Osburn v. Deforce

258 P. 823, 257 P. 685, 122 Or. 360, 1927 Ore. LEXIS 171

• Court: Oregon Supreme Court
• Decided: April 28, 1927
• Status: Published

Opinions

COSHOW, J.

The trial court erred in refusing to discharge the attachment: Ruby v. Whitten, 117 Or. 271 (243 Pac. 559); Neilson v. Title Guaranty & Surety Co., 101 Or. 262 (199 Pac. 948).

The principal issue involved in the appeal is the validity of the oral modification of the written contract between plaintiff and Elton O. DeForce. It is not controverted that the contract is within the statute of frauds.

“ * * Under the statute of frauds the rule is that parties to a written agreement coming within the provisions of the statute may not, by mere oral agreement, alter one or more of the terms thereof, and thus make- a new contract, resting partly in writing and partly in parol. Nor does it matter that the oral agreement affects only particulars of the contract which are not material, provided only it appears that the modification, even though slight, is tantamount to the substitution of a new contract for the old, and not merely to a waiver of its strict performance. *' * ” 27 C. J. 327, 328. 1 Williston on Contracts, §§ 593, 594, 599. In Neppach v. Oregon & Cal. R. R. Co., 46 Or. 374, 394 (80 Pac. 482, 7 Ann. Cas. 1035), relied on by plaintiff, it is said:

“ * * Ever since the decision of Lord Ellen-borough in Guff v. Penn, 1 Manle & S. 21, holding that a subsequent parol modification of the time of performance specified in a contract within the statute of frauds was valid, there has been much learning exhibited by judges and textwriters in the discussion of such question. The settled doctrine in England now seems to be contrary to that case, and it is now held that an agreement required by the statute of frauds to be in writing cannot be subsequently changed or modified as to the time of performance, or in any other respect, by an oral executory contract: * * The courts in other states, and probably a majority, deny the validity of such an agreement, unless acted upon by the parties, and hold that a part of a contract required by the statute to be in writing cannot rest in parol.”

In the cases of Sherman, Clay & Co. v. Buffum & Pendleton, 91 Or. 352 (179 Pac. 241), and McDaniels v. Harrington, 80 Or. 628 (157 Pac. 1068), the modification of written leases within the statute was upheld on the ground that the modification was for a period of less than one year and therefore not within the statute. In the case of McDaniels v. Harrington, above, the modification was also sustained on the further ground that not to do so would permit the use of the statute of frauds to perpetrate fraud. In Kingsley v. Kressly, 60 Or. 167, 173 (118 Pac. 678, Ann. Cas. 1913E, 746), we find:

“As to the effect of a subsequent parol modification of an agreement of the sale of real estate, the rule is that an agreement, required by the statute of frauds to be in writing, cannot be subsequently changed or modified as to the time of performance by any oral executory contract. * * ”

