Court Opinion

ID: 8198207
Source: CourtListenerOpinion
Date Created: 2022-09-09 23:21:46.589248+00
Date Added: 2024-06-11T16:40:49.908551
License: Public Domain

Wickhem, J.
(concurring). The opinion of the court holds that the complaint states a cause of action for breach of contract. With this view I concur for the reasons therein stated. A consideration of the question whether a cause of action in fraud is stated may well begin with an acceptance of the conclusion that a cause of action is stated for breach of contract. It may also fairly be stated that no cause of action is alleged for rescission, not because this relief is not demanded in the prayer, but because there is no allegation of facts showing a disaffirmance. In so far as fraud is relied upon as a basis for relief, it must be considered that the complaint proceeds upon an affirmance of the contract, and that the action was intended to be one at law for deceit. While the pleader’s theory is, of course, immaterial upon a general demurrer, it must be concluded that the only cause of action which can be claimed to have been stated in fraud is one that would have been denominated an action in deceit before the adoption of the code.
*196In considering the problem presented by this case, I think two wholly separate questions arise, and that any subordinate questions involved naturally group themselves under these main questions.
The first question is whether, under any circumstances, a promise may be the basis for an. action in fraud or deceit when it is coupled with a present intention never to perform the contract. The majority rule, and in my view the better rule, holds in such a situation that there is an implied misrepresentation of the state of mind of the promisor, and that this is sufficient to constitute fraud, which is generally by definition limited to the misrepresentation of a fact. Wisconsin is listed as holding to the minority view, and I favor abandoning this position.
The next question has to do with the relation of the parol-evidence rule to the subject of promissory fraud. In so far as this question relates to the present case, it may further be narrowed. In so far as a plaintiff seeks to predicate fraud upon an intention never to keep a contemporaneous oral promise, which formed a part of the negotiations between the parties, and which is inconsistent with the stipulations of the writing as ultimately integrated, it may well be that the parol-evidence rule operates to eliminate proof of this fraud on the ground that the promisee ought not to be permitted to rely upon an oral promise inconsistent with the written agreement, and that, however valid the doctrine that fraud may always be shown consistently with the parol-evidence rule, permission in such a situation to prove this type of fraud opens the door to a destruction of the. parol-evidence rule. See note 56 A. L. R. 46. Certainly this contention would seem to have much force where the action for fraud is based upon an affirmance of the contract. It is certainly more arguable, if the contract has been disaffirmed or if there is a defense based upon the assumed invalidity of the *197contract because of fraud, that the parol-evidence rule has no application, since the effect of the evidence is to destroy the contract from its beginning and not to contradict or modify any of its individual terms. As stated in Restatement of the Law of Contracts, § 238:
“Agreements prior to or contemporaneous with an integration are admissible in evidence
“(b) to prove facts rendering the agreement void or voidable for illegality, fraud, duress, mistake or insufficiency of consideration.”
These comments doubtless apply also to cases where the matter concerning which there has been a promissory misrepresentation formed a part.of the negotiations, but was not included in the contract. - .In-other words, if the parties have executed a writing intended to integrate the subject of their negotiations, presumably all' matters not included in the contract were not intended to have legal effect, and an attempt to show them would be as much a violation of the parol-evidence rule as would an attempt to contradict the terms of the contract.
The instant case presents neither of these situations. Assuming that promissory misrepresentations may in any case be the ground for fraud, does the fact that the oral promise is identical with the stipulation in the writing throw the case within the prohibitions of the parol-evidence rule? I do not think it does, and it is my conclusion that this is true whether the action be based upon an affirmance or disaffirmance of the contract. Here there is no attempt to vary, modify, or contradict the terms of the writing, nor is there any attempt to add to the contract by contemporaneous oral agreements. The charge is simply that a stipulation in the contract was made with the intent not to perform it. In this class of cases I see no relation between the parol-evidence rule and the question of promissory fraud. If fraud cannot exist *198under these conditions, it must be because one who enters into a contract ought to be precluded from relying upon anything but the stipulations in the contract, upon some doctrine that any preliminary oral negotiations have been merged into the contract and have entirely lost their legal materiality. I think this is not true, and that it cannot be true if the doctrine of promissory misrepresentation is to have any force whatever: The jurisdictions recognizing false promises as fraud do so upon the ground that there is an implied misrepresentation as to the state of mind of the person making the promise. Whatever happens to the - stipulation concerning which the intent is entertained, the misrepresentation is not -merged with the contract nor does it lose its materiality by reason of the execution of the contract. 56 A. L. R. 26. If the parol-evidence rule precludes it from being shown, the result is reached for the purpose of vindicating a policy which has nothing to do with the efficacy of the false promise as a basis of fraud.
It is suggested in the opinion that this question is in some manner determined by the so-called objective theory of contracts. I fail to see how this doctrine has any materiality whatever. This rule exists for the purpose of ascertaining the intent of the parties. This court is in agreement as to the intent of the parties to the contract involved in the complaint, and has arrived at its conclusion by application of certain objective tests. Having ascertained this, the function of the objective theory is fully discharged, and we are presented simply with the question whether if defendant, as alleged in the complaint, entered into this contract with no intention ever to carry out its terms, an action in deceit will lie. In my judgment it should be held that it will, and I perceive no danger to the rules of contract in such a holding.
I accept without further discussion the conclusions of Mr. Justice Fairchild to the effect that the misrepresentations *199as set forth in the complaint are sufficiently broad to bring into operation and materiality the principles heretofore discussed. I concede that in most of the cases examined the promissory fraud has related to some collateral matter not intended to be integrated. However, I find no authority so limiting the rule, and a large body of cases involving an intent by a vendee at the time of sale not to pay for the subject-matter of the purchase, are consistent with the views I have expressed. See also Traber v. Hicks, 131 Mo. 180, 32 S. W. 1145; 9 Harvard Law Review, 424; 1 Bigelow, Fraud, p. 484. In sec. 473, Restatement of the Law of Contracts, it is said:
“A contractual promise made with the undisclosed intention of not performing it is fraud.”
In illustration 2 under this section the following hypothetical case is given:
“A makes an offer to B, who accepts with the undisclosed intention of not performing. A’s promise is voidable for B’s fraud. Though A was not induced to promise by B’s fraud, the purpose of B is to obtain subsequent performance by A.”
These statements, of course, relate to such fraud as will render the contract voidable, but there is no evidence that the type of fraud necessary to maintain deceit is different from that which will warrant avoidance. In sec. 484, Restatement of the Law of Contracts, with reference to “loss of power of avoidance by affirming transaction,” one of the illustrations of such affirmance is the bringing of an action of deceit.
A motion for a rehearing was denied, with' $25 costs, on May 1, 1934.