of property sold, a note of a third party payable to the purchaser and indorsed by him "without recourse," on false representations by the latter that the maker of the note is a person of large wealth, may show the fraud in order to avoid the effect of the transaction, without violation of the rule against the varying of written contracts by parol.73 So, it has been held that one who is sued as surety on a promissory note may show, without violation of the parol-evidence rule, parol evidence that an indorsement thereon in blank was procured by fraud. Ellis v. First Nat. Bank (1924) 163 Ark. 471, 260 S. W. 714.

73 Pallister v. Camenisch (1912) 21 Colo. App. 79, 121 Pac. 958.

A transfer of a note "without recourse" may, in an action between the parties thereto, be shown to have been procured by false and fraudulent representations of the indorser as to the financial responsibility of the maker, without violation of the rule against the varying of written contracts by parol. Carter v. Turner (1928) Cal. App., 265 Pac. 870.

74 Barco v. Taylor (1908) 5 Ga. App. 372, 63 S. E. 224. The court said: "It is as much a provision of the Code that fraud avoids all contracts as that parol evidence is inadmissible to vary the terms of a written contract. In all of the cases cited by counsel for the plaintiff in error, it appears that there was in fact a contract of some kind between the plaintiff and the defendant. There was an agreement by which the defendant admitted that he had assumed an obligation to the plaintiff, though perhaps the obligation was not correctly set forth. There was in each case some affinity between the subject-matter of the contract that the defendant actually signed and the contract he intended to sign. But in the present instance the signer was not asked to assume any obligation or to enter into any agreement to do anything, nor was it necessary even that he should know what the contract really was. He was asked merely to witness a signature, and, according to the testimony, this trick by which his signature was obtained was the mutual device of the two parties to the note which had actually been originated by the plaintiff. In the nuinerous cases in which it has been

The parol-evidence rule does not, of course, preclude admission of evidence to show fraud entering into the execution of the instrument, as a fraudulent misreading of the note,75 a fraudulent decided that neither law nor equity will relieve one who signs a written obligation from the effects of his own gross negligence in not determining in advance the nature of the obligation he signs, the signer knew that he was signing something which imposed liability upon him. This fact is sufficient to put him upon notice. But a witness assumes no liability upon a note which he signs as such; and, therefore, parol evidence is admissible not to vary the terms of a written contract, but to show, as a matter of fact, that the signer never entered into the contract. Parol evidence is always admissible to show fraud in the procurement of a written instrument, and is no less admissible to show that by reason of fraud no contract was created."

74a In an action by the payee of a note against the maker and the surety thereon, it was held in Lee v. First Nat. Bank (1923) Tex. Civ. App. -, 254 S. W. 394, that there was no violation of the parol-evidence rule by permitting the surety to prove that he had been induced to execute the note by false representations to the effect that it was for money loaned by the payee to the maker of the note for use solely in financing the raising of a crop on land rented by the surety to the maker, whereas the note included an old debt owing from the maker to the payee.

75 Parol evidence was held admissible in Hopkins v. Hawkeye Ins. Co. (1881) 57 Iowa, 203, 42 Am. Rep. 41, 10 N. W. 605, to show that the agent of an insurance company who prepared the premium note and read it to the assured fraudulently misread the date when it was to become due, thereby inducing the latter to execute the note under a misapprehension of its terms, where the action was brought

omission therefrom,76 or misrepresentation of the nature of the instrument.77

While in an action on a note, if the only tendency of the parol evidence offered to avoid the note is to show a promise on the part of the payee not to enforce it, the same is of no avail, yet the maker of a note delivered upon such a promise is not barred by the rule applicable to the promise, from showing that the note was procured by deceitful practices, of which the note was a part.78 And it has been held that parol evidence tending to show fraud inducing the execution of notes, consisting of a purpose on the part of the payee to obtain the notes under the guise of an agreement not to negotiate the same before maturity, when his intention was otherwise, is not precluded by a stipulation in the notes expressly stating that they were given for a cash

upon the policy of insurance to recover for a loss, and the defense was that the note was overdue and unpaid at the time of the loss, and that thereby the contract was rendered void.

