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 parol evidence rule applies only between the parties to the contract and those claiming under them, and is limited to actions upon the contract.1 A stranger to the instrument may
7McFarland v. McGill, 16 Tex. Civ. App. 298; 41 S. W. 402 (citing Pickett v. Green, 120 Ind. 584; Pennsylvania Co. v. Dolan, 6 Ind. App. 109).
8 United Press v. Press Co., 164 N. Y. 406; 53 L. R. A. 288; 58 N. E. 527.
9Schrimper v. Ry. (la.), 82 N. W. 916.
10Sandage v. Mfg. Co., 142 Ind. 148; 51 Am. St. Rep. 165; 34 L. R. A. 363; 41 N. E. 380.
11 Merchants' State Bank v. Ruet-tell, - N. D. -; 97 N. W. 853.
1 Central, etc., Co. v. Good, 120 Fed. 793; 57 C. C. A. 161; British, etc., Co. v. Cody, 135 Ala. 662; 33 So. 832; Walker v. State, 117 Ala. 42; 23 So. 149; Coleman v. Pike
County, 83 Ala. 826; 3 Am. St. Rep. 746; 3 So. 755; Dunn v. Price, 112 Cal. 46; 44 Pac. 354; Dickey v. Grice, 110 Ga. 315; 35 S. E. 291; Central Coal & Coke Co. v. Good, - Ind. Ter. -; 64 S. W. 677; Hamlin v. Simpson, 105 la. 125; 44 L. R. A. 397; 74 N. W. 906; Livingston v. Stevens, 122 la. 62; 94 N. W. 925; Livingston v. Heck, 122 la. 74; 94 N. W. 1098; Provident, etc., Society v. Johnson, - Ky. -; 72 S. W. 754; Edwards v. Ballard, 14 B. Mon. (Ky.) 289; Baker v. Briggs, 8 Pick. (Mass.) 122; 19 Am. Dec. 311; Wilson v. Mulloney, -Mass. -; 70 N. E. 448; Witzel v. Zuel, 90 Minn. 340; 96 N. W. 1124; Pfei-fer v. Ins. Co., 62 Minn. 536; 64 N. W. 1018; First National Bank introduce extrinsic evidence to contradict it, or to show the real intention of the parties;2 and so may a party to the contract in an action between himself and a stranger thereto.3 So a stranger to the instrument cannot invoke the rule to prevent the other party to the action from introducing extrinsic evidence to contradict the written contract.4 Thus a third person suing for personal injuries due to negligence may show by extrinsic evidence that the relation between the parties to a written contract is that of master and servant, though on the face of the written contract the latter is an independent contractor.5 Thus, as between a bank and an attaching sheriff, the bank may show an oral agreement with the depositor, whose funds are sought to be attached, that such deposits should be applied to the payment of a note of the depositor's not yet due.6 So A gave a check on a bank in which he had no funds subject to check. The holder of the check neglected to present it for payment, and the bank failed soon after. In an action between the holder of the check and A, A was allowed to show that he had made a special deposit for which he had received a certificate of deposit, and that by oral agreement between himself and the bank checks drawn by him were to be paid out of such special deposit, though not ordinarily subject to check.7 So v. Tolerton (Neb.), 97 N. W. 248; Crockett v. Miller (Neb.), 96 N. W. 491; Roberts v. Bank, 8 N. D. 474; 79 N. W. 993; Clapp v. Banking Co., 50 O. S. 528; 35 N. E. 308; Schuler v. Bank, 13 S. D. 188; 82 N. W. 389; Myers v. Taylor, 107 Tenn. 364; 64 S. W. 719; Kahle v. Stone, 95 Tex. 106; 65 S. W. 623; Oriental Investment Co. v. Barclay, 25 Tex. Civ. App. 543; 64 S. W. 80; Olmstead v. Ry., - Utab -; 76 Pac. 557; Elliott v. S. S. Co., 22 Wash. 220; 60 Pac. 410.
2Sigua Iron Co. v. Greene, 88 Fed. 207; 31 C. C. A. 477; Bruce v. Lumber Co., 87 Va. 381; 24 Am. St. Rep. 657; 13 S. E. 153.
3 Sigua Iron Co. v. Greene, 88 Fed.
207; 31 C. C. A. 477; Coleman v. Pike County, 83 Ala. 326; 3 Am. St. Rep. 746; 3 So. 755; Tyson v. Post, 108 N. Y. 217; 2 Am. St. Rep. 409; 15 N. E. 316; Imperial Ins. Co. v. Dunham, 117 Pa. St. 460; 2 Am. St. Rep. 686.
4 Roberts v. Bank, 8 N. D. 474; 79 N. W. 993.
5 Powell v. Construction Co., 88 Tenn. 692; 17 Am. St. Rep. 925; 13 S. W. 691.
6 Schuler v. Bank, 13 S. D. 188; 82 N. W. 389.
7 Hamlin v. Simpson, 105 la. 125; 44 L. R. A. 397; 74 N. W. 906. Contra, Baer's Appeal. 127 Pa. St. 360: 4 L. R. A. 609. where an administrator who had deposited in an action between an agent of one of the parties to a written contract and bis principal,8 or the adversary party to the contract,9 or a third person,10 extrinsic evidence may be admitted to show the real understanding. So if an agent is a defendant in a criminal action in which he is charged with embezzlement, he may introduce extrinsic evidence to show the real contract between himself and his principal, and thus show that the money appropriated by him was not taken with criminal intent, though in an action between himself and his principal, upon the contract of employment, such evidence would have been inadmissible.11 A subsequent holder or assignee of a written contract is of course as much bound by the parol evidence rule as the original party thereto, under whom he claims.12 So if a third person bases his claim upon a contract, and is seeking to enforce it,13 as where he is seeking to show that the written contract was made between the parties thereto for his benefit,14 the parol evidence rule applies. If a release has been given to one of two joint wrongdoers, the other wrongdoer is a stranger thereto, within the meaning of the parol evidence rule, though the effect of such release may be to discharge him.15