184 A. 689

LAWRENCE
v.
ANDERSON.

Supreme Court of Vermont. Chittenden.
May 5, 1936.

[184 A. 689] Exceptions from Chittenden Municipal Court; Aaron H. Grout, Judge.

Action by A. B. Lawrence against Lillian V. Anderson. Judgment for the defendant, and plaintiff excepts.

Affirmed.

Argued before POWERS, C. J., and SLACK, MOULTON, THOMPSON, and SHERBURNE, JJ.

M. J. Bertrand, of Barre, for plaintiff.

J. Boone Wilson, Charles F. Black, and Willsie E. Brisbin, all of Burlington, for defendant.

POWERS, Chief Justice.

Answering an emergency call from an unknown source, the plaintiff, a licensed physician, administered to John Anderson, who had suffered severe injuries in an automobile accident somewhere on the "Williston Road" outside of the city of Burlington. This was on October 1, 1933. When the plaintiff arrived at the scene of the accident, he found there the defendant, a daughter of the injured man; and when he had introduced himself to her, she directed him, as he testified, to "do everything you can under the sun to see this man is taken care of." Thereupon, the plaintiff called an ambulance, in which Anderson was taken to a hospital where the plaintiff treated him until the next morning, when he was discharged by the defendant after she had conferred with her father about it. The patient died from the effects of the injuries a few days later. The plaintiff made his charges for his services to Mr. Anderson, and sent bills to his estate. He engaged a Burlington lawyer to proceed against the estate, for the collection of his charges, and some effort in that direction was made, but nothing came of it. About a year after the accident, the plaintiff began sending bills to Anderson's widow, but nothing came from that. Finally, about a year and a half after the accident, this suit was brought. It was returnable to the Chittenden municipal court, and there tried to a jury. At the close of the plaintiff's evidence, on motion therefor, a verdict was ordered for the defendant. The plaintiff excepted.

[184 A. 690] It is apparent that the facts above stated, standing alone, did not make a case for the jury; and if nothing more had been shown, the judgment would have to be affirmed. For it fully appears that the defendant's relations with her father were such that she was not liable for the plaintiff's services unless she became so by reason of what she said or did. The rule is fully established that one who merely calls a physician to render services to another is not liable therefor in the absence of an express agreement, unless he is legally bound to furnish such service, as it is a fair inference from the evidence that it was the intention of both parties that he should pay for it. The services here sued for were not, so far as the above recited facts show, beneficial, in a legal sense, to the defendant, and she would not be liable therefor. Smith v. Watson, 14 Vt. 332, 337.

But in addition to what has been recited, one Charles Brown, who was at the scene of the accident when the plaintiff arrived there, testified that in his presence the defendant said to the plaintiff, "I want my father taken care of, and give him the best care you can give him, and what the charges are * * * I will pay for it."

Ordinarily, this statement might make an entirely different case for the plaintiff. It shows that the defendant not only requested the services, but also that she made a direct promise to pay the plaintiff. Such a promise is not collateral or secondary, but primary and original. It comes within the law as laid down in Pocket v. Almon, 90 Vt. 10, 96 A. 421, and Enos v. Owens Slate Co, 104 Vt. 329, 160 A. 185. To such a contract the statute of frauds (P.L. 1675) does not apply, for the simple reason that it is not a promise to pay the debt of another, but is a promise to pay the debt of the promisor—one that he makes his own by force of his engagement.

But before we can apply this rule to the case in hand, we must consider the effect of the plaintiff's conduct.

When the defendant made the promise that Brown testified to, the plaintiff was at liberty to accept it and to rely upon it. But he was not obliged to do so. He could, if he chose, treat Anderson on his own credit. But he could not hold both Anderson and the defendant. If he gave the credit to Anderson, he could not hold the defendant, though she had tendered an engagement direct, in form. The plaintiff could not turn the defendant's sole obligation into a joint obligation without her concurrence. If he gave any credit to Anderson, he elected to accept the defendant's engagement as collateral to that of Anderson. Of course it is only where the promise sued on is primary and direct that this question we are now discussing arises. 27 C.J. p. 42. But in such cases, the extension of any credit to the third party involved requires a written promise on the part of the promisor. Blodget v. Town of Lowell, 33 Vt. 174, 175, 176.

As we have seen, it appears here that the plaintiff made his original charges against Anderson. Such a fact is not always conclusive evidence of the person who is to be regarded as the original debtor. It is subject to explanation, to be sure, Greene v. Burton and Sowles, 59 Vt. 423, 425, 10 A. 575, but to rebut the inference arising from the fact that the charges were so made, the proof must be of a strong character. Hardman v. Bradley, 85 Ill. 162. As we said in Enos v. Owens Slate Co, 104 Vt. 329, 333, 160 A. 185, the quality of a defendant's promise may usually be found by ascertaining whether the third person continues to be liable after the defendant's oral promise is made. In that case, it did not appear that the original charges for the services rendered by the plaintiff were made against the third person; and the plaintiff explained why he attempted to collect his pay from such person. Here no explanation is made or attempted. No reason is given why these charges were made against Anderson. So it must be taken that it was because the plaintiff considered him responsible therefor. Lomax v. McKinney, 61 Ind. 374; Langdon v. Richardson, 58 Iowa, 610, 12 N.W. 622. Having given credit to Anderson, the plaintiff cannot collect from the defendant. There being no error in the ruling on the motion for a verdict, there is no occasion to consider the other exceptions argued.

Judgment affirmed.

11 Ad. & E. 438, 113 Eng. Rep. 482

EASTWOOD
against
KENYON.

Decided January 16th, 1840.

[11 Ad. & E. 438] Defendant may shew, under non assumpsit, that the promise was within stat. 29 Car. 2, c. 3, s. 4, and was not in writing. Section 4 of that statute, as to promises to pay the debt of another, contemplates only promises made to the person to whom another is liable; therefore a promise by defendant to plaintiff to pay A. B. a debt due from plaintiff to A. B. is not within the statute. A pecuniary benefit, voluntarily conferred by plaintiff and accepted by defendant, is not such a consideration as will support an action of assumpsit on a subsequent express promise by defendant to reimburse plaintiff. Therefore, where the declaration in assumpsit stated that plaintiff was executor of the father of defendant's wife, who died intestate as to his land, leaving defendant's wife, an infant, his only child and heir; that plaintiff acted as her guardian and agent during infancy, and in that capacity expended money on her maintenance and education, in the management and improvement of the land, and in paying the interest of a mortgage on it; that the estate was benefited thereby to the full amount of such expenditure; that plaintiff, being unable to repay himself out of the personal assets, borrowed money of A. B. on his promissory note; that defendant's wife, when of age and before marriage, assented to the loan and the note, and requested plaintiff to give up the management of the property to her, and promised to pay the note, and did in fact pay one year's interest on it, that plaintiff thereupon gave up the management accordingly; that defendant, after his marriage, assented to the plaintiff's accounts, and upon such accounting a certain sum was found due to plaintiff for monies so spent and borrowed; that defendant, in right of his wife, received all the benefit of plairitiff's said services and expenditure, and thereupon in consideration of the premises, promised plaintiff to pay and discharge the note: Held, on motion in arrest of judgment, that the declaration was bad as not disclosing a sufficient consideration for defendant's promise.

[S. C. 3 P. & D. 276; 9 L. J. Q. B. 409; 4 Jur. 1081. Approved and adopted, Leaf v. Tuton 1842, 10 Mee. & W. 398. Hargreaves v. Parsons, 1844,13 Mee. & W. 570. Followed, Reader v. Kingham, 1862, 13 C. B. N. S. 353. Approved, Crippo v. Hartnoll, 1863, 4 B. & S. 420. Adopted, Guild v. Conrad, [1894] 2 Q. B. 893.]

Assumpsit. The declaration stated, that one John Sutcliffe made his will, and appointed plaintiff executor thereof, and thereby bequeathed certain property in manner therein mentioned: that he afterwards died without altering his will, leaving one Sarah Sutcliffe, an infant, his daughter and only child and heiress at law surviving: that after making the will John Sutcliffe sold the property mentioned therein, and purchased a piece of land upon which he erected certain cottages, but the same were not completed at the time of his death; which piece of land and cottages were at the time of his death, mortgaged by him; that he died intestate in respect of the same, whereupon the equity of redemption descended to the said infant as heiress at law: that after the death of John Sutcliffe, plaintiff duly proved the will and administered to the estate of the deceased: that from and after the death of John Sutcliffe until the said Sarah Sutcliffe came of full age, [11 Ad. & E. 439] plaintiff, executor as aforesaid, "acted as the guardian and agent" of the said infant, and in that capacity expended large sums of money in and about her maintenance and education, and in and about the completion, management, and necessary improvement of the said cottages and premises in which the said Sarah Siltcliffe was so interested, and in paying the interest of the mortgage money chargeable thereon and otherwise relative thereto, the said expenditure having been made in a prudent and useful manner, and having been beneficial to the interest of the said Sarah Sutcliffe to the full amount thereof: that the estate of John Sutcliffe deceased having been insufficient to allow plaintiff to make the said payments out of it, plaintiff was obliged to advance out of his own monies, and did advance, a large sum, to wit £140, for the purpose of the said expenditure; and, in order to reimburse himself, was obliged to borrow, and did [113 Eng. Rep. 483] borrow, the said sum of one A. Blackburn, and, as a security, made his promissory note for payment thereof to the said A. Blackburn or his order on demand with interest; which sum, so secured by the said promissory note, was at the time of the making thereof and still is wholly due and unpaid to the said A. Blackburn: that the said sum was expended by plaintiff in manner aforesaid for the benefit of the said Sarah Sutcliffe, who received all the benefit and advantage thereof, and such expenditure was useful and beneficial to her to the full amount thereof: that when the said Sarah Sutcliffe came of full age she had notice of the premises, and then assented to the loan so raised by plaintiff, and the security so given by him, and requested plaintiff to give up to one J. Stansfield as her agent, the controul and management of the [11 Ad. & E. 440] said property, and then promised the plaintiff to pay and discharge the amount of the said note; and thereupon caused one year's interest upon the said sum of £140 to be paid to A. Blackburn. That thereupon plaintiff agreed to give up, and did then give up, the controul and management of the property to the said agent on behalf of the said Sarah Sutcliffe: that all the services of plaintiff were done and given by him for the said Sarah Sutcliffe, and for her benefit, gratuitously and without any fee, benefit, or award whatsoever; and the said services and expenditure were of great benefit to her, and her said property was increased in value by reason thereof to an amount far exceeding the said £140. That afterwards defendant intermarried with the said Sarah Sutcliffe, and had notice of the premises, and the accounts of plaintiff of and concerning the premises were then submitted to defendant, who then examined and assented to the same, and upon such accounting there was round to be due to plaintiff a large sum of money, to wit, &c., for monies so expended and borrowed by him as aforesaid; and it also then appeared, that plaintiff was indebted to A. Blackburn in the amount of the said note. That defendant, in right of his wife, had and received all the benefit and advantage arising from the said services and expenditure. That thereupon in consideration of the premises defendant promised plaintiff that he would pay and discharge the amount of the said promissory note; but that, although a reasonable time for paying and discharging the said note had elapsed and A. Blackburn, the holder thereof, was always willing to accept payment from defendant, and defendant was requested by plaintiff to pay and discharge the amount thereof, defendant did [11 Ad. & E. 441] not, nor would then, or at any other time pay or discharge the amount, &c., but wholly refused, &c.

Plea: non assumpsit.

On the trial before Patteson J. at the York Spring Assizes 1838, it was objected on the part of the defendant that the promise stated in the declaration, and proved, was a promise to pay the debt of another within the Statute of Frauds, 29 Car. 2, c. 3, s. 4, and ought to have been in writing; on the other hand it was contended that such defence, if available at all, was not admissible under the plea of non assumpsit. The learned Judge was of the latter opinion, and the plaintiff had a verdict, subject to a motion to enter a verdict for the defendant.

Cresswell, in the following term, obtained a rule nisi according to the leave reserved, and also for arresting judgment on the ground that the declaration shewed no consideration for the promise alleged. In Trinity vacation, 1839,^[1]

Alexander and W. H. Watson shewed cause. The defence is not available under the general issue. [Upon this point, Buttemere v. Hayes,^[2] decided on the same day, was mentioned to the Court, and was considered conclusive.] Then, the promise is not within the statute, which requires a writing only where the promise is "to answer for the debt, default or miscarriages of another person." Here there is no other person in default, but the promise is to pay the amount [11 Ad. & E. 442] to the plaintiff. [Patteson J. It is rather a promise to pay Blackburn; a promise to take up the bill.] In substance it is a promise to pay the plaintiff what he is liable to pay Blackburn. No case has yet decided that a promise to pay the promisee's own debt to a third person is within the statute, which evidently contemplates the debt or default of third persons. The same point might be made in every case of an implied promise to indemnify, as where the plaintiff accepts a bill for the defendant's accommodation, or where the drawer is sued on the default of the acceptor. It is said by Parke J. in [113 Eng. Rep. 484] Thomas v. Cook (8 B. & C. 728, 732), that if the plaintiff, at the request of the defendant, paid money to a third person, a promise to repay need not be ill writing. In Castling v. Aubert (2 East, 325), a contract to indemnify the plaintiff if he gave up a lien, was held not to be within the statute. Williams v. Leper (3 Burr. 1886), is to the same effect. (Green v. Cresswell^[3] may be relied on, where a promise to indemnify the plaintiff against the consequence of becoming bail for a third party was held to require a writing; but there the defendant made himself answerable for the default of another, and so came exactly within the words of the statute. Then, as to the consideration; it has been distinctly held, that a moral obligation will support an express promise. There must be something done by the plaintiff at the defendant's request, or an act done for the defendant's benefit must be ratified by an express promise to pay; in either case, an action will lie. [Coleridge J. How are we to know the difference between an express and [11 Ad. & E. 443] an implied promise on the pleadings?] After verdict an express promise must be presumed. [Coleridge J. The same question may arise on demurrer.] In Lee v. Muggeridge (5 Taunt. 36), executors were held liable on a promise by the testatrix, after the decease of her husband, to pay a bond, made by her when under coverture, on the express ground that she was morally bound to pay it. The same doctrine was upheld in Seago v. Deane (4 Bing. 459), Atkins v. Hill (Cowp. 284), and in several other cases, cited in the note to Wennall v. Adney (3 B. & P., 247). A stronger case of moral obligation can hardly arise than the present, where the plaintiff is admitted to have been for many years the faithful guardian and manager of the estate of the defendant, while she was under age, and where the defendant and his wife have received great pecuniary benefit from the plaintiff's acts.

Cresswell, contra. The case is within the words, as well as the spirit and mischief of the statute. It is a promise to discharge the note. The words of the breach in the declaration all point at the note. If the defendant had paid Blackburn, could it have been contended that the promise was to pay the plaintiff; and that the payment to Blackburn was no answer to an action by the plaintiff? This is in truth a promise to pay Blackburn the debt due to him from the plaintiff, and it is not the less within the statute, because the promise is made to the plaintiff and not to Blackburn himself, for the Act does not say to whom the promise is to be made. The case of an accommodation acceptor, and the other cases of implied promises to indemnify are not in point. [11 Ad. & E. 444] They are either promises to pay the defendant's own debt, or they are cases of liability arising by operation of law, where no real promise is ever made or required, and which are, therefore, not within the mischief of the statute. In Williams v. Leper (3 Burr. 1886), and Castling v. Aubert (2 East, 325), there was a purchase by the defendant from the plaintiff. In the former, the landlord's right of distress was bought; in the latter, the plaintiff's lien on certain policies. Here the plaintiff has sold nothing to the defendant. Then as to the consideration: suppose A. gives a parol guarantee to a tradesman to induce him to supply goods to another, can A. be made liable on a subsequent parol promise? Such a construction would defeat the statute; yet the case is in principle the same as the present, and the moral obligation much stronger. A promise may be evidence of a precedent request, but has no efficacy ill itself. What is it that constitutes the moral obligation here? [Not the expenditure on the estate, for no duty was cast on the plaintiff to layout any thing on it, nor had he any right to interfere with the management; and if he had, the defendant had at that time no interest in it at all. If the honesty of the outlay causes the moral obligation, then it is indifferent whether it turned out profitable, or not, to the defendant or his wife. It would support a promise, though the property had been damnified by it. If the benefit constitutes the consideration, then whenever a party benefits another against his will, a subsequent promise will be a ground of action, If it had appeared that the wife was liable at the time of her marriage, then the consequent liability of the defendant might have supported his promise; but [ 11 Ad. & E. 445] no liability of the wife is stated, nor is it said that she promised in consideration of the premises. As to the agreement of the plaintiff to give up the control and management of the property, he had no right to either, and therefore nothing to give up; and if he had, it is not alleged to have been the consideration of the wife's promise. The doctrine of moral obligation as a ground for a promise must be [113 Eng. Rep. 485] limited to those cases where the law would have given a clear right of action originally, if some legal impediment had not suspended or precluded the liability of the party. The ordinary instances are infancy, bankruptcy, and the Statute of Limitations; and these were the cases referred to by Lord Mansfield when he laid down the above doctrine. As a general rule, it cannot be supported; Littlefield v. Shee (2 B. & Ad. 811). The law is correctly laid down and the cases explained in the note to Wennall v. Adney.^[4]

Cur. adv. vult.

In this term (January 16th), the judgment of the Court was delivered by

Lord Denman C.J. The first point in this case arose on the fourth section of the Statute of Frauds, viz., whether the promise of the defendant was to "answer for the debt, default, or miscarriage of another person." Upon the bearing we decided, in conformity with the case of Buttemere v. Hayes (5 Mee. & W. 456), that this defence might be set up under the plea of non assumpsit.

The facts were that the plaintiff was liable to a Mr. Blackburn on a promissory note; and the defendant, for [11 Ad. & E. 446] a consideration, which may for the purpose of the argument be taken to have been sufficient, promised the plaintiff to pay and discharge the note to Blackburn. If the promise had been made to Blackburn, doubtless the statute would have applied: it would then have been strictly a promise to answer for the debt of another; and the argument on the part of the defendant is, that it is not less the debt of another, because the promise is made to that other, viz., the debtor, and not to the creditor, the statute not having in terms stated to whom the promise, contemplated by it, is to be made. But upon consideration we are of opinion that the statute applies only to promises made to the person to whom another is answerable. We are not aware of any case in which the point has arisen, or in which any attempt has been made to put that construction upon the statute which is now sought to be established, and which we think not to be the true one.

The second point arose in arrest of judgment, namely, whether the declaration shewed a sufficient consideration for the promise. It stated, in effect, that the plaintiff was executor under the will of the father of the defendant's wife, who had died intestate as to his real estate leaving the defendant's wife, an infant, his only child; that the plaintiff had voluntarily expended his money for the improvement of the real estate, whilst the defendant's wife was sale and a minor; and that, to reimburse himself, he bad borrowed money of Blackburn to whom he had given his promissory note; that the defendant's wife, while sale, had received the benefit, and, after she came of age, assented and promised to pay the note, and did pay a year's interest; that after the marriage the plaintiff's accounts were shewn to the defendant, who assented [11 Ad. & E. 447] to them, and it appeared that there was due to the plaintiff a sum equal to the amount of the note to Blackburn; that the defendant in right of his wife bad received all the benefit, and, in consideration of the premises, promised to pay and discharge the amount of the note to Blackburn.

Upon motion in arrest of judgment, this promise must be taken to have been proved, and to have been an express promise, as indeed it must of necessity have been, for no such implied promise in law was ever beard of. It was then argued for the plaintiff that the declaration disclosed a sufficient moral consideration to support the promise.

Most of the older cases on this subject are collected in a learned note to the case of Wennall v. Adney (3 B. & P. 249), and the conclusion there arrived at seems to be correct in general,

"that an express promise can only revive a precedent good consideration, which might have been enforced at law through the medium of an implied promise, had it not been suspended by some positive rule of law; but can give no original cause of action, if the obligation, on which it is founded, never could have been enforced at law, though not barred by any legal maxim or statute provision."

Instances are given of voidable contracts, as those of infants ratified by an express promise after age, and distinguished from void contracts, as of married women, not capable of ratification by them when widows; Loyd v. Lee (1 Stra. 94); debts of bankrupt revived by subsequent promise after certificate; and similar cases. Since that time some cases have occurred upon this subject, which require to be more [113 Eng. Rep. 486] particularly [11 Ad. & E. 448] examined. Barnes v. Hedley (2 Taunt. 184), decided that a promise to repay a sum of money, with legal interest, which sum had originally been lent on usurious terms, but, in taking the account of which, all usurious items had been by agreement struck out, was binding. Lee v. Muggeridge,^[5] upheld an assumpsit by a widow that her executors should pay a bond given by her while a feme covert to secure money then advanced to a third person at her request. On the latter occasion the language of Mansfield O.J. and of the whole Court of Common Pleas, is very large, and hardly susceptible of any limitation. It is conformable to the expressions used by the Judges of this Court in Cooper v. Marten (4 East, 76), where a stepfather was permitted to recover from the son of his wife, after he had attained his full age, upon a declaration for necessaries furnished to him while an infant, for which, after his full age, he promised to pay. It is remarkable that in none of these there was any allusion made to the learned note in 3 Bosanquet and Puller above referred to, and which has been very generally thought to contain a correct statement of the law. The case of Barnes v. Hedley (2 Taunt. 184), is fully consistent with the doctrine in that note laid down. Cooper v. Martin (4 East, 76), also, when fully examined, will be found Dot to be inconsistent with it. This last case appears to have occupied the attention of the Court much. more in respect of the supposed statutable liability of a stepfather, which was denied by the Court, and in respect of what a Court of Equity would hold as to a stepfather's liability, and rather to have as [11 Ad. & E. 449] sumed the point before us. It should, however, be observed that Lord Ellenboro ugh in giving his judgment says, "The plaintiff having done an act beneficial for the defendant in his infancy, it is a good consideration for the defendant's promise after he came of age. In such a case the law will imply a request; and the fact of the promise has been found by the jury"; and undoubtedly the action would have lain against the defendant whilst an infant, inasmuch as it was for necessaries furnished at his request in regard to which the law raises an implied promise. The case of Lee v. Muggeridge (5 Taunt. 36), must however be allowed to be decidedly at variance with the doctrine in the note alluded to, and is a decision of great authority. It should however be observed that in that case there was an actual request of the defendant during coverture, though not one binding ill law; but the ground of decision there taken was also equally applicable to Littlefield v. Shee (2 B. & Ad. 811), tried by Gaselee J. at N. P., when that learned Judge held, notwithstanding, that "the defendant having been a married woman when the goods were supplied, her husband was originally liable, and there was no consideration for the promises declared upon." After time taken for deliberation this Court refused even a rule to shew cause why the nonsuit should not be set aside. Lee v. Muggeridge (5 Taunt. 36), was cited on the motion, and was sought to be distinguished by Lord Tenterden, because there the circumstances raising the consideration were set out truly upon the record, but in Littlefield v. Shee the declaration stated the consideration to be that the plaintiff had [11 Ad. & E. 450] supplied the defendant with goods at her request, which the plaintiff failed in proving, inasmuch as it appeared that the goods were in point of law supplied to the defendant’s husband, and not to her. But Lord Tenterden added, that the doctrine that a moral obligation is a sufficient consideration for a subsequent promise is one which should be received with some limitation. This sentence, in truth, amounts to a dissent from the authority of Lee v. Muggeridge (5 Taunt. 36), where the doctrine is wholly unqualified.

The eminent counsel who argued for the plaintiff in Lee v. Muggeridge (5 Taunt. 36), spoke of Lord Mansfield as having considered the rule of nudum pactum as too narrow, and maintained that all promises deliberately made ought to be held binding. I do not find this language ascribed to him by any reporter, and do not know whether we are to receive it as a traditional report, or as a deduction from what he does appear to have laid down. If the latter, the note to Wennall v. Adney (3 B. & P. 249), shews the deduction to be erroneous. If the former, Lord Tenterden and this Court declared that they could not adopt it in Littlefield v. Shee (2 B. & Ad. 811). Indeed the doctrine would annihilate the necessity for any consideration at all, inasmuch as the mere fact of giving a promise creates a moral obligation to perform it.

