238 F. Supp. 283 | E.D.N.Y | 1965
This is a motion pursuant to Rule 56, Fed.Rules Civ.Proc., 28 U.S.C.A., for summary judgment dismissing the complaint and for judgment upon defendant’s counterclaim against plaintiff in the amount of $86,488.96 plus interest, together with costs and disbursements, upon the ground that the causes of action set forth in the complaint are barred by the statute of frauds and that there is no genuine issue as to any material fact involved in the action.
In the first cause of action plaintiff alleges, in substance, that an agreement was entered into between the defendant, and the plaintiff’s incorporators on November 22, 1963, which was subsequently, on December 5, 1963, confirmed by defendant and plaintiff, whereby the defendant agreed to appoint the plaintiff its distributor of liquor products in the New York metropolitan area and by May of 1964 to appoint it the sole and exclusive distributor of its products in said area and to supply plaintiff with adequate stocks of its products upon extended credit terms and to arrange for certain selling assistance to the plaintiff if the plaintiff “would hire and keep employed as its General Manager one, IRVING KOERNER” and if plaintiff-obtained an initial capital investment of $50,000 and the necessary liquor licenses to act as defendant’s distributor in the New York metropolitan area and would promote defendant’s products and perform certain other services in, connection therewith, and that said appointment by defendant as such distributor “would last as long as the aforesaid IRVING KOERNER was employed by said corporation as General Manager”; that plaintiff performed the terms of the agreement to be performed by it as defendant’s liquor distributor and otherwise employed continuously and still has in its employ Irving Koerner but that
In the second cause of action plaintiff alleges that between December 5, 1963 and the institution of the suit, plaintiff with the full knowledge and consent of the defendant, expended certain monies and performed certain work, labor and services for defendant in the New York metropolitan area in connection with the sale, promotion and reputation of defendant’s products, which work, labor and services were reasonably worth the sum of $500,000.
In answer, the defendant interposes a general denial and an affirmative defense to both causes of action on the ground that both causes of action are based upon the alleged agreement which is void and unenforceable because by its terms it was “not to be performed within one year from the making thereof”. Defendant also counterclaims for $86,448.96 for goods sold and delivered, for which it seeks a summary judgment.
For the purpose of the motion it is admitted that the alleged agreement was oral and that there was no written memorandum to support it. Pertaining to its counterclaim the defendant attached to its moving papers a photocopy of its accounts receivable record showing a series of entries for goods sold and delivered, amounts of invoices, credit memoranda and payments for the period from March 2, 1964 to August 24, 1964, and an affidavit indicating a balance due of $86,448.96.
I
The most difficult question presented by this motion is whether the alleged agreement is enforceable under the statute of frauds requiring an agreement which “By its terms is not to be performed within one year from the making thereof”
These somewhat conflicting decisions present a perplexing problem. The troublesome question is whether the happening of the event within a year terminates the performance in accordance with the terms of the contract or whether such event destroys the cbntract. If there is an express option on the part of either party to terminate their respective performances at any time such as that in the Blake case, then the answer is easy. There are a number of events, however, which could happen within a year and terminate performance but which would not constitute performance in fulfillment of the terms of the contract but would effect the destruction of the contract. Thus insolvency, bankruptcy, dissolution of defendant’s business, retirement from business, impossibility of performance and breach of contract are examples of events which would terminate performance by means of the destruction of the contract rather than by fulfillment of its express terms. See RCA v. Cable Radio Tube Corporation, 2 Cir. 1933, 66 F.2d 778, 784, cert. denied, 290 U.S. 703, 54 S. Ct. 373, 78 L.Ed. 604 (1934); Zupan v. Blumberg, supra; Cohen v. Bartgis Bros. Co., supra.
In Cohen the court stated “We must distinguish between ‘performance’ which fulfils the contract and circumstances which defeat its purpose. 2 Williston on Contracts, Rev. ed., Section 499.” (35 N.Y.S.2d p. 208). In Martocci the court said that if the terms of the contract had included an event which might end the contractual relationship of the parties within a year, the possible liability of the defendant beyond that time would not subject the contract to the statute.
The answer to the problem might be different if, in considering such agreements of indefinite duration, the emphasis were placed upon, whether performance was completed in accordance with the terms of the agreement upon the happening of the event within one year
When termination of the contract which can be classified as performance removing the agreement from the statute is referred to in the New York cases, reference is generally to an event over which either one or both of the parties have exclusive control.
II
Defendant further contends that plaintiff’s second cause of action in quantum meruit for monies expended and the reasonable value of the work, labor and services rendered in promoting defendant’s products must also be dismissed because it is predicated upon the identical agreement alleged in the first cause of action which is barred by the statute of frauds.
It is axiomatic that an agreement which is void under the statute of frauds is void for all purposes and cannot be the basis of another action. Dung v. Parker, 52 N.Y. 494 (1873). On the other hand, a party to an express agreement which is unenforceable because of the statute of frauds may nevertheless have a cause of action for reasonable compensation for services actually rendered independently of any express agreement. Smith v. Kirkpatrick, 305 N.Y. 66, 111 N.E.2d 209 (1953) ; Potter v. Emerol Mfg. Co., 275 App.Div. 265, 89 N.Y.S.2d 68 (App.Div. 1st Dep’t 1949); Elsfelder v. Cournand, 270 App.Div. 162, 59 N.Y.S.2d 34 (App.Div. 1st Dep’t 1945). The issue raised is whether the second cause of action is founded upon the provisions of the alleged void agreement or upon a claim which is different from and independent of said agreement. The fact that an identical amount of damages is demanded in each cause of action is immaterial. The test is whether the allegations re-plead, in substance or effect, the terms and the conditions of the void agreement or whether they set
An analysis of the complaint indicates that the plaintiff in its second cause of action has disregarded the alleged agreement and has pleaded a self-sustaining and independent claim for compensation in quantum meruit for monies expended and services rendered. Therefore, the motion for summary judgment with respect to this cause of action is denied.
