Nyhus v. Travel Management Corporation

Decision Date11 August 1972
Docket NumberNo. 23264.,23264.
Citation466 F.2d 440,151 US App. DC 269
PartiesN. Sidney NYHUS, Appellant, v. TRAVEL MANAGEMENT CORPORATION.
CourtU.S. Court of Appeals — District of Columbia Circuit

COPYRIGHT MATERIAL OMITTED

Mr. David A. Donohoe, Washington, D. C., with whom Messrs. Worth Rowley and Steven K. Yablonski, Washington, D. C., were on the brief, for appellant.

Mr. Kevin Charles, Washington, D. C., for appellee.

Before FAHY, Senior Circuit Judge, and ROBINSON and WILKEY, Circuit Judges.

SPOTTSWOOD W. ROBINSON, III, Circuit Judge:

N. Sidney Nyhus appeals from a summary judgment1 in favor of his former employer, Travel Management Corporation (TMC), in Nyhus' suit for damages on account of TMC's allegedly wrongful refusal to issue shares of its common stock claimed by Nyhus under the terms of his employment contract. The District Court grounded its disposition on the three-year statute of limitations applicable to contract actions in the District of Columbia,2 holding that an alleged oral agreement of the parties to defer delivery of the stock until Nyhus' demand therefor lacked a valid consideration, and so did not extend the time for suit.

A party moving for summary judgment has "the burden of clearly demonstrating that there is no material issue of fact and that he is entitled to judgment as a matter of law."3 Coactively, the other litigant "is entitled to the benefit of all favorable inferences that may reasonably be drawn from the evidence for the purpose of defeating summary judgment."4 The court's function is limited to ascertaining whether any factual issue pertinent to the controversy exists; it does not extend to resolution of any such issue.5 And to justify a grant of the motion, the record must show the movant's right to it "with such clarity as to leave no room for controversy,"6 and must demonstrate that his opponent "would not be entitled to prevail under any discernible circumstances."7 Encountering, as we do, substantial factual issues as to whether the alleged oral agreement of the parties was valid and whether it effectively extended the statutory period sufficiently to render Nyhus' suit timely, we reverse and remand for further proceedings.

I

In aspects which are critical to any trial on the merits, the facts are seriously in dispute.8 On review of the propriety of the summary judgment awarded to TMC, however, we must read the record — and in this opinion we portray it9 — in the light most favorable to Nyhus.10 So viewed the backdrop against which we consider the legal problems presented becomes relatively simple although the problems themselves remain considerably less so.

In 1962, the parties entered into a written unsealed contract providing for Nyhus' employment by TMC in an executive capacity and stipulating the terms and duration of the employment.11 The contract set forth a formula by which Nyhus' salary was to be computed, and conferred options as to its payment in cash or in common stock of the employer. By mutual consent, the employment relation was terminated on May 31, 1964, at which time Nyhus was entitled to a block of TMC stock12 as a part of his compensation for the previous six-month period.

Shortly prior to close of the employment, Nyhus discussed his stock entitlement with Edward Kingman, TMC's treasurer.13 Nyhus expressed the fear that income taxes on the stock, as he conceived them, would impose a financial strain beyond his then present means.14 He proposed that, instead of issuing certificates for the stock at that time, a notation of TMC's obligation be made on the corporate books, and that delivery of the stock await Nyhus' call therefor at such future time as he might become financially able to face the tax consequences. Kingman, characterizing the proposal as a "common sense approach," agreed and stated that he would take the steps necessary to effectuate it.15 This arrangement was never reduced to writing.

On January 15, 1968, Nyhus made his first request for issuance of certificates for the stock. Similar demands were made on several occasions thereafter and TMC refused them all. Nyhus brought his action in the District Court on January 30, 1969. In its answer to the complaint, TMC coupled a general denial with a plea of the statute of limitations,16 and later moved for summary judgment solely on the ground that the suit was barred by the statute.