[113 Eng. Rep. 487] The enforcement of such promises by law, however plausibly reconciled by the desire to effect all conscientious engagements, might be attended with mischievous consequences to society; one of which would be the frequent preference of voluntary undertakings to [11 Ad. & E. 451] claims for just debts. Suits would thereby be multiplied, and voluntary undertakings would also be multiplied, to the prejudice of real creditors. The temptations of executors would be much increased by the prevalence of such a doctrine, and the faithful discharge of their duty be rendered more difficult.

Taking then the promise of the defendant, as stated on this record, to have been an express promise, we find that the consideration for it was past and executed long before, and yet it is not laid to have been at the request of the defendant, nor even of his wife while sole (though if it had, the case of Mitchinson v. Hewson (7 T. R. 348), shews that it would not have been sufficient), and the declaration really discloses nothing but a benefit voluntarily conferred by the plaintiff and received by the defendant, with an express promise by the defendant to pay money.

If the subsequent assent of the defendant could have amounted to a ratihabitio, the declaration should have stated the money to have been expended at his request, and the ratification should have been relied on as matter of evidence; but this was obviously impossible, because the defendant was in no way connected with the property or with the plaintiff, when the money was expended. If the ratification of the wife while sale were relied on, then a debt from her would have been shewn, and the defendant could not have been charged in his own right without some further consideration, as of forbearance after marriage, or something of that sort; and then another point would have arisen upon the Statute of Frauds which did not arise as it was, but which might in that [11 Ad. & E. 452] case have been available under the plea of non assumpsit.

In holding this declaration bad because it states no consideration but a past benefit not conferred at the request of the defendant, we conceive that we are justified by the old common law of England.

Lampleigh v. Brathwait (Hob. 105), is selected by Mr. Smith (1 Smith's Leading Cases, 67), as the leading case on this subject, which was there fully discussed, though not necessary to the decision. Hobart C.J. lays it down that

"a mere voluntary courtesy will not have a consideration to uphold an assumpsit. But if that courtesy were moved by a suit or request of the party that gives the assumpsit, it will bind; for the promise, though it follows, yet it is not naked, but couples itself with the suit before, and the merits of the party procured by that suit; which is the difference";

a difference brought fully out by Hunt v. Bate (Dyer, 272 (a)), there cited from Dyer, where a promise to indemnify the plaintiff against the consequences of having bailed the defendant's servant, which the plaintiff had done without request of the defendant, was held to be made without consideration; but a promise to pay £20 to plaintiff, who had married defendant's cousin, but at defendant's special instance, was held binding.

The distinction is noted, and was acted upon, in Townsend v. Hunt (Cro. Car. 408), and indeed in numerous old books; while the principle of moral obligation does not make its appearance till the days of Lord Mansfield, and then under circumstances not inconsistent with this ancient doctrine when properly explained.

[11 Ad. & E. 453] Upon the whole, we are of opinion that the rule must be made absolute to arrest the judgment.

Rule to enter verdict for defendant, discharged.

Rule to arrest judgment, absolute.^[6]

[1] June 19th. Before Lord Denman C.J., Patteson, Williams, and Coleridge Js.

[2] 5 M. & W. 456. The same point arose in Williams v. Burgess, 10 A. & E. 4099; and Joint v. Flint, 10 A. & E. 753.

[3] 10 A. & E. 453. See also Cresswell v. Wood, id. 460.

[4] 3 B. & P. 247. See also the argument of the Attorney-General in Haigh v. Brooks, 10 A. & E. 315, 316.

[5] 5 Taunt. 36. On a previous suit in equity to declare the bond a charge on the separate estate of the testatrix, the Master of the Rolls had refused relief. S. O. 1 V. & B. 118.

[6] The opinion ascribed to Lord Mansfield respecting the rule of nudum pactum, appears to be not an unreasonable deduction from the cases of Pillans v. Mierop 3 Burr. 1663; and Williamson v. Losh, reported from the paper books of Ashhurst J. in Chitty on Bills, 75, note (x) (9th ed.). Both are commented on by the Lord C. B. Skynner, in Rann v. Hughes, 7 T. R. 350, note (a). See also Evans's General View of the Decisions of Lord Mansfield, vol. i. p. 422.

121 S.E. 659

TAYLOR et al.
v.
LEE et al.

No. 229.
Supreme Court of North Carolina.
March 12, 1924.

Appeal from Superior Court of Duplin County; Grady, Judge.

Action by L. Taylor and another, trading as L. Taylor & Son, against H. F. Lee and another. Judgment for plaintiffs, and defendant named appeals. No error.

Civil action tried upon the following issues:

"(1) Did the defendant H. F. Lee promise and agree to become bound to the plaintiffs for supplies furnished to B. D. Parker, during the year 1920, as alleged in the complaint? A. Yes.

"(2) If so, in what amount is the defendant Lee indebted to the plaintiffs by reason of said contract? A. $1,552.60 and interest.

"(3) In what amount is the defendant Parker indebted to the plaintiffs for supplies furnished him during the year 1920? A. $1,552.60 and interest."

From a judgment of $1,552.60, rendered jointly and severally against the two defendants, the defendant H. F. Lee appeals.

Stevens, Beasley & Stevens, of Warsaw, for appellant.

Langston, Allen & Taylor, of Goldsboro, and R. D. Johnson, of Warsaw, for appellees.

STACY, J. Appellant's chief exception, as stressed on the argument and in his brief, is the one addressed to the refusal of the court to grant his motion for judgment as of nonsuit, made first at the close of plaintiffs' evidence and renewed at the close of all the evidence, and based upon the ground that appellant's special promise to plaintiff, which was not in writing, was to answer for the debt, default, or miscarriage of his co-defendant Parker, and was therefore void under the statute of frauds. C. S. § 987.

It was in evidence that the defendants Lee and Parker, landlord and tenant, respectively, went to the plaintiffs' store and made arrangements with them whereby the [121 S.E. 660] plaintiffs were to furnish the defendant Tarker with certain supplies during the year 1920. Plaintiffs understood that Lee was to be responsible for whatever Parker bought. He said to the plaintiffs: "Mr. Parker will be on our land this year, and you sell him anything he wants, and I will see it paid." Almost this identical language was held in Whitehurst v. Padgett, 157 N.C. 424, 73 S.E. 240, to be sufficient to warrant a finding that the promise was an original one and not within the statute of frauds, if made at the time or before the debt was created, upon sufficient consideration, and credit was given thereon solely to the promisor or to both promisors as principals, or if the promise were based upon a new consideration of benefit or harm passing between the promisor and the creditor, or if the promise were for the benefit of the promisor and he had a personal, immediate, and pecuniary interest in the transaction in which a third party was the original obligor. See Peele v. Powell, 156 N.C. 553, 73 S.E. 234, and cases there cited.

In the instant case, there was no exception to the charge, and we think the case was properly submitted to the jury. The verdict as rendered was warranted by the evidence.

No error.

257 N.Y. 97 (1931)

ADOLPH WITSCHARD, Plaintiff, 
v.
A. BRODY & SONS, INC. et al., and EDWIN S. BUCKLEY et al., Respondents, Impleaded with Others.

[97] Witschard v. Brody & Sons, Inc., 232 App. Div. 768, modified.

(Submitted June 4, 1931; decided July 15, 1931.)

APPEALS from two judgments of the Appellate Division of the Supreme Court in the second judicial department, entered February 20, 1931, and February 20, 1931, affirming a judgment in favor of defendants-respondents and against the defendants-appellants entered upon a decision of the court on trial at Special Term.

M. Warren Berk for appellants. The alleged agreement made by the defendant owner, guaranteeing the contractor's account, was not in writing and was, therefore, void under section 31 of the Personal Property Law and unenforceable. (Richardson Press v. Albright, 224 N.Y. 497; Gibbs v. Holden, 137 Misc. Rep. 480; Snyder v. [98] Eckstein Brewing Co., 107 App. Div. 328; 188 N.Y. 576; Mallory v. Gillett, 21 N.Y. 412; White v. Rintoul, 108 N.Y. 222; Roscoe Lumber Co. v. Reynolds, 124 App. Div. 539; Mechanics & Traders Bank v. Stettheimer, 116 App. Div. 198; Halstead v. Pelletreau, 101 App. Div. 125; Ackley v. Parmenter, 98 N.Y. 425.)

Alex C. Webber and Sidney H. Swezey for Westbury Lumber Company, respondent. The promise of defendant-appellant to pay for past and future deliveries was supported by a new consideration moving to the promisor and beneficial to it and the promisor undertook to perform an independent duty of paying. These conditions take the promise out of the statute. (Parisi v. Hubbard, 226 App. Div. 280.)

George E. Mulry for Cloyd Davis, respondent.

KELLOGG, J. The defendant Edwin S. Buckley entered into a contract with the defendant A. Brody & Sons, Inc., to perform certain work on the premises of the latter, in making excavations, building walls and laying concrete floorings. Buckley, for necessary lumber supplied to the job, became indebted in a substantial sum to the defendant Westbury Lumber Co., Inc. More lumber was required to complete the job, but the Westbury Company refused to make further deliveries. Mr. Ben Brody, of the Brody firm, said to officers of the Westbury Company that if they "continued to deliver the balance of materials needed on that job he would guarantee payment of what had already been delivered, and what was to be delivered in the future." The Westbury Company thereupon resumed deliveries to Buckley. Their bill against Buckley never having been paid, the Westbury Company seeks in this action to recover the amount of the bill from the Brody company upon the promise made by that company, through Ben Brody, to guarantee the Buckley account. We think that the promise, made orally, was not enforce [99] able under the Statute of Frauds, since, it was "a special promise to answer for the debt, default or miscarriage of another person." (Pers. Prop. Law; Cons. Laws, ch. 41, § 31, subd. 2.) The fact that the Westbury Company, in continuing its deliveries to Buckley, at the request of the Brody company, supplied a consideration for the latter's promise is not sufficient to make the statute inoperative. A promise to guarantee the account of another, like every promise, requires the support of a consideration paid or promised, in order that an enforceable contract may have been formed. To say that the payment of a consideration removes an oral contract of guarantee from the application of the statute is to say that the statute can never operate, for there is no such thing as a contract without consideration. (1 Williston on Contracts, § 472.) Prof. Williston says: "The true test of the validity of a new oral promise should be: Is the new promisor a surety?" (Id. § 475.) If, as between the promisor and the original debtor, the promisor is bound to pay, the debt is his own and not within the statute. "Contrariwise if as between them the original debtor still ought to pay, the debt cannot be the promisor's own and he is undertaking to answer for the debt of another." (Id.) We find the same view expressed in Mallory v. Gillett (21 N.Y. 412, 415) and Richardson Press v. Albright (224 N.Y. 497, 502). In the former, COMSTOCK, Ch. J., said that "the inquiry under that statute is, whether there be a debtor and a surety;" in the latter, POUND, J., said that the promise is original " only when the party sought to be charged clearly becomes, within the intention of the parties, a principal debtor primarily liable." In this instance, the language of the promisor unmistakably indicates its intention to become a surety, for the very promise relied upon is that it "would guarantee payment." We have no doubt that the oral promise was within the statute and unenforceable.

[100] The judgment in favor of respondent Cloyd Davis against appellant, A. Brody & Sons, Inc., should be affirmed; and the judgment in favor of the respondent Westbury Lumber Co., Inc., against the appellant A. Brody & Sons, Inc., should be reversed, with costs to the appellant A. Brody & Sons, Inc., against the respondent Westbury Lumber Co., Inc.

CARDOZO, Ch. J., POUND, CRANE, LEHMAN, O'BRIEN and HUBBS, J.J., concur.

Judgment accordingly.

289 Mass. 232

GUILFORD W. COLPITTS & another
vs.
L. C. FISHER COMPANY & others.

Suffolk County
November 5, 1934 - January 10, 1935.

Present: RUGG, C.J., PIERCE, FIELD, DONAHUE, & LUMMUS, JJ.

A corporation which was indebted to one of its employees on a note made an assignment for the benefit of creditors. A new corporation was formed to succeed to the business. An oral agreement was made between the new corporation and the employee that if he would forbear enforcement of his note against the old corporation and would permit its assets to be used to satisfy its other creditors, the new corporation would employ him and would pay his note. Thereafter the assets of the old corporation were sold and were transferred by the purchaser to the new corporation, and the proceeds of the sale were used to pay the creditors of the old corporation other than the employee. The employee forbore enforcing his note against the old corporation and continued in the employ of the new corporation until he was discharged. The new corporation did not pay his note. It derived a benefit from such oral agreement. Held, that the promise of the new corporation to pay the employee's note was unenforceable by reason of the statute of frauds, G. L. (Ter. Ed.) c. 259, s. 1, Second.

BILL IN EQUITY, filed in the Superior Court with a writ in trustee process dated December 8, 1932.

The suit was heard by Keating, J. Material findings by the judge are stated in the opinion. By his order there was entered a decree in favor of the plaintiffs against the defendant L. C. Fisher Co., Inc., and dismissing the bill as against the other defendants. That defendant appealed.

C. B. Cross, for the defendant L. C. Fisher Co., Inc.

J. R. Larkin, for & plaintiffs.

LUMMUS, J. On March 21, 1932, the plaintiffs were employees of the defendant L. C. Fisher Company, and held its notes for money lent to it. Its indebtedness upon notes was about equal to its indebtedness for merchandise. On that day, that corporation decided to make an assignment for the benefit of its creditors, and its officers with a [233] creditor named Bova decided to form a new corporation to be called L. C. Fisher Co., Inc., to succeed to the business. All the stockholders of the new corporation agreed orally with the plaintiffs on that day that if the plaintiffs would not enforce their claims against the old corporation, but would let its assets be used to satisfy the merchandise creditors, the new corporation would continue to employ the plaintiffs and would pay the notes given them by the old corporation. The judge found that this arrangement conferred a benefit on the new corporation. The assignee for the benefit of creditors sold all the assets of the old corporation to Bova for $3,000, which was used to pay dividends to the merchandise creditors, and then Bova turned the assets over to the new corporation for a consideration. The plaintiffs forbore to enforce their claims against the old corporation, and continued in the employ of the new corporation until they were discharged, but their notes have not been paid.

This bill was brought to require the new corporation, L. C. Fisher Co., Inc., to pay the notes. The final decree dismissed the bill as against the other defendants, but established liability against the new corporation, which appealed to this court.

The record shows that the first meeting of the new corporation was held on March 21, 1932, the date of the alleged agreement, but fails to show that on that date the articles of organization had been filed in the office of the "state secretary" so as to give the new corporation legal existence and capacity to contract. G. L. (Ter. Ed.) c. 156, s. 11, 12. Lennox v. Haskell, 253 Mass. 334. Falls Rubber Co. of Akron, Inc. v. Applebaum, 286 Mass. 18. If we assume in favor of the plaintiffs, without so deciding, that a later adoption or remaking of the contract by the new corporation could be found (North Anson Lumber Co. v. Smith, 209 Mass. 333; Washington & Devonshire Realty Co. Inc. v. Freedman, 263 Mass. 554; Shumaker v. Lucerne-in-Maine Community Association, 275 Mass. 201, 204), the question remains whether recovery against the new corporation would not be precluded by the statute of frauds.

[234] The new corporation sets up that any promise made by it was a "special promise to answer for the debt, default or misdoings of another," upon which G. L. (Ter. Ed.) c. 259, s. 1, provides that "No action shall be brought" in the absence of written contract or memorandum. This statute applies only to a promise made to the creditor (Hawes v. Murphy, 191 Mass. 469, 472, and cases cited), whereby the promisor purports to add his liability to a continuing liability on the part of a principal debtor. Williston, Contracts, s. 466, 469, 475. If liability on the part of another never existed (Alexander v. Dove, 231 Mass. 362, 365; Hammond Coal Co. Inc. v. Lewis, 248 Mass. 499, 501; compare Dexter v. Blanchard, 11 Allen 365; Williston, Contracts, s. 454), or is extinguished by a novation (Langdon v. Hughes, 107 Mass. 272; Curran v. O'Donnell, 236 Mass. 357; Slotnick v. Smith, 252 Mass. 303; for the converse case, see Dows v. Swett, 120 Mass. 322; S. C. 134 Mass. 140), the promise is "original" and not within the statute. In the present case, the liability of the old corporation was not extinguished, but continued.

The question is, whether the case falls within a class of cases in which the essence of the transaction is a purchase of property or rights, or the obtaining of some other benefit, by the promisor from the promisee, and the payment of the continuing debt of a third person in accordance with the promise is merely incidental and not the real object of the transaction. The leading case is Williams v. Leper, 3 Burr. 1886, and the leading cases in Massachusetts are Nelson v. Boynton, 3 Met. 396, and Curtis v. Brown, 5 Cush. 488. The later case of Harburg India Rubber Comb Co. v. Martin, [1902] 1 K. B. 778, is illuminating. The reasoning is not unlike that by which a contract to manufacture goods especially for the buyer is deemed not to be a contract for the sale of goods, although incidentally a transfer of title must result. Goddard v. Binney, 115 Mass. 450. M. K. Smith Corp. v. Ellis, 257 Mass. 269, 271.

Obviously, the mere existence of consideration for the oral promise does not bring a case within this class. Consideration is required by general principles of contract, and [235] the statute of frauds would add nothing to the law if the statute should be satisfied as soon as consideration is shown. Nelson v. Boynton, 3 Met. 396, 399, 400. Crowley v. Whittemore, 255 Mass. 99, 103. Even consideration which is not only a detriment to the promisee but also a benefit to the promisor, is not enough to take a case out of the statute. Curtis v. Brown, 5 Cush. 488, 492. Furbish v. Goodnow, 98 Mass. 296. Ames v. Foster, 106 Mass. 400. Richardson v. Robbins, 124 Mass. 105. A promise by an owner (Gill v. Herrick, 111 Mass. 501; Collins v. Abrams, 276 Mass. 106; Witschard v. A. Brody & Sons, Inc. 257 N. Y. 97) or a mortgagee (Ribock v. Canner, 218 Mass. 5) of land, to pay a contractor what another owes him if he will finish the building according to his contract, has been held within the statute, although the owner or mortgagee obtains a benefit. Williston, Contracts, s. 481. "A promise, upon which the statute of frauds declares that no action shall be maintained, cannot be made effectual by estoppel, merely because it has been acted upon by the promisee and not performed by the promisor." Brightman v. Hicks, 108 Mass. 246, 248.

The rule established in the class of cases under discussion has often been stated as limited to cases in which the transaction "is in the nature of a purchase of property or of a property right." Carleton v. Floyd, Rounds & Co. 192 Mass. 204, 206. In Ames v. Foster, 106 Mass. 400, 403, Morton, J., said,

"We think the authorities in this state have gone no further than to decide that a case is not within the statute, where, upon the whole transaction, the fair inference is, that the leading object or purpose and the effect of the transaction was the purchase or acquisition by the promisor from the promisee of some property, lien or benefit which he did not before possess, but which enured to him by reason of his promise, so that the debt for which he is liable may fairly be deemed to be a debt of his own, contracted in such purchase or acquisition."

The statements in Dexter v. Blanchard, 11 Allen 365, 367, Wills v. Brown, 118 Mass. 137, 138, and Crowley v. Whittemore, 255 Mass. 99, 103, are to the same effect. In Paul [236] v. Wilbur, 189 Mass. 48, 52, P. Berry & Sons, Inc. v. Central Trust Co. 247 Mass. 241, 245, and Washington & Devonshire Realty Co. Inc. v. Freedman, 263 Mass. 554, 560, the rule was stated in an abbreviated and possibly broader form, to the effect that the statute does not apply "where the promisor receives something from the promisee for his own benefit"; but that statement does not mean that any consideration running directly from the promisee to the promisor is enough unless the obtaining of such consideration was the real object of the contract. In Harburg India Rubber Comb Co. v. Martin, [1902] 1 K. B. 778, 786, Vaughan Williams, L. J., said,

"In each of those cases [applying this rule] there was in truth a main contract a larger contract — and the obligation to pay the debt of another was merely an incident of the larger contract. As I understand those cases, it is not a question of motive — it is a question of object. You must find what it was that the parties were in fact dealing about. What was the subject-matter of the contract? If the subject-matter of the contract was the purchase of property — the relief of property from a — liability, the getting rid of incumbrances, the securing greater diligence in the performance of the duty of a factor, or the introduction of business into a stockbroker's office — in all those cases there was a larger matter which was the object of the contract. That being the object of the contract, the mere fact that as an incident to it — not as the immediate object, but indirectly — the debt of another to a third person will be paid, does not bring the case within the section."

See also Am. Law Inst. Restatement: Contracts, s. 184, excluding from the statute cases where the consideration for the promise to pay the debt of another "is in fact or apparently desired by the promisor mainly for his own pecuniary or business advantage, rather than in order to benefit the third person."

This court has never stated the rule more broadly than in the foregoing quotations from its own decided cases. In Alger v. Scoville, 1 Gray 391, and P. Berry & Sons, Inc. v. Central Trust Co. 247 Mass. 241, the consideration was [237] a transfer of stock from the promisee to the promisor or his nominee. In Paul v. Wilbur, 189 Mass. 48, 52, a lawyer turned over legal documents, drawn for a client, upon the promise of his assignee to pay for the legal services. In Washington & Devonshire Realty Co. Inc. v. Freedman, 263 Mass. 554, a landlord accepted a corporation as tenant upon its promise to pay back rent owed by its predecessor. In Manning v. Anthony, 208 Mass. 399, and Kahn v. Waldman, 283 Mass. 391, a mortgagee forbore to foreclose upon the promise of the purchaser of the equity of redemption to pay the mortgage. In other cases, the holder of a lien forbore to enforce it upon the promise of the owner of the property to pay the debt. Fish v. Thomas, 5 Gray 45. Fears v. Story, 131 Mass. 47. Burr v. Wilcox, 13 Allen 269. Wills v. Brown, 118 Mass. 137. See v. Downey, 256 Mass. 47. See also Mackin v. Dwyer, 205 Mass. 472, 476. Compare Jepherson v. Hunt, 2 Allen 417, 423.

In the present case, the continuance of the plaintiffs in the employ of the new corporation was not part of the consideration for its promise, but rather a benefit to the plaintiffs in addition to the promise. The plaintiffs never became parties to, or entitled to benefits under, the assignment for the benefit of creditors, so far as appears. They held no lien, and surrendered nothing to the new corporation. The direct beneficiaries of their forbearance were the old corporation and its creditors. Only indirectly was the new corporation aided. Under these circumstances the case does not fall under the rule which we have discussed. The promise is unenforceable under the statute of frauds. Carleton v. Floyd, Rounds & Co. 192 Mass. 204. George Lawley & Son Corp. v. Buff, 230 Mass. 21. Harburg India Rubber Comb Co. v. Martin, [1902] 1 K. B. 778. Davys v. Buswell, [1913] 2 K. B. 47.

Final decree reversed.

Bill dismissed with costs.

188 Iowa 986

MINNIE H. BADER, Appellant,
v.
ANDREW N. HISCOX, Appellee.

Appeal from Cherokee District Court. — C. C. BRADLEY, Judge.

NOVEMBER 11, 1919.

REHEARING DENIED APRIL 13, 1920.

ACTION at law, to recover damages for an alleged violation of contract. There was a directed verdict and judgment for defendant, and the plaintiff appeals. — Reversed.

Claud M. Smith, for appellant.

[987] Molyneux & Maher, for appellee.

WEAVER, J. — This action was begun on September 13, 1918. The petition alleges that, in the year 1891, when plaintiff was about 17 years of age, she was seduced by one Eugene Hiscox, son of the defendant herein, and, as a result of her association with the said Eugene, she became pregnant, and gave birth to a daughter in September, 1892; that, shortly before the birth of the child, plaintiff brought action against the said Eugene Hiscox in the district court of Cherokee County, to recover damages for her seduction and for breach of promise of marriage, and also instituted criminal proceedings against him in the courts of that county, to punish him for said offense.

Plaintiff further alleges that, soon after the institution of said proceedings, civil and criminal, the defendant, father of Eugene Hiscox, came to her and offered that, if she would marry Eugene, and dismiss the proceedings against him, civil and criminal, he, defendant, would convey to the plaintiff a certain designated 40 acres of land in Cherokee County; that plaintiff accepted said offer, and did then and there dismiss her action for damages, and, by marrying the accused, caused the criminal proceedings against him to be abated; but the defendant neglected and refused, and still neglects and refuses, to perform his agreement to convey to her the land.

