Paragraph 218 of Schedule G of the tariff act of July 24, 1897 (30 Stat. 169 [U. S. Comp. St. 1901, p. 1648]), imposes a duty of $2 per head on cattle if they are less than one year old, and declares that all other cattle if valued at not more than $14 per head shall pay a duty of $3.75 per head, and if valued at more than $14 per head a duty of 272 per cent. ad valorem. It is true, therefore, that as the cattle in question, when correctly appraised, were not worth more than $14 per head, they did not become subject to an ad valorem duty, and that the amount of the duty payable to the government was not lessened by reason of the undervaluation. The statute, however, by its terms, imposes an additional duty of 1 per centum on account of an undervaluation, not only when the article is subject to an ad valorem duty, but also when the duty upon the article is "based upon or regulated in any manner by the value thereof." The case seems to fall, therefore, strictly within the letter and spirit of the act; for the duty on cattle, as heretofore shown, is based upon, and regulated in a measure by, the value of the animals. If cattle are more than one year old, and are valued at a sum exceeding $14 per head, they pay an ad valorem duty; otherwise the duty payable on cattle over one year old is a specific duty of $3.75 per head. The additional duty of 1 per centum is imposed, undoubtedly, to compel importers, when they enter merchandise, to make a truthful declaration concerning the value thereof, whenever the value of an article has a direct bearing upon the duty to be paid. The precise question which is involved in this case arose in Pings v. U. S., 18 C. C. A. 557, 72 Fed. 260, wherein it was decided, in a case in all respects analogous to the one at bar, that when the question whether goods are to pay a specific or an ad valorem duty depends upon whether they exceed a certain value, and an appraisement is essential, that if the appraisement discloses that the goods have been undervalued they are subject to the additional duty of 1 per centum which is imposed by section 32 of the act of July 24, 1897 IU. S. Comp. St. 1901, pp. 1701, 1893]. This case (Pings v. U. S.) was before the supreme court of the United States, and the doctrine enunciated therein was upheld, in the case of Hoeninghaus v. U. S., 172 U. S. 622, 629, 630, 19 Sup. Ct. 305, 43 L. Ed. 576.

Counsel for the defendant in error further contend that the additional duty is not recoverable by the United States in an action brought for that purpose, because the complaint does not allege that the additional duty of i per centum was levied by the collector of the port of El Paso. We are of opinion, however, that, if the additional duty ought to have been levied, collected, and paid, the amount thereof may be sued for and recovered by the United States from the importer, although there. was no formal levy. The right of the United States to the sum which was due to it and ought to have been paid was not forfeited by the neglect of the collector to make a levy, even if he was guilty of such neglect. It was not within his power, by a neglect of duty, to release a tax which was due to the United States. We feel constrained to hold, for the reasons above stated, that the case was erroneously decided by the lower court.

Its judgment is therefore reversed, and the case is remanded for a new trial.

ARNOLD V. SCHARBAUER et al.

(Circuit Court, W. D. Missouri, W. D. November 24, 1902.)

No. 2,596.

1. CONTRACTS-CONTEMPORANEOUS WRITTEN AND ORAL AGREEMENTS-CONFLICT

IN PROVISIONS.

A written contract which purports on its face to be complete cannot be varied or added to by a prior or contemporaneous parol agreement, in the absence of fraud or mistake, and especially where the written contract contained stipulations for the performance of duties and the assumption of obligations by a party which is not bound by the alleged agreement sought to be substituted.

2. SAME-MODIFICATION AS TO PARTIES-CONSIDERATION.

Where a written contract purporting to be between two parties on each side failed because of the refusal of one of the parties, upon whom obligations were imposed, to execute the same, a subsequent parol agreement by the parties, who were entitled to the benefit of such obligations, that the contract should stand with such party omitted, to be binding on them must rest upon some new and independent consideration.

Action for Breach of Contract. On demurrer to amended petition. Ward & Hadley, for plaintiff.

Lathrop, Morrow, Fox & Moore and Capps & Cantey, for defend

ants.