76 In Sistrunk v. Wilson (1911) 98 Miss. 672, 54 So. 89, it was held that one who gave a note for the purchase price of mules, should be permitted to show, in a suit by him to replevin the animals, that the defendant fraudulently omitted from the promissory note given for the purchase price and evidencing the contract of sale, a reservation of title by the seller, the admission of such evidence not violating the principle that the terms of a written instrument may not be varied by parol.

77

See, for example, Stoyell v. Stoyell (1890) 82 Me. 332, 19 Atl. 860, to the effect that the parol-evidence rule does not exclude evidence in an action by the payee against the maker of a note, to show that the former induced the latter to sign the note by falsely representing that it was a receipt instead of a note, and that the latter did not read the paper at the time; such evidence, if true, constituting a defense on the ground of fraud and being permissible between the original parties.

78 Wilbur v. Prior (1893) 67 Vt. 508, 32 Atl. 474.

It was held in Schipfer v. Stone (1928) Iowa, ―, 218 N. W. 568, that in an action on notes, where fraud was

consideration, and that the holder might negotiate the notes before due, and the maker would pay the purchaser in full at maturity; the rule applying that if a written contract is obtained by fraud, all the stipulations thereof fall with it, and the same do not preclude the admission of parol evidence to show the fraud.79

It may be observed that the conclusion reached in some cases that in actions on notes parol evidence is admissible to show a failure of consideration consequent upon a breach of a contemporaneous parol express warranty is based on the ground that the note does not purport to contain the entire agreement of the parties, and hence does not preclude the admission of such evidence, rather than on the ground that the misrepresentations were fraudulently made.80

pleaded as a defense, there was no infringement of the parol-evidence rule by the admission for the defendants, the makers of the notes, of evidence to show, as a part of the alleged fraudulent representations, that at the time of the execution of the notes the makers were told by the party procuring them that they would never be converted into cash, and that the makers would never have to pay them.

79 White v. Fisheries Products Co. (1923) 185 N. C. 68, 116 S. E. 169. The action was for damages for wrongfully negotiating notes of the plaintiff to a holder in due course, in breach of the agreement of the defendant, the payee in the notes, to hold the same until the plaintiff, the maker, had sold a certain farm, and to return the same to the latter if the farm were not sold before the maturity of the notes.

80 See, for example, Pryor v. Ludden & B. Southern Music House (1910) 134 Ga. 288, 28 L.R.A. (N.S.) 267, 67 S. E. 654, in which it was held that, in an action on a note reciting that it was for the purchase price of a piano, the maker of the note might plead, in defense of the action, that the plaintiff represented that the piano was new and capable of being used as a musical instrument, and that the defendant, acting on this representation and warranty, and without actual or constructive knowledge of its true condition,

c. Bonds.

The general rule, that the principle that parol or extrinsic evidence is inadmissible to vary or contradict the terms of a written contract is inapplicable where the issue is fraud in the procuring of the contract, has been applied or recognized in various cases involving bonds.81

bought the same, when in fact it was worse than secondhand, and not capable of use as a musical instrument.

81 Arkansas.-Harrell v. Hill (1857) 19 Ark. 102, 68 Am. Dec. 202.

Georgia. See Ham v. Parkerson (1882) 68 Ga. 830 (recognizing rule). Massachusetts. Holbrook v. Burt

(1839) 22 Pick. 546. New Jersey.. Den ex dem. State Bank v. Moore (1819) 5 N. J. L. 470. New York. Farmers' & M. Bank v. Whinfield (1840) 24 Wend. 419 (misreading).

Pennsylvania.

Hessner v. Helm (1822) 8 Serg. & R. 178; Miller v. Henderson (1823) 10 Serg. & R. 290; McColloch v. McKee (1851) 16 Pa. 289. See also Schuylkill County v. Copley (1871) 67 Pa. 386, 5 Am. Rep. 441 (misrepresentation as to nature of instrument).

Rhode Island. Phillips v. Potter (1862) 7 R. I. 289, 82 Am. Dec. 598. In this connection see IV. supra, dealing with sealed instruments.

