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Missouri Law on Performance of Oral Contracts As a Method of Validation When Statute of Frauds Is Invoked

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Missouri Law on Performance of Oral Contracts As a Method of Validation When Statute of Frauds Is Invoked Washington University Law Review Volume 20 Issue 2 January 1935 Missouri Law on Performance of Oral Contracts As a Method of Validation When Statute of Frauds Is Invoked Tyrrell Williams Washington University School of Law Follow this and additional works at: https://openscholarship.wustl.edu/law_lawreview Part of the Contracts Commons Recommended Citation Tyrrell Williams, Missouri Law on Performance of Oral Contracts As a Method of Validation When Statute of Frauds Is Invoked, 20 ST. LOUIS L. REV. 097 (1935). Available at: https://openscholarship.wustl.edu/law_lawreview/vol20/iss2/2 This Article is brought to you for free and open access by the Law School at Washington University Open Scholarship. It has been accepted for inclusion in Washington University Law Review by an authorized administrator of Washington University Open Scholarship. For more information, please contact [email protected]. ST. LOUIS LAW REVIEW Vol. XX FEBRUARY, 1935 No. 2 MISSOURI LAW ON PERFORMANCE OF ORAL CONTRACTS AS A METHOD OF VALIDATION WHEN STATUTE OF FRAUDS IS INVOKED BY TYRRELL WILLIAMS CLASSES OF CONTRACTS WITHIN THE STATUTE OF FRAUDS By the Statute of Frauds in this article is meant those portions of the Revised Statutes of Missouri which derive directly from the fourth section and the seventeenth section of the original English Statute of Frauds, 29 Charles II, c. 3 (1677). Revised Statutes of Missouri, 1929, Sec. 2967 (Mo. St. Anno., Sec. 2967, p. 1835) contains all the essential provisions of the fourth sec- tion of the English statute, and also two additional provisions, one relating to leases for more than one year, and one relating to an agent's authority to sell real estate. No further reference will be made to these additional provisions. Revised Statutes of Missouri, 1929, Sec. 2968 (Mo. St. Anno., Sec. 2968, p. 1835) covers the essential provisions of the seventeenth section of the original English statute, except that "thirty dollars" is substi- tuted for "ten pounds sterling." By grouping together these two sections of the original English Statute of Frauds, as re-enacted in Missouri, we find that the legislative modification of the common law was intended to oper- ate on six classes of contracts. These six classes are: Class I. Contracts by an executor or an administrator to an- swer out of his own funds for a continuing debt of the estate. Class II. Contracts by a guarantor with a creditor to answer out of his own funds for a continuing debt of the principal debtor. Washington University Open Scholarship ST. LOUIS LAW REVIEW Class III. Contracts in consideration of marriage. Class IV. Contracts for the sale of an interest in land. Class V. Contracts not to be performed within one year. Class VI. Contracts for the sale of goods, wares, and mer- chandise for the price of thirty dollars or more. All the contracts in these six classes are binding under the Statute of Frauds if evidenced by a signed note or memorandum. The kind of note or memorandum that will satisfy the Statute of Frauds in one class will ordinarily satisfy that statute in all the other classes. With reference to satisfying the Statute of Frauds by note or memorandum, generalized statements of law are common and useful. No further reference will be made in this article to the method of satisfying the Statute of Frauds by a note or memorandum. SCOPE OF THIS ARTICLE If an oral contract apparently falls within one or another of these six classes, and is performed, in whole or in part, by both parties or by one party, what are the legal rights of the parties under the Missouri Statute of Frauds? That is the question now to be considered. Really there are six questions, because the Statute of Frauds applies to six separate and distinctive classes of contracts, and the decisions show that what is true of one class, with reference to performance, is not necessarily true of another class. As to contracts in the sixth class, as above speci- fied, the Statute of Frauds itself prescribes performance by buyer, in whole or in part, as one method of making the contract binding, even if oral. GENERALIZED AND MISLEADING DICTA Unfortunately, many lawyers and judges have been disposed to forget that there are varying classes of contracts specified un- der the Statute of Frauds, and when correctly applying a prin- ciple apposite to the particular type of contract under considera- tion, often have used broad, general language as if the principle were applicable to all classes of contracts described in the Statute of Frauds. Johnson v. Reading (1889) 36 Mo. App. 306 is a valuable case