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 deed which is delivered after a contract for the sale of realty has been made, but which is not delivered by the vendor as in full performance of the contract, and is not accepted by the purchaser as in full performance of the contract, and which does not cover the entire subject-matter contracted for, does not operate as a merger of the prior contract.2 The fact that a deed was surrendered to the grantee and that he took possession of the realty which was sold to him. does not operate as a merger of a contract for the sale of such realty or of a provision therein binding the grantor to deliver an abstract showing a good title satisfactory to the attorney of the purchaser, if the contract and deed were executed at the same time and if the parties did not intend to modify the original contract by the transfer of the possession of the deed and of the realty.3 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.4 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.5 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.6 If a property owner petitions for an extension of a street on condition that he shall not be liable for the cost thereof, such conditions are not merged in his subsequent deed conveying land for the street.7
1Chetwynd v. Allen , 1 Ch. 353; Cavanaugh v. Casselman, 88 Cal. 543, 26 Pac. 515; Read v. Loftus, 82 Kan. 485, 108 Pac. 850 [sub nomine, Loftus v. Read, 31 L. R. A. (N.S.) 457]; Jones v. Johnson, 3 W. & S. (Pa.) 276, 38 Am. Dec. 760.
2 Cavanaugh v. Casselman, 88 Cal 543, 26 Pac. 515; Atlanta v. Akers, 145 Ga. 680, 89 S. E. 764; Read v. Loftus. 82 Kan. 485, 108 Pac. 850 [sub nomine,
Loftus v. Read, 31 L. R. A. (N.S.) 457]; Close v. Zell, 141 Pa. St. 390, 23 Am. St. Rep. 296, 21 Atl. 770; Stockton v. Gould, 149 Pa. St. 68, 24 Atl. 160.
3 Read v. Loftus. 82 Kan. 485, 108 Pac. 850 [sub nomine, Loftus v. Read, 31 L. R. A. (N.S.) 457].
4 Cavanaugh v. Casselman, 88 Cal. 543, 26 Pac. 515.
5 Stockton v. Gould, 149 Pa. St. 68, 24 Atl. 160.
Since the recital of a consideration in a deed is ordinarily a mere recital of a fact.8 and since it is very generally understood that the true consideration is not therein expressed,9 a deed does not ordinarily merge the covenants of the original contract with reference to the consideration.10 If, through mistake in computation, the grantee has paid more than the amount provided for by the terms of the original contract, the grantee may recover such payment, although he has accepted the deed.11 (2) The subsequent specialty will not merge the prior simple contract unless the specialty is valid.12 A subsequent deed, which proves to be void by reason of mistake, does not merge the contract under which it was given.13 (3) The specialty will not merge the prior simple contract if it is not intended as satisfaction thereof, but merely as collateral security thereto.14 Assignment of a specialty by the debtor to the creditor does not operate as a merger.15 An agreement which is intended by the parties to be collateral to the deed when delivered, is not merged by such deed.16 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.17 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 can not 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.18
6 Close v. Zell, 141 Pa. St. 390, 23 Am. St. Rep. 296, 21 Atl. 770.
7 Atlanta v. Akers, 145 Ga. 680, 89 S. E. 764.
8 See Sec. 2158. 9 See Sec. 2161.
10 Butt v. Smith, 121 Wis. 566, 105 Am. St. Rep. 1039, 99 N. W. 328.
See Sec. 2161 et seq.
11 Butt v. Smith, 121 Wis. 566, 105 Am. St. Rep. 1039, 99 N. W. 328.
12Gray v. Fowler, 1 H. Bl. 462; Haussman v. Burnham, 59 Conn. 117, 21 Am. St. Rep. 74, 22 Atl. 1065; Thurston v. Percival, 18 Mass. (1 Pick.) 415.
13Haussman v. Burnham, 59 Conn. 117, 21 Am. St. Rep. 74, 22 Atl. 1065.
14 England. Ernes v. Widdowson, 4 C. & P. 151.
Connecticut. Tryon v. Hart, 2 Conn. 120.
Indiana. Heeg v. Weigand, 33 Ind. 289; Grant v. School Town, 71 Ind. 58.
Minnesota. Pillsbury v. Morris, 54 Minn. 492, 56 N. W. 170.
Pennsylvania. Wolf v. Wyeth, 11 S. & R. (Pa.) 149; Kemp v. Pennsylvania R. R., 156 Pa. St. 430. 26 Atl. 1074.
Virginia. Witz v. Fite, 91 Va. 446, 22 S. E. 171.
15 Grant v. School Town, 71 Ind. 58.
16 Pillsbury v. Morris, 54 Minn. 492, 56 N. W. 170.
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.19 A bond executed by a public officer does not merge his liability for money had and received.20
It is not necessary that the specialty should show on its face that it is merely collateral to the original contract.21 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 contains no such provision.22
In some jurisdictions it is said that the effect of the deed as a merger of a prior contract depends upon the intent of the parties that it shall so operate.23 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.24