admissible to prove the existence of a separate oral agreement as to any matter on which the document is silent and which is not inconsistent with its terms.' (Emphasis added.) This exception to the application of the parol evidence rule has been employed in a wide variety of situations to permit proof of a contemporaneous oral agreement where the writing involved was silent as to one element of the...