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Case No. 77 IMPLIEDCONTRACTSAND

STATUTEOFFRAUDS/SUFFICIENCYOFWRITING

Valentino v. H.F. Davis Appellate Division, Third Department 270A.D.2d635,703N.Y.S.2d 609(2000)

FACTS:John Valentino(Valentino) is in the business of breeding and raising horses. Jonathon H.F.Davis (Davis) isaveterinarian whooperates Milfer Farm Inc. in theTown of Unadilla, Chenango County.Valentino and Davis decided to breed their horses and exchanged several drafts of agreements regarding the boarding, breeding, and care of Valentino's mares with Davis' stallions.Additionally, the draft proposals addressed the care and ownership of any future foals (young horses) for a three-year period at Milfer Farm.Theparties were unable toagree on theterms and asaresult no written agreement was executed. Evidence showed that the parties intended, had they been able to reach an agreement, to have aformal contract prepared by an attorney and signed by the parties.

While the parties were still negotiating, Valentino delivered twenty mares and unweaned foals to Milfer Farms.Per agreement, Davis cared for the mares and foals over the next four months, and was successful in breeding many of the mares.Thereafter, Valentino removed all his horses from Milfer Farms claiming that they were overgrazed and maintained inovercrowded stallsleading tosickness, and in somecases,death. Valentino kept the foals later born to mares as a result of breeding during this four-monthperiod.

Valentino sued Davis for breach of contract. The trial court determined that no written agreement had been entered but held that there were triable issues of fact regarding the existence of an enforceable oral or implied-in-fact contract.Davis appealed.

FIRST ISSUE:Where parties exchange draft proposals fora prospective agreement, and itisclearthattheparties intended todraftaformal writtencontractonceanoral agreement was reached, will the draft proposals satisfy the writing requirement of the Statute of Frauds?

DECISION:No

REASONING: A contract that by its terms cannot be performed within one year of making isunenforceableunder the statuteofFrauds unlessitisin writing.Inthiscase the proposedcontract wasforaperiod of three years,henceitisunenforceableunlessreduced to writing.Valentino claimed that the exchange of written proposals constituted a sufficient writing to satisfy the Statute of Frauds.The court rejected this argument because theevidence and testimony clearly indicated anintention by the parties toreduce their agreement to a formal writing prepared by an attorney. Since no writing was ever executed, the writing requirement of the Statute of Frauds was not satisfied.

SECOND ISSUE:Does an implied-in-fact contract exist from the conduct of the parties where the parties clearly intended to be bound only by the terms of a formal written agreement?

DECISION:No

REASONING:Valentino contended thatanimplied-in-factagreementexisted forathree year period because Davis partially performed by caring for Valentino's mares and unweaned foalsinaddition tofacilitating thebreeding process duringafourmonth period. However,Valentino acknowledged that the parties intended thatany longterm agreement bereduced towriting.For thisreason, thecourt denied theexistence of animplied-in-fact contract noting that"acontract may not beimplied in fact from theconduct of the parties where it appears that they intendedto be bound only by aformal written agreement".

Case No. 78 STATUTE OF FRAUDS/ONE-YEAR RULE Paul v. Emil Ascher, Inc. Supreme Court, Nassau County NYLJ, April 29, 1985, p. 16, col. 2m FACTS: Plaintiff Charles Paul (Paul) was a composer who specialized in background music for, among other projects, soap operas. He wrote the theme for "As the World Turns" and "Love of Life". Defendant Emil Ascher, Inc. (Ascher) was a music publisher. Paul and Ascher had a composer/publisher relationship for more than forty years. Between 1939 and 1959 Paul and Ascher entered into written agreements regarding four compositions, in which Paul transferred to Ascher the right to copyright the works. In return, Ascher agreed in the written contracts to pay Paul 10% of the list price for each copy of sheet music for the songs Ascher sold and 50% of net income received by Ascher in exchange for the right to perform the work. Paul in this lawsuit claimed that Ascher orally agreed to pay Paul 50% of the money Ascher received from both the sale of the sheet music and the sale of the right to perform the work. For unknown reasons Paul took no action to enforce the alleged agreement for twenty years. Ascher denied liability for more than 10% of the list price of the sheet music, the amount specified in the written contract. ISSUE: Can a party seeking to modify a written contract by evidence of an oral agreement made prior to the time the written contract was signed, introduce evidence in an attempt to prove the oral agreement? DECISION: No, judgment for Ascher. REASONING: The Statute of Frauds provides that an agreement that cannot be performed within a year from the date it was made is unenforceable unless it is in writing. An agreement to divide copyright royalties is effective for the full term of the copyright unless the agreement states otherwise. Ascher's copyright on the four songs was valid for a minimum of fourteen years and a maximum of twenty-eight. Because the alleged oral agreement to pay Paul 50% of all proceeds could not be completed within a year from when it was made, and because it was not in writing, Paul cannot introduce evidence seeking to prove the oral agreement. NOTE: The parol evidence rule might present another obstacle to Paul's lawsuit. The court did not discuss this issue. The duration of a copyright changed when the Copyright Law was revised in 1978. Prior to the revisions, the duration of a copyright was fourteen years and could be renewed once for a second fourteen-year period. Under the new law, a copyright lasts for the life of the author of the copyrighted work plus fifty years.

Case No. 80 STATUTE OF FRAUDS/ONE YEAR RULE/COLLATERAL PROMISES Nakamura v. Fujii Appellate Division, First Department 253 A.D.2d 387,677 N.Y.S.2d 113 (1998)

FACTS: Masaki and Isako Fujii (Fujii) informed Mikio Nakamura (Nakamura) that Fujii was unable to afford college tuition for his two daughters. Nakamura agreed to pay the tuition expenses in exchange for Fujii's promise to repay Nakamura "on demand". Nakamura issued several checks to the University of Southern California totaling approximately $101,000. Nakamura contends that the repayment obligations were confirmed during several meetings with Fujii. Fujii later refused to pay and Nakamura sued for breach of contract. Fujii claimed, among other things, that the oral repayment agreement was unenforceable under the Statute of Frauds because it could not be performed within one year and it was a collateral promise. The trial court granted Fujii's motion to dismiss and Nakamura appealed. FIRST ISSUE: Does the Statute of Frauds require a writing to enforce a contract to pay "certain tuition invoices" with repayment due on demand? DECISION: No REASONING: An agreement that cannot by its terms be performed within one year of its making must be in writing to be enforceable. In this case the money was due on demand. Because specific terms mandating payment at a specified time were absent from the agreement, it could possibly be performed within one year and so did not require a writing to be enforceable. The court also noted that the Statute of Frauds does not apply where "the performance...depends on a contingency which may or may not happen within one year". In this case the daughters could have left USC within one year. SECOND ISSUE: Is a promise by parents to a third party to pay the tuition costs of their children a promise to answer for the debt of another requiring a writing under the Statute of Frauds? DECISION: No REASONING: A collateral or secondary promise is one made by a third party to assume the debts or obligations of a primary party to the contract if that party does not pay. Such a promise must be in writing to be enforceable under the Statute of Frauds. In this case Fujii's daughters did not owe any money to Nakamura. Therefore Fujii's agreement to repay the tuition costs was not a contract to pay the debts of their daughters in the event that they failed to pay. It was a primary promise made directly and exclusively by Fujii to Nakamura. As a result, the promise to pay did not require a writing to be enforceable under the Statute of Frauds.