Droste v. Harry Atlas Sons, 56.

• Decision Date: 14 February 1945
• Docket Number: No. 56.,56.
• Citation: 145 F.2d 899
• Parties: DROSTE v. HARRY ATLAS SONS, Inc., et al.
• Court: U.S. Court of Appeals — Second Circuit

145 F.2d 899 (1944)

DROSTE v. HARRY ATLAS SONS, Inc., et al.

No. 56.

Circuit Court of Appeals, Second Circuit.

November 29, 1944.

Rehearing Denied February 14, 1945.

Rosston, Hort & Brussel, of New York City (Gerson C. Young, George Brussel, Jr., and Mortimer Goodman, all of New York City, of counsel), for appellants.

Bijur & Herts, of New York City, for appellee.

Before L. HAND, SWAN, and CLARK, Circuit Judges.

SWAN, Circuit Judge.

This is an action for breach of contract brought in the federal court on the ground of diverse citizenship of the parties. The complaint alleges an oral agreement under which Droste was to render services in aiding Harry Atlas Sons, Inc., to obtain a contract with Federal Surplus Commodities Corporation, an agency of the Department of Agriculture of the United States (for brevity hereafter referred to as FSCC) for the packaging of dehydrated egg powder in small cartons, and was to receive for his services a commission of 5% on all money received by Harry Atlas Sons, Inc., under any such government contract or contracts. It was further alleged that Harry Atlas Sons, Inc., obtained such a contract and transferred it to the other defendant, Atlas Packaging Corporation, and that the defendants collected thereunder large sums of money.¹ The defendants denied the making of the alleged agreement with the plaintiff and pleaded affirmatively the New York statute of frauds in bar of his claim. They admitted obtaining a contract from FSCC and receiving some $200,000 thereunder. The case was tried to a jury which rendered a verdict for the plaintiff of $11,091.03 plus interest. From the resulting judgment the defendants have appealed, asserting the following errors: (1) The oral contract is repugnant to the statute of frauds; (2) the verdict is contrary to the evidence; (3) evidence was improperly excluded; (4) the trial was unfairly conducted; and (5) the verdict is excessive by at least $2,231.25.

The New York statute of frauds makes void every oral agreement which "by its terms is not to be performed within one year from the making thereof * * *". Personal Property Law, Consol.Laws, c. 41, § 31, subd. 1. The agreement to pay Droste a commission was made on March 31, 1942, in connection with obtaining his aid in submitting the defendant's bid to the government for a FSCC contract. The contract resulting from this bid required performance, and the money collected thereunder was received, within less than a year from that date. Hence if the commission agreement had related only to this one contract it would clearly fall outside the statute of frauds. But the complaint alleged that the defendants promised to pay a 5% commission on "all payments received * * * in connection with whatever contract or contracts" the defendants might obtain from "any agency or agencies of the United States Government", and Droste's testimony was to the effect that the 5% commission was to be paid "on subsequent business" as well as "this contract". Obviously collections under subsequently made contracts might be received more than a year after March 31, 1942, and therefore, the defendants argue, the oral agreement bound them to pay commissions for an indefinite time. But the possibility that subsequent contracts might be made would not, in our opinion, were we free to form one independently, justify holding that "by its terms" the commission agreement was not to be performed within a year. There might or might not be subsequent contracts with FSCC or other governmental agency; the defendants were free to make such contracts but were not bound to do so; hence the commission agreement was capable of performance within the year. It has long been firmly established by New York cases that if an oral agreement may consistently with its terms be entirely performed within the year, even though it be neither probable nor expected that it will be performed within that time, it is outside the condemnation of the statute. Trustees of First Baptist Church v. Brooklyn Fire Ins. Co., 19 N.Y. 305, 307; Kent v. Kent, 62 N.Y. 560, 564, 20 Am.Rep. 502; Warren Chemical & Mfg. Co. v. Holbrook, 118 N.Y. 586, 593, 23 N.E. 908, 910, 16 Am.St.Rep. 788; Blake v. Voigt, 134 N.Y. 69, 73, 31 N.E. 256, 257, 30 Am.St.Rep. 622, Rochester Folding Box Co. v. Browne, 55 App.Div. 444, 66 N.Y.S. 867, affirmed, 179 N.Y. 542, 71 N.E. 1139.

We should, therefore, think it clear that the plaintiff's oral agreement is not within the statute were it not for Cohen v. Bartgis Bros. Co., 264 App.Div. 260, 35 N.Y.S.2d 206, affirmed, 289 N.Y. 846, 47 N.E.2d 443. That was an appeal from an order striking out the defense of the statute of frauds in an action to recover commissions under an oral agreement whereby the defendant agreed to pay plaintiff commissions "upon all orders placed by Resolute Paper Products Corp., at any time, whether or not plaintiff was in defendant's employ at the time of placing such orders." The sales upon which commissions were demanded were made to Resolute Paper Products Corporation more than a year after the making of the commission agreement with Cohen. Mr. Justice Untermyer, writing for the Appellate Division, differentiated several of the cases we have cited above, referred to Fish Clearing House v. Melchor, Armstrong, Dessau Co., 174 Wash. 539, 25 P.2d 381, as holding such an oral contract to be unenforceable and to Hewins v. Marlboro Cotton Mills, 242 Mass. 282, 136 N.E. 159, 23 A.L.R. 449, as being to the contrary, and said that the precise question had not been directly considered by the New York appellate courts. After discussion he reached the conclusion that the contract "requires the defendant, for an unlimited period of time, to pay commissions on orders accepted from Resolute Paper Products Corp., and,...