Reed v. McConnell — 41 N.Y. St. Rep. 815

Majority

p. 815

John Reed, Resp’t, v. George McConnell, Survivor, App’lt.

(Supreme Court, General Term, Third Department,

Filed November 30, 1891.)

Headnote

1. Statute of frauds—Void contract—Implied assumpsit.

The facts stated in complaint were equally adapted to a recovery upon

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an implied assumpsit or upon a contract for damages. Said complaint alleged an agreement to make the plaintiff a partner in a tannery business, part performance, expenditures made in said business and failure to keep said agreement. Upon the trial it appeared that the "oral agreement contemplated a partnership for a term of twelve years. Thereupon the defendant orally objected that as the contract was not in writing and by its terms could not be performed in a year, it was void by the statute of frauds. Held, that it was not error to allow the plaintiff to recover upon an implied assumpsit for what he had contributed to the business.

2. Contract—Torn option—Not a contribution to firm assets.

It appeared that one item of recovery arose as follows: The plaintiff had an option from a third person not in writirg, to buy 50,000 cords of bark at fifty cents a cord. ' The defendant firm took over this option, and as alleged made a large profit by it. Held, that as said contract was void, and as plaintiff: never had any legal right in it to transfer and did not show that he was either able or willing to go on with the contract if the defendant firm had not, it could not be deemed a contribution to the firm assets, and it was error to allow plaintiff for said profit upon said contract.

Appeal by the defendantfrom a judgment for the plaintiff for $24,002.68 entered in Warren county upon the decision of the special term upon the trial without a jury.

The complaint seeks a recovery:

First. For the services and expenditures of the plaintiff in building a tannery for defendant’s firm at Oregon, Warren county.

Second. For damages sustained by the plaintiff because of the breach by the defendants of an oral agreement to take the plaintiff into the tannery business upon the completion of said tannery, in the erection of which the services and expenditures mentioned in the first count of the complaint were rendered and made.

The answer admits that plaintiff did render services for defendants in the construction of the tannery, but denies they were of the value claimed by plaintiff, and sets forth the contract in terms different from those alleged by the plaintiff, and alleges that plaintiff voluntarily left defendants’ employment, and also sets up a counterclaim to which plaintiff replied.

The trial court found that the oral contract was made substantially as claimed by the plaintiff, that it was to continue twelve years, that after part performance defendants refused to perform and discharged plaintiff, that plaintiff rendered services and expended moneys in and about the erection of the tannery to the amount of $3,388.73 and that plaintiff made a contribution to the tannery enterprise as follows : He allowed the defendants to enter into and take the benefit of a contract with one Griffin for the purchase of 50,000 cords of bark at fifty cents per cord, which he had orally negotiated with Griffin in his own name, that said bark was really worth seventy-five cents per cord, making $12,500 more than defendants paid for it. The court established counterclaims against the plaintiff to the amount of $6,603.68.

Upon the trial the defendants took the objection that the contract between the parties was void by the statute of frauds, and the trial court, though not expressly so finding, assumed it to be so, and held that plaintiff having performed his contract with defendants for building the tannery and running the same, until they without just cause turned him away and refused to carry out their contract with him, he being ready and willing to continue p erf or

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manee, is entitled to recover the sum contributed by him towards buying the site ($100), also the value of said bark contract and interest thereon since it was made (namely $12,500 and interest), and for his services and expenditures in money and materials ($8,288.73), from which should be deducted the amount of the •counterclaims ($6,603.68). These items, reckoning interest, made .a balance in plaintiff’s favor of $21,843.13 for which judgment was directed with costs. Other facts are stated in the opinion.

Francis A. Smith, for app’lt; E. T. Brackett, for resp’t

The complaint seeks a recovery for services and -expenditures rendered and made by plaintiff while he was permitted by defendants’ firm to continue in performance of an oral •contract made with them, and also for damages because they prematurely discharged him, and would not allow him to continue performance. The plaintiff introduced his evidence and rested, •and then the defendant objected that the contract was void by the statute of frauds, being neither in writing nor by its terms performable within a year. The court apparently held that the contract was void by the statute of frauds, and because void, that the plaintiff was, under the complaint, entitled to recover the amount of his contribution, in services, money and property, to the tannery enterprise, which was the subject matter of the oral contract