To the same purport are Scott v. Hubbard, 67 Or. 498 (136 Pac. 653), and Keller v. Bley, 15 Or. 429 (15 Pac. 705). The subject matter is discussed at great length in notes under Schaap v. Wolf (173 Wis. 351, 181 N. W. 214), 17 A. L. R., beginning on page 9; also in notes to Liebermam v. Templar Motor Co. (236 N. Y. 139, 140 N. E. 222), 29 A. L. R., beginning on page 1095. The modification of the contract in the instant case is within the statute of frauds. It is a contract not to be performed by its terms within a year. The modification relied upon by plaintiff was not induced by defendants’ intestate, the other party to the contract. The changes attempted to be made in the contract were made on the solicitation and for the benefit of plaintiff. Plaintiff was not put in a worse condition thereby. By the terms of the modification plaintiff was relieved from performing a part of his undertaking. He was also relieved from his guarantee, a material part of the contract. He contends that he substituted the offal of other canneries, for the Union Fishermen’s Co-operative Packing Co., and the Columbia River Packers Association. But his contract expressly prescribes that plaintiff “does hereby covenant and agree to use his best efforts to operate and conduct said business for the best interests and to the greatest profit he can for the first party (DeForce), to give all the time necessary for the proper operation, care and management of said business, # * .” Plaintiff guaranteed to obtain from Union Fishermen’s Cooperative Packing Co., Sanborn-Cutting Co.-, Colum bia River Packers Association and Booth Fisheries, contracts for the offal from their respective canneries for a period of three years. Plaintiff’s obligation required him to secure sufficient offal from the canneries to operate the oil works at a profit. It was his duty to secure the offal from the canneries he claimed to have substituted for Union Fishermen’s Co-operative Packing Co. and the Columbia River Packers Association without any modification of his original contract. The plaintiff then did nothing by virtue of the modification of the contract that he was not obligated to do by the original contract. Plaintiff claims that defendants’ intestate waived the terms of the original contract by permitting plaintiff to proceed on the contract as modified. In as far as that modified agreement was executed that contention is sustained. The execution of the modified contract and its acceptance by defendants’ intestate amounted to an accord and satisfaction. But unless the original contract can be modified by an oral executory contract, plaintiff cannot recover for damages on account of a breach of the modified contract. The modification of the contract releases plaintiff from securing the offal from two of the largest canneries in the vicinity of Astoria where the oil works are located. The canneries substituted are situated across the Columbia River at quite a distance from the oil works. It was a substantial change of the contract which contained the guarantee of the plaintiff to secure the offal from two of the most desirable canneries. The effect of the modification was to make a new contract. The new contract was not to be performed within a year. It was therefore within the statute of frauds and according to all the authorities invalid.

A large number of the authorities cited and discussed in the briefs of the parties to this appeal permit the modification of a contract within the statute of frauds where not to do so would operate as a fraud upon the party relying upon the modification. This principle is well illustrated in Neppach v. Oregon & Cal. R. R. Co., above. In the instant case the element of fraud is not present. Elton C. DeForce did nothing to induce the plaintiff to seek the modification. He simply acquiesced in plaintiff’s continuing as manager for a time, notwithstanding his inability to secure the offal from two of the largest canneries. DeForce received no benefit from the modification. He has done nothing that estops him from claiming the benefit of the statute of frauds. No conduct on his part induced the plaintiff to seek the modification. On the contrary the plaintiff himself sought the modification of the contract and for his sole benefit. There is no element of estoppel to be found in the conduct of Elton O. DeForce.

“"Where a party to a contract which is in force causes or prevents another party thereto from strictly performing the terms of the agreement, the former will not be permitted to avail himself of the default which he has thereby occasioned.” Scott v. Hubbard, 67 Or. 498, 505, 506 (136 Pac. 653).

Cross v. Ramdullah, 274 Fed. 762, cited in the extensive note in 17 A. L. R. 13, 14:

“ * * If the modification made by parol has been acted upon by the parties and the position of one of them has been changed for the worse in reliance on the modification, the other party will be denied the right to set up the statute of frauds and stand on the original agreement.” Rogers v. Maloney, 85 Or. 61, 64 (165 Pac. 357).

In the instant ease plaintiff was not pnt in any worse situation by the modification of the original contract. On the contrary he was released from performance in part of his covenants and guaranties. Defendants are, therefore, not prohibited from relying on the statute of frauds, except to the extent that the modified contract has been executed and the conduct of the parties thereunder constitutes an accord and satisfaction. The statutes of frauds does not operate on executed contracts.

Defendants predicated error on the court’s refusal to instruct the jury in effect that plaintiff’s conduct in prosecuting the suit to enjoin the defendants’ intestate from interfering with plaintiff’s management of the oil works constituted sufficient cause for plaintiff’s discharge. Defendants rely especially upon this allegation in plaintiff’s suit to enjoin defendants from such interference:

“That said defendants, and both of them, are incapable of adequately or efficiently attending to the affairs and business details of the DeForce Oil Works, and that the various canneries now selling and delivering their offal to the DeForce Oil Works, obtained under said contracts, threaten to and will discontinue such sale and delivery in the event the said defendants continue to interfere with the duties to be performed by the said plaintiff under his said contract, and if the said defendants neglect to properly conduct said oil works and promptly care for all offal to be delivered.”

