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.
Extrinsic evidense is inadmissible to contradict the intention of the parties as expressed in a written contract by showing a prior or contemporaneous oral agreement contrary to the written agreement.1 Thus extrinsic evidence is inadmissible to show that a deed was not intended to convey the land therein described,2 or that it was meant only as a power of attorney,3 or that a bill of sale,4 or chattel mortgage,5 of personal property, was not intended to include all property therein described, or that under a written contract of sale, title was really reserved by the vendor,6 or that written contracts for work were not intended to include work specified therein.7 So a deed deposited in escrow under a written contract for delivery on specified conditions cannot be shown to be intended as a gift.8 An oral contemporaneous agreement that a written release of mutual rights should have no validity cannot be enforced.9 A written contract whereby a lessor whose title is in dispute agrees to indemnify his lessee against any loss that might be incurred from paying rent, in case his title is adjudged defective cannot be contradicted by a contemporaneous oral contract providing that the rent should not be paid until the title was settled.10 So where a railroad ticket is a complete contract, extrinsic evidence is inadmissible to contradict its terms, as to show that a limited ticket was by oral agreement to operate as an unlimited ticket.11 Extrinsic evidence is inadmissible to show that a different amount from that specified in a written contract for the payment of money was to be paid.12 Thus under a contract for the sale of milk, evidence is inadmissible to show that there was to be a discount of four cents a can to be applied on a note for a milk route.13 So a contract to pay royalties at a certain rate cannot be contradicted by showing an oral contract for a certain minimum amount to be paid.14 So, where a written contract shows that it was "agreed and stipulated" that a criminal case should be discontinued, evidence is inadmissible to show that it was discontinued by the prosecuting witness, and that the defendant merely acquiesced therein.15 So under a contract between two railroad companies, whereby all the trains belonging to one company are to have a priority of crossings, extrinsic evidence is inadmissible to show that this priority was to apply only to certain classes of trains.18 So a contract to "purchase" land can not be shown to be a contract for a right of way.17 A contract which on its face is to be performed in the alternative, cannot be shown to be restricted by oral agreement to the performance of one of the alternatives. Thus where a bill of lading is a contract whereby the carrier agrees to deliver to a connecting railroad, or to a steamer, extrinsic evidence is inadmissible to show that the contract was to deliver to the connecting railroad, and not to the steamer.18 So under a contract to ship property to New York, not specifying by which route, extrinsic evidence is inadmissible to show that the parties had agreed upon one specific route.19 However, where the bill of lading did not show the route it was held proper to show an oral agreement specifying to what connecting carrier the initial carrier was to deliver the goods.20 "Where a contract for a policy provides it shall not go into effect until the application is accepted, and the policy is issued and delivered, extrinsic evidence is inadmissible to show that the policy is to go into effect at once.21 Extrinsic evidence is inadmissible to show that a policy which on its face covers only the husband's interest, was intended to cover the wife's interest too. Accordingly, a clause providing that the policy shall become inoperative if the insured conveys his interest, operates where the husband conveys to the wife, an oral provision to the contrary notwithstanding.22 So where a clause provides that the policy shall become inoperative if the building is enlarged without the consent of the insurance company, extrinsic evidence is inadmissible to show that the enlargement was agreed upon before the policy issued, where the building is described as it existed when the policy issued.23 So, where a policy is made payable directly to a granddaughter, extrinsic evidence is inadmissible to show that it was issued to the grandfather on his own life, and at his request made payable to the granddaughter.24 So extrinsic evidence is inadmissible to show that a policy payable on its face to the insured was really payable to his sister.25 So extrinsic evidence is inadmissible to eliminate a warranty.26 So extrinsic evidence is inadmissible to contradict the effect of a covenant against incumbrances.27 The maker of a note cannot show an oral agreement between himself and the payee, that the note should have no validity.28 Thus extrinsic evidence is inadmissible to show that a note and mortgage were given to the bank in order that the bank might use them as apparent collateral