Ray H. Gilliam v. Mike Kouchoucos, 161 Tex. 299

Mr. Justice Smith delivered the opinion of the Court. This suit involves the application of the Statute of Frauds,

Article 3995,

Section 5, 2to an oral contract of employment for the term of ten years, and where the testimony also shows that it was agreed that “this contract and agreement shall, however, terminate on the death of the operator.” The parties are in agreement as to the terms of the oral contract. The question here is whether the agreement is within the prohibition of the statute, notwithstanding the possibility of termination within less than a year by reason of respondent’s death. An analogous question was before this court in the case of Chevalier v. Lane’s, Inc., 1948, 147 Texas 106, 213 S.W. 2d 530, 6 A.L.R. 2d 1045.

In that case, the question was answered in the affirmative. In the present case the trial court sustained petitioner’s motion for an instructed verdict and rendered judgment that the respondent take nothing. The judgment was based solely on the ground stated in petitioner’s motion that the contract was within the prohibition of the statute. The Court of Civil Appeals reversed the judgment of the trial court, thereby holding that under the cases of Chevalier v. Lane’s, Inc., supra, and Wright v. Donaubauer, 137 Texas 473, 154 S.W. 2d 637, the contract was not within the prohibition of the Statute of Frauds.

In reaching its conclusion the court said: “Under the authorities, when, under the terms of an oral agreement, an employment is to close on a contingency which may happen within a year, the oral agreement is not within the statute. The ‘contingency’ in the instant contract is the possible death of appellant within one year from the date of the contract.

We think the parties had that contingency in mind when they agreed ‘This contract and agreement * * * shall, however, terminate on the death of the operator.’ ” 328 S.W. 2d 817. [Emphasis added.] We have concluded to reverse the judgment of the Court of Civil Appeals and affirm that of the trial court for the reasons now stated. The respondent contends that in the case of Chevalier v. Lane’s Inc., the court was considering an oral agreement which contained no reference to the possible death of plaintiff or other contingency that might prematurely terminate the arrangement.

Respondent reasons further that since the present agreement contains the language that “This contract and agreement shall, however, terminate on the death of the operator * * * ” the contract of employment for ten years is not within the prohibition of the statute, and such provision brings the case squarely within the rule that the statute does not apply where the agreement may, by its own terms, be fully performed within the year. In the Chevalier case, this court reaffirmed our holding in the ease of Wright v.

Donaubauer, supra, and, in doing so, said: “* * * Where the agreement may, by its own terms, be fully ‘performed’ within the year, as, for example, the agreement in Wright v. Donaubauer, * * * for employment during the term of a man’s life, the statute does not apply. * * *” The Court of Civil Appeals has construed this language, used by the court in Chevalier, and the holding in Wright v. Donaubauer, supra, to mean that the defeasance provision in the present agreement with reference to termination on death is equivalent to an alternative form of performance. With this construction we cannot agree.

When this court used the Wright v. Donaubauer case as an example, and expressly reaffirmed the holding in that case, it clearly stated the character of an agreement to which the statute would have no application. There the agreement was for employment during the term of a man’s life. In the present case, the contract of employment is for a term of ten years.

The statute relates to a contract “not to be performed within the space of one year from the making thereof.” It thus has application only to contracts which are terminated by performance, and does not apply to contracts which may be terminated within a year by some means other than performance. All personal service contracts are terminated by death. Therefore, the addition of the words “but the agreement shall terminate on the death of the operator,” added nothing.

The statute is applicable even where the parties expressly provide, as here, for the termination of the agreement in the case of death of either of the parties. We hold that the rule announced in the Chevalier case, supra, brings the present case within the prohibition of the statute. The fact that the parties expressed the result that otherwise would have occurred by operation of law does not take this case out of the Statute of Frauds. The result in the Chevalier case would not have been different had the agreement in that case contained a similar termination provision as we have here. In the case of Deevy v.

Porter et al., 11 N.J. 594, 95 A. 2d 596, 597, the court said: “* * * On the other hand, where the oral agreement does bear a fixed term and is not to be performed within the year it is held to be within the statute even though the obligations thereunder may be terminable by operation of law well within the year; the most common illustration is an oral agreement for personal services for a fixed period exceeding one year but terminable by operation of law upon death.” In the case of Barnes v. P. & D. Mfg. Co., 123 N.J.

