March 1, 1876, A., by way of collateral security for his notes
of even date payable four months thereafter, made an instrument in
writing assigning to B., the payee of them, a judgment against C.,
and authorizing him to sell it, in case they should not be paid at
maturity, and apply the proceeds to the payment of them. C., at
said date, had sufficient personal property to satisfy the
judgment. Execution was issued June 19, but that property had been
previously exhausted by the levy of other executions. In a suit by
B. against A. on the notes,
held:
1. That B. was not bound by the terms of the assignment to take
steps for the collection of the judgment before the maturity of the
notes.
2. That, in the absence of accident, mistake, or fraud, evidence
was not admissible to show his parol agreement, made
contemporaneously with the assignment and as part of the
transaction, to issue execution and collect the judgment whenever
the money could be made thereon.
The facts are stated in the opinion of the Court.
MR. CHIEF JUSTICE WAITE delivered the opinion of the Court.
This is an action on three notes made by Bast, the plaintiff in
error, to the First National Bank of Ashland, defendant in error,
dated March 1, 1876, and payable four months after date, two being
for $2,000 each and the other for $3,481.79. Simultaneously with
the delivery of the notes, the following assignment in writing was
made:
"Know all men by these presents, that I, Emanuel Bast, do hereby
transfer and assign to William Torrey, cashier, of Ashland,
Pennsylvania, a certain judgment of June Term, 1875, in Court of
Common Pleas of Schuylkill County, No. 1292, in which the First
National Bank of Ashland is plaintiff, and the Ringgold Iron and
Coal Company is defendant, and the three several drafts upon which
the said judgment was obtained as collateral security for the
payment of two notes of $2,000 each, and one for $3,481.69, made by
me to order of William Torrey, cashier, dated March 1, 1876,
payable in four months after date, and upon failure on my
Page 101 U. S. 94
part to pay said notes at maturity or at the maturity of time
for which the same may be renewed, then the said Torrey, cashier,
is hereby authorized and empowered to sell the same at public sale,
after ten days' notice, to me, and apply the proceeds thereof to
payment of my said notes, and in case the proceeds of same shall
not be sufficient to pay said notes, then I promise to pay any
balance that may be due."
"In witness whereof, I have hereunto set my hand and seal this
first day of March, 1876."
"EMANUEL BAST [SEAL]"
"Witness: A. P. SPINNEY, S. HENRY NORRIS"
Bast was at the time the owner of the judgment assigned, on
which there was due the exact amount of his notes, and on each of
the notes was an endorsement to the effect that the judgment
assigned was held as collateral. There was no legal impediment in
the way of an immediate issue of execution on the judgment, and
until May 19, 1876, the Iron and Coal Company, the judgment
defendant, had unencumbered personal property subject to levy and
sale on execution sufficient to pay the amount that was due. No
execution was issued until June 19, and before that time the
property of the company had all been exhausted by the prior levy of
executions issued on other judgments. Bast made no demand on the
bank to issue execution on his judgment at any time before June
19.
After the maturity of the notes the judgment was sold pursuant
to the authority contained in the assignment and $2,141 realized,
which was applied towards the payment of the notes. This suit was
brought to recover the balance due after this application was
made.
Bast filed an affidavit of merits, which in Pennsylvania has the
effect, in cases of this class, of a plea, in which he alleges 1,
that it was the duty of the bank under the written assignment to
have issued execution on the judgment prior to the time it did, and
2,
"that simultaneously with his delivery of said notes to said
bank as aforesaid, as well as said assignment of said judgment as
collateral security for the same, it was agreed between deponent
(Bast) and said bank, as part of the transaction, that said bank
would issue execution upon said judgment and proceed to collect the
same whenever the money
Page 101 U. S. 95
could be made thereon."
He then claimed that,
"by reason of the supine neglect of the plaintiff in not issuing
execution as aforesaid, the said judgment assigned to it as
aforesaid as collateral security for the payment of the notes
sought to be collected in this case was lost and became worthless,
whereby deponent suffered damages to an amount equal to the full
amount due upon the notes in suit."
The court below held that the defense set up in the affidavit of
merits was insufficient in law, and gave judgment for the bank for
$5,440.46, the balance remaining due on the notes.
To reverse this judgment this writ of error has been
brought.
Two questions are presented by the defense in this case.
1. Was the bank bound by the terms of the written assignment to
take steps for the collection of the judgment before the maturity
of the notes?
