Case ID: ohio-st_6/html/0001-01.html
Source: Caselaw Access Project
Author: {"author": "Bartley, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Reuben H. Thurston and Thomas Hays v. William Ludwig.
    A verbal agreement, to be effectual as a waiver, variation, or change in the stipulations of a prior written contract between the parties, must rest upon some new and distinct legal consideration, or must have been so far executed or acted upon by the parties that a refusal to carry it out would operate as a fraud upon one of the parties.
    Petition in error to reverse the judgment of the district court of Crawford county.
    The original action was assumpsit, brought by the plaintiffs in error against the defendant in error, in the court of common pleas of Crawford county, March 17, 1852. The plaintiffs declared on a written contract as follows, viz:
    
      “ This is to certify that ffm. Ludwig agrees to deliver to Thurs-ton & Hays from 300 to 500 good merchantable stock hogs, none to :2] weigh less than 70 lbs., to be delivered in *Delaware, Ohio, from 1st to 5th of March next, for which Thurston & Hays agree to give :$3.10 per hundred gross weight on delivery.
    ■ “ Vm. Ludwig,
    “Thurston & Hats.
    “ Buctrus, January 13, 1852:”
    The defendant plead the general issue, with a notice, that, on the trial, he would give in evidence and insist in bar of the action, that .after the execution of the contract declared on, and on the same day, to wit, on the 13th day of January, 1852, said contract was varied by a verbal agreement between the plaintiffs and the defendant, whereby the plaintiffs for a good and sufficient consideration, promised to make the defendant an advancement of money on said written contract, before the 5th day of March, 1852, to wit, on the 1st ■day of February, of that year; and that in default of such advancement of money, the defendant was discharged from all liability on ¡said written contract; and that the plaintiffs neglected and refused to make such advancement of money to the defendant; whereby the defendant has become discharged from all liability to the plaintiffs •on said written contract.
    After a trial in the common pleas, the cause was apipealed to the district court. And at the August term of the district court, 1852, the intervention of a jury having been waived, and the cause -•submitted to the court, the pilaintiffs, to maintain the issue on their part, gave in evidence the written contract declared on, and also evidence proving the failure of the defendant to deliver the hogs; that, at -the time specified for the delivery, stock hogs, such as the .contract ■called for, were worth at Delaware from $3.70 to $3.75 per hundred weight gross. And it appieared in the evidence, that after the written contract had been executed between the parties on the 13th January, 1852, the defendant, Ludwig, told the plaintiff, Thurston, 3] that he would *oxpect an advancement of money on the contract before the delivery of the hogs, insisting that it was customary .among stock dealers to do so. To this Thurston replied, that it was not his custom, and that he did not expect to make any such an ■advance. Ludwig, however, insisted' on the advance, and Thurston finally said that he would either go himself or send to Bucyrus, ¡sometime about the 1st of February, and would then advance to Ludwig $150 or $200 on the contract. This parol agreement was not, however, either inserted in the written contract, or reduced to writing. It also appeared in evidence, that plaintiffs, Thurston & Hays, were partners in business in Delaware, Ohio ; and that about the last of January, or the 1st of February, after the making of this contract, the son of the plaintiff, Thurston, was sent to Ludwig, to make a contract for the purchase of more hogs, and also to see about the prospect of the delivery of those already contracted for, when Ludwig declined to contract for the delivery of any more hogs, but said that he would have those already contracted for, ready for delivery at the time specified ; but said nothing about the advance of money on the contract by Thurston. It also appeared, that about the last of February, Thurston sent a man to Ludwig to make further inquiry about the hogs, and to assist in driving them to Delaware, when Ludwig refused to deliver the hogs, assigning as his reason therefor, that Thurston had not kept his promise to make an advance of money on the contract.
    Upon this state of facts, the district court found for the defend^ ant, whereupon the plaintiffs moved the court for a new trial, on the ground that the finding by the court was against both the law and the evidence in the case, and that the finding should have been for the plaintiffs; but the court overruled the motion, and gave judgment for the ^defendant; and the plaintiffs took their bill [4 of exceptions, embodying the facts of the case.
    It is now assigned for error, that the district court erred in overruling the motion for a new trial; and also erred in rendering judgment for the defendant.
    