Plaintiff further alleges that the contract pleaded by her was made in Cherokee County, Iowa, where all the parties then resided; but that, after the performance of said agreement on her part, and within less than five years thereafter, the defendant removed from this state to the state of Mississippi, where he has since continuously resided; that, at the date of said agreement and its perform [988] ance on her part, the land was reasonably worth about $1,400, for which sum, with interest thereon, and for rents and profits of the land, she asks a recovery of $5,084. By an amendment to her petition, plaintiff increases her claim for damages to $8,000.

The defendant answers the petition, denying its allegations, pleading the statute of limitations, and alleging that the contract pleaded by plaintiff is "immoral, void, and in contravention of the statute of frauds."

The testimony offered tends fairly to sustain the allegations of the petition that, when the said Eugene Hiscox had been made defendant in both civil and criminal proceedings, charged with plaintiff's seduction, appellee visited plaintiff, and proposed that she dismiss her suit for damages, and, by marrying his said son, put an end to the criminal prosecution against him; and that, if she would do so, he, defendant, would convey to her by deed a certain 40 acres of land then owned by him. He further explained to plaintiff that, unless she married Eugene, the young man was liable to be sent to prison, and agreed that, if she would accept his offer, and release his said son from both civil and criminal liability, he would execute the deed of the land to her, as proposed, and send it to her with the marriage license. It is alleged that plaintiff finally accepted the proposition, the marriage was solemnized, the civil suit dismissed, and the criminal proceeding abated, but that defendant did not send the deed, as promised; that, shortly after the marriage, defendant again visited plaintiff at her home, and asked her to go out to the farm and live with Eugene, saying that he would make the deed and send it by Eugene when he (Eugene) came for her, and would put buildings on the 40, so that she and her husband could move upon it in the spring; that, without performing his promise in any respect, defendant left the state, since which time he has been and remained a nonresident of Iowa; that, [989] on two or more occasions since that time, when temporarily visiting Iowa, defendant talked with plaintiff on the subject, admitting his promise, and expressed his purpose to convey the land to her, for the benefit of herself and of the child, but always postponed the making of the deed, on some excuse or pretext. Plaintiff's testimony is corroborated in most respects by several witnesses. The land in question is shown to have been worth from $32 to $36 per acre in 1892, but has since advanced in value to about $250 per acre. It appears, also, that defendant sold and conveyed the land to a third person, in the year 1896, but this was not known to the plaintiff until several years thereafter.

When plaintiff had rested her case in chief, the defendant moved the court to strike all the testimony offered in support of her claim, and to direct a verdict in defendant's favor, on the grounds:

1. That the contract alleged and sought to be proved is within the statute of frauds, and, not being in writing, no proof thereof is admissible.

2. That the alleged cause of action is barred by the statute of limitations.

3. That proof of the value of the land does not afford the correct measure of plaintiff's damage, if any, and that there has been unreasonable delay in bringing her action.

The motion was sustained by the court, a directed verdict for defendant was returned, and judgment entered thereon.

I.

The record does not clearly indicate whether the trial court sustained the motion to strike, and for a directed verdict generally, upon all the grounds assigned therefor, but we infer from the abstract that the order was based on the objection that the contract pleaded by the plaintiff is within the statute of frauds. It is quite evident, we think, that there is no merit in the objection that plaintiff did not sufficiently avoid the plea of the statute of limitations, or in [990] the further objection that there is no sufficient proof of damages resulting to the plaintiff from the alleged violation of contract. We shall, therefore, confine our discussion to the question whether proof of the alleged contract is so affected by the statute of frauds as to preclude plaintiff's right to a recovery.

The provision of the statute referred to is that:

"Except when otherwise specially provided, no evidence * * * is competent, unless it be in writing and signed by the party to be charged," of certain specified contracts, among which are: "(2) Those made in consideration of marriage; (3) those wherein one person promises to answer for the debt, default or miscarriage of another * * *; (4) those for the creation or transfer of any interest in lands, except leases for a term not exceeding one year." Code Section 4625.

By the next section, Code Section 4626, it is provided that the provisions of the fourth subdivision of Section 4625, above quoted, relating to lands, shall not apply when any part of the purchase price has been paid, "or when there is any other circumstance which, by the law heretofore in force, would have taken the case out of the statute of frauds."

It may be conceded, for the purposes of this case, that if the promise upon which plaintiff relies, and for breach of which she asks damages, is within the statute of frauds, as being a promise in consideration of marriage, then the fact that she did enter into the marriage is not performance or part performance bringing it within the exception provided for in Code Section 4626, — though there is very respectable authority to the contrary: English v. Richards Co., 109 Ga. 635; Browne on Statute of Frauds, Section 459; Nowack v. Berger, 133 Mo. 24; Larsen v. Johnson, 78 Wis. 300.

[991] We have, then, to inquire whether the alleged promise in this case was within the statute, as having been made in consideration of marriage. In our judgment, this question must be answered in the negative. In the first place, let us recall that our statute of frauds does not make a contract which is within its terms either unlawful or void, and in this respect it differs from the statute of frauds in some other jurisdictions. The sole effect of the statute as we have it is to deny to the promisee the right to establish such contract or promise by parol proof. It follows, we think, that, if a promise be made upon a lawful and sufficient consideration, which is not within the statute, and may be established by parol testimony, the promisor cannot evade liability thereon because there was another or additional consideration, proof of which is excluded by the statute. But we think it clear that the promise in this case was not made in consideration of marriage. The thing for which the defendant was bargaining was not the marriage of his son, but the release of his son from liability to a judgment for damages in the plaintiff's civil suit, and to obtain a dismissal of the criminal prosecution against him. The marriage was a mere incident, and not the end to be attained or purpose to be accomplished, and to that end, defendant was willing to make a marriage settlement upon the plaintiff, for the protection of herself and of the child born, or to be born, of her relations with the accused.

Quite applicable in principle, though diverse in its facts, is the precedent found in Larsen v. Johnson, 78 Wis. 300. In that case, Susan Larsen, a widow, having a small amount of property, entered into an oral contract with Andrew Johnson, by which the latter undertook to provide for her support, pay her debts, and take care of, manage, and improve her land, so as to make it productive for such purpose; and to that end it was agreed that they should [992] become husband and wife, and live together on the land, and, in consideration of the foregoing agreement, the said Susan would convey the land to her husband in fee simple. The parties were married, and the husband performed the obligations of his said agreement. After the death of Susan, litigation with her heirs ensued, involving the question of the validity of the agreement between Johnson and his wife, and the statute of frauds was invoked by the parties claiming adversely to the husband. The court overruled the objection, saying:

"The marriage of the parties was not the consideration of the contract to convey the land or any part of it. It was only incidental, as the condition or relation in which the respondent should render to the said Susan Larsen, and she receive, her support and comfort, as the consideration of the conveyance. The agreement to marry may have been made at the same time, but not as any part of the consideration for the conveyance. It was for the benefit of the respondent, as much as, if not more than, it was for her benefit. There was sufficient lawful and valuable consideration to support the contract, aside from any supposable consideration of marriage."

Now, plaintiff had the right to settle or dismiss her suit for damages, and to consent to the dismissal of the criminal prosecution. The defendant had the right to purchase immunity for his son, in the civil case, on the best terms he could obtain, and he could lawfully bind himself to make provision for the support of plaintiff or her child, in consideration of the release by her of his son from criminal liability for her seduction. Armstrong v. Lester, 43 Iowa 159; Wright v. Wright, 114 Iowa 748. To be sure, the only way plaintiff could effectually dismiss the criminal proceeding was by marriage with her alleged seducer; but here again is demonstrated the fact that the marriage was only an incident to the thing contracted for, the release of the [993] accused from further liability, civil and criminal, for the wrong with which he was charged. Plaintiff has performed her part of the agreement; she has dismissed her action for damages, and by her act has secured the discharge of the defendant's son from criminal liability; and there is no apparent reason why defendant should not be held to performance on his part.

There is another aspect of the question we have discussed which, though possibly not quite pertinent to the case as made by the plea, is not without bearing upon the principles we affirm in this decision. The purpose and intent of the statute of frauds is to prevent fraud, and the courts will, so far as possible, refuse to permit it to be made the shield for fraud. Discussing the subject, the Massachusetts court says of precedents applying to this rule:

"The cases most frequently referred to are those arising out of agreements for marriage settlements. In such cases, the marriage, although not regarded as a part performance of the agreement for a marriage settlement, is such an irretrievable change of situation that, if procured by artifice, upon the faith that the settlement had been, or the assurance that it would be, executed, the other party is held to make good the agreement, and not permitted to defeat it by pleading the statute." Glass v. Hulbert, 102 Mass. 24, 39.

See, also, Peek v. Peek, 77 Cal. 106; Green v. Green, 34 Kan. 740; 4 Pomeroy's Eq. (3d Ed.), Section 1409.

The further suggestion by appellee, that the alleged promise of the defendant is within the statute of frauds, as being an engagement or promise to answer for the debt, default, or miscarriage of another, is not sound. The defendant did not undertake to answer for the debt or default of his son. The promise, if made at all, was his own individual undertaking, and this is none the less true [994] because his son enjoyed the benefit, in whole or in part, of the performance of the agreement on part of the plaintiff. The obligation assumed by him was primary, and upon his own credit. Nor can the promise be avoided on the theory that it was the transfer of title or interest in real estate, for plaintiff's evidence sufficiently shows full performance on her part.

It follows that the trial court erred in striking the evidence and directing a verdict for the defendant. A new trial is, therefore, awarded.

The judgment below is — Reversed.

LADD, C. J., GAYNOR and STEVENS, JJ., concur.

97 Mass. 208

JOHN DOYLE
vs.
JOHN DIXON.

September Term, 1867.

An agreement not to engage in a certain kind of business at a particular place for a specified number of years is not within the provision of the statute of frauds, (Gen. Sts. c. 105 § 1, cl. 5,) which requires agreements not to be performed within one year from the making thereof to be in writing in order to support an action thereon.

A. and B. made a contract that on a certain day A. should buy and B. would sell B.'s stock of goods, and B. would give and A. should take a lease of B.'s shop, and that if either party should fail to perform his part of the contract he would forfeit and pay to the other a stipulated sum. Held, that a subsequent agreement by A. to settle and adjust all matters between himself and B. and to sign the lease ten days before he was bound to do so by the contract was a sufficient consideration for a promise by B. not to do business for five years as a grocer in a certain town.

No exception lies to the exercise of the discretion of the presiding judge who, upon a motion to set aside a verdict for excessive damages, gives to the plaintiff the option to remit so much of the damages as in the judge's opinion is in excess.

B. was a grocer, and leased his shop and sold his stock of goods to A. with whom he agreed not to do business for five years as a grocer in the town. In an action by A. against him for a breach of this agreement the only direct evidence on the question of damages was that of A.'s partner, who testified that, after the breach, the business of the firm was lessened between two hundred and three hundred dollars per month, on which their profit would have been twenty-five per cent., and that of B. himself, who testified that after lie resumed business his trade amounted to eleven hundred dollars per month, mostly derived from his old customers. Four hundred dollars damages were awarded to A. for three months' breach of the agreement. Held, that no exception lies to the exercise of the discretion of the presiding judge in overruling B.'s motion to set aside the verdict as unwarranted by law upon the evidence, B. at the trial having asked no instruction to the jury on the limit of damages which they would be warranted upon the evidence in finding, and the injury to the plaintiff being such as was not capable of exact proof or definite computation.

CONTRACT for breach of an agreement by the defendant not to go into the grocery business in Chicopee for five years.

At the new trial in the superior court, before Rockwell, J., after the decision reported 12 Allen, 576, it appeared in evidence [209] that the defendant was a grocer at Chicopee, and that on November 19, 1864, he and the plaintiff entered into an agreement and signed a memorandum thereof in writing, by which it was provided that on December 1 ensuing the defendant would transfer to the plaintiff his stock of goods, and would lease to the plaintiff his shop for five years, at an agreed rent, receiving from the plaintiff the market value of the stock, and five hundred dollars besides as bonus, and that if either party should "back out" he should forfeit to the other two hundred dollars.

It appeared also that on November 21 the plaintiff went to the defendant's shop and said that some of his family were sick at North Brookfield and he wanted to go home, and would like to take the lease at once and "settle up the whole business," and the defendant agreed to do so, and proposed that they should go to an attorney's office for the lease to be drawn. One witness testified that, during this conversation, "the defendant said he had some flour coming, and asked if the plaintiff would take it of him; and the plaintiff said he did not want it, that he had not much capital and it would not be convenient to take it; and the defendant said, Will you give me the privilege of selling it? and the plaintiff said, Yes; and the defendant thanked him for it and said he would not trouble him by going into business in five years.'' The plaintiff himself testified that the defendant said, "I have a lot of flour coming; if you don't want to buy it, will you give me the privilege to sell it?" that he replied, "Yes;" and that the defendant then said, "If you’ll let me sell the flour it is all I want, and I shall not trouble you in the grocery business in Chicopee in five years."

It appeared further that the parties then went to an attorney's office, and that, while the lease was in preparation, the plaintiff asked if it would not be well to mention in it that the defendant was not to go into the business in Chicopee for five years, and the defendant said it would be foolish, and the attorney said that there was no need of it; that the parties agreed that the lease thus drawn should be deposited with the parish priest; and that a day or two before December 1 the plaintiff paid the bonus of five hundred dollars, and on or before that day all the [210] other stipulations of the memorandum signed on November 19 were fully performed by the parties respectively.

It was also in evidence that on May 15, 1866, the defendant did enter into the grocery business in Chicopee, and continued in it to the time of the commencement of this action on August 15 following.

The plaintiff claimed his right of action only upon and by virtue of the agreement of November 21; whereupon the defendant requested the judge to rule that he could not recover upon an oral agreement not to go into the grocery business in Chicopee within five years, because such agreement was not to be performed within one year from the making thereof and was within the statute of frauds; but the judge ruled the contrary.

The judge then gave instructions to the jury, to which no exception was taken, instructing them, among other things, at the request of the defendant,

"that the plaintiff, in order to recover, must show that the contract on which he claimed was made after the agreement of November 19 was signed, and was based on an independent and new consideration; that under the contract of November 19, as expressed in the written memorandum, the defendant being free to trade according to his pleasure, the alleged permission by the plaintiff to sell flour was no sufficient consideration for the alleged agreement by the defendant not to go into business; that in order to constitute a consideration for the alleged contract the plaintiff must have parted with something of value or have foregone some right which he enjoyed, or the defendant must have acquired or received something of value or some privilege or right which he had not before."

And then, at the plaintiff's request, the judge further instructed the jury that "if the plaintiff agreed with the defendant on November 21 to settle and adjust all matters on that day and waived his right to forfeit the two hundred dollars named in the written contract, that agreement would be a good consideration for the promise not to engage in business for five years;” and, upon the defendant's objecting to this instruction, he in [211] structed further that "if there was any act or agreement done or made by the plaintiff on November 21 which was valuable to the defendant, it would support the agreement, if proved, on the part of the defendant to refrain from the business."

On the question of damages the only evidence was that of the defendant, who testified that the business of the shop he opened in May was about eleven hundred dollars per month, mostly derived from customers who had formerly traded with him at the old shop; and that of one McGrath, who testified that he became the plaintiff's partner immediately after the plaintiff's purchase of the stock, and that the amount of trade at their shop was lessened after the defendant opened his shop in May between two hundred dollars and three hundred dollars per month, on which their profit would have been twenty-five per cent.

A verdict for eight hundred dollars' damages was returned for the plaintiff, which the defendant moved to be set aside for excess of damages and as contrary to the weight of evidence. At the hearing on this motion the judge was of opinion that the damages were excessive, but in consequence of the plaintiff's offer to remit four hundred dollars, ordered the verdict to stand for the balance.

The defendant alleged exceptions to this order; to the ruling of the judge upon the plaintiff's request for instructions; and to the ruling in regard to the statute of frauds.

A. L. Soule, for the defendant.

G. M. Stearns, for the plaintiff.

GRAY, J. It is well settled that an oral agreement which according to the expression and contemplation of the parties may or may not be fully performed within a year is not within that clause of the statute of frauds, which requires any "agreement not to be performed within one year from the making thereof" to be in writing in order to maintain an action. An agreement therefore which will be completely performed according to its terms and intention if either party should die within the year is not within the statute. Thus in Peters v. Westborough, 19 Pick. 364, it was held that an agreement to support a child until a [212] certain age at which the child would not arrive for several years was not within the statute, because it depended upon the contingency of the child's life, and, if the child should die within one year, would be fully performed. On the other hand, if the agreement cannot be completely performed within a year, the fact that it may be terminated, or further performance excused or rendered impossible, by the death of the promisee or of another person within a year, is not sufficient to take it out of the statute. It was therefore held in Hill v. Hooper, 1 Gray, 131, that an agreement to employ a boy for five years and to pay his father certain sums at stated periods during that time was within the statute; for although by the death of the boy the services which were the consideration of the promise would cease, and the promise therefore be determined, it would certainly not be completely performed. So if the death of the promisor within the year would merely prevent full performance of the agreement, it is within the statute; but if his death would leave the agreement completely performed and its purpose fully carried out, it is not. It has accordingly been repeatedly held by this court that an agreement not hereafter to carry on a certain business at a particular place was not within the statute, because, being only a personal engagement to forbear doing certain acts, not stipulating for anything beyond the promisor's life, and imposing no duties upon his legal representatives, it would be fully performed if he died within the year. Lyon v. King, 11 Met. 411. Worthy v. Jones, 11 Gray, 168. An agreement not to engage in a certain kind of business at a particular place for a specified number of years is within the same principle; for whether a man agrees not to do a thing for his life, or never to do it, or only not to do it for a certain number of years, it is in either form an agreement by which he does not promise that anything shall be done after his death, and the performance of which is therefore completed with his life. An agreement to do a thing for a certain time may perhaps bind the promisor's representatives, and at any rate is not performed if he dies within that time. But a mere agreement that he will himself refrain from doing a certain thing is fully performed if he keeps it so [213] long as he is capable of doing or refraining. The agreement of the defendant not to go into business again at Chicopee for five years was therefore not within the statute of frauds.

The agreement of the plaintiff to settle and adjust all matters between the parties, and to sign the lease, on the 21st of November, ten days before the time when he was bound by the written contract to do so, was a legal consideration for the defendant's agreement. Any act done by the promisee at the request of the promisor, however trifling the loss to himself or the benefit to the promisor, is a sufficient consideration for a promise made without fraud, and with full knowledge of all the circumstances. Burr v. Wilcox, 13 Allen, 273, and cases cited.

The defendant has no ground of exception to the action of the superior court upon the motion for a new trial. Such a motion, so far as it depends upon the weight of evidence or other matter of fact, is exclusively addressed to the discretion of the presiding judge. When the damages awarded by the jury appear to the judge to be excessive, he may either grant a new trial absolutely, or give the plaintiff the option to remit the excess, or a portion thereof, and order the verdict to stand for the residue. Lambert v. Craig, 12 Pick. 199. Hurry v. Watson, 4 T. R. 659 note. Blunt v. Little, 3 Mason, 107. The judge in this case having adopted the latter course, and ordered the verdict to stand for the sum of four hundred dollars, the only question of law arising thereon is whether the law would warrant a verdict for this amount. The injury to the plaintiff by diverting his trade was not capable of exact proof or definite computation, but depended very much on general estimate, which was peculiarly within the province of the jury. Marsh v. Billings, 7 Cush. 333. Earle v. Sawyer, 4 Mason, 14. Stephens v. Felt, 2 Blatchf. C. C. 37, 39. It is impossible to say that upon the evidence at the trial, and such inferences and estimates as the jury might rightfully make, a verdict for four hundred dollars was not warranted by law. Moreover, any questions of law involved in the motion to set aside the verdict were open to the defendant at the trial, and no instruction in point of law having been then requested as to the limit of the damages which the jury would be warranted upon [214] the evidence in finding, no exception lies to the rulings upon such questions on the motion for a new trial. Kidney v. Richards, 10 Allen, 419. Exceptions overruled.

166 Misc. 455

MARIE HARVEY, Plaintiff,
v.
J. P. MORGAN & Co., Defendant.

Municipal Court of New York, Borough of Queens, Fourth District,
December 24, 1937.

ACTION on alleged oral contract by defendant to pay plaintiff pension for life based on plaintiff's claim for personal injuries suffered while employed by defendant.

Warren J. Dyckman, for the plaintiff.

Davis, Polk, Wardwell & Reed [Ralph M. Carson of counsel; Cornelius W. Wickersham, Jr., with him on the brief], for the defendant.

[456] PETTE, J. Plaintiff herein sues on an alleged oral contract, which is based upon a claim against the defendant for personal injuries sustained by her while in its employ. The accident occurred in the latter part of January, 1928, when a filing cabinet drawer fell, injuring her foot. The plaintiff received medical treatment for some time from the doctors employed by J. P. Morgan & Co. Plaintiff received her regular compensation during this period. Subsequently, the plaintiff alleges a conversation took place on or about January 2, 1929, with Dr. H. T. Lee and that said Dr. Lee stated that the defendant had decided to offer her a pension. Following this conversation, plaintiff testified that she spoke to E. E. Thomas, the personnel manager in the defendant's office, and that he reaffirmed the conversation with Dr. Lee with respect to the alleged pension, which she claims was for life. She further testified that she thereupon thanked Mr. Junius Morgan, a partner in the defendant company, for his generosity, who made no reference whatever to the lack of authority of the defendant's agent or employee to act in its behalf.

The plaintiff contends: (1) That she has a valid cause of action in contract based upon her original cause of action in negligence for the injuries sustained by her in the defendant's office, and that the defendant had no compensation insurance at the time of the accident; (2) that she compromised her claim with the defendant in consideration of her forbearance of suit; (3) that the contract entered into by her with the defendant for the payment of a pension to her for life is irrevocable, being founded upon a good and valuable legal consideration, although its adequacy may be challenged; (4) and finally, that there was sufficient ratification of the acts of its employees by the defendant through the conduct of Junius Morgan and other partners in issuing and delivering to the plaintiff periodical checks in confirmance of said agreement from January, 1928, up to and including December, 1935, a period of approximately seven years.

In the present action the plaintiff seeks to recover the monthly payments under said agreement for January, February, March and April, 1936.

The answer denies the material allegations of the complaint and interposes the additional defenses of (a) Statute of Frauds; (b) want of consideration in that payments were in the nature of a gratuity; (c) Statute of Limitations.

The testimony herein was duly taken at great length before the court and jury. Upon the conclusion of the trial both sides moved for a directed verdict, taking the case from the jury as to the ques [457] tions of fact and placed both the questions of law and fact in the court for final decision.

The questions presented upon the trial are many in number and require careful consideration.

To begin with, there is the basic problem as to whether or not a valid contract was entered into by and between the plaintiff and the defendant to give her a "pension for life." This necessarily involves the preliminary vital issue as to whether there was a valid consideration supporting the alleged agreement.

Consideration has been defined in various ways by the courts and text writers, as for example, a thing of some benefit or legal possibility of benefit to the promisor, or a thing of some prejudice to the promisee; or anything that may be detrimental to the promise or beneficial to the promisor in legal estimation. (Freeman v. Freeman, 43 N.Y. 39.) A consideration may consist of "some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss or responsibility, given, suffered, or undertaken by the other." (Rector v. Teed, 120 N.Y. 583, 586; Union Bank v. Sullivan, 214 id. 332, 339.)

"'A classic form of statement identifies consideration with the detriment to the promisee sustained by virtue of the promise.' (Hammer v. Sidway, 124 N.Y. 538.) * * * 'The promise and the consideration must purport to be the motive each for the other, in whole or at least in part. It is not enough that the promise induces the detriment or that the detriment induces the promise, if the other half is wanting.'"

(Comfort v. McCorkle, 149 Misc. 826; Allegheny College v. National Chautauqua County Bank, 246 N.Y. 369.) "There has grown up of recent days a doctrine that a substitute for consideration or an exception to its ordinary requirements can be found in what is styled a 'promissory estoppel.' (Williston Contracts, §§ 139, 116.)" (Comfort v. McCorkle, 149 Misc. 826.) Up to the present time, the Court of Appeals of this State has limited and confined the doctrine of promissory estoppels to their connection with the law of charitable subscriptions, and has not as yet modified "the general law of consideration." (Comfort v. McCorkle, 149 Misc. 826.)

