Monday, January 14, 2013

Riverisland Cold Storage v. Fresno-Madera etc. Credit, S190581

Parol evidence rule (in California): the parol evidence rule protects the integrity of written contracts by making their terms the exclusive evidence of the parties’ agreement.  However, an established exception to the rule allows a party to present extrinsic evidence to show that the agreement was tainted by fraud.  Here, we consider the scope of the fraud exception to the parol evidence rule.
As we discuss below, the fraud exception is a longstanding one, and is usually stated in broad terms.  However, in 1935 this court adopted a limitation on the fraud exception:  evidence offered to prove fraud “must tend to establish some independent fact or representation, some fraud in the procurement of the instrument or some breach of confidence concerning its use, and not a promise directly at variance with the promise of the writing.”  (Bank of America etc. Assn. v. Pendergrass (1935) 4 Cal.2d 258, 263 (Pendergrass).)  The Pendergrass rule has been criticized but followed by California courts, for the most part, though some have narrowly construed it.  The Court of Appeal in this case adopted such a narrow construction, deciding that evidence of an alleged oral misrepresentation of the written terms themselves is not barred by the Pendergrass rule.
Plaintiffs, who prevailed below, not only defend the Court of Appeal’s holding but, alternatively, invite us to reconsider Pendergrass.  There are good reasons for doing so.  The Pendergrass limitation finds no support in the language of the statute codifying the parol evidence rule and the exception for evidence of fraud.  It is difficult to apply.  It conflicts with the doctrine of the Restatements, most treatises, and the majority of our sister-state jurisdictions.  Furthermore, while intended to prevent fraud, the rule established in Pendergrass may actually provide a shield for fraudulent conduct.  Finally, Pendergrass departed from established California law at the time it was decided, and neither acknowledged nor justified the abrogation.  We now conclude that Pendergrass was ill-considered, and should be overruled. (Cal. S. Ct., 14.01.13, Riverisland Cold Storage v. Fresno-Madera etc. Credit, S190581).

Parol evidence rule (en droit californien) : cette règle protège l'intégrité des contrats écrits en ce sens que leur contenu constitue l'unique moyen de preuve portant sur l'accord des parties. Une exception bien établie à cette règle permet à une partie de présenter des preuves extrinsèques pour démontrer que le contrat est entaché de fraude. Cette exception est établie depuis longtemps et elle est d'application large. Les limites que la cour avait placées à son application dans une jurisprudence de 1935, la décision Pendergrass, l'ont été à tort. Cette jurisprudence de 1935 est dès lors renversée. La présente décision constitue un revirement de jurisprudence. Les limitations introduites par Pendergrass ne trouvent aucun support dans le texte de la loi codifiant la « parol evidence rule » et codifiant l’exception pour preuve d’une fraude. En outre, Pendergrass s’est révélée difficile à appliquer. Par ailleurs, cette jurisprudence se trouve en conflit avec la doctrine des Restatements, avec la plupart des traités, et avec la majorité des Tribunaux des autres états.

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