Edward Greenband Enterprises of Arizona v. Pepper

• Decision Date: 15 July 1975
• Docket Number: No. 11691,11691
• Parties: EDWARD GREENBAND ENTERPRISES OF ARIZONA, an Arizona Corporation, Appellant and Cross-Appellee, v. Eugene M. PEPPER and Marilyn Pepper, his wife, Appellees and Cross-Appellants.
• Court: Arizona Supreme Court

Page 389

538 P.2d 389

112 Ariz. 115

EDWARD GREENBAND ENTERPRISES OF ARIZONA, an Arizona Corporation, Appellant and Cross-Appellee, v. Eugene M. PEPPER and Marilyn Pepper, his wife, Appellees and Cross-Appellants.

No. 11691.

Supreme Court of Arizona, In Division.

July 15, 1975.

Cunningham, Goodson & Tiffany by James P. Cunningham, Phoenix, for appellant and cross-appellee.

O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears by Jeffrey B. Smith, Phoenix, for appellees and cross-appellants.

STRUCKMEYER, Vice Chief Justice.

This is an appeal by Edward Greenband Enterprises, an Arizona corporation, from a $15,000.00 jury's verdict and judgment thereon for breach of an employment contract. Appellees Eugene M. Pepper and his wife, Marilyn Pepper, have cross-appealed. Reversed with directions.

Appellees brought this suit in a two-count complaint, alleging both the breach of an employment contract and fraud in its inducement. Prior to trial, appellant, without success, sought to compel an election of remedies between the breach and the fraud. The trial judge, before submitting the case to the jury, directed a verdict dismissing the count of fraud and instructed the jury only on the question of breach of contract. The jury returned a verdict in favor of appellees. Appellant asserts numerous grounds as the basis of its appeal. Appellees have cross-appealed, claiming error in the direction of the verdict on the count of fraud.

Appellant's first complaint is that the court should have compelled an election of remedies before trial as between the counts of fraud and breach of contract. It is urged that the two counts were manifestly from the beginning inconsistent because had both counts been submitted to the jury and favorable verdicts returned on both, the plaintiffs would have obtained a double recovery. Appellee argues on his cross-appeal that there were two separate wrongs, for each of which he should be allowed to recover.

In considering the parties' respective positions, we first note that in Jennings v. Lee, 105 Ariz. 167, 461 P.2d 161 (1969), the principle was established that a party who had been defrauded must either rescind the contract or affirm it and if the party affirms it, he must sue for damages for its breach. We have also held that an action for fraud is lost if the injured party, after acquiring knowledge of the fraud, manifests to the other party an intention to affirm the contract. Mackey v. Philzona Petroleum Co., 93 Ariz. 87, 378 P.2d 906 (1963).

The Rules of Civil Procedure, however, specifically sanction an inconsistent pleading. Rule 8(f)(2), 16 A.R.S., provides:

'A party may * * * state as many separate claims or defenses as he has regardless of consistency * * *.'

This rule was taken from the Federal Rules of Civil Procedure of the same number:

'Alternative or hypothetical pleading by its very nature is inconsistent. This, however, is not a valid objection to it * * *. The inconsistency may lie either in the statement of the facts or in the legal theories adopted, and the party will not be required to elect upon which legal theory he will proceed, since this would defeat the whole purpose of allowing inconsistent pleading.' Moore's Federal Practice, Volume 2A, § 8.32, at 1888--1890.

In Sligh v. Watson, 69 Ariz. 373, 214 P.2d 123 (1950), overruled on other grounds in Diamond v. Chiate, 81 Ariz. 86, 300 P.2d 583 (1956), we discussed the policy behind the rule, saying it was:

'* * * to allow the pleading party to take advantage of any possible development in the evidence which would show him to be entitled to recovery and thus prevent his being forced to elect in advance and at his peril which theory he will proceed upon.' 69 Ariz. at 377, 214 P.2d at 125.

Appellant argues that all the facts were known to appellee before trial and the only purpose he had in presenting inconsistent claims was that of prejudicing appellant with the jury. If we assume this was a deliberate trial tactic on the part of the appellee as is argued, we are still of the view that a person cannot be forced to elect in advantage at his peril upon what theory or remedy he will proceed until the conclusion of the trial. But as in this case, where at the conclusion of the trial, the appellee, having failed to elect which claim was to be submitted to the jury, the trial court could consider by his continued insistence on damages for breach of contract that he manifested an intention to affirm. We find merit neither in appellant's position nor in appellees' on their cross-appeal.

Appellant next questions the action of the trial court in failing to direct the verdict in its favor due to appellants' failure to comply with A.R.S. § 44--101. A.R.S. § 44--101 provides:

'No action shall be brought in any court in the following cases unless the promise or agreement upon which the action is brought, * * * is in writing and signed by the party to be charged, * * *:

* * *

* * *

5. Upon an agreement which is not to be performed within one year from the making thereof.'

Since the employment contract was oral, it is appellant's position that the statute of frauds was not satisfied because the employment contract was of unlimited duration.

In Waugh v. Lennard, 69 Ariz. 214, 226, 211 P.2d 806, 813--814, we held: 'The possibility of performance within one year is sufficient to take such an oral agreement out of the operation of the statute of frauds.' And in Co-op Dairy, Inc. v. Dean, 102 Ariz. 573, 435 P.2d 470 (1968), we approved the statement in 2 Corbin on Contracts, p. 534, that there must not be the slightest possibility that the contract can be fully performed within one year in order that it be barred by the statute of frauds.

While appellant testified that the employment was to be forever, both parties agreed that they planned to meet in one year and to re-evaluate the contract both as to its duties and its...