Summary
In Drake v. Seaman (97 N.Y. 230), a written memorandum signed by the defendant and accepted in writing by the plaintiff which stated the understanding between the parties to be that the plaintiff was to be paid $2,000 for the first year, $2,500 for the second year, and provided the increased sales warranted it, $3,000, was insufficient to take the case without the statute because it did not express what the plaintiff was to do in consideration of such payments.
Summary of this case from Brauer v. Oceanic Steam Navigation Co.Opinion
Argued October 13, 1884
Decided November 25, 1884
M.M. Waters for appellant. Samuel Hand for respondents.
The court below has defeated the plaintiff upon the ground that his cause of action rested upon a contract which, by its terms, was not to be performed within one year, and which was rendered void by the statute of frauds for the want of a sufficient note or memorandum. That determination is challenged upon this appeal; and it is contended on behalf of the appellant that the memorandum was sufficient, for the double reason, that no integral or material part of the agreement was omitted, but if it was, the omission was only of the consideration, which, under the statute, no longer needs to be expressed. It will be convenient to consider the last proposition first, since if it is sound it determines this appeal.
Before the Revised Statutes went into effect the consideration of an agreement within the statute of frauds was required to be stated in the memorandum. In the early case of Wain v. Walters (5 East, 10), this was put upon the ground of a distinction between the word "agreement" and the word "promise" as used in the statute; but later, upon the proposition that the memorandum should contain within itself all the elements of a complete cause of action without need of resort to parol evidence. ( Saunders v. Wakefield, 4 Barn. Ald. 595.) Thereafter the courts in this State admitted and enforced that rule, ( Sears v. Brink, 3 Johns. 210; Kerr v. Shaw, 13 id. 236), but held the memorandum sufficient if its language so indicated the consideration that it could be argued out or inferred, and very much of nice criticism and narrow distinction followed as a result. ( Rogers v. Kneeland, 10 Wend. 251; 13 id. 114.) The Revised Statutes sought to remedy the difficulty by an amendment requiring the consideration to be expressed, but the question whether in each case it was expressed, or what was a sufficient expression, led to renewed and continual litigation. It was soon held that the words "for value received" were enough to satisfy the requirement ( Miller v. Cook, 23 N.Y. 495), and in 1863 the legislature struck out the clause, and restored the section to its old form.
But in all the current of authority in this State, previous to that final amendment, it was steadily ruled that the memorandum must contain the whole agreement, and all its material terms and conditions, not indeed in detail and with absolute precision, but substantially, and so that one reading the memorandum could understand from that what the agreement really was. In Wright v. Weeks ( 25 N.Y. 159), which preceded the amendment of 1863 but a few years, that doctrine was declared in very strong terms and as entirely settled. But the change of 1863 has given rise to a new question, and bred in the courts a wide difference of opinion. In Speyers v. Lambert (6 Abb. [N.S.] 309), the General Term of the Superior Court held that the effect of striking out the clause requiring the consideration to be expressed was not merely to restore the law as it was before the words were inserted; that is to say, that the consideration must appear in the agreement, but might be argued out or inferred from its terms; but to go further than that, and make wholly and entirely unnecessary any statement of the consideration at all. That was said, however, in a case where the consideration was rendered at the moment in which the contract took effect, so that such contract was executory upon one side only, and not upon both. The exact contrary of this construction was held in Castle v. Beardsley (10 Hun, 343), and the remark of Bingham, in his work on Contracts for the Sale of Real Property (363), was cited with approval, that "it is certainly a singular way of construing a statute that has been once amended and then again amended by striking out the amendment, to mean something different from what it did before it was amended at all." What was said in Evansville National Bank v. Kaufmann ( 93 N.Y. 273) was not at all intended to decide the question upon which the courts have thus differed. The guaranty there was special and without consideration in fact, and the question now under discussion was not before the court. Very early it was doubted whether the amendment of 1830 at all changed the law ( Church v. Brown, 21 N.Y. 331, per COMSTOCK, J.), and it is extremely difficult to answer the logic of the doubt. In that view of the subject, neither amendment changed the law, and the presence or absence of the omitted clause was alike immaterial. But if the amendment of 1830 worked any change, it was no more than this: that the consideration should no longer be implied from the language of the instrument, but should be expressed in it. ( Brewster v. Silence, 8 N.Y. 207.) And the subsequent omission of the inserted clause would seem only to indicate a legislative intent not to require a definite expression of consideration, and leave the contract good if one could be implied or inferred from its terms. (Reed on Stat. of Frauds, § 423.) But whatever else may be said of the amendment of 1863, we are quite sure that it cannot be understood to destroy and annul the requirement that the note or memorandum must contain all the substantial and material terms of the contract between the parties. It must show on its face what the whole agreement is so far as the same is executory, and remains to be performed, and rests upon unfulfilled promise.
