Opinion ID: 1800193
Heading Depth: 1
Heading Rank: 2

Heading: did the chancellor err in applying the doctrine of equitable estoppel as an exception to the statute of frauds?

Text: Preliminarily, the chancellor's finding that this contract of employment was to be carried out over a period of some twenty-seven (27) months brings the contract under the statute of frauds. To be enforceable under the statute, there must be sufficient written evidence to substantiate the contract. Miss.Code Ann § 15-3-1(d) (1972). Bowers does not challenge the chancellor's finding that there were not sufficient writings to bring the employment contract into compliance with the statute of frauds, and for good reason. The chancellor found the writings offered at trial to be insufficient under the statute because there is no written confirmation of the length of employment. Clearly, the length of employment is a substantial term which must be included in a writing being offered to show a contract of employment for a definite term in order for the writing to satisfy the requirement of the statute. Cf. Short v. Columbus Rubber and Gasket Co., 535 So.2d at 64. Given, therefore, that the writings at issue contains no such reference, the chancellor was correct in concluding that the statute's requirement of a writing was not satisfied in this case. It becomes necessary, therefore, to consider whether the chancellor erred in applying the doctrine of equitable estoppel to bar Bowers from asserting the statute as a complete defense. That the doctrine of equitable estoppel is a recognized exception to the statue of frauds is established by the case law of this State. Bowers argues that this doctrine has never been held to be an exception to the statute of frauds in employment contract cases; that our prior cases applying the doctrine as an exception have not dealt with subsection (d) of § 15-3-1. However, this argument is contrary to established case law. In Shogyo Intern. v. First Nat. Bank of Clarksdale, 475 So.2d 425, 428 (Miss. 1985), this Court, while finding the statue of frauds inapplicable, held that even were it applicable, the doctrine of equitable estoppel would take this case outside of the statute of frauds. The Shogyo opinion relied for this statement on PMZ Oil Co. v. Lucroy, 449 So.2d 201 (Miss. 1984). There this Court held rather clearly that [e]quitable estoppel ... is a well-established exception to our statute of frauds. Our cases have repeatedly held that, where the elements of equitable estoppel are present, the statute of frauds constitutes no bar to enforcement of that which a party has agreed. 449 So.2d at 206. Admittedly neither Shogyo nor PMZ involved employment contracts governed by § 15-3-1(d), but in neither case did the Court remotely suggest that the doctrine of equitable estoppel could only be asserted as an exception in certain classes of cases where the statute of frauds is asserted. To the contrary, the Court quite clearly held that the doctrine may be pled as an exception in any case where the statute is asserted as a defense. See also Estate of McKellar v. Brown, 404 So.2d 550 (Miss. 1981); Sanders v. Dantzler, 375 So.2d 774, 776-77 (Miss. 1979); Martin v. Franklin, 245 So.2d 602 (Miss. 1971). The only question we must answer is whether the facts of this case justify application of the doctrine in favor of Dearman. If not, then we must hold the contract unenforceable under the statute of frauds and render judgment here for Bowers. In order to uphold the chancellor's finding, it must appear from the record that (1) Dearman changed his position in reliance on the conduct of Bowers, and (2) that he suffered a detriment as a result. PMZ, 449 So.2d at 206. In reviewing the record and the chancellor's finding, we are again constrained to accord deference, particularly here because we regard the question of whether [Dearman] relied to [his] detriment as a finding of fact. PMZ, 449 So.2d at 205. The chancellor obviously believed Dearman's version of the facts that Bowers desired to interview him in late August, 1986, as part of a plan to expand the Bowers operation into the Meridian area; that Dearman accepted an invitation to interview for a position in the Meridian area; that Dearman explained to Bowers that he had just recently married and built a new home in Meridian; that Dearman made it known to Bowers that he would only consider employment that was an advancement over his position at McGinnis; and that Dearman ultimately left the employ of McGinnis and accepted employment with Bowers in reliance on the terms offered by Bowers, those terms being essentially a guaranteed base salary of $24,000.00 per annum, $400.00 per month for expenses, commissions, and guaranteed employment through December, 1988. The chancellor also found that Dearman suffered a detriment as a result of his induced change of position. The chancellor found that a person acting in good faith reliance on the offer of another and surrendering gainful employment should not be denied the fruits of a valid contract via the operation of an archaic statute when in fact the other party should be estopped. As to the first part of the estoppel test, we find no error. Dearman testified that the salary structure offered by Bowers was a primary inducement to leave McGinnis. The offer of compensation which was reduced to writing was clearly more favorable than the compensation plan at McGinnis, and by itself, was a sufficient inducement for Dearman to leave McGinnis. Couple this with the chancellor's finding that Bowers also guaranteed employment to Dearman through December, 1988, and we can not conclude that the chancellor was manifestly wrong in finding that Dearman changed his position of employment in reliance on the offers made by Bowers. However, did Dearman change his position in reliance on the conduct of Bowers to his detriment? The only detriment that Dearman may claim is the loss of existing employment in reliance on an offer of more favorable employment. On this point, we find a case which is remarkably similar, and apparently illustrative of the majority rule. In Cunnison v. Richardson, 107 A.D.2d 50, 485 N.Y.S.2d 272 (1985), the plaintiff had been continuously employed from 1979 in Toronto, Canada. After extensive negotiations, the defendant allegedly orally agreed to employ Cunnison in New York for a period of five years. The defendant apparently confirmed this agreement by letter dated, ironically, September 3, 1982, and in a subsequent interoffice memorandum dated January 7, 1983. 