Thompson v. Libby
34 Minn. 374 (1885)
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Rule of Law:
When a written agreement appears on its face to be a complete expression of the parties' obligations, the parol evidence rule bars the admission of extrinsic evidence to add a contemporaneous oral term, such as a warranty of quality.
Facts:
- J. H. Thompson owned a quantity of logs marked 'H. C. A.' that were cut in the winters of 1882 and 1883.
- Through his agent, D. S. Mooers, Thompson reached an agreement with E. C. Libby for the sale of these logs.
- On June 1, 1883, Thompson and Libby executed a written agreement for the sale of all of Thompson's logs marked 'H. C. A.' for ten dollars per thousand feet.
- The written agreement specified that payments were to be made in cash as scale bills were produced.
- The agreement was formally signed by both parties (Libby himself, and Thompson's agent on his behalf).
- Libby later alleged that at the time of the sale, Thompson's agent made a verbal warranty concerning the quality of the logs.
Procedural Posture:
- J. H. Thompson (plaintiff) brought an action against E. C. Libby (defendant) in a trial court for the purchase money of the logs.
- Libby defended by pleading a breach of an alleged oral warranty of quality made at the time of the sale.
- At trial, the court admitted Libby's oral testimony about the warranty over Thompson's objection that it was barred by the parol evidence rule.
- The trial court denied Thompson's subsequent motion for a new trial.
- Thompson (appellant) appealed the order denying a new trial to the Supreme Court of Minnesota.
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Issue:
Does the parol evidence rule bar the admission of oral testimony to prove a warranty of quality when the contract for the sale of goods is a written instrument that appears complete on its face?
Opinions:
Majority - Mitchell, J.
Yes, the parol evidence rule bars the admission of oral testimony to prove a warranty of quality when the contract for sale is a written instrument that appears complete on its face. The rule presumes that when parties deliberately put their agreement into a writing that imports a complete legal obligation, the writing contains their entire engagement. The completeness of the instrument must be determined from the writing itself—the 'four corners' of the document. If the document appears complete, parol evidence cannot be used to add a new term, even if the writing is silent on that particular term. A warranty of quality is not a separate, collateral agreement; it is an intrinsic term of the contract of sale. To be considered truly collateral and thus admissible, a parol promise must relate to a subject distinct from that to which the writing relates. Because the written contract here appears to be a complete and formal expression of the sale, the oral warranty cannot be added.
Analysis:
This case provides a classic and strict application of the 'four corners' approach to the parol evidence rule, significantly strengthening the finality of written contracts. By holding that the completeness of a contract is determined solely by looking at the document itself, the court prevents parties from using the very oral evidence the rule seeks to exclude to argue that the contract was incomplete. The decision solidifies the principle that a warranty is an integral part of a sales contract, not a distinct collateral matter, thereby requiring parties to include all such terms in their final written agreement. This precedent promotes commercial certainty by making it substantially harder for a party to alter or add to an apparently complete written contract after the fact.
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