McGirr v. Campbell

Ingraham, J.:

The parties to this action were engaged as copartners in the business of gathering, shipping and selling manure in the then city of Hew York, and while so engaged, on the 20th of April, 1897, entered into a verbal agreement whereby the defendant sold to the plaintiff certain personal property and the business theretofore conducted with the good will thereof, which included certain contracts for gathering manure in the city of Hew York, for the sum of $20,000, which the plaintiff paid to the defendant, partly in cash and partly by the delivery of certain promissory notes aggregating $8,000. The complaint alleges that it was a part of that agreement that the defendant “ would not again enter into or carry on the business of gathering, shipping or selling manure, or either of them, in the then City of Hew York, until the last of said notes became due and payable, namely, twenty-seven months after the 20th day of April, 1897; ” that in or about the month of April, 1898, the defendant did, in breach of his said agreement, enter into and carry on the business of gathering, shipping and selling manure in the city of Hew York, and has ever since said last-mentioned date carried on, and still continues' to carry on, the said business, by reason whereof the plaintiff is and has been damaged in the sum of $15,100, and the action was brought to recover the damages sustained. The defendant denies the making of this agreement, but admits that he sold to the plaintiff his interest in certain scows, tugs, schooners and tools; that in or about the month of April, 1898, he entered into and carried on the business of gathering, shipping and selling manure, and has since the last-mentioned date carried on, and still continues to carry on, said business.

Upon the trial the plaintiff was allowed to amend his complaint in relation to this verbal agreement, and the defendant also amended his answer, alleging that the agreement which is sought to be enforced is void as being within the Statute of Frauds, it being an agreement not to be performed within one year, and being without consideration, and not being in writing, as required by said Statute of Frauds; and further, that the said agreement is without consideration and void.

The plaintiff proved that the defendant made a verbal agreement, as alleged, and at the end of the plaintiff’s case the defendant moved to dismiss the complaint upon the ground that this contract was void by the Statute of Frauds. The court denied the motion, but intimated that upon the proof there was no evidence that would justify a recovery for more than nominal damages. The plaintiff thereupon reopened his case and called the defendant as a witness. He testified as to the profits of the business, and in answer to the question of a juror testified that he never made an agreement to stay out of the business for twenty-seven months. The plaintiff again rested, and the defendant renewed his motion to dismiss the complaint upon the ground previously stated, which motion was denied, but a verdict for the plaintiff for nominal damages was directed, to which counsel for the plaintiff excepted, and it is from the judgment entered on this verdict that the plaintiff appeals.

The defendant having moved to dismiss the complaint upon the ground that the agreement sought to be enforced,was void by the Statute of Frauds, if the complaint had been dismissed upon that ground, it would seem that the plaintiff would not be aggrieved by the direction of a verdict for nominal damages, and that it would be a useless formality to reverse the judgment and order a new trial, if upon such new trial the complaint would have to be dismissed upon the ground that the agreement sued on could not be enforced. The contract, as alleged, was that “ it was further understood and agreed between the plaintiff and the defendant * * * that the defendant would not again enter into or carry on the business of gathering, shipping or selling manure, or either of them,' in the then City of New York, until the last of said notes became due and payable, namely, twenty-seven months after the 20th day of April, 1897.”

The Statute of Frauds (2 R. S. 135, §2, as amd. by Laws of 1863, chap. 464) provides that “ every agreement shall be void unless such' agreement, or some note or memorandum thereof, be in writing and subscribed by the party to be charged therewith * * * that by its terms is not to be performed within one year from the making thereof.”

