Acme Manufacturing Co. v. McPhail, 181 N.C. 205 (1921)

April 13, 1921 · Supreme Court of North Carolina

181 N.C. 205

ACME MANUFACTURING COMPANY v. JONAH McPHAIL.

(Filed 13 April, 1921.)

1. Contracts, Written — Negotiations—Merger—Parol Evidence.

Negotiations and conversations leading up to the execution of a written-, contract merge in the writing, and may not be received in evidence when, contradictory of its terms.

.2. Same — Vendor and Purchaser.

A written contract may not be contradicted by a parol contemporaneous agreement, and when a vendor and purchaser of merchandise have expressed in writing that freight allowance should be made to a certain point of transportation, parol evidence contemporaneous with the writing that the vendor contracted to make such allowance to a final destination is incompetent.

3. Same — Abrogation—Annulment—Subsequent Agreements.

The principle by which contemporaneous parol evidence is inadmissible to vary the written terms of the contract does not apply to a subsequent agreement between the parties whereby, for a consideration, the written contract has been abrogated or annulled.

-4. Same — freight Allowances.

The written contract between the vendor and purchaser that the former would make a freight allowance on the shipment of the merchandise to a certain point may be modified by parol evidence tending to show that since the making of the written contract they had agreed, in consideration of the purchaser’s ordering out the' goods, which otherwise he was not obligated to do, that the vendor would pay the freight to its destination.

.5. Same — Bills and Notes — Conditions Precedent.

The vendor and purchaser of fertilizer entered into a written contract for the supply of fertilizer during the season should the latter order it out at a certain price, and freight allowance to a certain point en route, and thereafter the purchaser gave his note, including full freight to destination, for the fertilizer he had received: SelA,' parol evidence was competent to show that the notes were accepted by the vendor on condition that they were to be returned unless full freight charges to destination should be credited on them, not as contradicting the written contract, but as explaining the conditions under which the notes were given and accepted, and as tending to show that the written contract had not been consummated.

6. Principal and Agent — Ratification—Evidence—Questions for Jury.

While a principal will not be bound by the unauthorized acts of his agent by ratification, assent, or acquiescence therein, without knowledge of the material facts, yet where the fact of agency has been established and the principal benefited, the evidence of ratification will be liberally construed, and very slight circumstances may raise the presumption of ratification to take the case to the jury; and the evidence in this case is held sufficient.

Appeal by defendants from Guión, Jat tbe May Term, 1920, of New Hanover.

Tbis is an action to recover $145.47 for tbe wrongful conversion of ■certain notes and accounts, and growing out of a contract 'for tbe sale •of fertilizers entered into between tbe plaintiff, a manufacturer of fertilizers, and tbe defendant, on 2 February, 1914.

Bj tbe terms of, tbe contract tbe defendant did not agree to buy, but tbe plaintiff agreed to sbip to tbe defendant certain fertilizers in sucb •quantities as might be thereafter agreed upon at prices and on terms named in tbe contract, “shipments to. be made in not less than car-load lots, and we (fertilizer company) to be at no expense after tbe delivery of tbe goods f. o. b. Dunn, N. C.”

Tbe shipments to tbe defendant were to be carried by rail to Dunn, N. C., and then over a logging road to tbe defendant, and tbe real dispute in this action is whether tbe plaintiff or tbe defendant should pay tbe freight on tbe logging road.

Tbe defendant offered to show that at tbe time of making tbe contract and before it was actually signed tbe plaintiff agreed that it would pay tbe freight on tbe logging road if other reputable fertilizer companies did so, and that other companies did pay this freight.

This evidence was excluded upon tbe ground that it contradicted tbe written contract, it being stipulated therein that tbe plaintiff was to be at no expense after delivery at Dunn.

Tbe defendant excepted.

Tbe defendant offered evidence tending to show that before be ordered any fertilizers a salesman of tbe plaintiff agreed that tbe plaintiff would pay tbe freight on tbe logging road and tbe jury has found that this agreement was made by tbe salesman.

Tbe plaintiff denied that tbe salesman bad any authority to make this contract, or that it bad ratified it.

His Honor charged that there was no evidence of knowledge of tbe contract on tbe part of tbe plaintiff, and that there was no evidence that tbe plaintiff bad ratified tbe contract, and tbe defendant excepted.

All tbe fertilizers bought by tbe defendant were shipped after tbe agreement with tbe agent of tbe plaintiff and tbe defendant prepaid tbe freight on tbe logging road.

At tbe close of tbe season for tbe sale of fertilizers tbe account of tbe defendant with tbe plaintiff was closed by tbe execution of four notes aggregating $2,574.48, all of which have been paid except $145.47, tbe amount in controversy in this action, which substantially includes tbe freight on tbe logging road.

Tbe defendant offered to prove that at tbe time of tbe execution of these notes be signed tbe notes and delivered them to tbe agent of tbe defendant upon tbe understanding that tbe notes would be returned to him, and that tbe plaintiff might sue on tbe whole account unless tbe plaintiff allowed him credit for tbe freight on tbe logging road.

This evidence was excluded, and tbe defendant excepted.

The jury, under the instructions of bis Honor, returned tbe following verdict:

“1. After tbe execution of tbe contract for tbe shipment of fertilizer to defendant, did Woodward, agent for tbe plaintiff, agree tbat tbe company would pay tbe freight on tbe fertilizer from Dunn over tbe log road? Answer: ‘Yes.’

“2. Did plaintiff have knowledge of such agreement, and ratify tbe same? Answer:‘No.’

“3. What amount, if any, is plaintiff entitled to recover of tbe defendant? Answer:‘$145.47.’”