Section 90 of the Restatement of the Law of Contracts provides:

"A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise." But the New York annotations thereto say: "This section announces a rule of promissory estoppel, applicable to charitable subscriptions, promises to make gifts, etc."

[458] Generally, mere forbearance without request is insufficient to constitute a valid consideration. However, here there is definite testimony by the plaintiff that the defendant by its agents requested her to forbear in the prosecution of her suit or claim for which they procured her a monthly pension up to and including December, 1935.

"A detriment incurred in reliance on a promise is not valid consideration unless the detriment was requested as consideration." (Williston on Contracts, §§ 136, 139, pp. 300, 301, 308; Walton Water Co. v. Village Water Co., 207 App. Div. 708, 712; Comfort v. McCorkle, supra, p. 828.)

As a general rule, the forbearance to assert or exercise a legal right is a sufficient consideration, and it is not necessary to show that such forbearance operated as a benefit to the promisor or a detriment to the promisee. (Hamer v. Sidway, 124 N.Y. 538; Rogers v. Wiley, 131 id. 527; German-American Bank v. Schwinger, 75 App. Div. 393; affd., 178 N.Y. 569.)

Though a person may in a sense have the legal right to bring an action on a totally unfounded claim, his refraining from doing so cannot constitute a consideration for an executory promise. (Springstead v. Nees, 125 App. Div. 230.) On the other hand, if a person asserts a claim in good faith, though it is unfounded in law, his refraining from suing (hereon will furnish a sufficient consideration. Where such a person forbears to sue he gives up what he believes a right of action and the other party gets an advantage, and, instead of being annoyed with an action, he escapes from the vexation incident to it. (Lockwood v. Title Ins. Co., 73 Misc. 296.) As heretofore shown and as said by HOUGHTON, J.:

"It is not necessary in order to uphold a compromise agreement based upon a surrender or composition or compromise of a claim that the claim should be a valid one, or one that can be enforced at law. A promise made upon a settlement of disputes and to prevent litigation is made upon a good consideration, and the settlement of a doubtful claim will uphold a promise to pay a stipulated sum or do any other lawful act * * *. Courts from the earliest times have favored compromises of bona fide disputes and have held agreements therefor to be founded upon good consideration irrespective of the validity of the claim which was compromised." (Minehan v. Hill, 144 App. Div. 854, 858.)

An executory promise may furnish a legal consideration, and such a promise may, if so accepted as in the instant case, furnish the necessary consideration to support an accord and satisfaction of an existing claim. (Spier v. Hyde, 78 App. Div. 151, 158.) Here there is present a bilateral contract, containing mutual promises; the promise of the plaintiff constitutes the consideration for [459] the promise of the defendant, and, the other necessary elements being present, render the contract binding on and enforcible by either party. (Justice v. Lang, 42 N.Y. 493; Britenstool v. Michaels, 56 id. 607; King v. Barnes, 109 id. 267.) A promise to perform in a bilateral contract may be implied from the terms of the agreement as a whole. (Eno v. Woodworth, 4 N.Y. 249; Clark v. Ulster, etc., R.R. Co., 189 id. 93; Benedict v. Pincus, 191 id. 377; Alexander v. Equitable Life Assurance Soc., 233 id. 300; Dairymen's League Co-operative Assn. v. Holmes, 207 App. Div. 429; affd., 239 N.Y. 503.)

As said by CARDOZO, J.:

"The law has outgrown its primitive state of formalism when the precise word was the sovereign talisman, and every slip was fatal. It takes a broader view today. A promise may be lacking, and yet the whole writing may be 'instinct with an obligation,' imperfectly expressed * * *. If that is so, there is a contract." (Wood v. Duff-Gordon, 222 N.Y. 88, 91.)

A promise, however, is only to be implied to enforce a manifest equity and reach a result which the acts of the parties indicate that they intended to effect. (Joseph v. Sulzberger, 136 App. Div. 499.)

In the instant case the plaintiff had a claim against the defendant in January, 1928, upon which she might have instituted suit in negligence, had not the defendant seen fit by its agents or employees to request plaintiff's forbearance therein in consideration of the defendant's promise to reimburse her for her injuries during her life. At common law, it was the duty of an employer to provide a safe place of work, and furnish reasonably safe appliances with which to work. (Rosa v. Volkening, 173 N.Y. 590; Spencer v. Worthington, 44 App. Div. 496; Pelow v. Oil Well Supply Co., 194 N.Y. 64; Dowdell v. Lackawanna Steel Co., 198 id. 362.) The defendant conceded that it had no compensation insurance at the time of the accident, and it follows that the plaintiff had a cause of action for her injuries arising out of the defective and dangerous condition of the filing cabinet which was caused to fall and severely injure her foot.

The plaintiff performed all that was demanded of her as the condition of the defendant's promise, and that was sufficient. The Court of Appeals of this State has long held:

"When one, acting on the faith of a promise, performs the condition upon which the promise was made, the promise attaches to the consideration so performed, and renders the promisor liable. After the promisor has had the benefit of the consideration for which he bargained, it is no defense to say that the promisee was not bound by the contract to do the act. (Addison on Contracts, 13; 1 Parsons on Contracts, 451; Sands v. Crooke, 46 N.Y. 564, 570.)" (White v. Baxter, 71 N.Y. 254, 260.)

[460] With respect to the contention concerning the adequacy of the consideration for the defendant's promise to pay the plaintiff a pension for life, it is well to call the defendant's attention to the fact that the law has declared that the slightest consideration is sufficient for the greatest undertaking. (1 Clark, New York Law of Contracts, p. 544; Oakley v. Boorman, 21 Wend. 588, 594; Walton Water Co. v. Village of Walton, 238 N.Y. 46, 51; Strobe v. Netherland Co., Inc., 245 App. Div. 573; Fredenburg v. Fredenburg, 159 Misc. 525.)

While the courts have sometimes spoken of contracts as not fair and conscionable, and for such reason not to be upheld, the reason for doing so is primarily based on an element of fraud, actual or constructive, and the inadequacy of the consideration does not at law go to its sufficiency if in fact it can be deemed of value. (Jackson v. Alpha Portland Cement Co., 122 App. Div. 345; Earl v. Peck, 64 N.Y. 596, 598; Trustees of Columbia College v. Lynch, 70 id. 440; Hamer v. Sidway, 124 id. 538; Ga Nun v. Palmer, 216 id. 603; Parsons v. Teller, 188 id. 318, 325.)

Almost every bargain is incapable of being made exactly equal on both sides. A person may give or agree to give an exorbitant price for a thing if he sees fit. (Matter of Todd, 47 Misc. 35.) The facts upon the trial of this action established no fraud, actual or constructive, on the part of the plaintiff. It is quite probable that the defendant, a very reputable banking company, did not wish to be involved in a law suit with an employee for personal injuries sustained by her, and made this bargain to pension her for life. This court is in no position to weigh the extent of the consideration. (Clark, New York Law of Contracts, p. 544; Oakley v. Boorman, 21 Wend. 588, 594; Walton Water Co. v. Village of Walton, 238 N.Y. 46, 51.) Likewise, the amount of pecuniary consideration on which a promise to answer for the debt of another is based is immaterial; the nominal consideration of one dollar is fully effective. (Childs v. Barnum, 11 Barb. 14, affg. 3 Sup. Ct. 38.) In the case of services the courts have, with seeming accord, recognized the right of the person to whom the services are rendered to fix the amount that he will pay therefor, though excessive. (Worth v. Case, 42 N.Y. 362; Earl v. Peck, 64 id. 596; Ga Nun v. Palmer, 216 id. 603; Niemoller v. Duncombe, 59 App. Div. 614; affd., 172 N.Y. 621.)

"There is no general rule of equity," says JAMES, J., "which relieves a party from hard and unreasonable bargains after they become executed, merely because they are such. On the contrary, mere inadequacy is not a sufficient ground for avoiding a sale, unless the inadequacy is so gross as to afford presumptive evidence of actual fraud * * * or is attended with actual fraud, surprise, ignorance, mistake, delusion, or imbecility of mind." (Parmlee v. [461] Cameron, 41 N.Y. 392, 396.) A covenant is well supported in law and in equity by any consideration, however slight. (Trustees of Columbia College v. Lynch, 70 N.Y. 440, 445.)

Where a promisor requests a specific service, which may consist of an act of omission as well as of commission, and promises indemnity, reimbursement or compensation, it is immaterial whether the service rendered be beneficial to the employer or not; the inconvenience or injury or detriment to the promisee from the performance of the act, the making of the expenditures, or the omission to act is itself a legal consideration. (Bohm v. Goldstein, 53 N.Y. 634; White v. Baxter, 71 id. 254.) Where the controversy between the parties is well based according to their beliefs and understanding, the same may be the subject-matter of a compromise or settlement as in the present case. (Sears v. Grand Lodge, A. O. U. W., 163 N.Y. 374.) Similarly where a person has become liable in tort to the owner of property for its wrongful use, the waiver of the tort is a sufficient consideration for the wrongdoer's promise to pay. If the dispute was bona fide, it matters not on which side the ultimate right may have been. This court will not look behind the compromise, even though the claim, if made in good faith, was unfounded in law and unenforcible. (Dunham v. Griswold, 100 N.Y. 224.) In the absence of fraud or duress, a settlement of a disputed claim preferred in good faith by a promisee against a promisor is a legal consideration for a promise, and the fact that the promisor had a legal defense to the claim settled is no defense to an action on the new promise. (Wahl v. Barnum, 116 N.Y. 87, 95.)

Nor do I feel that there is any element of estoppel here which goes to the extent of destroying plaintiff's vested rights under the contract. If there be any element of estoppel, it is equitable estoppels or estoppel in pais. The indispensable elements of "estoppel" are ignorance on the part of the party who invokes it, a representation by the party estopped which misleads, and an innocent alteration of position in reliance upon such representation, to one's damage. It is practically impossible to make a definition of estoppel which will apply to all cases, because estoppel rests largely upon facts and circumstances of the particular case. Generally, however, it may be said that a person making a representation or assuming a position which if not maintained would result in an injustice to another who, having a right to rely upon the representation or position assumed, has done so to his injury, is estopped. (Welland Canal Co. v. Hathaway, 8 Wend. 480; Frost v. Saratoga Mut. Ins. Co., 5 Den. 154; Brown v. Bowen, 30 N.Y. 519; New York Rubber Co. v. Rothery, 107 id. 310; Rothschild v. Title Guarantee & Trust Co., 204 id. 458.) It must have reference to the existence of some present or past fact. [462] A mere promise to do something, or not to do it, in the future cannot work an estoppel unless the promise or engagement is one on which the party to whom the promise or statement was made has acted to his disadvantage so that his status has been changed. There is in it an element of fraud, actual or constructive; and it has been said that such fraud lies beneath every equitable estoppel. The party invoking the estoppel must prove that he has been misled to his prejudice. (Trustees, etc., of Brookhaven v. Smith, 118 N.Y. 634; Parsons v. Lipe, 158 Misc. 32; affd., 269 N.Y. 630.)

In the instant case there was no possible deception; all the facts were as well known to one party as to another. The defendant here may not invoke the defense of estoppel.

The alleged defense of the Statute of Frauds interposed herein is without merit. Subdivision 1 of section 31 of the Personal Property Law provides:

"Every agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking:

"1. By its terms is not to be performed within one year from the making thereof or the performance of which is not to be completed before the end of a lifetime."

In the leading case of Rochester Folding Box Co. v. Brown (55 App. Div. 444; affd., 179 N.Y. 542) it was held that a parol agreement which does not, by its terms, extend for any definite time, is not void under the Statute of Frauds. The test of enforcibility under this statute is directed to the time of performance and not to the time of the incurring of the obligation under which performance is to be made. (McCabe v. Green, 18 App. Div. 625.) If full performance, such as the parties intended, could possibly, at the time of the making of the contract, be completed within a year, no matter how unlikely or improbable that might be, the alleged contract was not within the statutory ban. (Blake v. Voight, 134 N.Y. 69; Warren Chemical & Mfg. Co. v. Holbrook, 118 id. 586.)

An agreement made to pay X a sum of money for life, payments to commence within a year from the date when the contract is made, is considered to be one capable of being fully performed within a year and, therefore, not within the Statute of Frauds. (Pronchlet v. Campagnie Generale Transatlantique, N.Y.L.J. Jan. 5, 1933, at p. 69; affd., 239 App. Div. 817; Dresser v. Dresser, 35 Barb. 573; Kent v. Kent, 62 N.Y. 560.) On the other hand, an agreement made to pay X a sum of money for life, under which payments are not to commence till more than a year from the date of the contract's making, is within the statute and void. (See Williston Cont. [1924] § 496; [463] Anson Cont. [Corbin's ed.] § 100; Wahl v. Barnum, 116 N.Y. 87; Fredenburg v. Fredenburg, 159 Misc. 525.)

An analysis of the facts herein similarly eliminates the defense of the Statute of Limitations. In a suit for maintenance and care the cause of action is contractual. (Marshall v. International Mercantile Marine Corp., 39 F. [2d] 551.) The alleged cause of action herein did not accrue until the breach of the alleged agreement in January, 1936. Subdivision 1 of section 48 of the Civil Practice Act provides:

"The following actions must be commenced within six years after the cause of action has accrued: 1. An action upon a contract, obligation or liability expressed or implied."

The statute begins to run from the time when the cause of action accrues, unless some statutory exception postpones its operations. The right to relief accrues when the plaintiff first becomes entitled to maintain the particular action in question. (2 Carmody's New York Practice, p. 729.)

The defendant contends that neither Dr. Lee, of its medical department, nor Mr. Thomas, its personnel manager, had the authority, implied or expressed, to make the alleged contract to bind the defendant to support the plaintiff for life; nor was there any ratification in any manner respecting the same.

Generally, there can be no reliance on apparent authority unless the circumstances are such that the plaintiff is entitled to rely upon it. (Deyo v. Hudson, 225 N.Y. 602, 612, 614.) "If a third person has notice of a limitation of an agent's authority, he cannot subject the principal to liability upon a transaction with the agent in violation of such limitation." (Restatement of the Law of Agency, § 166. Cf. Id. § 167; Tiffany on Agency [2d ed.], § 19; 75 A.L.R. 1047; Ernst Iron Works v. Duralith Corporation, 270 N.Y. 165.) Plaintiff herein is entitled, under all the circumstances, to rely on defendant's employees' statements, particularly when they were sanctioned by word of mouth with Junius Morgan, a partner in the defendant company, and further by the ratification shown by the defendant's conduct in issuing and delivering to her checks for her salary, etc., from 1928 to 1936, inclusive. The question is always whether the particular act of the agent is within the scope of his actual or apparent authority, or as it has been stated, "whether the third party had reasonable grounds for believing, under all the facts of the case, that the principal had authorized the act." (Vance on Insurance, p. 306.) The question still remains one as to the extent of authority. (Smaldone v. Ins. Co. of North America, 162 N.Y. 530; Manchester v. Guardian Assurance Co., 151 id. 88.) The scope of an agent's actual authority is determined by the principal's intentions or manifestation thereof to his agent. (Wen Kroy Realty Co. [464] v. Public National Bank, 260 N.Y. 84.) A principal is liable for acts of his agent which are ostensibly authorized. An agent employed to perform certain duties is deemed authorized to do it in the manner his business intrusted to him is usually done. (Michaelyan, Inc., v. N.J. Fidelity & Plate Glass Ins. Co., 234 App. Div. 855.)

Even though it may be contended that the original agreement to compromise the plaintiff's claim by the defendant's employee was unusual, nevertheless there is sufficient evidence upon the facts and testimony to sustain ratification by the defendant company. In the leading case of Ramsey v. Miller (202 N.Y. 72, 75) the Court of Appeals held:

"One may ratify the acts of another purporting to be made on his behalf whether that other is an agent exceeding his authority or no agent at all. (Huffcut on Agency, § 30.) This principle is recognized by this court in Hamlin v. Sears (82 N.Y. 327), where Judge EARL said: 'The general doctrine that one may, by affirmative acts, and even by silence, ratify the acts of another who has assumed to act as his agent, is not disputed. It is illustrated by many cases to be found in the books, and set forth by all the text writers upon the law of agency. [Citing authorities.] The doctrine properly applies only to cases where one has assumed to act as agent for another, and then a subsequent ratification is equivalent to an original authority.'"

The defendant company as principal, to avoid ratification of its employees' acts, if they were unauthorized, should have repudiated the pension agreement within a reasonable time. Ratification for seven years by the defendant's conduct cannot be so easily disregarded. (Fatta v. Edgerton, 137 N.Y. 226.) The defendant, having once ratified its agents' acts, cannot afterwards avoid the effect of such ratification by showing that it was not acquainted with all the facts of the transaction ratified, when it was always in a position and was in possession of means of learning them. (Glor v. Kelly, 49 App. Div. 617; affd., 166 N.Y. 589.)

Ratification, as it relates to the law of agency, is the express or implied adoption of the acts of another by one for whom the other assumes to be acting, but without authority. (1 Am. & Eng. Ency. of Law [2d ed.], 1181, and authorities in note 2; Stanton v. Granger, 125 App. Div. 174; affd., 193 N.Y. 656.)

"It is said in 31 Cyc. 1247: 'In the literature of the law there has often been little inclination displayed to distinguish between ratification and estoppel in pais. * * * The substance of ratification is confirmation of the unauthorized act or contract after it has been done or made, whereas the substance of estoppel is the principal inducement to another to act to his prejudice. Acts and conduct amounting to an estoppel in pais may in some instances amount [465] to a ratification; but, on the other hand, ratification may be complete without any of the elements of an estoppel, and if the act or contract in question has in fact been ratified, and the ratification is sufficient, there is no need of invoking the doctrine of estoppel.'" (Stiebel v. Haigney, 134 App. Div. 516, 520.)

In Merritt v. Bissell (155 N.Y. 396) MARTIN, J., said:

"ratification of the unauthorized act of an agent, or of a stranger who claims to act as such, if it exists, must be found in the intention of the principal, either express or implied. If that intention cannot be shown no ratification can be held to have been established. While it is the duty of a principal to disavow the unauthorized act of his agent within a reasonable time after it comes to his knowledge, or otherwise, in some cases he makes the act his own, still, where one who has assumed to act as an agent for another has no authority to do so, but is a mere volunteer, a failure to disavow his acts will not amount to a ratification unless under such circumstances as indicate an intention to do so."

The preceding principles are applicable to the instant case. Plaintiff proved conclusively, not only the authority of the defendant's employees to make a contract for a "life pension," but also proved that Junius Morgan had ratified the agreement with full knowledge of the facts and with full intention to do so, and the defendant company continued to do so for seven years thereafter.

Judgment is hereby rendered in favor of the plaintiff and against the defendant in the sum of $566.64

290 Mass. 72

ELVIRA MONTUORI
vs.
DAVID BAILEN.

Court Below: Superior Court, Suffolk
November 13, 1934 - February 28, 1935.

Present: RUGG, C.J., CROSBY, PIERCE, DONAHUE, & LUMMUS, JJ.

On evidence that, after default under a mortgage of real estate, the mortgagor signed a writing under seal whereby he promised to pay the rents collected to the mortgagee in consideration of the mortgagee's "waiver of the taking of possession of" the mortgaged premises, and that shortly thereafter the mortgagee told the mortgagor to make repairs and improvements of the premises, to pay for them out of the rents and to pay the balance of the rents to him, "and I will not foreclose you," a finding was warranted that the agreement between the parties was not expressed completely in the writing alone, but in both the writing and the later conversation.

The making of such repairs and improvements by the mortgagor and a full accounting by him to the mortgagee for the rents collected constituted consideration for the mortgagee's promise not to foreclose.

The right to possession of land is an "interest in" it within the meaning of the statute of frauds, G. L. (Ter. Ed.) c. 259, s. 1, Fourth, and therefore a promise to refrain from taking and retaining possession of mortgaged land, which was involved in an oral promise by the mortgagee, made after default under the mortgage, not to foreclose it, likewise was within the statute; and the promise not to foreclose was unenforceable by reason of the statute even though it was supported by consideration.

Even if acts done by one of the parties to an oral contract within the statute of frauds amounted to part performance thereof under the doctrine applied in equity, such acts did not aid him in an action at law for breach of the contract against the other party thereto, who pleaded and relied on the statute in defence.

CONTRACT ON TORT. Writ dated July 19, 1929.

In each count of the declaration, the plaintiff alleged a breach by the defendant of the agreement described in the opinion, "all to the great damage of the plaintiff."

The action was tried in the Superior Court before Macleod, J. Material evidence is stated in the opinion. The judge denied a Motion by the defendant that a verdict be ordered in his favor on each count of the declaration. There [73] was a verdict for the plaintiff on each count in the sum of $1,980.77. The defendant alleged an exception. H. Bergson, for the defendant.

I. Bernstein, for the plaintiff.

LUMMUS, J. The evidence tended to show the following facts. The plaintiff had bought land and buildings subject to a first mortgage for $36,000 and a second mortgage, held by the defendant, for $29,000. There was a breach of the second mortgage in that taxes for the previous year were unpaid, when the plaintiff's agent and the defendant's attorney talked about the matter on February 26, 1929. Both had full authority. The attorney said in substance that so long as the rents should be accounted for at his office, the defendant would not take possession nor foreclose. The attorney drew a written agreement whereby

"in consideration of the waiver of the taking of possession of said premises the undersigned hereby agrees with the . . . [defendant] that she will account to the . . . [defendant] for all rents promptly as when collected and that the failure so to do shall be deemed conclusively an unlawful withholding of said rentals."

This was signed by the plaintiff's agent, under the words "witness my hand and seal," and she paid $200 towards the interest, as a part of the transaction. Later, about March 1, 1929, the defendant, discussing that agreement with the plaintiff's agent, said, "you fix the house better, more improvements, and spend a little money, and the rest of the money left on the rents you bring to the office of . . . [the attorney] and I will not foreclose you." The defendant later specified the repairs and improvements that he wished made. The plaintiff made them, to the defendant's knowledge, at a cost of $2,500, and also accounted fully to the attorney for all the rents.

Notwithstanding all this, the defendant took possession to foreclose his mortgage on May 15, 1929, and caused the property to be sold to his daughter at a foreclosure sale under a power in the mortgage on June 1, 1929.

The declaration contains two counts in contract. The jury returned a verdict for the plaintiff on each count in [74] the same amount, $1,980.77. The counts are not stated to be for the same cause of action, but obviously both arise out of the same transaction. No question is raised as to the pleadings, or the taking of the verdicts. The only exception is to the refusal of the judge to direct a verdict for the defendant.

It could be found that the written instrument was not the complete agreement between the parties, but only part of it. Davis v. Cress, 214 Mass. 379, 382. Glackin v. Bennett, 226 Mass. 316, 319. See v. Norris, 234 Mass. 345, 348. Dixon v. Lamson, 242 Mass. 129, 138. Blanchard Lumber Co. v. Maher, 250 Mass. 159, 162. Williams v. Pittsfield Lime & Stone Co. 258 Mass. 65, 68. Western Newspaper Union v. Dittemore, 264 Mass. 74, 77. McClintic-Marshall Co. v. Freedman, 274 Mass. 558, 563. MacLaren v. Windram Manuf. Co. 287 Mass. 221, 227. Consideration for the agreement could be found in the performance by the plaintiff of its terms, and that distinguishes this case from McCarthy v. Simon, 247 Mass. 514, and Sandler v. Green, 287 Mass. 404. In Zwicker v. Gardner, 213 Mass. 95, and Rosenberg v. Drooker, 229 Mass. 205, permitting the mortgagee to buy without competition at the foreclosure sale was held sufficient consideration for his oral promise to pay money to the mortgagor.

The important question is, whether the agreement was unenforceable, in the absence of a writing signed by the defendant, because it was "a contract for the sale of lands, tenements or hereditaments or of any interest in or concerning them," within the statute of frauds, G. L. (Ter. Ed.) c. 2059, s. 1, Fourth, which is set up in the answer.

We assume that the defendant's mortgage, as is usual, gave him no right to possession until default. G. L. (Ter. Ed.) c. 183, s. 26. But there was a default. He was entitled to take immediate possession by an open and peaceable entry on the mortgaged premises. By continuing that peaceable possession for three years, the mortgage would be effectively foreclosed. G. L. (Ter. Ed.) c. 244, s. 1, 2. Fletcher v. Cary, 103 Mass. 475. Fitchburg Co-operative Bank v. Normandin, 236 Mass. 332.

