Court Opinion

ID: 3952797
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:14:27.099795+00
Date Added: 2024-06-11T13:52:59.415616
License: Public Domain

I cannot agree with my Associates in the conclusion that the trial court erred in sustaining the demurrer to the petition. I think it clear that the parol contract upon which plaintiffs based their right of recovery so varies and contradicts the written contract between the parties covering the same subject-matter that it was not legally susceptible of proof. The note and deed of trust referred to in the petition evidence an unconditional promise to pay the amount specified in the note according to the terms expressed in the instruments, and it is the uniform rule of law wherever the common law is administered that in the absence of fraud or mutual mistake a written obligation cannot be varied or changed by any contemporaneous parol agreement, and all such agreements with reference to the subject-matter of the written contract are conclusively presumed to have been merged into the written instrument. This general rule is so universally recognized and established that the citation of authorities is unnecessary.
Plaintiff's in their amended petition, after stating the fact that they borrowed $90,000 from the appellee Guarantee Life Insurance Company on August 30, 1911, for which sum they executed their note due in five years, with interest at 8 per cent., and to secure the payment thereof executed a deed of trust upon 26,119.26 acres of land in Duval county known as the Gray ranch, thus allege their cause of action:
"IV. Plaintiffs allege that on or about the 25th day of April. 1912, at the special instance and request of the defendant Guarantee Life Insurance Company, its agents and representatives, they executed and delivered to the defendant Guarantee Life Insurance Company a new note for the sum of $96,925, bearing date September 1, 1911, payable to the order of the defendant Guarantee Life Insurance Company on the 1st day of September, 1916, with interest thereon at the rate of 6 per cent. per annum from date, in lieu of said $90,000 note; and to secure the payment of said new note plaintiffs executed and delivered to Lee C. Ayars, trustee, of Houston, Harris county, Tex., a deed of trust upon said 26,119.26 acres of land, which said new note and deed of trust, though executed on or about April 25, 1912, bear date September 1, 1911, and the said defendants, and each of them, are hereby notified to produce said note and deed of trust upon the trial of this cause, or secondary evidence of the same will be offered in evidence by the plaintiffs, and the said defendants are also notified to produce the original $90,000 note, executed by plaintiffs August 30, 1911, to the defendant Guarantee Life Insurance Company, and the deed of trust executed the same day, to secure the payment thereof, upon the trial of this cause, or secondary evidence of the contents thereof will be offered in evidence by plaintiffs.
"V. That said note for $96,925 was executed and delivered by the plaintiffs to the said defendant Guarantee Life Insurance Company at the special instance and request of the said defendant Guarantee Life Insurance Company, its agents and representatives, for its accommodation, and in order that the surplus account of the said Guarantee Life Insurance Company should have the benefit of the difference between 6 per cent. interest and 8 per cent. interest on $90,000 to the date of maturity of said note.
"VI. Plaintiffs allege that the sum of $6,925 was added to the face of said substituted note, which represented the amount necessary to be added to the $90,000 note, in order to cover the difference between the interest at the rate of 8 per cent. and 6 per cent. per annum on $90,000 for the full term of five years; and plaintiffs and said defendant Guarantee Life Insurance Company, acting by and through its duly authorized agents and representatives, at the time of the delivery of said note for $96,925 as aforesaid agreed, that if said land was sold by plaintiffs, or said note paid prior to the maturity thereof, the said defendant Guarantee Life Insurance Company would account to the plaintiffs for whatever amount of said sum of $6,925, which was added to the face of said note, as aforesaid, as interest, that had not been exhausted in the payment of the $90,000, at the rate of 8 per cent. per annum from September 1, 1911, to the date of such sale of said land or payment of said note.
"VII. Plaintiffs further say that on the 11th day of December, 1912, they sold said 26,119.26 acres of land, situated in Duval county, Tex., known as the Gray ranch, to the Continental Trust Company, a corporation having its principal office at Houston, Tex., and on said date conveyed the same to Lee C. Ayars, trustee, with the full knowledge and consent of the defendant Guarantee Life Insurance Company, the said Lee C. Ayars, as trustee, assuming the payment of said $96,925 note, executed by plaintiffs, as aforesaid, the interest on said note having at that date been fully paid by plaintiffs up to and including September 1, 1912, and as such trustee executed and delivered to plaintiffs his certain promissory note for the sum of $110,575.75, due and payable two years after date, with interest thereon at the rate of 6 per cent. per annum, which said note was then and there sold, transferred, and assigned by plaintiffs to the said Continental Trust Company, without recourse, in exchange for 5,529 shares of the capital stock of the said Continental *Page 586 
Trust Company, at the rate of $20 per share; that when plaintiffs made said sale of said land to the Continental Trust Company and conveyed the same to the said Lee C. Ayars, trustee, on the 11th day of December, 1912, as aforesaid, 15 months and 10 days of the five years for which said $90,000 loan made by the defendant Guarantee Life Insurance Company was to run, had expired, and at that date the sum of $1,769.30 of the $6,925 which was added to the face of the new note for $96,925, as aforesaid, had been consumed in the payment of interest at the rate of 8 per cent. per annum on said $90,000 loan, leaving a balance due plaintiffs of $5,155.61, for which said sum the said defendant Guarantee Life Insurance Company, under its said agreement to account to plaintiffs, became liable and promised to pay to plaintiffs the difference between the indebtedness existing against said land on account of the execution of said $96,925 note and the interest thereon at the rate of 6 per cent. per annum, and what would have been plaintiffs' indebtedness against said land on account of the said $90,000 note and interest thereon at the rate of 8 per cent. per annum at the date of the sale of said land on the 11th day of December, 1912, as aforesaid, which said difference at said date the said defendant Guarantee Life Insurance Company became liable and promised to pay to plaintiffs, as aforesaid."