      Peleg Bunker & James R. Hubbell, for plaintiffs.
    
      Stephen R. Harris, for defendant,
   Bartley, C. J.

The single question presented by this case is, whether the written contract of the parties was altered by a verbal agreement. The written contract expressly provided for payment for the hogs by the plaintiffs, at the time of delivery, which was to be between the 1st and the 5th of March, succeeding the time of the making of the contract on the 13th of January, 1852. It appears, that immediately after the execution of the written contract, the defendant, Ludwig, insisted that, according to a custom among stock dealers, he ought to have some money in advance; and the plaintiff, Thurston, at first declined, but finally promised the defendant, that he would make him an advance of $150 or $200 about the 1st of February. The district court regarded this verbal promise as a valid alteration of the written contract between the-parties, and as creating a condition precedent to the obligation of the defendant to deliver the hogs. "Was there error in the action, of the court in this regard?

It is well settled, as a general rule, that all par.ol negotiations between the parties to a written contract, anterior to, or contemporaneous with, the execution of the instrument^ are to be regarded as either merged in it, or concluded by it. Accordingly, it is held, that parol evidence is incompetent to show terms or conditions at variance with, or in addition to, a written agreement, which the 5] parties agreed to ^verbally, prior to, or at the time the contract was reduced to writing, but which were not inserted in the instrument. Powell v. Edmonds, 12 East, 6; Ridgeway v. Bowman, 7 Cush. 268; Small v. Quincy, 4 Greenl. 497; Chitty on Contracts, 110. And it appears to be equally well settled, that, subsequent to the execution of a-written contract, it is competent for the parties,, by a new contract, although not in writing, either to abandon, waive, or annul, the prior contract, or vary, or qualify the terms of it, in any manner. And where the verbal contract only changes or modifies some of the terms of the original contract, it embraces by reference, all the written stipulations of the original undertaking, and is to be proven by the verbal agreement taken in its connection with the written contract. But where a written contract is thus either totally abandoned and annulled, or- simply altered or modified in some of its terms, it is done, and can only be done, by a distinct and substantive contract between the parties, founded on some valid consideration. And among the multifarious verbal negotiations of parties in reference to their mutual stipulations in written contracts to draw the line of distinction between' those which are valid and effectual as alterations or modifications of the terms of written contracts, and those which are mere solicitations, or nuda pacta, and, therefore, of no binding validity, requires, sometimes, much nicety of discrimination. And it is to be regretted that the reported adjudications bearing upon this distinction, are not all entirely perspicuous and consistent. The general language employed by some of the elementary authors touching this subject, to the effect that the-parties to a written contract, may by parol agreement waive, abandon, or discharge a written - contract, in whole or in part, or alter or modify any of its terms,' has led some to the inconsiderate conclusion, *that it could be done without any new and valid [(> ■consideration. This, however, is a mistake. A valid consideration is an essential and indispensable element in every binding agreement. If a written contract be altered by verbal agreement, such .agreement must have the essential ingredients of a binding contract; and although it may have reference to, and, indeed, embody the terms of the written contract, yet it must be founded on a new .and distinct consideration of itself.

When the verbal agreement of parties amounts to a waiver or discharge of mutual stipulations in a written contract, either in whole, or in part, the discharge of each by the other, from the obligations of the contract, may furnish a sufficient consideration. Forbearance, or extrinsic considerations may exist to furnish sufficient legal foundation for an alteration, by verbal agreement, of the stipulations in a prior existing contract. An agreement by one person to discharge another from the obligations of a written contract, as a matter purely ex gratia and in the nature of a donation, would be of no binding validity as a mere executory agreement, and to be effectual, must be fully executed by an actual release, or surrender of the contract in writing. There is a class of cases, how■ever, where a written contract may be altered or modified by a mere verbal agreement of the parties, which, at its inception, or as a mere executory agreement, would have no binding effect, yet by being acted upon by the parties until it would work a fraud or injury to refuse to carry it out, becomes binding and effectual as a contract. But ■a verbal agreement to have the effect to alter or modify the terms of a prior written contract, must be a valid and binding contract of itself, resting upon some new and distinct consideration. And it can not be supported on the supposition that it is founded on the continuation *or extension of the consideration of the prior or writ- [7 ten contract, which was complete of itself, and so far as it went, fixed the rights of the parties.