[75] A contract whereby one is merely licensed to use real estate, conveys no interest in land, and is not within the statute. White v. Maynard, 111 Mass. 250. Johnson v. Wilkinson, 139 Mass. 3. Nelson v. American Telephone & Telegraph Co. 270 Mass. 471, 479. On the other hand, a contract by a mortgagee to relinquish his interest in the land in favor of another, is within the statute. Parker v. Barker, 2 Met. 423, 431, 432. Hunt v. Maynard, 6 Pick. 489. The present case concerns neither the mere use of land, nor the entire title of the mortgagee in it, but concerns the right of possession after breach, which is one of the incidents of that title. The oral agreement of the defendant not to foreclose involved an agreement not to take and retain the possession, which is one of the customary means of effecting a foreclosure. If the agreement to surrender that right to take and retain possession is within the statute of frauds, the whole agreement is unenforceable, in the absence of a writing signed by the defendant. McMullen v. Riley, 6 Gray 500. Hurley v. Donovan, 182 Mass. 64. Eaton v. Simcovitz, 239 Mass. 569.

The right to possession of land is an interest in it, and a contract to surrender possession or to forbear for a time to exercise a right to take and retain possession, is within the statute of frauds. Browne, St. Frauds (5th ed.) s. 231. Norton v. Webb, 35 Maine, 218, 220. This was decided in Colman v. Packard, 16 Mass. 39, which was approved in Wales v. Mellen, 1 Gray 512, although a contrary result on similar facts was reached in the latter case on a different ground. The contract upon which this action is brought is unenforceable under the statute of frauds.

If the facts in the present case amount to part performance, that cannot help the plaintiff in this action at law, for the doctrine of part performance is recognized only in equity. Kidder v. Hunt, 1 Pick. 328. Adams v. Townsend, 1 Met. 483. Williston, Contracts, s. 494, note 40. Browne, St. Frauds (5th ed.) s. 451. 59 Am. L. R. 1305. See also Dix v. Marcy, 116 Mass. 416; Minchin v. Minchin 157 Mass. 265; Hurley v. Donovan, 182 Mass. 64.

Cases in which a foreclosure has been opened or the right [76] of redemption extended, by oral agreement or by some act inconsistent with reliance on a foreclosure, do not apply. In such cases there was no agreement to surrender possession or the right of possession. At most there was an agreement that the effect of the possession should be limited. Furthermore, such cases ordinarily have arisen in equity, and in them equitable doctrines have been applied. In equity, a formal deed, absolute in form, does not prevent redemption by the grantor if a right of redemption was contemplated by the parties. Campbell v. Dearborn, 109 Mass. 130. Hassam v. Barrett, 115 Mass. 256, 258. Clark v. Seagraves, 186 Mass. 430, 433, 434. Southwick v. Bigelow, 237 Mass. 299, 305. A fortiori, a formal foreclosure of an equity of redemption by possession and lapse of time does not prevent redemption in equity, where the true understanding is that a right to redeem shall, nevertheless continue to exist. Lawrence v. Fletcher, 8 Met. 153, 164, et seq. Trow v. Berry, 113 Mass. 139, 147. Worcester Mechanics' Savings Bank v. Thayer, 136 Mass. 459, 463. Tompson v. Tappan, 139 Mass. 506, 507. Griffin v. Coffey,  9 B. Mon. 452. Butt v. Butt, 91 Ind. 305. Browne, St. Frauds (5th ed.) s. 267. In some cases a formal foreclosure by sale under a power, followed by deed, has been held not to prevent redemption, where the foreclosure was merely a "friendly foreclosure" not intended to be effective. O'Brien v. Hovey, 239 Mass. 37, 42, and cases cited. Flynn v. Curtis & Pope Lumber Co. 245 Mass. 291, 302, 303. See also Knowlton v. Fourth-Atlantic National Bank of Boston, 264 Mass. 181, 194.

A verdict ought to have been directed for the defendant. His exception is sustained, and judgment is to be entered in his favor. G. L. (Ter. Ed.) c. 231, s. 124.

So ordered.

129 Mass. 185

GUSTAVE AMSINCK & another
vs.
AMERICAN INSURANCE COMPANY.
SAME
vs.
BOYLSTON MUTUAL INSURANCE COMPANY.
SAME
vs.
NEW ENGLAND MUTUAL INSURANCE COMPANY.

Suffolk. March 18, 1879. — July 10, 1880. AMES & LORD, J J., absent.

One who has made an oral contract to purchase a vessel has an insurable interest in her, notwithstanding the statute of frauds.

In an action on a policy of marine insurance, evidence of a deviation from the voyage insured, by an unreasonable delay in prosecuting it, is admissible under a general denial in the answer.

[185] THREE ACTIONS OF CONTRACT upon policies of marine insurance. At the trial in this court, before Morton, J., the jury returned a verdict for the plaintiffs; the case was reported for the consideration of the full court, and appears in the opinion.

A. S. Wheeler & E. W. Hutckins, for the defendants.

L. S. Dabney & R. H. Dana, Jr., for the plaintiffs.

ENDICOTT, J. Upon the facts reported, the court is of opinion that Machado had an insurable interest in the vessel at the time the policies attached, even if we assume that they took effect on July 5, 1876, the day of their date. On that day, the plaintiffs, as agents for Machado, made an oral agreement in New York with the owners of the vessel for her purchase for the sum of $11,000, payable on delivery of a proper bill of sale; and, having previously ascertained that the defendants would insure her, they gave directions to have the insurance closed. The policies were written on that day; the precise time of their delivery does not appear. The oral contract to purchase was reduced to writing and signed by the plaintiffs and the owners on July 7; and a portion of the purchase money was paid on that day. Possession was taken by Machado, the balance due was paid, and a bill of sale was duly executed to a third person in trust for Machado, who was a foreigner.

It is conceded by the defendants that Machado was the only person whose interest was insured, as appears by the declarations and the policies. But they contend that he had no insurable interest on July 5, for at that time he had only an oral contract for the purchase of the vessel; and that such a contract, being [186] within the statute of frauds, and incapable of being enforced, gives no insurable interest.

But the oral contract to purchase was not void or illegal by reason of the statute of frauds. Indeed, the statute presupposes an existing lawful contract; it affects the remedy only as between the parties, and not the validity of the contract itself; and where the contract has actually been performed, even as between the parties themselves, it stands unaffected by the statute. It is therefore to be "treated as a valid subsisting contract when it comes in question between other parties for purposes other than a recovery upon it." Townsend v. Hargraves, 118 Mass. 325, 336. Cahill v. Bigelow, 18 Pick. 369. Beal v. Brown, 13 Allen, 114. Norton v. Simonds, 124 Mass. 19. See also Stone v. Dennison, 13 Pick. 1. Machado had under his oral agreement an interest in the vessel, and would have suffered a loss by her injury or destruction. Eastern Railroad v. Relief Ins. Co. 98 Mass. 420. This interest he could have assigned for a valuable consideration, and, if he had assigned it, all the rights afterwards perfected in him would have enured to the benefit of his assignee. Norton v. Simonds, ubi supra. The case of Stockdale v. Dunlop 6 M. & W. 224, relied upon by the defendants, does not sustain their position, for reasons which are stated in Townsend v. Hargraves, ubi supra.

The several policies of the defendants insure the ship on a voyage "at and from New York, via Bangor, to St. Michael, Western Islands." She left New York on September 3, and arrived at Bangor on September 13, where she took in additional cargo; from that port she sailed on October 27, and was lost on her passage to St. Michael. The defendants offered evidence of unreasonable delay at Bangor, where the ship remained for forty-three days, contending that, under the general denial of the answer, they could show that she did not sail on the voyage insured; in other words, that there was a deviation.

Any departure from the route named in the policy to a port or place not named, and any delay in prosecuting the voyage, without necessity or just cause, or any delay at a port named in the policy, for the prosecution of business not connected with the business of the voyage, or any unreasonable delay at such port in prosecuting the business of the voyage, is a deviation. Whether [187] the risk is increased thereby is immaterial. The assured has no right to substitute a different voyage for that which is insured, and can only recover for a loss sustained while the ship is prosecuting the voyage named in the policy; and if she has deviated prior to the loss, she is not then prosecuting the voyage for which she was insured. Whenever, therefore, she departs from the route, or delays in the prosecution of it, it is incumbent on the assured to show that the departure was caused by necessity, or that the delay at a port named in the policy was reasonable under the circumstances in order to accomplish the objects of the voyage. Burgess v. Equitable Ins. Co. 126 Mass. 70, and cases cited. African Merchants v. British Ins. Co. L. R. 8 Ex. 154.

The declaration in each of these cases alleges that the defend ant insured the ship, "on a voyage at and from New York, via Bangor, to St. Michael, Western Islands; and while proceeding on said voyage said ship was wrecked, and totally lost by the perils and dangers of the seas." These are necessary allegations, which the plaintiff is bound to establish in order to recover, namely, that the ship was insured on that voyage, and while prosecuting it she was lost by the perils of the sea. The answers admit that the defendants insured the ship for that voyage, but they contain a general denial of each and every other allegation in the declaration. In this state of the pleadings, the plaintiffs introduced evidence to prove that the ship was prosecuting the voyage named in the policy when she was lost; that she sailed from New York to Bangor, and from Bangor to St. Michael, and was totally lost between those ports.

We are of opinion that the defendants should have been allowed to rebut and control that evidence, which was a necessary part of the plaintiff's case, by showing that the ship did not sail on the voyage insured, that there was a deviation from that voyage by unreasonable delay at Bangor; and evidence of deviation, by departing from the route, or by unreasonable delay in prosecuting it, is appropriate to prove that the voyage actually prosecuted was not the voyage insured. It certainly would have been competent to prove, under the general denial, and in reply to the plaintiffs' evidence, that the ship went to Portland, and not to Bangor; and it is equally competent to prove that she deviated from her route by unreasonable delay at Bangor. The [188] defendants rest their defence, not upon matter in discharge and avoidance, but upon a denial of the allegations in the declaration, to support which evidence must be introduced; and we are of opinion that the ruling which excluded the evidence offered by the defendants, as inadmissible under the answer, was erroneous. A denial of each and every allegation in the declaration puts in issue every fact which the plaintiff must prove to make out a prima facie case. Gen. Sts. c 129, § 17. Mulry v. Mohawk Valley Ins. Co. 5 Gray, 541. Lincoln v. Lincoln, 12 Gray, 45. Boston Relief & Submarine Co. v. Burnett, 1 Allen, 410. Bavin v. Travis, 98 Mass. 222. Brigham v. Aldrich, 105 Mass. 212. Hill v. Compton, 119 Mass. 376. Mosler v. Potter, 121 Mass. 89. Of these cases Lincoln v. Lincoln most nearly resembles the case at bar. It was there held that, under an answer denying the making of a promissory note, an alteration after it was signed might be proved; and it was said by Mr. Justice Metcalf, in delivering the opinion, "No law, of which we have any knowledge, requires a defendant to give a plaintiff notice, written or oral, of the evidence which he intends to produce by way of rebutting that which the plaintiff must produce in order to support his case." The question is to be decided under our own system of pleading, as expounded by this court, and it is immaterial what may be the rule at common law, or under the practice in England.^[*]

In this aspect of the case, we express no opinion upon the other questions raised in the report, and argued at the bar. They all relate to the admission of evidence, and to prayers for instructions, in regard to the unreasonable delay of the ship at New York. Many of them may not arise at a new trial, and, by the terms of the report, if any of the rulings made were erroneous, the verdicts are to be set aside. As we decide that Machado had an insurable interest in the ship when the policies attached, and that it was open to the defendants to show that there was unreasonable delay at Bangor, the cases must stand for trial upon the questions of delay at New York and at Bangor.

Verdicts set aside.

[*] On this point the plaintiffs cited Tidmarsh v. Washington Ins. Co. 4 Mason, 439, 441; 2 Greenl. Ev. §§ 395, 399, 403; Chit. PL (11th Am. ed ) 515 a.

305 N.Y. 48 (1953)

Nate L. Crabtree, Respondent,
v.
Elizabeth Arden Sales Corporation, Appellant.

Court of Appeals of the State of New York.
Submitted November 25, 1952.
Decided January 21, 1953.

Crabtree v. Elizabeth Arden Sales Corp., 279 App. Div. 992, affirmed.

APPEAL from a judgment of the Appellate Division of the Supreme Court in the first judicial department, entered April 23, 1952, affirming, by a divided court, a judgment of the Supreme Court in favor of plaintiff, entered in New York County upon a decision of the court at a Trial Term (RABIN, J.), without a jury.

J. Howard Carter, John R. Schoemer, Jr., John J. Macchia and Arthur W. Knapp, Jr., for appellant.

I.

There is no written memorandum of plaintiff's alleged contract of employment sufficient to satisfy the Statute of Frauds. (Carter, Macy Co. v. Matthews, 220 App. Div. 679; Brauer v. Oceanic Steam Navigation Co., 178 N. Y. 339; Friedman & Co. v. Newman, 255N. Y. 340; Standard Oil Co. v. Koch, 260 N. Y. 150; United Press v. New York Press Co., 164 N. Y. 406; Culotta v. Banana Sales Corp., 142 Misc. 149; Watson v. Gugino, 204 N. Y. 535; Martin v. New York Life Ins. Co., 148 N. Y. 117; Miller v. Burlington Mills Ribbon Corp., 304 N. Y. 600; Mesibov, Glinert & Levy v. Cohen Bros. Mfg. Co., 245 N. Y. 305.)

II.

The court below adopted an erroneous measure of damages. (Toplitz v. Ullman, 2 Misc. 130; Griffin v. Oklahoma Nat. Gas Corp., 132 Kan. 843.)

Frank A. Fritz, Frank H. Platt, George Q. Slocum and Anthony T. Antinozzi for respondent.

I.

Plaintiff's employment was for a definite term and did not constitute an employment at will. (Braxton v. Mendelson, 233 N. Y. 122; Ferguson v. De Witt, 230 App. Div. 778; Fellows v. Fairbanks Co., 205 App. Div. 271; Aerated Products Co. v. Godfrey, 290 N. Y. 92; Matter of Aurelio [Cohen] 291 N. Y. 176; Drivas v. Lekas, 292 N. Y. 204; Gressing v. Musical Instrument Sales Co., 222 N. Y. 215; Mason v. New York Produce Exch., 127 App. Div. 282; Breakey v. Lake Placid Co., 271 App. Div. 586.)

II.

The contract of employment is evidenced by writings which together constitute a sufficient memorandum in compliance with the Statute of Frauds. (Marks v. Cowdin, 226 N. Y. 138; Spiegel v. Lowenstein, 162 App. Div. 443; Raubitschek v. Blank, 80 N. Y. 478; Webster v. Zielly, 52 Barb. 482; General Overseas Corp. v. Republic Pictures Int. Corp., 74 F. Supp. 698; Baxter v. Lustberg, 205 App. Div. 673; Doughty v. Manhattan Brass Co., 101 N. Y. 644; Coe v. Tough, 116 N. Y. 273; Delaware Mills v. Carpenter Bros., 200 App. Div. 324; Atlas Shoe Co. v. Lewis, 202 App. Div. 244.)

III.

Plaintiff exercised reasonable care to mitigate damages. There was no abandonment of the employment or waiver of defendant's breach. (Whitmarsh v. Littlefield, 46 Hun 418; Colloraff v. Hickson, Inc., 159 N. Y. S. 177; Milage v. Woodward, 186 N. Y. 252; Howard v. Daly, 61 N. Y. 362; Bassett v. French, 10 Misc. 672; Fuchs v. Koerner, 107 N. Y. 529; Briscoe v. Litt, 19 Misc. 5; McClelland v. Climax Hosiery Mills, 252 N. Y. 347; Toplitz v. Ullman, 2 Misc. 130; Richardson v. Hartmann, 68 Hun 9.)

IV.

Plaintiff is entitled prima facie to the amount of the unpaid salary for the unexpired term of the contract. (Karas v. H. R. Laboratories, 271 App. Div. 530, 297 N. Y. 494; Hollwedel v. Duffy-Mott Co., 263 N. Y. 95; Milage v. Woodward, 186 N. Y. 252; Sinclair v. Positype Corp. of America, 237 App. Div. 525; Howard v. Daly, 61 N. Y. 362; Van Wyck v. Mannino, 256 App. Div. 256; Preager v. Unity Shoemakers Corp., 257 App. Div. 632.)

FULD, J.

In September of 1947, Nate Crabtree entered into preliminary negotiations with Elizabeth Arden Sales Corporation, manufacturers and sellers of cosmetics, looking toward his employment as sales manager. Interviewed on September 26th, by Robert P. Johns, executive vice-president and general manager of the corporation, who had apprised him of the possible opening, Crabtree requested a three-year contract at $25,000 a year. Explaining that he would be giving up a secure well-paying job to take a position in an entirely new field of endeavor — which he believed would take him some years to master — he insisted upon an agreement for a definite term. And he repeated his desire for a contract for three years to Miss Elizabeth Arden, the corporation's president. When Miss Arden finally indicated that she was prepared to offer a two-year contract, based on an annual salary of $20,000 for the first six months, $25,000 for the second six months and $30,000 for the second year, plus expenses of $5,000 a year for each of those years, Crabtree replied that that offer was "interesting". Miss Arden thereupon had her personal secretary make this memorandum on a telephone order blank that happened to be at hand:

"EMPLOYMENT AGREEMENT WITH

NATE CRABTREE               Date Sept 26-1947

At 681 — 5th Ave             6: PM

                 * * *

Begin                             20000.

6 months                        25000.

6 "                                 30000.

                5000. — per year

                     Expense money

            [2 years to make good]

Arrangement with

  Mr Crabtree

By Miss Arden

Present Miss Arden

           Mr John

           Mr Crabtree

           Miss OLeary"

A few days later, Crabtree 'phoned Mr. Johns and telegraphed Miss Arden; he accepted the "invitation to join the Arden organization", and Miss Arden wired back her "welcome". When he reported for work, a "pay-roll change" card was made up and initialed by Mr. Johns, and then forwarded to the payroll department. Reciting that it was prepared on September 30, 1947, and was to be effective as of October 22d, it specified the names of the parties, Crabtree's "Job Classification" and, in addition, contained the notation that "This employee is to be paid as follows:

"First six months of employment           $20,000. per annum

Next six months of employment             25,000.   "        "

After one year of employment                30,000.   "        "

                                   Approved by RPJ [initialed]"

After six months of employment, Crabtree received the scheduled increase from $20,000 to $25,000, but the further specified increase at the end of the year was not paid. Both Mr. Johns and the comptroller of the corporation, Mr. Carstens, told Crabtree that they would attempt to straighten out the matter with Miss Arden, and, with that in mind, the comptroller prepared another "pay-roll change" card, to which his signature is appended, noting that there was to be a "Salary increase" from $25,000 to $30,000 a year, "per contractual arrangements with Miss Arden". The latter, however, refused to approve the increase and, after further fruitless discussion, plaintiff left defendant's employ and commenced this action for breach of contract.

At the ensuing trial, defendant denied the existence of any agreement to employ plaintiff for two years, and further contended that, even if one had been made, the statute of frauds barred its enforcement. The trial court found against defendant on both issues and awarded plaintiff damages of about $14,000, and the Appellate Division, two justices dissenting, affirmed. Since the contract relied upon was not to be performed within a year, the primary question for decision is whether there was a memorandum of its terms, subscribed by defendant, to satisfy the statute of frauds (Personal Property Law, § 31).^[1]

Each of the two payroll cards — the one initialed by defendant's general manager, the other signed by its comptroller — unquestionably constitutes a memorandum under the statute. That they were not prepared or signed with the intention of evidencing the contract, or that they came into existence subsequent to its execution, is of no consequence (see Marks v. Cowdin, 226 N.Y. 138, 145; Spiegel v. Lowenstein, 162 App. Div. 443, 448-449; see, also, Restatement, Contracts, §§ 209, 210, 214); it is enough, to meet the statute's demands, that they were signed with intent to authenticate the information contained therein and that such information does evidence the terms of the contract. (See Marks v. Cowdin, supra, 226 N.Y. 138; BaylesStrong, 185 N.Y. 582, affg. 104 App. Div. 153; Spiegel v. Lowenstein, supra, 162 App. Div. 443, 448; see, also, 2 Corbin on Contracts [1951], pp. 732-733, 763-764; 2 Williston on Contracts [Rev. ed., 1936], pp. 1682-1683.) Those two writings contain all of the essential terms of the contract — the parties to it, the position that plaintiff was to assume, the salary that he was to receive — except that relating to the duration of plaintiff's employment. Accordingly, we must consider whether that item, the length of the contract, may be supplied by reference to the earlier unsigned office memorandum, and, if so, whether its notation, "2 years to make good", sufficiently designates a period of employment.

The statute of frauds does not require the "memorandum to be in one document. It may be pieced together out of separate writings, connected with one another either expressly or by the internal evidence of subject matter and occasion". (Marks v. Cowdin, supra, 226 N.Y. 138, 145; see, also, 2 Williston, op. cit., p. 1671; Restatement, Contracts, § 208, subd. [a].) Where each of the separate writings has been subscribed by the party to be charged, little if any difficulty is encountered. (See, e.g., Marks v. Cowdin, supra, 226 N.Y. 138, 144-145.) Where, however, some writings have been signed, and others have not — as in the case before us — there is basic disagreement as to what constitutes a sufficient connection permitting the unsigned papers to be considered as part of the statutory memorandum. The courts of some jurisdictions insist that there be a reference, of varying degrees of specificity, in the signed writing to that unsigned, and, if there is no such reference, they refuse to permit consideration of the latter in determining whether the memorandum satisfies the statute. (See, e.g., Osborn v. Phelps, 19 Conn. 63; Hewitt Grain & Provision Co. v. Spear, 222 Mich. 608.) That conclusion is based upon a construction of the statute which requires that the connection between the writings and defendant's acknowledgment of the one not subscribed, appear from examination of the papers alone, without the aid of parol evidence. The other position — which has gained increasing support over the years — is that a sufficient connection between the papers is established simply by a reference in them to the same subject matter or transaction. (See, e.g., Frost v. Alward, 176 Cal. 691; Lerned v. Wannemacher, 91 Mass. 412.) The statute is not pressed "to the extreme of a literal and rigid logic" (Marks v. Cowdin, supra, 226 N.Y. 138, 144), and oral testimony is admitted to show the connection between the documents and to establish the acquiescence, of the party to be charged, to the contents of the one unsigned. (See Beckwith v. Talbot, 95 U. S. 289; Oliver v. Hunting, 44 Ch. D. 205, 208-209; see, also, 2 Corbin, op. cit., §§ 512-518; cf. Restatement, Contracts, § 208, subd. [b], par. [iii].)

The view last expressed impresses us as the more sound, and, indeed — although several of our cases appear to have gone the other way (see, e.g., Newbery v. Wall, 65 N.Y. 484; Wilson v. Lewiston Mill Co., 150 N.Y. 314) — this court has on a number of occasions approved the rule, and we now definitively adopt it, permitting the signed and unsigned writings to be read together, provided that they clearly refer to the same subject matter or transaction. (See, e.g., Peabody v. Speyers, 56 N.Y. 230; Raubitschek v. Blank, 80 N.Y. 478; Peck v. Vandemark, 99 N.Y. 29; Coe v. Tough, 116 N.Y. 273; Delaware Mills v. Carpenter Bros., 235 N.Y. 537, affg. 200 App. Div. 324.)

The language of the statute — "Every agreement is void, unless some note or memorandum thereof be in writing, and subscribed by the party to be charged" (Personal Property Law, § 31) — does not impose the requirement that the signed acknowledgment of the contract must appear from the writings alone, unaided by oral testimony. The danger of fraud and perjury, generally attendant upon the admission of parol evidence, is at a minimum in a case such as this. None of the terms of the contract are supplied by parol. All of them must be set out in the various writings presented to the court, and at least one writing, the one establishing a contractual relationship between the parties, must bear the signature of the party to be charged, while the unsigned document must on its face refer to the same transaction as that set forth in the one that was signed. Parol evidence — to portray the circumstances surrounding the making of the memorandum — serves only to connect the separate documents and to show that there was assent, by the party to be charged, to the contents of the one unsigned. If that testimony does not convincingly connect the papers, or does not show assent to the unsigned paper, it is within the province of the judge to conclude, as a matter of law, that the statute has not been satisfied. True, the possibility still remains that, by fraud or perjury, an agreement never in fact made may occasionally be enforced under the subject matter or transaction test. It is better to run that risk, though, than to deny enforcement to all agreements, merely because the signed document made no specific mention of the unsigned writing. As the United States Supreme Court declared, in sanctioning the admission of parol evidence to establish the connection between the signed and unsigned writings. "There may be cases in which it would be a violation of reason and common sense to ignore a reference which derives its significance from such [parol] proof. If there is ground for any doubt in the matter, the general rule should be enforced. But where there is no ground for doubt, its enforcement would aid, instead of discouraging, fraud." (Beckwith v. Talbot, supra, 95 U. S. 289, 292; see, also, Raubitschek v. Blank, supra, 80 N.Y. 478; Freeland v. Ritz, 154 Mass. 257, 259; Gall v. Brashier, 169 F.2d 704, 708-709; 2 Corbin, op. cit., § 512, and cases there cited.)

