BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 824|
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CONSENT
Bill No: AB 824
Author: Jones (R)
Amended: As introduced
Vote: 21
SENATE JUDICIARY COMMITTEE : 7-0, 06/11/13
AYES: Evans, Walters, Anderson, Corbett, Jackson, Leno, Monning
ASSEMBLY FLOOR : 75-0, 5/13/13 (Consent) - See last page for
vote
SUBJECT : Written agreements: exclusion of evidence
SOURCE : Conference of California Bar Associations
DIGEST : This bill adds trust instruments to the list of
agreements that are covered by the statute codifying the parol
evidence rule.
ANALYSIS :
Existing law:
1. Provides that the terms set forth in a writing intended by
the parties as a final expression of their agreement as are
included therein may not be contradicted by evidence of any
prior agreement or of a contemporaneous oral agreement.
2. Provides that the terms set forth in a writing described
above may be explained or supplemented by evidence of
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consistent additional terms unless the writing is intended
also as a complete and exclusive statement of the terms of
the agreement.
3. Requires that the court 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.
4. Specifies circumstances under which evidence is not excluded,
including, among other things, evidence of a mistake or
imperfection in the writing that is put in issue by the
pleadings, or where the validity of the agreement is in
dispute.
5. Defines "agreement" to include deeds and wills, as well as
contracts between parties.
This bill amends the definition above to include "trust
instruments" and makes other technical changes.
Background
Codified the Code of Civil Procedure, Section 1856, the parol
evidence rule, with certain exceptions, operates to bar the
introduction of any extrinsic evidence (oral or written) to vary
or add to the terms of a complete and final written agreement.
This rule is not merely a rule of evidence; rather, it is a rule
of substantive law which holds that the act of embodying the
complete terms of an agreement in writing becomes the contract
of the parties. In other words, as a matter of law, the writing
is the agreement and extrinsic evidence is excluded because it
cannot serve to prove what the agreement was when the agreement
has already been determined to be the writing itself. (2 Witkin
Cal. Evid. Documentary Evidence Secs. 59, 62.)
A writing constitutes an integration when it is intended to be a
final expression of one or more terms of the parties' agreement.
(Code of Civil Procedure [CCP] Section 1856(a).) The existence
of integration, which triggers the application of the parol
evidence rule, is a question of law for the judge, as opposed to
a question of fact for the jury. The judge must also decide
whether the writing is intended also as a complete and exclusive
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statement of the terms of the agreement-in other words, if the
agreement was completely integrated. (CCP Section 1856(d).) If
it is a completely integrated agreement, then, generally, no
extrinsic evidence may be introduced (exceptions are made in
some circumstances, such as where a mistake or imperfection in
the writing is put at issue in the pleadings.) If not, then
evidence of a consistent collateral term would not necessarily
be barred by the parol evidence rule.
To help illustrate this distinction, a written contract between
an inventor and an entity may provide that royalties received
from a license of the inventor's invention should be paid to the
entity. While the contract may, in fact, constitute an
integrated agreement as to the form of payment and thereby bar
any introduction of extrinsic evidence as to that agreement,
other evidence may still be relevant and introduced in court to
establish an agreement as to the use of that money-such as where
it is alleged that the entity had agreed use those royalties to
conduct research in the inventor's particular field. (Simmons
v. California Institute of Technology (1949) 34 Cal.2d 264.)
In such an instance, the introduction of the evidence is not
permitted in order to contradict the writing, but rather,
operates to prove a consistent additional agreed upon term that
is either agreed to for separate consideration or is such a term
as in the circumstances might naturally be omitted from the
writing. (2 Witkin Cal Evid., Documentary Evidence, Sections
65, 68, 86-87.)
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/12/13)
Conference of California Bar Associations (source)
ARGUMENTS IN SUPPORT : According to the author:
Code of Civil Procedure [Section] 1856 sets forth
California's statutory "parol evidence rule," which states,
in effect, that if a contract (or other similar document) is
intended to be final and complete, its terms cannot be
contracted by evidence of an earlier agreement or
contemporaneous oral agreement. The section specifically
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refers to deeds, wills, and contracts between the parties,
but not trust instruments.
It is completely logical and good policy for trust
instruments to be included within the parol evidence rule.
Courts have recognized this fact, and there is an abundance
of case law holding that trust instruments are indeed within
the rule's scope. (See Miller v. Security-First National
Bank of Los Angeles (1933) 219 Cal. 120, 128-129, Lonely
Maiden Productions, LCC v. Goldentree Asset Mgmt., LP (2011)
201 Cal.App.4th 447, 453, Wells Fargo Bank v. Marhsall
(1993) 20 Cal.App.4th 447, 453; Levy v. Crocker-Citizens
National Bank (1971) 14 Cal.App.3d 102, 104, Kr[o]pp v.
Sterling Savings and Loan Assoc. (1970) 9 Cal.App.3d 1033,
1045.)
Case law notwithstanding, the fact is that the statute does
not include trust instruments in the list of agreements
subject to the parol evidence rule. By adding trust
instruments to the list, AB 824 would promote clarity and
predictability in probate and trust litigation by codifying
existing case law. It also would reduce unnecessary
litigation and cost to the extent the change would
discourage (obviously futile) attempts to litigate the issue
of whether the parol evidence rule applies in these cases.
ASSEMBLY FLOOR : 75-0, 5/13/13
AYES: Achadjian, Alejo, Atkins, Bigelow, Bloom, Blumenfield,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Jones,
Jones-Sawyer, Levine, Linder, Logue, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
P�rez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,
Ting, Torres, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. P�rez
NO VOTE RECORDED: Allen, Ammiano, Holden, Lowenthal, Vacancy
AL:d 6/12/13 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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