#### ARMINGTON et al., Respondents, *v.*STELLE et al., Appellants.

(No. 1,765.)

(Submitted May 8, 1902.

Decided June 13, 1902.)

*Written Lease*— -Extension *of Time*— Understanding *of Lessees —Contemporaneous Oral Agreement*— Evidence — *Admissibility*— Subsequent *Agreement*— Consideration.

1. Testimony by lessees that they would not have signed the lease but for an understanding that the time would be extended was not admissible to show a contemporaneous oral agreement to extend, because showing mere mental reservations not disclosed to the lessor, and not in any wise affecting him.

2. Under Civil Code, Sec. 2186, providing that the execution of a contract in writing, whether required to be written or not, supersedes all oral negotiations or stipulations which preceded or accompanied its execution, and Code of Civil Procedure, Sec. 3132, providing that, between the parties to a written agreement, there can be no evidence of its terms, other than the writing itself, except where a mistake is put in issue, its validity disputed, or evidence tending to explain an intrinsic ambiguity <}r establish illegality or fraud offered, evidence of a contemporaneous agreement between the *14parties to a written sublease of a mining claim, that in case the sublessors should buy the property the lease would be extended, was inadmissible.

3. Under Civil Code, Sec. 2281, providing that a contract in writing may be altered by a contract in writing or by an executed oral agreement, and not otherwise, a subsequent oral agreement between the parties to a written sublease of a mining claim that in case the sublessors should buy the property, the lease would be extended was void, being a mere executory agreement, without consideration.

*Appeal from District Court, Cascade County; J. B. Leslie, Judge.*

ActioN by J. T. Armingfon, P. M. Collins, Lavina A. Collins and Leonie E. Barker against H. L. Steile and Dan Mc-Kinnon. From an order granting a temporary injunction, defendants appeal.

Affirmed.

*Mr. A. G. Qormley,*and *Messrs. Word & Word,*for Appellants.

1. Parol evidence is admissible to> establish a contemporaneous oral agreement which induced the execution of a written contract, although it may change, vary or reform the instrument. *(Thomas et al.*v. *Loose et al.,*114 Pa. St. 35, 6 Atl. 326; *Cullmans*v. *Lindsay,*114 Pa. St. 166, 6 Atl. 332; *Wallcer*v. *France,*112 Pa. St. 203, 5 Atl. 208; *Qodkm*v. *Monahcm,*83 Fed. 116; *Ayers*v. *B. W. Bell Mfg. Co.,*147 Mass. 46; *Hazard*v. *Long,*10 Cush. 267; *Erslcme*v. *Adeane,*L. R. Chanc. App. 756; *Morgan*v. *Griffith,*L. R. 6 Exch. 70; *Eighmie*v. *Taylor,*98 N. T. 288; *Welz*v. *Rhodens,*87 Pnd1. 1, s. c. 44 Am. Pep. 747; *School District Warsaw Twp'.*v. *Sidney School Furniture Co.*(Pa.), 18 Atl. 606; *Thudium*v. *Yost*(Pa.), 11 Atl. 436; *Boivn*v. *Morange,*108 Pa. St. 69; *Michels*v. *Olmstead,*14 Fed. 219; *Oregomcm Railway Co.*v. *Wright,*10 Ore. 162; *Durkin*v. *Cobleigh*(Mass.), 17 L. R. A. 270-275 and notes; *Clenighan*v. *McFarland,*11 N. V. S. 719; *Ferguson*v. *Rafferty*(Pa.), 6 L. R. A. 33-48 and notes; *McCormack, etc. Co-,*v. *Nicholson,*17 Pa. Super. Ct. 188; *King*v. *Dahl,*84 N. W. 737.)

2. A parol agreement made subsequent to the execution of a written lease, and for the extension of such written lease, is *15valid. The provision of the Code that influenced the lower could in its decision, as well as all other provisions of the Code bearing on this question, are simply declaratory of the common law rule, and this rule has been considered! and applied in a number of decisions. As particularly in point in the case at bar, we refer the court.to the following: *Street B. B. Co.<y. Morrison,*160 Ill. 288, 294; *Hugh Martin*v. *Topliff,*88 Ill. Appi 362; *Schiueihert*v. *Seavey',*62 Pac. 600.