In the ease of Gross v. Nugent, 5 Barn. & Adolph. 65, in which the doctrine, that a written contract may be annulled, or its terms altered by subsequent verbal contract, is laid down by Lord Denman in the broadest language, it is not pretended that it can be done, otherwise than by a “ new contract ” which, of course, must be founded on a new and distinct consideration.

The case of Lattimore v. Harsen, 14 Johns. 330, was a case in which the-plaintiffs, in a suit'to enforce a verbal contract, had subjected themselves to a penalty‘for the nOn-fulfillment of a written _ contract; and finding the contract a hard one, chose to pay the penalty rather than perform the contract, 'and'thereupon, the other party preferring the fulfillment of the contract to the payment of the penalty, verbally agreed that if the plaintiffs would go on and perform the work, they should be paid therefor, whatever it was reasonably worth, with which the plaintiffs complied. Here was a new and distinct contract, and'founded upon a new and distinct consideration. The performance of the work under the first contract, was abandoned, and being more beneficial'to the defendant even than the penalty incurred, furnished a good consideration for the new contract. And the court place the decision strictly on the ground of a sufficient new consideration. Substantially to the same effect is the case of Monroe v. Perkins, 9 Pick. 298, where one, by an instrument under seal, agreed to erect a building- for a fixed price, which proved to be an inadequate compensation, and having performed part of the work, refused to proceed further, whereupon the obligee promised, that if the party would go on and 8] complete the work, he should be paid for *his labor and materials what they were reasonably worth, and the work was done. Here the employer had aright of action on the written contract which was broken ; but he chose, in view of the benefit of the work, to make a new contract for its performance.

And the case of Cummings v. Arnold, 3 Met. 486, stands upon the same principle; also the case of Dearborn v. Cross, 7 Cow. 48; Randolph v. Perry, 2 Porter (Ala.), 376; Perrine v. Cheesman, 6 Halst. 177.

There is a class of cases, where parol evidence has been admitted in connection with written evidence, where it is apparent from the writing itself, that it does not embody the whole contract of the parties, or where the verbal agreement is not inconsistent with, but supplementary to, the written agreement. The case of Jeffry v. Walton, 1 Starkie, 213; falls within this class, where in the hire of a horse, a written stipulation on a card existed, merely regulating the time' of hiring and the rate of payment, parol evidence was admitted, showing additional terms in the agreement. Also Wallace v. Rogers, 2 N. H. 506, where articles are sold accompanied by a bill of parcels fixing the quantity, price, etc. Hoggins v. Plympton, 11 Pick. 99; and Brodford v. Manly, 13 Mass. 139, are to the same effect. To this class, also belongs the case of White v. Parkin, 12 East, 582. The principle of these cases must be distinguished from that which is applicable to the case before us.

There is a still more extensive class of cases, in which parol evidence has been admitted to vary the terms of a prior written contract, where the verbal agreement, as a mere executory contract, would, at its inception, be wholly ineffectual, but which acquires validity and becomes binding from having been executed or acted on by the parties. Under the rule in this class of cases, oral evidence is ^admissible to show, that by subsequent agreement, [9 the time for the performance has been enlarged or the place for the performance changed from that fixed by the written contract. 1 Greenl. Ev., sec. 304. Keating v. Price, 1 Johns. Cases, 22.

