Emerson v. Universal Products Co., Inc.

• Decision Date: 17 October 1932
• Citation: 162 A. 779,35 Del. 277
• Court: Delaware Superior Court
• Parties: ANNETTE E. EMERSON v. UNIVERSAL PRODUCTS COMPANY, INCORPORATED, a corporation of the State of Delaware

162 A. 779

35 Del. 277

ANNETTE E. EMERSON v. UNIVERSAL PRODUCTS COMPANY, INCORPORATED, a corporation of the State of Delaware

Superior Court of Delaware, Sussex County

October 17, 1932

Superior Court for Sussex County, No. 26, June Term, 1931.

Case heard on demurrer of the defendant to the plaintiff's replication.

The declaration alleged that on December 22, 1914, one Victor Lee Emerson being the inventor of a new and useful universal joint, filed his application for United States Patent, Serial No. 878,531; that subsequently on December 27, 1914, Emerson sold, assigned and transferred the entire right and interest in the invention covered by the application to Annette E Emerson, the plaintiff.

That on December 30, 1914, the plaintiff entered into an agreement with the defendant whereby the defendant received the exclusive right to manufacture and sell the universal joints covered by the patent and application and for the full term or time that the patent granted on application No. 878,531 should continue in force; that in consideration of the exclusive right to manufacture and sell the patented article the defendant agreed to pay a royalty or license fee for each universal joint so manufactured and sold, said royalties or license fees to be paid on the tenth of each month during the life of the patent and that subsequently U.S. Letters Patent No. 1,183,064, were issued by the U.S. Patent Office pursuant to the application, Serial No. 878,531.

The declaration then alleged that immediately upon entering into the agreement as aforesaid on December 30, 1914, the defendant began to manufacture and sell the universal joints covered by the patent and application and continued to do so until the bringing of the suit but that the defendant was greatly in default in the payment of the royalties or license fees agreed upon.

A number of common counts were also attached to the declaration.

To the special count of the declaration the defendant filed a special plea in which it was set out that the contract or agreement was not to be performed within one year from the making of it, to-wit, December 30, 1914, and that the contract or agreement was not reduced to writing and was therefore, unenforceable under the Statute of Frauds.

The plaintiff filed a replication to this plea setting out that she had, on her part, fully and completely performed the contract within one year from its date and, therefore, that the Statute of Frauds did not apply.

The defendant demurred to this replication.

That part of the Statute of Frauds applicable to this case is found in Section 2626 of the Revised Code of Delaware of 1915:

"No action shall be brought whereby to charge any person * * * upon any agreement that is not to be performed within the space of one year from the making thereof * * * unless the same shall be reduced to writing, or some memorandum, or note thereof, shall be signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized in writing. * * *"

The demurrer is overruled.

Hugh M. Morris and Ivan Culbertson for plaintiff.

William G. Mahaffy and Charles F. Curley for defendant.

RICHARDS and RODNEY, J. J., sitting.

OPINION

RODNEY, J.

This case raises for the first time in Delaware, the precise question whether an oral contract which by its terms cannot be completely performed by both parties within a year comes within the Statute of Frauds when the complaining party could and did within the year fully and completely perform his part of the agreement.

Our Statute is almost the exact counter part of Section 4 of the English Statute of 29 Charles II, and was adopted by our Colonial Assembly in 1752. It is suggested by the plaintiff that because the Delaware Statute was adopted from the English Law that the English decisions construing their own act have peculiar weight in this case. It is only necessary to suggest that the Delaware Statute was adopted many years before any construction of the English Act that we have seen pertinent in this case and these cases, therefore, are entitled to that measure of respect that their reasoning warrants.

Because, however, our Statute of Frauds was essentially a re-enactment of the English Statute, it seems logical first to consider the construction placed there upon it. Of the English Rule there can be no doubt. 7 Halsbury Laws of England, p. 366. Beginning with Donellen v. Read, 3 B. & Ad. 899, 23 E.C.L. 215, 6 Eng. Rul. Cas. 298, 110 Eng. Reprint 330, the English cases have all consistently held that the Statute of Frauds only applied to cases where the contract was wholly executory on both sides; that the Statute was no defense where it appeared that the contract was to be and had been fully performed by the plaintiff within the year even though complete performance could not be made by the defendant until after the expiration of the year. Donellen v. Read was followed by Cherry v. Heming, 4 Exch. 631; Miles v. New Zealand Alford Co., 32 Ch. Div. 266; Bevan v. Carr, 1 Cababe & Ellis 499; Smith v. Neale, 2 C. B. (N. S.) 67. See, also, Bracegirdle v. Heald, 1 B. & Ad. 722; Reeve v. Jennings, 2 K. B. (1910) 522.

