Case Name: Lou P. Moore, Appellant, v. John L. Vosburgh, Respondent
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1901-11
Citations: 66 A.D. 223
Docket Number: 
Parties: Lou P. Moore, Appellant, v. John L. Vosburgh, Respondent.
Judges: 
Reporter: Appellate Division Reports
Volume: 66
Pages: 223–228

Head Matter:
Lou P. Moore, Appellant, v. John L. Vosburgh, Respondent.
Statute of Frauds—oral agreement to repay a sum paid for certain stock if the purchaser did not realize a profit thereon within a year of twenty per cent.
An oral agreement, made by a party interested in a corporation, with the wife of a man who had agreed to pay a certain sum of money for one fifth of the stock of the corporation, in order to induce her to make such payment on behalf oilier husband, by which he agreed to repay said sum to her on demand at any time subsequent to one year from the date of said agreement, provided that she did not within said year receive a profit of at least twenty per cent on said sum is. void under the Statute of Frauds as it could not be determined whether the corporation would declare any dividend, until the expiration of the year, and, . therefore, the contract was one not to be performed within one year.
Appeal by the plaintiff, Lou P. Moore, from a judgment of the Supreme Court in favor of the defendant, entered in. the office of the clerk of the county of Erie, on the 20th day of December, 1900, upon a nonsuit granted by the court after a trial at the Erie Trial Term, and also from an order entered in said clerk’s office on the 20th day of December, 1900, denying the plaintiff’s motion for a, new trial made upon the minutes.
The action was commenced on the 1st day of March, 1898, to recover the sum of §1,500 with interest, the amount which it is. alleged the defendant orally agreed to pay to the plaintiff on demand at any time subsequent to one year from the date of said agreement.
Harry L. Taylor and Bradley H. Phillips, for the appellant.
Eugene M. Bartlett, for the respondent.

Opinion:
McLennan, J.:
The facts are not in dispute. On the 23d day of September, 1893, the Buffalo Gas Saving Company, a copartnership composed of Alfred Hall and John L. Yosburgh, parties of the first part, said Hall and Yosburgh parties of the second part-, and George P. Moore, the husband of the plaintiff, party of the third part, entered into an agreement in writing which provided in substance that-the second parties should prosecute their applications for certain letters patent pertaining to a gas governor, and that they would transfer to George P. Moore,-party of the third part, the sole right to sell " The Economist Gas Governor " in certain counties of the State for five years, under certain conditions and restrictions. The parties of the second part further agreed that at any time prior to December 1, 1893, the party of the third part might, at his option, purchase from the second parties a one-fiftli interest in all business profits and property of the parties of the first part, and become a copartner in said business to that extent.
The party of the third part agreed, in case, he exercised said option, to pay to the second parties on or before December 1, 1893, the sum of $'l,500 in cash, and the further"sum of $500 out of liis share of the first profits of the business, and it was agreed that he thereupon should become a member of the firm as from September 1,1893.
Thereafter, and on the 23d day of December, 1893, Yosburgh, Hall and Moore entered into another contract in writing by which, after reciting the contract of September twenty-third, it was agreed that Moore should receive one-fifth part of the stock of a corporation to be organized and called " The Buffalo Gas Saving Company,'" and to carry on the business of the former copartnership referred to in the agreement of September twenty-third, which stock said Moore agreed tó receive in lieu of his interest in the copartnership, and agreed to release Vosburgh and Hall from their obligations as members of the copartnership, and they released'him from the payment of $250 of the $500 that he promised to pay into the copartnership out of his profits. After executing this last contract Moore was obligated to pay the sum of $1,500 mentioned in .the contract of September twenty-third, in order to obtain a one-fifth interest in the corporation. Moore, the plaintiff's husband, did not have the $1,500 with which to obtain such interest and to pay for the stock to be issued to him. The plaintiff was thereupon interviewed by the defendant Vosburgh in the presence of her husband, and solicited to make such 'payment in behalf of her husband, with the result that she did pay said- sum of $1,500 to said corporation, handing the money to Vosburgh upon the verbal agreement on the part of Vosburgh that he, Vosburgh, would repay to plaintiff the said sum of $1,500 on demand at any time subsequent to one year from the date of said agreement, provided that plaintiff did not, within said year, receive a profit of at least twenty (20) per cent of said sum of $1,500." One-fifth of the stock of said corporation was thereupon issued to plaintiff's husband.
The business of the corporation- was conducted by Hall, Vosburgh and Moore, and no profits were realized, or at least none were paid to the plaintiff or to plaintiff's husband dtiring the first year of the corporation's existence'. After the expiration of the year the plaintiff demanded of Vosburgh the $1,500 paid by her, and upon the trial offered to surrender the stock which had been issued to her husband, all with her husband's consent in open court. The defendant refused to pay such sum and this action was commenced.
