Calpetro Producers Syndicate v. Chas M. Woods Co.

This is an action upon an implied guaranty of title upon the sale of personal property. Defendant had judgment. Plaintiffs have appealed.

The appeal is determined by the proper application of a rule of evidence. Plaintiffs purchased from the defendant upon April 6, 1923, under a written conditional sales contract, certain oil-drilling machinery, which contract not only on its face shows that the writing contained all the

“It is expressly understood this proposal made in duplicate contains all agreements pertaining to property herein specified, there being no verbal understanding whatsoever, and when signed by purchaser and approved by an executive officer or local manager of the Charles M. Woods Company becomes a binding contract between the parties hereto.”

It appears, however, that prior thereto and on or about 'January 3, 1923, defendant herein had, under a like contract, agreed to sell this identical personal property to one J. E. O’Hea. However, on the said sixth day of April, 1923, said O’Hea was, by the district court of the United States for the southern district of California, declared a bankrupt. Soon thereafter the trustee of said bankrupt made claim to the personal property involved in this action by reporting it as a part of the assets of said estate and posting notices upon the property itself.

Thereafter, and on or about April 16, 1923, appellants herein, acting presumably under a provision of the said sales contract with respondent requiring them to protect respondent’s title thereto, filed in the said bankruptcy proceedings a petition styled “Petition for order of reclamation from trustee,” in which petition they sought to have the claims of said bankrupt estate adjudged groundless and respondent’s and their own rights to said property confirmed. At the time this petition was filed appellants had not made all. the payments called for under said sales contract, although they later made them according to the terms of their covenant, so the title to said property as between the parties hereto was at said time in respondent. The trustee answered and a hearing was had on this issue before the referee, in which J. A. Smith, the secretary and treasurer of respondent, testified as a witness at the instance of appellants. The result of this hearing was an order and decree of said referee in bankruptcy, dated June 29, 1923', that the bankrupt’s interest in said property had not been forfeited by respondent and that, subject to the unpaid portions of the purchase price due from O’Hea to respondent, the beneficial interest in said prop

A review of this order of the referee was sought and obtained in the district court, and on January 15, 1924, the findings and order of the referee in said matter were in all respects confirmed. A judicial sale of said property thereafter occurred in said bankruptcy proceedings, at which appellants became the purchasers, buying in the property, the subject of this action, in connection with other property and property rights, for the sum of $25,000, which said sale was confirmed on May 25, 1925.

On April 5, 1924, appellants brought the present action, setting up said written contract of sale, the bankruptcy of said O’Hea, the action of the trustee of his estate, and the order and judgment of the referee respecting said property, the confirmation of said order by the district court, and the further fact that respondent had full notice of the proceedings taken in said bankruptcy proceedings and should be hound by the judgment entered therein, and prayed for judgment against respondent in the sum of $25,000, plus interest and costs, to which respondent filed its answer and amended answer, denying liability and basing its principal defense upon the ground that appellants took the title to said property subject to any claim or claims that might be made thereto by said O’Hea and his representatives, and expressly, but orally, waived a guaranty of title thereto.

The court sustained the defenses made by respondent and, among other things, found that appellants knew of the previous sale of said personal property to O’Hea under a conditional sales contract and were familiar with all the terms and conditions of said sale and knew that respondent had retaken possession of said personal property and had attempted to foreclose or terminate all rights of O’Hea under said contract, and at all times knew all the facts concerning the retaking of possession of said personal property by respondent and the foreclosure proceedings in connection therewith, and further found that it was understood and agreed between respondent and appellants that the appellants should take possession of said personal property subject to any claims or infirmities in the said proceedings

Parol evidence was the sole resort for the testimony upon which the court predicated its findings that respondent refused to warrant the title to said property and that appellants expressly waived the implied guaranty of title given by section 1765 of the Civil Code. The important question, then, is: Was it proper under this written contract for the court to permit an excursion into the domain of parol evidence to establish a waiver of the implied warranty of title above mentioned?

To justify this position taken by the court respondent depends upon the case of Miller v. Van Tassel, 24 Cal. 459 , 464, 465. This decision was followed in this respect in Johnson v. Powers, 65 Cal. 179 [ 3 Pac. 625 ], and referred to approvingly in Hull v. Bay, 80 Cal. App. 284 , 292 [ 251 Pac. 810 ], Said case of Miller v. Van Tassel must therefore receive consideration at our hands. It must be admitted that language found therein upholds the action of the court. Said action was brought by the vendee of an American jack to recover back from the vendor the purchase money, on the ground that the vendor had no title