82 United States. Tinsley v. Jemison (1896) 20 C. C. A. 371, 38 U. S. App. 665, 74 Fed. 177; Cook v. Sterling Electric Co. (1907) 80 C. C. A. 502, 150 Fed. 766; Hubert v. Apostoloff (1921; D. C.) 278 Fed. 673 (affirmed in (1922; C. C. A. 2d) 285 Fed. 161); Pennok Oil Co. v. Roxana Petroleum Co. (1923; C. C. A. 8th) 289 Fed. 416 (contract for purchase of oil and gas rights).

Alabama.-Paysant v. Ware (1840) 1 Ala. 160; Waddell v. Glassell (1851) 18 Ala. 561, 54 Am. Dec. 170; Bank of Guntersville v. Webb (1895) 108 Ala. 132, 19 So. 14.

Colorado.-Sellar v. Clelland (1875) 2 Colo. 532; Johnson v. Cummings (1898) 12 Colo. App. 17, 55 Pac. 269. Connecticut. Callahan v. Jursek

(1924) 100 Conn. 490, 124 Atl. 31 (contract to purchase agency for signal device).

Delaware.-Thomas v. Grise (1898) 1 Penn. 381, 41 Atl. 883 (contract for sale of newspaper and plant).

Georgia. Janes v. Mercer Univers

d. Contracts generally.

Various classes of contracts are treated separately in the annotation, but attention is called in the footnote 82 to cases of a general or miscellaneous nature which have applied, or at least recognized, the rule permitting the introduction of parol or extrinsic evidence to establish fraud

ity (1855) 17 Ga. 515 (donation to school); Lunday v. Thomas (1858) 26 Ga. 537; McBride v. Macon Teleg. Pub. Co. (1897) 102 Ga. 422, 30 S. E. 999; McCrary v. Pritchard (1904) 119 Ga. 876, 47 S. E. 341 (contract for purchase of insurance business); Chicago Bldg. & Mfg. Co. v. Butler (1913) 139 Ga. 816, 78 S. E. 244; Hayes v. Farmers Bank (1915) 143 Ga. 183, 84 S. E. 442 (agreement acknowledging title to collateral securities in plaintiff signed on misrepresentations as to nature of instrument); Hixon v. Hinkle (1923) 156 Ga. 341, 118 S. E. 874 (assignment of bonds); State Historical Asso. v. Silverman (1909) 6 Ga. App. 560, 65 S. E. 293 (subscription); Thomason & Sons v. Goldman (1911) 9 Ga. App. 349, 71 S. E. 596; Loyless v. Hesse Envelope & Lithographing Co. (1912) 10 Ga. App. 660, 74 S. E. 90 (contract for special envelops).

Illinois. Block v. Wabash, St. L. & P. R. Co. (1884) 111 Ill. 351, 53 Am. Rep. 628 (shipping contract); Barrie v. Frost (1902) 105 Ill. App. 187 (book subscription; statute referred to).

Indiana. Hines v. Driver (1880) 72 Ind. 125 (contract to purchase interest in partnership); Citizens Nat. Bank v. Kerney (1915) 59 Ind. App. 96, 108 N. E. 139 (composition agreement with creditors); Marker v. Outcault Adv. Co. (1919) 69 Ind. App. 344, 122 N. E. 32 (contract for advertising service); Tribune Co. v. Red Ball Transit Co. (1926) 84 Ind. App. 666, 151 N. E. 338 (rehearing denied in (1926) 84 Ind. App. 672, 151 N. E. 836 (advertising contract; rule recognized); Mt. Pleasant Coal Co. v. Watts (1926 Ind. App. -, 151 N. E. 7 (contract of employment).

Iowa. Hunt v. Carr (1852) 3 G. Greene, 581 (contract for carriage of goods); First Nat. Bank v. Hurford (1870) 29 Iowa, 579 (contract of subscription in aid of railroad); Nixon v. Carson (1874) 38 Iowa, 338 (contract for manufacture and delivery of plows); Wilson Sewing Mach. Co. v.

inducing a written contract, notwithstanding the principle prohib

Sloan (1879) 50 Iowa, 367 (contract for sewing-machine agency); Mann v. Taylor (1889) 78 Iowa, 355, 43 N. W. 220 (contract for agency for patented articles); Burlington Lumber Co. v. Evans Lumber Co. (1896) 100 Iowa, 469, 69 N. W. 558 (written assignment by debtor to creditor); Joseph v. Mangos (1921) 192 Iowa, 729, 185 N. W. 464 (contract of purchase of interest in partnership business). See also The Wisconsin v. Young (1851) 3 G. Greene, 268 (fraud or mistake in bill of lading); Davis v. Dumont (1873) 37 Iowa, 47 (contract of subscription in aid of railroad).