The defendant’s position is that the plaintiff must recover, it it all, upon the causes of action set forth in the complaint; that is, first, under the contract, and second, for its subsequent breach; •that the plaintiff’s evidence disproves the contract counted upon and takes away the basis of recovery. That the recovery allowed "by the court is upon the basis of the invalidity of the contract set forth; that is, upon no contract; certainly not upon the contract set forth in the complaint If it was proper to amend the complaint so as to conform it to the theory upon which the recovery was allowed, then the objection is not well taken. The question is not free from difficulty, but we are inclined to think that the amendment suggested might have been made. The evidence was as applicable to one theory of recovery as the other; and the true "test, we apprehend, is whether the amendment introduces a new .subject matter of recovery, or whether, with or without additional collateral facts, it is simply a new characterization of the old. Here, the plaintiff, in framing his complaint, was not mistaken as to his facts, but simply as to his rights under them; nor could he know until the defendant interposed the objection of the statute •of frauds that it would be taken ; and if it had not been taken the court would have been bound to uphold the validity of the oral contract, since it was competent (neither good morals nor public policy being violated) for the defendant to waive by his silence the statute of frauds.

We pass now to consider the question whether the allowance to the plaintiff of the estimated profits of the bark contract was proper.

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The plaintiff was a practical tanner, owning and operating a. tannery at ¡North Creek, Warren county, and holding contracts-with McConnell & Gardner of Boston, Mass., who were partners- and dealers in hides and leather, and in procuring hides to be-tanned into leather, of which firm defendant McConnell is the survivor, Gardner having died since the commencement of this-action. Prior to March, 1877, the plaintiff proposed to McConnell & Gardner that they should build and operate a tannery at-Oregon in said county, about twelve miles from plaintiff’s tannery ; they to furnish the funds and he to superintend and manage the enterprise. The plaintiff pointed out to them the advantages of a particular site which he designated, among which was the abundance of bark near the proposed site upon land which one-Griffin was about to purchase at foreclosure sale. Plaintiff had opened negotiations with Griffin for the purchase of the bark upon this land to the amount' of 50,000 cords, at fifty cents a. cord, in case Griffin should complete the purchase. Griffin did orally agree with plaintiff that he would sell him the bark at fifty cents a cord when he should acquire title to the land. It is not. claimed that this was a valid contract under the statute. The plaintiff also obtained from one Van Dusen a contract allowing him to purchase within a limited time the site for the proposed tannery for $8,000, being a tract of 400 acres of land. Plaintiff' paid $100 upon this contract, to be" allowed upon the purchase-money if the land should be purchased, and to be forfeited if not purchased. McConnell & Gardner, in May, 1877, concluded to-embark in the enterprise, and then entered into an oral agreement with the plaintiff, whereby they agreed to furnish the money for the purchase of said bark and site, and for the erection and proper equipment of a tannery on said site, the plaintiff to cause-the title to the site to be procured in their names and the said bark at said price to be purchased of Griffin also in their names, the plaintiff to superintend the erection and equipment of the-tannery. McConnell & Gardner upon the completion of the tannery were to stock it with hides for tanning, all of said bark to be-used for such purpose, the plaintiff to superintend the business-- and be paid $1,000 per year from the commencement and during the period necessary to consume said bark, which was estimated at twelve years, and also after computing the expenses and receipts upon a plan agreed upon, the plaintiff was to be paid, in addition, one-third of the net profits.

In pursuance of such agreement the site was purchased, and the contract for the purchase of the said bark by McConnell & Gardner was made by them with Griffin in writing, plaintiff assisting in the negotiations, and the firm furnishing the money for both bark and site. The plaintiff proceeded with the erection of the tannery, the firm furnishing him large sums of money for the purpose. The plaintiff rendered services in this employment/ from May, 1877, until October, 1878, when the firm, without just cause, discharged him. Upon these facts, and upon defendant’s-objection, sustained by the trial court, that the contract was void-by the statute of frauds, plaintiff was entitled to recover, not un

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der the contract, but as upon an implied assumpsit for whatever services, money or property he had furnished the firm. Day v. N. Y. C. R. R. Co., 51 N. Y., 583 . The contract has no value as such, but is evidence of a request for the services, money and property supplied by plaintiff.

