Court Opinion

ID: 8864653
Source: CourtListenerOpinion
Date Created: 2022-11-26 18:00:33.57478+00
Date Added: 2024-06-11T17:05:57.316645
License: Public Domain

SANBORN, Circuit Judge
(after stating tbe facts as aboye). A written contract is tbe highest evidence of tbe terms of tbe agreement between tbe parties to it, and, when those terms are clear and unambiguous, they cannot be contradicted or modified by parol evidence of tbe statements of tbe parties in tbe previous oral negotiations which led to it. In view of this rule, it becomes tbe duty of every contracting party to see to it that every agreement to which be puts bis signature fairly and fully expresses tbe terms of bis contract. He owes this duty to tbe party with whom be agrees, because tbe latter invariably pays bis money or shapes bis action in reliance upon tbe express terms of tbe agreement. If be fails to discharge this duty, bis failure is the result of bis own negligence; and he is, and ought to be, estopped thereby from showing that tbe terms of bis contract were other than those expressed in tbe writing. Railway Co. v. Belliwith, 83 Fed. 437, 440, 28 C. C. A. 358, 361, and 55 U. S. App. 113, 119.
Tbe real issue in tbe case at band was whether or not tbe contract of July, 1890, ceased to be executory, and became executed, on October 19, 1891, when tbe release of that date was made and delivered. Tbe claim of tbe company was that, by tbe express terms of the written agreements, it did become executed; and tbe contention of tbe plaintiff was that, in view of tbe terms of tbe contracts, and tbe oral testimony be produced, it remained executory. Tbe contract of July, 1890, expressly provided that 10 per cent, of tbe amounts earned by tbe plaintiff under it should be retained by tbe company until tbe final completion of the work embraced in it, and that then all sums due to tbe plaintiff should be fully paid, and tbe contract should be considered canceled. In other words, it provided that tbe payment of tbe 10 per cent., and of all other sums due under tbe contract, should cancel tbe agreement, and evidence its completion. On October 19, 1891, after tbe plaintiff bad suspended work tbe second time, be accepted tbe final estimate of, and payment for, all tbe work be bad completed under tbe contract, including tbe 10 per cent, which was to be paid only when tbe contract was performed and canceled, and executed a receipt for $9,362.23, tbe balance due him on this basis, “in full payment for work done and for, material and supplies furnished under a contract between tbe said railway company and tbe undersigned, dated tbe 15th day of July, A. D. 1890, for masonry for bridges for 2nd track from Clinton to Lisbon, Iowa,; and which is in full satisfaction, payment, and discharge of all claims on account of tbe -work, supplies, or materials mentioned in said contract, and for all liabilities of said railway company in any manner arising or growing out of said contract.” A final estimate, with a receipt and release at tbe fo.ot of it, is tbe usual evidence of tbe completed execution of an agreement. This contract expressly provided that full payment for all tbe work and labor under it should cancel tbe agreement, and tbe plaintiff accepted full payment, and signed and delivered tbe final estimate and tbe complete reléase. How, then, does be seek to escape from tbe estop-*877pel of these writings? He endeavors to do so in three ways: By testimony of the oral statements of Blunt, the engineer of the company, before and at the time when the release was made; by testimony that there was no consideration for the release; and by construction of the contracts.
