3. VALIDITY OF INSTRUMENT QUESTIONED

STATE (CUMMINGS, Prosecutor) v. CASE.

(Supreme Court of New Jersey, 1889. 52 N. J. Law, 77, 18 Atl. 972.) REED, J.19 Catharine E. Case brought an action against Samuel Cummings, Jr., in the second district court of Newark, for the recovery of the sum of $125, the price which she had paid for a horse purchased by her of Cummings. The gravamen of the demand of the plaintiff was that such sale was brought about by the fraudulent representation of the defendant, which fraudulent conduct conferred upon her the right of rescission, and that, in the exercise of such right, she tendered back the animal, and demanded a return of the consideration paid, and that the defendant refused to comply with such demand. The case was tried before a jury; and, under the law, as charged by the court, the jury found the facts to be such as to entitle the plaintiff to a verdict for the full amount paid. The judgment entered upon this verdict was taken to the Sussex county common pleas, and there affirmed. That judgment is brought up by the present writ.

The representations, the falsity of which constituted the ground of the verdict against the defendant, appears, by the state of the case agreed upon by the attorneys, to have been made as follows: One Van Buskirk, as the agent of the plaintiff, inquired of defendant about a certain brown horse owned by defendant. Van Buskirk asked if the brown horse could travel seven or eight miles an hour, and stated that a horse that could do that was required. The defendant said that the brown horse was too slow for that purpose, but pointed Van Buskirk to a gray horse, stating that he could easily go seven or eight miles an hour, as it had formerly been a very fast horse, and attached to the salvage corps wagon but that, meeting with an accident one day, while going to a fire, it had injured one leg a little, making it unfit for the work required of it by the salvage corps. On another occasion, Mr. Case, in the presence of his wife, the plaintiff, stated to defendant that they desired. a horse that could make the distance between Roseland and Orange Valley, between seven and eight miles, in one hour, or one and a half hours, and stated that, if the horse could not do that, they did not want to buy him; to which defendant replied that the horse could easily do that. Plaintiff sought to try the horse by driving him one evening; but the defendant refused to allow said trial, stating that the horse had already, on that day, been to Harlem and Orange, which statement was true. The next morning plaintiff purchased the

19 A portion of the opinion is omitted.'

horse for $125, paid $50 in cash, and gave a promissory note of four months, indorsed by Mr. Van Buskirk.

There was evidence that the horse was not able to travel seven or eight miles in one hour, or in one hour and a half, and was not fit for the purpose for which he had been bought. It appeared on the cross-examination of the plaintiff that at the time of the sale a written warranty of the horse had been given, in the following form: "Newark, April 6th, 1887. To one gray horse, Charley, which I warrant to be sound and kind, with the exception of straining of muscle of left hind leg." The counsel for defendant thereupon moved that all evidence as to representations made by the defendant, other than those contained in the written warranty, be stricken out, on the ground that, the agreement of the parties having been reduced to writing, such writing could not be varied or enlarged by parol evidence. The court denied the motion, and allowed an exception.

When the plaintiff rested his case, the counsel for defendant moved for a nonsuit, upon the ground that, a written warranty having been proved to have been given on the sale of the horse, and there being no evidence that the horse did not correspond with this warranty, the plaintiff had not made out any case for damages. This motion was denied, and an exception was allowed. At the close of the summing up of counsel, the counsel for the defendant requested the court to charge the jury that, there being no warranty, the jury cannot consider any testimony as to any representation not contained therein. This request was refused, and an exception allowed.

The court charged the jury that if they believed that the representations alleged to have been made in relation to the speed of the horse were made, and that the plaintiff, relying upon them, purchased the horse, and that such representations were in fact not true, and the horse was therefore unfit for the purpose for which it was bought, that plaintiff could recover the purchase money, she having offered to return the horse, on the ground of fraud or deceit, which was independent and irrespective of the so-called warranty. To this portion of the charge an exception was allowed.