The District Court sustained that defense and indicated from the bench its reasons. There was no bailment of the stock, the court said, for "there was no delivery. There was no property involved." Rather, by the court's assessment, "the suit in question is simply a suit on a contract and the statute has run on the contract." The court explicated "that the so-called accommodation was not a new contract. There was no consideration for that, unless it be a mutual agreement to assist the plaintiff to avoid his tax obligations, and that is illegal consideration and such a contract would be unenforceable." TMC's motion for summary judgment was accordingly granted, and the case was dismissed.

II

We agree unreservedly with the District Court that no bailment of the stock in question ever arose. A sine qua non of bailment is possession by one of the personal property of another;17 the first essential is a subject matter in esse.18 The record here negates any notion that TMC at any time held stock — as existing property — for Nyhus. An affidavit submitted by TMC in support of its motion for summary judgment declares that no certificate for the stock which Nyhus claims was ever issued. Not only has Nyhus not controverted that declaration, but his theory throughout this litigation has been that TMC was under a duty as a contractor, rather than as a bailee, to deliver the stock on demand. Like the District Court, we accept the relationship of the parties as one purely of contract.

In the District of Columbia, suit on a contract not under seal must ordinarily be commenced within three years from the time the cause of action accrues.19 The stock to which Nyhus laid claim represented a portion of the compensation he earned during the six-month period ending May 31, 1964. On the latter date, Nyhus' right to the stock vested under the terms of his employment contract. He did not institute suit for alleged breach of TMC's obligation to deliver the stock until January 30, 1969. It is evident that if nothing more appeared, the action was time-barred.

By Nyhus' version, however, there was considerably more. He says that in May, 1964, he informed TMC of his inability to absorb income taxes on the stock, and requested that delivery be put off until his financial pressures sufficiently eased. He says further that TMC orally concurred in the proposal, and that that concurrence amounted to an agreement to delay delivery pending his future call. Nyhus first demanded the stock on January 15, 1968, and, following TMC's refusal to issue it, instituted his action slightly more than a year later. Arguing that the statute began to run only when he asked for the stock, he urges us to hold that his suit was well within the statutory three-year period.

By our analysis, Nyhus confronts four problems. The initial question, which the District Court answered in the negative, is whether the agreement to defer issuance of the stock was accompanied by such consideration as would enable it to serve as a basis for postponing the running of the statute. The postponement which Nyhus requested and to which TMC acceded was an arrangement with a view to putting off Nyhus' income tax liability — through deferral of delivery — to a future tax period, thus developing the further question whether it was illegal. The agreement between Nyhus and TMC was oral, and an additional question is whether an unwritten understanding to suspend the time of performance of a contract can effect the running of the statute. Lastly, the understanding was at most to delay issuance of the stock until Nyhus called for it, and the final question is whether a demand was necessary to activate the statute. To a consideration of these questions, in the order mentioned, we now proceed.

III

The power to contract is also the power to modify the effect of prior agreements by mutual consent.20 We have no doubt as to the parties' prerogative and ability to contract to alter their rights under an existing agreement and ingraft new terms upon it.21 Acting concurrently, they are as free to change their contract after making it as they were to make it in the first instance.22 Nyhus invokes his employment contract as the basis for his contention that TMC owed him stock as a part of the compensation he had earned. Nyhus says that the deferral arrangement to which TMC agreed changed the time for performance of that obligation to the point at which he demanded delivery. It is evident that if this theory is correct, Nyhus' action was instituted in the District Court in time.

To this approach TMC registers the initial objection that its alleged undertaking to postpone delivery of the stock lacked any consideration whatsoever and, as previously stated, the District Court so held. We do not doubt that a prior contract is effectively modified by a new agreement only if the latter possesses all of the essential elements of a valid contract.23 Like any other contract, the modifying agreement must be supported by a consideration,24 and that is no less so where the office of the agreement is to extend the time for performance.25

Ordinarily, the agreement of contracting parties to extend the time for the contract's performance finds its consideration in the mutual promises of the parties.26 Normally there is, on the one side forbearance of the right to insist upon performance until arrival of the new date and, on the other, benefit derived from postponing performance, and the promise on each side is consideration for the promise on the other.27 It may well be...

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