The question presented by this appeal is whether the plaintiff’s complaint pleads an enforceable cause of action. The defendant moved to dismiss on the ground that the contract which furnishes the basis of the claim, as averred in the complaint, is unenforceable by reason of § 4 of the Pennsylvania Sales Act, 1 commonly known as the Statute of Frauds relating to personalty. The learned judge of the court below sustained the motion and dismissed the complaint.
Jurisdiction of the action is based upon diversity of citizenship. The complaint (as amended) alleges that Continental Collier *633 ies, Inc., one of the plaintiffs, in 1938 entered into five written agreements with five owners or lessees of coal mines for Continental’s exclusive sales agency of the coal produced by the mines. Each agreement provided that the agency thereby created was to endure for five years or until the exhaustion of the coal in the mines, respectively. Continental assigned to another of the plaintiffs, one Wattles, a one-half interest in each of the agency contracts in consideration of his services in negotiating them. The plaintiff Tate is the president of Continental.
On or about January 4, 1939, in Cincinnati, Ohio, Shober, the defendant, orally agreed to pay Continental $5,000 for an assignment of all of Continental’s right, title and interest in and to the agency contracts. On January 13, 1939, Wattles, purporting to act as the agent of Shober sent a letter to Tate in the latter’s capacity as president of Continental, enclosing a draft of such an assignment and requesting that it be executed by Continental and Tate. Wattles’ letter stated that upon the return of the executed assignment Shober would “issue his check in your [Continental’s] favor for $5,000.00” and that “upon receipt * * * [thereof] I [Wattles] will turn over to * * * [Shober] the executed papers and contracts and simultaneously mail * * * [Continental] Mr. Shober’s check.” By the assignment as drafted Tate, Wattles and Continental, in consideration of the sum of $5,000, were to assign to Shober all their right, title and interest in the five exclusive sales agency contracts. The assignment was executed by Continental and Tate and returned to Wattles with a letter from Continental on January 16, 1939, wherein Wattles was requested to “act as trustee in handling the closing of” the contract of assignment as contemplated by the last paragraph of Wattles’ letter of January 13, hereinabove quoted in material part.
The complaint then avers that Shober neglected and refused to pay the consideration for the assignment or any part thereof; that at or about the time o.f the transactions looking to the assignment Shober was engaged in organizing a coal producing business in association with Wattles under the name of Antrim Coal Company; that through this company Shober had sold and at the time of the suit was selling the product of one or more of the mines covered by the exclusive sales agency contracts; and that thereby Shober accepted and retained the benefits of the assignment. The complaint further avers that Tate and Wattles have no interest in the $5,000 consideration for which the suit was instituted; that they were joined in the action only because their signatures were appended to the assignment at the request of Shober; and that they are not real parties in interest.
The learned judge of the court below held that under the averments of the complaint Wattles was one of the assignors and as such could not act as the agent of Shober for the purpose of signing a memorandum contemplated by the Statute of Frauds. The court was of the further opinion that the averment that Wattles was not a real party in interest did not overcome the earlier averment that he had an interest in the contracts assigned and that the allegation of Wattles’ lack of any interest in the assignment could not be accepted in view of the provisions of the assignment attached to the complaint as an exhibit. The District Court also held that, as there was no averment of delivery of the assignment or that Shober acted under the assignment as sales agent for any of the coal companies, there was nothing by way of Shober’s actual receipt and acceptance of the benefits of the assignment to remove the case from the operation of the statute. Accordingly, the court below held that the amended complaint failed to disclose a legally enforceable cause of action.
As federal jurisdiction of this case rests upon diversity of citizenship and the requisite amount in controversy, the substantive rights of the parties are to be determined according to local law. Erie R. Co. v. Tompkins,
It has been expressly stated in decisions of Pennsylvania courts that § 4 of the Sales Act of that state affects only the remedy and not the validity of the contract. Producers’ Coke Co. v. Hoover,
An aspect which serves to inject confusion in any consideration of the exact character of § 4 of the Pennsylvania Sales Act lies in the cases which hold that a plaintiff’s statement of claim must contain all the facts necessary to show compliance with the requirements of the statutory provision. Vitro Mfg. Co. v. Standard Chemical Co.,
The appellant argues that the subject of the assignment, viz., the exclusive right to sell the coal produced at certain mines, is not a chose-in-action and that therefore the assignment was not within § 4 of the Sales Act. Concededly, the assignment was not “A contract to sell or a sale of any goods * * But the assignment would have supported a right of action for damages for the assignor’s failure to respect Shober’s exclusive right to sell under the agency contracts. The Restatement of Contracts, (1932) § 199, treats with a contract to sell or to buy “interests in intangibles” as being within pertinent local *635 statutes of frauds. We think that the subject matter of the assignment in this case was a chose-in-action within the contemplation of § 4 of the Pennsylvania Sales Act.
Under the Federal Rules of Civil Procedure the function of the complaint is to afford fair notice to the adversary of the nature and basis of the claim asserted and a general indication of the type of litigation involved. Securities and Exchange Comm. v. Timetrust, Inc., D.C.N.D.Cal.,
While most defenses are to be pleaded affirmatively under the Federal Rules, Rule 12(b) (6) provides that the defense may take the form of a motion to dismiss for “failure to state a claim upon which relief can be granted”. As observed in Leimer v. State Mut. Life Assur. Co., 8 Cir.,
In the instant case the amended complaint alleges the making of the oral contract of assignment and the. execution of a written memorandum signed by one purporting to be the authorized agent of the party to be charged therewith. True enough, there is an allegation that the ostensible agent had an interest in the subject matter of the assignment, but there is a further averment that the agent had no real interest in the chose which was the subject matter of the sale and assignment. If the claimant can by proper proof establish the latter fact, the question of the agent’s interest drops out of the case and at the same time his right to sign the memorandum for the party to be charged therewith may be established. Whether the defendant’s sale of coal from mines covered by the agency contracts, as averred in the complaint, grew out of his receipt and acceptance of the benefit of the assignment would also depend upon the proofs as to Wattles’ capacity and authority to accept delivery of the assignment for Shober. In these circumstances it can hardly be said that it appears “to a certainty” from the complaint that Continental is not entitled to “relief under any state of facts which could be proved in support of the claim”. We are, therefore, of the opinion that the appellant should have been given an opportunity to prove the allegations of the amended complaint and that the District Court erred in sustaining the motion to dismiss.
On the question of whether the Statute of Frauds may be raised by a motion to dismiss or whether it should be pleaded as an affirmative defense there has been some differences of opinion. In Piest v. Tide Water Oil Co., D.C.S.D.N.Y.,
The judgment of the District Court is reversed and the cause remanded for further proceedings.