In his amended answer the defendant set up as a defense, among others, to plaintiff's demand, the Statute of Frauds, alleging that the contract upon which the plaintiff seeks to recover was not in writing, and was not to be performed within one year. We think the statute precludes a recovery by the plaintiff, and that defendant's motion for a nonsuit was properly granted.
Concededly the agreement was not in writing. Was it to be performed, in whole or in part, within one year from the making thereof %
It is apparent that no action could have been maintained against the defendant to enforce his promise to pay to the .plaintiff $1,500 until after the expiration of one year. By the terms of the agreement he had a full year, had until the expiration of the last day of the year, to cause a profit of twenty per cent to be made, and to pay to the plaintiff, and if he liad done so at arty time before the expiration of the contract period he would have fully kept his agreement. But it is urged that the defendant might at his option have discharged ' the obligation, at arty time' before - the expiration of the year, and that, therefore, within The rule laid -down in Blake v. Voigt (134 N. Y. 69) the statute does not apply. In that case it appeared that on November 27, 1888, the parties entered into an. oral agreement by which the- defendants, who were commission merchant's, agreed to pay to plaintiff a specified commission on all goods the plaintiff could influence to be sent to the defendants for sale-for one year, beginning December first thereafter, either party having tlie-privilege of -terminating the contract by notice in June. Under the option the contract was terminated in June by, the-defendants and it was held that -the plaintiff could recover ; that the option having been exercised, the agreement was taken out -of the Statute of Frauds, was' to be performed within one year, within the contemplation of the parties. In that case the court said (p. 75): " Where the parties agree to carry on business for a period exceeding one year, or until the happening' of an event which may transpire before the end of the year, we think that by principle as well as by ¡the weight of authority the contract is protected from the operation of the statute."
The rule is stated in Trustees of First Baptist Church v. Brooklyn Fire Ins. Co. (19 N. Y. 305) as follows : "If the"obligation of the contract is not by its very terms or necessary construction, to endure for a longer period than one year, it is a valid agreement."
The'application of such a rule does not make valid'the agreement in" question. Its obligation continued until the full expiration of the year. Until then it could not be discharged. It is suggested that the defendant might have paid the profits before the expiration' of the year, but it could hot be known until its expiration whether or not the business of the year would yield profits-. If the business had resulted in profits during the first six months after the agreement in question was made, they might have been all lost or dissipated in the last hour of the contract period, so that the year's business would show a net loss instead of profits; and if the profits so earned during said six months had been paid to the plaintiff out of the funds of the corporation, and such profits had been wiped out and lost as the result of the business for the entire year, good morals at least would have required the plaintiff to refund to the corporation the moneys received by her, because her agreement was that she should not receive profits unless they existed as a result of the business for an entire year. Whether profits would result or not, as we have seen, could not be known with certainty to either, party to the agreement until the expiration of the year, and, therefore, there was no way in which the defendant could properly discharge his obligation to the plaintiff by the payment to her of profits; and, as we have also seen, he was not obligated to make personal payment to- her of the sum. advanced by her, and which went into the business of the corporation, until after the expiration of the entire year.
Lapham v. Whipple (8 Mete. 59) is a case which arose under the Massachusetts Statute of Frauds, which is substantially the same as our statute, and involved a state of facts almost identical with the facts in the case at bar, and. it was held that the agreement there being considered was within the statute. Browne, in his work on Statute of Frauds (5th ed.) § 283, says: "An agreement made by one who sold a patent-right that he would refund the price paid if the purchaser did not in three years realize the amount of the profits is manifestly within the statute. The promisee might have realized the amount in less than a year, whereby the. promisor would have been discharged from his liability, but his promise would not take effect and he be liable to an action for the nonperformance until the expiration of the three years."
Again, it was said in Packett Company v. Sickles (5 Wall. 595) " That the possibility of defeasance does not make it the less a contract not to be performed within the year."
But citation of authorities would seem to be unnecessary. The contract was not in writing, and upon the conceded facts in this case we think it clear that the agreement alleged by the plaintiff in her complaint and proved upon the trial was not to be and could not be performed within one year, and was, therefore, within the Statute of Frauds, and that the plaintiff is not entitled to recover. Having reached this conclusion, it is Unnecessary to consider the other questions involved upon this appeal.
It follows that the judgment of nonsuit and the order denying plaintiff's motion for á new trial should be affirmed, with costs.
All concurred, except Rumsey, J., not sitting.
Judgment and order affirmed,with costs.