Kansas. See Bird & M. Map Co. v. Jones (1882) 27 Kan. 177 (contract for map); Hart v. Haynes (1915) 96 Kan. 262, 150 Pac. 530; Outcault Adv. Co. v. Smalley (1917) 101 Kan. 645, 168 Pac. 677 (contract for right to use advertising matter).

Kentucky.

Vansant v. Runyon (1898) 19 Ky. L. Rep. 1981, 44 S. W. 949.

Michigan.

Hobbs v. Solis (1877) 37 Mich. 357 (fraud in execution of contract for installation of lightning rods); Rambo v. Patterson (1903) 133 Mich. 655, 95 N. W. 722 (contract to purchase interest in real estate business); Schupp v. Davey Tree Expert Co. (1926) 235 Mich. 268, 209 N. W. 85 (fraud in obtaining signature to contract for treatment of trees).

Minnesota. Vilett v. Moler (1900) 82 Minn. 12, 84 N. W. 452 (contract of apprenticeship in barber college); Silliman v. Dobner (1925) 165 Minn. 87, 205 N. W. 696 (contract for installation of rendering plant; GANLEY BROS. v. BUTLER BROS. BLDG. Co. (reported herewith) ante, 1 (contract to construct highway).

Missouri. Metropolitan Paving Co. v. Brown-Crummer Invest. Co. (1925) 309 Mo. 638, 274 S. W. 815 (fraud inducing assignment of contract); Beck & P. Lithographing Co. v. Obert (1892) 54 Mo. App. 240 (contract for advertising matter); Horne v. John A. Hertel Co. (1914) 184 Mo. App. 725, 171 S. W. 598 (contract of employment); Shallcross Printing & Stationery Co. v. Brown (1916) - Mo.

iting the varying or contradicting of written instruments by parol. App.- 185 S. W. 745 (contract to print advertisement in directory).

Montana. Sathre v. Rolfe (1904) 31 Mont. 85, 77 Pac. 431 (contract for sale of business which, through fraud, omitted lease of premises).

New Jersey. Sheldon Co. v. Harleigh Cemetery Asso. (1905) 73 N. J. L. 115, 62 Atl. 189 (misrepresentation that defendant had sent word to his agent to sign contract); Margolis v. Pinnas (1924) 99 N. J. L. 515, 124 Atl. 529 (contract to procure loan).

New York.-Callanan v. Keeseville, A. C. & L. C. R. Co. (1910) 199 N. Y. 268, 92 N. E. 747; Electrical Audit & Rebate Co. v. Greenberg (1907) 56 Misc. 514, 107 N. Y. Supp. 110 (misrepresentation that 'contract for inspection of electrical installation conformed to oral agreement); Jackson v. State (1924) 210 App. Div. 115, 205 N. Y. Supp. 658 (affirmed on opinion below in (1925) 241 N. Y. 563, 150 N. E. 556) (contract for excavating).

North Dakota.-Dalheimer v. Lucia (1923) 50 N. D. 78, 194 N. W. 925 (cropping contract).

Maute v. Gross (1867) 56 Pa. 250, 94 Am. Dec. 62 (agreement to accept oil as per sample in payment of judgment, induced by fraudulent representations regarding sample); Witte v. Dixon (1878) 35 Leg. Int. 114 (contract for sale of grocery business; evidence admissible of seller's agreement, omitted from writing, not to re-enter business).

Rhode Island. Continental Illustrating Co. v. Longley Motor Sales Co. (1921) 43 R. I. 552, 113 Atl. 870 (contract for advertising matter; misrepresentation as to nearest place which would have similar matter).

