Foley Whitehill v. Texas Co. , 252 S.W. 566 ( 1923 )

1. The appellants in their brief and in their argument urge that the petition presents a cause of action founded on an oral contract, and not upon a written contract, of employment covering a period of "at least two years" after its date, and of which oral contract the alleged letter is a sufficient "memorandum thereof in writing" to charge the appellee within the statute of frauds in this state. In this view, then, the principal question is that of whether or not the alleged letter is a sufficient "memorandum in writing" of the previously made oral contract between the parties. The statute does not require the contract itself to be in writing, but "some memorandum thereof." Article 3965, R.S. As may be stated:

"The mischief meant to be prevented by the statute is leaving the terms of the contract to memory for a longer period than a year."

Consequently "the memorandum" is not the contract, but only the evidence of it. And such "memorandum," in order to satisfy the statute of frauds, as the rule is laid down in Browne on the Statute of Frauds, § 371:

"Must contain the essential terms of the contract expressed with such a degree of certainty that it may be understood without recourse to parol evidence to show the intention of the parties."

It seems well settled that "the memorandum," to be a legally sufficient "writing," must contain all the material substantive terms of the oral contract, so that it is not necessary to resort to oral testimony to supply one or more of such terms and to make it complete and definite. Johnson v. Granger, 51 Tex. 42; Fulton v. Robinson, 55 Tex. 401; Patton v. Rucker, 29 Tex. 402; 20 Cyc. 258; 28 C.J. p. 269, § 319; 1 Mechem on Sales, 360-367. See Wagniere v. Dunnell, 29 Rawle I. 580, 73 A. 309, 17 Ann.Cas. 205.

Does the alleged letter obviate the necessity of going to oral testimony to show what the material and essential terms of the oral contract were? The letter on its face evidences and authorizes the construction, that the Texas Company promises or agrees: (1) To give to T. H. Foley Co. actual "work" or employment drilling oil wells to the extent of "four strings" of oil drilling tools, the performance of the work to be on the specified leases located 4 1/2 or 5 miles from the town of Eastland; and (2) to "reimburse" Foley Co. "for the amount of the freight paid on the four strings," under the following four conditions, viz.: (a) that the four strings of tools are shipped within 12 days from August 4, 1919; (b) that such tools arrive promptly on the location to be drilled; (c) that Foley Co. "in a satisfactory manner" drill and complete "eight wells altogether; and (d) that Foley Co. "keep" or continue to have "these tools working" or at work during that period of time, "for us," meaning exclusively the Texas Company, and no other party. The letter does not state for how long a time, unless to drill "eight wells altogether." The Texas Company was to give "work" or employment to Foley Co., and does not state the price payable for such work. The letter, then, as a "memorandum" of the alleged oral agreement, differs materially from the oral agreement as set out in the pleading.

It is the main issue of fact under the alleged oral agreement as to whether the employment was for a period of "at least two years," and actual employment for "at least two years" is a material and substantive term of such agreement. But the letter does not show on its face employment for "at least two years," or a definite time equivalent to that time. When it is apparent, as here, that a material term agreed on is omitted from the alleged "memorandum," such memorandum so relied on is legally insufficient to satisfy the statute of frauds. The alleged "memorandum" cannot be completed by oral evidence, for that would amount to construing the statute to require a portion, but not all, of the essential terms of the oral agreement to be shown by a "memorandum." It is the rule in this state that all, and not just a portion, of the essential elements of the oral contract must be contained in the memorandum, and that such omitted requisites cannot be supplied by parol proof. Zanderson v. Sullivan, 91 Tex. 499, 44 S.W. 484.

The appellants further rely, as is claimed, upon certain pleaded estoppel to assert the statute of frauds. The petition affirmatively alleges that the appellee has paid the appellants for all the work that has been performed under the contract. Consequently the appellee is not in the attitude of receiving a benefit from part performance of a contract within the statute of frauds and for which it refused to pay, after refusing to carry out the agreement. The theory is untenable that the purchase of the oil tools, as well as the loss of future labor and profits after the refusal to carry out the agreement, was such loss and damage that the appellee induced appellants to incur in virtue of the oral promise or agreement as to make inequitable the application of the statute of frauds. Besides, the action is not founded on fraudulent promises.

Moreover, assuming that it should be said that the petition, properly construing it, did not in legal effect found the cause of action entirely on the oral contract, but in legal effect declared a cause of action on the letter, signed by the defendant and accepted by the plaintiff, as a written contract complete in itself. In other words, that the intendment was to allege that the oral negotiations and agreement were merged into the letter as a written agreement. In this view the letter as a written contract, properly construed, is an agreement, other than the drilling of eight wells, for an indefinite hiring. It is a general contract of employment, without the time. Such an agreement after drilling of the eight wells was terminable at will. The petition alleged that the eight wells were drilled and paid for, and that the contract was by the appellee terminated. A legal liability for damages for future work and promises is not therefore shown, and the demurrer as to such claim for damages was properly sustained.

However, there remains the question of whether or not, as against a general demurrer, a cause of action was alleged to recover the $1,709.30 freight charges paid. This amount of money was distinctly sued for, and is based upon a promise to pay same. The statute of frauds did not reach this item of agreement, and therefore the promise to pay same was enforcible. We think the demurrer did not reach the agreement in respect to this freight claim, and that the ruling, so far as it pertained to this item, was reversible error, and for which error the judgment is reversed and the cause remanded.