But an oral agreement to enlarge the time, or change the place of performance fixed by a written contract, must be subsequent to the time of the execution of the latter, and constitute an independent agreement of itself, acquiring its binding effect, either from an existing consideration at the time, or from having been acted upon by the parties, until it could not be disregarded by one party without working an injury to the other party. In the case of Lefevre v. Lefevre, 4 Serg. & Rawle, 241, it was held that parol evidence was admissible to prove, that after the execution of a deed conveying a right to a water-course through the granted land, by courses and distances, a verbal agreement was entered into between the parties for their-mutual accommodation, altering the route of the water-course. And this evidence was admitted expressly on the ground, that the parties had acted on the verbal agreement, so that the original contract could no longer be enforced without a fraud upon one party. To the same effect is Grossman v. Fuller, 17 Pick. 174; also Richardson v. Cooper, 25 Maine, 450; Bailey v. Johnson, 9 Cow. 115; Lynd v. Beech, 7 Howard’s Pr. 113.

Upon a full review of the whole subject, it appears to be well established, that a verbal agreement, to be effectual and binding as an alteration of the express terms of a prior written contract between the parties, must be supported by a new and valid consideration. And that a mere executory contract, of the kind to constitute an exception to this rule, must have been acted upon so far, that a refusal to carry it out would work a fraud on one of the parties.

*The application of this view of the law to the case before us, removes all difficulty in making a satisfactory disposition of it. The verbal promise of Thurston was manifestly unsupported by any valid consideration, as disclosed by the evidence. The parties had just settled the terms of their written contract, completed the execution of it, by which Ludwig had bound himself to deliver the hogs, in consideration of the undertaking of Thurston & Hays to pay the stipulated price, at the time of delivery in March. The time and place of payment were fixed by the express terms of the written contract. The custom of the country, if any such actually existed as that spoken of by Ludwig, could not have affected the express terms of the written contract. What .conceivable consideration can be assigned to support Thurston’s promise as a binding obligation ? Ludwig had not refused a compliance with the written contract which he had just executed. Why should Thurston, except as a mere matter of accommodation, or favor, resting in his own discretion, promise an advance of $150 or $200 to Ludwig, one month before the stipulated time of payment, and that too, without security, when the terms of his written contract secured him against any such a risk ? Asa consideration for this promise, Ludwig was not required to deliver any more hogs, nor of a better quality, nor at any other time or place, nor at a less price, nor wait any greater length of time for the balance of the money. In short, Thurston was to take nothing for the fruits of' his promise, to which he was not entitled, and which he had not a' •right to expect at the time, from the performance of the written contract by Ludwig. The proposed advance, therefore, so far as the evidence discloses it, was a naked promise of an accommodation or favor, resting in the option of Thurston ; and it appears to 11] *have been so treated by the parties at the time. The written contract which had just been signed, was before them when the promise of the advance was made. If intended as a stipulation in their contract, why was it not inserted or indorsed on the contract at the time ? Why did Ludwig take his duplicate copy of the contract, -at the very time of the promised advance, and separate from Thurston without a change in the writing, which he carried away with him as the evidence of the agreement ? And it is not made to appear, that Ludwig ever made any request of Thurston for the advance. On the contrary, when Thurston, about the first of February, and near the time when the promised advance was to have been made, sent his son to Ludwig to inquire about the delivery of the hogs, instead of requesting the advance, he did not even inquire about it, but said that he had the hogs, or the most of them, and would be ready to deliver them at the time specified. If the solemn stipulations of a written contract could be altered by a mere naked verbal promise under such circumstances, that certainty, which is the greatest guaranty of safety among business men, arising out of written contracts, would be greatly weakened. And evidence of loose and inconsiderate conversations, often not fully understood or accurately remembered, would be resorted to in many cases, to show waivers or variations in the stipulations of parties, with a view of avoiding the binding obligations of written contracts.

We are unanimous in the opinion that there was error in the proceedings of the district court.

Judgment reversed, and cause remanded.

Swan, Bkinkerhoee, Bowen, and Scott, JJ., concurred.