Judgment was entered upon tbe verdict in favor of tbe plaintiff, and tbe defendant excepted and appealed.

Rountree & Davis for plaintiff.

Wright & Stevens for defendant.

AlleN, J.

Negotiations and conversations preparatory to tbe execution of a written contract are merged in tbe writing, and evidence will not be received of a contemporaneous agreement which contradicts its terms.

To do so would be “contrary to tbe well settled rule, as stated by tbe Chief Justice in Walker v. Venters, 148 N. C., 388, where be said: ‘It is true tbat a contract may be partly in writing and partly oral (except when forbidden by tbe statute of frauds), and tbat in such eases tbe oral part of tbe agreement may be shown. But this is subj'ect to tbe well settled rule tbat a contemporaneous agreement shall not contradict tbat which is written. Tbe written word abides, and is not to be set aside upon tbe slippery memory of man,’ citing Basnight v. Jobbing Co., 148 N. C., 350.” Cherokee County v. Meroney, 173 N. C., 655.

It follows, therefore, tbat bis Honor correctly excluded tbe evidence offered by the defendant tending to prove an agreement on tbe part of tbe plaintiff to pay tbe freight on tbe logging road, made at tbe time, because in direct contradiction of tbe contract, which imposed this duty on tbe defendant.

Tbe principle excluding parol evidence has no application to subsequent agreements, which change or modify tbe original contract, and consequently it was competent to offer evidence tbat, after tbe making of tbe contract tbe plaintiff agreed to pay tbe freight. McKinney v. Matthews, 166 N. C., 580.

Nor does tbe rule require tbe exclusion of tbe evidence of tbe defendant tbat be delivered tbe notes to tbe agent of tbe plaintiff upon tbe agreement tbat tbe notes were to be returned, if tbe plaintiff refused tO' credit them with tbe amount of tbe freight on tbe logging road, such evidence being received, not for tbe purpose o£ changing or modifying tbe contract represented by tbe notes, but to sbow tbat tbe contract was never in existence, because tbe condition upon wbicb tbe delivery was made bad not been performed, and tbe evidence was very material, as tbe freight was included in tbe notes, and without explanation tbe defendant was iir tbe position of trying to avoid payment of tbe freight when be bad deliberately included tbe amount in bis notes.

Tbe authorities in support of this principle are numerous. See Pratt v. Chaffin, 136 N. C., 350; Bowser v. Tarry, 156. N. C., 38; Garrison v. Machine Co., 159 N. C., 285, and cases cited.

We are also of opinion tbat it was error to instruct tbe jury, in tbe present state of tbe record, tbat there was no' evidence of ratification by tbe plaintiff of tbe agreement by its agent to pay tbe freight on tbe logging road.

It is true tbat “In order to bind a principal by ratification, assent, or acquiescence in prior acts of bis agent in excess of authority actually given, a knowledge of tbe material facts must be brought borne to him. He must have been in possession of all tbe facts, and must have acted in tbe light of such knowledge.” 21 R. C. L., 928. And tbe same rule, requiring knowledge, ordinarily prevails when tbe contract of the agent has been performed, unless tbe performance shows knowledge, but “Where an agency has been shown to exist, tbe facts will be liberally construed in favor of tbe ratification by tbe principal of tbe acts of tbe agent, and very slight circumstances and small matters will sometimes suffice to raise tbe presumption of ratification, particularly where tbe act is for tbe benefit of tbe principal,” 2 C. J., 492, and ratification may be “implied when tbe conduct of tbe principal constitutes an assent to tbe acts in question.” 21 R. C. L., 921.

Let us then see, not whether tbe contract of tbe agent has been ratified, but is there evidence of ratification fit to be considered by a jury.

Tbe contract was executed 2 February, 1914. Tbe defendant did not order out any fertilizers until about tbe middle of March, and not until tbe agent of tbe plaintiff bad agreed tbat tbe plaintiff would pay tbe freight on the logging road.

Tbe defendant then sent bis orders to tbe plaintiff for fertilizer, wbicb showed tbat they were to be shipped over tbe logging road.

Tbe plaintiff accepted tbe orders and prepaid all of tbe freight, wbicb was contrary to tbe provisions of tbe contract, and in accordance with tbe agreement made by tbe agent. All of tbe fertilizers were shipped under this arrangement, and tbe freight paid by tbe plaintiff, and tbe plaintiff made no demand on tbe defendant to repay tbe logging road freight until some time in July or later.

It does not appear that the plaintiff was compelled to pay the freight in order that shipments might be made, nor is there any evidence of any custom for the manufacturers of fertilizers to prepay freight when the contract requires the purchaser to do so, and leave the question of the payment of freight for final adjustment between the parties, and on the contrary the defendant offered evidence tending to prove that consignees paid freight on shipments when the contract required them to do so, and that the manufacturer was not required to make payment in order that delivery might be made.

The letter of the plaintiff of'6 August, 1914, also furnishes some evidence that the agent was not without authority, because the plaintiff, instead of saying that the agent had no authority to make the agreement with the defendant, says that he was “without sufficient information,” and it may also be inferred from it that the agent informed the plaintiff of his contract with the defendant, because it is said therein, “He was later directed to notify you that this freight would not be paid.”

The fact that the plaintiff paid the logging road freight is not conclusive, and may be explained, but in the absence of explanation taken in connection with the other circumstances, it furnishes evidence for the consideration of the jury that the plaintiff consented to the modification of the' contract in accordance with the agreement with the agent, and this should have been submitted to the jury.

For the errors pointed out, there must be a

New trial.