Muir v. Morris

154 P. 117, 80 Or. 378, 1916 Ore. LEXIS 9

• Court: Oregon Supreme Court
• Decided: January 11, 1916
• Status: Published

Opinions

Mr, Justice Burnett

delivered the opinion of the court.

1. The precise question to be determined is whether there was any competent evidence to take the case to the jury. Besides the writings hereinafter mentioned, the evidence is found in the deposition of the decedent and the testimony of Julius Christensen and W. H. Hurlburt, the former a member of the firm, and the latter president and general manager of the Power Company while under control of the bank and the firm. Muir admitted as a witness that he entered the employment of the bank in February, 1901, at a salary of $200 per month, which was agreed upon in advance. He continued under that arrangement until April, 1902, from which date to December 31st of that year he drew a salary of $275 per month. During the year 1903 he received a monthly compensation agreed upon in advance of $400, and afterward until the Power Company was sold, he received $275 per month. He says:

“During this entire time it was frequently stated by Mr. Fred S. Morris, who had charge of the business here and the operations of Morris & Whitehead, bankers, Morris Bros. & Christensen, and Morris Bros., in this territory, that I was inadequately compensated, the statement being commonly that Mr. Brown, Mr. Hurlburt, and myself were all working for inadequate salaries; that this was recognized by our employers, and the purpose was to see that we received additional compensation. There was never anything definite said to me, just how this compensation would be paid; there was no promise of any definite amount, or any particular thing’, but there was a continual statement and promise that there was recognition of the fact that I and the other two men spoken of were very much underpaid; that this was appreciated, that they desired me and them to continue and do the very best we could to co-operate with him, making things a success, and upon the successful issue that we would receive substantial reward, putting it in the light that, upon the failure, as I looked upon it, we would not be expected to be additionally compensated, but upon the issue of success we would be, and we were urged in that way, at least I was, to do the very best we could to see that things were made a success.”

Giving this testimony its utmost weight it is plain there was nothing in the contemplation of the parties except a possible honorarium unsupported by any legal obligation. Under the contract of employment his services were met by the consideration of his monthly salary settled upon in advance. Having already agreed to render these services, he was bound to perform them, and they could not, as a consideration, support any additional or different contract.

It should be observed that in the thirteenth allegation of the complaint, to which reference has been made, the plaintiff founds her cause of action upon the contract for the dissolution of the firm, and it is stated as an inducement thereto- and as part of the agreement of dissolution the defendants promised to issue 1,000 shares of Power Company stock to Muir. The record discloses four written agreements affecting the liquidation of the firm. The first was dated January 31, 1905, and provides in general terms that the partnership should terminate by July 1, 1905, unless continued by mutual written consent; that the indebtedness and liabilities of the firm should be reduced and paid off as rapidly as possible without sacrificing the interests or assets of the concern; and that no more business should be undertaken, the general purpose being to enter upon a course of liquidation and settlement of the affairs of the firm. The original agreement of partnership provided that Christensen should be owner of one fifth of the firm’s property, and each of the two Morris brothers should own two fifths of the same, and that the partners should be liable for the firm’s indebtedness in like proportion. The next agreement affecting the winding up of the firm’s affairs was dated June 26, 1905. By its terms Morris Bros., the defendants here, assumed the payment of the Ivins note of $100,000, turned over to Christensen 647 shares of Catawba Power Company, 6% shares of Warren & Jamestown Street Railway Company, and 2,383 shares of York Haven Water & Power Company, for which Christensen transferred to them 49 shares of Land Company of Oregon, 2,096 shares of Power Company stock, and all his interest in the 5,000 shares of the latter stock pledged to Ivins, subject to the terms of the pledge and his option to purchase the same at $50 per share. This agreement does not purport to affect the remaining interests of Christensen or Morris Bros, in the Power Company stock or the other assets of the firm still on hand. The next agreement was dated June 27, 1905, and provided that the defendants here, on or before August 1, 1905, should personally discharge without using any of the partnership assets, all the firm’s obligations represented by several of its promissory notes, required Christensen to discharge certain other of its obligations, and generally provided for the disposal of the remainder of the firm’s assets. The fifth paragraph states that:

“None of the funds or assets of the partnership shall be in any way used by any of the liquidating partners, except as provided herein. The said funds shall be kept separate and apart from and be in no wise commingled with any other funds or assets. All moneys of the partnership shall be deposited in the name of and to the credit of Morris Bros. & Christensen.”

