purported to contain the entire agreement of the parties.84 The same is true with regard to contracts of subscrip

printed and tendered, when payment was refused.

84 In Outcault Adv. Co. v. Smalley (1917) 101 Kan. 645, 168 Pac. 677, it was held that, although the written contract for the exclusive use by the defendant of certain advertising matter to be furnished by the plaintiff provided that "all promises and agreements are stated herein; verbal agreements with salesmen not authorized," -parol evidence was admissible to show false representations by the plaintiff's salesman to the effect that he had made arrangements with newspapers to carry the advertisement at a certain rate. It was held that an instruction was not erroneous that, if the jury found that the salesman made false representations, in order to procure the contract, the clause in question would not apply to the defense interposed, for the reason that a principal may not send out an agent for the purpose of soliciting contracts, and, after a contract has been obtained by false and fraudulent representations, accept the contract and at the same time avoid the effect of such fraudulent statements made to procure it, by incorporating a clause of this kind in the agreement.

And the doctrine that antecedent negotiations are not merged in the written contract when fraud inducing the contract is in issue, and that oral testimony tending to prove fraud is admissible, even though it may vary, add to, or contradict the terms of the written instrument, is recognized in Marker v. Outcault Adv. Co. (1919) 69 Ind. App. 344, 122 N. E. 32, notwithstanding the contract (for advertising service) contained a provision that, "all promises and agreements are stated herein; verbal agreements with salesman not authorized." But the effect of such a provision is not discussed. The alleged fraud consisted in false representations on the part of the seller's agent as to the terms at which advertisements would be carried by a newspaper, and as to another merchant having agreed to order similar advertising matter.

In an action on a written contract for the furnishing by the plaintiff to the defendant of certain cards weekly for advertising purposes, where the 56 A.L.R.-6

tion for books,85 or for a bookkeeping system,86 notwithstanding special stipulations in the contract.87

defense was fraud in the procuring of the contract, in that the agreement was that the cards would be furnished every two weeks, and the plaintiff's agent at the time the contract was signed pretended to change the contract in this regard, but failed to do so, it was held in Hart v. Haynes (1915) 96 Kan. 262, 150 Pac. 530, that parol evidence of the fraud was not precluded by a recital in the caption of the contract or order to the effect that the plaintiff could not be held responsible for any provisions not embodied in the writing, and that the contract could not be canceled without the written consent of the company, since such a recital did not limit or restrict the rights of the parties in a defense that the contract was procured by fraud.

85 In Jewett v. Carter (1882) 132 Mass. 335, an action on a contract for the price of a book, in which the defense was false representations in procuring the defendant's signature to the contract of subscription, it was held that parol evidence was admissible to show false representations by the plaintiff's agent making the sale as to what the book would contain, notwithstanding it was objected that, as the title of the book (history of a designated county) had a well-defined and unambiguous meaning, parol evidence was not admissible to show in what sense the words were understood by the party.

86 In an action for the purchase price of a bookkeeping system sold by the plaintiff to the defendant, it was held in McCaskey Register Co. v. Mann (1926) Tex. Civ. App. --, 283 S. W. 544, that the parol-evidence rule was not violated by the admission of evidence on the part of the defendant to show that the real contract between the parties was an oral one whereby the defendant purchased the system on condition that it prove satisfactory after installation by the plaintiff, and that otherwise it would be removed and no charges would be made, and that the written contract was signed by him, without reading it, on false representations by the seller's agent that it embodied the terms of the oral agreement, notwithstanding the fact that the written contract expressly

It has been held, also, in cases involving construction contracts, that

stated that there should be no goods sold on trial.

87 See McCaskey Register Co. V. Mann (Tex.) supra.

The parol-evidence rule was held not violated in J. B. Millett Co. v. Andrews (1913) 175 Mich. 351, 141 N. W. 578, where the written contract for the purchase by the defendant from the plaintiff of a set of books contained an agreement, also, that the purchaser should receive a deed for a certain lot, by the admission of evidence to show false representations made by the seller's agent regarding the lot, inducing the contract, notwithstanding the written agreement provided that no promise or representations had been made other than were expressed therein.