Ill
Based upon its counterclaim, its moving papers and the plaintiff’s admission that it is indebted to the defendant for $81,072.96, the defendant contends that it is entitled to a summary judgment for $86,488.96 but for the purpose of the motion only (not for the trial) is willing to reduce the application for summary judgment to the amount of $81,072.96.
Plaintiff contends that the defendant is not entitled to the entry of a judgment at this time for the amount admittedly due on the counterclaim until the defendant’s liability under the complaint is determined, asserting that only then would it be possible to ascertain which party is indebted to the other. This principle would be applicable if the claim stated in the counterclaim arose out of the same contract or transaction set forth in the complaint so that it could be said that the claim of the plaintiff and the claim of the defendant were inherently inseparable and consequently should be adjudicated at the same time and together.
But this conclusion does not solve the problem. Defendant claims that under the circumstances it is entitled to a separate judgment against the plaintiff for the amount of its counterclaim under Rules 54(b) and 62(h), Fed.Rules Civ.Proc., 28 U.S.C.A. Rule 54(b) provides that when more than one claim is presented the Court may expressly direct the entry of a final judgment as to one or more such claims but fewer than all upon the express determination that there is no reason for delay but in the absence of such determination and direction, any order or decision which adjudicates fewer than all of the claims shall not terminate the action and the order or decision is subject to revision before entry of the judgment. Rule 62(h) simply provides for a stay of enforcement of a final judgment entered under Rule 54(b) upon such conditions as may be necessary to protect the beneficiary of the judgment. The application for summary judgment is made under Rule 56(a) and (d), which has been construed as proscribing a summary judgment for only a part of a claim but authorizing in such a case only an order specifying the non-controverted facts. 6 Moore’s Federal Practice, par. 56.20(3), pp. 2306-8 (1953 Ed.); Leonard v. Socony-Vacuum Oil Co., 7 Cir. 1942, 130 F.2d 535; Audi Vision, Inc. v. RCA Mfg. Co., Inc., 2 Cir. 1943, 136 F.2d 621, 147 A.L.R. 574. If Rule 54(b) is to have any application to this case, the defendant must be entitled to a final judgment as to one or more single claims. The defendant’s claim is predicated upon a series of purchases and sales. These do not
Motion for summary judgment on defendant’s counterclaim is denied but an order may be entered in accordance with the above.
Settle order within ten (10) days on two (2) days’ notice.
. Section 31 of the New York Personal Property Law, McKinney’s Consol.Laws, c. 41, then in effect (now General Obligations Law, § 5-701, McKinney’s Consol.Laws c. 24--A) provides in 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 or the performance of which is not to be completed before the end of a lifetime;”.
. (Rochester Folding-Box Co. v. Brown, 55 App.Div. 444, 66 N.Y.S. 867 (1900), aff’d, 179 N.Y. 542, 71 N.E. 1139 (1904); Blake v. Voigt, 134 N.Y. 69, 31 N.E. 256 (1892); Warren Chemical & Mfg. Co. v. Holbrook, 118 N.Y. 586, 593, 23 N.E. 908, 910, 16 Am.St.Rep. 788 (1889); Kent v. Kent, 62 N.Y. 560, 564, 20 Am. Rep. 502 (1875); Trustees of the First Baptist Church v. Brooklyn Fire Ins. Co., 19 N.Y. 305 (1859).
. Cf., Blake v. Voigt, supra; Farmer v. Arabian American Oil Co., supra.
. Mar-Bond Beverage Corp. v. Dublin Distributors, Inc., supra; Lenz v. World-Wide Automobiles Corp., supra; High v. Pritzker, supra; Suslak v. I. Rokeach & Sons, Inc., supra.
. See note 3, supra.
. 3 Williston on Contracts (Third Edition) §§ 495, 498B and 499, makes a distinction between agreements containing a defeasance clause and those providing for performance in the alternative. (See Coan v. Orsinger, 1959, 105 U.S. App.D.C. 201, 265 F.2d 575.) The author states that an oral promise of performance might be subject to a right of defeasance within a year by an express provision of the contract as well as by operation of law, in which event the contract would be barred by the statute, while an agreement providing for an alternative performance which might be accomplished within a year is without the statute, indicating that a promise providing for a performance “during the continuance of” a certain condition is a promise providing for alternative performance which could be completed within a year. Cf., Warner v. Texas & P. Ry. Co., 1896, 164 U.S. 418, 17 S.Ct. 147, 41 L.Ed. 495. The problem is whether the happening of the event constitutes defeasance or marks the end of the alternative performance.
. RCA v. Cable Radio Tube Corporation, supra; Zupan v. Blumberg, supra; Martocci v. Greater New York Brewery, supra; Blake v. Voigt, supra; Cohen v. Bartgis Bros. Co., supra; Krawitz v.
. While in Perrin v. Pearlstein, supra, the event was included as an express provision in the agreement and was within the control of the parties, it was an event of discontinuance of business referred to in Cohen, which is implied as a condition of performance in the agreement at all events. These conditions apparently fall in the same category as impossibility of performance.
. Good faith would require the plaintiff to otherwise continue his employment.
. Gaetano Marzotto & Figli S. P. A. v. G. A. Vedovi & Co., S.D.N.Y.1961, 28 F.R.D. 320; Omark Indust., Inc. v. Lubanko Tool Co., Inc., 2 Cir. 1959, 266 F.2d 540, 541.