Finally, on November 1, 1905, the members of the firm made their last written stipulation, so far as the record discloses, winding up its affairs in detail according to schedules annexed to the document, and apportioned among themselves the liabilities assumed by each. In all these written contracts affecting-liquidation of the firm, no mention whatever is made of any obligation to Muir or of his ownership of or right to any of the stock of the Power Company. On the contrary, as quoted above, they expressly interdicted any use of the assets except as prescribed in the language of their stipulations. There is no attempt whatever to prove the averment of the complaint that as early as November 7, 1904, the partners of the firm had determined to issue any stock to Muir.

2. Plaintiff offered oral testimony to show that in the negotiations culminating in the agreement of J une 26, 1905, the partners set aside 1,000 shares each for Muir, Brown and Hurlburt, and one share each for J. Prank Watson and A. B. Croasman. Such proffered evidence is found in the deposition of Muir, wherein he speaks of having seen a certain yellow paper memorandum shown him in Philadelphia in April or May, 1908, by James H. Morris, whereon were set down in the latter’s handwriting 1,000 shares each for Muir and Hurlburt, and he thinks 2,000 for Brown, which Morris told him were made when the agreement of June 26, 1905, was framed so as to determine what would be left of the Power Company stock to be disposed of between the partners. The witness Christensen also testified about the same memorandum all over the objections of the defendants. The plaintiff relies upon this paper to prove the fixing of the then yet undetermined amount of extra remuneration to be awarded to her decedent. If it was of any value as proof, the paper itself was the best evidence; but curiously enough, no effort appears to have been made to produce it or to account for its absence. Not only so, but - Muir, avowing his complete forgetfulness of it, offered as evidence of its contents part of a written statement made by himself May 30, 1908, when, as he says, the matter was fresh in his memory, covering his recollection of the conversation with Morris and the terms of the paper which the latter exhibited to him.

In the light of such cases as Wiseman v. Northern Pac. R. R. Co., 20 Or. 425 (26 Pac. 272, 23 Am. St. Rep. 135), Jones v. Teller, 65 Or. 328 (133 Pac. 354), and Parker v. Smith Lumber Co., 70 Or. 41 (138 Pac. 1061), the witness, though clearly remembering the same, could not be permitted to state the contents of the paper, unless some showing was made to account for not producing it. Much less, in the absence of such explanation, could he substitute his own memorandum of his remembrance of its terms.

3. All this, however, as stated in the complaint, was part of, and hence, as a matter of law, was merged in, the written agreement, and cannot affect the conditions thereof as thus finally settled.

We here recite the oft-quoted Section 713, L. O. L.:

"When the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms, and therefore there can be, between the parties and their representatives or successors in interest, no evidence of the terms of the agreement, other than the contents of the writing, except in the following cases:

‘ ‘ 1. Where a mistake or imperfection of the writing is put in issue by the pleadings;

"2. Where the validity of the agreement is the fact in dispute. But this section does not exclude other evidence of the circumstances under which the agreement was made, or to which it relates, as defined in Section 717, or to explain an ambiguity, intrinsic or extrinsic, or to establish illegality or fraud. The term ‘agreement’ includes deeds and wills as well as contracts between parties.”

4. The plaintiff argues that she was entitled to show the actual consideration of the contract in question ; that she is not bound by its terms, and may show other conditions supporting her claim. It must be admitted that the talk about other possible additional compensation was not definite enough to constitute a legal obligation. As a corollary to this, it is plain that the amount and manner of additional pay rested - solely in the discretion of the employers, and without some definite stipulation supported by sufficient consideration, no liability would accrue against them. It is indispensable, therefore, for the plaintiff to show some such contract. Indeed, this is the avowed theory of the complaint, as stated in the thirteenth paragraph. The plaintiff must therefore claim under the contract of dissolution or not at all. Her demand cannot rise above its source. If the theory of the complaint is sound, Muir was in every sense of the word a privy to the contract of dissolution, both by the allegations of that pleading and the operation of the law. Under the provisions of Section 713, L. O. L., no other evidence is admissible to declare the terms of the contract, except the writing itself. The partners had a right to contract as they chose concerning the assets of their own firm. It is true enough, as argued by the plaintiff, they could have disposed of the personalty of the concern by oral agreement, and have fastened upon it a trust in favor of anyone they chose to mention. But although it is competent to create a trust in chattels by parol, yet it is equally true that when parties have reduced their contract to writing, even about a matter that might have been left to recollection, that instrument is the exclusive standard to which their obligation must be referred. Taken altogether, the contracts already mentioned constitute a complete disposition of all the assets of the firm in detail. They are binding not only upon the parties themselves, but also upon those who claim under them. The writings left nothing to determine respecting the stock in question. All the shares were finally and effectively disposed of, nothing remaining to he done. In other words, the contract was complete within itself about all such matters. Therefore, it cannot be varied by parol testimony. The case is essentially controlled by Oregon Mill Co. v. Kirkpatrick, 66 Or. 21 (133 Pac. 69), where a similar question was involved. In brief, unless Muir was privy to the contracts involving disposition of the shares in question, he cannot claim the benefit of them. On the other hand, if he was privy to them, he must take them as he found them. In them, however, as before stated, there is no provision for his benefit.

