Summary
In Hutzler v. Richter (13 App. Div. 592) the defendants purchased a tract of land of the plaintiff for $1,200, $400 of which were paid in cash and the balance was secured by the bond and mortgage of the defendants. The defendant mortgagors agreed to keep the buildings insured as owners for the benefit of the mortgagee in the sum of $700, which was not done, and the buildings subsequently burned uninsured.
Summary of this case from Hanes v. SackettOpinion
January Term, 1897.
Henry W. Brendel, for the appellants
W.C. Miner, for the respondent.
The decision of the learned trial court was manifestly made to rest upon the assumption that the verbal agreement established by the evidence, if given any force or effect, would conflict with the rule which prohibits parol evidence to explain, vary or contradict a written instrument, and if such was the necessary result of investing that agreement with validity, the court was undoubtedly correct in its conclusion.
The rule adverted to is one which, while subject to modification in cases where fraud or injustice are attempted, as where it may be shown by parol that an instrument is not what it purports to be, or in another class of cases, where an instrument obviously incomplete in itself, may be rendered complete and efficient by resort to parol proof, is, nevertheless, one which, in its essential features, has been long applied and is still preserved in its integrity by the courts of this State.
The opinions in the case of Thomas v. Scutt (52 Hun, 343; S.C. affd., 127 N.Y. 133) may be referred to as containing an exhaustive and instructive statement of the principle which lies at the foundation of this rule, as well as of the circumstances which will warrant any departure from its strict enforcement; and a careful examination of that case will also, as we think, make it perfectly clear that the rule adopted by the trial court has really no application to the case now under consideration; for the covenant to insure, which is written into the mortgage in suit, is one which, upon its face, leaves nothing to be supplied in order to render it complete and entire; nor can it be claimed that it is not precisely what it purports to be; and, in our view of the matter, its terms and requirements will be in no sense varied or contradicted if full effect be given to the agreement which was not reduced to writing.
If, then, the verbal agreement does not conflict with, and is not merged into, the written one, obviously the principle upon which it must be sustained, if at all, is that it constitutes a collateral contract, separate and distinct from the one which is contained in the mortgage, it being well settled that proof of an independent, contemporaneous oral contract, even though it relates to the same subject-matter, in no manner violates the rule we have been considering. (Tayl. Ev. §§ 1038-1040; Batterman v. Pierce, 3 Hill, 171; Lewis v. Seabury, 74 N.Y. 409; Thomas v. Scutt, supra.)
Let us endeavor, therefore, to determine from the established facts of this case whether these two agreements are to be treated as dependent or independent contracts.
When the defendants purchased the premises in question of the plaintiff, they also, it seems, purchased something else of value, which was a policy of insurance for $700, having nearly two years to run. And the plaintiff agreed that if the defendants would pay him his price for the land he would let them have this policy, and would, moreover, see that it was properly transferred to them, so that they could have the full benefit thereof. Here, then, were all the essentials of a valid contract, and in reliance thereon, the defendants made their purchase, paid a portion of the purchase price in cash, and secured the remainder by their bond and mortgage, in which they agreed, by way of additional security, to keep the buildings upon the premises insured in the amount of $700.
This contract of insurance does not provide how the insurance indemnity is to be furnished, whether by means of a separate policy or the one already existing, which the plaintiff was to retain in his hands until the mortgage was paid. In either event the condition would have been fulfilled, and had the defendants procured another policy in a different company for the like amount, they would unquestionably have had the right to avail themselves of whatever benefit might accrue to them from the ownership of the policy which the plaintiff sold to them. They could have retained it for what it was worth by way of additional insurance, or they could have surrendered it and obtained whatever rebate they were entitled to receive thereunder.
This fact alone would seem to furnish a complete demonstration of the correctness of the idea we are seeking to develop, which is that the verbal contract was not only supported by an adequate consideration, but it was one which was also capable of absolute fulfillment, without interfering with the obligation under which the defendants rested to make good the covenant contained in their mortgage. It follows, therefore, that it was a distinct and independent agreement for the breach of which some redress should be afforded, and when we come to consider the remedy available to the defendants, we are furnished with still another test by which the principal question in this case may possibly be determined.
The plaintiff seeks by this action to foreclose his mortgage, claiming a certain amount to be due thereon, and this is not denied by the defendants. That is, they do not claim to have paid anything upon the mortgage beyond what the plaintiff concedes has been paid, but they do insist that they have been damaged by the plaintiff's breach of the contract made contemporaneously with their mortgage and growing out of the same transaction, in consequence of which they ask to recoup such damage and to have the same applied in liquidation of the amount due upon the mortgage.
If we are correct in the view which we take of this case, the plaintiff's failure to secure to the defendants the benefits of the policy which he had sold to them constituted a breach of his contract, for which a separate action would lie. And this being the case, we fail to see why the damage occasioned by such breach, whatever it may prove to be, is not the proper subject of recoupment in this action. ( Batterman v. Pierce, supra; Van Brunt v. Day, 81 N.Y. 251; Acer v. Hotchkiss, 97 id. 395.)