Laying aside for the moment the question of consideration, the paroi evidence upon which the plaintiff relies consists of testimony of the oral statements of Mr. Blunt prior to the execution of the release, and of his interpretation of its meaning when it was signed. The former tends to establish a parol agreement made before* the release was executed, and while negotiations for it were progressing, to the effect: that the payment in full for the work done under the contract, including the 10 per cent., should not cancel the original agreement, and evidence its complete execution, as it provided; that the final estimate which Green signed should not be a final estimate, but an intermediate one; and that, in essential particulars, the legal effect of the transaction should be contrary to that evidenced by the writings. No rule or principle of law occurs to us under which this testimony could have been admissible. It Hies in the teeth of the rule that parol evidence cannot be received to contradict or modify written contracts, mid of the conclusive presumption that the whole engagement of the parties, and the manner and extent, of their undertaking, are expressed in their written agreements. McKinley v. Williams, 74 Fed. 94, 101, 20 C. C. A. 812, 319, and 36 U. S. App. 749, 761; Thompson v. Libby, 34 Minn. 374, 377, 26 N. W. 1; Wilson v. Ranch Co., 73 Fed. 994, 999, 20 C. C. A. 244, 249, and 36 U. S. App. 634, 643. The testimony as to Blunt’s interpretation of the release was equally objectionable. IÍ was when Green was about to sign it that Blunt told him that it did not mean what it plainly read, that it covered nothing but the work up to that time, and that it liad no reference to the future, when it expressly provided that lie received the money in full payment and discharge of all work and materials mentioned in the contract, and of all liability of the railway company in any manner arising thereunder. The question which this evidence presents has been repeatedly considered and decided by this court, and our conclusion upon it has been embodied in this rule:
“No representation, promise, or agreement made or opinion expressed in the previous pa-rol negotiations as to the teims or legal effect of the resulting written agreement can be permitted to prevail, either at law or in equity, over the plain provisions and Just interpretation of the contract, in the absence of some artifice or fraud which concealed its terms, and prevented the complainant from reading it.”
The reason for this rule is stated, many authorities in support of it are cited, and some of them are reviewed, in Insurance Co. v. McMaster, 87 Fed. 63, 68-72, 30 C. C. A. 532, 538-510, and 57 U. S. App. 638, and it is useless to repeat them here.
Turning now to the argument of counsel for the plaintiff in error upon the question of consideration, their contention is that the only consideration for the release of the liability of the company to pay for the work and labor done after October 19, 1891, was the fact *878that the 10 per cent, of the amount already earned was paid before it was due; that it is always competent to prove by parol that a contract had no consideration to support it; that the company had the power to waive its right to retain this 10 per cent, until the contract was completed; that the plaintiff testified that it did so before the release was made; that he received no consideration for the release, except the payment for the work he had actually done, and the materials he had actually furnished, under the contract; and that this evidence establishes the want of any consideration for the release. In support of this position, much reliance is placed upon the case of Association v. Wickham, 141 U. S. 564, 580, 12 Sup. Ct. 84. In that case the defendants, who were the owners of a vessel, had two claims against the insurance companies, of about $15,000 each, — one for damages to the vessel by fire, and the other for the cost of raising and saving her cargo after she had been scuttled and sunk to stop the -fire. Each claim was in existence, was known to both parties, and was just and incontestable. The companies adjusted the first claim, paid it 55 days before it was due, and took receipts which by their terms released them from all liability under their policies. There was testimony that before the payment was made the companies waived their right to retain the amount owing on the first claim until it was due; and the trial court instructed the jury that, if the prepayment of the amount owing on this claim was understood to be the consideration for the release of all claims, it was sufficient to sustain it, but that otherwise it was not. The supreme court invoked the rule that the payment of a part of an entire debt which is conceded or shown to be owing is no consideration for the release of the part not paid; declared that the payment of $15,364.78, which was the exact amount of the first claim as adjusted, constituted no consideration for the release of the second claim of $15,000, which was justly owing; held that the insurance companies might lawfully waive their right to retain the $15,364.78 until it became due, and that, if they did so before the release was made or agreed upon, there was no consideration for the satisfaction of the second claim; and sustained the charge of the court below. There is a marked distinction between that case and the one in hand. In the Wickham Case there were two debts in existence, established and known, and the payment of one was no consideration for the release of the other. In this case there was but one debt in existence, and that was paid in full. There was no other debt owing or due, and there was no knowledge on the part of either party that there ever would be one. The final estimate and receipt in the case at bar did not, in addition to the satisfaction of the debt actually owing, release or discharge another existing debt, but simply evidenced the agreement of the parties that no such debt should ever be incurred under the contract. Moreover, while we concede that the nature of the consideration for a contract, or the fact that there was no consideration, may be proved by parol, we are unwilling to adopt as a general rule the proposition that, where a single con sideration is paid for a contract which contains several covenants or provisions, one may admit the receipt of the entire consideration, *879and then escape from any of the provisions which seem burdensome to him by testifying that the consideration was not paid on account of those provisions, but on account of others which are less troublesome to Mm. The conclusive answer, however, to the contention of counsel for the plaintiff in error upon this question of consideration, is this: The real consideration for the agreement that the contract of July, 1890, became executed and functus officio on October 19, 1891, inhered in the original contract itself. That contract was valid and binding upon both the parties to it. It was supported by their mutual promises, and one of the covenants which it contained was that when the 10 per cent., and all the sums due under the contract, were fully paid, it should be considered canceled. They were fully paid, and by that payment itself, without more, the contract became executed, by its very terms. Not only this, but by the provisions of the final estimate and release of October 19,1891, the parties agreed with each other that these sums were fully paid, and that the company was released from all liability under the original agreement. The payment of this money and the acceptance of this release •by the company absolved G-reen from all obligations of further performance of the contract, as fully as it released the company from its undertaking to employ him. The result is that the mutual promises of the original contract and the mutual releases of the agreement of October 19, 1891, provide ample consideration for both agreements, without regard to the question whether or not the $9,-362.23 was paid before it was due.
