Bower v. Heer

This case is before us on appeal from a judgment of the court below sustaining a demurrer and dismissing the amended petition.

The amended petition states, in substance, that the plaintiff perfected a system of legislative service in connection with legislation of the state; that on August 1, 1938, plaintiff and defendant entered into an oral contract of partnership for the purpose of furnishing a legislative service to the state of Ohio; that by the terms of the contract it was provided that the partnership would continue for a period of at least two years, from September 1, 1938, and could be canceled and dissolved by either partner only by giving the other ninety days written notice; and that this contract provided that the plaintiff should contribute a certain sum in money and personal services, that the defendant should do likewise, and that the plaintiff should be the managing director and should receive from the partnership a salary of $5,000 per year. The contract provided that the defendant should furnish to the partnership printing and other office supplies necessary to the operation of the partnership or to be purchased from the defendant at standard prices; and that the profits and liabilities should be on the basis of 60 per cent to plaintiff and 40 per cent to defendant to be made by mutual agreement.

It is alleged that in pursuance of the contract, the plaintiff resigned a position in which he had been earning a salary of $4,000. It is also alleged that the partnership known as the "Legislative Service Bureau" commenced doing business on September 1, 1938, and from that date until May 1939, the plaintiff devoted all his time to the business and made cash contributions, all to the extent of $4,000; that the business was successful and increasing; and that had it not been dissolved by the breach of the contract by the defendant large profits would have resulted.

It is asserted that on the 5th day of May 1939, defendant, without notice of any cause, dissolved the partnership by withdrawing and refusing to contribute; that plaintiff was ready, able and willing to complete his contract; and that by reason of the breach and the resulting dissolution the plaintiff has been damaged in the sum of $12,000.

The defendant demurred to this amended petition on the ground that it did not state facts sufficient to constitute a cause of action. This demurrer was sustained and the plaintiff not desiring to plead further the petition was dismissed on May 1, 1941. Notice of appeal was given and the case lodged in this court.

The assignment of errors is brief, to the effect that: "The court erred in sustaining defendant's demurrer to the amended petition."

The demurrer was directed against the amended petition on the ground that it did not state facts sufficient to constitute a cause of action, reliance being placed upon the claim that plaintiff's cause of action is based upon a breach of an oral contract not to be performed within one year.

Section 8621, General Code, provides:

"No action shall be brought whereby to charge the defendant * * * upon an agreement that is not to be performed within one year from the making thereof; unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing and signed by the party to be charged therewith * * *."

Counsel for plaintiff take the position that the statute requires that the contract must either be in writing or somememorandum or note thereof be signed by the party to be charged, to take it out of the statute; and that the Ohio General Code is express in its declaration that only facts which appear upon the face of the petition can be challenged by demurrer and that defects not appearing thereon must be challenged by answer. They insist that both of the provisions of the statute, to wit, that the contract is oral and that no memorandum has been signed, must appear on the face of the petition, and base their argument upon the statement in 19 Ohio Jurisprudence, 666, Section 160, to the effect that where the petition is silent as to whether the contract is in writing it will be presumed, for the purpose of testing the sufficiency of the petition, to be in writing, and as stated in the same authority on page 666, that where there is no allegation that a contract is in writing, there is a presumption that it is, where the sufficiency of the petition is challenged by demurrer. Counsel claim that from these principles, establishing that where the petition is silent, a signing of the contract will be presumed, it follows that if there be no allegation in the petition that some memorandum is in writing there must be an inference that there is such a memorandum in writing which takes the contract out of the provisions of the statute. We do not follow counsel in this. The petition should have alleged that there was a memorandum thereof in writing, if that be true, and not leave it to an inference to be drawn by the court that inasmuch as the petition was silent the inference must be drawn that there was such a memorandum. We are of the opinion that, inasmuch as the petition is silent as to there being a memorandum in writing, the inference can be logically drawn to the effect that there is no memorandum in writing, otherwise it would have been pleaded in order to save the action from the effect of the statute. Counsel were conscious of the fact when they drew the petition that, when they stated that the contract was oral and made the further allegations that it was not to be performed within the period of one year, they would be confronted with the bar of the statute unless they removed it by pleading that there was a memorandum in writing. We, therefore, are of the opinion that this position of counsel is unsound, and that the court committed no error in its holding upon this matter.