PHILIPS, District Judge. The original petition in this case counted upon the written contract set out in the amended petition. A demurrer thereto was sustained for the reasons assigned in the opinion of the court (see Arnold v. Scharbauer [C. C.] 116 Fed. 492), which sets out in full the written contract in question. The demurrer to that petition was sustained on the grounds, inter alia, that the Western Cattle Brokerage Company, which purported to be a party to the contract equally with Arnold, had not executed the contract, and, as it stipulated for services which were to be rendered by one or the other of them, it did not become a completed contract enforceable against the first parties at the suit of one of the parties of the second part; and for the further reason that the contract contemplated certain obligations to be assumed by said Western Cattle Brokerage Company, as well as certain liabilities for which the parties of the first part would have had a right to look to the said company in the event of a breach of the contract; and for the further reason that the contract did not express on its face any consideration to the parties of the first part for transferring their land to the corporation to be created, to represent the stock thereof to be sold by the parties of the second part. The plaintiff in his amended petition seeks to avoid the infirmities of the written contract by setting up that prior to the reduction of the contract to writing the plaintiff and defendants had an oral agreement to the effect as follows:

"That defendants should organize, as speedily as possible, a corporation under the laws of the state of Texas, to be known as the Pennsylvania &

12. See Contracts, vol. 11, Cent. Dig. § 1119.

Texas Oil Company, with a capital stock of one million five hundred thousand dollars ($1,500,000.00), whose offices should be in Kansas City, Missouri, and Beaumont, Texas, and the par value of whose stock should be ten cents (10 cents) and one dollar ($1.00) per share. It was also agreed that the defendants should furnish one representative man, in addition to themselves, as incorporators of said oil company, ten or eleven in number, at Kansas City and other eastern points, and upon the organization of said oil company defendants should convey to said oil company the lands hereinafter described, and on conveying said land to said oil company defendants were to become the owners of all the shares of capital stock of said oil company. It was further agreed that the defendants should furnish one hundred thousand dollars ($100,000) of the capital stock of said oil company, to be disposed of among the directors and shareholders of the said oil company, and should also furnish ten thousand dollars ($10,000.00) for newspaper and other advertisements, and the defendants should bear the expense of literature, stamps, and other necessary expenses. It was also agreed by plaintiff and defendants that said Western Cattle Brokerage Company or plaintiff should have the exclusive sale of said shares of stock, and for services in making an effort to sell said stock said Western Cattle Brokerage Company or plaintiff should receive ten (10) per cent. of the capital stock of said corporation, and for actually making sales of said stock should receive ten (10) per cent. of the proceeds of said sales, as a brokerage; and that said Western Cattle Brokerage Company or plaintiff should furnish an office in a centrally located building in Kansas City, Missouri, and should bear the expense of bookkeepers, stenographers, and assistant; and that while said brokerage company or plaintiff were engaged in trying to sell and in selling said stock said brokerage company or plaintiff were not to handle any other oil stock. It was further agreed by plaintiff and defendants that defendants might take said oil stock off the market at any time, on paying said brokerage company or plaintiff a reasonable compensation for services, and that the proceeds of sale of said defendants' stock should be deposited to the credit of said Pennsylvania & Texas Oil Company in a bank designated by defendants."

It is then alleged that on the same day plaintiff and defendants partially reduced said agreement to writing, and executed the same. The petition sets out, in hæc verba, the written agreement as stated in the former opinion herein. This is followed by giving a description of the lands which were intended to be included, but not described, in the written agreement, with the further statement that, at the time said oral agreement was made and partially reduced to writing and executed by plaintiff and defendants, plaintiff and defendants did not know whether the directors of the said Western Cattle Brokerage Company would authorize it to become a party to said oral agreement and writing "hereinbefore set out and execute the same; that thereafter, on the day of April, 1901, the directors of said company refused to authorize said company to become a party to said oral agreement and writing, or to execute the same, and that the plaintiff and defendants were advised thereof; "that thereupon and thereafter, on the day of April, 1901, plaintiff and defendants, with such knowledge, agreed to adopt and did actually adopt as their agreement said oral agreement and said writing, which plaintiff and defendants had already executed; and plaintiff and defendants entered upon the performance of said terms and conditions of said oral agreement and said writing adopted by them as their agreement, and plaintiff duly performed all the conditions of said agreement to be performed by him, but defendants failed to ful

118 F.-64

ly perform their part of said oral agreement and writing, to the damage of plaintiff," etc.

There is no rule of law better established than that all precedent as well as contemporaneous negotiations and understandings in relation to a contract afterwards reduced to writing (in the absence of mistake, accident, or fraud, as understood in equity jurisprudence) are conclusively presumed to have been completely swallowed up, merged, and expressed in the written instrument, and that thenceforth the written instrument becomes the sole expression of the mind and agreement of the contracting parties. In other words, it is conclusively presumed that the entire engagement and the extent and manner of their undertaking were reduced to writing, and therefore evidence of any understanding and concurrence of minds of the parties in their antecedent negotiations respecting the contract resting in parol is wholly inadmissible to add to, take from, or in any wise vary the obligations of the parties as expressed in the written instrument. This rule is rigidly adhered to by the supreme court of this state. Woodward v. McGaugh, 8 Mo. 162; Walker v. Engler, 30 Mo. 130; State v. Hoshaw, 98 Mo. 358, 11 S. W. 759; Morgan v. Porter, 103 Mo. 135, 15 S. W. 289; Tracy v. Iron Works Co., 104 Mo. 193, 16 S. W. 203; Boyd v. Paul, 125 Mo. 9, 28 S. W. 171.