Turning to the writings in the case before us — the unsigned office memo, the payroll change form initialed by the general manager Johns, and the paper signed by the comptroller Carstens — it is apparent, and most patently, that all three refer on their face to the same transaction. The parties, the position to be filled by plaintiff, the salary to be paid him, are all identically set forth; it is hardly possible that such detailed information could refer to another or a different agreement. Even more, the card signed by Carstens notes that it was prepared for the purpose of a "Salary increase per contractual arrangements with Miss Arden". That certainly constitutes a reference of sorts to a more comprehensive "arrangement," and parol is permissible to furnish the explanation.

The corroborative evidence of defendant's assent to the contents of the unsigned office memorandum is also convincing. Prepared by defendant's agent, Miss Arden's personal secretary, there is little likelihood that that paper was fraudulently manufactured or that defendant had not assented to its contents. Furthermore, the evidence as to the conduct of the parties at the time it was prepared persuasively demonstrates defendant's assent to its terms. Under such circumstances, the courts below were fully justified in finding that the three papers constituted the "memorandum" of their agreement within the meaning of the statute.

Nor can there be any doubt that the memorandum contains all of the essential terms of the contract. (See N. E. D. Holding Co. v. McKinley, 246 N.Y. 40; Friedman & Co. v. Newman, 255 N.Y. 340.) Only one term, the length of the employment, is in dispute. The September 26th office memorandum contains the notation, "2 years to make good". What purpose, other than to denote the length of the contract term, such a notation could have, is hard to imagine. Without it, the employment would be at will (see Martin v. New York Life Ins. Co., 148 N.Y. 117, 121), and its inclusion may not be treated as meaningless or purposeless. Quite obviously, as the courts below decided, the phrase signifies that the parties agreed to a term, a certain and definite term, of two years, after which, if plaintiff did not "make good", he would be subject to discharge. And examination of other parts of the memorandum supports that construction. Throughout the writings, a scale of wages, increasing plaintiff's salary periodically, is set out; that type of arrangement is hardly consistent with the hypothesis that the employment was meant to be at will. The most that may be argued from defendant's standpoint is that "2 years to make good", is a cryptic and ambiguous statement. But, in such a case, parol evidence is admissible to explain its meaning. (See Martocci v. Greater New York Brewery, 301 N.Y. 57, 63; Marks v. Cowdin, supra, 226 N.Y. 138, 143-144; 2 Williston, op. cit., § 576; 2 Corbin, op. cit., § 527.) Having in mind the relations of the parties, the course of the negotiations and plaintiff's insistence upon security of employment, the purpose of the phrase — or so the trier of the facts was warranted in finding — was to grant plaintiff the tenure he desired.

The judgment should be affirmed, with costs.

LOUGHRAN, Ch. J., LEWIS, CONWAY, DESMOND, DYE and FROESSEL, JJ., concur.

Judgment affirmed.

[1] While our opinion is limited to treatment of that question, we have, of course, considered the other points argued.

22 S.D. 293
117 N.W. 363

E. C. HUGHES, Plaintiff and appellant,
v.
W. H. PAYNE, Defendant and respondent.

South Dakota Supreme Court.
Appeal from Circuit Court, McPherson County, SD
Hon. Lyman T. Boucher, Judge
Reversed

John H. Perry
Attorney for appellant.

Taubman, Williamson & Herreid
Attorneys for respondent.

Opinion filed July 22, 1908.

[294] CORSON, J.

This is an appeal by the plaintiff from an order of the circuit court sustaining a demurrer to the complaint. The action was instituted by the plaintiff to reform a contract and for the specific performance of the same when so reformed.

It is alleged in the complaint:

"That on the 5th day of April, 1906, the plaintiff purchased of the defendant, and the defendant agreed to sell and convey to the plaintiff by a good and sufficient warranty deed, the SE ¼ of section 30, in town 124 N., range 79 W., in Walworth county, State of South Dakota, for the sum of $12 per acre, which price was mutually agreed on by plaintiff and defendant, and at said time and in pursuance of said agreement the said plaintiff paid to said defendant on the purchase price for said real estate the sum of $300, and the balance of said purchase price was to be paid when defendant delivered to plaintiff a deed conveying said real estate to plaintiff, which deed defendant promised to execute as soon as he could go to Selby to have the same prepared, and would deliver the same to plaintiff within a week from said 5th day of April, 1906. That at said time said defendant made, signed, and delivered to said plaintiff a receipt in writing, which receipt is in the words and figures as follows:

[295] 'Java, S. D., April 5th, 1906. Received of E. C. Hughes three hundred dollars ($300.00), in part payment on S.E. quarter section 30, R. 124-79 in Walworth county, S. Dak. W. H. Payne.'

"And plaintiff alleges that through mistake, oversight, and inadvertence the purchase price for said real estate was omitted from said receipt, and alto through mistake, oversight, and inadvertence said receipt fails to state when deed was to be delivered and the balance of said purchase price paid, and plaintiff demands judgment that said receipt be reformed so as to express the whole transaction as aforesaid alleged. And plaintiff further alleges that ever since said contract was entered into he has been ready, willing, and able to pay the balance of said purchase price to said defendant, and offered to pay said defendant the balance of said purchase price, and ever since said contract was made said defendant has refused to execute and deliver said deed, to the damage of said plaintiff in the sum of $1,000. That plaintiff offers to bring into court the balance of the purchase price for said real estate. Wherefore plaintiff prays judgment that said receipt be reformed to cover the whole transaction as aforesaid alleged, that he have judgment for specific performance of said contract as reformed, and that defendant be compelled to convey said real estate to the plaintiff, upon plaintiff bringing into court the balance of said purchase price, and for such other and further relief in the premises as shall be just and equitable and for the costs and disbursements of this action."

The demurrer was interposed upon the ground that the facts stated in the complaint do not constitute a cause of action against the defendant.

It is contended by the appellant that, as the facts stated in the complaint were admitted for the purpose of the demurrer, the plaintiff was entitled to have the contract reformed to correspond with the agreement made between the parties, and to have the same specifically enforced when so reformed. It is contended by the respondent that the contract is void under the statute of frauds, as such contracts are specifically required by statute to be in writing. Sections 1238, 1311 Rev, Civ. Code.

It may be conceded that the alleged contract without being reformed is insufficient to constitute a contract under the statute that [296] will be specifically enforced, but it seems to be well settled that, when a mistake is made in a contract by the omission therefrom of certain terms of the same, it may be reformed, and, when so reformed, enforced specifically by a court of equity, and such mistake in the contract may be proved by oral evidence. 1 Story’s Eq. Juris, (12th Ed.) § 166; Pomeroy on Specific Performance, § 261; Chambers v. Roseland, (1907); Keisselbrack v. Livingstone, 4 Johns. Ch. (N.Y.) 148; Keim v. Lindley, 30 Atl. 1087; Murphy v. Rooney, 45 Cal. 78; Murray v. Dake, 46 Cal. 645. In the latter case the learned Supreme Court of California held that the general rule that parol testimony is inadmissible to contradict, add to, or vary a written instrument does not exclude parol testimony of fraud or mistake in the execution of the contract, when a reformation of the instrument is sought. For this purpose, the testimony is always admissible, and the only question is whether it establishes such fraud or mistake as will induce a court of equity to interfere and correct the writing. Mr. Pomeroy in the section above cited says:

"The doctrine is well settled in the United States that, where the mistake or fraud is such as admits the equitable remedy of reformation, parol evidence may be resorted to by the plaintiff seeking to enforce it, as well as by the defendant seeking to defeat a specific performance."

It appears from the allegations of the complaint that on the 5th day of April, 1906, the plaintiff purchased of the defendant, and the defendant agreed to sell and convey to the plaintiff by good and sufficient deed, a quarter section of land described in the complaint for the agreed price of $12 per acre, $300 of which was paid in cash on that day, and the balance was to be paid on the delivery of the deed within one week from the said 5th day of April. It further appears that said respondent signed the written memorandum or receipt set forth in the complaint by which the receipt of $300 is acknowledged in part payment of the land in controversy, but the price for which the land was to be sold, and the time and manner of making the payment of the balance was not specified therein, and the plaintiff alleges that "through mistake, oversight, and inadvertence the purchase price of said real estate was omitted from said receipt and also through mistake, oversight, and inadvertence [297] said receipt fails to state when said deed was to be delivered and the balance of said purchase price paid."

And the appellant demands judgment that said receipt be reformed so as to express the whole transaction as aforesaid, and that the judgment may be entered by the court for specific performance of the contract as so reformed. We are of the opinion that, under the facts alleged, the appellant shows himself entitled to a reformation of the contract and specific enforcement of the same as reformed. While the contract or receipt is exceedingly meager, it contains sufficient to show that the respondent on the day specified agreed to sell to the plaintiff the quarter section of land described in the contract, and that he received $300 on account of said contract. It clearly appears from this receipt who was the party selling and the party purchasing the land and the description of the land contracted to be sold.

There seems to be a clerical error in the description of the land in the use of the letter "R" before "124-79 in Walworth county," when the letter "T" was probably intended. No reference is made to this error in the complaint, and it is not discussed in appellant’s brief, but is referred to in the brief of respondent. In view of the fact that it is clearly a clerical error, we do not deem it necessary to further consider it in this opinion. Under the rules established by courts of equity, therefore, it was competent for the court to reform the instrument in such manner as to include the price to be paid and the time and manner of payment, if it should be satisfied that the amount of the purchase price and the time and manner of payment were omitted by mistake or inadvertence.

Of course, the views herein expressed are based entirely upon the assumption that the facts stated in the complaint are true, and so clearly and definitely established as to satisfy the court that the appellant is entitled to have the contract reformed in accordance with the allegations of the complaint,

Taking this view of the complaint, we are of the opinion that the circuit court was in error in sustaining the demurrer, and the order sustaining the same is reversed.

FULLER, J., dissents.

82 Kan. 240, 108 P. 83 (1910)

D. M. BALDRIDGE, Appellant,
v.
LEOPOLD CENTGRAF, Appellee.

No. 16,444.
Supreme Court of Kansas.

[240] SYLLABUS BY THE COURT.

1. CONTRACTS — Specific Performance — Grounds. The ground upon which a court, notwithstanding the statute of frauds, may compel the complete performance of an oral contract for the sale of real estate, which has been partly performed, is that such a decree may be necessary in order to avoid injustice toward one who in reliance upon the agreement has so altered his position that he can not otherwise be afforded adequate relief.

2. Possession Taken with Owner's Consent. The mere fact that a proposed buyer has taken possession of real estate with the consent of the owner, upon the faith of an oral agreement for its purchase, does not in and of itself avoid the effect of the statute and justify a decree for the specific performance of the contract.

3. Possession and Deposit of Check for Purchase Price. In the absence of any further showing as to the injury that would result to the plaintiff by a denial of that relief, a decree for the specific performance of an oral contract for the sale to him of a dwelling house is not justified by evidence that, having deposited a valid check for the purchase price with a third person, mutually agreed upon, to be delivered upon the execution of a deed, he took possession of the premises by the owner's permission, but was on the same day served with a notice to vacate.

4. EJECTMENT—Evidence of Plaintiff's Title — Admissions. In ejectment, where the defendant claims a right of possession only under a contract with the plaintiff for the purchase of the property, evidence of title on the plaintiff's part becomes immaterial.

Appeal from Sumner district court; CARROLL L. SWARTS, judge. Opinion filed April 9, 1910. Reversed.

F. A. Dinsmoor, for the appellant.

James Lawrence, and Levi Ferguson, for the appellee. [241] The opinion of the court was delivered by

MASON, J.: D. M. Baldridge brought ejectment against Leopold Centgraf, who defended on the ground of an oral contract for the purchase of the property, rendered enforceable by having been partly performed. The court found in favor of the defendant and rendered a judgment for the specific performance of the contract, from which the plaintiff appeals.

The evidence showed an oral agreement between the parties for the sale of the property, which included an unoccupied dwelling house. The buyer deposited his check for the purchase price with a third person, mutually agreed upon, to be delivered in exchange for a deed. According to his testimony (which, although contradicted, must be accepted as true in view of the finding of the trial court), he then said that he wanted to move in and the owner told him either that he would or that he could. He did move in, but on the same day received from the owner a writing notifying him to vacate the premises and asserting that he was merely a trespasser thereon. The owner followed up the notice with a proceeding under the forcible entry and detainer article, but, upon the defendant's claiming title, abandoned that for the present action.

Although by putting up his check the defendant did all that was incumbent upon him in that regard, the deposit did not amount to a payment. No money changed hands; the plaintiff received none, the defendant parted with none, and there was therefore none to be repaid in order to restore the parties to their original position. No showing was made that the defendant had improved the property or otherwise incurred expenses or placed himself at a disadvantage in any respect in reliance upon the contract. The case therefore presents the question, which this court has not heretofore been required to decide, whether in and of itself the fact that a proposed buyer has taken pos [242] session of real estate with the consent of the owner, upon the faith of an oral agreement for its purchase, so far avoids the effect of the statute of frauds as to justify a decree for the specific performance of the contract. The opinion in Edwards v. Fry, 9 Kan. 417, 423, includes the statement that delivery of possession will take a case out of the statute of frauds, but there the possession was in fact accompanied by the making of permanent improvements, and that circumstance was treated as a determining factor. In Baldwin v. Baldwin, 73 Kan. 39, 45, it was said that while the statement referred to is supported by the weight of authority, if the question were a new one the court would incline to hold that bare possession is not sufficient. The precise question involved is considered in an exhaustive note in 3 L. R. A., n. s., 790, which is supplemented by further citations in 8 L. R. A., n. s., 870. In the introductory portion of the note it is said:

"Whether possession, standing by itself, is enough to do away with the plain words of the act is a troublesome question, upon which there is considerable conflict of opinion, and apparently some confusion. . . . The rule that possession alone is sufficient to remove the bar of the statute appears to have sprung largely from obiter statements to that effect. In many cases in which the rule is announced other acts in part performance besides possession appear, although the courts seem to uphold the oral contract on the ground of possession alone. . . . The idea that one who had gone upon land under an oral contract might be driven off as a trespasser if he could not take refuge behind his agreement is the main support of the English doctrine of part performance, and of the rule that possession alone is sufficient to answer for the writing required by the statute. That it was necessary to break the statute to such an extent to shield the party in possession from the pains and penalties which might follow a trespass has been doubted. . . . In this country the courts have been swayed for the most part by the idea that it would be a shock to the conscience to allow one who had put another in a hard position to throw up his contract and get off under cover of the [243] statute. The statute would thus be aiding and abetting fraud, which it was its design and purpose to prevent. Under the fraud theory, pure and simple, possession alone would not necessarily be a sufficient act of part performance to take an oral contract relating to real estate out of the statute, since the party to whom possession had been delivered might be put back where he was before the contract, and no real loss be suffered by him as a result of the transaction." (Pages 790, 791, 792.)

The argument in favor of what has been regarded as the general rule is thus outlined in volume 2 of the thirteenth edition of Story's Equity Jurisprudence, section 761:

"Nothing is to be considered as a part performance which does not put the party into a situation which is a fraud upon him unless the agreement is fully performed. Thus, for instance, if upon a parol agreement a man is admitted into possession, he is made a trespasser, and is liable to answer as a trespasser, if there be no agreement valid in law or equity. Now for the purpose of defending himself against a charge as a trespasser, and a suit to account for the profits in such a case, the evidence of a parol agreement would seem to be admissible for his protection; and if admissible for such a purpose there seems no reason why it should not be admissible throughout."

We do not think it follows that if proof of the existence of an oral agreement is admissible the contract itself must be capable of enforcement. The statute does not make an oral contract for the sale of real estate illegal or void, nor does it forbid evidence thereof to be given for any purpose consistent with the statute. (Ann Berta Lodge v. Leverton, 42 Tex. 18; Glass v. Hulbert, 102 Mass. 24, 33, 34.) The law, in letter and in spirit, is that no one shall be charged upon such a contract; that is, he shall not be compelled to perform it or to answer in damages for his refusal to do so. One party can recover nothing of the other on account of the loss of the fruits of his bargain, but no reason is apparent why if in reliance upon the agreement he [244] has incurred expense he may not assert a claim for reimbursement, not under the contract, but upon all the facts of the case. Such a practice was recognized in Deisher v. Stein, 34 Kan. 39, where it was said:

"Of course the case should not be taken out of the statute of frauds any further than is necessary to do justice and to prevent fraud; and to pay the plaintiff a fair compensation for what he has lost by reason of the parol agreement between the parties is probably sufficient for that purpose." (Page 42.)

The mere payment of money is not such part performance as upon this principle to take a contract out of the statute of frauds, because the recipient can be compelled to restore it. (26 A. & E. Encycl. of L. 54; 29 A. & E. Encycl. of L. 838; 20 Cyc. 297, 298; Baldwin v. Squier, 31 Kan. 283, 284.) The verbal agreement is not the basis of an action for that purpose, but evidence of its terms is often necessary to establish the implied contract upon which recovery is sought.

"In an action to recover upon an implied promise to pay for partial performance of a contract within the statute of frauds, the contract is admissible in evidence, not as being binding and conclusive as to the amount of recovery, but merely as a circumstance to be considered in estimating the value of what has been done." (29 A. & E. Encycl. of L. 842.)

The ground upon which a court, notwithstanding the statute of frauds, may compel the complete performance of an oral contract for the sale of real estate, which has been partly performed, is that such a decree may be necessary in order to avoid injustice toward one who in reliance upon the agreement has so altered his position that he can not otherwise be afforded adequate relief. His mere entry into possession with the consent of the owner does not in and of itself meet this condition. It does not make him a trespasser in fact, and a decree of specific performance is not necessary to protect him from liability as such. Nor does it in and of itself place him at any disadvantage or involve him in [245] any loss. True, whenever he has made permanent improvements upon the property the courts are ready to order a conveyance, even although it might be possible to provide compensation in damages. A sufficient reason for this is that alterations in the artificial features of real estate are so largely a matter of individual taste that the loss to their designer in being deprived of their benefit might not be adequately measured, either by the increased value of the property or by his expenditures in making them. And whenever possession is taken under such circumstances that its relinquishment involves a disadvantage, apart from the mere loss of the benefits of the bargain, a case may be presented for equitable relief, dependent upon the special circumstances. Nothing having been shown here beyond the bare fact of possession, we think the court erred in finding for the defendant.

A question is raised regarding the proof of title, but it is rendered immaterial by the fact that the defendant admitted deriving his possession from the plaintiff and justified it under the contract for the purchase of the property. (O'Brien v. Wetherell, 14 Kan. 616; 10 A. & E. Encycl. of L. 501.)

The judgment is reversed and a new trial ordered.

396 Pa. 506 (1959)

Harry Rubin & Sons, Inc., Appellant,
v.
Consolidated Pipe Company of America, Inc.

Supreme Court of Pennsylvania.
Argued April 23, 1959.
July 24, 1959.

[507] Before JONES, C.J., BELL, MUSMANNO, JONES, COHEN, BOK and McBRIDE, JJ.

Alfred L. Luongo, with him Morris L. Weisberg, Goncer M. Krestal, and Blank, Rudenko, Klaus & Rome, for appellants.

Harry R. Kozart, with him Milton H. Weissman, and Weissman & Kozart, for appellees.

OPINION BY MR. JUSTICE BENJAMIN R. JONES, July 24, 1959:

This is an appeal from the action of the Court of Common Pleas No. 1 of Philadelphia County, which [508] sustained, in part, the appellees'^[1] preliminary objections to the appellants'^[2] complaint in assumpsit.

Rubin-Arandell, in their complaint, alleged that on three different dates — August 22nd, 25th and 28th, 1958 — they entered into three separate oral agreements, all for the sale of goods in excess of $500, with one Carl Pearl, an officer and agent of Consolidated-Lustro, for the purchase of plastic hoops and materials for use in assembling plastic hoops, and that Consolidated-Lustro failed to deliver a substantial portion of the hoops and material as required by the terms of the oral agreements. The court below, passing upon Consolidated-Lustro's preliminary objections, held that two of the alleged oral agreements violated the statute of frauds provision of the Uniform Commercial Code^[3] and were unenforceable. Rubin-Arandell contend that certain memoranda^[4] (attached as exhibits to the complaint) [509] were sufficient to take both oral agreements out of the statute of frauds. Rubin-Arandell also contend that the court below erred in rejecting their claim for damages for loss of good will because of their inability to supply their customers with plastic hoops by reason of Consolidated-Lustro's breach of the agreements.

The statute of frauds provision of the Uniform Commercial Code, supra, states:

"§ 2-201. Formal Requirements: Statute of Frauds (1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and signed by the party against whom enforcement is sought or by his authorized [510] agent or broker. A writing is not insufficient because it omits or incorrectly states a term agreed upon but the contract is not enforceable under this paragraph beyond the quantity of goods shown in such writing. (2) Between merchants if within a reasonable time a writing in confirmation of the contract and sufficient against the sender is received and the party receiving it has reason to know its contents, it satisfies the requirements of subsection (1) against such party unless written notice of objection to its contents is given within ten days after it is received."

As between merchants, the present statute of frauds provision (i.e. under § 2-201 (2), supra) significantly changes the former law by obviating the necessity of having a memorandum signed by the party sought to be charged. The present statutory requirements are: (1) that, within a reasonable time, there be a writing in confirmation of the oral contract; (2) that the writing be sufficient to bind the sender; (3) that such writing be received; (4) that no reply thereto has been made although the recipient had reason to know of its contents. Section 2-201 (2) penalizes a party who fails to "answer a written confirmation of a contract within ten days" of the receipt of the writing by depriving such party of the defense of the statute of frauds.^[5]

The memoranda upon which Rubin-Arandell rely consist of the purchase order on the Lustro form signed by Rubin stating the quantity ordered as 30,000 hoops with a description, the size and the price of the hoops listed and the letter of August 25th from Rubin to Consolidated requesting the entry of a similar order for an additional 60,000 hoops at a fixed price: "As per our phone conversation of today." This letter closes with the significant sentence that: "It is our understanding that these [the second order for 60,000 [511] hoops] will be produced upon completion of the present order for 30,000 hoops."

Consolidated-Lustro's objection to the memoranda in question is that by employment of the word "order" rather than "contract" or "agreement, the validity of such memoranda depended upon acceptance thereof by Consolidated-Lustro and could not be "in confirmation of the contract[s]" as required by § 2-201 (2). We believe, however, that the letter of August 25th sufficiently complies with § 2-201 (2) to remove both oral contracts from the statute of frauds. The word "order" as employed in this letter obviously contemplated a binding agreement, at least, on the part of the sender, and in all reason, should have been interpreted in that manner by the recipient. The sender in stating that "It is our understanding that these will be produced upon completion of the present order for 30,000 hoops," was referring to the initial order as an accomplished fact, not as an offer depending upon acceptance for its validity. Any doubt that may exist as to the sender's use of the word "order" is clearly dispelled by its use in the communication confirming a third contract.^[6] This letter of August 28th, 1958, states: "Pursuant to our phone conversation of yesterday, you may enter our order for the following [number, description and price]. . . . This order is to be entered based upon our phone conversation, in which you agreed to ship us your entire production of this Hoop material at the above price. . . ." (Emphasis supplied) The letter of August 25th was a sufficient confirmation in writing of the two alleged oral contracts, and, in the absence of a denial or rejection on the part of the recipient within ten days, satisfied the requirements of [512] § 2-201 (2) of the Uniform Commercial Code.