2. Was parol evidence admissible to prove the alleged promise,
made simultaneously with the assignment and as part of the
transaction, to issue execution and collect the judgment whenever
the money could be made thereon?
1. As to the assignment.
No obligation to collect was in terms put on the bank by the
writing. On the contrary, the only power conferred on the bank in
reference to the judgment was to sell if the notes were not paid at
maturity, or at the maturity of their renewals. All parties seem to
have contemplated delay in the collection, and Bast seems also to
have been especially careful to retain in his own hands the power
to withhold execution if he saw fit. Until a sale was made under
the express power granted for that purpose, he continued the actual
owner of the judgment, subject only to the lien of the bank to
secure the payment of his notes. So far as anything appears on the
face of the written instrument, he retained full control of the
collection by legal process; but whether that be so or not, he
certainly could call on the bank at any time before a sale to take
the necessary steps, or permit him to do so, to enforce its
collection, or to secure and preserve such priority of lien as the
judgment was entitled to over other judgments or executions
thereon. If the bank had failed to comply with his demand, and loss
had
Page 101 U. S. 96
ensued, other questions than such as are now presented might
have arisen. But upon the face of the assignment, we are clearly of
the opinion that the bank put itself under no obligation to collect
except on the demand of Bast. Any attempt to do so before the
maturity of the notes, without his consent, would be a direct
violation of the terms of the instrument under which it acquired
all its rights.
2. As to the parol evidence.
No principle of evidence is better settled at the common law
than that when persons put their contracts in writing, it is, in
the absence of fraud, accident, or mistake, "conclusively presumed
that the whole engagement, and the extent and manner of their
undertaking, was reduced to writing." 1 Greenl. Evid., sec. 275. In
Pennsylvania, the stringency of this rule has been very
considerably relaxed, but we have been referred to no case where,
in the absence of fraud or mistake, parol evidence has been
admitted to alter the plain and unequivocal terms of a written
instrument. In
Martin v. Berens, 67 Pa.St. 463, the court
said:
"Where parties, without any fraud or mistake, have deliberately
put their engagements in writing, the law declares the writing to
be not only the best, but the only evidence of their agreement, and
we are not disposed to relax the rule. It has been found to be a
wholesome one, and now that parties are allowed to testify in their
own behalf, the necessity of adhering strictly to it is all the
more imperative."
In this case, the Pennsylvania decisions are extensively
reviewed, and the exceptions to the rule of the common law which
they recognize carefully stated, but the conclusion is that, "as a
general rule, it (parol evidence) is inadmissible to contradict or
vary the terms of a written instrument." Again, in
Bernhart v.
Riddle, 29
id. 96, this language is used:
"Where parties have deliberately put their engagements in
writing, and no ambiguity arises out of the terms employed, you
shall not add to, contradict, or vary the language mutually chosen
as most fit to express the intention of their minds. What if parol
evidence prove never so clearly that they used such and such words
in making their bargain; the writing signed, if it contain not
those words, is final and conclusive evidence that they were set
aside in favor of the other expressions that are found
Page 101 U. S. 97
in the written instrument. And hence this rule of law is only a
conclusion of reason, that that medium of proof is most trustworthy
which is most precise, deliberate, and unchangeable."
This is the rule, it was said, which prevails in reference "to
the terms in which the writing is couched," and that "evidence to
explain the subject matter of an agreement is essentially different
from that which varies the terms in which a contract is conceived."
It is not always easy to determine when in Pennsylvania parol
evidence is admissible to explain a written instrument, but in
Anspach v. Bast, 52
id. 356, it is expressly
declared that
"no case goes the length of ruling that such evidence is
admitted to change the promise itself, without proof or even
allegation of fraud or mistake. The contrary has been repeatedly
decided."
To the same effect is the case of
Hacker v. National Oil
Refining Co., 73
id. 93, as well as many others that
might be cited.
In the present case, as we have seen, the contract which the
parties reduced to writing is in effect that the bank should not,
before the maturity of the notes, take measures to collect the
judgment assigned without the consent of Bast. The offer was to
prove a contemporaneous parol agreement that it should do so. This
is a clear contradiction of the terms of the written contract in a
matter where there is no pretense of ambiguity and where there has
been no fraud or mistake.
We think the court below was right in giving judgment for the
bank notwithstanding the affidavit of merits.
Judgment affirmed.