Bannatyne v. Florence Milling & Mining Co.

VAN BRUNT, P. J.

I concur in the result of Mr. Justice PARKER’S opinion, only because I think he is mistaken in his statement that it has ever been decided, in any case where the result depended upon this issue, that where the existence of the contract is denied in a pleading, and want of compliance with the statute of frauds is the ground relied upon, such ground must be stated in the pleading; and because, if it has been so decided, such decision is contrary to all the authorities cited to support it. Mr. Justice PARKER cites as his authority the statement of Judge Finch contained in the case of Wells v. Monihan, 129 N. Y. 164, 29 N. E. 232, in which case the latter says:

“So far as the defense in this case rests upon the statute of frauds, it must fail for two reasons: No such defense has been pleaded, and it is not raised by the averments of the complaint; and, without one or the other of these conditions, the defense, if existing, cannot be made available;” citing Porter v. Wormser, 94 N. Y. 450.

And then the learned judge proceeds to dispose of the validity of the contract upon other grounds. Upon an examination of the case of Porter v. Wormser, supra, cited by Judge Finch, it does not seem to have held the proposition which it is cited to support. All that was decided in that case on this subject was that, where a vendee brings an action to impeach the account of his vendor, on grounds which imply the existence of a formal contract of sale, he cannot question the validity of the contract under the statute of frauds. Chief Judge Andrews, who wrote the opinion in that case, says:

“The plaintiff, having become an actor, and brought an action to impeach the account upon grounds which implied the existence of a formal contract, is not in a position to question the validity of the contract under the statute;" citing Cozine v. Graham, 2 Paige, 177; Vaupell v. Woodward, 2 Sandf. Ch. 143; and 2 Story, Eq. Jur. § 755.

The above proposition is plainly supported by these cases, as will be presently shown. But the learned judge writing the opinion in the case under consideration went further, and stated:

“The general rule is that the defense of the statute of frauds must be pleaded, except when the complaint on its fáce discloses a case within the *338statute. It cannot be doubted that, if the defendants had brought an action to recover a balance claimed to be due on the contract for the purchase of the bonds, without disclosing whether the contract was oral or written, the plaintiff would have been bound to plead the statute to avail himself of its protection.”

This last proposition is not supported by the authorities cited. It is true that the headnote in Vaupell v. Woodward, supra, seems to support the dictum of Chief Judge Andrews, but an examination of the opinion shows upon what ground the decision proceeded. The opinion upon this point is as follows:

“The first objection to the complainant’s claim is on the ground that the contract between the parties is not in writing, subscribed by the defendant. The bill alleges that the parties entered into a contract, by which one agreed to sell to the other 200 shares of stock, upon terms which are fully stated. The answer admits the making of the contract as set forth in the bill. On this state of the pleadings, the court has nothing to do with the question whether the contract is in writing or by parol. The chancellor’s decision in Cozine v. Graham, 2 Paige, 177, is conclusive that, where it’does not appear by the bill that the contract is not in writing, the defendant admitting the contract must insist by plea or answer that it is not in writing, or he cannot raise that objection to its validity; and in such case no proof of the agreement is necessary.”

In other words, where the contract is admitted, and under the pleadings no proof thereof is necessary, if a defendant desires to impeach it he must allege his grounds. To the same effect is the case of Gozine v. Graham, supra. In this case the chancellor held that, where a complaint alleged the existence of an agreement, without stating whether it was in writing or oral, the defense that the agreement was within the statute of frauds could not be raised by demurrer; that, where the agreement is admitted, it must be deemed to be valid, unless the contrary is alleged and proven. ¡Neither of these cases supports the proposition enunciated in Porter v. Wormser and Wells v. Monihan, supra, that “the general rule is that the defense of the statute of frauds must be pleaded, except where the complaint on its face discloses a case within the statute.” Upon the contrary, the chancellor, in Cozine v. Graham, supra, expressly states that:

“If the agreement is denied, the plaintiff must produce legal evidence of its existence, which can only be done by producing a written agreement, duly executed according to the provisions of the statute. If the agreement is admitted by the pleadings, no evidence to prove its existence is necessary, and the court never inquires whether it was or was not in writing.”

