Zupan v. Blumberg
161 N.Y.S.2d 428, 2 N.Y.2d 547, 141 N.E.2d 819 (1957)
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Rule of Law:
An oral employment contract of indefinite duration to procure customers or accounts on a commission basis, where performance is dependent upon the continued will of a third party, is not performable within a year and therefore falls within the Statute of Frauds, requiring it to be in writing to be enforceable.
Facts:
- Plaintiff, a freelance advertising solicitor, orally negotiated with defendants in 1946 and again in 1949.
- The oral agreement stipulated that plaintiff would secure advertising accounts for defendants.
- Under this agreement, plaintiff was to receive a 25% commission on any account he brought in for as long as that account remained active.
- In 1950, plaintiff procured a specific advertising account for the defendants.
- Defendants paid plaintiff commissions on this particular account until May 1951.
- After May 1951, defendants ceased paying commissions on the account, despite continuing to handle the account.
- Plaintiff is suing for commissions on orders placed by this customer after more than one year from the alleged date of the contract to pay commissions.
Procedural Posture:
- Plaintiff sued defendants in the trial court, alleging breach of an oral employment contract.
- The trial court rendered judgment in favor of the plaintiff.
- Defendants appealed the trial court's judgment to the Appellate Division.
- The Appellate Division affirmed the trial court's judgment for the plaintiff.
- Defendants, as appellants, appealed the Appellate Division's decision to the Court of Appeals of New York.
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Issue:
Does an oral contract for employment to procure advertising accounts on a commission basis, where commissions are to be paid for as long as the account is active, fall within the Statute of Frauds as a contract not performable within one year?
Opinions:
Majority - Van Voorhis, J.
Yes, an oral employment contract of indefinite duration to procure accounts on a commission basis, where compensation is tied to the continued business of a third-party customer, falls within the Statute of Frauds and is unenforceable unless in writing. The court affirmed the precedent set in Cohen v. Bartgis Bros. Co. and Martocci v. Greater N. Y. Brewery, which established that such service contracts are not by their terms performable within a year because performance is dependent upon the will of a third party, not the contracting parties themselves. The possibility of termination of the contract within a year (e.g., through a breach, or dissolution of business) is not equivalent to performance within a year; termination is the destruction of the contract, not its fulfillment. The court distinguished Nat Nal Service Stations v. Wolf, where the alleged agreement was deemed 'at will' and involved a continuing offer where neither party was bound beyond individual transactions, and performance depended solely on the parties' mutual willingness to continue placing and accepting orders. In contrast, the current contract contemplated the customer providing orders for years and the defendants' liability enduring, which makes it a contract not performable within a year. The testimony that employment was 'at will' could only mean the defendants could cease employing plaintiff for further accounts, not that they could stop paying commissions on accounts already procured.
Analysis:
This case significantly clarifies and reinforces the application of the Statute of Frauds to oral employment contracts involving indefinite duration and third-party performance. It draws a critical distinction between a contract being 'performable' within a year and being 'terminable' within a year, thereby limiting avenues for circumventing the statute's writing requirement. For future cases, this decision emphasizes the necessity of memorializing commission-based agreements, especially those contingent on customer longevity, in writing to ensure enforceability and prevent disputes over long-term liabilities. It also serves as a guide for distinguishing between true 'at will' agreements where each transaction is discrete and long-term commitments where liability endures.
