OPINION OF THE COURT
At issue on this appeal is the enforceability of alitor part, of an agreement for the sharing of commissions earned by the placement and subsequent renewals of insurance policies.
Plaintiffs complaint alleged that he and defendant were parties to an oral agreement concerning the placement of business by plaintiff, a licensed insurance broker, through defendant, a general insurance brokerage company. The parties agreed that, in accordance with the custom and usage of the insurance business, defendant would pay plaintiff one half of any commissions it received on policies resulting from business produced by plaintiff and placed through defendant. They further agreed that defendant would pay plaintiff one half of any commissions it received on renewals of policies that had originally been placed through defendant by plaintiff. Pursuant to this agreement, defendant paid plaintiff a percentage of the commissions for the new policies which it had accepted from plaintiff and for subsequent renewals of any of those policies until it terminated the agreement in June 1987. Since that time it had withheld payments already due at the time of termination on original policies placed and had further refused to pay plaintiff a share of the commissions received for renewals on policies previously placed. Plaintiff
Defendant moved to dismiss the complaint for failure to state a cause of action pursuant to CPLR 3211 (a) (7), alleging, inter alia, that the agreement, which was entered into in 1984, was unenforceable under the Statute of Frauds. In his reply plaintiff noted that the agreement was terminable at will by either party. The IAS court granted the motion and dismissed the action as barred by the statute.
The Statute of Frauds applicable herein, General Obligations Law § 5-701 (a), provides in pertinent part:
"Every agreement, promise, or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking:
"1. By its terms is not to be performed within one year from the making thereof’.
It has long been held that the statute will be strictly construed so that it is "limited * * * to those contracts only which by their very terms have absolutely no possibility in fact and law of full performance within one year.” (D & N Boening v Kirsch Beverages,
However, if the terms of the agreement provide that it is not within the defendant’s power to terminate his obligation without thereby breaching the agreement, the Statute of Frauds must apply. Thus, a promise to pay commissions that extends indefinitely, dependent solely on the acts of a third
In this case the facts before the court on the motion to dismiss reveal that defendant was free at any time to decline to accept new business brought in by plaintiff. Since the agreement was thus terminable at will as to the earning of commissions on original policies placed by plaintiff through defendant, defendant’s agreement to pay commissions for original policies was not within the statute (Nat Nal Serv. Stas. v Wolf,
However, this was not the full agreement encompassed within the contract as alleged by plaintiff. Defendant also promised to pay plaintiff a percentage of the commission earned every time one of the policies which plaintiff had originally placed with defendant was renewed. There was no allegation that defendant could decline to accept these renewals nor any allegation that defendant was only liable for commissions for renewals that were made during the pendency of the agreement, either of which would bring this portion of the agreement outside the statute. (Cf., Agee v Read Q Sys.,
As a general rule, if part of an entire contract is void under the Statute of Frauds, the whole contract is void. (De Beerski v Paige,
The contract alleged herein is easily divisible into two such separate parts. The first part provided that plaintiff would share commissions with defendant on original policies placed by plaintiff through defendant. Once the policy was placed, the transaction was completed, and commissions would immediately become due for the initial term. As earlier indicated, since defendant was free to decline the placement of new policies at any time, that part of the agreement was capable of performance within a year and not proscribed by the statute. With respect to the second part of the agreement —i.e., the separate promise by defendant to pay commissions on subsequent renewals of any policies—since renewals were solely dependent upon the acts of third parties, it would be barred by the statute. Significantly, however, whether or not a particular policy was renewed would constitute a completely separate and distinct transaction which would in no way alter the fact of the original placement of that policy nor impact on the commissions due by virtue of that placement. Under these circumstances, we find that the contract should be severed and plaintiff permitted to proceed on the part of the action which seeks commissions earned on original policies placed by plaintiff through defendant.
Judgment, Supreme Court, Bronx County (Jack Turret, J.), entered on or about August 4, 1989, which dismissed plaintiffs complaint for failure to state a cause of action, should be modified, on the law, to reinstate that part of the action which seeks commissions earned on original policies placed by plaintiff through defendant before plaintiffs relationship with defendant was terminated in June 1987, and otherwise affirmed, without costs, the appeal from the order of the same court, entered July 11, 1989, granting defendant’s motion to dismiss the complaint, dismissed as subsumed in the appeal from the judgment, without costs.
Sullivan, J. P., Ross, Rosenberger and Rubin, JJ., concur.
Judgment, Supreme Court, Bronx County, entered on or about August 4, 1989, unanimously modified, on the law, without costs and without disbursements, to reinstate that part of the action which seeks commissions earned on original policies placed by plaintiff through defendant before plaintiffs