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Lee v. Jenkins Bros. - 268 F.2d 357 (2d Cir. 1959)

Rule:

An individual's promise to guarantee payment of a pension by a corporation is a contract of suretyship and hence expressly prohibited by the Connecticut Statute of Frauds, Conn. Gen. Stat. § 8293 (1949).

Facts:

At the time of the alleged contract, plaintiff Bernard Lee was in the employ of the Crane Company for 13 years. In December 1919, the Crane Company agreed to sell its Bridgeport plant to Jenkins Brothers, a New Jersey corporation. According to Lee's testimony, this was the first venture into the manufacturing phase of the business for Jenkins, which was formerly content to be merely a customer of Crane. Jenkins was therefore extremely anxious to secure competent personnel, particularly the old Crane employees. With this in mind Charles V. Barrington, Vice President of Jenkins in charge of manufacturing, approached Lee in February, 1920, in an attempt to induce him to join Jenkins. Lee, however, was reluctant to do so. He felt his prospects with Crane were good and he had accumulated 13 years of pension rights under the Crane Company plan that he did not want to give up. Some time after this conversation but before June 1, 1920, Barrington arranged a meeting for Lee at his hotel suite in Bridgeport with the co-defendant Yardley, president of Jenkins. Yardley convinced Lee of his fine prospects with Jenkins, of the company's need for him as assistant to Barrington, and allegedly made a promise on behalf of Jenkins and a promise on his own behalf with respect to Lee's pension rights, “regardless of what happens”. The agreement was never reduced to writing. Lee failed to meet one of the express requirements for receiving the pension. In 1950 the payments under the alleged pension agreement became due. Although nothing was paid under this agreement, Lee waited until 1955 to institute suit against Jenkins, joining Yardley eight and one-half months later. The District Court dismissed the complaint. Lee appealed the dismissal.

Issue:

Was Lee entitled to receive the pension orally promised by Yardley?

Answer:

No.

Conclusion:

The dismissal of the complaint was affirmed by the Court. First, defendant president's statement that plaintiff would receive the pension "regardless of what happens" did not prove plaintiff was promised the pension even if he did not meet the plan requirements. Second, since both plaintiff and defendant president believed defendant corporation had an obligation to plaintiff, defendant president's guarantee of that obligation was a suretyship agreement. Thus, it had to be in writing for statute of frauds purposes, regardless of whether defendant president actually had authority to bind defendant corporation.

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