Court Opinion

ID: 3497181
Source: CourtListenerOpinion
Date Created: 2016-07-05 22:04:48.911161+00
Date Added: 2024-06-11T13:54:56.863927
License: Public Domain

This is an appeal by plaintiff from an order granting defendant's motion to dismiss count 1 of his declaration, on the ground that the separate cause of action as therein pleaded is unenforceable under the provisions of the statute of frauds, 3 Comp. Laws 1929, § 13417 (Stat. Ann. § 26.922), and that such defect appears on the face of the declaration.
In count 1 of his declaration, plaintiff, Dr. Elek K. Benedek, a resident of Chicago, Illinois, who describes himself as an experienced mechanical and consulting engineer and a specialist in fluid pressure variable speed pumps and transmissions, states that he is the original and sole inventor of various inventions and improvements in that field. After listing 16 letters patent by number, date, and subject matter, and three applications for patents, Benedek claims that on or about November 29, 1943, he granted to defendant Mechanical Products, Inc., a Michigan corporation, the license and privilege to manufacture and sell such devices, and that Mechanical Products, Inc., agreed to pay him a royalty of five per cent. on the selling price of such manufactured product sold by it, with a guaranteed minimum annual royalty of $10,000 per year. He avers that he performed his portion of the obligation, but that, although defendant performed its obligation for about three months, it then breached its contract and agreement and refused to pay the accrued royalties, et cetera. Counts 2 and 3 of the declaration, which are not here involved, have to do with compensation for personal services and labor rendered by plaintiff to defendant, recited in detail in count 2, and are based on the common counts in count 3.
There is attached to the declaration an exhibit referred to in count 1, which is a letter directed to the United States Selective Service System in Chicago, *Page 498 
and signed, Mechanical Products, Inc., A.D. Knapp, president, requesting deferment of one Chester Alfred Czohara, which states in part:
"Recently our company secured the exclusive manufacturing rights of a complete line of industrial and aeronautical high pressure hydraulic pumps from Dr. Elek K. Benedek, consulting engineer, who is a specialist in fluid pressure variable speed pumps and transmissions. Dr. Benedek's office and laboratory is located at 9243 South Oakley Ave., Chicago, Ill.
"In connection with the above, the company has secured the services of Chester Alfred Czohara because of his design and development experience in aircraft hydraulic control apparatus in which he has irreplaceable skill and it is our understanding that his prior deferment was based on that skill.
"Our company have been requested by the Air Corps at Wright Field, to make certain changes in these hydraulic pumps for their application, and it constitutes the work that Mr. Czohara is doing for us at the present time. We might add that these high pressure variable speed pumps are very desirable to the Army Air Corps and Naval Air Corps and the writer feels that we are using Mr. Czohara's experience to the very best possible advantage."
The decisive question is whether this letter, addressed to one not a party to the claimed contract, is sufficient to satisfy the requirements of the statute that the license agreement relied upon is void, "unless such agreement, contract or promise, or some note or memorandum thereof be in writing and signed by the party to be charged therewith, or by some person by him thereunto lawfully authorized." (3 Comp. Laws 1929, § 13417 [Stat. Ann. § 26.922]).
Because of the provisions of 3 Comp. Laws 1929, § 13420 (Stat. Ann. § 26.925), the consideration "need not be expressed in the written contract, agreement or promise, or in any note or memorandum *Page 499 
thereof, but may be proved by any other legal evidence."
As stated in 112 A.L.R. p. 491:
"Letters, telegrams, or other written communications by a party to a contract to one who is not a party thereto, which sufficiently disclose the terms of the agreement and admit it or affirm it, are, according to the great weight of authority, valid memoranda thereof within the requirements of the statute of frauds."
See authorities therein annotated from 22 States, not including Michigan, England, and Canada.
In Cochran v. Staman, 201 Mich. 630, Mr. Justice KUHN, in a dissenting opinion, agreed with counsel's statement "that the memorandum, to be sufficient under the statute of frauds, must be complete in itself, and leave nothing to rest in parol." The majority, however, speaking through Chief Justice OSTRANDER, had this to say:
"The writing relied upon, in my opinion, is a promise to pay a commission for or upon a sale of real estate. So far as the statute of frauds is concerned, no more is required. Suppose that the seller, in this case, and the proposing buyer, produced by plaintiff, had agreed upon terms of payment and completed a sale and conveyance of the premises for $100 an acre. In an action for the commission, could the seller defend upon the ground that the promise to pay the commission was not in writing? I think not. And this, I think, is the test to apply, and not the one whether the written agreement or promise contains also, — has incorporated therein, — all of the details necessary to be stated in an agreement to sell and convey real estate. In Paul v.Graham, 193 Mich. 447, it was decided that a particular writing did not satisfy the statute. But a written promise to pay a stated commission for the sale of described property, both of which elements, as the opinion *Page 500 
points out, were lacking in the writing relied upon in that case, are present in the writing in this case. See Toomy v. Dunphy,86 Cal. 639 (25 P. 130).
"`Every agreement, promise or contract to pay any commission for or upon the sale of any interest in real estate,' is the language of the statute."
Thereafter the court unanimously held in Badger v.Finlayson, 219 Mich. 660, that an agreement, in writing, to pay a broker a commission for the sale of real estate is sufficient to satisfy the statute even though it failed to state the price, terms of sale, et cetera, as required in case of a sale of real estate. In the Badger Case the court, after referring to the case of Cochran v. Staman, supra, said:
"The majority opinion in the case cited holds this is unnecessary. That if the agreement shows a promise to pay a commission upon the sale of real estate the statute is satisfied. Defendant insists that the case of Paul v. Graham, 193 Mich. 447, supports his contention. If counsel are right in their contention, the holding in Paul v. Graham must give way in so far as it is in conflict with the Cochran Case. Undoubtedly, the controlling thought in the mind of the legislature in adding section 5 to the statute (3 Comp. Laws 1915, § 11981*) was to put an end to controversies arising over parol agreements for the sale of real estate. In order to correct this it was provided that the agreement should be in writing. If this is the correct view the legislature had in the matter it may be reasonable to say that when a written agreement to pay a commission for the sale of real estate is shown it complies with the demand of the statute without any further proof as to the details of the sale. This was the controversy in the Cochran Case and was what caused a division of the court."
In considering the propriety of the order dismissing count 1 of plaintiff's declaration, as was said in *Page 501 Dodge v. Blood, 299 Mich. 364, 378 (138 A.L.R. 322):
"Upon demurrer, every inference must be indulged in favor of the pleader, and against the demurrant. This means that in order to justify dismissal of the bill upon the ground that it and its exhibits state no contract, we must be prepared to hold that, as a matter of law, there is no explanation that can be placed upon the pleading that is consistent with a contract."
We are not required to determine whether or not the agreement can be proven, but rather whether or not the inability to prove the contract because of the requirements of the statute of frauds appears upon the face of the declaration. Because of the overwhelming weight of authority as to communications to third parties, stated in 112 A.L.R. 490, 491, and the holdings inCochran v. Staman, supra; and Badger v. Finlayson, supra, it cannot be said that this defect, if any, appears upon the face of the pleadings.
The order dismissing count 1 should be vacated and the cause should be remanded for further proceedings. Costs to appellant.
* See 3 Comp. Laws 1929, § 13417 (Stat. Ann. § 26.922). — REPORTER.