Burton v. Atomic Workers Federal Credit Union
119 Idaho 17, 803 P.2d 518, 1990 Ida. LEXIS 202 (1990)
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Rule of Law:
An oral agreement for employment intended to last until a specific retirement age is a contract that cannot be performed within one year and is therefore invalid under the Statute of Frauds unless it is in writing.
Facts:
- Lila Burton began working for the Atomic Workers Federal Credit Union on May 1, 1966.
- For approximately the last ten years of her employment, Burton served as executive secretary to the manager, Daryl Tanner.
- Burton alleged that she received oral representations that she would not be terminated without 'just cause' before she reached the retirement age of 65.
- After Tanner was succeeded by a new manager, Ron Johnson, Burton was demoted to receptionist on June 11, 1985.
- The Credit Union terminated Burton's employment on July 11, 1985, after nineteen years of service.
- The Credit Union claimed the termination was part of a reduction in force due to economic conditions and also cited Burton's alleged poor work performance.
- Burton claimed her termination was due to personal animosity from the chairman of the Credit Union's board of directors.
Procedural Posture:
- Lila Burton sued the Atomic Workers Federal Credit Union in an Idaho district court (trial court) for wrongful termination.
- The trial court denied the Credit Union's motion for summary judgment.
- During trial, the court also denied the Credit Union's motion for a directed verdict.
- A jury returned a special verdict in favor of Burton, awarding damages for breach of contract and breach of an implied covenant of good faith and fair dealing.
- The trial court entered judgment on the verdict.
- The trial court denied the Credit Union's subsequent motions for judgment notwithstanding the verdict (j.n.o.v.) and for a new trial.
- The Atomic Workers Federal Credit Union (appellant) appealed the judgment to the Idaho Supreme Court.
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Issue:
Does an oral employment agreement that promises employment until the employee reaches a specific retirement age (age 65) fall within the Statute of Frauds as an agreement that cannot be performed within one year?
Opinions:
Majority - Bakes, Chief Justice
Yes. An oral employment contract for a definite term exceeding one year, such as until a specific retirement age, is invalid under the Statute of Frauds unless it is in writing. The court reasoned that Burton’s alleged contract to be employed until age 65 could not, by its terms, be performed within one year. It explicitly rejected the arguments that the possibility of the employee’s death within a year or that partial performance (working for many years) would remove the contract from the statute's requirements. The court held that the trial court committed reversible error by failing to instruct the jury on the Credit Union's Statute of Frauds defense and also by failing to instruct the jury on the specific elements of equitable estoppel, which Burton could potentially use to overcome the Statute of Frauds defense. The case was reversed and remanded for a new trial.
Dissenting - Bistline, Justice
No. An oral employment contract of indefinite duration does not fall within the Statute of Frauds, even if it provides for retirement at a certain age, because it is subject to contingencies that could terminate it within one year. The dissent argued that the majority ignored decades of Idaho precedent holding that contracts terminable within one year for reasons such as termination for just cause or the employee quitting are not subject to the statute. The dissent contended that Burton's contract was for an indefinite term, not a fixed term of years, and that providing for retirement benefits at age 65 does not convert it into a multi-year agreement. Applying the Statute of Frauds in this context, the dissent warned, would promote fraud by allowing employers to renege on long-term oral promises made to loyal employees.
Analysis:
This decision solidifies the application of the Statute of Frauds to oral employment contracts that promise employment until a specific retirement age, classifying them as contracts for a definite term exceeding one year. It clarifies that in Idaho, neither the possibility of death nor the doctrine of part performance will remove such contracts from the writing requirement, aligning with a stricter interpretation of the statute. The case also underscores the critical importance of proper jury instructions on all asserted defenses and claims, such as the Statute of Frauds and equitable estoppel, establishing that their omission constitutes reversible error. This ruling makes it significantly harder for employees to enforce long-term oral employment promises in Idaho, increasing the importance of written employment agreements.
