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.
It is sometimes said in very general language that extrinsic evidence is always admissible to show contemporaneous oral agreements as to the method of performing a written contract, as long as the evidence does not contradict the terms thereof. The application of this rule in its most general form would go a long way toward annulling the parol evidence rule. In certain cases its operation is clear. The case in which it undoubtedly applies is where the written contract is incomplete or ambiguous on its face. Thus if a contract is incomplete or ambiguous upon its face, extrinsic evidence is admissible to show the manner of payment,1 or the character,2 size,3 or quality,4 of material to be furnished, or to show how and by whom logs sold are to be measured.5 or where railroad ties are to be inspected,6 or to show where a furnace whose erection is contracted for is to be placed.7 So where a furnace is sold under a guaranty that it will save a certain per cent, of fuel, extrinsic evidence is admissible to show what kind of test is to be made.8 So if the written contract is incomplete, extrinsic evidence is admissible to show the time of performance,9 as the time of payment.10 If a contract with reference to a specified water course leaves it uncertain whether the tributaries of such stream were included or not, evidence of the prior agreement of the parties may be shown.11 A contract for securing water by drilling a well, which does not specify the kind of water to be secured, may be explained by evidence of the prior negotiations of the parties so as to show that fresh water was intended.12 If the contract shows that some credit is to be given, evidence is admissible to show for what length of time it was given,13 and in time of paying an agent commissions,14 or the length of time for which the contract is to run,15 as that it is a contract at will.16 So if no time is fixed in the contract for passing title, extrinsic evidence is admissible to show that title is to be retained until the property is paid for.17 If the contract is incomplete, evidence is admissible to show the place of payment.18 In some cases this principle has been applied to notes which did not provide for the place of payment, and extrinsic evidence has been admitted to show an oral agreement fixing the place of payment.19 In other cases it has been held that in the absence of a provision in the note fixing a place of payment, the law would draw inferences as to such place, which inferences could not be contradicted by extrinsic evidence.20 If a contract for the transportation of goods implies the right of the owner to require delivery at an intermediate point, extrinsic evidence of such instructions on his part is admissible.21 Another class of cases which is discussed elsewhere,22 exists where the parties to a written contract enter into a collateral consistent contract by which they provide a means for the performance of the written contract.23 While cases of this sort can be explained readily upon general principles, there is practically a sharp conflict of authority between the different cases as to the relation between the collateral contract and the written contract and as to their consistency or inconsistency.24 Thus where A gave B his note, an oral agreement whereby B was to collect certain rents belonging to A and apply them on such note was enforceable.25 A collateral contract by which a note is to be paid out of the proceeds of the sale of property,26 or by which the payee is to accept the partnership interest of one of the makers of the note as payment of a portion thereof,27 or by which property which is to be paid for in installments may be paid for by specified kinds of work and labor,21 has been enforced. An oral contract by which a creditor of a corporation, who has given a note for a subscription to its stock, is not to be obliged to pay such note until the debt of the corporation to him is paid, has been enforced.29 An oral contract by which a number of incorporators agree to sign a subscription contract for a specified amount of the stock and by which it was agreed that they should pay for only a portion of the amount thus indicated and the remaining portion was to be paid by the other parties who had agreed to subscribe and pay for such stock, was said to be "a convenient way of paying" the amount of the written subscription.30 Where a note under seal was given, the maker was allowed to show that it was not to be paid until another note given therewith had been collected.31 Beyond these classes of cases the courts should not go. It must be admitted, however, that some authorities permit oral terms to be added to a complete written contract, and in some cases even allow the written terms to be contradicted under guise of showing the method of performance. Thus where A had given a note to B, it was held that A could show that A and B had sold to X land owned by A and B, that X had given therefor his note to A, and that the note in litigation, given by A to B and for one half the amount of X's note to A, was to be paid only out of X's note.32 This case, however, is, on this point, contrary to the weight of authority, as such evidence is generally held to contradict the written contract. Where A had bought land from B and had given his note therefor, it was held that A could show that the note was payable only after the land was surveyed and that a reduction in the price was to be made proportional to the deficiency in acreage below the estimated amount.33 This case may be sustained on the theory that a partial failure of consideration was shown. So an oral contract for the payment of a note by sawing lumber has been enforced.34 So a written contract to deliver a quantity of peaches ranging from a maximum to a minimum quantity at vendor's option, to be grown in "sundry orchards" in a certain specified county, may be shown by oral evidence to be a contract for the product of certain specific orchards and to be conditioned on the fact of producing a crop on such orchards.35
S. E. 86; Outcault Advertising Co. v. H. G. Waltner Mercantile Co., 96 Kan. 689, 153 Pac. 518; Carpenter v. Sug-den, 231 Mass. 1, 119 N. E. 959; Trout v. Norfolk & W. R. Co., 107 Va. 570. 17 L. R. A. (N.S.) 702. 59 8. E. 394.
