Gianni v. R. Russel & Co., Inc.
Citation: 126 A. 791 (1924)
Author: GailG

Facts: Gianni ran a store selling, among other things, soft drinks. Russel bought the property where Gianni rented space for the store and its agent negotiated with Gianni for further leasing of the space. Gianni signed a 3-year lease that provided that he could "use the premises only for the sale of fruit, candy, soda water," etc. but could not sell tobacco. Gianni agreed not to sell tobacco and to pay increased rent, but in consideration he would have the exclusive right to sell soft drinks in the building. This stipulation was not included in the written lease. Soon after this, Russel rented an adjoining space in the building to a drug company without restricting that company's right to sell soda water and soft drinks.

Procedural Posture: Gianni sued Russel for damages for breach of the alleged oral contract, alleging that the sale of soft drinks by the drug company had greatly reduced his profits. The trial court held for Gianni.

Issue: Is evidence of an oral contract admissible under the parol evidence rule when the written contract is the complete contract of the parties and covers the subject matter of the oral contract?

Holding: No

Rule: When a written lease is the complete contract of the parties and covers the subject matter of an alleged oral contract, evidence of the oral contract is inadmissible under the parol evidence rule.

Reasoning: Where parties, without any fraud or mistake, have deliberately put their engagements in writing, the law declares the writing to be not only the best, but the only evidence of their agreement. If the subject of an oral agreement relates to the same subject matter as the written contract, and they 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. Where the cause of action rests entirely on an alleged oral understanding concerning a subject which is dealt with in a written contract, it is presumed that the writing was intended to set forth the entire agreement as to that particular subject.