Farash v. Sykes Datatronics, Inc.
Decision Date | 12 July 1983 |
Citation | 465 N.Y.S.2d 917,59 N.Y.2d 500,452 N.E.2d 1245 |
Parties | , 452 N.E.2d 1245 Max M. FARASH, Appellant, v. SYKES DATATRONICS, INC., Respondent. |
Court | New York Court of Appeals Court of Appeals |
Plaintiff claims that he and defendant entered an agreement whereby defendant would lease a building owned by plaintiff, who was to complete its renovation and make certain modifications on an expedited basis. Defendant, however, never signed any contract and never occupied the building. Plaintiff commenced this litigation, and defendant unsuccessfully moved to dismiss for failure to state a cause of action. On appeal, the Appellate Division, 90 A.D.2d 965, 456 N.Y.S.2d 556, reversed, with two Justices dissenting in part. For the reasons that follow, we now modify.
Plaintiff pleaded three causes of action in his complaint. The first was to enforce an oral lease for a term longer than one year. This is clearly barred by the Statute of Frauds (General Obligations Law, § 5-703, subd. 2). The third cause of action is premised on the theory that the parties contracted by exchanging promises that plaintiff would perform certain work in his building and defendant would enter into a lease for a term longer than one year. This is nothing more than a contract to enter into a lease; it is also subject to the Statute of Frauds (see Geraci v. Jenrette, 41 N.Y.2d 660, 664, 394 N.Y.S.2d 853, 363 N.E.2d 559). Hence, the third cause of action was properly dismissed.
Plaintiff's second cause of action, however, is not barred by the Statute of Frauds. It merely seeks to recover for the value of the work performed by plaintiff in reliance on statements by and at the request of defendant. This is not an attempt to enforce an oral lease or an oral agreement to enter a lease, but is in disaffirmance of the void contract and so may be maintained (see Baldwin v. Palmer, 10 N.Y. 232, 235). That defendant did not benefit from plaintiff's efforts does not require dismissal; plaintiff may recover for those efforts that were to his detriment and that thereby placed him in a worse position (see Kearns v. Andree, 107 Conn. 181, 139 A. 695; 5 Corbin, Contracts, § 1107; 12 williston Contracts [3d ed.], § 1480). "The contract being void and incapable of enforcement in a court of law, the party * * * rendering the services in pursuance thereof, may treat it as a nullity, and recover * * * the value of the services" (Erben v. Lorillard, 19 N.Y. 299, 302; accord Day v. New York Cent. R.R. Co., 51 N.Y. 583, 590).
The dissent's primary argument is that the second cause of action is equivalent to the third, and so is also barred by the Statute of Frauds. It is true that plaintiff attempts to take the contract outside the statute's scope and render it enforceable by arguing that the work done was unequivocally referable to the oral agreement. This should not operate to prevent recovery under a theory of quasi contract as a contract implied by law, which "is not a contract at all but an obligation imposed by law to do justice even though it is clear that no promise was ever made or intended" (Calamari and Perillo, Contracts [2d ed.], § 1-12, p. 19). Obviously, the party who seeks both to enforce the contract that is unenforceable by virtue of the Statute of Frauds and to recover under a contract implied in law will present contradictory characterizations. This, however, is proper in our courts where pleading alternative theories of relief is accepted. Moreover, the existence of any real promise is unnecessary; plaintiff's attempt to make his acts directly referable to the unenforceable contract simply is irrelevant.
The authorities all recognize that a promisee should be able to recover in the present situation. (5 Corbin, Contracts, p. 578 [n. omitted] ). Thus, plaintiff may recover for those expenditures he made in reliance on defendant's representations (see id., §§ 998, 1011) and that he otherwise would not have made. The Restatement provides that an injured party who has not conferred a benefit may not obtain restitution, but he or she may "have an action for damages, including one for recovery based on * * * reliance" (Restatement, Contracts 2d, § 370, Comment a ). "[T]he injured party has a right to damages based on his reliance interest, including expenditures made in preparation for performance or in performance, less any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been performed" (Restatement, Contracts 2d, § 349). The Restateme recognizes an action such as is involved here (see Restatement, Contracts 2d, §§ 139, 349, Comment b ).
The dissent relies on Bradkin v. Leverton, 26 N.Y.2d 192, 309 N.Y.S.2d 192, 257 N.E.2d 643 and Miller v. Schloss, 218 N.Y. 400, 113 N.E. 337 for the proposition that plaintiff can recover only if there is an actual benefit to the defendant. Those cases do not state that there can be no recovery for work performed in the absence of any real benefit to defendant. As stated by Professor Williston (12 Williston, Contracts [3d ed.], pp. 282-284, 286-287 [nn. omitted] ):
A lesson in this area can be taken from Professors Calamari and Perillo: (Calamari and Perillo, Contracts [2d ed.], § 15-4, p. 574 [nn. omitted]; see, also, id., § 19-44; Perillo, Restitution in a Contractual Context, 73 Col.L.Rev. 1208, 1219-1225).
We should not be distracted by the manner in which a theory of recovery is titled. On careful consideration, it becomes clear that the commentators do not disagree in result, but only in nomenclature. Whether denominated "acting in reliance" or "restitution," all concur that a promisee who partially performs (e.g., by doing work in a building or at an accelerated pace) at a promisor's request should be allowed to recover the fair and reasonable value of the performance rendered, regardless of the enforceability of the original agreement.
Accordingly, the order of the Appellate Division should be modified, with costs to appellant, by reinstating plaintiff's second cause of action and, as so modified, affirmed.
Plaintiff's second cause of action alleges that "[p]laintiff, in reliance on statements made [by] the defendant and at its request, performed work, provided labor and material to the defendant" and that "[d]efendant has failed to compensate the plaintiff for monies and other expenses incurred by the plaintiff in preparing the property at 49 East Avenue to the defendants' needs", causing damage to the defendant in the amount of $400,000.
The majority hold that this cause of action is not barred by the Statute of Frauds as it "merely seeks to recover for the value of the work performed by plaintiff in reliance on statements by and at the request of defendant" and does not "attempt to enforce an oral lease or an oral agreement to enter [into] a lease." Inasmuch as the record before us on this motion for summary judgment clearly demonstrates that this cause of action is barred by the Statute of Frauds, I must dissent.
Plaintiff alleges that "in reliance on statements...
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