And, in an action on a written contract of subscription for books obtained by an agent of the plaintiff, it Iwas held in Smith v. Hildenbrand (1895) 15 Misc. 129, 36 N. Y. Supp. 485, that, as fraud vitiates all contracts, and one cannot escape from the penalty of fraudulent representations made by his agent within the scope of his apparent authority, by a stipulation in the contract that he is not to be held responsible for any agreement or promise not expressed in the contract in writing, parol evidence was admissible, notwithstanding such stipulation, of alleged false representations made by the agent as to the contents of the books to be delivered.

In Edward Thompson Co. v. Sawyers (1921) 111 Tex. 374, 234 S. W. 873, the court applied the doctrine that the rule excluding parol evidence to vary the terms of a written contract does not preclude the admission of such evidence to show fraud avoiding the contract, to a case where a written contract for the sale of an encyclopædia of law contained a provision that no representations or guaranties had been made by the salesman on behalf of the seller which were not expressed in the written contract. It was held that, notwithstanding this provision, evidence was admissible, in an action by the seller against the purchaser for the balance of the purchase price, in support of the defendant's plea of fraud, to show false representations made by the seller's agent, without intention of performance, that the seller would continue to publish and deliver

the parol-evidence rule did not preclude admission of evidence to prove

supplements for a certain number of years or for so long as the purchaser continued to practise law.

In

So, notwithstanding a provision in a contract for sale of a set of law books, that "no representation or agreement has been made by salesman not herein stated," it was held in American Law Book Co. v. Fulwiler (1920) Tex. Civ. App., 219 S. W. 881, that the rule applied that parol evidence is always admissible to show that a written contract was obtained by fraud, which in this instance consisted in false representations of the seller's agent that the work subscribed for was in plate ready for the press. The court said: "It is insisted that evidence of the salesman's representation of existing facts contradicts this portion of the written contract. this there is no merit. Parol evidence is always admissible to show that an instrument was obtained by fraud. If the contract sued upon was obtained by fraud, the portion thereof relied upon by the appellant never became operative or effective. The parol evidence of the false and fraudulent representations as to the existing facts is not introduced to vary or contradict that portion of the written contract, but to show that this portion and every other part of the contract never became operative or binding upon the appellee. Evidence of the oral representations made by the salesman of existing facts does not alter or vary any of the contractual obligations assumed by the parties in the written contract, but merely contradicts a recitation of fact."

And, although no special point is made in the opinion of this fact, it may be noted that in State Historical Asso. v. Silverman (1909) 6 Ga. App. 560, 65 S. E. 293, the contract for the purchase of a book, to be published at a future date, contained a stipulation, "No agreement recognized unless embodied herein," and the court nevertheless regarded parol evidence as admissible to show that the contract was induced by fraudulent representations as to what the book would contain, on the theory that such evidence would not vary or contradict the terms of the contract, but absolutely destroy it. There were, however, other grounds for the decision.

fraud inducing the execution of the written contract,88 notwithstanding stipulations of the contract purporting

88 Parol evidence that a subcontract for railroad-construction work was induced by false representations by one of the parties to the contract that the material to be moved would be loose dirt only, and that a haul of only a certain distance would be required, which prevented the other party from making a personal inspection, is not objectionable as contradicting varying the terms of a written contract which is silent as to these matters. Boynton v. Johnson (1912) 68 Wash. 370, 123 Pac. 522.

or

89It was held in GANLEY BROS. V. BUTLER BROS. BLDG. Co. (reported herewith) ante, 1, that the rule admitting parol evidence to show fraudulent representations inducing the execution of a written contract was applicable, notwithstanding the contract (for the construction of a highway) contained a provision that the contractor was familiar with the kind and character of the work to be done, was experienced in road building, knew all the requirements, and was not relying upon any statements made by the other party in respect thereto. The court said: "Parol evidence is admissible to show that the making of the contract was procured by fraudulent representations. This does not vary the terms of the contract. It is merely to show the presence of fraud which permits an avoidance of the contract. Established fraud impeaches its validity. A contract resting on fraud, when under attack, cannot stand. The fact that the contract has been reduced to writing does not change the rule. The written agreement may express what was intended, but the wronged party so intended because of the fraud, and not otherwise. The contract as written was induced by the fraud. The evidence in proof of the fraud establishes the inducing or influencing cause, and in no way varies or contradicts the terms of the contract. This rule cannot be curtailed or destroyed by writing in the contract: "This contract was not procured by fraud.' If so, a party could take advantage of his own fraud, if he could succeed, by fraud if necessary, in getting into the instrument a clause negativing fraud. The evidence relates to an inducing cause which is

