_A._ The condition is not embodied upon the face of the contract; it is a condition upon which I held the contracts. _Q._ Now Mr. Watson, as a lawyer, if you are such, are verbal conditions made with a third party to change the terms of a written contract executed in all respects? _A._ Let me give you an illustration within my experience that is exactly parallel to this: I had a note executed, sealed, and complete in every way, put into my possession to be delivered upon the production of a deed. _The Chairman._—Wait a moment, there must be some kind of order in this proceeding. I wish you to answer the question which has been asked you, whether as a lawyer the conditions stated would change the terms of a written contract. If you are able to give an answer to that legal question you may do so. _Witness._—Let me hear the question and I will endeavour to answer it fully, if you will allow me to answer it in my own way. By Mr. Sheldon. _Q._ The question is, whether a verbal understanding to be performed by other parties not embraced in the written contract can be made effective to modify the terms of that contract as between the parties to it. _A._ An agreement between the parties to a contract, whether verbal or written, fixing the terms upon which the contract shall go into effect, is perfectly competent and would be binding. _Q._ That is your opinion as a lawyer? _A._ That is my opinion. _Q._ Now, sir, these contracts contemplated a considerable increase in the freight charges, both upon crude and refined petroleum? _A._ They contemplate an increase almost up to the price for coal and lumber, as they are ordinarily carried, amounting to about 1½ cents a pound. _Q._ Did it contemplate an increase upon both crude petroleum and refined oil? _A._ Certainly; the railroads had been carrying these articles at a loss of nearly a million dollars; they carried for less than cost, and one object of these contracts was to increase the price of freight to the railroads. _The Chairman._—Let me suggest the propriety of first answering the question and then giving your explanation. That is the regular course, and I am sorry to say that during your whole examination there has not been a direct answer given to a question. _Witness._—Well, sir, where a question is such that it would give a false impression unless answered fully and fairly, I do not want to convey that false impression by my testimony. Mr. Sheldon. _Q._ Very well, I am satisfied with your explanation; now could not these railroad companies have raised the price of freight without the intervention of the South Improvement Company? _A._ There were a good many difficulties in the way. _Q._ Could they not have done it, and had they not the power to do it?