The counsel for the defendant also requested the court to charge that, if the jury should find for the plaintiff, the measure of damages must be the difference in value between what the horse was actually worth in the condition he was in at the time of the sale and what he would have been worth if the representations made by the defendant had been true; which request the court refused to charge, and allowed an exception. The court, to the contrary, charged the jury that if they found for the plaintiff they must find in the sum of $125, that being the price she had paid for the horse. An exception was allowed to this part of the charge. Reasons covering the above exceptions were assigned for the reversal of the judgment below.

The primary question raised by the exceptions, and argued with elaborate care, is one of evidence. It involves the correctness of the

judicial ruling by which the testimony in respect to certain representations made by the vendor previous to, and at the time of, the sale, were admitted in evidence. These representations, as already appears, were made in respect to the traveling qualities of the animal sold. It also appears that there was a written warranty in respect to the quality of soundness and quietness. It is insisted by counsel for the defendant below that the admission of the verbal representations enlarged and varied the written contract. He therefore invokes the inexorable rule of evidence that, when parties have put their contract into writing, oral testimony cannot be substituted for, or added to, the written evidence of the agreement. 1 Greenl. Ev. § 88. This principle has, from the earliest period of jurisprudence, been rècognized as a wholesome and necessary rule of public policy. Id. § 275; Wright v. Remington, 41 N. J. Law, 48, 32 Am. Rep. 180; Remington v. Wright, 43 N. J. Law, 451; Naumberg v. Young, 44 N. J. Law, 331, 43 Am. Rep. 380.

But this rule of evidence is not infringed by the admission of parol testimony which is not intended as a substitution for, or an addition to, a written contract, but which goes to show that the instrument is void or voidable, and that it never had any legal existence, or binding force, either by reason of fraud, or for want of due execution and delivery, or for the illegality of the subject-matter of the contract. 1 Greenl. Ev. § 284. Nor is the admission of parol evidence for the purpose of avoiding a written contract on the ground of fraud confined to such testimony as goes to show that a party was lured to make a contract other than that intended, as by the substitution of one contract for another by trickery, or by misreading a contract to an illiterate person. Parol testimony may be admitted to show that the execution of a written contract was brought about by a fraudulent representation. The force given to a seal, which formerly excluded testimony in respect to the failure of consideration in a specialty, is now abolished by legislation. So that the rule above stated, respecting the admissibility of fraudulent representation, is now applicable to all contracts.

The elements essential to constitute such fraudulent representation will be considered later; and it is now necessary only to remark that such evidence as will lay a foundation for an action of deceit, or a ground for the rescission of the contract, is always receivable, although it consists of oral representations. This point was strenuously denied in the arguments submitted by the counsel for the defendant. His contention was that fraud in the execution of the instrument could be shown, but that oral representations, going to a failure of consideration only, could not. The seeming strength of his contention lay in the likeness between the written and the oral facts in the present case, both concerning the quality of the animal sold. The written warranty applied to the soundness and kindness of the horse, and the oral testimony to the speed of the animal.

The danger of permitting parol declarations to be proved which were so nearly related to the subject-matter of the written warranty was strongly pressed as an evil which the rule of evidence already stated seemed especially designed to prevent.

But the distinction between such representations as add to the contract and such as avoid the contract, because of their fraudulent character, is too firmly established in our jurisprudence to be now shaken. As an additional warranty, that is, as an addition to the contract, the present representations were clearly inadmissible. So soon, however, as they displayed such features as went to show that through them the contract had been fraudulently induced, and so was unenforceable, for that reason, at the election of the defrauded party, the rule excluding parol testimony to enlarge a written contract became inoperative. It is, of course, obvious that the fact that there was a written warranty in respect to the soundness and kindness of the animal would be a forcible argument that no other representations as to quality were made. The existence of the written warranty would be useful in determining the probability of the truth of the counter-statements of the parties as to the existence or non-existence of the parol declaration; but when the fraudulent affirmation is once proven to exist the written contract becomes unimportant. This seems to be an elementary principle of the law of evidence. The right to prove fraud, in whatever shape it may exist, to avoid written contracts, has been so uniformly recognized that it can hardly be said to have been the subject of serious judicial discussion.