security,29 or might show them to the bank examiner as apparent assets.30 In some jurisdictions, however, an extension of the principle that conditions precedent to a written instrument's taking effect may be shown,31 has induced the courts to hold that extrinsic evidence is admissible to show that a written contract delivered between the parties was delivered as a mere form and was never intended to take effect. Thus where A had signed a contract agreeing to take a certain amount of street-car advertising from B at certain rates, and had delivered it to B's agent, A could show in an action on the contract that the real contract was an oral agreement for a less amount at a lower rate, and that A signed the written contract merely to enable B to show A's order to other prospective customers, and yet conceal the fact that B had been given an especially low rate.32 If this case were carried to its logical conclusion,it would be difficult to imagine a case to which parol evidence rule would apply. Where a payee. in assigning a note signs it on the face under the name of the maker, he cannot use extrinsic evidence to show that he was merely an indorser.33 So a surety may not show an agreement with the payee whereby he was not to be held liable on the note.34 So a note, negotiable in form, cannot be shown to be intended to be non-negotiable.35 So the maker of a check in payment of a subscription to a soldiers' monument cannot show an agreement with the payee that the check should be surrendered and the maker's bond payable at a later time, or be taken in place thereof,36 and where a written subscription is given, extrinsic evidence is inadmissible to show that it was given solely to secure the necessary certificate of the state engineer, and that the town was to raise funds to pay the amount of the subscription.37 If a son receives property from his father, and gives his father his note in return therefor, extrinsic evidence is inadmissible to show that the property was given as an advancement, and that the note was intended merely as a re-ceipt therefor.38 A different view has been expressed in some authorities, holding that extrinsic evidence of such agreement is admissible. This can be reconciled with the general rule only on the theory that under the facts of the transaction there was no consideration for the note.39 So extrinsic evidence that an obligor signed a bond under an agreement with the obligee that he should not be liable thereon, is inadmissible.40 So a written receipt for wheat, with the promise to pay therefor, cannot be contradicted by showing that the person receiving the wheat did so merely as a bailee.41 So a written contract for the sale of a machine cannot be contradicted by showing that it was merely a rental on commission.42 A written promise to pay money cannot be contradicted by showing that it was to be paid in work,43 or in property,44 as in building material,45 or in corporate stock,40 or in lots and in corporate stock,47 or in accounts against third person.48 So in an action on a lease to recover rent, evidence is inadmissible to show that part of the rent was to be paid to the lessor by the lessee's furnishing him with table-board.49 So in an action on a note evidence is inadmissible to show that such note was to be paid by the maker's collecting certain claims for the payee at a certain commission, which commission would amount to the face of the note.50 Such a contract may, however, be the basis of a counterclaim if broken. So a contract that a note is to be paid in part by having damages due the maker arising out of another transaction credited on the note is unenforceable.51 If a note is payable in money, an oral contract that it is payable in certain bank notes not legal tender is unenforceable,52 though a contract to redeem in gold the bank-bills for which the note was given is enforceable.53 An exception to this rule was recognized in contracts made during the Civil War in Southern states, in which the weight of authority recognizes the right of the parties to the contract to show that they intended payment in money of the United States,54 or in money of the Confederate States.55 Whether this is an illustration of evidence showing the intention of the parties direct, or whether it is merely an illustration of the admissibility of evidence showing the surrounding facts and circumstances, to enable the court to place itself in the position of the parties to the contract, and thus to determine what medium of payment they contemplated is a question not always easy to determine from an examination of the opinions of the courts. So a written contract to pay money, which by its terms imports a general personal liability cannot be shown to be a contract to pay out of a particular fund,56 as out of the profits of the transaction in connection with which the written promise was made,57 or out of dividends on the stock for which the note was given.58 So if a note is payable to the firm of A and B it cannot be shown that A was intended as the real payee.59