## Facts

- A feed retailer operated a “layer-feeder program” in which it supplied layer hens, feed, and financing to poultry farmers.
- The parties signed a written feeder contract under which the retailer agreed to sell all required feed at its retail prices, provide 21,000 layer hens, and provide financing.
- The contract required the farmers to execute a $34,650 promissory note (for hens and initial feed), payable on demand, with all indebtedness due by a stated date.
- The contract gave the retailer the sole option to make further advances up to a stated limit and included an acknowledgment that the farmers had read and agreed to be bound by the contract’s terms.
- After the contract, both farmers signed the $34,650 note, and one farmer later signed an additional $12,000 note payable on a stated date.
- The retailer sued to collect unpaid balances on both notes.
- The farmers admitted signing the notes but asserted partial failure of consideration, claiming an oral agreement that repayment would come only from egg proceeds and that the retailer would continue refinancing with successive hens until the debt was paid.
- The trial court accepted the defense and ruled for the farmers; the retailer appealed.

## Issues

1. Whether parol evidence of an oral agreement limiting repayment to egg proceeds and requiring continued refinancing was admissible given the written contract and unconditional notes.
2. Whether the alleged oral refinancing promise could support a defense of partial failure of consideration to defeat enforcement of the notes.
3. Whether the evidence established an enforceable collateral agreement or modification that altered the farmers’ unconditional liability on the notes.

## Decision

- The Arkansas Supreme Court reversed the judgment for the farmers.
- The court held the written contract and notes were controlling and treated as the integrated agreement.
- The court held the alleged oral repayment/refinancing arrangement contradicted the writings and was barred by the parol evidence rule.
- The court rejected partial failure of consideration based on the alleged oral promise because the written agreement made additional advances optional, not mandatory.
- The case was remanded with directions consistent with entering judgment for the retailer on the notes.

## Legal Principles

- When a writing is intended as the final and complete expression of the parties’ agreement, prior or contemporaneous oral agreements that contradict it are inadmissible to vary or defeat its terms.
- An unconditional promissory note cannot be converted into a conditional obligation (e.g., payable only from a particular fund) through inconsistent oral understandings.
- A refusal to perform an obligation found only in an inadmissible, contradictory oral agreement does not constitute failure of consideration for notes supported by consideration supplied under the written contract.
- Where a written contract reserves future advances to the creditor’s sole option, the borrower cannot enforce an alleged oral promise of continued refinancing that conflicts with that reservation.

## Conclusion

The court enforced the promissory notes as unconditional obligations and applied the parol evidence rule to exclude an asserted oral agreement that would have limited repayment to egg proceeds and imposed a continuing refinancing duty inconsistent with the integrated written contract.


Farmers Cooperative Ass’n, Inc. v. Garrison, 454 S.W.2d 644 (Ark. 1970)