15 Outcault Advertising Co. v. H. G. Waltner Mercantile Co., 96 Kan. 689, 153 Pac. 518.
16 Carpenter v. Rugden, 231 Mass. 1, 119 N. E. 959.
17 Louisville & N. R. Co. v. Willbank*
133 Ga. 15, 24 L. R. A. (N.S.) 374, 65 S. E. 86: Trout v. Norfolk & W. R. Co., 107 Va. 576, 17 L. R. A. (N.S.) 702. 59 S. E. 394.
18 Van Winkle v. Crowell, 146 U. R. 42, 36 L. ed. 880.
19 Becker v Baker. 174 Ia. 97, 156 N. W. 317.
29 Hardwick v. McClurg, 16 Colo. App. 354, 65 Pac. 405.
21 Adams v. Turner, 73 Conn. 38. 46 All. 247.
1 Block Queensware Co. v. Metzger, 70 Ark. 232, 65 S. W. 920. Even if the contract is within the Statute of Frauds. See v. Butler, 167 Mass. 426, 57 Am. St. Rep. 466, 46 N. E. 52.
2Whatley v. Reese, 128 Ala. 500, 29 So. 606.
3 Meader v. Allen, 110 Ia. 588, 81 N. W. 799.
4Aultman v. Clifford, 55 Minn. 159, 43 Am. St. Rep. 478, 56 N. W. 593.
5 Gould v. Excelsior Co., 91 Me. 214, 64 Am. St. Rep. 221, 39 Atl. 554.
6 Havana, etc., Ry. v. Walsh, 85 111. 58.
7Kumberger v. Spring Co., 158 N. Y. 339, 53 N. E. 3.
8 Hawley, etc., Co. v. Hooper, 90 Md. 390, 45 Atl. 456.
9 Whatley v. Reese, 128 Ala. 500, 29 So. 606; Richter v. Stock Co., 129 Cal. 367, 62 Pac. 39.
10Schaeppi v. Glade, 195 111. 62, 62 N. E. 874.
11 Johnson v. Tackitt, 173 Ky. 406, 191 S. W. 117.
12 Smith v. Vose & Sons Piano Company, 194 Mass. 193, 9 L. R. A. (N.S.) 966, 80 N. E. 527.
13 Crowley v. Langdon. 127 Mich. 51, 86 N. W. 391.
14 Walters v. King. 119 Cal. 172, 51 Pac. 35.
15 Bankers' Accident Ins. Co. v. Rogers, 73 Minn. 12, 75 X. W. 747.
16 Real Estate Title Co.'s Appeal, 125 Pa. St. 549, 11 Am. St. Rep. 920, 17 Atl. 450.
17 Myers v. Taylor, 107 Tenn. 364, 64 S. W. 719.
18Ebert v. Arends, 190 111. 221, 60 N. E. 211.
19 Cox v. Bank, 100 U. S. 704, 25 L. ed. 739; Blackerly v. Ins. Co., 83 Ky. 574.
20 Moore v. Davidson, 18 Ala. 209.
21 Virginia & Southwestern Railroad Co. v. Sutherland, 138 Tenn. 266, L. R. A. 1918B, 77, 197 S. W. 863.
22 See Sec. 2191.
23 Arkansas. Jones v. Little, 128 Ark. 640, 194 S. W. 229.
Iowa. Roberts v. Ozias, 179 Ia. 1141, 162 N. W. 584.
North Carolina. Vaughan-Robertson Drug Co. v. Grimes-Mills Drug Co., 173 N. Car. 502, 92 S. E. 376.
Oklahoma. Mackin v. Darrow Music Co., - Okla. - , 169 Pac. 497.
Pennsylvania. Gandy v. Weckerly, 220 Pa. St. 285, 18 L. R. A. (N.S.) 434, 69 Atl. 858.
24 See Sec. 2191 and 2196.
25Stebbins v. Lardner, 2 S. D. 127, 48 N. W. 847.
26 Roberts v. Ozias, 179 Ia. 1141, 162 N. W. 584.
27 Jones v. Little, 128 Ark. 640, 191 S. W. 229.
28Mackin v. Darrow Music Co., - Okla. - , 169 Pac. 497.
29Gandy v. Weckerly, 220 Pa. St. 285, 18 L. R. A. (N.S.) 434, 69 Atl. 858. . (This decision is based upon the theory of fraud and is affected by the peculiar Pennsylvania view of the admissibility . of extrinsic evidence.)
30 Vaughan-Robertson Drug Co. v.
Grimes-Mills Drug Co., 173 N. Car. 502, 92 S. E. 376.
31Quin v. Sexton, 125 N. Car. 447, 34 S. E. 542.
32Quin v. Sexton, 125 N. Car. 447, 34 S. E. 542.
33McGee v. Craven, 106 N. Car. 351, 11 S. E. 375.
34 Ramsay v. Capshaw, 71 Ark. 408, 75 S. W. 479.