That a warranty is as much one of the elements of sale and as much a part of the contract of sale as any other portion of the contract, and is not a mere collateral undertaking, was held in Germain Fruit Co. v. Armsby Co., 153 Cal. 585 , 594 [ 96 Pac. 319 ], We cannot give the holding in that ease full credit and at the same time uphold the pronouncement of the court as to the nature of the warranty in Miller v. Van Tassel, supra. See, also, to the same effect, United Iron Works v. Outer Harbor etc. Co., supra, at page 85, of 168 Cal. [ 141 Pac. 920 ], where the court quotes from 2 Meehem on Sales, section 1254, as follows: “The rule is well settled that where the parties have reduced to writing what appears to be a complete and certain agreement, importing a legal obligation, it will, in the absence of fraud, accident or mistake, be conclusively presumed that the writing contains the whole of the agreement between

The holding in the two last-mentioned cases was approved in the recent ease of Nimmo v. Fitzgerald, 202 Cal. 565 , 568 [ 261 Pac. 1015 ], where an attempt was made to introduce parol evidence to vary a written contract so as to show an express warranty, the court using the following language: “Exclusion of the testimony on the ground that defendants were attempting to vary the terms of the written contract by parol evidence was likewise proper. Defendants contend that where, as here, the written contract is silent, evidence is admissible to prove a parol warranty, said warranty being collateral to the written contract. Such is not the law of this state.”

From this line of cases it will be seen that this court has repeatedly held that a warranty not contained in a written instrument cannot be inserted therein by parol. Neither can a warranty that is found within the writing be varied in that manner. But this does not exclude from the contract the warranty the law writes therein. On the contrary, the pronouncement of these cases is but the converse of the question we have before us and foreshadows a departure from the reasoning in Miller v. Tan Tassel, supra.

But other decisions of our courts have spoken directly upon the question before us. For example, in the ease of Standard Box Co. v. Mutual Biscuit Co., 10 Cal. App. 746 , 750 [ 103 Pac. 938 , 939], it is said: “It is a well-settled principle that that which is implied by law becomes as much a part of the contract as that which is therein written, and if the contract is clear and complete when aided by that which is imported into it by legal implication, it cannot be contradicted by parol in respect of that which is implied any more than in respect of that which is written.”

In Kullman, Salz & Co. v. Sugar Apparatus Mfg. Co., 153 Cal. 725 , 731 [ 96 Pac. 369 , 371], it is said: “But the general principle of law, well settled, is that where a complete written contract is made, oral representations or warranties, and implied warranties, and all oral negotiations, are merged in the written contract, and by its terms the parties must be bound. (Civ. Code, sec. 1625, etc.) ” The above statement is quoted with approval in Monahan v. Watson, 61 Cal. App. 417 , 421 [ 214 Pac. 1001 ]. See, to the same effect, California D. & M. Co. v. Crowder, 58 Cal. App. 529 , 531, 533 [ 209 Pac. 68 ] ; 17 Cyc. 570; also the recent case of LaFrance v. Eashishian, 204 Cal. 643 [ 269 Pac. 655 ].

Thus the cases of Miller v. Van Tassel, supra, and Johnson v. Powers, supra, on this point have been practically receded from by this court. In the LaFrance case, above cited, plaintiff, a lessee, was suing the lessor for a violation of the implied warranty of title to the premises. The lease was silent as to any guaranty of ownership of the premises by the lessor, but the plaintiff relied upon the implied warranty of title given by section 1927 of the Civil Code. Defendant sought to show by parol testimony that plaintiff agreed to accept such title as the defendant had and to take possession of the premises subject to all infirmities therein and had been conceded a reduced rental in view of that fact, well knowing his title rested merely upon tax proceedings. But this court upheld the lower court in the rejection of such parol testimony, saying: “But the weight of authority, especially as bearing upon a matter such as is here presented, is to the effect that an implied stipulation in a contract is of as great force as though it were fully set forth therein, and such implied stipulation may no more be contradicted or varied by parol evidence

The case of Johnson v. Powers, supra, in so far as it upholds the case of Miller v. Tan Tassel, supra, is subject to the same misconception of the nature of the implied warranty above pointed out. The same is true of the' case of Hull v. Bay, supra.

We therefore conclude that parol testimony to vary the terms of the written contract, the subject of this action, was inadmissible; hence the findings of the court below to the effect that appellants waived the implied warranty of title given by the statute are without legitimate support in the record. This conclusion makes necessary a reversal of the cause. We have been asked, however, not only to reverse the judgment of the court below, but also to direct a judgment in favor of appellants and against respondent. This we feel disinclined to do. The binding character of the judgment of the federal court upon respondent is not absolutely certain in view of the nature of the proceedings and of the findings of the court. This fact, and other reasons not necessary to dwell upon, render the amount of damage suffered by appellants uncertain. Neither party should, therefore, be denied a full opportunity to present its position on these questions upon a second trial.

The judgment is reversed.

Richards, ‘J., Curtis, J., Langdon, 3., Seawell, J., Shenk, J., and Waste, C. J., concurred.