Griffin did obtain title to the bark land, and was ready and willing to sell the bark to plaintiff at fifty cents a cord. Whether, independent of the tannery enterprise, plaintiff was ready, able and willing to purchase the bark for himself is not directly found by the trial court. His own testimony and his letters lead us to think that he made his negotiation for it as an inducement to McConnell & Gardner to engage in the tannery enterprise, and if they had not-so engaged, plaintiff would not have bought the ■bark. He testifies that Griffin told him he would sell the bark for fifty cents “ to start a tannery there.” That McConnell told him to “close the contract with Griffin for the bark if you can; make arrangements to go ahead and build when you are sure you -can get the bark.” The large supply of bark and its cheapness were the principal advantages of the location at Oregon. Plaintiff, in a letter to McConnell & Gardner, dated April 6, 1877, writes: “ There is 200,000 cords of bark in that location that must come to the two tanneries.” The plaintiff did not testify that he would have bought the bark if his negotiations with McConnell ■& Gardner had fallen through. He does testify that in September, 1877, in a conversation with Gardner, in which he objected to leaving the employment of the firm, he said to Gardner: When I first talked of buying this bark, I intended it for the Horth Creek tannery (plaintiff’s). I afterwards concluded it would be better to build a tannery at Oregon."’ This subsequent declaration of his earlier intention may not be the best evidence -of it; but if we accept it, it shows that the intention was transient and was soon replaced by a different one.

The finding of the trial court that Griffin would have sold the bark to the plaintiff and not to the firm, except with the consent -of the plaintiff, falls short of a finding that plaintiff would have bought the bark if the firm had not. The evidence would not justify the latter finding. When, therefore, McConnell & Gardner agreed with him upon the erection of the new tannery and for the purchase of the bark, for which plaintiff had obtained an oral •refusal of Griffin, and McConnell & Gardner, with the consent and assistance of plaintiff, purchased the bark, it seems clear that the plaintiff did not either transfer or contribute to them any tangible property of his own, or any valuable right existing in himself to acquire it. The plaintiff had not converted his opportunity to acquire property into property. He, in effect, said to McConnell & Gardner: “ I think, indeed, Í am sure I can buy this bark for fifty cents a cord, but if you will go into this enterprise I will let you buy it, and will assist you in doing so.” Plaintiff cites Benton v. Pratt, 2 Wend., 385 . In that case a firm of hog buyers had -orally agreed with plaintiff to buy of him 200 hogs at the market price, provided he delivered them within two weeks. By the .statute of frauds this agreement was void. The plaintiff procured

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the hogs and was driving them along the highway to the place of delivery. When seventy miles distant from said place defendant with a little drove of hogs passed him on the road, and learning from plaintiff his arrangement for the sale of his hogs, hastened along to the same place. The hog buyers there told defendant that they could not buy of him on account of their contract with plaintiff. Defendant told them plaintiff was not coming, but was going elsewhere with his drove. The hog buyers were thereby induced to buy defendant’s hogs, and being thus supplied refused to purchase of plaintiff when he arrived with his hogs. Had they known he was coming they would not have purchased of defendant and would have purchased of plaintiff. Plaintiff recovered of defendant the damages he sustained in consequence of the deceit practiced by defendant Rice v. Manley, 66 N. Y., 82 , was also a case of deceit causing damage, and the recovery was placed upon that ground. In the present case, McConnell & Gardner practiced no fraud or deceit They refused to perform a void agreement, not amounting to a contract, which imposed no legal obligation of performance. Dung v. Parker, 52 N. Y., 494 , Levy v. Brush, 45 id., 589 . Moreover, it does not distinctly appear here that the plaintiff would have secured 'any advantage from his option to buy the bark if he had not given McConnell & Gardner the benefit of it.

Plaintiff’s contribution to the tannery enterprise, aside from money and materials, as found by the court, were his skill, services, activity, knowledge of local conditions and opportunities to-make this bark and other contracts advantageous to his employers,, whom, when he entered their service as their agent and superintendent, he undertook to serve faithfully in those respects. He-contributed no bark, nor profits .in a bark-contract, for he had neither; nor is it clear that he was induced by any act of his employers to forego any advantage otherwise certain to result to himself in respect to the bark. In measuring his recovery his-actual contribution to the tannery enterprise should be allowed at its actual value, but not the profits of a contract which plaintiff negotiated for the defendant’s firm, and not for himself.

The defendant urges that there are some errors in the items of the other allowances; if so, they can be readily corrected upom another trial.

Judgment reversed, new trial granted, costs to abide the event..

Learned, P. J., and Mayham, J., concur.