255. There are rules of law which, operating upon certain sets of circumstances, will bring about the discharge of a contract; as in case of

(a) Merger.

(b) Alteration of a written instrument.

(c) Proceedings in bankruptcy.

Same - Merger

256. Acceptance of a higher security in the place of a lower merges or extinguishes the lower, but

(a) The two securities must be different in their legal operation, the one of a higher efficacy than the other. »

(b) The subject-matter of the two securities must be identical.

(c) The parties must be the same.

The merger of a lower in a higher security does not depend on the intention of the parties. The mere acceptance of the higher security ipso facto extinguishes the lower.1 We shall presently see an instance of this form of discharge in the case of a judgment recovered in an action for breach of contract. The judgment extinguishes by merger the right of action arising from the breach. In like manner, if the parties to a simple contract embody its contents in a deed which they both execute, the simple contract is discharged.2 In order to effect a merger, the two securities must be different in their legal operation, the one of a higher efficacy than the other. A second security, taken in addition to one similar in character, will not affect its validity unless there be a discharge by substituted agreement.3 It is also necessary that the subject-matter of the two securities shall be identical,4 and that the parties shall be the same.5 Even a security of a higher nature, if it is taken expressly as a collateral security, will not extinguish the inferior.6

1 Price v. Moulton, 10 C. B. 561; Jones v. Johnson, 3 Watts & S. (Pa.) 276, 38 Am. Dec. 760; Moale v. Hollins, 11 Gill & J. (Md.) 11, 33 Am. Dec. 6S4; Keefer v. Zimmerman, 22 Md. 274; Wann v. McNulty, 2 Gilman (I11.) 355, 43 Am. Dec. 58; ante, p. 71. See "Contracts" Dec. Dig. (Key-No.) § 245; Cent. Dig. §§ 1129, 1130.

2 Martin v. Hamlin, 18 Mich. 354, 100 Am. Dec. 181; Howes v. Parker, 3 Johns. (N. Y.) 506, 3 Am. Dec. 526; CLIFTON v. JACKSON IRON CO., 74 Mich. 183, 41 N. W. 891, 16 Am. St. Rep. 621, Throckmorton Cas. Contracts, 406; Williamson v. Cline, 40 W. Va. 194, 20 S. E. 917. If, however, the deed is accepted by the vendee, not as in full performance, but only as performance pro tanto of the contract of sale, it does not discharge the contract. Read v. Loftus, 82 Kan. 485, 108 Pac. 850, 31 L. R. A. (N. S.) 457, and note. Fee "Contracts," Dec. Dig. (Key-No.) § 245; Cent. Dig. §§ 1129, 1I30.

3 Higgen's Case, 6 Coke, 45b; Andrews v. Smith, 9 Wend. (N. T.) 53;

It is often said that where a simple oral contract is reduced to writing the written contract merges the oral agreement, but the term "merger" is thus used in a different sense. A simple contract in writing is of no higher nature than a simple contract by word of mouth. What is meant is simply that where the parties have reduced their contract to writing they cannot vary or add to it by parol evidence. It is simply a question of evidence.7 Again, one simple contract may be substituted for another. In such case, however, there is no discharge by operation of law, but the substitution depends upon the intention of the parties.8