On appeal from the Superior Court, Law Division.
For reversal -- Chief Justice Vanderbilt, and Justices Case, Heher, Oliphant, Wachenfeld, Burling and Ackerson. For affirmance -- None. The opinion of the court was delivered by Oliphant, J.
[3 NJ Page 324] Defendant appeals from a judgment entered in favor of plaintiff-respondent as the result of a jury verdict in the Superior Court, Bergen County. While the appeal was pending in the Appellate Division it was certified here on our own motion pursuant to Rule 1:5-1(a).
Plaintiff instituted an action for the alleged breach of a contract which had been entered into between the parties on August 7, 1946, for the erection of a "Standard Quonset" at Teterboro Airport. That contract provided, inter alia, that the building was to be erected "on standard cinder block foundation with 4" monolithic concrete slab poured throughout the building area." It is conceded the foundation was not so constructed but was built with a 4" drop slab construction. Plaintiff paid the full contract price, the last payment being made on September 21, 1946.
Some time after final payment, on January 21, 1947, plaintiff says it was advised defendant had failed to build the foundation as contracted for and requested the contract terms be complied with. Defendant did not do so and this action was brought for damages alleged to have been occasioned by the failure to install the cinder block foundation and for loss of profit due to the resulting delay in making use of the building.
Defendant contends that after the contract was made an inspection of ground conditions at the site and the consideration of airport regulations made the use of cinder block foundation inadvisable. It alleges and attempted to prove at the trial that Mr. George Galipeau, a Vice President of the plaintiff company, was notified of this and of the fact that it would be better building practice to install a monolithic 4" slab foundation and that he agreed thereto. The further contention is made that this waiver of the contract provision is also evidenced by the acceptance of and payment for the building by plaintiff and its failure to call defendant's attention to the matter for a period of four months thereafter.
At the trial defendant was not permitted to introduce any evidence as to conversations it had with Mr. Galipeau relating to contract changes or any statement made by him indicating his acceptance of the building on behalf of his company in its completed form. The learned trial judge based his refusal to permit such testimony on the ground it was offered to vary the terms of the written contract, that it violated the parol evidence rule and that the doctrine enunciated in Naumberg v. Young, 44 N.J.L. 331 (Sup. Ct. 1882), controlled.
The trial court misconceived the purpose of the proffered testimony. The law is generally that if the benefit of a provision in a contract is waived compliance therewith is excused and the party waiving it cannot thereafter insist on its performance. Wilson v. Renner, 85 N.J.L. 340 (E. & A. 1913). No attempt was being made to alter or enlarge the provisions of the written contract. What the defendant was endeavoring to prove was that the foundation provisions of the contract were waived and a new, separate and distinct oral agreement entered into with respect thereto. The testimony was admissible for these purposes if supported by competent proof of the authority of Mr. Galipeau to act for his principal in the premises and of a consideration for the new agreement.
A waiver or novation may be made by oral agreement of the parties. In Headley v. Cavileer, 82 N.J.L. 635, 638 (E. & A. 1912), it was held "No matter how stringently such clauses may be worded, it is always open for the parties to agree orally or otherwise, upon proper consideration, that they shall be partially or entirely disregarded and another arrangement substituted. Were any different rule adopted, the right of contract would be to that extent impaired. So that until the legislature sees fit to enact some statute of frauds covering this point, building contracts solemnly entered into in writing and under seal must be subject to radical change by the mere conversation of the parties if such conversation answers the tests of a contract at common law * * *," and that case was cited and followed in Ball v. Metalwash Machinery Co., Inc., 123 N.J.L. 285, 289 (E. & A. 1939), wherein the Court said "The oral agreement of July 7, 1932, between the parties was neither illegal nor violative of any rule of public policy. Under such circumstances, it is settled law that 'parties to an existing contract may, by mutual consent, modify or change it by altering or excising certain of its provisions, or by adding new provisions thereto * * * and (all) this may be done orally (as here) even though the original contract be in writing.'" This court held, in Ross et al. v. Orr, 3 N.J. 277, that while it is true where a written contract purports to contain the
whole agreement and it is not apparent from the writing itself that something is left out to be supplied by extrinsic evidence, parol evidence to add to its terms is not admissible, nevertheless a written contract may be altered or changed by a subsequent agreement if based on a proper consideration. Cf. 3 Williston on Contracts, §§ 679, 680.
The proof offered was further clearly admissible to show acceptance of any payment for the building by plaintiff and its failure to call attention to the change for a period of approximately four months between the time of completion of the building and plaintiff's request that the contract terms be complied with. Bozarth v. Dudley, 44 N.J.L. 304 (Sup. Ct. 1882); Feeney v. Bardsley, 66 Id. 239 (E. & ...