Farmer v. Arabian American Oil Company

• Decision Date: 28 July 1959
• Citation: 176 F. Supp. 45
• Parties: Howard FARMER, Plaintiff, v. ARABIAN AMERICAN OIL COMPANY (a Delaware corporation), Defendant.
• Court: U.S. District Court — Southern District of New York

176 F. Supp. 45

Howard FARMER, Plaintiff, v. ARABIAN AMERICAN OIL COMPANY (a Delaware corporation), Defendant.

United States District Court S. D. New York.

July 28, 1959.

William V. Homans, New York City, Kalman I. Nulman, New York City, of counsel, for plaintiff.

White & Case, New York City, Chester Bordeau and William Conwell, New York City, of counsel, for defendant.

PALMIERI, District Judge.

Defendant moves for judgment in accordance with its motion during the trial for a directed verdict. Fed.R.Civ.P. 50(b), 28 U.S.C.A. Unhappily, after almost two weeks of testimony and many hours of deliberation, the members of the jury were unable to agree and they were discharged.

The plaintiff, a physician, seeks damages for his alleged wrongful discharge from defendant's employment. His suit is based upon an alleged oral contract of employment pursuant to which plaintiff was to have been employed as an ophthalmologist in defendant's hospital and public health installation in the Kingdom of Saudi Arabia "for the duration of defendant's operation of its oil wells in the Kingdom of Saudi Arabia."¹

The defendant, in its amended answer, denied the alleged oral contract and alleged that the plaintiff was hired pursuant to a written agreement. This was in the form of a letter of the defendant offering the plaintiff employment, and countersigned by plaintiff so as to indicate his acceptance.² Further, the defendant alleged two affirmative defenses: first, that the alleged oral agreement of employment was void because it was not in writing,³ and second, that the plaintiff's employment was terminated for good cause.

The matter of good cause was much bruited at the trial and was the rock on which the jury deliberations foundered. It was the subject of the first of the framed issues submitted to the jury. The members of the jury were unable to reach agreement as to whether good cause existed for the plaintiff's discharge.⁴

Upon plaintiff's direct examination at the trial, defendant objected to testimony concerning the alleged oral contract of employment and was granted a continuing objection to such testimony on the basis of (a) the parol evidence rule; (b) the Statute of Frauds; and (c) plaintiff's failure to prove the authority of Dr. Allen, the defendant's representative who allegedly made the oral contract in the course of a long distance telephone conversation with plaintiff. Defendant was also permitted to reserve its right to strike this testimony for the reasons stated. At the close of plaintiff's case defendant was permitted to reserve its motions until all the evidence had been received, when it renewed its objection and moved that the testimony be stricken. Decision was reserved. The defendant also then moved for judgment on grounds (b) Statute of Frauds and (c) lack of authority as above indicated, and on the further ground that the plaintiff testified that it was his understanding that he was employed for a period of at least five years, and that such an agreement would be void under the Statute of Frauds. After the discharge of the jury, the defendant moved for judgment pursuant to Fed.R.Civ.P. 50(b) on all the above grounds and on the further ground that the evidence established beyond any question its justification for discharging the plaintiff.

I shall not refer again to the question of justifiable discharge. It was a vigorously contested factual issue, appropriately within the province of the jury to decide. As to the motion for judgment on the ground that the contract, as plaintiff understood it,⁵ was void under the Statute of Frauds, that ground will not sustain the motion, for plaintiff's "understanding" of his obligation under the contract does not establish that the parties' minds met on that subject. E. g., Lee v. Jenkins Brothers, 2 Cir., 1959, 268 F.2d 357, at 362.

The New York⁶ Parol Evidence Rule

The letter of May 26, 1955, set forth in footnote 2, supra, evidences only a hiring at will. Watson v. Gugino, 1912, 204 N.Y. 535, 98 N.E. 18, 39 L.R.A.,N.S., 1090; Martin v. New York Life Ins. Co., 1895, 148 N.Y. 117, 42 N.E. 416. If plaintiff's testimony that he was orally promised employment for so long as defendant was operating its oil wells in Saudi Arabia was inadmissible, there has been a failure of proof and defendant is entitled to judgment on the ground that the evidence established only a hiring at will under which it was free to discharge plaintiff at any time, with or without cause.

