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JOSEPH v. KRULL WHOLESALE DRUG CO.

December 19, 1956

Charles E. JOSEPH
v.
KRULL WHOLESALE DRUG CO.



The opinion of the court was delivered by: DUSEN

This case is before the court on plaintiff's post-trial motions after a jury rendered a special verdict in defendant's favor in this contract action. Considering the testimony in the light most favorable to the jury's verdict, the facts will be summarized below.

Following preliminary meetings with the officers of the defendant company, *fn1" the plaintiff, Charles E. Joseph, on Wednesday, October 17, 1951, at the Warwick Hotel in Philadelphia met with Paul D. Helfrich, President, and Harry C. Andersen, Vice-President and Secretary, of the defendant company. At this time, the latter officers presented to the plaintiff an offer of employment as sales manager for the defendant, Krull Wholesale Drug Company, on the basis of paying him $ 833.33 a month. *fn2" The agreement was to be terminable at will by either party. *fn3" At the meeting, the plaintiff suggested that the company make him a vice-president in charge of sales, as it would carry prestige in the trade, and also said he would like to discuss the entire thing with his wife and family and would call either Mr. Helfrich or Mr. Andersen to let them know whether he would accept the proposition offered to him.

 On Friday, October 19, plaintiff called Mr. Andersen, who was at his home in Drexel Hill, Pa., from Pelham, New York, and accepted the offer. On Monday, October 22, 1951, a meeting of the Board of Directors was called, at which Mr. Paul Helfrich, Mr. Andersen and Mr. Wilton Helfrich were present. *fn4" As a result of this meeting, a resolution was adopted by the Board which elected the plaintiff vice-president in charge of sales of the company, effective October 29, 1951, to continue at the discretion of the Board of Directors. *fn5"

 Plaintiff brought suit alleging a fixed term of employment to December 31, 1952, by means of a verbal contract, and demanded judgment for the loss of wages involved. Following a jury verdict on special questions, *fn8" establishing that the contract was entered into as described above and was to be continued at the discretion of the board, plaintiff moved to set aside the verdict the judgment entered thereon and for a new trial.

 To determine applicable law in a federal court, where jurisdiction is based, as here, on diversity of citizenship, the substantive rights of the parties are determined according to the forum's local law. Erie R. Co. v. Tompkins, 1938, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188. See, also, Klaxon Co. v. Stenton Electric Mfg. Co., 1941, 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477. *fn9" Therefore, we look to the law of Pennsylvania to determine the place of contracting.

 When acceptance is made over the telephone, as here, the place of contracting is where the acceptor speaks. Rothenberg v. H. Rothstein & Sons, 3 Cir., 1950, 181 F.2d 345, 346; Restatement of Conflicts of Laws, 326, comment C. Thus, here the place of contracting was New York. *fn10"

 In Pennsylvania the validity of a contract, so far as it may be affected by the statute of frauds, is governed by the law of the place of contracting and we must, therefore, look to the New York Statute of Frauds to determine the validity of this contract. Continental Collieries v. Shober, 3 Cir., 1942, 130 F.2d 631, 633; Renault v. L. N. Renault & Sons, D.C.E.D.Pa.1950, 90 F.Supp. 630; and Bernstein v. Lipper Manufacturing Co., 1932, 307 Pa. 36, 43 160 A. 770. *fn11"

 In the Bernstein case, supra, the court emphasized the value of this rule when performance takes place in more than one state. *fn12" Here, likewise, there was performance of the contract in jurisdictions other than Pennsylvania *fn13" and so there is present the additional reason for finding the governing law to be that of the place of contracting.

 The New York Statute of Frauds, in Section 31 of the Personal Property Law, McKinney's Consol.Laws, c. 41, states:

 ' ยง 31. Agreements required to be in writing

 'Every agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking;

 '1. By its terms is not to be performed within one year from the making thereof or the performance of which is not to be completed before the end of a lifetime; * * *.'

 Though the cases are not crystal clear in their holdings, it seems apparent that in a situation such as this the New York courts would apply this statute and render the contract void. See Silverman v. Indevco, Inc., Sup.1951, 106 N.Y.S.2d 669, affirmed 1951, 279 App.Div. 573, 107 N.Y.S.2d 542; *fn14" Lindeman v. Textron, Inc., 2 Cir., 1956, 229 F.2d 273, 276; *fn15" and Canister Co. v. National Can Corp., D.C.D.Del.1945, 63 F.Supp. 631, appeal dismissed 3 Cir., 1947, 163 F.2d 683. *fn16" See, also, Rubin v. Irving Trust Co., Sup.1951, 107 N.Y.S.2d 847, 852, affirmed 1953, 305 N.Y. 288, 113 N.E.2d 424. *fn17" The latest discussion by the New York courts of this rule in Rubin v. Irving Trust Co., 1953, 305 N.Y. 288, 113 N.E.2d 424, relied upon by plaintiff, is quite different from this case. *fn18" From a reading of the New York cases and the Lindeman case, supra, it appears to the court that the Second Circuit has led the way by holding sub-division 10 *f ...


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