Bank of America v. Lamb Finance Co

In Bank of America v. Lamb Finance Co. (1960) 179 Cal. App. 2d 498, the sole shareholder of the defendant corporation claimed that, contrary to the written terms of the promissory note, the bank fraudulently promised her that she would not be personally liable on a guarantee. Because the alleged false promise or representation clearly related to the matter covered by the main agreement and contradicted its very terms, the trial court ruled that shareholder's testimony relating to the alleged false promise was properly stricken as incompetent under the parol evidence rule. ( Id. at pp. 502-503.) The Court rejected a plaintiff's effort to avoid liability pursuant to the express written terms of a guaranty based upon alleged oral assertions by the bank that she would not have such liability. The court stated, 'A distinction has been made by our courts in cases in which the fraud sought to be proved consists of a false promise. They have held that if, to induce one to enter into an agreement, a party makes an independent promise without intention of performing it, this separate false promise constitutes fraud which may be proven to nullify the main agreement; but if the false promise relates to the matter covered by the main agreement and contradicts or varies the terms thereof, any evidence of the false promise directly violates the parol evidence rule and is inadmissible.' ( Id., at p. 502.)