Plaintiff appeals from an order denying his motion for judgment notwithstanding the verdict or a new trial.
In July 1945 defendant commenced working for plaintiff in the latter's garage. In the early part of August of the same year plaintiff said to the defendant and other employees:
"You boys stick with me for five years and I will give you a hundred dollars a year bonus." (Italics supplied.)
Defendant thereafter worked continuously for plaintiff in the garage until April 1950 when plaintiff transferred him to a bulk oil station where his employment continued until April 1952 when he voluntarily quit. In other words, defendant worked continuously for plaintiff for a period of about six years and nine months. When he quit he owed plaintiff $349.14 for tires and fuel oil. In plaintiff's action to collect this sum, defendant counterclaimed for the promised bonus of $100 a year. The jury awarded him $670 on the counterclaim.
The issues arising on this appeal are (1) whether the offer is sufficiently definite and certain to form the basis of a contract, (2) whether the oral agreement is within the statute of frauds, (3) whether there is a consideration for the contract, and (4) whether the evidence concerning defendant's alleged misconduct was properly excluded.
1. Although the evidence sustains a finding that plaintiff made the oral offer in the words above quoted, plaintiff asserts that such offer is so indefinite as to what he meant that a verdict awarding a bonus in any amount is based on conjecture and speculation. We do not agree. It is true that an offer must be sufficiently definite to form the basis of a contract.
2-3. Plaintiff's offer was converted into a contract when defendant had continued his employment for the full five-year period. Since the resulting oral contract was not conclusively susceptible of only one construction, its construction was for the jury.
Furthermore the jury was justified in finding that defendant refrained from exercising his right to quit plaintiff's employment
"Here is an account I'll never collect. I owe him some money which he won't collect either." (Italics supplied.)
Although the last quoted sentence did not expressly refer to the bonus, the jury, in view of the circumstance surrounding the parties, could reasonably infer that it related to the bonus and that it amounted to an admission by the plaintiff that he knew defendant had continued his employment in reliance upon his offer. Upon the evidence as a whole we find that the jury did not err in finding the element of reliance.
4. Was either plaintiff's promise or offer to pay a bonus or the oral agreement which subsequently resulted when the offer was accepted within the statute of frauds (M.S.A. 513.01), which provides, insofar as here pertinent, that no action shall be maintained upon any agreement that is not to be performed within one year from its making unless it is in writing? At the outset it should be noted that the only applicable provisions of § 513.01, namely paragraph (1), is expressly limited to "every agreement" and does not include the word "promise" as do paragraphs (2), (3), and (4) of said statute. The term "agreement" as used in the statute of fraud is synonymous with the term "contract." The statute presupposes an existing lawful contract which is suspended until the statute is satisfied. Browne, Statute of Frauds (5 ed.) § 115a. Clearly, a bare promise or offer to pay a bonus does not qualify as a contract within the meaning of the statute of frauds until it has been actually converted into a contract by an acceptance of some kind.
5. Was the contract within the statute of frauds? Since defendant's performance covered not only the specified time of five years but also an additional period, we shall in the interest of clarity,
"* * * A bilateral contract is one in which there are mutual promises between two parties to the contract; each party being both a promisor and a promisee." Restatement, Contracts, § 12.
6-7. A promisee may, however, accept an offer or promise to pay a bonus by performing the act or forbearance specified in the offer, but such act or forbearance must differ from what the promisee is already obligated to do either by law or by existing contract. When a promise is thus accepted by performance of the designated act or forbearance, the promisor's offer is converted into a unilateral contract which comes into being the moment the act or forbearance has been fully performed.
Here the defendant accepted plaintiff's offer by forbearing to leave plaintiff's employment for five years. The moment plaintiff's offer was thus converted into a contract, the bonus became due and payable. At that moment such parol contract was clearly not within the statute of frauds since it was then fully performed by one of the parties, the defendant.
What of the employment of one year and nine months which followed the creation of the contract upon the completion of the
8-9. The contention that the oral contract is invalid for lack of consideration has no merit. In a unilateral contract, the exchange for the promise is something other than a promise, and the doctrine of mutuality is inapplicable.
"* * * if the purpose and effect of the executory promise of a bonus is to induce the employee to refrain from exercising his liberty of quitting and, in reliance thereon, he does so refrain for the period specified, there is sufficient consideration to render the promise enforceable."
10. The trial court did not err in excluding evidence to show that plaintiff had justifiable grounds for discharging the defendant for cause before the expiration of the five-year period. If an employer who has promised to pay a bonus for continuous service for a specified period has knowledge of facts sufficient to discharge his employee for good cause but still retains him for the specified period, he cannot set up these facts as a defense to an action for the bonus where the employee has fully complied with the terms of the offer unless such facts show a substantial and material failure striking at the very essence of the contract or that the parties intended that such facts would invalidate the contract. Abramson v. Dry Goods Refolding Co. Inc. 166 N.Y.S. 771. We find no error herein since the plaintiff made no such showing.
We find no variance between the proof and the pleadings.
The order of the trial court is affirmed.