Citizens National Trust & Savings Bank of Los Angeles v. Londono Dulien Steel Products, Inc., of California v. Londono

204 F.2d 377

• Court: Court of Appeals for the Ninth Circuit
• Decided: June 24, 1953
• Docket: 12886
• Status: Published

Opinions

HARRISON, District Judge.

The appellants, Citizens National Trust & Savings Bank of Los Angeles, hereinafter referred to as the “Bank” and Dulien Steel Products, Inc., of California and Dulien Steel Products, Inc., referred to herein as the “Steel Co.” seek to reverse judgments in favor of J. B. Londono, a citizen and resident of Colombia and referred to in this opinion as “Mr. Londono”, in the aggregate sum of $236,355.51. The bank’s liability was fixed at the sum of $120,312.88.

The judgment provided that upon satisfaction by the Steel Co. it would also be satisfied as against the Bank and in the event the Bank satisfied any part or all of the judgment against it, the Bank would be subrogated to the extent of such payment to the rights of Mr. Londono against the Steel Co.

This litigation arose out of two separate transactions. The complaint in the trial court was in three counts. The first count is against the Steel Co. for alleged breach of warranty respecting the quality of the wire sold. The second count is against the Bank for breach of contract by payment to the Steel Co. of $214,000 without obtaining a bill of lading required by a letter of credit. The third count was disposed of by the trial court and is not involved in these appeals. The two separate causes of action were tried together without objection.

At the outset of the trial Mr. Londono offered parol evidence tending to prove over strenuous objections of the Bank and the Steel Co. the wire was warranted as to quality. The trial court overruled the objections to evidence that purported to establish the sale was by sample.

The admission of the parol evidence to vary or add to the terms of the written contract of sale presents the controlling question to be determined on these appeals. The agreement of sale presents the keystone of this litigation. If the parol evidence was not admissible, then the many assignments of error must fall by the wayside until they present proper justiciable controversies.

The contract of sale was in writing subscribed by the parties and upon its face purported to be a complete agreement covering the sale of “unused government surplus barbed wire, as purchased by the seller from Interior Department”.

In overruling the objections of the Bank and of the Steel Co. to the admission of parol evidence the court engaged with counsel for the Steel Co. in the following colloquy:

“The Court: It is not plain because it is not plain what is meant by 'as purchased by seller from Interior Department’. When was it purchased, 40 years before? Five years before? Ten minutes before? How are you going to explain that unless you have it by oral conversations or evidence?

“Mr. Dasteel: That was the duty of the buyer to ascertain at the time. The buyer has a d.uty—

“The Court: And, moreover, the phrase, ‘as purchased by seller from Interior Department’, I realize what your contention is, you set them up in documents which have previously been filed, but I do not know — I will not say that I do not know — I will say this, that the document is not clear as to whether or not the condition of the wire as purchased is the same as at the time of the purchase, at the present time, and so on.”

In identifying the subject matter, parol evidence would properly be admitted to identify the portion of the wire, “as purchased by seller from Interior Department”, sold to Londono. Londono at the most would be entitled to wire of no better quality than the best of the lot purchased from the .Interior Department.

The trial court in this respect was correct. It admitted evidence, parol and physical, showing the quality of the wire agreed to be sold. However, the plaintiff was not satisfied to limit the evidence to a mere showing of the agreed quality. He proceeded to introduce parol evidence of fraudulent representations, which had the effect of adding to the written contract a warranty, as expressed by the court in its Findings V:

“ * * * and that said contract in substance was that Dulien would sell and deliver to plaintiff and plaintiff would buy and receive from Dulien, for the total of $214,000.00, payable upon draft by Dulien against letter of credit to be established by plaintiff with said bank on or before July 27, 1946, at the price of $107.00 per ton f. o. b. steamer Los Angeles, 2,000 tons of good, non-rusty, merchantable barbed wire, 1,000 tons of which would be black and 1,000 tons galvanized, equal in quality and condition to the sample rolls shown and the sample cuttings given to plaintiff as herein stated, for export to and sale in South America by plaintiff, * * * ”.

It is apparent the court used parol evidence to rewrite the contract of sale for the parties. This is violative of the settled law of California. Inasmuch as the judgment against both appellants was predicated upon parol evidence contrary to section 1856 of the Code of Civil Procedure and section 1625 of the Civil Code of California, the court was in error in admitting parol evidence for purposes other than •clarification of the terms of the agreement. If Londono had been defrauded his action would have been predicated on fraud, a tort, not upon a breach of warranty, an action on a contract. Dougherty v. California Kettleman Oil Royalties, 13 Cal.2d 174, 183, 88 P.2d 690, 694; Merchants’ Ice •& Cold Storage Co. v. Globe Brewing Co., 73 Cal.App.2d 828, 834, 167 P.2d 503, 507; Firpo v. Pacific Mutual Life Ins. Co., 80 CalApp. 122, 251 P. 657; 1 Cal.Jur.2d p. ■625 ; 37 C.J.S., Fraud, § 94, p. 393; 24 Am.Jur., Sec. 254, p. 85.

We think the case of Germain Fruit Co. v. J. K. Armsby Co., 153 Cal. 585, 595, 96 P. 319, 323 is controlling and binding upon this court inasmuch as the factual situation is very similar to the case at bar. It was therein stated:

“ * * * To hold parties to diligence and care in reducing their negotiations to writing, and to hold the writing to be subject to attack only by specific allegations of fraud or mistake, appears to be the better rule, and is now supported by the weight of authority. Like the statute of frauds, this rule is founded upon long and convincing experience that written evidence is more certain and accurate than ‘slippery memory.’ So long as the rule is applied, the actual contract made can be preserved without fear of its being affected in its terms by the frailties of an interested human recollection. That sometimes the written contract does not include all the terms intended by reason of neglect or oversight, and injustice is thereby done in particular cases, does not justify the abandonment of. the rule. To construe it away is to destroy one of the greatest barriers against fraud and perjury. Without specially indicating the rulings to which this opinion is applicable, it is sufficient to say that the admission of testimony to show a sale by sample for the purpose of establishing an express warranty of quality of the apricots sold was error. The finding of such a warranty was without competent evidence to sustain it, and the case was tried on an erroneous theory inconsistent with the rule declared in Gardiner v. Mc-Donogh, supra, [147 Cal. 313, 81 P. 964].”

See also Yuba Mfg. Co. v. Stone, 39 Cal.App. 440, 179 P. 418; El Zarape Tortilla Factory v. Plant Food Corp., 90 Cal. App.2d 336, 203 P.2d 13.

Judgments appealed from are hereby reversed and the causes are remanded to the trial court for further proceedings consistent with the views herein expressed.