McKinney v. National Dairy Council

• Decision Date: 28 May 1980
• Docket Number: Civ. A. No. 75-5379-K.
• Parties: William B. McKINNEY, Plaintiff, v. NATIONAL DAIRY COUNCIL, Defendant.
• Court: U.S. District Court — District of Massachusetts

491 F. Supp. 1108

William B. McKINNEY, Plaintiff, v. NATIONAL DAIRY COUNCIL, Defendant.

Civ. A. No. 75-5379-K.

United States District Court, D. Massachusetts.

May 28, 1980.

Edward S. Englander, Boston, Mass., for plaintiff.

Paul W. Goodrich, Morrison, Mahoney & Miller, Boston, Mass., for defendant.

MEMORANDUM

KEETON, District Judge.

This matter is before the court on motions for judgment.

At trial four special interrogatories were submitted to the jury, and the jury answered all four favorably to plaintiff McKinney.¹ The court conferred with counsel in drafting the interrogatories, and counsel agreed to the form of the special interrogatories as ultimately submitted, defendant National Dairy Council ("NDC") reserving its objection that the evidence presented no issue for jury consideration. Pursuant to its reserved objection, NDC now challenges McKinney's right to have judgment entered for him on the basis of the answers to the special interrogatories.

I. Sufficiency of the Evidence with Respect to Question 1

In answer to the first special interrogatory, the jury found that McKinney and NDC entered into a contract "under the terms of which, in the absence of cause for termination, McKinney was to work for National Dairy Council either until he died, or until the National Dairy Council ceased to exist, or until his normal retirement date (April 1, 1977), whichever occurred first."

NDC first contends that there was insufficient evidence to support the jury's affirmative answer to this interrogatory.

The evidence adduced at trial regarding the contract between NDC and McKinney, viewed in the light most favorable to McKinney, was as follows:

1. McKinney placed a newspaper advertisement seeking employment which stated "Interested in change which would be the third and must be the last." (Plaintiff's Exhibit No. 1.)

2. NDC responded to this advertisement. (Stipulation of parties.)

3. McKinney was interviewed in New York by Mr. Milton Hult, then president of NDC. At this interview there was a general discussion of the available position and McKinney's qualifications.

4. A second meeting between McKinney and Hult occurred. In the interim McKinney had received three job offers, one of which was from the McCann-Erickson advertising agency, which had offered McKinney $1000 more per year than the maximum NDC was able to offer. At this second meeting the McCann-Erickson offer and McKinney's desire for job security were discussed. McKinney said he was primarily interested in a job that would last for the remainder of his career. Hult indicated that that was what NDC had in mind too and that the NDC job would be more stable and longer-lasting than the McCann-Erickson job.

5. McKinney accepted a position with NDC as Eastern Regional Manager.

6. In a meeting in Hult's office in 1961 in the context of a discussion of another employee's tendency to change jobs, Hult or another said something to the effect that there was no comparable concern regarding McKinney since he was there for good.

This evidence was sufficient to permit an inference that McKinney and NDC entered into a contract an express term of which was that McKinney was to work for NDC until his normal retirement date. There was, however, no evidence of any communication between the parties expressly about the possibility or effect of NDC's ceasing to exist or McKinney's dying before McKinney reached his normal retirement date.

When the parties have reached an agreement otherwise sufficient to constitute a contract but have had no communication regarding a matter as to which their legal rights must be determined, the missing element may be supplied either by proof of an implied-in-fact understanding between them or by operation of a rule of law. There is no evidence in the present case of an implied-in-fact understanding regarding the possibility of NDC's ceasing to exist or McKinney's dying before McKinney reached retirement age. Unless unenforceable under the statute of frauds, however, a contract for personal services is not invalidated by the absence of any express or implied agreement on these subjects. As a matter of law, in the absence of an express or implied agreement to the contrary, if either of these events occurs the period during which the employee must perform services and for which the employer must pay terminates. A distinction may be drawn, in describing the legal consequence, between determining that performance of the contract was complete upon the occurrence of one of these events and determining that further performance was excused. See Part II, infra. In whatever way the legal consequence is described, however, that consequence follows by operation of law and not in fulfillment of an agreement in fact, express or implied. If the rule of law that produces this conclusion is regarded as one of the terms of the contract between the parties (rather than being merely a part of the law applicable to the contract), it is a term implied in law as distinguished from one agreed upon in fact, whether expressly or impliedly.