to negative extraneous representations or reliance thereon.89 And the general principle indicated has been

entirely distinct from the terms of the contract, which are in no sense varied or modified. Our decisions, which are cited, have silently, but effectually, erased the holding of Peterson v. Landahl (1902) 86 Minn. 32, 89 N. W. 1131 [set out in annotation in 10 A.L.R. on p. 1474], which can no longer be considered the law of this state. Counsel argues with persuasion that a party should have the legal right to let his work to a certain person because the other will therein agree that he relies and acts only upon his own knowledge, and not upon the representations of his adversary. On first thought this suggestion seems plausible. It would seem that a man should have this right. It is not in itself unreasonable. But is it sound? It is superfluous where there is no fraud. It may be desirable in dealing with unscrupulous persons to have this clause as a shield against wrongful charges of fraud. But if there is no fraud that fact will be established on the trial. The merits of defendants' claim reach only the expense and annoyance of litigation. But every person should have his day in court. The making of the contract is not compulsory. We are unable to formulate a rule of law sustaining defendants' contention which would not at the same time give opportunities for the commission of fraud for which the wronged party would have no redress. The authorities will

not permit a distinction so as to allow the contract to be valid and binding to the extent that the defrauded party has agreed and unalterably committed himself to the fact that he has not relied upon any statements or representation of his adversary, but upon his own knowledge and information. Moreover, this limitation would effectually destroy the general rule, because, in the absence of reliance, there is seldom actionable fraud."

Where a contract was made with the state for the construction of a portion of a canal, it was held in 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), that the contractor was not precluded from showing that the contract had been induced by fraudulent

misrepresentations on the part of the agent of the state as to the nature of the stratum through which it was necessary to excavate, by a provision of the contract to the effect that the contractor had satisfied himself by his own investigation regarding all of the conditions affecting the work, and that his conclusion to execute the contract was based on such investigation and research, and not on estimates or other information prepared by the state engineer, and that he would make no claim against the state because any of the estimates or representations of any kind affecting the work, made by any officer or agent of the state, might prove erroneous. The court said that a party to a contract cannot, by misrepresentation of a material fact, induce the other party to enter into it to his damage, and then protect himself from the legal effect of such misrepresentation by inserting a clause to the effect that he is not to be held liable for the misrepresentation which induced the party to enter into the contract; that the effect of misrepresentation and fraud cannot be thus easily defeated; and that, if it could, the implied covenant of good faith and fair dealing existing in every contract would cease to exist. It was said, further, that a contract to take a thing with all faults does not mean that it is to be taken with all frauds.

other

So, a contract for excavation and construction work for a county, containing a stipulation to the effect that the contractor was fully informed as to all conditions affecting the work to be done, as well as the labor and material to be furnished, that such information was secured by personal investigation and research, and not wholly from the estimate of the county engineer, and that he would make no claim against the county by reason of estimates, tests, or representations made by any of its officers or agents, should not be so construed as to make it available as an instrument of fraud and oppression; and if, in procuring such a contract, an agent of the county, by way of inducement, makes a false representation of such character as, under the circumstances, vests in the contractor the right of rescission of the contract, on the ground of fraud, the contractor is not precluded

from the exercise of the right by such a stipulation. Corns-Thomas Engineering & Constr. Co. v. County Ct. (1922) 92 W. Va. 368, 115 S. E. 462.