L. 246, 8 A. 2d 388, the court held that termination, through bankruptcy or breach did not mean completion or performance, and that the oral contract was in the Statute of Frauds. The court in that case quoted language from the case of Marble v. Town of Clinton, 298 Mass., 87, 89, 9 N.E. 2d 522, 524, 111 A.L.R. 1101 which we deem appropriate here. The quotation reads: “Contracts for service for more than a year * * * at the election of a party upon the happening of some event or even at the mere will of a party, have generally been held to be within the statute.

The contemplated performance would occupy more than a year.

If the contract should be terminated within the year, the result would not be an alternative form of performance, but excusable nonperformance.” Williston states that: “The distinction doubtless is a fine one between the performance of a promise on the one hand, and an excuse for nonperformance on the other, especially when under the heading of excuse for non-performance must be included an excuse provided by the contract itself by way of defeasance or condition subsequent. “The distinction involves the form of the contract quite as much as its substance but, as has been said: ‘To the criticism that the distinction is more technical than substantial, it may well be answered that the ancient statute is itself rather technically worded.’ That the form of the contract may be involved in this distinction is demonstrated by the following illustrative cases: “1.

A promise to serve two years; “2. A promise to serve as long as the employee lives, not exceeding two years; “3. A promise to serve two years if the promisor lives so long; “4. A promise to serve two years, but if the promisor dies the contract shall be terminated. “It is obvious that all these promises have substantially the same meaning and, if enforceable, the same legal effect; yet certainly the first promise, and presumably the fourth, are within the Statute, while certainly the second and presumably the third are not.” Williston on Contracts, Third Edition,

Section 499. See also, Ibid,

Section 498. Obviously, the present case falls in the fourth class. This distinction has been adopted in the Restatement. See Restatement, Contracts (1932),

Section 198, Comment (c). Although there is respectable authority to the contrary (See Corbin, Contracts, 1950,

Section 275 et seq.) this court is definitely committed to the view herein declared. The rule adopted is without doubt in accord with the rule adopted by a majority of the Courts of the United States. The case of Chevalier v. Lane’s, Inc., supra, recognized this conflict of authority and rejected the minority contention as pronounced in such cases as Weatherford, Mineral Wells & Northwestern Ry. Co. v. Wood, 88 Texas 191, 30 S.W. 859, 28 L.R.A. 526; Great Atlantic & Pacific Tea Co. v. Warren, Texas Civ. App., 44 S.W. 2d 510, wr. ref., and others of a like holding.

The opinion reflects that an exhaustive study was made of the authorities, and the origin of the statute was traced back to its counterpart in the 1677 Statute of King Charles II, which was the same as paragraph 5 above quoted. The result reached in Chevalier v. Lane’s, Inc. is in full accord with English law, as well as the great weight of authority in that country. See Hanau v. Ehrlich

(1912) A.C. 39; 7 Halsbury’s Laws of England (2d ed. 1932), 111; Deevy v. Porter, supra. “In the Hansu case, Lord Alverstone differentiated the controlling lines of English cases, saying: “ ‘The one class of cases decides that if there is no mention of time, and the time is uncertain, the agreement is not within the statute. The other class of cases decides that if the time mentioned is more than one year, but there is power to determine, th agreement is within the statute. I have never been able to see why this is not a perfectly good working construction of this statute.’ ” This court, speaking through Mr.

Justice Garwood, said in Chevalier v. Lane’s, Inc., supra, (1948) : “* * * We accordingly restate the rule so that where, by the terms of the oral agreement, its period is to extend beyond a year from the date of its making, the mere possibility of its termination by operation of law within the year, because of death or other fortuitous event, does not render paragraph 5 of the Statute inapplicable, * * * .” The judgment of the Court of Civil Appeals is reversed and that of the trial court is affirmed.

Opinion delivered November 9,1960. . —“No action shall he brought in any court in any of the following cases, unless the promise or agreement upon which such action shall be brought, or some memorandum thereof, shall be in writing and signed by the party to be charged therewith or by some person by him thereunto lawfully authorized: “5. Upon any agreement which is not to be performed within the space of one year from the making thereof.” Acts 1840, p. 28; P.D. 3875; G.L. Vol. 2, p. 202.