WORTENDYKE, District Judge.
Defendant's present motion for summary judgment "dismissing the amended complaint" follows the denial of plaintiff's motion for summary judgment upon defendant's counterclaim. See D.C.1959, 177 F.Supp. 588. The case was removed to this Court from the Superior Court of New Jersey upon diversity jurisdictional grounds.
Plaintiff was chief executive officer and a controlling stockholder of Advance Solvents & Chemical Corporation (Advance), a New Jersey corporation, which was acquired by defendant Carlisle Chemical Works, Inc., (Carlisle), an Ohio corporation a wholly owned subsidiary of the Cincinnati Milling Machine Company (Cincinnati Milling), also an Ohio corporation. Carlisle acquired the stock of Advance on April 18, 1955,
On November 30, 1953 Advance had entered into Group Annuity Contract No. GA-783 with State Mutual Life Assurance Company (State Mutual) which provided a non-contributory retirement plan for Advance employees, including plaintiff. This annuity contract permitted discontinuance by Advance of its premium payments thereunder, as of November 30 of any year. This option was exercised by Carlisle as of November 30, 1955 and on February 8, 1956 the board of directors of Cincinnati Milling, by resolution, included both Carlisle Division (of Cincinnati Milling) and Advance Division (of Carlisle) in the Cincinnati
Plaintiff here sues upon an alleged oral promise, made to him in New York City on November 17, 1955, by Karl L. Schanbacher, president of Carlisle, that the Cincinnati Milling Trust Plan would apply to plaintiff, and that, if he were discharged or involuntarily retired before he had completed 25 years of service, he would be certified for "hardship" retirement under the proposed plan.
By its present motion, Carlisle impugns the validity of the oral agreement in suit upon the grounds that it (1) lacked consideration, and (2) is within the Statute of Frauds of the State of New York.
Assuming that Schanbacher did make the oral promise which plaintiff alleges, but which defendant emphatically denies, we must face the preliminary question of what law applies to the determination of its enforceability. This Court's jurisdiction rests upon the diversity of citizenship of the parties. New Jersey's law of conflicts applies. Klaxon Co. v. Stentor Electric Mfg. Co., Inc., 1941, 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477; Specialties Development Corp. v. C-O-Two Fire Equipment Co., 3 Cir., 1953, 207 F.2d 753. The validity of a contract is determined by the law of the place of contracting. Colozzi v. Bevko, Inc., 1955, 17 N.J. 194, 110 A.2d 545; Naylor v. Conroy, App.Div.1957, 46 N.J.Super. 387, 134 A.2d 785, 67 A.L.R.2d 689. See also Restat. Conflict of Laws, § 332. The promise here sued upon was made in New York. The validity
We first face defendant's contention that the New York statute of frauds applies to the promise. Failure of compliance with the requirements of the statute is fatal to the validity of a contract. Silverman v. Indevco, Inc., Sup. 1951, 106 N.Y.S.2d 669, affirmed 279 App.Div. 573, 107 N.Y.S.2d 542. The statute relied upon by Carlisle for this contention is Section 31 of the New York Personal Property Law (40 McKinney, Consol. Laws of N.Y. § 31). That section provides in part:
Plaintiff asserts that the promise which he seeks to enforce was made on November 17, 1955. There was no note or memorandum thereof in writing signed by or in behalf of the defendant. Was the alleged promise to be performed within one year from the date of the making thereof? Both parties are in accord in stating that § 31 of the statute does not render unenforceable promises which are capable of being, although not required to be, performed within one year from the making thereof. Nat Nal Service Stations v. Wolf, 1952, 304 N.Y. 332, 107 N.E.2d 473. Sed cf. Droste v. Harry Atlas Sons, Inc., 2 Cir., 1944, 145 F.2d 899, rehearing denied 2 Cir., 147 F.2d 675, certiorari denied 325 U.S. 891, 65 S.Ct. 1408, 89 L.Ed. 2003. See cases cited in Farmer v. Arabian American Oil Company, D.C.S.D.N.Y.1959, 176 F.Supp. 45. Mullaly's employment by Carlisle became effective on April 18, 1955. Therefore, at the time of the alleged oral agreement, Mullaly had been performing services for Carlisle under that employment contract for a period of seven months. By the terms of that contract Carlisle reserved the right to terminate Mullaly's employment at any time, subject to its obligation to continue payment of the agreed salary for the full term of three years prescribed therein. That contract recited that it constituted the entire agreement between the parties. When certification of Mullaly for "hardship" retirement benefits under the subsequent oral promise would have to be made, if at all, is not disclosed. His discharge from employment under the written agreement could occur at any time within one year from the making of the oral promise. The promise, therefore, could be performed in less than a year. Carlisle concedes that on the date of the alleged promise (November 17, 1955) Mullaly had served Advance since June 23, 1933, and Carlisle from April 18, 1955 to November 17, 1955; an aggregate period of over 22 years. He was, therefore, eligible for the allegedly promised approval for "hardship retirement" on the basis of total time served on the date the promise was made. The alleged promise was not, therefore, within subdivision 1 of the New York statute.
I disagree with defendant's contention that the promise in suit was to establish a trust. On the contrary, it was merely an undertaking to approve Mullaly's eligibility for "hardship" retirement after fifteen years of service, as a beneficiary of a trust to be created inter alios. Cf. Blanco v. Velez, 1945, 269 App.Div. 133, 54 N.Y.S.2d 217, reversed on other grounds 1946, 295 N.Y. 224, 66 N.E.2d 171. The promise in suit is not rendered unenforceable either by subdivision 1 or subdivision 8 of the New York statute of frauds.
