Summary
In First National Securities Corp. v. Hott (1954), 162 Ohio St. 258, 262, the Ohio Supreme Court stated, [u]nder no statute does a written memorandum which merely evidences an oral contract convert such oral contract into a contract in writing.
Summary of this case from Diemert v. RubensteinOpinion
No. 33842
Decided December 1, 1954.
Limitation of actions — Action on oral employment contract — Memorandum in writing attached to petition — Oral contract not thereby converted into one in writing, when — Fifteen-year limitation inapplicable — Section 11221, General Code.
Where an action is based upon an oral contract of employment and the petition alleges that "the terms of this oral contract are evidenced by a memorandum in writing * * * signed by defendant, a copy of which is hereto attached and marked exhibit `A,'" the memorandum so attached and which the petition does not seek to enforce as a distinct instrument in writing does not convert the oral contract into a contract in writing so as to entitle the plaintiff to the benefit of the 15-year limitation prescribed by Section 11221, General Code (Section 2305.06, Revised Code).
APPEAL from the Court of Appeals for Cuyahoga County.
The original petition herein was filed November 5, 1948.
In its third amended petition, herein referred to as the petition, filed May 3, 1951, the plaintiff, First National Securities Corporation, alleges that it was a licensed dealer in securities prior to September 23, 1937; that on August 1, 1936, an oral contract was entered into between the plaintiff and defendant, Hott, which was made effective as of April 1, 1936, and which "continued in full force and effect to May 1, 1937"; that under that agreement defendant was employed as sales manager of plaintiff and "the compensation of defendant would be 40 per cent of the net profits realized by the plaintiff from its operations or if any loss should result, the defendant would assume and pay 40 per cent of such loss"; and that "the terms of this oral contract are evidenced by a memorandum in writing dated May 11, 1937, and signed by defendant, a copy of which is hereto attached and marked exhibit `A.'"
The memorandum, "exhibit A," was not by allegation made part of the petition. The following is a complete copy of exhibit A:
"First National Securities Corp."To Frank J. Allen Date May 11, 1937
"From Melvin B. Hott
Subject Sales Manager's Account
"..........
"Confirming our conversation of a few days ago, it is understood that any profits which accrue or any money that is paid me in connection with the Cleveland Hotel law suit, that I am to pay you or the First National Investment Corporation sixty per centum (60%).
"On May 1, 1937, my account with the First National Securities Corporation shows a debit balance of $1,670.66. Practically all of this is the result of 40% of the loss for the first four months of 1937, and I am assuming that all salesmen's overdrafts, as of May 1st, which are later reduced, that I will be credited with 40% to apply against this overdraft.
"Also, the First National Securities Corporation holds an option to participate in Romec stock to the extent of 2,000 shares and I am assuming that if this option is exercised, thereby realizing a profit, that 40% of such profit will be credited to my account.
"I would imagine the same procedure would be followed on any profits derived from the error account, whereby a loss was charged off of approximately $2,500.
"We have in inventory about 125 AT N bonds on which there would be a loss, if sold today, and I would naturally expect to assume 40% of the responsibility on these bonds.
"If the above is not consistent with your understanding please advise me.
M.B. Hott."
Four causes of action are pleaded charging losses and expenses in the business, which should be born in part by defendant, and profits realized by him for which he should account. The total amount for which recovery is sought exceeds $12,000.
Four defenses are pleaded in the answer, one of which is the statute of limitations.
Upon trial judgment was rendered for the defendant upon the pleadings and opening statement of plaintiff's counsel.
The Court of Appeals reversed the judgment of the Common Pleas Court "as contrary to law in granting the motion of defendant for judgment on the pleadings and opening statement when the obligation which constituted a promise in writing was attached to the pleading by order of the court, by reason whereof the 15-year statute of limitations is applicable."
The motion of defendant to certify the record was allowed by this court.
Mr. Edward E. Edmiston, for appellee.
Messrs. Kuth Meyers and Mr. W.D. Cole, for appellant.
The controlling question submitted to this court is: Does the memorandum, which was attached to the petition as exhibit A, make the 15-year statute of limitations applicable to the causes of action pleaded in the petition?
It is to be observed that the plaintiff in its petition pleads and relies upon "an oral contract" entered into on or about August 1, 1936, effective as of April 1, 1936, and which continued in force only until May 1, 1937. That the contract was oral is again recognized in the allegation, "the terms of this oral contract are evidenced by a memorandum in writing dated May 11, 1937," quoted more fully above.
The action is not based upon the memorandum as a contract in writing or as a written promise to pay. An "oral contract" is certainly "a contract not in writing."
Section 11222, General Code (Section 2305.07, Revised Code), provides:
"An action upon a contract not in writing, express or implied, or upon a liability created by statute other than a forfeiture or penalty, shall be brought within six years after the cause thereof accrued."
Section 11221, General Code (Section 2305.06, Revised Code), provides:
"An action upon a specialty or an agreement, contract or promise in writing shall be brought within fifteen years after the cause thereof accrued."
Section 11223, General Code (Section 2305.08, Revised Code), then provides:
"If payment has been made upon any demand founded on a contract, or a written acknowledgment thereof, or a promise to pay it has been made and signed by the party to be charged, an action may be brought thereon within the time herein limited, after such payment, acknowledgment, or promise."
Under no statute does a written memorandum which merely evidences an oral contract convert such oral contract into a contract in writing.
The memorandum may acknowledge the oral contract so as to establish its existence and thus extend the period of limitation for six years from the date of the memorandum. This would result from the application of Section 11223, General Code, but the contract would remain oral and subject to the six-year rather than the 15-year limitation.
This action was instituted eleven years, five months and 25 days after May 11, 1937.
If the action were one to enforce the memorandum as a written promise to pay money, an entirely different question would be presented — one which is not before us and as to which we express no opinion.
It appears that the Court of Appeals considered it significant that the memorandum was attached to the petition. In our judgment such attachment does not change the cause of action from one based on an oral contract. The possible effect which would have resulted if the memorandum had been incorporated in the petition and made part thereof is not before us, for it was not so incorporated, and the action is not based upon the memorandum as an enforceable promise to pay money.
In view of our conclusion as above indicated, it is unnecessary to discuss the four causes of action pleaded in the petition or to consider whether they are supported in whole or in part by the memorandum.
The contract as pleaded was not in writing and the six-year limitation prescribed in Section 11222, General Code, is applicable to it.
The judgment of the Court of Appeals is reversed and final judgment is rendered for the defendant.
Judgment reversed.
WEYGANDT, C.J., HART, ZIMMERMAN, STEWART and LAMNECK, JJ., concur.
TAFT, J. I dissent so far as the judgment of the Court of Appeals with respect to the first and second causes of action is reversed.