In summary, the court concludes that the evidence was sufficient to support an affirmative answer to Question 1 since, in relation to this question, it makes no difference whether the terms of the contract dealing with the effect of McKinney's death or NDC's ceasing to exist before McKinney's normal retirement date were implied in fact or instead in law.

II. Statute of Frauds

NDC's second contention is that the contract found by the jury in its affirmative answer to Question 1 is invalid or unenforceable under the statute of frauds.

With respect to the question whether the contract was within the statute of frauds, the distinction between terms implied in law and those implied in fact may be significant. In light of the position taken on the issues addressed in Part I, supra, the contract under scrutiny is an oral contract between McKinney and NDC under the express and implied-in-fact terms of which McKinney was to work for NDC until his normal retirement date, subject to such other terms as the law imposes. The affirmative answer to Question 1 cannot be taken as answering the question whether the contract is within the statute of frauds. That issue is a question of law for the court to resolve.

Two inquiries must be made: (1) Is the contract by its terms within the statute? (2) Are there sufficient written memoranda of the contract to take it outside the statute?

The parties have devoted considerable attention to the question whether the statute of frauds of Massachusetts, Illinois, or New York governs this case. As both parties recognize, the point of departure for this inquiry is Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), which indicates that a federal district court sitting in diversity is to apply the conflict of law rules of the forum state. Past this point, however, the parties do not agree.

Relying on the conflicts rule that the procedural law of the forum need never be displaced, McKinney characterizes the Massachusetts statute of frauds as procedural, citing Townsend v. Hargraves, 118 Mass. 325 (1875), Emery v. Burbank, 163 Mass. 326, 39 N.E. 1026 (1895), Porter v. Reid, 79 F.Supp. 898 (D.Mass.1948), and other cases, and asserts that therefore the Massachusetts statute of frauds governs in this case. The cases cited by McKinney, however, are distinguishable. In none of them was the Massachusetts statute of frauds applied to validate and enforce a contract that was invalid or unenforceable under the law of the place where it was made. Rather, the cases cited by McKinney indicate that the Massachusetts statute of frauds does not make oral contracts invalid but merely unenforceable, and that Massachusetts courts have on occasion refused to enforce a contract valid where made if it comes within the Massachusetts statute.

NDC contends that the Massachusetts conflict rule is that the law of the place where the contract was made governs the issue of validity of the contract, citing Molinar v. Western Electric Co., 525 F.2d 521 (1st Cir. 1975), cert. denied, 424 U.S. 978, 96 S.Ct. 1485, 47 L.Ed.2d 748 (1976), and Dicker v. Klein, 360 Mass. 735, 277 N.E.2d 514 (1972), that the contract at issue, if made at all, was made in New York, and that the New York statute of frauds therefore governs. The evidence at trial would support a finding that the contract was made in New York and would not support a finding that the contract was made elsewhere. To this extent NDC's contention is correct. However, in a case more recent than those cited by NDC the Massachusetts Supreme Judicial Court indicated that it was ready to discard the place-of-making test and adopt a more functional approach such as "interest" analysis or the "most significant relationship" test of the Restatement (Second) of Conflict of Laws (1971). Choate, Hall & Stewart v. SCA Services, Inc., 79 Mass.Adv.Sh. 1877, ___ Mass. ___, 392 N.E.2d 1045 (1979). This court predicts that when squarely confronted with the issue the Supreme Judicial Court will in fact adopt "a more functional approach" to choice of law in the contracts context.² Although the Supreme Judicial Court might, if adopting a test of this general nature, define its details in a way different from the Restatement Second formulation, no suggestion appears in the arguments that such a variation would be material to the outcome in the present case. In considering the outcome, then, under an "interest" analysis or "most significant relationship" test, this court will turn to the formulation in the Restatement (Second) of Conflict of Laws (1971).³

Section 141 of the Restatement Second directs that the rules of §§ 187-188 apply to the statute of frauds question. Since the parties here have not chosen the law of a particular state to govern their contractual rights and duties, § 187 is inapplicable and § 188 controls. An evaluation...