But it is insisted that, under the true construction of the release itself, it must be confined in its effect to a satisfaction of plaintiff’s claim for the specific work and labor described in it, and that it cannot have the effect of an agreement that the contract is executed. The familiar rules that the court may place itself in the situation of •the parties at the time the contract 'was made, and then, in view of all the circumstances surrounding them, endeavor to ascertain the true meaning of their agreement; that, if its interpretation is doubtful, it should be construed more strongly against the party who prepared it; that, if it is ambiguous, the practical interpretation of the parties should prevail; that, where there is a narticular recital followed by general words in a release, the latter are qualified by the particular recital; and that a release does not apply to claims of which the parties had no knowledge when it was made,' — are invoked, and a learned and persuasive argument in support of the view of the counsel for plaintiff in error is presented under each rule. There are two reasons why the rules that the general words of a release are qualified by a particular recital, and that a release does not cover claims of which the parties had no knowledge, ought not to be applied to the agreements under consideration: One is that the original agreement on this subject, as we have attempted to show, is found in the contract of July, 1890, and the final estimate and release is but the agreed evidence that the contract has become functus officio, and that it is executed and canceled. The other is that the existence of the contract, and the question whether or not it was then completed and canceled, or continuing and executory, were *880necessarily and actually in the minds of t^e parties when the release was. signed. This appears from the terms of the release itself, as well as from the testimony of Green that he objected to those terms when he signed it. This release is not of the character of that quoted in Railway Co. v. Artist, 60 Fed. 365, 9 C. C. A. 14, 16, and 19 U. S. App. 612, in which it was held that a release of a claim for damages on account of injuries to the person from a collision with a railroad car which was specifically described, and also “from all manner of actions, causes of action, claims, and demands whatsoever, from the beginning of the world to this day,” did not cover a cause of action for malpractice, which was unknown to both parties when it was signed. The final estimate and release in this case is the customary evidence of the complete execution of a construction contract. The full payment which it acknowledged was the very fact which, by the terms of the contract itself, the parties had agreed should evidence its complete execution, and effect its cancellation. The release which acknowledged this payment was denominated the “final estimate.” It recited the contract, and the receipt of all that was due under it, and then declared that the receipt of this $9,-362.23 was “in full satisfaction, payment, and discharge of all claims on account of the work, supplies, or materials mentioned in said contract, and for all liabilities of said railway company in any manner arising or growing out of said contract.” Thus, the specific question whether the contract was thereafter executory or executed was specified and determined by the final estimate and agreement provided for by the original contract, and not by the mere general words of the release. No good purpose would be served by extending this opinion to review other general and familiar rules of construe tion. Such rules are helpful to ascertain the true interpretation of contracts whose terms are doubtful or ambiguous, but they cannot be permitted to abrogate those whose provisions are clear and certain. It is sufficient to say that a careful consideration of the agreements of the parties to this suit, in the light of these rules and of the circumstances under which the agreements were made, has failed to convince us that there was any error in the decision of the trial court that they disclose a binding written contract between the parties, unassailable by the parol evidence offered, to the effect that the agreement of July, 1890, was executed and became functus of-ficio on October 19,1891, when the final estimate, receipt, and release were signed and delivered. In view of this conclusion,' all the alleged errors which we have not considered become immaterial, and the judgment below must be affirmed. It is so ordered.