The judgment appealed from should be reversed and a new trial granted, with costs to abide the event
All concurred, except GREEN, J., dissenting.
The original agreement of the parties relating to the insurance upon the property is in writing and contained in the mortgage. It was provided, in and by this instrument, that the mortgagors should keep the buildings erected upon the lands described in the mortgage insured against loss by fire; that they should assign the policy to the mortgagee, his executors, administrators or assigns. This writing, upon inspection, appears to be a complete contract, embracing all the particulars necessary to make a perfect agreement and designed to express the whole arrangement between the parties concerning the insurance. The subject of this contract is the insurance of the buildings upon the premises covered by the mortgage. There is nothing to be explained or added to the same to make it a complete contract. It fully indicates the intention and design of the parties thereto. In such a case the presumption of law arises that the written instrument contains the whole of the agreement, and there can be no question from the instrument itself but that the writing was intended by the parties as a repository of their agreement concerning this insurance. It is contended by the appellants and, at their request, the court found as follows: "That it was mutually verbally agreed between the plaintiff and the defendants, at the time the said premises were conveyed, as aforesaid, that the defendants should pay to the plaintiff the sum of four hundred dollars in cash and execute and deliver a bond and mortgage, with a tax, insurance and interest clause for eight hundred dollars, payable as set forth in the complaint; and, as part of the consideration for the buying of said premises by the defendants from the plaintiff, he, the plaintiff, was to assign and transfer the said policy of insurance to the defendants." This parol agreement is inconsistent with the terms of the written agreement, which, as we have seen, is full and complete upon the subject of insurance. By the terms of the written agreement the mortgagors were to procure the insurance on the buildings upon the premises described in the mortgage and assign the same to the mortgagee. By the terms of the parol agreement, it appears that the claim of the defendants is, that the mortgagee should obtain the policy of insurance and that he should assign the same to the mortgagors. In Seitz v. Machine Company ( 141 U.S. 510), FULLER, Ch. J., stated the rule as follows: "Undoubtedly the existence of a separate oral agreement as to any matter on which an original contract is silent and which is not inconsistent with its terms, may be proven by parol, if, under the circumstances of the particular case, it may properly be inferred that the parties did not intend the written paper to be a complete and final statement of the whole of the transaction between them. * * * It must not be so closely connected with the principal transaction as to form part and parcel of it. And when the writing itself, upon its face, is couched in such terms as import a complete legal obligation, without any uncertainty as to the object or extent of the engagement, it is conclusively presumed that the whole engagement of the parties and the extent and manner of their undertaking were reduced to writing." The defendants, as it appears to me, attempted by this oral agreement to add another term or condition to this contract and to render inoperative the terms of the written contract. "Both at law and in equity, one who sets his hand and seal to a written instrument, knowing its contents, cannot be permitted to set up that he did so in reliance upon some verbal stipulation, made at the time, relating to the same subject and qualifying or varying the instrument which he thus signs." ( Wilson v. Deen, 74 N.Y. 531. ) The appellants rely upon the case of Thomas v. Scutt ( 127 N.Y. 133) as holding that collateral agreements are not included in the established rule excluding parol evidence tending to vary, modify or extend a written contract, because they are separate, independent and complete contracts, although relating to the same subject; but it was held in that case that they are allowed to be proved by parol because they were made by parol, and no part thereof committed to writing. That rule is not applicable to the question at bar, as it appears from the written instrument itself that the entire contract concerning the insurance was committed to writing; and the purpose of this parol agreement is to modify and change the contract, so that the mortgagee, instead of the mortgagors, shall do that which the mortgagors themselves agreed to do, as shown by the written covenant.
This agreement appears to be of a complete and comprehensive character, and the verbal agreement, if given force and effect, would conflict with the rule prohibiting parol evidence to explain, contradict, vary or change a written instrument. The learned trial court took this view of the case and decided the same in accordance therewith. His decision is, in my opinion, fully upheld in the following cases: Thomas v. Scutt ( 127 N.Y. 133); Case v. Phœnix Bridge Co. (134 id. 78); House v. Walch (144 id. 418); Maher v. Garry ( 3 App. Div. 487, 496); Lewis v. Yagel (77 Hun, 352); Van Mater v. Burns (76 id. 3); Emmett v. Penoyer (Id. 556); Woodard v. Foster (64 id. 148); Lamson Consolidated Store Service Co. v. Hartung (46 N.Y. St. Repr. 193); Gerard v. Cowperthwait ( 2 Misc. Rep. 371; affd., 143 N.Y. 637); Hall v. Beston ( 16 Misc. Rep. 528). Lewis v. Seabury ( 74 N.Y. 413) is clearly distinguishable. In the last-mentioned case the court said it was "very near the line."
I am of the opinion that the judgment herein should be affirmed, with costs.
Judgment reversed and a new trial ordered, with costs to abide the event.