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.
In order to have the doctrine of merger operate, the subsequent specialty must bear the following relation to the prior written contract. (1) The specialty must be between the same parties as the prior simple contract and upon the same subject-matter.1 A subsequent deed, which is not accepted by the grantee in full performance of the prior contract, and does not cover the subject-matter contracted for, does not merge the prior contract Thus a contract to convey a tract of land, is not merged in a subsequent deed conveying only a part of such tract, which is accepted by the grantee as part performance only of the contract.2 So an agreement whereby the grantee is to pay a mortgage upon the premises conveyed as a part of the purchase price, is not merged in a subsequent conveyance.3 So an agreement whereby the grantor is to refund the consideration if the title to the land conveyed is not good, is not merged in a subsequent deed, which contains a covenant of special warranty but none of title.4 (2) The subsequent specialty will not merge the prior simple contract unless the specialty is valid.5 A subsequent deed, which proves to be void by reason of mistake, does not merge the contract under which it was given.6 (3) The specialty will not merge the prior simple contract if it is not intended as satisfaction thereof but merely as collateral security thereto.7 Assignment of a specialty by the debtor to the creditor does not operate as a nerger.8 An agreement which is intended by the parties to be collateral to the deed when delivered, is not merged by such deed.9 Thus a written contract that a certain dam should be maintained adjoining the property sold, is not merged in a subsequent deed of the property contracted for.10 A contract, whereby a person agrees to convey a right of way to a railroad, and to release the railroad from all damages caused by taking and using such way, is not merged in a subsequent conveyance of such right of way, and the grantor cannot subsequently maintain an action against the railroad for obstructing a right of way owned by the grantor by the use of the right of way thus conveyed to the railroad.11 A sealed instrument which recognizes a prior simple contract as existing, recites a dispute as to the method of ascertaining the amount due thereunder, and fixes the method of ascertaining such amount does not waive such prior contract.12 A bond executed by a public officer does not merge his liability for money had and received.13 It is not necessary that the specialty should show on its face that it is merely collateral to the original contract.14 An express agreement that a sealed contract delivered to the holder of a promissory note and executed by two out of three of the makers of such note should be accepted as collateral and not as satisfaction prevents merger though the sealed contract con tains no such provision.15 A contract by A, who owns an undivided interest in a tract of land, in common with B. whereby A agrees to convey to X a part of such tract, has been held not to be merged in a subsequent contract between A and B to convey the entire tract to X if not intended as a merger.14
1 Chetwynd v. Allen (1899), 1 Ch. 353; Cavanaugh v. Casselman, 88 Cal. 543; 26 Pac. 515; Jones v. Johnson, 3 W. & S. (Pa.) 276; 38 Am. Dec. 760.
2 Cavanaugh v. Casselman, 88 Cal. 543; 26 Pac. 515.
3 Stockton v. Gould, 149 Pa. St. 68; 24 Atl. 160.
4 Close v. Zell, 141 Pa. St. 390; 23 Am. St. Rep. 296; 21 Atl. 770.
5 Gray v. Fowler, 1 H. Bl. 462; Haussman v. Burnham, 59 Conn. 117; 21 Am. St. Rep. 74; 22 Atl.
1065; Thurston v. Percival, 1 Pick. (Mass.) 415.
6 Haussman v. Burnham, 59 Conn. 117; 21 Am. St. Rep. 74; 22 Atl. 1065.
7 Ernes v. Widdowson, 4 C. & P. 151; Tryon v. Hart, 2 Conn. 120; Grant v. School Town, 71 Ind. 58; Heeg v. Weigand, 33 Ind. 289; Pills-bury v. Morris, 54 Minn. 492; 56 N. W. 170; Kemp v. Ry., 156 Pa. St. 430; 26 Atl. 1074; Wolf v. Wyeth. 11 S. & R. (Pa.) 149; Witz v. Fite, 91 Va. 446; 22 S. E. 171.
8 Grant v. School Town, 71 Ind. 58.
9 Pillsbury v. Morris, 54 Minn. 492; 56 N. W. 170.
10 Shelby v. Ry., 143 111. 385; 32 N. E. 438.
11 Kemp v. By., 156 Pa. St. 430; 26 Atl. 1074.
12 Bank v. Patterson, 7 Cranch (U. S.) 299.
13 Walton v. United States, 9 Wheat. (U. S.) 651.
14 Van Vleit v. Jones, 20 N. J. L. 340; 43 Am. Dec. 633; Burke v. Cruger, 8 Tex. 66; 58 Am. Dec. 102; s. c, 11 Tex. 694; Witz v. Fite, 91 Va. 446; 22 S. E. 171.
15 Witz v. Fite, 91 Va. 446; 22 S. E. 171.
16 Henry v. Nubert (Tenn. Ch. App.), 35 S. W. 444.