General Federal Construction, Inc. v. James A. Federline, Inc.

Smith, J., delivered the opinion of the Court. We shall here hold that the “one year clause” of the Maryland Statute of Frauds does not bar collection of damages for breach of an oral contract absent an express and specific provision in that contract that it was not to be performed within one year or a clear demonstration by its terms that it was not or could not be so performed. In the circumstances of this case we find that there was a clear demonstration that the contract could not be performed within one year. Thus, there must be a reversal.

This controversy arises from the construction of the Ambulatory Care Facility of Prince George’s General Hospital and Medical Center. Appellant, General Federal Construction, Inc. (General), is a general contractor. Appellee, James A. Federline, Inc. (Federline), submitted a bid to General for a subcontract for the mechanical work on this project. General was awarded the contract for the construction of the facility.

It is conceded that Federline’s bid for the mechanical work was used by General in submitting its bid and was the low bid received at that time. General ultimately awarded the subcontract to someone other than Federline. Federline sued General alleging a breach of “an ⁶⁹³ express oral agreement” under which Federline was to do the mechanical portion of the work on the project. General’s defense in the circuit court included a contention that recovery was barred under the terms of the Statute of Frauds (the statute) as in force in Maryland, now Maryland Code (1957,1978 Repl.

Yol.) Art. 39C, § 1 (3), which provides that no action may be brought upon any agreement “not to be performed within the space of one year from the making thereof” unless “the contract or agreement upon which the action is brought, or some memorandum or note of it, is in writing and signed by the party to be charged, or some other person lawfully authorized by him.” This same language is found in the fourth section of the English Statute of Frauds, 29 Charles II, ch. 3, which, by reason of the provisions of Maryland Declaration of Rights Art. 5, was in effect in Maryland until its repeal by Chapter 649 of the Acts of 1971, which enacted a new statute. See 2 J. Alexander, British Statutes in Force in Maryland 509, 534-35 (2d ed„ W. Coe, 1912). The trial judge ruled as a matter of law that the statute did not preclude recovery. A judgment in the amount of $82,800 was entered in favor of Federline against General upon a jury’s verdict in the Circuit Court for Montgomery County.

General appealed to the Court of Special Appeals. We granted the writ of certiorari prior to consideration of the case by that court. For purposes of this case we need only address the first contention presented by General to us, that the trial judge erred in failing to direct a verdict in its favor on the issue of the Statute of Frauds. There was testimony adduced on behalf of Federline flatly stating that the work could be performed within one year.

Although the contract documents considered by prospective general contractors and subcontractors contain no specific statement of the time to be consumed in the project, there is no question but that it was estimated that 600 days would be required for completion. In support of its argument here on the matter of a directed verdict General points to this fact plus certain warranties which the subcontract bid documents required and work as to certain items which those documents ⁶⁹⁴ specified should be done subsequent to completion of the project. Under the contract documents a subcontractor who did the work Federline says it was to do was required in certain instances to guarantee that all material and apparatus used would “be new, of first-class quality____” There were a number of instances in which certain work was specified to be performed upon the completion of the project such as demonstrating “proper operation of the plumbing controls,” and seeing that “all construction dirt [was] removed” from roof drains, water closets, urinals and the like. The mechanical contractor was specifically mandated to “provide the necessary skills and labor to assure the proper operation and to provide all required current and preventative maintenance for all equipment and controls provided under [one section of the contract] for a period of one year after substantial completion of the contract.” Also, when the condensor water system was placed in operation the subcontractor was obligated to “furnish a complete water treatment service for control of corrosion, carbonate scale and slime or algae” for the period of “one calendar year after Owner’s acceptance of installation____” The subcontractor was required to give “[a] one year warranty” as to heat pumps “for furnishing parts and labor for replacing any part of the conditioners] which [might become] defective in normal operation, with an additional four year warranty covering replacement of the hermetic compressor at the factory or authorized depot.” Certain other heating equipment was to have a one year warranty “for furnishing parts and labor for replacing any part of the control panel which [might become] defective in normal operation from the date of the original installation.” In Ellicott v. Peterson, 4 Md. 476, 487-91 (1853), Chief Judge LeGrand carefully reviewed for our predecessors the law relative to the Statute of Frauds and contracts to be performed within one year.

Judge McWilliams again examined the law for this Court in Sun Cab Co. v. Carmody, 257 Md. 345, 349-51 , 263 A. 2d 1 (1970). He found that since the time of Ellicott the law has been well established in this ⁶⁹⁵ State that where there is a possibility that a contract may be performed within a year the remedy for breach of the contract is not barred by the Statute of Frauds, notwithstanding the fact that the parties might have intended that operation should extend through a much longer period. The old Maryland authority, W. Brantly, Law of Contracts % 59 at 139 (2d ed. 1922), states, “The statute does not apply if the contract can by any possibility be completed within a year, although the parties may have intended that its operation should extend through a much longer period and in fact it does so extend.” (Footnote omitted.) Campbell v. Burnett, 120 Md. 214 , 87 A. 894 (1913), is correctly cited in 2 A. Corbin, Contracts § 444 at 535 (1950), for the proposition that it makes no difference how long the parties expect the performance to take or how reasonable and accurate those expectations are, if the agreed performance can possibly be completed within a year. The full Corbin statement is: “It makes no difference how long the agreed performance may be delayed or over how long a period it may in fact be continued.

It makes no difference how long the parties expect performance to take or how reasonable and accurate those expectations are, if the agreed performance can possibly be completed within a year. Facts like these do not bring a contract within this provision of section 4. A provision in the contract fixing a maximum period within which performance is to be completed, even though that period is much in excess of one year, does not make the statute applicable. A building contract is frequently such that it can be fully performed within one year, even though the fixed time limit is in excess of one year.

If so, it is not within the one-year clause, however long the parties may expect to take or actually do take.” Id. at 535-37 (footnotes omitted). 3 S. Williston, Law of Contracts § 495 at 575-76 (3d ed. W. Jaeger, 1960), states, “It is well settled that the oral contracts ⁶⁹⁶ invalidated by the Statute because not to be performed within a year include those only which cannot be performed within that period.” Some contracts by their terms can be performed within one year, hence the statute is not applicable, although the contract might well have continued for a longer period of time. Such a contract was before the Supreme Court in Warner v. Texas & P. Ry., 164 U. S. 418 , 17 S. Ct. 147 , 41 L. Ed. 495 (1896). Mr. Justice Gray carefully reviewed for the Court cases so holding.

The statute was held not applicable to a contract between a railroad company and an individual by which he was to furnish ties and grade ground for a switch at the place where he proposed to erect a sawmill and the railroad company was to put down rails and maintain the switch for the plaintiffs benefit for shipping purposes as long as he needed it. The Court pointed out that the parties might have expected the contract to continue for more than a year, that it might have been improbable