BILL ANALYSIS �
AB 824
Page 1
Date of Hearing: May 7, 2013
ASSEMBLY COMMITTEE ON JUDICIARY
Bob Wieckowski, Chair
AB 824 (Jones) - As Introduced: February 21, 2013
PROPOSED CONSENT
SUBJECT : WRITTEN AGREEMENTS: EXCLUSION OF EVIDENCE
KEY ISSUE : SHOULD THE PAROL EVIDENCE RULE, WHICH EXPRESSLY NOW
APPLIES ONLY TO DEEDS, WILLS, AND CONTRACTS, BE AMENDED TO
CODIFY CASE LAW ESTABLISHING THAT TRUST INSTRUMENTS ARE ALSO IN
THE SCOPE OF THE RULE?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This non-controversial bill, sponsored by the Conference of
California Bar Associations, seeks to amend the parol evidence
rule to expressly include trust agreements among the types of
written agreements to which the rule applies. The parol
evidence rule embodies the longstanding principle that if a
written agreement is intended to be final and complete, its
terms cannot be contradicted by evidence of an earlier agreement
or contemporaneous oral agreement. Section 1856 of the Code of
Civil Procedure, the statutory expression of this rule in
California, currently applies only to written agreements that
include deeds, wills, and contracts between parties. This bill
would simply codify case law establishing that trust instruments
are in the scope of the parol evidence rule. There is no known
opposition to this bill.
SUMMARY : Provides that the parol evidence rule, in addition to
deeds, wills, and contracts between parties, also shall apply to
trust agreements.
EXISTING LAW :
1)Provides that terms set forth in a writing intended by the
parties as a final expression of their agreement with respect
to such terms as are included therein may not be contradicted
by evidence of any prior agreement or of a contemporaneous
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oral agreement. (Code of Civil Procedure Section 1856(a).
Unless otherwise stated, all further references are to this
code.)
2)Defines "agreement", for purposes of the parol evidence rule,
to include deeds and wills, as well as contracts between
parties. (Section 1856(f).)
3)Provides that the terms set forth in a writing to which the
rule applies may be explained or supplemented by evidence of
consistent additional terms unless the writing is intended
also as a complete and exclusive statement of the terms of the
agreement. (Section 1856(b).)
4)Provides that the terms set forth in a writing to which the
rule applies may be explained or supplemented by course of
dealing or usage of trade or by course of performance.
(Section 1856(c).)
5)Provides that the court shall determine whether the writing is
intended by the parties as a final expression of their
agreement with respect to such terms as are included therein
and whether the writing is intended also as a complete and
exclusive statement of the terms of the agreement. (Section
1856(d).)
COMMENTS : This non-controversial bill, sponsored by the
Conference of California Bar Associations, seeks to amend the
parol evidence rule to expressly include trust agreements among
the types of written agreements to which the rule applies.
The parol evidence rule is a rule of substantive law that
generally prohibits the introduction of any extrinsic evidence,
whether oral or written, to vary, alter, or contradict the terms
of an integrated written instrument intended by the parties as a
final expression of their agreement. (Morey v. Vanunucci (1998)
64 Cal.App. 4th 904.) Section 1856 of the Code of Civil
Procedure, the statutory expression of this rule in California,
currently applies only to written agreements that include deeds,
wills, and contracts between parties.
This bill would simply codify case law establishing that trust
instruments are in the scope of the parol evidence rule.
According to the author:
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The issue arises from time to time in pleadings, when
an inexperienced lawyer argues that trust instruments
should not be subject to the parol evidence rule.
Although these arguments are quickly disposed of by
reference to case law, everyone's time has already
been wasted in the process. This simple change will
promote clarity and consistency in the law, and will
reduce unnecessary litigation and cost by obviating
any obviously futile attempts to litigate the issue of
whether the parol evidence rule applies in these
cases.
Despite the fact that trust instruments are not specifically
mentioned in Section 1856, courts in California have repeatedly
held that trust instruments are within the scope of the parol
evidence rule. (See, e.g., Lonely Maiden Productions, LLC. v.
Goldentree Asset Management, LP (2011) 201 Cal. App. 4th 368,
holding that in interpreting the settlor's words and conduct in
connection with the alleged creation of a trust, the
circumstances surrounding the transfer may be considered unless
they are excluded by the parol evidence rule. See also Miller
v. Security-First National Bank of Los Angeles (1933) 219
Cal.120, 128-129; Wells Fargo Bank v. Marshall (1993) 20
Cal.App.4th 447, 453; Levy v. Crocker-Citizens National Bank
(1971) 14 Cal.App.3d 102, 104; Krapp v. Sterling Savings and
Loan Assoc. (1970) 9 Cal.App.3d 1033, 1045.)
The purpose of the California parol evidence rule is to make
sure the parties' final understanding, deliberately expressed in
writing, shall not be changed. (Iconix v. Tokuda (2006) 457
F.Supp.2d 969.) In disputes involving trust instruments, courts
have held that it is the intention of the trustor which is the
focus of the court's inquiry. (Estate of Lindner (1978) 85
Cal.App.3d 219, 226.) Courts have held that in interpreting a
document such as a trust, it is proper for the court to consider
the circumstances under which the document was made so that the
court may be placed in the position of the trustor whose
language it is interpreting, in order to determine whether the
terms of the document are clear and definite, or ambiguous in
some respect. (Estate of Russell (1968) 69 Cal.2d 200,
208-210.) For these reasons, the author contends that it is
good public policy for the parol evidence rule to also apply to
trust instruments, so as to ensure that the intent of the
trustor and the integrity of the final written agreement are
protected by the rule, as they are for deeds, wills, and other
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contracts between parties.
REGISTERED SUPPORT / OPPOSITION :
Support
Conference of California Bar Associations (CCBA)
Opposition
None on file
Analysis Prepared by : Anthony Lew / JUD. / (916) 319-2334