Case Title: Dudley v. Boise Cascade Corp.

Citation: 457 P.2d 586, 76 Wash. 2d 466

Docket Number: 

State: washington

Court: Washington Supreme Court

Date: 1969-08-07T00:00:00Z

Document:
76 Wn.2d 466 (1969) 457 P.2d 586 HAWLEY DUDLEY, SR., et al., Appellants, v. BOISE CASCADE CORPORATION, Respondent.[*] No. 39442. The Supreme Court of Washington, Department Two. August 7, 1969. Kenneth F. Ingalls and Robert L. Butler, for appellants. Helsell, Paul, Fetterman, Todd & Hokanson and Harold D. Johnson, for respondent. NEILL, J. This appeal is from a judgment of dismissal *467 entered on a challenge to the sufficiency of the evidence at the conclusion of plaintiffs' case in a jury trial. The action is by employees against their employer for salaries and bonuses allegedly due under a contract of employment. The appeal centers around issues of applicability of the statute of frauds and parol evidence rule. Hawley Dudley, Sr., his wife, and his son, Jonathan Dudley, founded Poly Bead Board, Inc., in March, 1961. The company was engaged in the manufacture of polystyrene panels, a product used in insulation. In September, 1963, plaintiffs agreed to sell this company to defendant corporation. The sale was evidenced by four written documents. The first of these, entitled "Exchange Agreement and Plan of Reorganization," is dated September 24, 1963, and provides primarily for the transfer of Poly Bead Board, Inc., shares from its shareholders to defendant. The second document, entitled "Memorandum Agreement," is also dated September 24, 1963. As the principal controversy is concerned with this document, we set forth its pertinent provisions: The third document evidencing the parties' agreement is a letter from defendant to plaintiff Hawley Dudley, Sr., dated October 28, 1963, which reads as follows: *469 There is no express provision for Mr. Dudley to approve capital expenditures contained in either the exchange agreement or the memorandum agreement. The fourth document, dated November 15, 1963, is an amendment to the exchange agreement and plan of reorganization in particulars which are not involved in the current dispute. Plaintiffs began work for defendant on October 1, 1963. In August or September, 1964, defendant transferred Hawley Dudley, Sr., to California where he no longer worked in the manufacture of polystyrene. In October, 1964, an official of defendant corporation informed Mr. Dudley, Sr., that defendant was contemplating discontinuing the production of polystyrene panels. In the latter part of October, 1964, defendant offered him two sales jobs, one of which was on a commission basis. He refused these jobs. His employment with defendant was terminated October 31, 1964. Plaintiff Jonathan Dudley was also informed that defendant planned to discontinue the manufacture of polystyrene panels and his employment with defendant was terminated December 31, 1964. There was evidence that after plaintiffs left defendant's employ they formed a company in California and attempted to sell polystyrene panels to former customers of defendant. There was also evidence that during the first 2 years of the operation of its Poly Bead Board Division, defendant did not earn sufficient profits to entitle plaintiffs to any bonus under the terms of the memorandum agreement. Plaintiffs' action is for the full amount of the $100,000 bonus and for the salaries they would have earned if they had been employed by defendant for 4 years. The latter claim is based upon an allegation that the parties agreed that plaintiffs were to be employed by defendant for a 4-year term. Plaintiffs' counsel sought to elicit testimony from Jonathan Dudley that the parties agreed that he and his father were to be employed by defendant for 4 years. The trial *470 court sustained an objection to this testimony based upon the parol evidence rule. Plaintiffs made an adequate offer of proof. Defendant's motion to dismiss was granted as to the claim for salaries and any bonus derived from the first 2 years' earnings, but without prejudice to an action for an accounting of the final 2 years' bonus for which the figures were incomplete. The trial court based its ruling with respect to the claim for salaries upon the statute of frauds, and upon a failure of proof of the term of the employment contract resulting from application of the parol evidence rule. The trial court refused to find that plaintiffs violated the agreement not to compete. [1] Plaintiffs' assignments of error challenge the exclusion of the offered oral evidence of a 4-year term for the employment contract, and the trial court's dismissal at the close of their case. The Washington statute of frauds, RCW 19.36.010, provides in part: The general rule, almost universally adhered to, is that a contract for personal services which by its terms is not to be performed within a year must be in writing. See Building Serv. Employees Int'l Union Lodge 6 v. Seattle Hosp. Council, 18 Wn.2d 186, 138 P.2d 891 (1943); Cope v. School Dist. 122, 149 Wash. 76, 270 P. 120 (1928); Union Sav. & Trust Co. of Seattle v. Krumm, 88 Wash. 20, 152 P. 681 (1915); 49 Am. Jur. Statute of Frauds § 52, at 410 (1943); 3 Williston, Contracts § 495, at 585 (3d ed. 1960). Plaintiffs seek to avoid the impact of this rule by arguing that the contract could have been performed within a year if plaintiffs during that time had died, become disabled, or *471 if defendant had been unable to continue operating its Poly Bead Board facility. In Gronvold v. Whaley, 39 Wn.2d 710, 717, 237 P.2d 1026 (1951), we outlined the effect of this provision of the statute as follows: (Italics ours.) The termination of an obligation because of impossibility, including death or disability of one of the parties, when this contingency is not covered by the agreement, results because performance is excused rather than because performance is completely rendered. Professor Corbin discusses this distinction in 2 Corbin, Contracts § 452, at 567 (1950): Plaintiffs did not allege before the trial court, nor do they argue on appeal, that the parties expressly or by reasonable implication considered the contingencies of death or impossibility. Therefore, the possibility that these contingencies might have occurred will not remove plaintiffs' claim for salaries from the bar of the statute. [2] In Smith v. Twohy, 70 Wn.2d 721, 725, 425 P.2d 12 (1967), we discussed the sufficiency of a writing to satisfy the statute of frauds as follows: (Citations omitted.) Even if we were to assume the admissibility of the parol evidence to establish a 4-year employment contract under a theory of partial integration, mistake, or ambiguity, plaintiffs would still be barred by the statute of frauds since they would thereby be relying on parol to establish an essential element of the contract, i.e., the duration of the contract. This violates the rule quoted in Smith v. Twohy, supra. Therefore, as plaintiffs' claim for salaries is based upon an alleged contract of employment which is required to be in writing by RCW 19.36.010, and the writings introduced in support of the claim do not satisfy the requirements of the statute, the trial court properly dismissed plaintiffs' claim for salaries. Plaintiffs have not challenged the trial court's judgment with respect to their claim for bonuses. The judgment is affirmed. HUNTER, C.J., HILL and ROSELLINI, JJ., and DONWORTH, J. Pro Tem., concur. [*] Reported in 457 P.2d 586.