Citation. 52 Haw. 29, 469 P.2d 177 (Supreme Court of Hawaii, 1970)
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An employee agreed to move to Hawaii to work for an employer. The parties never entered into a written agreement. The employer fired the employee and the employee brought suit. The employer alleged the agreement must, but did not satisfy the Statute of Frauds ("SOF")..
Synopsis of Rule of Law.
Courts can circumvent the harshness of the SOF by exercising their equity powers, specifically via the doctrines of part performance or equitable estoppel.
Facts.
The Plaintiff, Dick McIntosh (the "Plaintiff"), allegedly entered into a one-year oral employment contract over the phone on Saturday, April 25, 1964 with the Defendant, Murphy Motors, Ltd. (the "Defendant"), to be an assistant sales manager. The Plaintiff arrived in Hawaii on Sunday, April 26, 1964 and began working for the Defendant on Monday, April 27, 1964. In reliance on the job offer, the Plaintiff moved some belongings to Hawaii, sold other belongings, obtained an apartment and forwent other employment opportunities. The Plaintiff continued working with the Defendant until July 16, 1964 when he was discharged. The trial court found on the Defendant's motion for directed verdict found that the contract did not come within the SOF because it was a contract for exactly a year. The jury awarded the Plaintiff damages.
Issue.
Did the oral employment agreement violate the provision of the SOF requiring contracts that cannot be performed in one year be in writing?
• Does the doctrine of equitable estoppel apply to these proceedings making the SOF inapposite?
Held.
The court found the one-year provision was not operative. The court first examined when the Plaintiff accepted the Defendant's agreement of employment. The Defendant argued that the contract would have been outside the SOF if a Saturday or Sunday were counted when computing the one-year period. However, the trial court refused to consider the Saturday or Sunday. The court, however, did not decide the case of this ground.
• Instead, the court began by discussing the history of the SOF and how it was initially promulgated to stop fraud. The court then stresses how courts have tempered the effects of the SOF by not adhering to it to the letter. The goal of this is to "mitigate the harshness of mechanical operation." The court also stresses how courts have circumvented the SOF by exercising their equity powers. Specifically the "legal labels of 'part performance' or 'equitable estoppel.' " Relying on a Supreme Court of California case [Monarco v. Lo Greco, 35 Cal.2d 621, 623, 220 P2d 737, 739 (1950)] the court observed "[t]he doctrine of estoppel to assert the statute of frauds has been consistently applied by the courts of this state to prevent fraud that would result from refusal to enforce oral contracts in certain circumstances. Such fraud may inhere in the unconscionable injury that would result from denying enforcement of the contract after one party has been induced by the other seriously to change his position in reliance on the contract * * *."
• The court then adopts the approach to equitable estoppel advocated by the Second Restatement of Contracts. Applying the relevant facts, the court observed that the Defendant was aware the Plaintiff would have to move to Hawaii in order to perform his duties. After being let go by the Defendant, the court recognized the Plaintiff was in Hawaii without a job. The Plaintiff relied on the Defendant's promise.
Dissent.
The dissenting judge disagrees with the majority's circumvention of the SOF. The dissenting judge accuses the majority of usurping the legislature's power.
Discussion.
This case demonstrates a creative way by which courts can circumvent the SOF.