And, in an action by contractors against a municipal corporation for deceit in that they were induced to enter into a contract for the construction of sewage works by statements of the defendant's engineers as to the existence and location of an old wall, which statements were made with knowledge of their falsity, or with such reckless indifference to their truth as amounted to fraud, it was held in Pearson v. Dublin [1907] A. C. (Eng.) 351-H. L., that the plaintiffs were not precluded from relying on the alleged fraud and requiring submission of this question to the jury, by provisions in the written contract to the effect that the contractors should satisfy themselves as to the dimensions, levels, and nature of all existing works, that the corporation did not hold itself responsible for the accuracy of information as to existing works, and that no charges for extra work or otherwise would be allowed in consequence of incorrect information or inaccuracy in the drawings or specifications. It was held that these clauses contemplated honesty on both. sides, and protected only against honest mistakes. and not against fraud. The Lord Chancellor observed that it seemed clear that no one can escape liability for his own fraudulent statements by inserting in a contract a clause that the other party shall not rely upon them; that the principal and the agent are one, and it does not matter which of them makes the false statements; but he also pointed out that he did not intend to hold that a person who is himself innocent may not under any circumstances, however peculiar, guard himself by apt and express clauses in the contract, against liability for the fraud of his own agents.

plaintiff as to the negotiations and terms of agreement between himself and the ticket agent concerning the purchase of the ticket, that, as the ticket was in writing and constituted a written contract, such testimony would vary and contradict the written provisions, where the petition alleged that, through mistake, fraud, and negligence on the part of the agent, there was a failure to incorporate the real agreement in the ticket.

And, in an action against common carriers for damages sustained through their alleged negligence in the carriage of goods, it was held in Hunt v. Carr (1852) 3 G. Greene (Iowa) 581, that the court improperly refused to permit the introduction of evidence to show fraud inducing the execution of the written contract, consisting in misrepresentations by the plaintiff as to the distance and condition of the road between the points of carriage, with which matter the carriers were not familiar. The written contract contained no representations or statements in this regard.

In an action at law on a contract contained in a written order by the defendant on the plaintiff, for the latter to manufacture and deliver a certain number of plows at a specified price, it was held in Nixon & Co. v. Carson (1874) 38 Iowa, 338, that it was competent to show by parol evidence, as a defense, that the contract was induced by prior false and fraudulent representations concerning the character and quality of the plows contracted for.

Where a provision in the contract for sale of a motion-picture theater, prohibiting the seller from engaging in a competing business for five years, was not a part of the oral contract, and was objected to by the seller before signing, but he was induced to execute the contract on the representations of the purchaser that this provision would not be enforced, and that the seller would be given a written statement to this effect, it was held in Swanson v. Sims (1917) 51 Utah, 485, 170 Pac. 774, that it was not a valid objection to the admission of parol evidence to show fraud on the part of the purchaser in making the representations or promises indicated, without intention of performance, that the same tended to vary or contradict the written contract.

The rule excluding parol evidence

to vary or contradict a written contract has no application to preclude proof by parol of the false and fraudulent representations made by mechanical experts as to the safety and suitableness of an amusement device which they were engaged to manufacture according to a certain plan, by one who was ignorant of such matters and relied on their representations, although the contract was subsequently reduced to writing, where the action is by the latter for damages for such false representations. Farmers' Mfg. Co. v. Woodworth (1909) 109 Va. 596, 64 S. E. 986.

A written permit to a telegraph company to locate its line wherever it chooses over the premises of the party granting the permit may be shown to have been induced by fraudulent representations that the line would be located at a certain place. Mason v. Postal Teleg. Cable Co. (1905) 71 S. C. 150, 50 S. E. 781.

The rule that all the evidence as to oral agreements, understandings, or representations made at the time of the execution of the written contract, or prior thereto, which tends to sustain a charge of fraud in procuring its execution, is admissible, in an action. for annulment of the contract and for damages, was applied in Port Banga Lumber Co. v. Export & Import Lumber Co. (1914) 26 Philippine, 602 (appeal dismissed on question of jurisdiction in (1915) 237 U. S. 388, 59 L. ed. 1009, 35 Sup. Ct. Rep. 604), where a corporation, which had an oral agreement with another company for the furnishing of logs on joint account, to fill a contract with third parties which the latter company expected to procure, was subsequently induced to enter into a written agreement for the furnishing of the logs, on less advantageous terms, by fraudulent representations on the part of an officer of the other company as to the price which the third parties were to pay for the same.

In The Tarquin (1874) 2 Low. Dec. 358, Fed. Cas. No. 13,755, it was held that courts of admiralty may admit all evidence to prove that illiterate seamen signed a contract which was not read to them, and which differed from their parol engagement, even without proof that any fraud was intended to be practised upon them, this being true because the variation in favor of the ship owner operates as a practical