We cite the following additional authorities in support of the validity of this subsequent parol agreement: 1 Greenleaf on Evidence, Sec. 304; 2 Pomeroy’s Eq. Jur. Sec. 863; *Smith*v. *Lilley,*20 Atl. 227 (R. I.) ; *Warren*v. *Mayer Mfg. Co.*(Mo.), 61 S. W. 646; *Wilson*v. *McClenavy,*13 So. 873; *Grace*v. *Lynch et al.,*49 N. W. 751; *Fvers*v. *Shumaher,*57 Mo. App. 454; *Thomas*v. *Barnes,*31 N. E. 683 (Mass.) ; *Emerson*v. *Slater,*63 IT. S. 28, 16 L. Ed. 360; *Crandin*v. *United States,*89 II. S. 496, 22 L. Ed. 858.

*Mr. Fletcher Maddox,*for Respondents.

MR. CHIEF JUSTICE ERANÍTLY

delivered the opinion of the court.

This action -was brought hy plaintiffs to' recover from defendants possession of a portion of the Ripple quartz lode mining claim, situate in Cascade county. The portion of the claim in controversy is described as the “south or southerly 300 feet of the Ripple quartz lode mining claim;” and it is alleged that the defendants, on or about October 10, 1901, the plaintiffs being then the owners and entitled to the possession thereof, wrongfully and unlawfully entered upon the premises, and engaged in mining and-removing valuable ores therefrom, to the irreparable damage of the plaintiffs. Equitable relief is also sought by way of injunction to perpetually restrain further trespasses by the defendants. Upon the filing of the complaint the district court made an order requiring the defendants to show cause why they should not also be restrained from mining and removing ores pending the final determination of the *16cause. The defendants answered, admitting plaintiffs’ title to tbe premises as alleged, but alleging that they1 themselves were-lawfully and rightfully in possession under a lease from the plaintiffs, the term of which had1 not expired at the time the-action was commenced. After a hearing the court ordered a. temporary injunction to issue. The defendants have appealed.

The action was commenced .on November 16, 1901. It appears from the evidence submitted that on February 20, 1901,. the plaintiffs, being the owners of an undivided one-half inter-v est in the claim, also held a lease of the other undivided one-half interest from one Briggs, the owner of it, with an option to purchase it on or before October 10, 1901, the date at which the term of their lease expired. The plaintiffs leased to the defendants and two others the portion of the claim in controversy under a written contract for a term beginning on February '20, 1901, and ending on October 10, thus making the two leases expire on the same date. The defendants! and their co-lessees desired a lease for a year, but the plaintiffs refused to-extend the term beyond October 10 for the reason that it was-then uncertain whether the Briggs interest would be paid for, and they did not care to bind themselves for that interest. It being admitted that the Briggs interest had been purchased by plaintiffs under their option, the defendants undertook to show that their lease was good to the end of the year by virtue of an oral understanding with the plaintiffs had on and subsequent to February 20. John Joki, one of the defendants’ co-lessees, testified that plaintiff J. C. E. Barker, who represented himself and the other plaintiffs, told him at the time the lease was signed that if plaintiffs took up the Briggs interest under their option, and the lessees made no- money out of their lease, they could have an extension, in order that they might make some money. B, O. Kempfer, who was present at the time, stated that, after reading over .the lease, Barker said to Jokir “You understand this lease calls- for October 10. Well, you are to have a written agreement holding the lease for one year. October 10 is the day our bond expires on Briggs’ half interest in this claim, and your lease is to run for one year in ease we *17take up. that bond.” Defendant Stelle stated: “About February 20, 1901, Joki came to me and asked me if I wanted to take a lease. I asked bim bow long the lease would be, and be said the written lease was only made out for.six months, but Barker bad told bim, if be raised the bond on Briggs’ interest, our lease would rim for one year from February 20, 1901. Tie bad Barken* put my name and McKinnon’s; in the. lease, and after that I signed the lease.” He stated' further that in April bo talked with Barker, and was told by him that the lease was good for a year if the Briggs; intei*est was purchased. He testified that a short, time subsequently be also' bad a talk with Annington, who told bim that McKinnon and Joki had been after bim for a written extension, and then said: “I can’t give it to them. If wa take up the bond, which We expect to, your time will be good up to' February 20, 1902.” McKinnon testified that be talked with Barker and Annington about the end of March, 1901, when Barker said: “We couldn’t give papers on Briggs’ interest, for we haven’t got it after October 10 if we don’t take up the bond. We could only give what we have ourselves. There is no doubt but what we will take up this bond,, and, after iva do*, ive will give you a written extension of the; lease.” Other witnesses testified to the same effect as the foregoing. Both defendants stated that they would not have entered into the lease but for the understanding that it would be good for1 a year if the bond should be taken up1. The other lessees abandoned the lease during the time, and hence are not parties to this action.