The suit in equity was filed June 4, 1925. Some time prior to that date friction had arisen between the plaintiff and his employers, Elton C. DeForce and Mary H. DeForce. After the injunction was dissolved by the court, to wit: June 29, 1925, the De Forces discharged plaintiff. Plaintiff seeks to avoid the effect of his suit in equity as a cause of discharge by pleading in his reply and adducing evidence tending to show that he was in effect discharged prior to the institution of the suit in equity. But plaintiff is bound by the allegation in his complaint. He alleges that he was discharged on the twenty-ninth day of June, 1925. That is the date of the formal discharge. The friction between plaintiff and his employers might have been ehminated if plaintiff had recognized his employers’ authority and had not instituted that suit in equity. Plaintiff’s discharge took effect on the date of the formal notice: 1 Labatt’s Master and Servant, 582, 583.

We are of the opinion that plaintiff’s charges against his employers, set out in the complaint in the suit for injunction, as a matter of law justified the discharge of plaintiff. For that reason we think the court erred in submitting to the jury the issue as to the right of defendants to discharge plaintiff. Plaintiff breached his contract expressly and impliedly by instituting the suit in equity, publicly charging his employers with incompetency. In his agreement with Elton O. DeForce plaintiff undertook and agreed:

i “ # * to use his best efforts to operate and conduct said business for the' best interests and to the greatest profit he can for the first party, * * .”

In addition to the excerpt set out above from the complaint in equity plaintiff alleged in said complaint :

“That said Defendant Elton C. DeForce had for a number of years just previous to June, 1923, neglected his said business and had so conducted his personal habits and his business affairs to such an extent that he was unable and unwilling to take upon himself the active management of said plant and reorganize the same for the purpose of securing raw product and profitably selling the same or efficiently conducting said business.”

The making of this complaint and publishing it to the world as plaintiff did was calculated to injure defendants’ business. Plaintiff was the employee of the defendants’ intestate and his wife. The charges plaintiff made against them displayed a lack of fidelity to their business and disloyalty to them. Plaintiff had expressly contracted to do his utmost to build up his employers’ business. Every contract of employment implies an engagement on the part of the employee to be faithful to his employers’ interests and loyal to his employers. The charges made by plaintiff against his employers are the opposite of his implied contract with them.

Where the facts are not disputed and different inferences from the facts admitted or proved cannot be drawn reasonably therefrom the question of whether or not the discharge of an employee by his employer is lawful is for the court. If there is any dispute in the facts the question must then be presented to the jury with proper instructions.

” * * But many cases have also been decided upon the specific ground that the commission by the servant of any act which produces, or in the natural course of events is likely to produce, such detriment, is itself a breach of duty on his part. On this footing, culpable misconduct has been predicated, where the servant * * had made a wilful and deliberate attempt to injure his master’s business, where his acts or words had been such as to injure the master’s standing as a business man; # * 1 Labatt’s Master & Servant (2 ed.), 869.

For the objection, Messrs. G. C. & A. C. Fulton and Mr. James L. Hope. Contra, Mr. John W. Kaste and Mr. Nicholas Jaureguy.

“ * * But, as a general proposition, any aot of the servant which injures or has a tendency to injure his master’s business, interests, or reputation, will justify his dismissal. * * ” 39 O. J., § 79.

“What constitutes a good and sufficient cause for the discharge of a servant is a question of law, and where the facts are undisputed, it is for the court to say whether the discharge was justified. * * ” 39 C. J., § 128.

Von Heyne v. Tompkins, 89 Minn. 77 (93 N. W. 901, 904, 5 L. R. A. (N. S.) 524); Peniston v. Huber Co., 196 Pa. 580 (46 Atl. 934); Kendall v. West, 196 Ill. 221 (63 N. E. 683, 89 Am. St. Rep. 317).

18. Defendants contend that this court should determine the issues joined regarding defendants’ counterclaim. The counterclaim is for damages sustained by defendants for breach of the contract by plaintiff. We believe that a jury is better qualified to assess such damages, if any, than is this court. For that reason we decline to determine the question on the evidence brought here. It is not necessary to determine or discuss the other assignments of error.

The judgment is reversed and the ease remanded for further proceedings consistent with this opinion.

Reversed and Remanded.