Same - Form Of Discharge By New Agreement

235. The general rule is that a contract must be discharged in the same form as that in which it was made. Therefore:

(a) A contract under seal can only be discharged by agreement, where the agreement is under seal; but by the weight of authority, in this country, at least, the rule does not apply where a parol contract rescinding or modifying a contract under seal has been acted upon, so that it would be inequitable to hold the parties to their original contract.

(b) A simple contract may be discharged by writing or by word of mouth, whether or not the original contract is in writing, except that -

EXCEPTION - Where the original written contract was within the statute of frauds, though an absolute discharge by rescission may take place by word of mouth, a discharge by substituted agreement must, by the weight of authority, be in writing.

The general rule of the common law being that a contract can only be discharged in the same form as that in which it was made, it follows that an agreement, to operate as a discharge or modification of a previous contract under seal, must also be under seal. The parties to a deed cannot, at common law, discharge' their obligation by a parol agreement.37 This rule is, however, subject to some qualifications or exceptions.

35 Welch v. Mischke, 154 Mo. App. 728, 136 S. W. 36. And see note 16, supra. See "Contracts," Dec. Dig. (Key-No.) § 237; Cent. Dig. §§ 1119-1122.

36 Ante, D. 158.

37 Spence v. Healey, 8 Ex. GG8; West v. Blakeway, 2 Man. & G. 729; Allen v. Jaquish, 21 Wend. (N. T.) 628; Thompson v. Brown, 7 Taunt 656; Spence v. Healey, 8 Exch. 668; Cordwert v. Hunt, 8 Taunt. 596; Woodruff v. Dobbins, 7 Blackf. (Ind.) 582; Hogencamp v. Ackerman, 24 N. J. Law, 133; Mc-Murphy v. Garland, 47 N. H. 316; Leavitt v. Stern, 159 111. 526, 42 N. E. 869. See "Contracts," Dec. Dig. (Key-No.) § 288; Cent. Dig. §§ 1117, 1123.

In the first place, it is possible for them to make a parol contract which creates obligations separate from, and yet substantially at variance with, the deed, so that it in effect contravenes the terms of the deed, and gives a right of action to which the deed furnishes no answer. In a case illustrative of this point a person had let rooms to another, by contract under seal, for a certain time, at a rent to be ascertained in a certain way, and after his death his administrator entered into a parol agreement with the lessee by which, in consideration of a certain sum to be paid by the lessee, to be taken as a reasonable rent, neither party should be called upon to perform his part under the deed. The lessee failed to make the payment so agreed upon, and the administrator sued him upon the parol contract. The lessee contended that the parol contract was an attempt to vary the deed by an instrument not under seal, and that a performance of this contract, being no discharge of the deed, would leave him liable to his obligation under the deed. The court held, however, that the parol contract created a new obligation; and that a performance of this new contract would furnish an equitable answer to an action on the contract under seal; and that the administrator was entitled to sue on the parol contract.38

Again, where the obligee does something to prevent performance by the obligor, as where he orally consents to an extension of the time for performance, and the oral waiver is acted upon, when he sues the obligor for nonperformance, he cannot object to parol evidence of his conduct.39

There is an exception very generally recognized in this country, though not in England, it seems.40 The cases are not very clear as to the limits of this exception, but they seem to establish the rule that where a contract under seal has been rescinded or modified by a subsequent parol agreement, and this agreement has been acted upon by the parties, and they have changed their situation so that it would be inequitable to hold them to the original contract, the parol agreement may be shown;41 and this rule is recognized at law as well as in equity.42 Though the language of most of the opinions in these cases is as broad as the rule stated, it will be found that some of them will fall within one or the other of the qualifications of the rule mentioned above.

38 Nash v. Armstrong, 10 C. B. (N. S.) 259. See "Contracts," Dec. Dig. (Key-No.) § 238; Cent. Dig. §§ 1111, 1123.

39 Fleming v. Gilbert, 3 Johns. (N. Y.) 528; Nicholas v. Austin, 82 Va. 817, 1 S. E. 132; Franklin Fire Ins. Co. of Philadelphia v. Hamill, 5 Md. 170; Baltimore Fire Ins. Co. v. McGowan, 16 Md. 47; Lawrence v. Miller, 86 N. Y. 131. See "Contracts," Dec. Dig. (Key-No.) § 288; Cent. Dig. §§ 1117, 1123.

40 The rule is recognized in equity. Steeds v. Steeds, 22 Q. B. Div. 537. See "Contracts," Dec. Dig. (Key-No.) § 239; Cent. Dig. § 1124.

41 Becker v. Becker, 250 111. 117, 95 N. E. 70, Ann. Cas. 1912B, 275. See "Contracts," Dec. Dig. (Key-No.) § 239; Cent. Dig. § 1124.