Objection w*as made to the introduction of the testimony of Joki and other witnesses on the ground that it was an attempt, to show by oral evidence an extension of the written lease, and it ivas therefore incompetent, as in violation of the provisions, of Section 2281 of the Civil Code. The court admitted the evidence, reserving a ruling upon the objection until the close of the hearing. When the hearing was concluded the evidence was excluded from the record upon the ground assigned in the objection. The defendants excepted. They now contend that the evidence was; admissible either (1) as. tending to establish *18a contemporaneous *agreement which,*induced, the execution of the written contract, or (2) as tending to establish an oral agreement made subsequent to the execution of the written lease, whereby the term stipulated for therein was extended to the end of the year;

1. Upon the first branch of this contention the plaintiffs insist that the casé falls clearly within the rule declared by Section 2186 of the Civil Code, which is as follows: “The execution of a contract in writing, whether the law requires it to be written or not, supersedes all the oral negotiations or stipulations concerning its matter which preceded or accompanied the execution of the instrument.” They also cite and rely upon Section 3132 of the Code of Civil Procedure, which provides that: “When the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms, and therefore there can be between the parties and their representatives, or successors in interest, no evidence of the terms of the agreement other than the contents of the writing, except in the following cases: (1) Where a mistake or imperfection of the writing is put in issue by the pleadings. (2) Where the validity of the agreement is the fact in dispute.' * * *” This section also provides that evidence shall not he excluded which tends to explain an extrinsic ambiguity in the writing, or to establish illegality or fraud.

The statement made by Stelle in the conversation between himself and Joki was clearly incompetent as hearsay. Equally as objectionable, it would seem, was the statement by both the defendants that they would not have signed the lease but for the understanding that it would' he good for a, y’ear in case the Briggs interest should he purchased. Even if everything that was said and done at the time the lease was executed by the defendants were admissible, as defendants contend, for the purpose of showing what the contract actually was, the unexpressed motive or mental reservation entertained by the defendants could not -aid the court in arriving at a correct conclusion, nor could the defendants'be permitted to testify h> it in order to modify or add 'to-the express words of their contract. What*19ever may bave been tbe motive wbicb prompted tbem to sign tbe lease, so long as snob motive was not disclosed to Barker, wbo represented tbe plaintiffs, as tbe inducing cause of tbeir signing tbe contract, the plaintiffs could not be bound by it. It is only tbe acts done and! words spoken during tbe progress of tbe negotiations to wbicb tbe court may look, and upon wbicb it may base an inference as to wbat w!as in fact tbe agreement of tbe parties.

