Contract, What constitutes. Frauds, Statute of. Equity Jurisdiction, Specific performance, Insolvency of defendant.
If the parties to a contract to be executed in writing put their agreement in writing but defer its execution and do not sign it, it is not a contract.
A contract for the sale of a business including the stock in trade, fixtures and good will of the seller, if it includes also the seller's leasehold interest in the premises where the business is carried on, is a contract for the sale of an interest in land within the meaning of R.L.c. 74, § 1, cl. 4, as well as a contract for the sale of goods, wares or merchandise under § 5 of the same chapter.
An oral contract to execute a contract in writing embodying terms which bring it within the statute of frauds is itself within the statute.
A contract for the sale of a business, including the stock in trade, fixtures and good will of the seller and also including the seller's leasehold interest in the premises where the business is carried on, is not taken out of the statute of frauds by a delivery and acceptance of a part of the goods composing the stock in trade, because the contract is an entire one, and the sale of the leasehold interest is an essential part of it which cannot be separated from the sale of the merchandise and business.
In a suit in equity to enforce specifically an alleged contract for a sale by the defendant to the plaintiff of the stock in trade, fixtures and good will of the defendant's business and his leasehold interest in the premises in which it is carried on, where the contract is within the statute of frauds and there is no memorandum in writing of it signed by the defendant, if the plaintiff can prove that, in consequence of his expectation of performance of the contract by the defendant, he was put to expense in spending a considerable part of his time in a certain city during the negotiations, that he cancelled the lease of a store which he had intended to open, with a consequent loss of business, discharged an employee in order to comply with the terms of the agreement and allowed to lapse a suit which he had brought against the defendant for the value of certain property which was provided for in the contract, and that he also ceased to carry on a theretofore existing competition with the defendant, this does not show such a part performance of the contract by the plaintiff as to entitle him to have it enforced against the defendant, such expenses of the plaintiff and changes in his business being purely collateral matters which are not shown to have been entered upon with the actual knowledge or assent of the defendant.
In a suit in equity for the specific performance of an alleged contract, where it appears that the alleged contract was within the statute of frauds and that the statute was not satisfied, the insolvency of the defendant does not confer jurisdiction in equity to assess damages for a breach of the contract.
BRALEY, J.
In a suit for specific performance, before relief can be granted, the plaintiff must prove the existence of a contract which can be enforced. It apparently was understood that the defendant was to sell to the plaintiff a going business enterprise, including full possession of the premises where it was conducted, and thereafter, within certain prescribed areas, neither for a term of years was to solicit trade in the territory of the other. The parties having discussed the subject and agreed upon details, it is stated in the report that the writing which had been prepared embodied the proposed contract. It was to this paper alone that the defendant referred, when he delayed its execution, to enable him to arrange a settlement with an employee, whom he must discharge when the store where he was employed should be transferred to the plaintiff. If the evidence tended to prove that, having been rivals in business before the writing was drawn up, they afterwards rendered mutual assistance in certain mercantile affairs in which because of their intended agreement each was interested, these transactions should be regarded as merely supplemental, but forming no part of the actual bargain. The plaintiff's understanding also that the writing alone expressed their agreement was manifest when he assented or yielded to further delay, upon the defendant's assurance that the adjustment should not be a precedent condition to his final execution of the instrument. If the unsigned writing, therefore, is regarded as being the definite agreement, it never came into existence as a contract or became binding, because it was left unexecuted by the parties. McIntire v. Bowden, 61 Maine, 153. Mississippi Dominion Steamship Co. v. Swift, 86 Maine, 248.
But, if the bill is considered as seeking to enforce an oral promise by the defendant to enter into the formal writing, as containing all the essential elements of the contract, it cannot be maintained. The agreement proposed should be construed as embracing the sale of personal property, and the transfer of the defendant's leasehold interest in the premises. Locke v. Homer, 131 Mass. 93. Cincinnati, Sandusky Cleveland Railroad v. Indiana, Bloomington Western Railway, 44 Ohio St. 287, 314, 315. By the statute of frauds such an agreement was required to be in writing, and an oral promise to execute a contract embodying these terms also comes within the statute. Colman v. Packard, 16 Mass. 39. Stevens v. Stevens, 11 Met. 251. Glass v. Hulbert, 102 Mass. 24. Chase v. Fitz, 132 Mass. 359. Howard v. Easton, 7 Johns. 205. R.L.c. 74, § 1, cl. 4; § 5.
The plaintiff further claims there was a complete oral contract, which has been taken out of the statute by an acceptance of part of the goods, and also because there has been a partial performance by him. If the contract is treated as separable, and enforcement of the provisions relating to the sale of the personal property alone is asked, the receiving of a trifling amount of the goods by a corporation in which the plaintiff was interested is said to have been an acceptance by him of a part of the purchase. Adams v. Messinger, 147 Mass. 185. But it further appears that the defendant understood, or asserted, that the transaction was an independent sale, nor was there evidence that the corporation was authorized to act as the plaintiff's agent or bailee. At most, the obtaining of a part not having been contemplated by the contract, which provided only for the sale of an entire stock of goods connected with an existing business, there has not been a clear and unequivocal act of either delivery or acceptance which concludes the defendant from relying on the statute. Marsh v. Hyde, 3 Gray, 331, 333. Howe v. Hayward, 108 Mass. 54, 55. Kemensky v. Chapin, 193 Mass. 500, 506.
While the equitable remedy of specific performance applies to a sale of chattels, where it appears that damages for a breach in an action at law do not afford an adequate remedy, the doctrine of part performance is inapplicable, as it is acceptance by the purchaser of a part of the goods or part payment by him which makes the contract binding. Britain v. Rossiter, 11 Q.B.D. 123. No written memorandum then being necessary, the statute is satisfied.
But if a sufficient delivery and acceptance are assumed, the stipulation for the plaintiff's assumption of the lease of the store for the remainder of the term cannot be separated from the sale of the merchandise and business, of which it evidently formed an essential part, and the contract being entire was within the statute. Irvine v. Stone, 6 Cush. 508. French v. Boston National Bank, 179 Mass. 404, 407. Hurley v. Donovan, 182 Mass. 65, 69. Fullam v. Wright Colton Wire Cloth Co. 196 Mass. 474, 476.
To justify relief, the plaintiff then must show, that by his part performance he has been placed in a position where a refusal by the defendant to further execute the contract is a fraud on him, which a court of equity will not sanction. Glass v. Hulbert, 102 Mass. 24, 31. Graves v. Goldthwait, 153 Mass. 268, 269. If in expectation of performance by the defendant the plaintiff has incurred expenses, and made changes in his business which have resulted in pecuniary loss, such transactions, not having been either expressed or referred to, where not within the terms of any existing agreement, nor are they shown to have been entered upon with the actual knowledge or assent of the defendant, but having been purely collateral cannot be taken advantage of as a partial execution. Potter v. Jacobs, 111 Mass. 32, 37. Barnes v. Boston Maine Railroad, 130 Mass. 388, 390. Graves v. Goldthwait, 153 Mass. 268. Powell v. Lovegrove, 8 DeG., M. G. 357.
If there was no enforceable contract, the insolvency of the defendant, on which the plaintiff finally relies, does not confer jurisdiction in equity to assess damages for a breach rather than to remit him to an action at law.
We have treated the offer of proof as constituting the evidence on which the plaintiff rested his case, and, for the reasons stated, a majority of the court are of opinion that the findings of the trial judge and his ruling that the bill should be dismissed were right.
Decree accordingly.