Opinion
No. 6,908.
Submitted March 16, 1932.
Decided April 8, 1932.
Contracts — Sale of Personalty — Oral Abrogation or Modification of Executory Contract by Mutual Consent Permissible — Declarations of Deceased Parties to Contract — Evidence — Admissibility. Contracts — Terminating Obligations of Parties by Mutual Consent Permissible. 1. The parties to an executory contract may terminate it by mutual consent independently of any agreement permitting them to do so, it being immaterial whether such termination be characterized abandonment, mutual rescission, modification or waiver, and the effect thereof is to discharge them from obligations previously assumed under the contract. Same — Making New Agreement Relating to Matter Covered by Former One — When Former Contract Discharged. 2. Where the parties to a contract make a new and independent agreement concerning the same matter, and the terms of the new are so inconsistent with those of the former one that they cannot stand together, the new agreement may be construed to discharge the preceding one. Same — Sale of Personalty — Abandonment or Modification of Contract may be Accomplished Orally — Declarations — Parol Evidence Admissible. 3. The mutual abandonment, rescission or modification of a contract for the sale of personal property may be accomplished orally, and the facts relating to the transaction may be established by evidence of oral statements and declarations by the parties made in the presence of witnesses. Same — Administrator's Action — Sale of Personal Property — Oral Modification of Contract — Parol Testimony as to Declarations by Deceased Parties to Contract Held Admissible. 4. In an action by the administrator of the estates of the sellers of meat market equipment against the executor of the buyer to recover the purchase price on which a small installment had been paid, the defendant alleged that by mutual consent of the decedent parties the original agreement had been modified orally to the effect that the bulk of the property should be stored and kept by the buyer until disposed of, and that the partial payment made should be accepted by the sellers in full satisfaction of the remainder of the chattels. Held, under the above rules, that the modification could properly be shown, and that testimony of witnesses as to oral statements and declarations made by the parties, though not the most satisfactory evidence, was admissible, by reason of necessity, to show the agreement.
Appeal from District Court, Pondera County; R.M. Hattersley, Judge.
Mr. W.L. Bullock and Mr. D.W. Doyle, for Appellant, submitted a brief; Mr. Doyle argued the cause orally.
Mr. Louis P. Donovan and Mr. Henry McClernan, for Respondent, submitted a brief; Mr. Donovan argued the cause orally.
The testimony of the defendant is so lacking in every essential necessary to show a modification of the original contract of sale that we deem argument on the point involved unnecessary except to quote the statute. (Quoting secs. 7568, 7569, Rev. Codes 1921.) The testimony does not show whether the original contract was oral or written, but the proof of the defendant is insufficient to show a modification of any contract. In fact the original contract is not even mentioned by any of the witnesses. Furthermore the subject matter of the various conversations is hardly shown except that the parties were going to try to sell an ice machine because it was too expensive.
Learned counsel for appellant cites sections 7568 nad 7569, Revised Codes of 1921, without any argument or discussion of same, but he apparently assumes that section 7568 prohibits the alteration of an oral contract except by an agreement in writing. Respondent respectfully submits that notwithstanding the provisions of the sections above cited, any oral contract may be extinguished at any time by the mutual consent of the parties thereto. (Secs. 7564, 7565, Id.) Even a written contract may be rescinded and extinguished in the same manner. (13 C.J. 601.)
Nelson's release of his interest in the ammonia plant was sufficient consideration for Kristofferson's release of his obligation to pay the same. "The contract when modified by the subsequent oral agreement is substituted for the contract as originally made and the original consideration attaches to and supports the modified contract." ( Thomas v. Barnes, 156 Mass. 581, 31 N.E. 683; Brown v. Everhard, 52 Wis. 205, 8 N.W. 725; Long v. Pierce, 22 Wn. 330, 61 P. 142; 3 Elliott on Contracts, sec. 1857.)
Section 7569 has no application to the case at bar, because the original contract (if any was made) was not in writing. Section 7568 merely declares that an oral contract may be modified by a subsequent written contract "without a new consideration." It leaves the common-law rule in force and effect whereby an oral contract could be modified by a subsequent oral contract where the same was based upon a consideration. As shown above, the mutual release of rights under the original oral contract is a sufficient consideration for the new contract. This is but another way of saying that a contract may be extinguished by mutual consent of all the parties thereto. (Sec. 7564.)
Respondent respectfully submits that if the evidence may be deemed to establish conclusively the original contract of sale as alleged in the complaint, the evidence introduced on behalf of the defendant is sufficient to justify a verdict that the original contract was extinguished and abandoned by the mutual consent of the parties thereto.
This action was instituted by C.H. Kester, as administrator of the estates of C.B. Rinio and Hans Kristofferson, both deceased, against James Nelson to recover the sum of $2,182.44, the balance alleged to be due from Nelson on a sale made to him by plaintiff's intestates of certain meat market equipment, consisting of an Armstrong ammonia plant and other chattels described. After the institution of the action the defendant James Nelson died, and Harvey Nelson, as the executor of his last will and testament, was substituted as defendant, and appropriate amendments made to the answer.