But passing these features of the evidence, and taking it all together, does tbe case fall within tbe rule declared by these statutory provisions ? We think it does. Tbe averment of tbe answer is that tbe defendants were in possession under a lease authorizing tbem to mine upon tbe premises until February 20, 1902. There is no allegation that there was any mistake in the terms of tbe contract. Tbe writing itself in evidence limits tbe term unequivocally to October 10, 1901. To admit the evidence and give it tbe force contended for by tbe defendants would be to permit tbem to insert in tbe written instrument by oral evidence an additional agreement based upon a condition upon the happening of wbicb the term would be extended for a period of four months. The statutory provisions cited are but declaratory of tbe common-law rule (1 Green!. JEv. Sec. 275), and recognize all tbe exceptions for wbicb it provides. Among these is tbe case in wbicb evidence may be received of tbe existence of an independent oral agreement not inconsistent with tbe stipulations of tbe written contract, and in respect of wbicb tbe writing does not speak, but not to contradict, vary, add to, or qualify tbe absolute terms of tbe written contract. In such a case tbe independent oral agreement must bave been upon some collateral matter, and must bave operated as an inducement to tbe complaining party to enter into tbe agreement, whereas in tbe absence of it be would not bave done so. To deny tbe admission'of evidence in such a case, if relevant to tbe issues' made by tbe pleadings, would be to allow, one of tbe parties to induce another to enter into tbe engagement under false representations, and to' aid him to enforce it against bis adversary notwithstanding tbe fraud prae-*20ticed upon him, by holding out to him the fraudulent inducement. We recognize this principle, and believe it to be in full accord not only with the spirit of the. statute, but also with adjudged cases. *(Thomas*v. *Scutt,*127 N. Y. 133, 27 N. E. 961; *Naumberg*v. *Young,*44 N. J. Law, 331, 43 Am. Rep. 380; *Hei*v. *Heller,*53 Wis. 415, 10 N. W. 620*;Specht*v. *Howard,*83 U. S. 564, 21 L. Ed. 348; *Forsythe*v. *Kimball,*91 U. S. 291, 23 L. Ed. 352; *Seitz*v. *Bremers' Refrigerating Machine Co.,*141 U. S. 510, 12 Sup. Ct. 46, 35 L. Ed. 837; *Van Winkle*v. *Crowell,*146 U. S. 42, 13 Sup. Ct. 18, 36 L. Ed. 880; Cliver v. *Heil,*95 Wis. 364, 70 N.W. 346; *Flynn v. Bourneuf,*143 Mass. 277, 9 N. E. 650, 58 Am. Rep. 135; *Eighmie*v. *Taylor,*98 N. Y. 288; *Beall*v. *Fisher,*95 Cal. 568, 30 Pac. 773; *Bradford Investment Oo.*v. *Joost,*117 Cal. 204, 48 Pac. 1083.) This principle, however, does not apply to a case in which the oral promise relates directly to the subject of the contract, even though the claim be that the complaining party signed the instrument in reliance upon such promise. *(Fisher*v. *Briscoe,*10 Mont. 124, 25 Pao. 30; *Gillett*v. *Clark,*6 Mont. 190, 9 Pac. 823; *Nelson v. Spears,*16 Mont. 351, 40 Pac. 786.) “Where there is no fraud or mistake in the prepamtion of the instrument, and it appears that the party signing understood its language and purport, it cannot be reformed on the ground that he signed upon the faith of a contemporaneous oral promise which was not kept, nor may such promise be received in evidence to control the written contract.” *(Sanford*v. *Gates, Townsend & Co.,*21 Mont. 277, 53 Pac. 749.) It is well said in *Naumberg v. Young, supra,*“that, where the written contract purports on its face to be a memorial of the transaction, it supersedes all prior negotiations and agreements, and that oral testimony will not be admitted of prior or contemporaneous promises on a subject which is SO' closely connected with the principal transaction, with respect to' which the parties’ are contracting, as to be part and parcel of the transaction itself, without the adjustment of which the parties cannot be considered as having finished their negotiations and finally concluded a contract.” Under the evidence in question, giving it *21all the force which is claimed for it, the alleged oral agreement had reference not to an independent collateral matter, but to the very subject-matter of the written lease, namely, the length of the term specified therein. It therefore hadi to do -with the very essence of the contract itself; and it is impossible to' admit it, and give it the import contended for by the plaintiffs, without allowing it to substitute an entirely new contract for the old one, and to adjudge the rights of the respective parties thereon. It presents a case, therefore, which not only does not fall under any one of the exceptions to the rule, but is in direct violation of it. Furthermore, w¡e do not think the evidence tends to establish any agreement whatever which operated as an inducement to the defendants to sign the lease. Giving it its utmost force, it does not establish any agreement whatever. The plaintiffs did no more than malee a promise of what they would do under certain circumstances which might arise in the future. The condition involved no new or different consideration. Nor did the defendants sign the lease upon the express, or even implied, condition that the alleged promise wjas to be made good to them.

2. The action of the court in excluding the evidence upon the objection as made was also correct Section 2281 of the Civil Code provides, “A contract in writing may be altered by a contract in writing, or by an executed oral agreement, and not otherwise.” The principle embodied in this provision applies to all kinds of contracts in writing, whether they are required by law to be in writing or not. The purpose of the section is the same as1 that of the rule contained in the other provisions which we have been considering. It is, however, a distinct departure from the common-law rule, which permitted parties, at their pleasure, to alter by oral agreement, whether executed or executory, any contract which was not required to be evidenced by a writing. The only exception- recognized is the case in which the subsequent oral agreement has been executed by one or both of the parties. In such case the agreement, as altered or modified, is deemed to have been substituted *22for tbe written one, wbicb then ceases to be tbe only evidence of tbe engagement of tbe parties.

Rehearing denied July 9, 1902.

Tbe excluded evidence does, not, at most, tend; to establish more than a mere executory agreement to so change, tbe terms of tbe written agreement as to substitute another date for tbe one written therein, and to extend tbe life of it for four months. No consideration passed from the defendants to tbe plaintiffs, by virtue of wbicb tbe promise became a binding obligation. The alleged subsesquent agreement Was. therefore within tbe prohibition of the statute, and consequently void. The evidence offered to show it ivas incompetent, and was properly excluded.

Let tbe order be affirmed.

*Affirmed.*

Mr. Justice Pigott : I concur in tbe order of affirmance.

Mr. Justice Milburn: I concur.