This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The parties to a contract choose words to express their intention in view of all the surrounding circumstances. It is practically impossible to state these facts in the contract, and is rarely if ever attempted. The court which construes the contract must therefore either disregard all the material facts which led the parties to express their intention as they did, or else admit extrinsic evidence of the surrounding facts and circumstances. In this dilemma the courts have chosen the latter alternative. It is a recognized rule of construction that the court will place itself in the position of the parties who made the contract as nearly as can be done, by admitting evidence of the surrounding facts and circumstances,1 the nature of the subject-matter,2 the relation of the parties to the contract,3 and the objects sought to be accomplished by the contract.4
U. S. 673; Forest City Ins. Co. v. Hardesty, 182 111. 39; 74 Am. St. Rep. 161; 55 N. E. 139; Paul v. Ins. Co., 112 N. Y. 472; 8 Am. St. Rep. 758; 3 L. R. A. 443; 20 N. E. 347; Webster v. Ins. Co., 53 O. S. 558; 53 Am. St. Rep. 658; 30 L. R. A. 719; 42 N. E. 546.
6 Jacobs v. Spalding, 71 Wis. 177; 36 N. W. 608.
7 Thornton v. Ins. Co., 116 Ga. 121; 94 Am. St. Rep. 99; 42 S. E. 287; Forest City Ins. Co. v. Hardesty, 182 111. 39; 74 Am. St. Rep. 161; 55 N. E. 139; Ętna Ins. Co. v. 110
Deming, 123 Ind. 384; 24 N. E. 86, 375; Connecticut Fire Ins. Co. v. Jeary, 60 Neb. 338; 51 L. R. A. 698; 83 N. W. 78; Webster v. Ins. Co., 53 O. S. 558; 53 Am. St. Rep. 658; 30 L. R. A. 719; 42 N. E. 540; McNamara v. Ins. Co., 1 S. D. 342; 47 N. W. 288.
8 Sun Life Ins. Co. v. Taylor, 108 Ky. 408; 94 Am. St. Rep. 383; 56 S. W. 668.
9 Hull, etc., Co. v. Coke Co., 113 Fed. 256; 51 C. C. A. 213.
10 Patterson v. Gage, 11 Colo. 50; 16 Pac. 560.
1 Chicago, etc., Ry. v. Ry., 143 U. S. 596; Reid v. Insurance Co., 95 U. S. 23; Nash v. Towne, 5 Wall. (U. S.) 689; Hull, etc., Co. v. Coke Co., 113 Fed. 256; 51 C. C. A. 213; Fox V. Tyler, 109 Fed. 258; 48 C. C. A. 356; Kauffman v. Raeder, 108 Fed. 171; 54 L. R. A. 247; 47 C. C. A. 278; Campbell v. Moran Bros. Co., 97 Fed. 477; 38 C. C. A. 293; Speed v. Ry., 86 Fed. 235; 30 C. C. A. 1; Mississippi River Logging Co. v. Robson, 69 Fed. 773; 16 C. C. A. 400; Crass v. Scruggs, 115 Ala. 258; 22 So. 81; Remy v. Olds (Cal.), 21 L. R. A. 645; 34 Pac. 216; Union Pacific Ry. v. Anderson, 11 Colo. 293; 18 Pac. 24; Illges v. Dexter, 77 Ga. 36; Burke, etc., Co. v. Wells, etc., Co., 7 Ida. 42; 60 Pac. 87; Givens v. Keeney, 7 Ida. 335; 63 Pac. 110; Illinois Terra Cotta Lumber Co. v. Owen, 167 111. 360; 47 N. E. 722; reversing, 64 111. App. 632; Street v. Storage Co., 157 111. 605; 41 N. E. 1108; Torrence v. Shedd, 156 111. 194; 41 N. E. 95; 42 N. E. 171; Dougherty v. Rogers, 119 Ind. 254; 3 L. R. A. 847; 20 N. E. 779; New York, etc., Ry. v. Ry., 116 Ind. 60; 18 N. E. 182; Ketcham v. Coal Co., 88 Ind. 515; Crane v. Williamson, 111 Ky. 271; 63 S. W. 610, 975; Watson v. Succession of Barber, 105 La. 456; 29 So. 949; Rackemann v. Improvement Co., 167 Mass. 1; 57 Am. St. Rep. 427; 44 N. E. 990; Hoose v. Ins. Co., 84 Mich. 309; 11 L. R. A. 340; 47 N. W. 587; Mathews v. Phelps, 61 Mich. 327; 1 Am. St. Rep. 581; 28 N. W. 108; Nordyke & Marmon Co. v. Kehlor, 155 Mo. 643; 78 Am. St. Rep. 600;
56 S. W. 287; Rice v. McCague, 61 Neb. 861; 86 N. W. 486; Saddlery Hardware Mfg. Co. v. Hillsborough Mills, 68 N. H. 216; 73 Am. St. Rep. 569; 44 Atl. 300; Cohen v. Envelope Co., 166 N. Y. 292; 59 N. E. 906; Gillet v. Bank, 160 N. Y. 549; 55 N. E. 292; Sattler v. Hallock, 160 N. Y. 291; 73 Am. St. Rep. 686; 46 L. R. A. 679; 54 N. E. 667; Berry Harvester Co. v. Machine Co., 152 N. Y. 540; 46 N. E. 952; Smith v. Kerr, 108 N. Y. 31; 2 Am. St. Rep. 362; 15 N. E. 70; Reynolds v. Ins. Co., 47 N. Y. 597; Mosier v. Parry,