The complaint is in two counts, designated as a first and a second cause of action. The first count is predicated upon an alleged sale made on May 1, 1928, by the plaintiff's intestates to James Nelson of "meat market equipment consisting of Armstrong ammonia plant, a five horse power electric motor, set of platform scales, two refrigerators, set beam scales, and equipment usual to a meat market including 2 meat blocks, coats and aprons, counter, dishes and knives," for which Nelson agreed to pay the sum of $2,000, of which amount he made payments from time to time aggregating $120, leaving a balance due and owing to plaintiff's intestates of $1,880. The second count alleges an indebtedness of Nelson to the plaintiff's intestates aggregating the sum of $302.44 "for goods, wares and merchandise sold and delivered" by plaintiff's intestates. As to the second count of the complaint, it is eliminated from consideration and is not here involved, due to the fact that the defendant confessed judgment and paid into court the sum of $314.60 to cover the amount admitted to be due from the estate of James Nelson, deceased, together with costs.
As to the first count contained in the complaint, the defendant, by answer, denied generally its averments, and alleged affirmatively that the property described therein was sold to James Nelson for the agreed purchase price of $1,000, and that on or before September, 1929, there had been paid thereon the sum of $120, and that in the month of September, 1929, the contract was abrogated and rescinded, it being agreed in substitution that the ammonia plant, which constituted the principal item of the chattels involved, should be and remain the property of the seller, to be kept and stored by James Nelson until disposed of, and that the sum of $120 paid by James Nelson under the original contract would be accepted by the plaintiff's intestates in full satisfaction for the remainder of the property. Issue was joined by reply, and the cause was tried to a jury, which rendered verdict in favor of the defendant. Judgment was duly entered upon the verdict, and the cause is now before us on appeal from the judgment.
As reason for a reversal, the plaintiff contends that the evidence does not support the verdict and judgment. The plaintiff urges that the evidence respecting the abrogation of the contract for the purchase of the ammonia plant, consisting of the oral declarations and admissions of deceased persons, parties to the contract, is not sufficient in law to warrant a modification or substitution for the original agreement. He cites and relies exclusively upon the provisions of section 7568 of the Revised Codes of 1921, which provides that "a contract not in writing may be altered in any respect by consent of the parties in writing, without a new consideration, and is extinguished thereby to the extent of the new alteration." But he overlooks other provisions of our Codes permitting the rescission of a contract by consent of the parties. (Id., secs. 7563, 7565, 7567.) It is expressly provided by section 7565 that a contract may be rescinded by consent of the parties, and recognition thereof is given by sections 7563 and 7567.
The right of the parties to an executory contract to terminate [1-3] it by mutual consent exists independently of any agreement permitting them so to do; and it is immaterial whether such termination be characterized an abandonment, mutual rescission, modification, or waiver. The effect is the same, to discharge the parties from obligations previously assumed. ( Ogg v. Herman, 71 Mont. 10, 227 P. 476.)
"Persons competent to contract can as validly agree to rescind a contract already made as they could agree to make it originally. However, as a contract is made by the joint will of two parties, it can be rescinded only by the joint will of the two parties. It is obvious that one of the parties can no more rescind the contract, without the other's express or implied assent, than he alone can make it. But if the parties agree to rescind the contract, and each one gives up the provisions for his benefit, the mutual assent is complete, and the parties are then competent to make any new contract that may suit them." (6 R.C.L., sec. 304, p. 922.) "Again, a contract need not be rescinded by an express agreement to that effect. If the parties to a contract make a new and independent agreement concerning the same matter, and the terms of the latter are so inconsistent with those of the former that they cannot stand together, the latter may be construed to discharge the former." (Id., sec. 307, p. 923.)
There can be no question but what a contract may be mutually abandoned or modified by the parties at any stage of performance, and each of the parties released from further obligation on account thereof; that it may be accomplished by parol, and the fact of its having been done established by evidence of the acts and declarations of the parties. ( Tompkins v. Davidow, 27 Cal.App. 327, 149 P. 788; 6 Cal. Jur., p. 382.)
The modification of the contract of sale or its rescission as [4] respects the ammonia plant was established by the testimony of witnesses as to the oral statements and declarations made by the parties in their lifetime in the presence of witnesses; and while such testimony is not the most satisfactory, yet by reason of necessity it is admissible. ( Escallier v. Great Northern Ry. Co., 46 Mont. 238, Ann. Cas. 1914B, 468, 127 P. 458; Welch v. All Persons, 78 Mont. 370, 254 P. 179; Marcellus v. Wright, 65 Mont. 580, 212 P. 299; Gray v. Grant, 62 Mont. 452, 206 P. 410.)
The evidence presented a question of fact for the jury to decide as to whether the contract of sale was modified or rescinded under proper instructions as to the law. The jury has resolved the question of rescission or modification of the original contract of sale in favor of the defendant, and we see no reason to disturb the verdict. The judgment is affirmed.
MR. CHIEF JUSTICE CALLAWAY and ASSOCIATE JUSTICES FORD, ANGSTMAN and MATTHEWS concur.