In addition, plaintiff relies upon the proposition, first, that partnership contracts of the type set out in the amended petition are not within the statute of frauds; and, second, that, conceding for argument that such a contract might be within the statute, the petition alleges sufficient facts to constitute part performance. It will be observed that the contract provided that the partnership would continue for a period of at least two years from September 1, 1938, and could be cancelled and dissolved only by either partner giving the other ninety days written notice. It is urged by counsel that by this provision a dissolution prior to one year could be secured and that this option takes the contract out of the statute of frauds. Counsel claim that this position is sustained by the overwhelming weight of authority, citing 27 Corpus Juris, 177, Section 94. The theory that the statute does not cover partnership contracts is based largely upon the contention that a partnership is a personal relation which could be terminated by the death of one of the partners, that this death might occur within the period of one year, and that therefore this possibility takes the entire contract out of the provisions of the statute. We have read the citations of authorities by counsel for plaintiff and by counsel for defendant upon this point and arrive at the conclusion, after carefully considering them all, as well as the opinion of the court below, that this contention is not tenable. We hold that if the contract upon its face is not to be performed within one year from the making thereof, the fact that it may be earlier terminated by the death of one of the parties does not remove it from the provisions of the statute. If it should happen that one of the parties died within the period of one year, it might well be a good defense against the other, who thereafter seeks to enforce the provisions of the contract, to show that it could not be performed because of the death of the party. But we are not of the opinion that the possibility of the death of one of the parties within the period of one year destroys the effect of the statute.

Counsel take the position that the allegations of the petition show clearly that there was a "part performance" of the contract which takes it out of the statute. Counsel are correct in their statement that the petition itself shows that there was a part performance, but that does not solve the difficulty. We do not intend to discuss this question at length, but rely upon three cases to which we make brief references:

The case of Kling, Admr., v. Bordner, 65 Ohio St. 86, 61 N.E. 148, holds in paragraph five of the syllabus:

"The doctrine of part performance obtains in equity only, and does not avail to render a contract which is void by the statute because unwritten or unsigned, capable of being sued on in a court of law."

The case at bar is not an equity case.

LaBounty v. Brumback, 126 Ohio St. 96, 184 N.E. 5, holds in paragraph two of the syllabus:

"The plea of partial performance of a contract, in an action at law on such contract, if established by the evidence, is just as effectual to take the contract out of the statute of frauds today as it was in 1824 when the rule was first announced by the Supreme Court of Ohio. (Wilber v. Paine, 1 Ohio, 251, approved and fol-followed.)"

The opinion in this case was written by Judge Stephenson and as usual is interesting reading. However, very shortly thereafter, in the case of Hodges v. Ettinger, 127 Ohio St. 460,189 N.E. 113, it was held that:

"The doctrine of part performance can be invoked to take a case out of the statute of frauds in Ohio only in cases involving the sale or leasing of real estate, wherein there has been a delivery of possession of the real estate in question, and in settlement made upon consideration of marriage, followed by actual marriage. Such doctrine of part performance has no place in the law governing contracts for personal services. (The cases of LaBounty v. Brumback, 126 Ohio St. 96, and Kling, Admr., v. Bordner,65 Ohio St. 86, distinguished.)"

The opinion in this case was likewise by Judge Stephenson and referring to his decision in the LaBounty case he says at page 464:

"This pronouncement of the law is altogether too broad and sweeping, just as the rule in Kling, Admr., v. Bordner, 65 Ohio St. 86, 61 N.E. 148, is too narrow."

The opinion concludes with the statement that the second paragraph of the syllabus in the LaBounty case is limited and the fifth paragraph of the syllabus in the Kling case is extended to conform to the opinion there rendered.

It seems to us that it would be useless to discuss this point further inasmuch as the Supreme Court seems finally to have determined it and it is of no consequence what the courts of other states may have held upon the point.

We, therefore, arrive at the conclusion that inasmuch as the agreement was not to be performed within one year and the petition states that the contract was oral, and since Section 8621, General Code, provides that no action shall be brought to charge the defendant, the petition was demurrable in spite of the fact that there was no reference to a memorandum in writing, and of the further fact that the action was based on a partnership agreement where there was conceded to have been part performance. We are at some loss to understand why counsel for plaintiff took the chance of having the decision of the court below sustained in this court rather than amend the petition in that court, if they could make an allegation that there was some written memorandum.

The judgment of the court below is affirmed.

Judgment affirmed.

HORNBECK and BARNES, JJ., concur.