Hopper v. Lennen & Mitchell, Inc.
146 F.2d 364, 161 A.L.R. 282, 1944 U.S. App. LEXIS 2301 (1944)
Rule of Law:
An oral contract that by its terms permits termination by one or both parties within one year is not subject to the Statute of Frauds' requirement of a writing for agreements 'not to be performed within a year,' because the exercise of the termination option constitutes a performance of the contract within the contemplation of the parties.
Facts:
- On or about November 12, 1942, Hedda Hopper entered into a verbal agreement with Lennen & Mitchell, Inc.
- Under the agreement, Hedda Hopper agreed to render her services on the radio for a minimum period of twenty-six weeks, commencing on or about December 27, 1942, and not exceeding five years (ten 26-week periods).
- The verbal agreement further provided that Lennen & Mitchell, Inc. would have the right to cancel upon notifying Hedda Hopper in writing four weeks prior to the last broadcast of any twenty-six-week period.
- Hedda Hopper’s services were to be exclusive on the radio for a weekly program advertising products of The Andrew Jergens Company, for whom Lennen & Mitchell, Inc. was the advertising agent, unless written consent was obtained.
- The compensation Lennen & Mitchell, Inc. agreed to pay Hedda Hopper was stipulated to be $1,250.00 per week for the first twenty-six-week period, increasing periodically up to $2,500.00 per week for the last twenty-six-week period.
- Hedda Hopper was ready at all times to render her services under the contract.
- Lennen & Mitchell, Inc. refused to perform its obligations under the contract and repudiated it.
Procedural Posture:
- Hedda Hopper filed a complaint for damages upon four alleged causes for breaches of an oral contract in the Superior Court of the State of California.
- The case was removed to the District Court of the United States because of diversity of citizenship.
- Defendant-appellees Lennen & Mitchell, Inc. and The Andrew Jergens Company filed separate motions in the District Court to dismiss the complaint and each count thereof.
- The District Court granted the motions to dismiss the first, second, and fourth causes of action.
- Plaintiff-appellant Hedda Hopper appealed the judgment of dismissal as to the first, second, and fourth causes of action to the Circuit Court of Appeals (the appeal was later abandoned as to the fourth cause of action).
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Issue:
Does an oral contract for personal services that specifies a potential duration of more than one year but includes a provision allowing one party to terminate it within one year fall within the California Statute of Frauds' requirement that agreements 'not to be performed within a year' must be in writing?
Opinions:
Majority - Stephens, Circuit Judge
No, an oral contract for personal services that specifies a potential duration of more than one year but includes a provision allowing one party to terminate it within one year does not fall within the California Statute of Frauds. The court adopted the view, established in cases like New York's Blake v. Voight and California's Dutton Dredge Co. v. United States Fidelity & Guaranty Co., that when a contract explicitly provides for termination within a year, the exercise of that option constitutes a performance of the contract according to its terms, rather than a frustration or breach. California law consistently holds that if performance of a contract is possible within one year, it is not within the Statute of Frauds, even if it is likely to extend beyond that period. The contract in question allowed Lennen & Mitchell, Inc. to terminate it within any 26-week period, meaning it could be fully performed (by termination) within a year without departing from its terms. The court distinguished Sessions v. Southern California Edison Co. by noting it concerned discharge from liability due to supervening circumstances (death), not an express contractual right of termination, which is a key distinction between 'performing a contract and being discharged from liability under it.'
Analysis:
This case significantly clarifies the application of the Statute of Frauds in California, particularly for contracts containing termination clauses. By embracing the principle that exercising a contractual right to terminate within a year constitutes 'performance' rather than mere 'discharge from liability,' the court expands the enforceability of oral contracts that, while potentially long-term, offer an early exit. This ruling provides crucial guidance for parties drafting or interpreting such agreements, indicating that express termination provisions can circumvent the writing requirement of the Statute of Frauds. It reinforces California's 'possibility of performance' rule, making it a powerful defense against Statute of Frauds claims for agreements with defined exit strategies.