We turn now to the defendant's primary attack upon the oral agreement in suit, based upon the alleged lack of consideration therefor. What, if any, was the consideration for the alleged promise, if it was made? Consideration
By letter dated December 30, 1955 Carlisle cancelled Advance's group retirement policy with State Mutual, effective November 30, 1955, the anniversary date thereof, stating that it had its own retirement plan. The insurance company (State Mutual) in acknowledging this notice of cancellation, announced, in its letter of January 13, 1956, that "In accordance with the terms of the contract, annuity coverage credited to participants under the contract as of November 30, 1955 becomes vested in them. This annuity coverage is paid-up and on a deferred basis, with monthly income payments commencing on the normal retirement dates of the participants." On April 16, 1957, the termination of Mullaly's interest under the insurance policy underlying the Advance plan was consummated by his acceptance of a check from State Mutual in the amount of $3,211.47, in payment of the reserve value, on April 1, 1957, of his paid-up benefits under Certificate No. 19 of the master policy. Thus, any vested right which Mullaly may have acquired in the Advance retirement plan terminated with his election to accept, and his acceptance of, this commutation of his benefits thereunder (and no part of that benefit appears to have passed to Carlisle to constitute consideration for the alleged oral promise.) Plaintiff's written contract with Carlisle to serve as chief executive officer of its Advance Division specifically limited the period of his employment to three years from Carlisle's acquisition of the stock of Advance. This acquisition was consummated in April of 1955. The latest possible date
In his discovery deposition of June 24, 1959, Mullaly testified that the alleged agreement here in suit was oral, that it was a part of a continuing conversation which took place between him and Mr. Schanbacher (president of Carlisle) and that he, Mullaly, has no written memorandum of such an agreement, nor was there any witness to the conversation. Schanbacher testified, in his deposition of the same date, that no such conversation ever occurred and no such promise was ever made. While the question of whether the promise was made, and that of Schanbacher's authority to bind Carlisle in making such a promise are issues of fact, if there was no consideration for the promise as a matter of law, the plaintiff would not be entitled to recover in this action.
Only in the event that there is no genuine issue of fact to be resolved may a summary judgment issue on a motion such as that presently under consideration. Any doubt as to the existence of a genuine issue of fact is to be resolved against the moving party, who has the burden of demonstrating that no such genuine issue exists. Fairbanks, Morse & Co. v. Consolidated Fisheries Co., 3 Cir., 1951, 190 F.2d 817, 824; Lawlor v. National Screen Service Corp., 3 Cir., 1956, 238 F.2d 59, 65, vacated 352 U.S. 992, 77 S.Ct. 526, 1 L.Ed.2d 540; Krieger v. Ownership Corp., 3 Cir., 1959, 270 F.2d 265. Although the Court of Appeals in the Krieger case denied a petition for rehearing, two of the members of the Court, concurring in the result, dissented from some of the language employed in the opinion for the majority by taking issue with the statement that "facts conceded and embodied in a pretrial order cannot be the basis of a summary judgment." On the pretrial conference in the case presently before me the plaintiff was afforded an opportunity to reiterate, modify, qualify and amplify the contentions respecting the consideration for the oral promise here in suit (see footnote 4 supra), which he had previously asserted in his complaint, his amended complaint, his deposition and his brief on the present motion. The opinion of the Circuit Court in Krieger quotes with approval from that in the Tenth Circuit in Zampos v. United States Smelting, Refining & Mining Co., 1953, 206 F.2d 171, 173 which describes the purpose of Rule 56 to be "to provide against the vexation and delay which necessarily comes from the formal trial of cases in which there is no substantial issue of fact. It is to permit the expeditious disposition of cases of that kind. * * * And it (the Rule) should be invoked with caution to the end that litigants may be afforded a trial where there exists between them a bona fide dispute of material facts." Citing Associated Press v. United States, 1945, 326 U.S. 1, 6, 65 S.Ct. 1416, 89 L.Ed. 2013. The contentions of the plaintiff in the case before me respecting the existence of legal consideration for the promise in suit, whether they be expressed in the complaint, the amended complaint, the plaintiff's deposition, plaintiff's brief on the motion or plaintiff's contentions at the pretrial conference, pose for the Court the purely legal question, viz., whether, assuming the truth of the facts (as distinguished from the conclusory allegations set forth in such contentions), such legal consideration can be spelled out. In effect the present motion is suggestive of a demurrer to the allegations of the plaintiff respecting the sufficiency of consideration for the promise. I am strongly inclined to the opinion that assuming the facts, as distinguished from the conclusions embodied in the allegations in which the plaintiff couches his contention that the promise was supported by a legal
At the pretrial conference in this case, heard in the interval between argument of the present motion and the writing of this opinion, plaintiff's contentions respecting consideration for the oral promise in suit were stated as follows: (1) plaintiff's agreement to accept status under the proposed Cincinnati Milling retirement plan plus a sum of money from State Mutual equivalent to the actuarial value of his existing right under its policy; (2) plaintiff's agreement to use his best efforts to persuade Advance employees to accept inclusion in the Cincinnati Milling plan as in their best interests; (3) plaintiff's agreement to persuade Advance employees to continue in the employment of Carlisle, plaintiff's said undertaking to survive any termination of his employment by defendant; and (4) the representations made by Advance to its employees, in the form of a brochure explaining the Advance plan under its contract with State Mutual, to make an additional premium payment to the insurance company for the purchase of a past-service retirement annuity for each employee of Advance with credited past service who was enrolled under the plan on November 30, 1953. Plaintiff claims to have been a beneficiary of the foregoing undertaking (4), and asserts that Carlisle assumed all of the undertakings of Advance to the latter's employees.