involving a contract within Class V, as above set forth. Undoubt- edly the case is correctly decided when judged by modern Mis- souri law, by the weight of American authority, and by the Amer- https://openscholarship.wustl.edu/law_lawreview/vol20/iss2/2 PERFORMANCE OF ORAL CONTRACTS ican Law Institute, Restatement, Contracts, Sec. 198. Unfortu- nately, the St. Louis Court of Appeals, when rendering the cor- rect decision, in its official opinion formulated this dictum: "It is fairly deducible from all cases decided in this state touching contracts falling within the various sections of the Statute of Frauds, that where the contract has been fully performed on one side, and the other party had the benefit of such performance, recovery may be had even upon the contract itself." Of course, this is not true of a guaranty contract, as described in Class II above. Only seven months after the Johnson case was decided, the same appellate court decided an oral guaranty case. A brew- ing corporation, bound in writing to a lessor as guarantor of a lessee, requested the lessor to release the lessee and take another person as his substitute, and orally promised to guarantee pay- ment of rent by the second lessee. The oral guarantor's offer was accepted, and the contract was performed by the lessor. When sued on the oral guaranty, the brewing company relied on the Statute of Frauds, and won. The principle of full performance on one side, properly adopted as a rule of decision in the Johnson case, where the contract was within Class V, as above set forth, was utterly beside the issues in the subsequent case involving a contract within Class II. The case just referred to is Koenig v. Miller Brothers Brewing Co. (1889) 38 Mo. App. 182. Even the attorney for the plaintiff (appellant) did not advance the rule of full performance. His chief effort was to argue that the con- tract was not a guaranty at all. To a student in a law school, the decision in the Koenig case would seem to be at variance with the generalized and dogmatic dictum in the Johnson case. A thor- ough study of the two cases from the same court in the same year, and the earlier authorities cited in the two cases, is a valu- able exercise to teach an important lesson, namely, that in law, human experience is more important than logic. In the official edition of Revised Statutes of Missouri, 1929, on page 878, in notes to the Statute of Frauds, appears this com- ment: "Estoppel.-After performance of contract within the statute by one party, other cannot plead statute as bar. Phelps v. McCaw, 210 Mo. App. 514, 240 S. W. 845." The opinion in the case cited contains a generalized dictum that amply justifies the annotator's comment. But the case merely decided that an oral contract for the sale of land when partly performed by the Washington University Open Scholarship ST. LOUIS LAW REVIEW vendor will create against him an equitable estoppel to prevent his pleading the Statute of Frauds. In Missouri Statutes Annotated, in notes to Sec. 2967, p. 1837, appears the following: "A parol contract completely performed by one of the parties is not within statute. Self v. Cordell, 45 Mo. 345; Mitchell v. Branham, 104 Mo. App. 480; 79 S. W. 739; Marks v. Davis, 72 Mo. App. 557; Bless v. Jenkins, 31 S. W. 938, 129 Mo. 647; Hubbardv. K. C. Stained Glass Works, 188 Mo. 18, 86 S. W. 82." A reading of this proposition would suggest that it applies to all classes of the Statute of Frauds. A reading of the cases referred to reveals that every case has to do with a con- tract within or alleged to be within Class V. In Jones v. Jones (1933) 333 Mo. 478, 63 S.W. (2nd) 146, the court said: "Full or even part performance generally takes an oral contract out of the Statute of Frauds." The suit was by vendee for specific performance of an oral contract to sell land after full performance by the equitable vendee, who agreed to render services as consideration for the transfer of the land, and had done so. Plaintiff won the suit. When the writer of the court's opinion used the language quoted he probably was think- ing only of cases within Class IV of the Statute of Frauds. CONTRACTS FULLY PERFORMED ON BOTH SIDES In legal thinking, a simple contract is regarded as an unper- formed promise supported either (1) by an executed considera- tion, or (2) by a return promise which is unperformed. A bilateral agreement, after full performance on both sides, ceases to be a contract in the strict legal sense although as a matter of convenience the term "contract" is often applied to mutual prom- ises even after full performance on both sides. Apart from con- stitutional law, criminal illegality, equitable grounds for rescis- sion or reformation, and legal incapacity of parties, courts are not concerned with so-called contracts after they have been fully performed on both sides.
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