In Smith v. Neale the facts were somewhat similar to the case at bar. Here the plaintiff had assigned a patent to defendant reserving a percentage of profits of manufacture covering a number of years. As indicated by the head note the Court held:

"* * * An agreement whereby all that is to be done by the plaintiff constituting one entire consideration for the defendants promise is capable of being performed within the year and no part of what the plaintiff is to do constituting such consideration is intended to be postponed until after the expiration of the year is not within the fourth section of the Statute of Frauds notwithstanding the performance on the part of the defendant is or may be extended beyond that period."

Turning then from the English authorities we find a vast preponderance of American cases adopting and approving the same rule. Some of the general authorities where these citations are collected are 27 C. J. 350, 356; 8 A. & E. (1st Ed.) 692; 29 A. & E. (2d Ed.) 943, under heading of Verbal Agreements; City of Tyler v. St. Louis Southwestern R. Co., 99 Tex. 491, 91 S.W. 1, 13 Ann. Cas. 916, and note; East Tennessee Tel. Co. v. Paris Electric Co., 156 Ky. 762, 162 S.W. 530, Ann. Cas. 1915C, 548, and note; Seddon v. Rosenbaum, 85 Va. 928, 9 S.E. 326, 3 L. R. A. 337, and note; 6 Eng. Rul. Cas. 297; 1 Williston on Contracts, § 504; 2 Elliott on Contracts, § 1289, etc.; 2 Page on Contracts, §§ 1295, 2240; Browne on Statute of Frauds (5th Ed.), p. 385; 1 Reed on Statute of Frauds, § 206, etc.; Smith on Frauds, § 352, and note.

It is vain to attempt to disguise the fact that the rule adopted in England and some twenty odd states of this Union has been severely and ably criticized. In Massachusetts, Vermont, Michigan, and to some extent in New York, the Courts have refused to accede to the doctrine and Marcy v. Marcy, 9 Allen (Mass.) 8, and Pierce v. Paine's Estate, 28 Vt. 34, leave little to be added in support of the minority view. The opinion of Chief Justice Bigelow in Marcy v. Marcy, supra, seems in particular to be approved in Browne Statute of Frauds, § 290, 1 Reed Statute of Frauds, and in the excellent article in 29 Amer. Law Review 481.

Before listing some of the authorities reaching the same conclusion reached by this Court, a short discussion of the underlying principles may not be inappropriate.

The Statute of Frauds, we think, was only intended to operate upon agreements executory in character. The consideration moving to and the obligations assumed by each party made the agreement executory and when these obligations could not be performed within a year the Statute of Frauds required that they be reduced to writing to be binding upon a party. When, however, the agreement contemplates one party immediately, fully and completely complying with his entire obligation and he does so immediately comply and there remains nothing to be done by the other but the payment of money pursuant to the agreement then the agreement has ceased to be executory in character and has become executed. Hollis v. Morris, 2 Harr. 3. In Donovan v. Maloney, 3 Boyce (26 Del.) 453, 84 A. 1032, ^[1] it was held that an agreement to enter into a lease was an executory contract and within the Statute of Frauds but if the plaintiff delivered possession pursuant to the contract the executory contract became executed and the letting became a yearly one and not within the statute. Why, in the present case, should not a plaintiff be entitled to recover upon a contract which he has completely performed? The defendant has received the full benefit--not of an implied contract, but of an express one. He has received everything that the express contract stipulated that he should receive and nothing remains to be done on his part but the payment of money. Nor do we see any substance in the minority rule. In almost every case where recovery upon the contract has been refused it has been suggested that a recovery could be had under quantum meruit or quantum valebant counts. It has been said that any other rule "promotes rather than prevents fraud." See note 49 A. L. R. 1121. In these cases the contract price has always been admitted as evidence of an admission by the parties of value and the only discussion has been as to whether the contract alone fixes the price or whether it is only to be considered together with other testimony of value. ^[1] Now if the amount of the contract price is admissible under the quantum meruit or quantum valebant counts and if the fixation and payment of the contract price be all that remains to be...