Down to the amendment of 1863 no case wandered from that rule, so far as we have been able to discover; and since that date it has been re-stated and enforced in this court. In Newberry v. Wall ( 65 N.Y. 484), a letter admitting the purchase of goods by the writer from the person to whom it was written was held to be an insufficient note or memorandum, because it did not "express any consideration or terms of the purchase," "and it is impossible to say from the contents of the letter what the contract in fact was." And again in Stone v. Browning ( 68 N.Y. 604), RAPALLO, J., said of a similar letter admitting the agreement to purchase: "It does not state the price or any of the terms of the contract. These deficiencies cannot be supplied by oral evidence. All the essential parts of the contract must be evidenced by the writing." Now those essential parts cannot be omitted, because, in addition to constituting such material elements, they constitute also a consideration of the contract. The agreement of the defendants in this case was not merely to pay so much money to plaintiff. It was to pay him that money for his services as salesman to be thereafter rendered. For what the payment was to be made constituted a material and essential element of the agreement on the part of the defendants; an important condition of the contract on their side. Their agreement was not absolute to pay the money. It was conditioned upon the rendition of the stipulated services. Any memorandum which omits the condition falsifies the agreement which they actually made, and represents them as agreeing to pay the money absolutely when they did not so contract. It is no answer that the omitted condition, coupled with the other party's promise of performance, constituted a consideration for his own agreement, and so need not be expressed. If we were to grant that, and follow Speyers v. Lambert to its full extent, it would only justify an omission from the memorandum of plaintiff's promise to perform the services, and not of defendants' condition modifying and limiting and measuring their own promise. As in the cases last cited in our own reports, the agreement was not an absolute agreement to purchase irrespective of price, but to buy at an agreed and specified price, so here the agreement was not an absolute agreement to pay so much money, but to pay it upon condition that certain specific services were rendered. And if we conceded that the consideration might be wholly omitted from the memorandum, it would still be requisite that all the essential and material elements of defendants' own agreement should be stated, and they are not stated where the very condition upon which they were to pay at all is omitted, and the subject-matter of their agreement is absent.
And that brings us to the question whether the memorandum on its face stated the actual contract which the defendants made; or whether from the memorandum we can determine what the real contract between the parties was. The actual agreement was that the defendants would pay yearly the sums specified in the memorandum for the services of the plaintiff as a salesman, to be rendered for three years, and the inquiry is whether that contract is stated in the memorandum. The writing begins with the words "preserve this," and continues thus: "The understanding with Mr. Drake is as follows: 2,000 dollars for the first year; 2,500 dollars for the second year sure, and provided the increase sales shall warrant it, he is to have $3,000. 3 year in proportion to business as above." On the face of this writing the contract of the defendants with its essential terms and conditions does not at all appear, unless we yield to the construction very ingeniously suggested and forcibly argued on behalf of the appellant, that the words "for the first year" mean, for the first year's time of the plaintiff, and so on through the other stipulations. It is said the word "year" means a period of time, and must be held to refer to the plaintiff's time, using that word in the sense of services, and the construction is sought to be strengthened by parol evidence, showing that plaintiff was a salesman, and defendants manufacturers. There are no technical or ambiguous words in the memorandum requiring explanation, and we cannot resort to parol evidence to insert in the writing what is not there. ( Wright v. Weeks, supra.) Confining our attention to what the memorandum says, we observe that its language is equally applicable to many contracts entirely different from that actually made. Although plaintiff is a salesman, he may have invented or purchased a patent valuable for the use of the defendants, and bargained to give them that use for three years, in return for which plaintiff was to have $2,000 for the first year, $2,500 for the second year, sure, and provided the increase sales shall warrant it he is to have $3,000. Third year in proportion to business as above. Or the plaintiff may have rented to the defendants a store or factory for three years, and the memorandum recite the rental. And so the illustrations might be multiplied. Nothing in the writing indicates which of all the possible contracts was intended, or identifies the one really made. To a person depending wholly upon the writing, the real contract made is impossible to be ascertained. And here comes in the difficulty against which the statute was aimed. If the memorandum be held sufficient, any falsehood or perjury on the part of the plaintiff might apply it to an agreement never made or thought of, and against that the memorandum would not furnish the least protection. And there is a further difficulty as to the third year, which is the only one here in controversy. Precisely what the final clause means it is not easy to say. It does not provide in terms for any fixed salary, but makes the payment dependent upon the business in proportion to the rates above stated. No evidence was given showing the amount of business. We cannot hold this memorandum sufficient without a dependence upon parol evidence which would practically nullify the statute, and since we have held that one party may be bound by his signature while the other party, not signing, is not bound at all ( Mason v. Decker, 72 N.Y. 595), it becomes very important for the party who does sign and is bound, that the rule should be firmly adhered to which requires the real contract to be stated with its substantial terms and conditions. We, therefore, agree with the conclusion of the General Term.
The order of the General Term should be affirmed and judgment absolute rendered for the defendants, with costs.
All concur.
Order affirmed, and judgment accordingly.