Barnes v. P. & D. Mfg. Co., Inc.

• Decision Date: 02 October 1936
• Docket Number: No. 112.,112.
• Parties: BARNES v. P. & D. MFG. CO., Inc.
• Court: New Jersey Supreme Court

187 A. 186

BARNES

v. P. & D. MFG. CO., Inc.

No. 112.

Court of Errors and Appeals of New Jersey.

Oct. 2, 1936.

Appeal from Supreme Court.

Suit by Harold E. Barnes against the P. & D. Manufacturing Company, Incorporated. From a judgment of nonsuit, the plaintiff appeals.

Reversed.

Plaintiff-appellant instituted suit against defendant-respondent by the issuance of a writ of attachment. The complaint consists of three counts. The first count alleges that, on or about August 1, 1930, plaintiff and defendant entered into an agreement, a copy of which is annexed to the complaint, and under which, generally stated, defendant was to manufacture and sell exclusively, devices embodying plaintiff's inventions, and pay plaintiff a minimum annual royalty on the sales of said patented devices; the term of the agreement was for five years from August 1, 1930; pursuant to the agreement defendant paid plaintiff $9,360 for the first two years, and there was due and owing to the plaintiff from the defendant $14,040 for the last three years of the term of said agreement. The second count alleges a demand for an accounting, a refusal thereof, and that a sum, the exact amount of which was unknown to plaintiff, approximated at $10,000 in excess of the minimum royalties, was due plaintiff. The third count alleges that defendant agreed to pay plaintiff the reasonable value for the exclusive use of his inventions; that defendant did, in fact, use plaintiff's patents; that plaintiff had fully performed all of the provisions of the agreement on his part; and that there was due and owing plaintiff $20,640 under this count.

Defendant filed no answer; but it did make a demand for a bill of particulars which was furnished. Plaintiff's answers disclosed that the agreement upon which this suit was based, although reduced to writing, was not signed by either party.

Thereafter, defendant served plaintiff with a notice of an application to strike the complaint on the grounds that it was in part sham, and was in part frivolous, in that it did not disclose a legal cause of action. This notice was supported by an affidavit, to which was attached the particulars furnished, and in which the affiant concludes that since the agreement was to commence August 1, 1930, and thereafter continue for a period of five years, it was in violation of section 5 of our Statute of Frauds. 2 C.S. (1709-1910) p. 2612, § 5.

Plaintiff filed an affidavit verifying the allegations set forth in the complaint.

The learned circuit court judge, sitting as a Supreme Court Commissioner, held:

"The contract upon which the action is based is undeniably an oral one. It is for services not to be performed within one year. As such it is void and unenforceable under section 5 of the Statute of Frauds. Also see McElroy v. Ludlum, 32 N.Eq. 828; Dolan v. Miller, 179 A. 619, 13 N.J.Misc. 543."

"I have examined the authorities submitted on behalf of the plaintiff contending that the complaint cannot be struck because of the defense of the Statute of Frauds without the same having been set up by answer and because the bill of particulars is not a part of the record and cannot be considered on this motion; also that it is inequitable for defendant, where there has been part performance, to set up the Statute of Frauds, and, further, that because the contract was reduced to writing, even though not signed, it may be sufficient to take the case out of the Statute. A careful consideration of all those matters leads me to the conclusion that they are not in point and have no merit."

"The complaint being sham will be struck."

Accordingly, he ordered that the defendant's application be granted and "that the complaint herein be and the same is hereby struck."

On rule for judgment the Supreme Court ordered that the clerk enter a judgment of nonsuit, and that the writ of attachment be vacated and for nothing holden. The rule was entered. It is the propriety of that judgment that is here challenged.

On appeal from Supreme Court.

Joseph J. Corn, of Newark, for appellant.

Lionel P. Kristeller, of Newark (James A. Castner, of Newark, on the brief), for respondent.

PERSKIE, Justice (after stating the facts as above).

We desire, in limine, to make the observation that we are not to be understood, in our determination of this cause, as in any wise departing from "an ancient rule of law that error (now appeal) will lie only after final judgment" (Lully v. National Surety Co., 106 N.J.Law, 81, 85, 148 A. 762, 764; Salaman v. Equitable Trust Co., 105 N.J.Law, 649, 146 A. 423), and that an "appeal does not lie from an order granting a motion to strike out the cause of action contained in a complaint." Lully v. National Surety Co., supra. But a writ of error (now appeal) does lie in all cases where the decision of the lower court is final, and has not proceeded from a matter resting in discretion. Cf. Eames v. Stiles, 31 N.J.Law, 490; Allgair v. Hickman, 82 N.J.Law, 369, 81 A. 752; Hanford v. Duchastel, 87 N.J.Law, 205, 93 A. 586; Jaudel v. Schoelzke, 95 N. J.Law, 171, 112 A. 328. The right of appeal from a judgment of nonsuit is well settled. Rutherford v. Fen, 21 N.J.Law 700; Jaudel v. Schoelzke, supra.

