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McDonnell v. General News Bureau Inc.

September 21, 1937


Appeal from the District Court of the United States for the Eastern District of Pennsylvania.

Author: Buffington

Before BUFFINGTON and BIGGS, Circuit Judges, and DICKINSON, District Judge.

BUFFINGTON, Circuit Judge.

In the court below Arthur C. McDonnell, a citizen of Pennsylvania, brought suit on June 4, 1934, against the General News Bureau, Inc., a corporate citizen of Illinois, to recover for breach of an alleged oral contract of employment made in July, 1929. Defense was made, inter alia, that defendant's employment of plaintiff was by a written contract dated August 19, 1929, signed by both parties, that all prior negotiations were presumed by law to be embodied in said writing, and that the plaintiff could not recover on its alleged prior oral contract. On the trial the court refused the defendant's point for binding instruction in its favor and submitted the case to the jury, which found a verdict for the plaintiff. Subsequently, on motion of the defendant, a judgment in its favor n. o. v. was entered by the court. Thereupon, plaintiff took this appeal.

The proofs in the case and the law bearing thereon are set forth at length in the court's opinion, reference to which saves present restatement. Its opinion was predicated on the conclusions, first, that the written contract by its terms embodied the whole subject of plaintiff's employment; second, that the plaintiff's evidence was not of the indubitable character required by federal and Pennsylvania decisions to cancel the written contract.

After due consideration had, we are of opinion the court was justified in so holding, and that it was in error in refusing defendant's request for binding instructions. Indeed, the court frankly conceded its error, and accordingly entered a judgment non obstante veredicto in favor of defendant.

The decisive questions here involved are, first, whether the court was in error in its conclusion that binding instruction should have been given. In that regard the court said:

"On August 19, 1929, McDonnell signed a written contract by which the defendant agreed to employ him for a period of five years at salary of $150 per week. This contract appears to be a complete instrument in all respects, and it contains no reference to any prior verbal arrangements. It deals with the plaintiff's business as follows: '(3) to induce General News Bureau to enter into this agreement and pay the compensation herein mentioned Mr. McDonnell agrees: * * * to give up and abandon the news service business now conducted by him in the city of Philadelphia. * * * ' That is all. There is no suggestion that the defendant is to pay any separate price for the business or that McDonnell is to receive any money beyond his salary. The agreements to pay $500 for moving and to take on McDonnell's employees are not mentioned.

"The plaintiff admitted that he signed the paper, and therefore is confronted by the parol evidence rule.

"Wigmore statement of the rule is, 'When a legal act is reduced into a single memorial all other utterances of the parties on that topic are legally immaterial for the purposes of determining what are the terms of their act.'

"Of course, in order to call the parol evidence rule into operation, it is necessary that the parties intended to embody the subject matter of a transaction exclusively in the document. Whether or not they did so is a question which the court must determine -- primarily from the document itself -- but where that is not conclusive, by resort to evidence of the circumstances and nature of the entire transaction. At the trial I submitted this question to the jury. In so doing I was clearly wrong. Wigmore,ยง 2430(2); Seitz v. Brewers, etc., Co., 141 U.S. 510, 12 S. Ct. 46, 35 L. Ed. 837; Gianni v. R. Russell & Co., 281 Pa. 320, 126 A. 791. Under the point reserved I must now make the determination.

"The law of Pennsylvania governs. Watson Company v. Atlantic Refining Company, 42 F.2d 449 (C.C.A.3d). It is, if anything, less strict than the rule of the federal courts. Gianni v. R. Russell & Co., supra, states the Pennsylvania rule, and the case is as close, on its facts, to the present case as any I have found. The oral evidence was offered in that case not to contradict anything in the written contract but to supply a term, and the question involved was, as in the present case, whether the written contract was a complete integration of the subject matter. The court said 'When does the oral agreement come within the field embraced by the written one? This can be answered by comparing the two, and determining whether parties, situated as were the ones to the contract, would naturally and normally include the one in the other if it were made. If they relate to the same subject matter and are so interrelated that both would be executed at the same time, and in the same contract, the scope of the subsidiary agreement must be taken to be covered by the writing. This question must be determined by the court'.

"Applying this practical and workable test to the present case, I make the finding (which really is a fact finding although the basis for ruling of law) that the agreement for the purchase of the plaintiff's business and the contract of employment are so interrelated that both would naturally be executed at the same time and in the same contract.

"I think we might go further however and say that the written contract alone is sufficient to exclude oral testimony as to any agreement to pay a price for the business. As was pointed out by the Supreme Court in Seitz v. Brewers, etc., Co., supra, if the written contract on its face is complete, embracing the whole subject matter, it may be taken as the sole criterion. This written contract provides that McDonnell will give up and abandon his business and not engage in any similar business in competition with the defendant. His doing so is expressly made a condition precedent of the execution of the contract. It is in reality a part of the consideration for the defendant's promise to pay him $150 a week for five years, and vice versa, the $150 a week is the consideration for his giving up the business. What is the subject matter which the parties are dealing with in these terms? Obviously the disposition of the business conducted by McDonnell. The sole provision ...

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