The power to consider parol evidence, in regard to its effects upon contracts in respect to the question of fraud, has been passed over sub silentio, and the courts have gone on to consider the probative force of the testimony. No case was discovered by the industry of counsel which excluded such testimony, and all the cases in which judges have touched upon the subject have assumed the admissibility of testimony setting up fraudulent representations to avoid a written contract. Dobell v. Stevens, 3 Barn. & C. 623; Hotson v. Browne, 9 C. B. (N. S.) 442; Steward v. Coesvelt, 1 Car. & P. 23; Koop v. Handy, 41 Barb. (N. Y.) 454; Prentiss v. Russ, 16 Me. 30; Van Buskirk v. Day, 32 Ill. 260; Eaton v. Eaton, 35 N. J. Law, 290.

I conclude, therefore, that if the evidence established fraudulent conduct on the part of the defendant the testimony was properly admitted. * * [Reversed on another ground.]

CHARLES MULVEY MFG. CO. v. MCKINNEY.

(Appellate Court of Illinois, 1914. 184 Ill. App. 476.)

BAKER, P. J.20 * * * The owners of certain real estate demised portions thereof to Albert L. Berry by ground leases made on and prior to April 1, 1907, for terms ending in 1937. April 29, 1907, Berry en

20 A portion of the opinion is omitted.

tered into a contract in writing, which began with a recital that it was made by Berry of the first part and the complainants in the bill, appellees here, of the second part, but was signed only by Berry, the complainant corporation, W. H. Gervais and W. H. Barry. By this agreement Berry agreed to lease a portion of the land so leased to him to the parties of the second part for a term of ten years from June 1, 1907, at a rental of $2,000 per year, payable in monthly instalments of $166.66 each on the 5th day of each month, and to erect a two-story building containing an area of 8,800 square feet on the premises. The parties of the second part agreed to pay to Berry $2,000 in instalments, the last instalment to be paid when the building was ready for occupancy, which sum, the writing provided, should be applied in payment of the rent for the tenth year of the term unless Berry desired to apply it on the rent for some prior year. The writing further provided that for the $2,000 Berry should give his note bearing interest at five per cent., "up to the beginning of the year which it shall apply as payment of the rent," and also that said note should be in the nature of a receipt for the year's rent. The Mulvey Company advanced to Berry $2,000 and received. from him the following receipt:

"Chicago, July 1, 1907.

"Received of the Chas. Mulvey Mfg. Co. two thousand dollars for rent of Building 1335 35th street, Chicago, same being rent in advance for said premises as described between Chas. Mulvey Mfg. Co. et al., from Albert L. Berry.. Albert L. Berry."

The writing further provided that the parties of the second part should issue to Berry the note of the Mulvey Manufacturing Company for $4,000, payable in three years, indorsed by W. B. and L. L. Gervais, W. H. and P. E. Barry and E. L. Beckerleg, bearing interest at six per cent., which note, the writing stated, was given for the purpose. of assisting Berry to secure funds for the erection of said building. A note made and indorsed as provided in the agreement, dated July 1, 1907, and payable three years after date, with interest at six per cent., was delivered to Berry. It later came into the hands of appellant McKinney, who brought suit on it against the maker and indorsers July 15, 1910.

The bill alleged, the evidence proved and the court found that prior to the assignment of the lease by Berry to McKinney, Berry orally promised the complainants that in case they or any one of them should be required to pay said note, the amount so paid should apply on rent under said lease coming due after three years from the date thereof. * * *

The note for $4,000 was an accommodation note and the maker and indorsers have therefore no defense to it. It is held by McKinney and he has put it in suit. Berry has filed a voluntary petition in bankruptcy and it is certain that the maker or indorsers will have to pay the note. Berry, as has been said, orally agreed with the maker and indorsers before the lease was made, that if any one of them had to pay the note