We think the learned judge fell into reversible error.

First. Nowhere is it brought to our attention, nor do we perceive, anything which can possibly be characterized as false about the facts set forth in the complaint. The opposite, in fact, appears to be true. Obviously, therefore, the complaint is not sham. Cf. National Surety Co. v. Mulligan, 105 N.J.Law, 336, at page 338, 146 A. 372, 373, and cases there cited. It is, moreover, well settled that the power to strike a pleading as sham, frivolous, or false will not be exercised unless it clearly and palpably appears to be so. The cautious exercise of such power is imperative. Louis Kamm, Inc., v. Flink, 113 N.J.Law, 582, 175 A. 62. Thus it has been said repeatedly that the duty of the court, on such a motion, is to determine whether on issue of fact is presented, and not to try the issue on affidavits. It is only where the matters set up in the affidavits submitted on the part of the defendants are not controverted, and demonstrate that the cause of action pleaded is a sham, and is without factual support, that the court is justified in granting the motion. See Solomon v. Salins, 108 N.J.Law, 214, 157 A. 383; Jaeger v. Naef, 112 N.J.Law, 417, 171 A. 166; Torricelli v. Sebastini, 112 N. J.Law, 458, 171 A. 526; Louis Kamm, Inc., v. Flink, supra, 113 N.J.Law, 582, at page 596, 175 A. 62. There was no such proof in the case at bar. Defendant did not even attempt to deny, much less to demonstrate, the falsity of the facts as pleaded by the plaintiff.

Second. Was the allegation in defendant's affidavit, based on plaintiff's answer to the bill of particulars, that plaintiff's alleged cause of action was predicated on an oral agreement in violation of section 5 of the Statute of Frauds (2 Comp.St. 1910, p. 2612, § 5), sufficient to justify the learned judge in concluding that the complaint did not set forth a legal cause of action? We think not.

(a) A bill of particulars furnished is no part of the record of the case and cannot be used on a motion to strike a pleading. "The theory of ordering particulars is to limit the proof to matters specified in the bill of particulars and to enable the other party to meet his opponent's proof without danger of surprise. Consequently such bills have relation to the trial, and not to the record." State v. Lehigh Valley R. Co., 94 N.J.Law, 171, 174, 111 A. 257, 258, 10 A.L.R. 977. The same theory applies to civil cases. Cassatt v. First Nat. Bank of West New York, N. J., 156 A. 278, 9 N.J.Misc. 848; Tierney v. Tierney, 179 A. 314, 13 N.J.Misc. 654, 656, et seq.; Wolfson v. Mills, 112 N.J.Law, 1, 169 A. 359.

(b) In order to be available as a defense, the Statute of Frauds, like the statute of limitations, the pleas of release, payment, performance, or of facts showing fraud, illegality, or contributory negligence, must be specifically pleaded. Supreme Court Rule No. 58 (Rule 40, Practice Act of 1912, P.L.1912, p. 391). Thus the Statute of Frauds cannot be raised under the circumstances exhibited here, on a motion to strike but only by answer in the nature of a plea.

Our courts (both in law and in equity) have held that where the existence of the agreement is denied, such a denial entitles the defendant to the benefit of the statute without pleading it, but where the existence of the agreement is admitted, the statute of frauds must be pleaded to be available as a defense. Van Duyne v. Vreeland, 12 N.J.Eq. 142, 152; Busick v. Van Ness, 44 N.J.Eq. 82, at pages 84, 85, 12 A. 609. See, also, Lozier v. Hill, 68 N.J.Eq. 300, at pages 305, 306, 59 A. 234.

A clear and comprehensive resume of the law on the subject is found in Douma v. Powers, 92 N.J.Eq. 25, at pages 26, 27, 111 A. 401, 402, wherein Vice Chancellor Stevenson held that:

"The rule is well settled [in New Jersey and generally in the other states] that declarations in actions at law and bills in suits in equity are not demurrable because they fail to allege affirmatively that the contracts sued on, which are within the operation of the statute of frauds, are in writing. The rule of pleading is precisely the same in courts of law and courts of equity. [Browne on Fraud (5th Ed.) § 505.] In Whitehead v. Burgess, 61 N.J. Law, 75, 76, 38 A. 802 (1897) Mr. Justice Van Syckel, speaking for the Supreme Court, states the principle as follows:

"'Where an action is founded upon a contract which at common law is valid without writing, but which the statute required to be in writing, the declaration need not count upon or take notice of the writing. If an action is brought upon a promise to pay the debt of another, the...