107 A.D.2d at 50-51, 485 N.Y.S.2d 272. The confirmatory letter was remarkably similar to the one sent by Bowers. It stated that the defendant offered Cunnison the Institutional Sales job we ... discussed at a salary of $2,000 per month from September 27, 1982 to December 31, 1982, and depending upon performance, $30,000 annually thereafter, in addition to commissions. Id. at 51, 485 N.Y.S.2d 272. Cunnison was terminated in December, 1983, 14 and 1/2 months after commencing work for Richardson. She thereafter sued for wrongful discharge alleging the existence of a guaranteed five year contract. Id. Richardson defended on the ground that the contract was unenforceable under the statute of frauds for lack of a writing substantiating the term, rendering the contract terminable at will. Cunnison conceded the absence of a writing confirming the length of the contract but argued that enforcement of the contract was mandated by principles of estoppel and part performance. Id. In support of this argument she alleged that in reliance upon the oral promise of Richardson she turned down other employment, gave up her Toronto job and residence, and at great personal sacrifice, moved to New York City. Id. In its analysis, the court established first that the writings were not sufficient to satisfy the statute of frauds since the term or length of employment was not contained in either. Id. at 52, 485 N.Y.S.2d 272. As in this case, the plaintiff did no more than to establish an annual rate of salary for plaintiff. It provided for no specific terms of employment, so that even if the letter were considered to be a contract of employment it would still be insufficient in law. Id., quoting Chase v. United Hosp., 60 A.D.2d 558, 558-59, 400 N.Y.S.2d 343 (1977). Thus, the statute of frauds would be an absolute bar to Cunnison's recovery unless some legal impediment to its assertion could be established. Cunnison, 107 A.D.2d at 52, 485 N.Y.S.2d 272. Cunnison argued estoppel on the basis that it would be unconscionable to deny enforcement of the contract. She cited her move from Toronto to New York and her rejection of other jobs as circumstances sufficiently egregious to estop the defendant from invoking the statue of frauds as a defense. Id. First recognizing that Richardson paid the costs of relocation for Cunnison, the court held that in any event, it has been consistently held that a change of job or residence, by itself, is insufficient to trigger invocation of the promissory estoppel doctrine. Id. at 53, 485 N.Y.S.2d 272. In Ginsberg v. Fairfield-Noble Corp., 81 A.D.2d 318, 321, 440 N.Y.S.2d 222 (1981), the court held that a change of job, even with increased emoluments and advanced status `is not sufficient to call promissory estoppel into play.' The choice to forgo current employment because of rosy promises `does not put the stigma of unconscionability upon the defendant's right to assert the Statute of Frauds.' (emphasis added); accord Swerdloff v. Mobil Oil Corp., 74 A.D.2d 258, 263, 427 N.Y.S.2d 266 (1980). It appears to be the general majority rule that the termination of existing employment in reliance on an oral contract of employment, even for better pay, is only a necessary incident of being in the labor market and is not such an injury as to estop a defendant from asserting the statute of frauds as a defense. See e.g. Lovely v. Dierkes, 132 Mich. App. 485, 347 N.W.2d 752, 753-54 (1984) (termination of existing employment is itself insufficient proof of detriment such as to bar application of the statute of frauds); Rowe v. Noren Pattern & Foundry Co., 91 Mich. App. 254, 283 N.W.2d 713 (1979) (termination of existing employment may give rise to estoppel if coupled with a loss of valuable retirement benefits); Ruinello v. Murray, 36 Cal.2d 687, 227 P.2d 251 (1951) (must show that not only was existing employment given up, but that valuable rights under the existing contract were forfeited as well); see also Annot. Action by Employee in Reliance on Employment Contract Which Violates Statute of Frauds as Rendering Contract Enforceable, 54 A.L.R.3d 715, 725-56 (1973). Dearman has not shown any detriment sufficient to invoke an estoppel. Certainly Dearman did not relinquish any valuable rights by leaving McGinnis since he admitted that he worked almost exclusively on commission, and apparently at will. At oral argument Dearman argued that the November letter from Bowers stating that he was not an employee, but only an independent contractor, was deceitful, and this constituted evidence of detriment. First, Bowers stipulated at trial that Dearman was an employee. Second, it is impossible for this Court to hold that Dearman somehow changed his position in reliance on this letter since it was written after his firing. The November letter could in no way have served as an inducement for Dearman to change jobs, and a fortiori, there can be no detrimental reliance arising therefrom. This Court can only conclude that the chancellor erred in finding that Dearman suffered sufficient detriment to invoke the doctrine of equitable estoppel. Therefore, the decision of the lower court must be reversed and judgment rendered here for Bowers. REVERSED AND RENDERED. ROY NOBLE LEE, C.J., HAWKINS and DAN M. LEE, P.JJ., and PRATHER, ROBERTSON, SULLIVAN, ANDERSON and BLASS, JJ., concur.