60 O. S. 388; 54 N. E. 364; Sheldon's Estate, - Wis. - ; 97 N. W. 524.
2 Pensacola Gas Co. v. Lotze, 23 Fla. 368; 2 So. 609; Mathews v. Phelps, 61 Mich. 327; 1 Am. St. Rep. 581; 28 N. W. 108; Crocker v. Hill,
61 N. H. 345; 60 Am. Rep. 322.
3 Hall v. Bank, 133 111. 234; 24 N. E. 546; Holmes v. Parker, 125 111. 478; 17 N. E. 759; affirming, 25 111. App. 225; Holmes v. Bemis, 124 111. 453; 17 N. E. 42; affirming, 25 111. App. 232; H. G. Olds Wagon Works v. Combs, 124 Ind. 62; 24 N. E. 589; Darrah v. Gow, 77 Mich. 16; 43 N. W. 851; Morgan v. Ry.,
57 Mich. 430; 25 N. W. 161; 26 N. W. 865; Farr v. Nichols, 132 N. Y. 327; 30 N. E. 834; Blood v. Elevator Co., 1 S. D. 71; 45 N. W. 200; Heatherly v. Bank, 31 W. Va. 70; 5 S. E. 754.
4 Kauffman v. Raeder, 108 Fed. 171; 54 L. R. A. 247; 47 C. C. A. 278; Rockefeller v. Merritt, 76 Fed. 909; 35 L. R. A. 633; 22 C. C. A. 608; Davis v. Robert, 89 Ala. 402;
Thus in contracts of guaranty,5 contracts between pro-motors of a corporation,6 and contracts of bailment7 the surrounding facts, the relations of the parties and the object of the contract may all be looked to. Even though the contract is in writing extrinsic evidence of the surrounding facts and circumstances is admissible to aid the court to determine the intention of the parties.8 Thus extrinsic evidence of the surrounding facts is admissible to show want of consideration,9 whether a contract is severable or not10 or the mode of performance.11 Where one tenant in common agreed to sell realty to another, it was permitted to show that they were partners and that the balance due one of them from the firm was to be applied on the price of the land.12 Thus in a contract to release dower in consideration of one fourth of the proceeds of the property extrinsic evidence is admissible to show that the proceeds are the rents, and that an expensive building was erected upon the property after this contract was made.13 So where a note was given for $240, payable in case certain taxes were not rebated, "or such part of the above sum as may not be rebated," extrinsic evidence was admissible to show that the taxes amounted to $842, and that the note was not to be paid if $2-40 or more of such taxes were rebated.14 So where a village made a contract to take the water it might "need or desire for any and all purposes," extrinsic evidence is admissible to show that when the contract was made the village had a partial supply of water.15 If the meaning of a written contract is clear, evidence of the surrounding facts is inadmissible to contradict its terms.16 Thus where in return for money put into his business by his wife a husband gives her a note, promising to pay her son $800 after her death, evidence of his means and the amount expended by him for her in her last illness is inadmissible to show that he is not liable on the note.17
18 Am. St. Rep. 126; 8 So. 114; Construction Information Co. v. Cass, 74 Conn. 213; 50 Atl. 563; Cravens v. Cotton Mills, 120 Ind. 6; 16 Am. St. Rep. 298; 21 N. E. 981; Rackemann v. Improvement Co., 167 Mass. 1; 57 Am. St. Rep. 427; 44 N. E. 990; Nordyke & Marmon Co. v. Kehlor, 155 Mo. 643; 78 Am. St. Rep. 600; 56 S. W. 287; Mosier v. Parry, 60 O. S. 388; 54 N. E. 364; Lancaster Mills v. Cotton-press Co., 89 Tenn. 1; 24 Am. St. Rep. 586; 14 S. W. 317.
5 Cambria Iron Co. v. Keynes, 56 O. S. 501; 47 N. E. 548.
6 Mosier v. Parry, 60 O. S. 388; 54 N. E. 364.
7 Lancaster Mills v. Cotton-press Co., 89 Tenn. 1; 24 Am. St. Rep. 586; 14 S. W. 317.
8 Western Union Telegraph Co. v. Telephone Co., 105 Fed. 684; Bank v. Brigham, 61 Kan. 727; 60 Pac. 754; reversing, 58 Pac. 1117; Al-vord v. Cook, 174 Mass. 120; 54 N. E. 499; White v. Rice, 112 Mich. 403; 70 N. W. 1024; Doutliett v. Gas Co., 202 Pa. St. 416; 51 Atl. 981; Uhl v. Ry., 51 W. Va. 106; 41 S. E. 340.
9 Spies v. Rosenstock, 87 Md. 14; 39 Atl. 268.
10 Morrison v. Baechtold, 93 Md. 319; 48 Atl. 926.
11 Yorston v. Brown, 178 Mass. 103; 59 N. E. 654.
12 Redfield v. Gleason, 61 Vt. 220; 15 Am. St. Rep. 889; 17 Atl. 1075.
13 Irwin v. Powell, 188 111. 107; 58 N. E. 941.
 
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