This contract was that the defendant would not again enter into or carry on the business of gathering, shipping or selling manuré for a period of twenty-seven months. It was an entire contract covering the period. Its performance required the defendant not to act for twenty-seven months, and thus by its terms it was not to.be performed within one year. This agreement is analogous to a contract for an employment which was to continue for a longer period 'than one year;, and such agreements have always- been held to be within the statute.. Drummond v. Burrell (13 Wend. 307) was a case where the defendant agreed to work two years from the date of the agreement for the plaintiffs, and the plaintiffs agreed to pay him $100; and the court, in holding that this agreement was within the Statute of Frauds, say: “ When was the agreement to be performed ? The defendant was to occupy two years. in performing his part of the agreement; of course he could not perform within one year. When were the plaintiffs to pay the $100 ? On this point the contract is silent in terms, but as the payment is to be made in consideration of the services, those services are a condition precedent to the payment, and must be performed in full before payment can be enforced. The money then was to be paid at the end of two years, and, of course, not within one year. The contract, then, by its terms, Was not to be performed within one year. * * * The word performed, ex vi termini, means complete performance, or consummation of the work, and that part performance could not be called performance.” (See, also, Oddy v. James, 48 N. Y. 685.) So, also, a contract to form a copartnership to be continued beyond one year is within the statute. (Wahl v. Barnum, 116 N. Y. 97), and a contract to marry by its terms not to be performed within one year is within statute. It is claimed, however, that this contract is not within the statute, because it being a per sonal covenant on the part of the defendant, it cannot last beyond his life, and, therefore, the real agreement was that he would perform it for twenty-seven months, or so long as he lived within that time, and as he might have died within the year the contract was not one which by its terms could not be performed within a year. This construction of the statute is supported by the case of Knowles v. Hull (97 Mass. 207) and several other cases in that State. These cases are cited by Chief Justice Daly in McKinney v. McCloskey (8 Daly, 368), and his opinion was adopted by the Court of Appeals in affirming an appeal from that judgment. (See 76 N. Y. 594.) That case, however, was upon an entirely different agreement, and it cannot be supposed that the Court of Appeals in adopting this opinion approved the views adopted in the Massachusetts cases. A contract for personal services, or a contract for a copartnership, or a contract to marry, are limited by the life of the contracting parties, certainly as much so as a contract to refrain from carrying on a certain business within a specified time. Upon the death of either partner a copartnership is dissolved and no contract for a copartnership could continue for a longer period than the lives of all the parties entering into the agreement. A contract for a copartnership to continue for twenty-seven months would be within the statute, although upon the death of either partner there would be an instantaneous dissolution of the copartnership. In the American and English Encyclopaedia of Law (vol. 8 [1st ed.], 687, 688) it is stated that a contract “ to continue to do an act for a period greater than one year, or to refrain from doing during such a period ” is within the statute, and there is cited in the note to sus tain that conclusion Davey v. Shannon (4 Exch. Div. 81); Perkins v. Clay (54 N. H. 518); Gottschalk v. Witter (25 Ohio St. 76). This note to this section says : “ Where the contract .will be fully performed by the death of the party during the term, the courts of Massachusetts hold the statute does not apply — Doyle v. Dixon (97 Mass. 208); but the law elsewhere is as stated in the text.” In the note on page 691 it is said : “ Where, however, the death of any person will simply put an end to the contract, leaving it unperformed, the fact that the death may happen within the year will not take the agreement out of the statute ; ” and the cases to which attention is there called seem to establish that the general rule adopted in this country and in England is that stated in the text. This question is also discussed in Browne on the Statute of Frauds (5th ed. § 282b), where it is said : “ The question is not without difficulty, but upon the whole, the weight of reasoning would seem to be opposed to the judgment of the Supreme Court of Massachusetts. * * * The distinction between an agreement to do a thing and an agreement not to do a thing for a definite term of years would seem to be, barely stated, quite unsubstantial. In each case the promisor undertakes that during the stipulated term of years he will submit to and observe a certain obligation which the agreement imposes upon him and * * * his death only makes the performance of that obligation for the residue of the stipulated time impossible.” Taking the contract in question in its entirety it was clearly contemplated that it was not to be performed by either party within a year. The plaintiff agreed to pay for the business, partly by notes, the payment of which was extended for twenty-seven months, and the defendant was to refrain from entering into business similar to that carried on by the copartnership ’for a like period. The consideration for the defendant’s Undertakings viz., the payment of $20,000, was not by the contract to be performed within a year, and the contract of the defendant that he would refrain from carrying on this business was extended for a. like period. There could be no complete performance of the contract by either side until the termination of the period specified. The plaintiff gave his notes by which he promised to make the- payments. The defendant agreed, assuming that the testimony of the plaintiff was correct, that he would not carry on this business for twenty-seven months. It seems to me it was clearly within the intention of the parties that the contract was not to be performed within a year, and thus was within the statute. Such an agreement is, I think, clearly within the spirit of the statute, for as said by Bayley, J., in Boydell v. Drummond (11 East, 159): “The mischief meant to be prevented by the statute, was the leaving to-memory the terms of a contract for longer time than a year. The person's might die who were to prove it; or they might lose their faithful recollection of the terms of it.” A contract restricting the right of an individual to carry on a particular trade or business-would seem to be one which was within the class of contracts that, the statute intended should be evidenced by a writing. It is a contract to restrain the liberty of the individual, and if it is good for twenty-seven months, it is good for twenty years or the life of the promisor ; and, thus, a restraint upon the power of an individual to earn his livelihood would be valid for many years, depending upon the uncertain recollection of conversations, and without the certainty of proof as to the contract that the statute intended should be presented.

I think the contract was within the statute, and for that reason the judgment and order should be affirmed, with costs.

Van Brunt, P. J., and McLaughlin, J., concurred; Patterson, and Hatch, JJ., dissented.