The testimony of the plaintiff was that the oral contract was made in the course of a telephone conversation which took place on April 13, 1955, between Dr. T. E. Allen, a member of the defendant's medical staff, and himself. One of Dr. Allen's duties was to interview candidates for positions on the medical staff of defendant's hospital in Saudi Arabia and it was in this connection that he met plaintiff in February 1955. The testimony upon which plaintiff relies is as follows:

"I told him that I did not want to go over there for a very short time, a few months or anything like that, and I would not be interested in going for less than a period of five years and he says, `Well, we cannot measure this in years due to the circumstances of being expropriated or something of that kind, but you will have that job so long as we operate oil wells, and—in Arabia.' And I said, `Very well. With that assurance I will accept the position.' And he said, `You are hired.'" (Transcript, p. 57.)

In substance, there is a writing setting forth an agreement, and a prior alleged oral agreement, both relating to plaintiff's employment by defendant. Since the writing and the alleged oral contract are tied together in time and by their subject matter, the plaintiff cannot avoid or add to the writing by proof of an oral understanding. Probably the most cogent expression of the applicable law was made in the case of St. Regis Paper Co. v. Hubbs & Hastings Paper Co., 1923, 235 N.Y. 30, 138 N.E. 495. The Court there quoted with approval the following statement from a leading authority on evidence (St. Regis Paper Co. v. Hubbs & Hastings Paper Co., supra, 235 N.Y. at page 35, 138 N.E. at page 496):

"`When a legal act is reduced into a single memorial, all other utterances of the parties on the topic are legally immaterial for the purpose of determining what are the terms of their act.' Wigmore on Evidence § 2425."

The Court then went on to say (235 N.Y. at page 36, 138 N.E. at pages 496-497):

"* * * Evidence of a parol brokerage agreement was therefore incompetent to show that the formal writings were not the final repository of the agreement before us.

"`You can no more add to or contradict its legal effect by parol stipulations preceding or accompanying its execution than you can alter it through the same means in any other respect.' Thomas v. Scutt, 127 N.Y. 133, 140, 27 N.E. 961, 963."

In the early case of Eighmie v. Taylor, 1885, 98 N.Y. 288, the Court enunciated the applicable principle of law which remains valid to this day. In commenting upon the importance of sustaining a rigid application of the parol evidence rule, the Court there said (Eighmie v. Taylor, supra, 98 N.Y. at page 294):

"For if we may go outside of the instrument to prove that there was a stipulation not contained in it, and so that only part of the contract was put in writing, and then, because of that fact, enforce the oral stipulation, there will be little of value left in the rule itself."

And further, the Court said (Eighmie v. Taylor, supra, 98 N.Y. at pages 294-295):

"If upon inspection and study of the writing, read, it may be, in the light of the surrounding circumstances in order to its proper understanding and interpretation, it appears to contain the engagements of the parties, and to define the object and measure the extent of such engagement, it constitutes the contract between them and is presumed to contain the whole of that contract."

The case of Miller v. Burlington Mills Ribbon Corp., 2d Dep't 1951, 278 App. Div. 854, 104 N.Y.S.2d 484, affirmed without opinion, 1952, 304 N.Y. 600, 107 N.E. 2d 88, provides a persuasive parallel with the facts here. There, as here, the employer sent the employee a letter which the employee accepted. There, as here, the writing specified the position and the yearly compensation, but stated nothing with respect to the precise duration of the employment. There, as here, the employee sued the employer for damages based upon wrongful discharge. There, as here, the plaintiff-employee sought to prove the duration of his employment by oral proof. In its per curiam opinion granting judgment on the pleadings in favor of the defendant, the Appellate Division said (278 App.Div. at page 854, 104 N.Y.S.2d at page 485):

"The note or memorandum upon which the respondent relies evidences only a hiring at will * * * and recourse may not be had to parol evidence to establish a different intention of the parties. Drake v. Seaman, 97 N.Y. 230; Matter of Levin's Estate, 276 App.Div. 739, 97 N.Y.S.2d 148; Brodlie v. Fink, 275 App.Div. 1061, 92 N.Y.S.2d 610."

In the Miller case, the plaintiff claimed unsuccessfully both in the Appellate Division and in the Court of Appeals that the phrase "on the basis of $14,000.00 a year" was ambiguous and could be interpreted by oral proof to mean a year's employment,⁷ thereby satisfying the Statute of Frauds. The per curiam opinion of the Appellate Division just quoted, and the affirmance, without opinion, by the Court of Appeals, clearly rejected the plaintiff's contention. While the Miller case arose in the context of the Statute of Frauds, its holding that the written contract was not ambiguous and that prior oral negotiations could not be proven, is equally applicable here.

It follows, therefore, that under the applicable New York law the plaintiff would not be permitted to introduce proof of his alleged oral contract,⁸ that he would be bound by his written agreement, and that...