The rule has been applied or recognized, for instance, in cases of conAmerican Cotton Co. v. Collier (1902) 30 Tex. Civ. App. 105, 69 S. W. 1021 (contract for conveyance of gin plant to new corporation which was to be organized for carrying on the business, induced by misrepresentations as to cotton-compress discovery); international Land Co. v. Parmer (1909) 58 Tex. Civ. App. 70, 123 S. W. 196 (promise made without intention of performance to secure extension of note, inducing written contract not specifying this consideration); Southern Badge Co. v. Smith (1911) - Tex. Civ. App., 141 S. W. 185 (order for badges or buttons induced by fraudulent representations that president of association who signed order was not to be personally 'bound); Chicago, R. I. & G. R. Co. v. Howell (1914) Tex. Civ. App. 166 S. W. 81 (railroad ticket); McCaskey Register Co. v. Mann (1926) Tex. Civ. App. —, 283 S. W. 544 (contract for installation of bookkeeping system).

Utah. Swanson v. Sims (1917) 51 Utah, 485, 170 Pac. 774 (contract by seller of motion picture theater not to engage in competing business).

Vermont. Cameron v. Estabrooks (1901) 73 Vt. 73, 50 Atl. 638 (contract of employment; misreading of contract).

Virginia. Farmers' Mfg. Co. v. Woodworth (1909) 109 Va. 596, 64 S. E. 986 (contract to manufacture amusement device).

Washington. Kinnane v. Conroy (1909) 52 Wash. 651, 101 Pac. 223 (assuming rule with regard to contract of employment as real estate broker; misreading of contract); Boynton v. Johnson (1912) 68 Wash. 370, 123 Pac. 522 (railroad-construction contract); Gleason Co. v. Carman (1920) 109 Wash. 536, 187 Pac. 329 (contract to manufacture and install special lighting fixtures); Svarz v Dunlap (1925) 134 Wash. 555, 235 Pac. 801 (agreement with architect to draw plans for and supervise building induced by fraudulent representation as to cost); Bertelson V. Arthur (1926) 138 Wash. 445, 244 Pac. 695 (contract of sale of apartment-house lease and furniture).

West Virginia.-Corns-Thomas Engineering & Constr. Co. v. County Ct. (1922) 92 W. Va. 368, 115 S. E. 462

tracts which involved advertising,83 although the written contract expressly (contract for excavation and construction work).

Wisconsin. Hurlbert v. T. D. Kellogg Lumber & Mfg. Co. (1902) 115 Wis. 225, 91 N. W. 673 (contract for cutting and delivery of logs); Creasey Corp. v. Dunning (1924) 182 Wis. 388, 196 N. W. 775 (misrepresentations as to credits to which subscribing member in wholesale grocery association would be entitled; recognizing rule).

England. Hotson v. Browne (1860) 9 C. B. N. S. 442, 142 Eng. Reprint, 174 (contract for advertisements).

83 See cases in note 82, supra, in which, as there indicated, advertised contracts were involved.

It is held in Beck & P. Lithographing Co. v. Obert (1892) 54 Mo. App. 240, that parol evidence is admissible in an action for breach of a contract for advertising matter, purporting to be an order by the defendant from the plaintiff, a lithographing company, for "5 M." display cards, to show that the plaintiff's agent fraudulently represented to the defendant, who had an imperfect knowledge of English, that the terms quoted meant 500, which was the number orally agreed upon, and that the defendant executed the order in reliance upon such false representation.

And it is held in Shallcross Printing & Stationery Co. v. Brown (1916)

Mo. App., 185 S. W. 745, that evidence of fraudulent representations was improperly disregarded by the trial court on the theory that the same tended to vary and enlarge the terms of the written contract, where an action was brought by the assignee of a contract to insert an advertisement for the defendant in an automobile directory, to recover the agreed price of the same; and it appeared that, although the written contract merely contained the order for the publication and the price, with the words "five thousand edition" printed across the end of the contract, the defendant offered evidence to prove that the party taking the order positively represented that the entire edition of 5,000 copies of the proposed publication had been subscribed for and sold in advance, that the defendant believed and relied on this representation, and did not discover the falsity of the same until the book had been