Under the statute of frauds as revised in the Code "All that is required is that the writing afford a basis for beliving that the offered oral evidence rests on a real transaction."^[7] Its object is the elimination of certain formalistic requirements adherence to which often resulted in injustice, rather than the prevention of fraud. The present memoranda fulfill the requirement of affording a belief that the oral contracts rested on a real transaction and the court below erred in holding otherwise. Nor are Consolidated-Lustro harmed by such a determination since Rubin-Arandell must still sustain the burden of persuading the trier of fact that the contracts were in fact made orally prior to the written confirmation.^[8]

Rubin-Arandell further contend that the loss of the good will of their customers caused by Consolidated-Lustro's failure to supply the hoops is a legitimate item of damage under the consequential damage provision of the Code.^[9]

Section 2-715 of the Code which provides for consequential damages for both a breach of warranty and for nondelivery, states: ". . . (a) Consequential damages include (a) any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise. . . ." Our research fails to reveal any judicial [513] authority in Pennsylvania which sustains, under the Sales Act, a recovery for a loss of good will occasioned either by nondelivery or by the delivery of defective goods.^[10] As this Court stated in Michelin Tire Co. v. Schulz, 295 Pa. 140, 144, 145 A. 67: "So far as appears, the tires in question were all used by defendant's customers and paid for, so he lost nothing thereon. What he claims is that because the tires were less durable than recommended he lost customers, which otherwise he would have retained and whose business would have netted him a profit. . . . This is entirely too speculative and not the proper measure of damages." There is no indication that the Uniform Commercial Code was intended to enlarge the scope of a buyer's damages to include a loss of good will. In the absence of a specific declaration in this respect, we believe that damages of this nature would be entirely too speculative, and that the court below acted properly in sustaining Consolidated-Lustro's objections thereto.^[11] We are in agreement with the statement of the Court in Armstrong Rubber Co. v. Griffith, 43 F. 2d 689, 691, that: "If the plaintiff here can recover for loss of good will, it is difficult to see what limits are to be set to the recovery of such damages in any case where defective goods are sold [or where goods are not delivered] and the vendee loses customers. Indeed, if such were the holding, damages which the parties never contemplated would seem to be involved in every contract of sale."

[514] The order of the court below, as modified, is affirmed and the record remanded for proceedings consistent with this opinion.

[1] Consolidated Pipe Company of America, Inc., Lustro Plastic Tile Company, Inc. and Lustro Tile Products Company, Inc. (herein termed Consolidated-Lustro) are the appellees.

[2] Harry Rubin & Sons, Inc. and Leonard Rubin and Robert Rubin, t/a Arandell Products Company (herein termed Rubin-Arandell) are the appellants.

[3] Act of April 6, 1953, P.L. 3, § 2-201, 12A PS § 2-201.

[4] "PURCHASE ORDER Lustro Plastic Tile Company No. 2859 General Office & Warehouse 1066 Home Avenue AKRON 10, OHIO POrtage 2-8801 Ordered From Consolidated Pipe Co. Date Ship to Ship when Route Via FOB Quantity Number Description Price 30,000 Hoops Te-Vee 36 1/2c Red, Green, Blue as per sample From Lengths 8'-10" to 9'-3" So they can nest LUSTRO PLASTIC TILE CO. By /s/ HARRY RUBIN & SONS INC."

Leonard R. Rubin, V. Pres.

"Consolidated Pipe Co. August 25, 1958 1066 Homes Ave. Akron, Ohio. Att: Mr. Carl Pearl

Dear Carl,

As per our phone conversation of today kindly enter our order for the following:

60,000 Tee-Vee Hoops made of rigid polyethylene tubing from lengths of 8' 10" to 9' 2"; material to weigh 15 feet per lb., colors red, green and yellow packed 2 Dozen per carton

39c each

It is our understanding that these will be produced upon comp[l]etion of the present order for 30,000 hoops.

Very truly yours, HARRY RUBIN & SONS, INC. /s/ Leonard R. Rubin, Vice-pres.

[5] Comment to § 2-201, 12A PS p. 87.

[6] As to this alleged oral contract, the court below held Consolidated-Lustro's defense of the statute of frauds provision was without merit.

[7] See: "Uniform Commercial Code Comment" under "Purpose of Changes 1", 12A PS § 2-201.

[8] Appellees also argue that parties not named in the communications cannot be bound. Oral testimony to establish that the addressee of the letter was an agent of the unnamed appellees is admissible and does not violate the Statute of Frauds. See: Penn Discount Corp. v. Sharp, 125 Pa. Superior Ct. 171, 189 A. 749.

[9] Act of April 6, 1953, P.L. 3, § 2-715, 12A PS, § 2-715.

[10] Appellants rely on Sarfert Hosiery Mills, Inc. v. Parayarn Co., 75 Pa. D. & C. 58, in support of their claim to such damages. The issue in that case was whether or not such a claim was averred with sufficient specification. The court assumed without discussion or citation of authority that recovery could be had for a loss of good will. Under these circumstances, we do not believe that this case is authority for appellants' contention.

[11] For cases contra see: Note, 28 A.L.R. 2d 580.

228 N.Y. 447

IMPERATOR REALTY COMPANY, INC., Appellant,
v.
SAMUEL P. TULL, Respondent.

[448] Imperator Realty Co. v. Tull, 179 App. Div. 761, reversed.

(Argued January 28, 1920; decided April 13, 1920.)

APPEAL from a judgment, entered November 24, 1917, upon an order of the Appellate Division of the Supreme in the first judicial department, reversing a judgment in favor of plaintiff entered upon a verdict and directing a dismissal of the complaint. The nature of the action and the facts, so far as material, are stated in the opinion. Harry E. Herman and Arthur O. Ernst for appellant. A modification of a detail of performance of a contract by arrangement subsequently and for valuable consideration made between the parties, does not constitute a waiver of any of the provisions of the contract. (Penn. Steel Co. v. Title G. & T. Co., 193 N.Y. 37; Schoonmaker v. Hoyt, 148 N.Y. 425.) The parol evidence rule is a rule which should not be invoked as a shield for fraud or be applied so as to work injustice. (17 L.R.A. 272; Best v. Stowe, 2 Sandf. Ch. 298; Pom. Eq. Juris. 324, § 858.) Every contract implies good faith and fair dealing between the [449] parties to it. (Wiegand v. Bachmann, 222 N.Y. 272; Coff-Garrod Co. v. Dodwell, 170 N.Y. Supp. 615; General El. Co. v. Nat. Cont. Co., 178 N.Y. 369; Brassil v. Maryland Casualty Co., 210 N.Y. 235.)

William A. Young for respondent. A contract under seal cannot be modified by a subsequent oral and unexecuted agreement. (Coe v. Hobby, 72 N.Y. 141; McKenzie v. Harrison, 120 N.Y. 260; Stowell v. Greenwich, 163 N.Y. 298; Lese v. Lampricht, 196 N.Y. 32; Nightingale v. Eagle, 205 N.Y. 628; Lossing v. Cushman, 195 N.Y. 390; Mead v. Dunlevie, 174 N.Y. 108; Penn. Steel Co. v. Title G. & T. Co., 193 N.Y. 37.)

CHASE, J. The parties to this action entered into a written contract under seal for the exchange of pieces of real property in the city of New York. On the day fixed therein for carrying out the contract and making the conveyances, the defendant deliberately defaulted. The action was brought to recover damages alleged to have been sustained by the plaintiff.

At the trial the jury determined all of the issues in favor of the plaintiff and rendered a verdict for it. The defendant appealed from the judgment entered upon such verdict and the Appellate Division reversed the judgment and dismissed the complaint. (Imperator Realty Company, Inc., v. Tull, 179 App. Div. 761.)

One of the provisions of the contract is "All notes or notices of violations of law or municipal ordinances, orders, or requirements noted in or issued by any department of the city of New York against or affecting the premises at the date hereof, shall be complied with by the seller and the premises shall be conveyed free of the same."

There were several notices of violations of law or municipal ordinances, orders or requirements noted in [450] or issued by a department of the city of New York against or affecting the premises to be conveyed by the plaintiff at the date of the contract which, although aggregating an amount that is comparatively very small were not satisfied or discharged on the day when the property was to be conveyed. The plaintiff sought to avoid the failure to procure the discharge of such violations by an alleged modification of the contract pursuant to a conversation between the president of the plaintiff and the defendant in which it is claimed that there were reciprocal promises. The president of the plaintiff testified that after the making of the contract and on the same day thereof, it was agreed between the parties to the contract that either party in place of satisfying any of the so-called violations that might be filed against the pieces of real property therein mentioned might deposit with the New York Title Insurance Company a sufficient amount of cash to pay and discharge the same. There is evidence in the record to show that the plaintiff was able and willing on the day and at the time and place for closing the contract to carry out the same as therein provided except that he could not convey the property to be transferred by him free from such violations, and there is also evidence that he was able and willing to deposit a sufficient amount of cash to comply with and free the property from the violations as required by such oral agreement between the parties.

The conversation testified to by the plaintiff's president is denied by the defendant, but in our judgment the question whether the conversation occurred and the agreement was entered into by the parties as claimed by the plaintiff, was a question of fact properly submitted to the jury. The objection that the oral agreement and waiver were not alleged in the complaint was not sufficiently taken by objection at the trial. If it had been so taken at that time the plaintiff would have had an opportunity to apply for an amendment of its complaint.

[451] It is claimed by the defendant that the contract with the plaintiff was in writing under seal and could not be changed as claimed by an oral agsoreement as to be binding upon either party to it. The contract was also within the provisions of section 259 of the Real Property Law (Consolidated Laws, chap. 50), and it was, therefore, necessary that it should be in writing as stated in the statute.

Where a contract is reduced to writing and appears to include the entire agreement of the parties and to be free from fraud, the rule is quite universal that oral evidence will not be received of conversations or transactions leading up to the making of a contract or in connection with the execution thereof for the purpose of varying, modifying, reducing or extending the terms thereof. (Lese v. Lamprecht, 196 N.Y. 32; Eighmie v. Taylor, 98 N.Y. 288.)

After the execution of a written contract including one within the statute the parties may, of course, reconsider the subject-matter thereof and decide to modify or rescind it. The oral agreement found in this case was made after the execution of the written contract. It is not the right to make a new and independent contract to modify a prior unperformed written contract that we are considering but the effect, if any, of an oral contract upon a contract under seal or required by the statute to be in writing. We must assume in this case that the oral contract as claimed by the plaintiff, to accept a deposit in cash in place of the payment of outstanding violations, was actually made upon a sufficient consideration. The jury has so found. The oral contract did not purport to be inconsistent with any material part of the written contract, nor to substitute a new oral contract for any material part of the written contract. The plaintiff was simply told in effect to let the violations stand unsatisfied until the due day and then provide for the expense of satisfying the same by a deposit in cash. The extent of the violations was inconsiderable. Both parties were [452] convenienced by waiving the necessity of having them actually canceled and satisfied before the due day.

In Thomson v. Poor (147 N.Y. 402, 409), which was an action to recover upon a balance claimed to be due pursuant to a written contract which was within the statute, this court say:

"We know of no principle of law which will permit a party to a contract, who is entitled to demand the performance by the other party of some act within a specified time and who has consented to the postponement of the performance to a time subsequent to that fixed by the contract, and where the other party has acted upon such consent and in reliance thereon has permitted the contract time to pass without performance, to subsequently recall such consent and treat the non-performance within the original time as a breach of the contract. The original contract is not changed by such waiver, but it stands as an answer to the other party who seeks to recover damages for non-performance induced by an unrecalled consent. The party may, in the absence of a valid and binding agreement to extend the time, revoke his consent so far as it has not been acted upon, but it would be most inequitable to hold that a default, justified by the consent, happening during its extension, should furnish a ground of action. It makes no difference, as we conceive, what the character of the original contract may be, whether one within or outside the Statute of Frauds. The rule is well understood that if there is a forbearance at the request of a party, the latter is precluded from insisting upon non-performance at the time originally fixed by the contract as a ground of action. * * * Until he gives notice of withdrawal he has no just right to consider the latter in default, although meanwhile the contract time has elapsed. We think the principle of equitable estoppel applies in such case."

The court further say that the principle of estoppels applies equally to sealed and unsealed contracts.

[453] More recently this court in Arnot v. Union Salt Company (186 N.Y. 501) held that where the time of payment under a contract had been extended by parol and the party required to make the payment had acted upon such extension the party waiving such time of payment cannot consider the debtor in default unless he withdraws the waiver before the time of payment has arrived.

The oral contract in the case before us modified the written contract simply as to the manner of charging the plaintiff with the amount required to satisfy the violations. Such oral contract if carried out in good faith made unnecessary the haste otherwise required to make the slight changes to comply with the notices which constituted the incumbrances or so-called violations.

The defendant by his mutual oral contract with the plaintiff is estopped from now claiming that the plaintiff who relied thereon was in default on the due day of the written contract because of its omission to then have the property free of the violations. He should not be allowed to take advantage of an omission induced by his unrevoked consent. (Thomson v. Poor, supra; Arnot v. Union Salt Co., supra; Swain v. Seamens, 76 U.S. [9 Wall.] 254; Brede v. Rosedale Terrace Company, 216 N.Y. 246.)

Parol evidence of the waiver constituting an estoppel as against the defendant under the circumstances was not error. (Penn. Steel Co. v. Title Guarantee & Trust Co., 193 N.Y. 37.) We do not think that the objections made by the defendant to the admission of evidence were upon a consideration of the whole record of sufficient consequence to have materially affected the jury or to require further consideration in this opinion.

The judgment of the Appellate Division should be reversed and that of the Trial Term affirmed, with costs in the Appellate Division and in this court.

CARDOZO, J. (concurring in result). The statute says that a contract for the sale of real property "is void [454] unless the contract, or some note or memorandum thereof, expressing the consideration, is in writing, subscribed by the * * * grantor, or by his lawfully authorized agent" (Real Property Law, sec. 259 [Statute of Frauds]; Consol. Laws, ch. 50). In this instance, each party was a grantor, for the sale was an exchange. I think it is the law that where contracts are subject to the statute, changes are governed by the same requirements of form as original provisions (Hill v. Blake, 97 N.Y. 216; Clark v. Fey, 121 N.Y. 470, 476). Abrogated by word of mouth such a contract may be (Blanchard v. Trim, 38 N.Y. 225), but its obligation may not be varied by spoken words of promise while it continues undissolved (Swain v. Seamens 9 Wall. 254, 271, 272; Emerson v. Slater, 22 How. [U.S.] 28, 42; Goss v. Lord Nugent, 5 B. & Ad. 58; Harvey v. Graham, 5 Ad. & El. 61; Hickman v. Haynes, L.R. 10 C.P. 598; Abell v. Munson, 18 Mich. 306; Malkan v. Hemming, 82 Conn. 293; Long v. Hartwell, 34 N.J.L. 116; Rucker v. Harrington, 52 Mo. App. 481; Bradley v. Harter, 156 Ind. 499; Jarman v. Westbrook, 134 Ga. 19; 1 Williston on Contracts, sec. 593). A recent decision of the House of Lords review's the English precedents, and declares the rule anew (Morris v. Baron & Co., 1918, A.C. 1, 19, 20, 31). Oral promises are ineffective to make the contract, or any part of it, in the beginning (Wright v. Weeks, 25 N.Y. 153; Marks v. Cowdin, 226 N.Y. 138). Oral promises must also be ineffective to vary it thereafter (Hill v. Blake, supra). Grant and consideration alike must find expression in a writing (Real Prop. Law, sec. 259; Consol. Laws, ch. 50).

Some courts have drawn a distinction between the formation of the contract and the regulation of performance (Cummings v. Arnold, 3 Metc. 486; Stearns v. Hall, 9 Cush. 31; Whittier v. Dana, 10 Allen, 326; Hastings v. Lovejoy, 140 Mass. 261; Wood on Statute of Frauds, p. 758). The distinction has been rejected in many [455] jurisdictions (see cases cited supra; also L.R.A. 1917 B. 141 note). It has never been accepted by this court, and the question of its validity has been declared an open one (Thomson v. Poor, 147 N.Y. 402, 408, characterizing as dicta the statements in Blanchard v. Trim, supra). I think we should reject it now. The cases which maintain it hold that oral promises in such circumstances constitute an accord, and that an accord, though executory, constitutes a bar if there is a tender of performance (Cummings v. Arnold; Whittier v. Dana, supra). There seems little basis for such a distinction in this state where the rule is settled that an accord is not a bar unless received in satisfaction (Reilly v. Barrett, 220 N.Y. 170; Morehouse v. Second Nat. Bank of Oswego, 98 N.Y. 503, 509; Ladd v. King, 1 R.I. 224; Pollock on Contracts [3d Am. ed.], p. 822). But there is another objection, more fundamental and far reaching. I do not know where the line of division is to be drawn between variations of the substance and variations of the method of fulfilment. I think it is inadequate to say that oral changes are effective if they are slight, and ineffective if they are important. Such tests are too vague to supply a scientific basis of distinction. "Every part of the contract, in regard to which the parties are stipulating, must be taken to be material" (Per PARKE, B., Marshall v. Lynn, 6 M. & W. 109, 117; 1 Williston on Contracts, sec. 594). The field is one where the law should hold fast to fundamental conceptions of contract and of duty, and follow them with loyalty to logical conclusions.

The problem, thus approached, gains, I think, a new simplicity. A contract is the sum of its component terms. Any variation of the parts is a variation of the whole. The requirement that there shall be a writing extends to one term as to another. There can, therefore, be no contractual obligation when the requirement is not followed. This is not equivalent to saying that what is ineffective to create an obligation, must be ineffective [456] to discharge one. Duties imposed by law irrespective of contract may regulate the relations of parties after they have entered into a contract. There may be procurement or encouragement of a departure from literal performance which will forbid the assertion that the departure was a wrong. That principle will be found the solvent of many cases of apparent hardship. There may be an election which will preclude a forfeiture. There may be an acceptance of substituted performance, or an accord and satisfaction (McCreery v. Day, 119 N.Y. 1, 9; Swain v. Seamens; Long v. Hartwell; Ladd v. King, supra). What there may not be, when the subject-matter is the sale of land, is an executory agreement, partly written and partly oral, to which, by force of the agreement and nothing else, the law will attach the attribute of contractual obligation.

The contract, therefore, stood unchanged. The defendant might have retracted his oral promise an hour after making it, and the plaintiff would have been helpless. He might have retracted a week before the closing, and if a reasonable time remained within which to remove the violations, the plaintiff would still have been helpless. Retraction even at the very hour of the closing might not have been too late if coupled with the offer of an extension which would neutralize the consequences of persuasion and reliance (Arnot v. Union Salt Co., 186 N.Y. 501; Brede v. Rosedale Terrace Co., 216 N.Y. 246). The difficulty with the defendant's position is that he did none of these things. He had notified the plaintiff in substance that there was no need of haste in removing the violations, and that title would be accepted on deposit of adequate security for their removal in the future. He never revoked that notice. He gave no warning of a change of mind. He did not even attend the closing. He abandoned the contract, treated it as at an end, held himself absolved from all liability thereunder, because the plaintiff had acted in reliance on a [457] consent which, even in the act of abandonment, he made no effort to recall.

I do not think we are driven by any requirement of the Statute of Frauds to sustain as lawful and effective this precipitate rescission, this attempt by an ex post facto revocation, after closing day had come and gone, to put the plaintiff in the wrong. "He who prevents a thing from being done may not avail himself of the non-performance which he has, himself, occasioned, for the law says to him, in effect; 'This is your own act, and, therefore, you are not damnified'" (Dolan v. Rodgers, 149 N.Y. 489, 491, quoting West v. Blakeway, 2 M. & Gr. 751). The principle is fundamental and unquestioned (U.S. v. Peck, 102 U.S. 64; Gallagher v. Nichols, 60 N.Y. 438; Risley v. Smith, 64 N.Y. 576, 582; Gen. El. Co. v. Nat. Contracting Co., 178 N.Y. 369, 375; Mackay v. Dick, 6 App. Cas. 251; New Zealand Shipping Co. v. Societe des Aletiers, etc., 1919 A.C. 1, 5). Sometimes the resulting disability has been characterized as an estoppel, sometimes as a waiver (Gallagher v. Nichols; Gen. El. Co. v. Nat. Contr. Co.; Thomson v. Poor, supra). We need not go into the question of the accuracy of the description (Ewart on Estoppel, pp. 15, 70; Ewart on Waiver Distributed, pp. 23, 143, 264). The truth is that we are facing a principle more nearly ultimate than either waiver or estoppel, one with roots in the yet larger principle that no one shall be permitted to found any claim upon his own inequity or take advantage of his own wrong (Riggs v. Palmer, 115 N.Y. 506). The Statute of Frauds was not intended to offer an asylum of escape from that fundamental principle of justice. An apposite precedent is found in Thomson v. Poor (147 N.Y. 402). In deciding that case, we put aside the question whether a contract within the Statute of Frauds could be changed by spoken words. We held that there was disability, or as we styled it, estoppel, to take advantage of an omission induced by an unrevoked [458] consent (Cf. Swain v. Seamens, supra, at p. 274; Arnot v. Union Salt Co.; Brede v. Rosedale Terrace Co., supra; 1 Williston on Contracts, sec. 595). A like principle is recognized even in the English courts, which have gone as far as those of any jurisdiction in the strict enforcement of the statute. They hold in effect that until consent is acted on, either party may change his mind. After it has been acted on, it stands as an excuse for non-performance (Hickman v. Haynes, L.R. 10 C.P. 598, 605; Ogle v. Lord Vane, 2 Q.B. 275; 3 id. 272; Cuff v. Penn, 1 Maule & S. 21; Morris v. Baron & Co., 1918 A.C. 1, at p. 31). The defendant by his conduct has brought himself within the ambit of this principle. His words did not create a new bilateral contract. They lacked the written form prescribed by statute. They did not create a unilateral contract. Aside from the same defect in form, they did not purport to offer a promise for an act. They did, however, constitute the continuing expression of a state of mind, a readiness, a desire, persisting until revoked. A seller who agrees to change the wall paper of a room ought not to lose his contract if he fails to make the change through reliance on the statement of the buyer that new paper is unnecessary and that the old is satisfactory. The buyer may change his mind again and revert to his agreement. He may not summarily rescind because of the breach which he encouraged. That is what the defendant tried to do. When he stayed away from the closing and acted upon an election to treat the contract as rescinded, he put himself in the wrong.

I concur in the conclusion that the judgment must be reversed.

HISCOCK, Ch. J., POUND and ANDREWS, JJ., concur with CHASE, J.; CARDOZO, J., concurs in opinion, in which POUND and ANDREWS, JJ., also concur; COLLIN and CRANE, JJ., dissent.

Judgment reversed, etc.

153 K.Y. 233

Boone, et al.
v.
Coe.

(Decided March 28, 1913.)

Appeal from Monroe Circuit Court.

ALLEN SANDIDGE, SHERMAN SPEAR and PORTER & SANDIDGE for appellants.

BAIRD & RICHARDSON for appellees.

OPINION of THE COURT BY WILLIAM ROGERS CLAY, COMMISSIONER—Affirming.

[234] Plaintiffs, W. H. Boone and J. T. Coe, brought this action against defendant, J. F. Coe, to recover certain damages alleged to have resulted from defendant's breach of a parol contract of lease for one year to commence at a future date. It appears from the petition that the defendant was the owner of a large and valuable farm in Ford County, Texas. Plaintiffs were farmers, and were living with their families in Monroe County, Kentucky. In the fall of 1909, defendant made a verbal contract with plaintiffs whereby he rented to them his farm in Texas for a period of twelve months, to commence from the date of plaintiffs' arrival at defendant's farm. Defendant agreed that if plaintiffs would leave their said homes and businesses in Kentucky, and with their families, horses and wagons, move to defendant's farm in Texas, and take charge of, manage and cultivate same in wheat, corn and cotton for the twelve months next following plaintiffs' arrival at said farm, the defendant would have a dwelling completed on said farm and ready for occupancy upon their arrival, which dwelling plaintiffs would occupy as a residence during the period of said tenancy. Defendant also agreed that he would furnish necessary material at a convenient place on said farm out of which to erect a good and commodious stock and grain barn, to be used by plaintiffs. The petition further alleges that plaintiffs were to cultivate certain portions of the farm and were to receive certain portions of the crops raised, and that plaintiffs, in conformity with their said agreement, did move from Kentucky to the farm in Texas, and carried with them their families, wagons, horses and camping outfit, and in going to Texas they traveled for a period of 55 days. It is also charged that defendant broke .his contract, in that he failed to have ready and completed on the farm a dwelling house in which plaintiffs and their families could move, and also failed to furnish the necessary material for the erection of a suitable barn; that on December 6th, defendant refused to permit plaintiffs to occupy the house and premises, and failed and refused to permit them to cultivate the land or any part thereof; that on the. . . .day of December, 1909, they started for their home in Kentucky, and arrived there after traveling for a period of four days. It is charged that plaintiffs spent in going to Texas, in cash, the sum of $150; that the loss of time to plaintiffs and their teams in making the trip to Texas was reasonably worth $8 a [235] day for a period of 55 days, or the sum of $440; that the loss of time to them and their teams during the period they remained in Texas was $8 a day for 22 days, or $176; that they paid out in actual cash for transportation for themselves, families and teams from Texas to Kentucky, the sum of $211.80; that the loss of time to them and their teams in making the last named trip was reasonably worth the sum of $100; that in abandoning and giving up their homes and businesses in Kentucky, they had been damaged in the sum of $150, making a total damage of $1,387.80, for which judgment was asked. Defendant's demurrer to the petition was sustained and the petition dismissed. Plaintiffs appeal.

