Hudson v. Venture Industries, Inc.

• Decision Date: 14 February 1979
• Docket Number: No. 34187,34187
• Citation: 243 Ga. 116,252 S.E.2d 606
• Parties: HUDSON v. VENTURE INDUSTRIES, INC., et al.
• Court: Georgia Supreme Court

Page 606

252 S.E.2d 606

243 Ga. 116

HUDSON v. VENTURE INDUSTRIES, INC., et al.

No. 34187.

Supreme Court of Georgia.

Argued Jan. 8, 1979.

Decided Jan. 24, 1979.

Rehearing Denied Feb. 14, 1979.

Brinson, Askew & Berry, Robert M. Brinson, Robert N. Farrar, Atlanta, for appellant.

Sutherland, Asbill & Brennan, Thomas A. Cox, Alfred A. Lindseth, D. R. Cumming, Jr., Atlanta, for appellees.

UNDERCOFLER, Presiding Justice.

This certiorari presents the question whether leaving a job for a higher paying one is such part performance as will take an oral contract of employment out of the statute of frauds. Hudson reluctantly left his position with a prior company after a recruitment effort by Venture Industries, for a five year contract at an increased salary and generous fringe benefits. The contract was not reduced to writing, but Hudson worked for over two years for Venture Industries before being terminated. He sued for the value of the remaining term of employment under the alleged oral contract. Summary judgment was granted for Venture Industries by the trial court and affirmed by the Court of Appeals. Hudson v. Venture Industries, 147 Ga.App. 31, 248 S.E.2d 9 (1978). We granted certiorari and affirm. Leaving lucrative employment for a higher paying job does not constitute such part performance of an oral contract subject to the statute of frauds that will take the contract out of the statute.

Code Ann. § 20-401(5) states: "To make the following obligations binding on the promisor, the promise must be in writing, signed by the party to be charged therewith, or some person by him lawfully authorized, viz: . . . (5) Any agreement . . . that is not to be performed within one year from the making thereof." According to Corbin, "(t)he purpose of . . . (the statute of frauds) was to prevent the foisting of an obligation of specified classes by perjury upon one who had never assented to assume it." 2 Corbin on Contracts § 275 at p. 3.

Code Ann. § 20-402(3), however, provides that the "foregoing section (Code Ann. § 20-401) does not extend to the following cases, viz: . . . (3) When there has been such part performance of the contract as would render it a fraud of the party refusing to comply, if the court did not compel performance." Our inquiry is directed at this section.

" The true rule is believed to be that, wherever there has been a 'part performance' that is of such a character as to make the restitutionary remedy ¹ wholly inadequate, and the facts are such that it is what the courts call a 'virtual fraud' for the defendant to refuse performance, equitable remedies are thereby made available to the injured party on the same terms as in other cases. The proof of the oral contract must be clear and convincing, the performance sought must be of a kind that courts of equity ordinarily feel competent to compel, and other similar conditions of the right to equitable relief must exist. In the great majority of the cases holding that part performance does not take a case out of the one-year clause, the facts did not fulfil these requirements. Most often they are cases of a contract for services for stated wages." 2 Corbin on Contracts § 459 at pp. 583-584. (Footnotes in original omitted; footnote added.)

In Georgia, the courts have adhered to the fraud requirement, but recovery under Code Ann. § 20-402(3) has not been limited to cases in which specific performance is sought, and recovery of damages has been allowed in contracts of employment. Barnett Line of Steamers v. Blackmar & Chandler, 53 Ga. 98 (1874); Rader v. Rayette-Faberge, Inc., 123 Ga.App. 328, 181 S.E.2d 83 (1971); Piedmont Life Ins. Co. v. Bell, 103 Ga.App. 225, 119 S.E.2d 63 (1961); Pacific Mut. Life Ins. Co. v. Caraker, 31 Ga.App. 707, 121 S.E. 876 (1924); Stone Mtn. Granite Corp. v. Patrick, 19 Ga.App. 269, 91 S.E. 286 (1917); 2 Corbin on Contracts § 459 at p. 583, n. 93.

The part performance required by Code Ann. § 20-402(3), however, must be essential to the contract, that is, required by its terms, such that a benefit is conferred upon the employer, with a consequent loss to the employee which renders the court's refusal to enforce the contract tantamount to a fraud upon the employee. E. g., Barnett Line of Steamers v. Blackmar & Chandler, supra; Utica Tool Co. v. Mitchell, 135 Ga.App. 635, 218 S.E.2d 650 (1975); Norman v. Nash, 102 Ga.App. 508, 116 S.E.2d 624 (1960); Cofer v. Wafford Oil Co., 85 Ga.App. 444, 69 S.E.2d 674 (1952); Waller v. American Life Insurance Co., 75 Ga.App. 76, 41 S.E.2d 910 (1947); Yarborough v. Hi-Flier Manufacturing Co., 63 Ga.App. 725, 12 S.E.2d 133 (1940); White v. Simplex Radio Co., 61 Ga.App. 157, 5 S.E.2d 922 (1939); Dameron v. Liberty Nat. Life Ins. Co., 56 Ga.App. 257, 192 S.E. 446 (1936); Neuhoff v. Swift & Co., 54 Ga.App. 651, 188 S.E. 831 (1936); Pacific Mut. Life Ins. Co. v. Caraker, supra. Thus, the part performance shown must be consistent with the presence of a contract and inconsistent with the lack of a contract.

It is clear that mere entry on employment is insufficient part performance to satisfy this requirement. Utica Tool Co. v. Mitchell, supra; Norman v. Nash, supra; Lewis v. Southern Realty Invest. Corp., 42 Ga.App. 171, 155 S.E. 369 (1930); Bentley v. Smith, 3 Ga.App. 242, 59 S.E. 720 (1907). It has also been held that, even with such entry, refusal of another offer is not sufficient part performance under Code Ann. § 20-402(3). Utica Tool Co. v. Mitchell, supra; Morris v. Virginia-Carolina Chemical Corp., 48 Ga.App. 702, 173 S.E. 486 (1933). Nor is moving to a new location and taking on employment adequate to remove an oral contract from the statute of frauds. Norman v. Nash, supra; Bentley v. Smith, supra; Marston v. Downing, 73 F.2d 94 (5th Cir. 1934). The rationale underlying these cases is that these acts, entry on employment, moving, and refusal of another offer, are, as stated in Utica Tool Co. v. Mitchell, supra, 135 Ga.App. at p. 637, 218 S.E.2d at 652, "merely preparatory or preliminary to the performance of a contract terminable at the will of either party, . . ." and not a substantial act essential to an oral contract. These acts do not verify the probable existence of the contract. For this reason, Alexander-Seewald Co. v. Marett, 53 Ga.App. 314, 185 S.E. 589 (1936), which holds to the contrary and is...