A parol or simple contract may be discharged by writing or by word of mouth. It is immaterial that the original contract is in writing, for, as we have seen, the writing is not the agreement, but the evidence of the agreement only.43 There is an exception in cases where the original agreement was required by the statute of frauds to be in writing. . In such a case an absolute discharge might probably take place by word of mouth.44 If, however, the discharge is not a simple rescission, but is by substitution of a new contract, either by express provision, or by implication because of inconsistency between it and the original, the better opinion requires a writing. The new contract, resting in parol, would be unenforceable for noncompliance with the statute, and could not discharge the original contract.45 There are some cases in conflict with this statement.46 Parol evidence is admissible, however, to prove substantial performance when the performance is completed and accepted, and such performance is a defense by way of accord and satisfaction.47

42 Mckenzie v. harrison, 120 n. y. 260, 24 n. e. 458, 8 l. r. a. 257,

17 Am. St. Rep. 638, Throckmorton Cas. Contracts, 365; Chesapeake & O. Canal Co. v. Ray, 101 U. S. 522, 25 L. Ed. 792; McCreery v. Day, 119 N. Y. 1, 23 N. E. 198. 6 L. R. A. 503, 16 Am. St. Rep. 793; Le Fevre v. Le Fevre,

4 Serg. & R. (Pa.) 241, 8 Am. Dec. 696; Phelps v. Seely, 22 Grat. (Va.) 573; Munroe v. Perkins, 9 Pick. (Mass.) 298, 20 Am. Dec. 475; Van Syckel v. O'Hearn, 50 N. J. Eq. 173, 24 Atl. 1024; White v. Walker, 31 111. 422; Lawrence v. Dole, 11 Vt 549; Hydeville Co. v. Slate Co., 44 Vt. 395; Green v. Wells, 2 Cal. 584; Hastings v. Lovejoy, 140 Mass. 261, 2 N. E. 776, 54 Am. Rep. 462; Herzog v. Sawyer, 61 Md. 344; Dickerson v. Commissioners, 6 Ind. 128, 63 Am. Dec. 373; Thomson v. Poor, 147 N. Y. 402, 42 N. E. 13. See, also, Palmer v. Meriden Britannia Co., 188 111. 508, 59 N. E. 247. See "Contracts," Dec. Dig. (Key-No.) § 239; Cent. Dig. § 1124.

43 Goss v. Nugent, 5 Barn. & Adol. 65; Brown v. Everhard, 52 Wis. 205.

8 N. W. 725; Swain v. Seamens, 9 Wall. 254, 19 L. Ed. 554; Blagborne v. Hunger, 101 Mich. 375. 59 N. W. 657; McNish v. Reynolds, 95 Pa. 483; Allen v. Sowerby, 37 Md. 410; Wiggin v. Goodwin, 63 Me. 389; Aldrich v. Price, 57 Iowa, 151, 9 N. W. 376, 10 N. W. 339; Utley v. Donaldson, 94 U. S. 29, 24 L. Ed. 54; Teal v. Bilby, 123 U. S. 572, 8 Sup. Ct. 239, 31 L. Ed. 263; Flanders v. Fay, 40 Vt. 316; Robinson v. Batchelder, 4 N. H. 40; Thurston v. Ludwig, 6 Ohio St. 1, 67 Am. Dec. 328; Deshazo v. Lewis, 5 Stew. & P. (Ala.) 91, 24 Am. Dec. 769; Low v. Forbes, 18 111. 568; Jones v. Grantham, 80 Ga. 472, 5 S. E. 764; Lewis v. Say, 151 N. C. 168, 65 S. E. 907; Robinson v. Horner, 176 Ind. 226, 95 N. E. 561; Smith-Wogan Hardware & Implement Co. v. Jos. W. Moon Buggy Co., 26 Okl. 161, 108 Pac. 1103. Contra: Her-reshoff v. Misch, 21 R. I. 524, 45 Atl. 145 (cannot be varied). Contra, by statute, in some states, where the oral agreement is unexecuted. Benson v. Shotwell, 103 Cal. 163, 37 Pac. 147; Mettel v. Gales, 12 S. D. 632, 82 N. W. 181. See. also, ante, pp. .490, 492. Even a provision that no modifications shall be made except in writing, may be changed by parol. A. J. Anderson Electric Co. v. Lighting Co. (Tex. Civ. App.) 27 S. W. 504. See "Contracts," Dec. Dig. (Key-No.) § 238; Cent. Dig. §§ 1117, 1123.

44 Gorman v. Salisbury, 1 Vera. 240; Wulschner v. Ward, 115 Ind. 219, 17 N. E. 273; Hurley v. Schring, 62 Hun, 621, 17 N. Y. Supp. 7; Buel v. Miller, 4 X. II. 196. As to novation, see ante, p. 84. See "Contracts," Dec. Dig. (Key-No.) § 238; Cent. Dig. §§ 1117, 1123.