Doty v. Smith — 43 N.Y. St. Rep. 707

Majority

p. 707

Reuben Doty et al., App’lts, v. Alexander Smith, Resp’t.

(Supreme Court, General Term, Fifth Department,

Filed January 22, 1892.)

Headnote

.Statute of frauds—Sale of chose in action.

In this action defendant counterclaimed for the purchase price of a claim against one B. under a party wall agreement, which he had sold to plaintiff. The sale was by paroi, the purchase price $400, and no requirement of the statute of frauds was complied with. Held, that the alleged sale was not an executed, but an executory one, and that evidence of ■ the oral agreement was not admissible.

Appeal by the plaintiffs from a judgment entered on the report of a referee.

William Spargur, for app’lts; F. B. Church, for resp’t.

The case presents but a single exception, ■namely, to a ruling of the referee by which he admitted evidence

p. 708

of an oral agreement between the parties. The agreement was-one by which the defendant attempted to sell to the plaintiffs at-the agreed price of $400 a claim of the former against the estate* of one Barnes, deceased, for something over $500. The claim itself rested in an oral agreement of Barnes, in his lifetime, to pay to the defendant in a certain contingency one-half the expense incurred by the latter in building a party wall between adjoining lots of Barnes and the defendant, and was made the basis of a counterclaim by the defendant in this action. The evidence was. objected to by the plaintiffs on the ground that the attempted contract of sale was void by the Statute of Frauds. 2 B. S.r 136, § 3.

The subject of sale was a thing in action. The statute, so far as applicable to things in action, is as follows :

“ Sec. 3. Every contract for the sale of any * * * * things-in action for the price of fifty dollars or over shall he void, unless :

“ 1. A note or memorandum of such contract be made in writing,, and be subscribed by the parties to be charged thereby ; or,

“ 2. Unless the buyer shall accept and receipt * * * the-evidences, or some of them, of such things in action; or,

“ 3. Unless the buyer shall at the time pay some part of the-purchase money.”

It is conceded that no one of the requirements of the statute-was complied with in this, case. There was no note or memorandum of the contract; no acceptance or receipt of any evidence of the claim or thing in action, and the buyers have never paid any part of the purchase money. The referee finds that the sale was; executed on the part of the defendant, and that he parted with his title, and that the plaintiff accepted the transfer of the claim, so far as either of those objects could be accomplished by an oral agreement; but this does not advance the discussion in the least,, because the question is whether either of those objects can be accomplished at all without compliance with one or another of the-requirements of the Statute of Frauds.

As an original question and upon the plain reading of the statute, there would seem to be no room for doubt that this contract, was void, but counsel for the respondent cites many cases to the effect that a chose in action-may be assigned by paroi and that the-statute applies only to executory and not to executed contracts.Both of these propositions are undoubtedly true, but not necessarily decisive of this case. By the plain reading of the statute, a paroi contract for the sale of a thing in action, that is, a contract without note or memorandum in .writing, is good provided, some evidence of the thing in action is delivered by the'seller,, or some part of the purchase money is paid by the buyer; and' in most, if not all of the cases referred to as cited by the respondent, it was substantial compliance with one or both of the two last requirements of the statute which saved the paroi contract from condemnation. This was well shown in the opinion of the court in the case of Truax v. Slater, which is given at length, in the report of the case of Bowery Nat. Bank v. Wilson, 1 N. Y. Supp., 473 . In that opinion Van Brunt, P. J., reviews briefly a.

p. 709

large number of cases thus cited, with the result above indicated. The judgment in Truax v. Slater was affirmed by the court of appeals, 86 N. Y., 630 , where Earl, J., says“ It is not entirely clear how much must be done to make an effectual assignment of an account (citing many cases) but the better opinion seems to be that an account may be sold like any chattel, and that any agreement which will pass the title to a chattel will pass the title to an account; there must be a valid agreement of sale, based upon .a sufficient consideration, and if the price be $50 or over the statute-of frauds must be complied with.”

Counsel for the respondent also cites several cases in which expressions have been used to the effect that the statute of frauds applies only to executory and not to executed contracts. Dodge v. Crandall, 30 E. Y., 304; Bray ton v. Sherman, 24 St Rep., 369 ; Brown v. Farmers' Loan & Trust Co., 117 E. Y., 273; 27 St. Rep., 470 . But these were cases in which the action was not, like the countérclaim'in this case, by one of the parties to the ■ alleged contract of sale or assignment to enforce that contract against the other party thereto, but by a third party in repudiation of that contract, and to collect or recover the choses in action assigned, or their proceeds.

In Brown v. Farmers' Loan & Trust Company, the court, by Finch, J., says: “It is insisted, however, that the sale cannot stand because the contract was void under the statute of frauds. But that statute affects only executory and not executed contracts. It is the rule of evidence where one party or the other is seeking performance or damages for non-performance. It has no office where the contract has been executed on both sides, has been fully carried, out by the parties, and requires no aid from the law.” The defendant by his- counterclaim in this case is, precisely, seeking performance of the alleged contract of sale on the part of the purchaser by the payment of the purchase price of the choije in action. To that end he requires the aid of the law, and for the purpose of such an action, or counterclaim, as said by Judge Finch, the statute of frauds furnishes the rule of evidence.

We conclude, therefore, that the decision of the courts have ■not had the effect, to the extent contended for on the part of the* respondent, of abrogating the plain and positive provisions of the statute of frauds, but that those provisions still control in cases of this character, and that the learned referee was in error in admitting the evidence to which objection was made.

The judgment appealed from should be reversed and a new trial granted, with costs to abide the event.

Macomber and Lewis, JJ., concur.