The rule, therefore, undoubtedly was, until the dicta of Chief Judge Andrews and Judge Pinch in the cases cited, that where the contract was denied in an answer, the objection that the contract was- within the statute of frauds, when the plaintiff attempted to prove his contract, was available to the defendant. Such a rule is entirely in harmony with our general rules of pleading, viz. that where an agreement is denied in an answer, the plaintiff must support his allegation by legal proof of its truth; and this he cannot do in the case of a contract void under the statute of frauds, unless in writing, without proving a written contract. Every other agreement is void by the express provisions of the statute, and is therefore *339no contract; and proof of such an oral agreement furnishes no basis for an obligation. The cases of Hamer v. Sidway, 124 N. Y. 538, 27 N. E. 256, and Crane v. Powell, 139 N. Y. 379, 34 N. E. 911, may be cited as also holding contrary to the above rule, but an examination of those cases will show that the cases cited to support the rule therein expressed either contain mere dicta upon the point, or the cases therein cited do not support the rule contended for in them. In the case of Hamer v. Sidway, supra, the court, after holding that the case had been taken out of the statute, further stated that, under the authority of Porter v. Wormser, 94 N. Y. 431-450, the statute of frauds not having been pleaded, such a defense was not available. This was a dictum not necessary to the decision of the case, and rested simply upon the case cited. In the case of Crane v. Powell, 139 N. Y. 379, 34 N. E. 911, it was held that where, in an action upon an agreement within the statute, defendant did not plead the statute, and permitted the plaintiff to prove without objection a verbal agreement, a motion to dismiss the complaint on the ground that the agreement was within the statute, and void, made at the close of the plaintiff’s evidence, was properly denied, upon the ground that the admission of incompetent evidence of the agreement without objection was a waiver of the statute, the same as an admission of the contract in an answer would be; and various cases are cited to support this proposition, none of which, however, support the contention of the learned judge writing the opinion, except the dicta in the cases of Porter v. Wormser, Hamer v. Sidway, and Wells v. Monihan, supra. In the case of Harris v. Knickerbacker, 5 Wend. 638, cited in Crane v. Powell, the rule laid down is precisely that which is here contended for. The court say:

“It appears from the cases that it remained for a long time doubtful as to the manner in which a defendant could avail himself of this statute, and under what circumstances he was deemed to have renounced it. I apprehend that it is now settled that, if the defendant admits the agreement, and insists on the statute, he can protect himself from a decree for specific performance, notwithstanding his admission; but if he admits the agreement, but neither pleads the statute nor insists on it in his answer, he is deemed to have renounced the benefit of it. Cooth v. Jackson, 6 Ves. 39. If the bill states generally a contract which the law requires to be in writing, the court will presume that it is made with the requisite formalities to give it validity, until the contrary appears. The defendant, in answering, may either plead that the contract was not in writing, or insist upon that fact in his answer. If he meets the allegation of a contract in the bill with a general denial, and the complainant is put to his proof to establish it, he must show a written contract; and, if he does not, the evidence to establish the issue will be adjudged incompetent. Cozine v. Graham, 2 Paige, 177; Talbot v. Bowen, 1 A. K. Marsh. 437. But if the bill set up an agreement, admitting it to be by parol, or which shall in proof turn out to be by parol, the defendant cannot avail himself of the benefit of the statute, provided the bill contains, along with the agreement, matter sufficient to avoid the bar created by the statute. Such is -said to be this case. A part performance by the respondent is alleged, whereby it is insisted that the contract is taken out of the operation of the statute.”

The rule laid down is that, if the contract is denied, and it is one which comes within the statute, the plaintiff must show a written contract. In the case of Duffy v. O’Donovan, 46 N. Y. 226, all that *340was held was that the objection could not be raised for the first time on appeal that no contract was proved, valid by the statute of frauds, or where the contract was admitted by the answer. And then the rule was laid down that:

“If the defendants intended to insist upon the statute of frauds, or upon the invalidity of the contract for any other reason, they should have denied the making of the same, and put the plaintiff to proof, or set up the special matter relied upon.”

In the case of Marston v. Swett, 66 N. Y. 209, also cited, the con rect rule is again laid down. It is that:

“If the contract alleged in the complaint had been denied, or the statute of frauds set up as a defense, it would have been necessary upon the trial to prove that the contract was in writing, if it was one which the statute required to be in writing.”

• The rule undoubtedly was, prior to Porter v. Wormser, supra, that where the contract was absolutely denied the statute of frauds was available to the defendant; and it might further be contended, under our system of pleading, that if the agreement is admitted by the answer, even if it is attempted to be attacked by another allegation in the answer as no contract, because not in writing, such a defense cannot be available, because, the agreement being admitted by the pleadings, the court will not inquire whether it was or was not in writing. Cozine v. Graham, supra. This is the rule laid down in section 755, Story, Eq. Jur. He says:

“Courts of equity will enforce specific performance of a contract within the statute, not in writing, where it is fully set forth in the bill, and is confessed by the answer of the defendant. The reason given for the decision is that the statute is designed to guard against fraud and perjury; and in such case there can be no charges of that sort.”

Such also is the rule of pleading declared in our court of appeals in the case of Fleischmann v. Stern, 90 N. Y. 110. In this case it was held that, where a material averment of the complaint is not put in issue, such averment must, for the purposes of the trial, be taken as true; and the defendant is not at liberty to deny the existence of the facts constituting the cause of action stated in the complaint, or to prove any state of facts inconsistent therewith; and certainly, where the agreement is expressly admitted in the answer, the same rule must apply. The defense of the statute seems to be only available, therefore, when the obligation of the contract is denied, and not otherwise. In the case at bar the contract was denied. The plaintiff was, therefore, obliged to prove a contract valid under the statute.