Under the rule in force in this State, the statute of frauds relates to the remedy or mode of procedure, and not to the validity of the contract. Though the land is located in Texas, the parol contract of lease was made here, and here it is sought to enforce it. If unenforceable under our statute, it cannot be enforced here. Kleeman & Co. v. Collins, 9 Bush, 460. If the statute requires the contract to be in writing, and the petition does not allege it to be in writing, defense may be presented by demurrer. Bull v. McCrea, 8 B. Mon., 423; Smith v. Fah, 15 B. Mon., 446; Smith v. Theobold, 86 Ky., 141.

The statute of frauds, section 470, sub-sections 6 and 7, Kentucky Statutes, provides as follows:

"No action shall be brought to charge any person:

"6. Upon any contract for the sale of real estate, or any lease thereof, for longer term than one year; nor

"7. Upon any agreement which is not to be performed within one year from the making thereof, unless the promise, contract, agreement, representation, assurance, or ratification, or some memorandum or note thereof, be in writing, and signed by the party to be charged therewith, or by his authorized agent: but the consideration need not be expressed in the writing; it may be proved when necessary, or disproved by parol or other evidence."

A parol lease of land for one year, to commence at a future date, is within the statute. Greenwood v. Strother, 91 Ky., 482.

The question sharply presented is: May plaintiffs recover for expenses incurred and time lost on the faith of a contract that is unenforceable under the statute of frauds?

[236] In the case of Hurley v. Woodsides, 21 Ky. L. Rep., 1073, Woodsides made a parol lease with Hurley for 25 acres of timber land for a period of five years. Under the contract Hurley was to clear five acres of the land in the winter of 1897 and 1898, ten acres in the winter of 1898 and 1899, and ten acres in the winter of 1899 and 1900, and was to have free use of the land so cleared up for three years thereafter. Woodsides agreed to erect a dwelling house, smoke house, kitchen and stable on the leased premises for Hurley's occupancy, and was to furnish a team of oxen with which to break up the land as soon as it was cleared. He was also to remove the logs lying upon the land at the time of the lease and to erect a tobacco barn for Hurley's use. Moreover, it was a part of the agreement that the contract was to be put in writing. Relying upon Woodsides' promise to do so, Hurley moved his personal effects into an old house located upon the land, which he was to occupy until the new house was finished, and gave up the premises previously occupied by him. After such removal, Woodsides denied that he had agreed to furnish cattle to break up the land or to remove the logs or to erect a tobacco barn, and refused to sign a contract embracing these stipulations. This refusal necessitated Hurley's abandonment of the leased premises. Alleging that as a result of Woodsides' failure to carry out the contract, he had been damaged in the sum of $100, the cost of removing his effects; $50 for time lost in hunting up another place; $200 in prospective profits which he would have realized by reason of his bargain, and $300 by reason of having been induced to surrender the premises formerly occupied by him. Hurley brought suit against Woodsides to recover the aforesaid item of damages, aggregating the sum of $650. The trial court sustained a demurrer to the petition, and the petition was dismissed. On appeal here the judgment was affirmed. After setting out the statute of frauds, the court said:

"Under this provision of the statute the alleged verbal contract was not binding or enforceable upon the parties thereto for the reason that it was a contract for the lease of real estate for a longer term than one year from the making thereof; and as the contract itself was not enforceable between the parties, no action for damages for refusing to execute it or to reduce it to writing can be maintained, as 'it would leave but little, if anything, of the statute of frauds to hold that a party might [237] be mulcted in damages for refusing to execute in writing a verbal agreement, which, unless in writing is invalid under the statute of frauds.' (Chase v. Frits, 132 Mass., 361; Lawrence v. Chase, 54 Mo., 196.)"

In the case of Bromley, et al. v. Broyles, 58 S. W., 984, it was held that a tenant with a parol agreement for a lease for another year, which was within the statute of frauds, could not recover as damages for breach of the contract the loss sustained by him in making preparations for raising a crop.

In the case of King v. Cheatham, 31 Ky. L. Rep., 1176, King sued upon a writing signed by himself alone, in which he bound himself to buy from Cheatham certain trees standing on her land, to be severed in the future. It appears that he cut some 263 trees from the land before he was ousted. He asked damages for his labor and profit. There was a judgment below for defendant. On appeal the judgment was affirmed. In discussing the validity of the contract, and the right of plaintiff to recover damages thereon, the court said:

"The statute merely withholds a right of action upon them as against the party who has not signed them. The prohibition of the statute must reach the spirit of its purpose. As a suit to recover damages for the breach of such a contract would be an indirect enforcement, such actions are held to be within the inhibition of the statute. (McCampbell v. McCampbell, 5 Litt., 92; Bromley v. Broyles, 58 S. W., 984.) Nor does part performance of the party signing affect the matter. (Hunter v. Simrall, 5 Litt., 62; Hambell v. Hamilton, 3 Dana, 501; Montague v. Garnett, 3 Bush, 297; Mannen v. Bradbury, 4 Ky. L. Rep., 951, 81 Ky., 153; Graves Co. Water Co. v. Ligon, 23 Ky. L. Rep., 2149; 112 Ky., 775.)

"Although a recovery of purchase money paid on such contract may be recovered if the party not bound refused to execute it, that is not in any sense an action upon the contract, but is for money had and received for which the consideration has failed, and for which the law implies a promise to repay. But nothing was paid by appellant as consideration on this contract."

The same doctrine is applied in the case of Greenwood v. Strother, supra.

Indeed, it is the general rule that damages cannot be recovered for violation of a contract within the statute of frauds. Alabama Mineral Land Co. v. Jackson, 121 Ala., [238] 172, 25 Southern, 709, 77 Am. St. Rep., 464; Dunphy v. Ryan, 116 U.S., 497, 6 Sup. Ct., 486, 29 L. Ed., 703; Franklin v. Matoa Gold Mining Co., 158 Fed., 941, 86 C. C. A., 145, 16 L. E. A. (N. S.), 381, 14 Am. & Eng. Ann. Cas., 302.

To this general rule there are certain well recognized exceptions. Thus, in Speers v. Sewell, 4 Bush, 239; Myles v. Myles, 6 Bush, 237; Usher v. Flood, 83 Ky., 552; Thomas v. Feese, 21 Ky. L. Rep., 206, 51 S. W., 150; Story v. Story, 61 S. W., 279, 22 Ky. L. Rep., 1731; Doty v. Doty, 118 Ky., 204, 80 S. W. 803, 26 Ky. L. Rep., 63, 2 L. R. A. (N. S.), 713; and in a number of other cases, it has been held that where services have been rendered during the life of another, on the promise that the person rendering the service should receive at the death of the person served a legacy, and the contract so made is within the statute of frauds, a reasonable compensation may be recovered for the services actually rendered. It has also been held that the vendee of land under a parol contract is entitled to recover any portion of the purchase money he may have paid, and is also entitled to compensation for improvements. Fox v. Longley, 1 Mar., 388; McCracken, v. Saunders, 4 Bibb, 511; Grimes v. Shrieve, 6 T. B. Monroe, 557; Dean v. Cassidy, 88 Ky., 572.

And under a contract for personal services within the statute, an action may be maintained on a quantum meruit. Kleeman v. Collins, 9 Bush, 460; Myers v. Korb, 21 Ky. L. Rep., 163, 50 S. W., 1108. The doctrine of these cases proceeds upon the theory that the defendant has actually received some benefits from the acts of part performance, and the law, therefore, implied a promise to pay. In 29 Am. & Eng. Encyc, 836, the rule is thus stated:

"Although part performance by one of the parties to a contract within the statute of frauds will not, at law entitle such party to recover upon the contract itself, he may nevertheless recover for money paid by him, or property delivered, or services rendered in accordance with and upon the faith of the contract. The law will raise an implied promise on the part of the other party to pay for what has been done in the way of part performance. But this right of recovery is not absolute. The plaintiff is entitled to compensation only under such circumstances as would warrant a recovery in case there was no express contract, and hence it must appear that the defendant has actually received or will receive some benefit from the acts of part performance. It is immaterial that the plaintiff may have suffered a loss because he is unable to enforce his contract."

In Brown on Statute of Frauds, section 118-a, the rule is announced in the following language:

"The rule that, where one person pays money or performs services for another upon a contract void under the statute of frauds, he may recover the money upon account for money paid, or recover for the services upon a quantum meruit, applies only to cases where the defendant has received and holds the money paid or the benefit of the services rendered. It does not apply to cases of money paid by the plaintiff to a third person in execution of a verbal contract between the plaintiff and defendant, such as by the statute of frauds must be in writing."

The foregoing rule is supported by the following cases: Kimmins v. Oldham, 27 W. Va., 265; Emery v. Smith, 46 N. H., 157; Marcey v. Marcey, 9 Allen (Mass.), 8; Pierce v. Payne, 28 Vt., 34; Hambell v. Hamilton, 3 Dana, 501; Montague v. Garnett, 3 Bush, 297; Mannen v. Bradbury, 81 Ky., 153.

In the case under consideration, the plaintiffs merely sustained a loss. Defendant received no benefit. Had he received a benefit, the law would imply an obligation to pay therefor. Having received no benefit, no obligation to pay is implied. The statute says that the contract of defendant made with plaintiffs is unenforceable. Defendant, therefore, had the legal right to decline to carry it out. To require him to pay plaintiffs for losses and expenses incurred on the faith of the contract without any benefit accruing to him would, in effect, uphold a contract upon which the statute expressly declares no action shall be brought. The statute was enacted for the purpose of preventing frauds and perjuries. That it is a valuable statute is shown by the fact that similar statutes are in force in practically all, if not all, of the states of the union. Being a valuable statute, the purpose of the law-makers in its enactment should not be defeated by permitting recoveries in cases to which its provisions were intended to apply.

The contrary rule was announced by this court in the case of McDaniel v. Hutchinson, 136 Ky., 412. There the plaintiff lived in the State of Illinois. The defendant owned a farm in Mercer County, Kentucky. The defendant [240] agreed with plaintiff that if plaintiff and his family would come to Kentucky and live with defendant, the defendant would furnish the plaintiff a home during defendant's life, and upon his death, would give plaintiff his farm. It was held that although the contract was within the statute of frauds, plaintiff could recover his reasonable expenses in moving to Kentucky, and reasonable compensation for loss sustained in giving up his business elsewhere. Upon reconsideration of the question involved, we conclude that the doctrine announced in that case is not in accord with the weight of authority, and should be no longer adhered to. It is therefore overruled.

Judgment affirmed.

McCutcheon, Nesbett & Rader, Buell Nesbett, Anchorage, Alaska, Gerald J. McMahon, Harold Harper, New York City, Stuart G. Oles, Seattle, Wash., for appellant.

Davis, Renfrew & Hughes, Anchorage, Alaska, for appellee.

Before POPE, LEMMON and CHAMBERS, Circuit Judges.

CHAMBERS, Circuit Judge.

Arthur W. Stephenson, plaintiff-appellee, is the discharged general manager of Alaska Airlines, Inc., a company organized under the laws of the Territory of [296] Alaska. The company was defendant in the trial court and is appellant herein. The case falls entirely on the territorial side of the district court in Alaska, i.e., no federal questions are presented and we take it that diversity of citizenship did not exist.^[1]

Stephenson seems to have had through the years a varied career in the airlines. One day he is a pilot. The next day he is an executive. In September, 1950, he was a pilot regularly employed by Western Airlines. At Western he had certain rights to continued employment. But he could take a leave of absence therefrom for a period of not to exceed six months without prejudice to his rights of continued employment with Western.

Alaska Airlines, Inc., herein called Alaska, Inc., in 1950 was a small airline operating in the Territory of Alaska. It was living from day to day in the hope of obtaining a certificate to operate from the states, probably from Seattle, Washington, to Alaska. When that day should come, it was to be a big airline.

The financial headquarters of the company, at least, was in the City of New York. There R. W. Marshall, chairman of the board, had his office.

Stephenson went to New York on September 15, 1950, at the request of an aviation consultant company to be interviewed by Marshall. Then and there Stephenson was employed as general manager. He took leave of absence from Western and rather promptly commenced his duties. He eventually in mid-winter moved his family to Anchorage, Alaska, from Redondo Beach, California. In the winter of 1950-1951, with Stephenson's six months' leave with Western about to expire, he was in and out of New York pressing for a written contract of definite duration and of substantial length. He had one drawn up and conferred not only with Marshall but with the company's lawyer. He could not get it signed. The company wasn't signing any contracts, we take it, until it found out whether it was to have its certificate. Later on we shall advert to some of the discussions.

The certificate apparently was granted in May, 1951. It seems strange that with the granting of the certificate there followed no negotiations or steps to put the agreement in writing, if Alaska, Inc., had agreed to do so. But we do get the impression that by this time Stephenson had lost favor with the company. It appears that he was relieved of his duties about September 1, 1951, and was continued on the payroll until October 15, 1951.

Then Stephenson filed suit against Alaska, Inc., setting up two causes of action. The first claim is for salary beyond the time he was carried on the payroll. The second is for moneys he claimed due on his expense account and for salary admittedly due except for an offset claimed by Alaska, Inc. The evidence is in sharp conflict. If the jury had accepted Alaska, Inc.'s, testimony, it would have found Stephenson owed it money. On the claim for salary, it seems to us that Alaska, Inc., on the evidence, would have to concede that Stephenson sustained his burden of proof for $11,050 in unpaid salary awarded him by the jury. Of course, it does not concede the point.

But what of the statute of frauds and a contract clearly not to be performed fully within one year? Alaska, Inc., relied on the statute of frauds.^[2] We have [297] a contract made in New York to be performed entirely or almost entirely in Alaska. Does New York law apply, or does the law of the Territory of Alaska apply. And what of promissory estoppel.^[3]

At the outset, one well may wonder if the courts from the beginning had vigorously enforced the statute of frauds from its first adoption in England, wouldn't we have less injustice? If people were brought up in the tradition that certain contracts inescapably had to be in writing, wouldn't those affected thereby get their contracts into writing and, on the whole, wouldn't the public be better off?

But we have to take the law as we find it. For generations, in hard cases, the courts have been making exceptions to "do justice," granting relief here, calling a halt there. The result is that one with difficulty can predict the result in a given state and the situation becomes more confounded when the query arises as to whose (what state's) law we should apply.

Stephenson's version of his employment may be summed up as follows:

1. When he was hired by Marshall the agreement was that he would go to work at $1,300 a month and that they would get together in six weeks to three months and work out a long-range agreement; that he was to have a raise when the certificate of convenience and necessity was granted for Alaska, Inc., to fly to and from the states.

2. Negotiations were had for the "contract" about January 6, 1951, in New York, with Marshall. At that time about all that was agreed definitely was that Stephenson should take his family with him to the Territory of Alaska. This he did. Then, about March 15, 1951, Stephenson, his leave with Western about to expire, was in New York at the company office, pressing Marshall for the contract. He made clear to Marshall that because of this contingency the employment had to be made definite and formalized. (The testimony wobbles, but the jury could have found that on March 16 or 17 Marshall orally hired Stephenson for a period of two years at a salary of $1,300 per month, with the further understanding that on the granting of the certificate Stephenson was to have an increase in salary and a written contract.) Thereupon, Stephenson let his right to return to Western expire.

New York many times has let down the bar on the statute of frauds. The members of this court have examined dozens of New York cases and have come to the conclusion that the New York state courts would probably deny Stephenson recovery here if the action were brought there. But of this we are not positive. See Roberts v. Fulmer, 301 N.Y. 277, 93 N.E.2d 846; Weiss v. Weiss, Sup., 49 N.Y.S.2d 128; In re Melia's Estate, Sur., 98 N.Y.S.2d 941; Porter v. Commissioner, 2 Cir., 60 F.2d 673; McLachlin v. Village of Whitehall, 114 App.Div. 315, 99 N.Y.S. 721; Kahn v. Cecelia Co., D.C., 40 F.Supp. 878.

But should we use New York law on this case in the Alaska forum? The latest authority of the highest New York court, Rubin v. Irving Trust Co., 305 N.Y. 288, 113 N.E.2d 424, where a contract without the statute of frauds in Florida was sued upon in New York, as we read it, says, inter alia, that New York's law is primarily procedural and [298] perhaps substantive, too. Also, it seems to rely on the center of gravity of the contract, i.e., the contract though made in Florida concerned mainly New York business. If historically New York had declared clearly its statute of frauds one of substance only, going to the essential validity of the contract, comity would dictate that we follow it. Whether the Irving case is to be construed as a holding that the statute is procedural or as a holding that the center of gravity rule must be applied, we think it demonstrates that the New York courts would hold that the Alaska statute is the one to be applied in this case. We so hold.

Turning to the Alaska statute, what is it? Where did it come from? What history does it have behind it?

It would appear that it went to Alaska from Oregon. Oregon may have taken it from Iowa or New York. We find nothing in the decisions made by the Alaska courts (or by this court) or in Oregon prior to Alaska's adoption of the statute that will help us.

Section 90 of the Restatement of the Law of Contracts provides as follows:

"Promise reasonably inducing definite and substantial action.

"A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise."

The foregoing section, not mentioning promissory estoppel, is addressed not to the statute of frauds but to promissory estoppel as a substitute for consideration. However, when one considers the part Samuel Williston took in the formulation of the Restatement of Contracts and then examines Section 178, Comment f., one must conclude that there was an intention to carry promissory estoppel (or call it what you will) into the statute of frauds if the additional factor of a promise to reduce the contract to writing is present. Williston on Contracts, 1936 Ed., Sec. 533A.

The circumstance of Stephenson's relinquishing his rights with Western and the promise to make a written contract on the future condition, we think, meets the test of the Restatement.

Parenthetically, we observe that California courts probably would reach the same result. Seymour v. Oelrichs, 156 Cal. 782, 106 P. 88. True it is that under earlier decisions where one gave up job A to take job B on an oral promise of long time employment on job B, no exception to the statute of frauds was made. But we believe with the growth of tenure rights and fringe benefits on a given job, the pendulum has swung the other way and that Seymour v. Oelrichs, supra, will generally be followed throughout the country.^[4]

Further, it occurs to us that the Restatement of Contracts, Section 178, Comment f., has come up with a very good compromise in the confusion of decisions under the statute of frauds which leaves some vitality to the statute, yet gives a workable rule in making exceptions.

But when New York, knowing full well what Florida law is, nevertheless to vindicate New York's own laws ignores Florida law, we think we commit no sin to follow the Restatement of Contracts when we cannot be sure whether New York law is purely procedural or is both fundamental and procedural.

In reaching a conclusion as to the nature of the statute (and we here adopt on this point the Restatement of Contracts), we have given some slight weight to the center of gravity theory in conflict of laws. See 56 Yale L.J. 1155. This we would hesitate to do if it were clearly and unequivocally shown that the New York statute of frauds was one going to the initial validity of a contract made in New York.

[299] We do not deem it necessary to proclaim the Alaska statute of frauds one of substance or of procedure. However, we are not impressed with the argument that it must be considered as one of procedure simply because it is found in the procedural sections of the Alaska code. We would think that in a purely Alaskan situation without old Alaska precedents a desire for uniformity among states would indicate that we follow the Restatement of the Law of Contracts, and if Alaska contracts end up in other jurisdictions we should hope that the forum will apply the Restatement. The foregoing expressions, we recognize, would have little basis for suggesting to any other court what it should do unless we hold that the Alaska statute is one of substance. We think substance is the better rule.

We recognize that if we hold the New York statute procedural and the Alaska statute substantive, then it is logical to argue that therefore no statute of frauds is applicable to a New York contract sued upon in the Territory of Alaska. We cannot go that far. We think that we should hold that if the lex loci contractus is procedural and the law of the Territory of Alaska is primarily substantive, the fundamental public policy of the territory should require that no contract invalid under the Alaska statute of frauds, if made in Alaska, escapes invalidity under the statute of frauds just because it is made outside of Alaska.^[5] (If the Alaska statute is procedural, then certainly whatever interpretation we give the Alaska statute is applicable to the Stephenson contract.) Here, following the Restatement of Contracts as we have applied it, and depending on how one looks at it, the contract is not within the Alaska statute, or it is within Alaska's statute but subject to a recognized exception of the Restatement of Contracts.

A contention arises that it was stipulated (or there was expressed or implied consent) that New York law is applicable. We think the record does not sustain that contention.

Defendant complains that the record shows plaintiff failed to mitigate his damages. Of course, the plaintiff did have a duty to mitigate his damage, and his excuses for failing to seek other employment are rather flimsy. But we take it, on the issue of failure to mitigate damages, the burden of proof rested upon the defendant. After carefully considering the evidence on the subject we think that a jury question was presented as to whether plaintiff should be charged with failure to mitigate.

Alaska, Inc., also complains that it was clearly entitled to an offset or to deduct from the plaintiff's claim for wages admittedly due by Alaska, Inc., payments made by plaintiff on a purchase contract for a house in Anchorage, Alaska. The contract provided that in the event Stephenson did not complete the purchase of the house the payments should be considered as rent. We have considered the evidence which appellee argues entitled the question of reimbursement for home payments to go to the jury. We think plaintiff's evidence on this point was little more than that it was his opinion he was entitled to be repaid for the installments paid on his real estate contract. And for all that the record shows, Stephenson's equity in the place may have increased beyond the amount he paid. These payments being $2,000, the verdict on the second cause of action should be reduced in that amount.

The judgment on plaintiff's first claim in the amount of $11,050 is affirmed. The judgment for $2,695.20 on the second claim is to be modified by the trial court's reducing it to the extent of $2,000 to $695.20.

[300] Each party should pay his own costs on appeal, except that the appellee should be charged with half of the cost of the reporter's transcript of evidence and half of the cost of the printed record.

As directed to be modified, the judgment is affirmed.

LEMMON, J., did not participate in the decision of this case.

[1] Stephenson's citizenship was not pleaded.

[2] The New York statute of frauds provides as follows:

New York Personal Property Law, McKinney's Consol.Laws, c. 41.

"31. Agreements required to be in writing

"Every agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking;

"1. By its terms is not to be performed within one year from the making thereof or the performance of which is not to be completed before the end of a lifetime; * * *."

The Alaska statute reads:

Alaska Compiled Laws, Section 58-2-2

"In the following cases an agreement is void unless the same or some note or memorandum thereof expressing the consideration be in writing and subscribed by the party to be charged or by his lawfully authorized agent: First. An agreement that by its terms is not to be performed within a year from the making thereof; * * *."

[3] The term promissory estoppel generally is considered to be properly applied when the existence of "promissory estoppel" is used as a substitute for consideration in the law of contracts to create a binding contract. However, the term, correctly or not, is found in many cases where courts are making exceptions to prevent manifest injustice in statute of frauds cases. 3 Stanford Law Review 281.

[4] See Fibreboard Products, Inc., v. Townsend, 9 Cir., 202 F.2d 180, following Monarco v. Lo Greco, 35 Cal.2d 621, 220 P.2d 737.

[5] Section 602, Restatement of Conflicts, is as follows:

"Formal Requirements.

"If the law of the forum forbids action unless certain forms have been employed, no action can be maintained on a foreign cause of action without satisfying such requirements of form."