It is not alleged in the petition that there was any mistake or fraud in the procurement of the written contract, nor is it sought to reform or recast it on any of the grounds recognized in equity for the reformation of written contracts. On the contrary, the action is purely one at law for the enforcement of a contract made.

It will be observed by a reference to the opinion of this court on the original demurrer that the court, speaking of the written contract, said:

"While it imposes the obligations and undertakings on the part of the parties of the second part on James H. Arnold or the Western Cattle Brokerage Company, the defendants, by its terms, are as much entitled to have the Western Cattle Brokerage Company bound as James H. Arnold. By the express terms of the contract, the obligation to put the stock on the market after the creation of the corporation, and to exploit and sell it, is imposed upon the Western Cattle Brokerage Company as much as it is on James H. Arnold. It is a reasonable inference that in agreeing to organize the corporation at their expense and trouble, and investing it with the title to their 500 acres of land, the inducement of the defendants thereto was that they should have the right to the services, influence, and responsibility of the organized body of the Western Cattle Brokerage Company as much so as that of Mr. Arnold. In other words, they were to have the personal responsibility of either, so that, in case of default on the part of the parties of the second part, they could look for indemnity to both Arnold and the brokerage company. The defendants never came to a compact The contract stipu

alone with Arnold in the proposed enterprise. lates that it is agreed and understood that the said parties of the second part are not to handle any other oil stock during the time they are handling the stock of said parties of the first part.' The contract, as drawn,

*

not only entitled the defendants to the services of this brokerage company in disposing of the stock, based upon the 500 acres of land to be conveyed by them to the corporation, but the additional right and advantage of having the brokerage company refrain from handling any other oil stock during the obligated service of the parties of the second part to the defendants."

The court, further on, commenting upon the provision of the written contract allowing James H. Arnold alone a reasonable compensation in addition to the brokerage of 10 per cent. in the event the parties of the first part took the stock off the market, and that the contract might be changed or altered if acceded to alone by Arnold, said that for aught it knew these "were the reasons why the contract was not executed by the Western Cattle Brokerage Company." It is now alleged in the amended petition that the Western Cattle Brokerage Company did refuse, when the contract was presented to it, to enter into the agreement.

It is observable that the antecedent verbal agreement, set up in the amended petition, is quite different in several material respects from the written agreement. The written agreement obligated the parties of the second part—that is, John Scharbauer and John T. McElroy— "to pay ten per cent. on the capital stock as a brokerage, and ten per cent. to Jas. H. Arnold for his services"; whereas the oral agreement pleaded in the amended petition provides that the Western Cattle Brokerage Company or the plaintiff were to have "for services in making an effort to sell said stock ten per cent. of the capital stock of said corporation, and for actually making sales of said stock should receive ten per cent. of the proceeds of said sales, as a brokerage. The written contract recites that "it is agreed and understood that the said parties of the second part [that is, Arnold and the brokerage. company] are not to handle any other oil stock during the time they were handling the stock of the said parties of the first part." The antecedent oral agreement, as alleged in the amended petition, is "that, while said brokerage company and the plaintiff were engaged in trying to sell and in selling said stock, said brokerage company or the plaintiff were not to handle any other oil stock"; thus showing that the oral agreement now sought to be enforced limits the obligation alternatively,-"while said brokerage company or the plaintiff were engaged in trying to sell or in selling said stock" they were not to handle any other oil stock. Quite different is the obligation expressed in the written contract that said parties of the second part are not to handle any other oil stock during the time they were handling the stock of said parties of the first part and that expressed in the antecedent oral agreement that they were not to handle any other oil stock while engaged in trying to sell and in selling said stock. The clear meaning of the written contract was that during the period of time this stock was on the market, being handled by them, they were not to have on their list any other stock for sale; whereas, the oral agreement only required them to refrain from handling any other oil stock while they were trying to sell, and in selling said stock. Under this latter arrangement, Arnold and the brokerage company, when not actually trying to sell, or engaged in selling, the stock of the oil company, could have consistently handled and sold other stock.

The written contract provided "that said Jas. H. Arnold or the Western Cattle Brokerage Company is to have the exclusive sale of said stock, but if, for any reason, the said McElroy and Scharbauer desire to take the stock off the market, they shall have the right