The trial amendment is as follows:
"That when the plaintiffs, on or about the 25th day of April, A.D. 1912, at the special instance and request of the defendant Guarantee Life Insurance Company, its agents and representatives, executed and delivered to the defendant Guarantee Life Insurance Company a new note for the sum of $96,925 bearing date September 1, 1911, with interest thereon at the rate of 6 per cent. per annum, in lieu of the $90,000 note executed by plaintiffs on or about the 30th day of August, A.D. 1911, bearing interest from date at the rate of 8 per cent. per annum, and executed the deed of trust on the 26,119.26 acres of land to secure the said $96,925 note, as set forth in paragraphs IV, V, VI, and VII of plaintiffs' fourth amended original petition filed herein, on the 5th day of June, A.D. 1918, that the sole consideration that induced plaintiffs to execute and deliver said note and deed of trust to the Guarantee Life Insurance Company was the said Guarantee Life Insurance Company, its agents and representatives' agreement and promise to plaintiffs that if said land was sold by plaintiffs, or said notes paid prior to the maturity thereof, the defendant Guarantee Life Insurance Company to account to and refund to plaintiffs whatever amount of the said $6,925 which had been added to the $90,000 actually loaned to plaintiffs that had not been at the time exhausted in the payment of interest on the $90,000 at the rate of 8 per cent, per annum; and that but for said agreement plaintiffs would not have executed said $96,925 note or executed the deed of trust to secure the payment of the same.
"Plaintiffs further say that the note for $96,925 and the deed of trust securing the same was not intended by the parties thereto to be the entire contract or the written evidence of the entire agreement between the parties, but were only intended as evidence of the indebtedness and its security. The obligation assumed by the defendant Guarantee Life Insurance Company to account to plaintiffs for whatever amount of said $6,925 that had not been exhausted in the payment of the interest at the rate of 8 per cent. per annum on the $90,000 actually loaned to the plaintiffs, as aforesaid, which was the basis for plaintiffs' cause of action, was at the suggestion and request of the defendant Guarantee Life Insurance Company, intentionally omitted from the writing and left to rest in parol."
These are all of the allegations of the petition setting out plaintiffs' cause of action.
It appears from these pleadings that plaintiffs executed a note and deed of trust by which they unconditionally obligated themselves to pay the appellee insurance company the sum of $96,925, with interest at 6 per cent., and that they are now seeking to recover from said appellee on a parol agreement, made prior to or contemporaneously with their written obligation, that in event they paid the note or sold the land covered by the deed of trust before maturity of the note they were not to pay the full amount stated in the note and deed of trust.
In the case of Dolson v. De Ganahl, 70 Tex. 620, 8 S.W. 321, it is held by our Supreme Court that the obligation of a note cannot be changed or varied by a parol agreement made before or at the time of the execution of the note, unless fraud or mistake in the execution of the note is alleged and proven. This case only announces and applies to promissory notes the universal rule as to varying the terms of a written instrument before stated. In a note under the case of Gandy v. Weckerly, 220 Pa. 285,69 A. 858, 18 L.R.A. (N.S.) 434, 123 Am. St. Rep. 691, many of the cases bearing upon this question are cited and discussed, and the editors state that the rule as above stated prevails in all of the states of the United States except in Pennsylvania, where the decisions are conflicting.
It cannot be true that while a parol agreement that a note for a specific amount can be discharged by the payment of a lesser sum cannot be shown in defense of a suit to recover the amount of the note, a parol agreement that when the note is paid the payee will return to the makers a portion of the amount paid can be established and enforced in a suit brought by the maker to recover the amount agreed to be refunded. The substance and effect of the two agreements are the same, and both of them vary and change the written obligation to the same extent. It seems to me that to hold one agreement enforceable and the other not is to trifle with fundamental verities, and to give more regard to form than to substance.
The allegation in the trial amendment that the agreement plaintiffs base their cause of action upon was intentionally omitted by the parties from the written instruments and allowed to rest in parol, at the request of the *Page 587 
Insurance company, cannot affect the rule against varying the terms of the written instrument. This is not an allegation of fraud, was not so intended by the pleaders, and cannot be so considered. This allegation is also ineffectual to permit a recovery on the ground that the written instruments did not embody the entire agreement between the parties. It is always true, when there is a parol agreement contemporaneous with a written contract, but not embodied in the written instrument, that the written contract does not contain the entire agreement between the parties, but this fact does not permit proof of the parol agreement if such agreement changes or varies the written contract. To hold otherwise would be to abrogate the rule against varying the writing by parol. Coverdill v. Seymour, 94 Tex. 8, 57 S.W. 37.
The rule which preserves the sanctity of written agreements when such agreements are not attacked for fraud or mistake in their procurement or execution is a salutary rule which experience has shown tends to prevent fraud and perjury and to secure and protect the citizens in the enjoyment of their property rights, and it should not be frittered away by ingrafting thereon specious exceptions which find support only in the supposed equity of the particular case. It seems to me that in this case no equity is shown by the petition which should cause a court to hestitate to enforce the rule. There is no allegation in the petition that the appellee has received or the plaintiffs paid one cent more than the amount of the original loan to them and interest thereon at the agreed rate of 8 per cent. per annum to the time of its payment.
I think the judgment of the court below should be affirmed.