The principle is stated thus by Mr. Chief Justice Moore in Pacific Biscuit Co. v. Dugger, 42 Or. 513 (70 Pac. 523):

“The rule that an instrument in writing cannot be contradicted or varied by parol evidence applies only between the parties and their privies, and cannot be invoked in controversies between third parties and any of the parties to the contract. ’ ’

In that case a son had executed to his mother a bill of sale of a stock of goods in his possession absolute on its face, but in reality as a mortgage to secure her for moneys which shé had advanced to him. The plaintiff, claiming that the son in control of the business was her agent, sued her for the price of certain goods delivered to him and which he had included in the bill of sale. The paper was offered to prove her absolute ownership of the stock of goods. This document was thus drawn in question collaterally between parties, one of whom was a stranger to it, and it was held that she might show the real object of the contract as against the stranger. In such cases as the American Contract Co. v. Bullen Bridge Co., 29 Or. 549 (46 Pac. 138), only the rate of payment and quality of the property to be delivered was specified in the offer and acceptance of the parties, nothing being said about the quantity to be furnished. It is plain in such a ease that not all the contract is included in the writing, and that the remainder of the terms may be proven by parol. In the instant case, however, the contracts are complete in themselves, leaving nothing more to be said.

5. The plaintiff cannot import into them any additional stipulation inuring to her benefit on the pretense that she is merely inquiring into the consideration^ The provisions of the agreements constituting the consideration are contractual in their nature, and not merely monetary. Within the meaning of Sutherlin v. Bloomer, 50 Or. 398 (93 Pac. 135):

‘ ‘ The consideration specified in the written contract consists of certain acts to be performed, and the authorities are practically unanimous in holding that, where the statement in the written instrument as to the consideration is of a contractual nature, as where the consideration consists of a specific and direct promise by one of the parties to perform certain acts, it cannot be changed or modified by parol or extrinsic evidence.”

All the assignments of error upon which the plaintiff relies are bottomed upon an effort to go behind the written contract of dissolution and prove by oral testimony an agreement for the benefit of the plaintiff’s decedent. They must all yield to the rule declared by Section-713, L. O. L., and cannot avail the plaintiff at this juncture. The judgment of the Circuit Court was right, and must be affirmed.

Affirmed.

Mr. Chief Justice Moore and Mr. Justice Harris concur. Mr. Justice Bean dissents.

In Banc. Statement by Mr. Justice Harris.

In response to an urgent petition for a rehearing the entire record has again been examined. Morris & Whitehead, Bankers, was a corporation which owned and had control of several other corporations, including the Oregon General Electric Company, which was incorporated on December 6,1901, with a capital stock of $2,000,000 divided into 20,000 shares. W. T. Muir and three others each subscribed for one share of the stock of the Oregon General Electric Company, and the balance of the stock was subscribed by Fred S. Morris, who held the stock, however, as the property of Morris & Whitehead, Bankers. On June 7, 1902, the name of the Oregon General Electric Company was changed to the Oregon Water Power & Railway Company. On November 24, 1902, Julius Christensen and the defendants James H. Morris and Fred S. Morris formed a partnership under the name of Morris Bros. & Christensen, and succeeded to all the assets and business of Morris & Whitehead, Bankers. The capital stock of the Oregon Water Power & Railway Company was transferred from the corporation of Morris & Whitehead, Bankers, to the partnership of Morris Bros. & Christensen, the partnership agreement making James H. Morris and Fred S. Morris each the owner of two fifths and Julius Christensen the owner of one fifth of the stock so transferred. In June, 1905, the partnership of Morris Bros. & Christensen was dissolved, and about the same time James H. Morris and Fred S. Morris formed a partnership under the name of Morris Bros. When the firm of Morris Bros. & Christensen was dissolved, all the assets, including stock in the Oregon Water Power & Railway Company, which were apportioned to James H. Morris and Fred S. Morris, were taken over by the partnership of Morris Bros. In April, 1906, Morris Bros, sold all their stock in the Oregon Water Power & Railway Company for $65 per share.