Clark v. Coats & Suits Unlimited

135 Mich. App. 87, 352 N.W.2d 349 (1984)

 

RULE:

The elements of equitable or promissory estoppel are: (1) a promise; (2) that the promisor should reasonably have expected to induce action of a definite and substantial character on the part of the promisee; (3) which in fact produced reliance or forbearance of that nature; and (4) under such circumstances that the promise must be enforced if injustice is to be avoided.

FACTS:

The employee alleged that he had an agreement with the corporation and with the individuals that he would leave his position as a buyer for another company and would establish a new store in exchange for a salary of $ 40,000 and a 20 percent ownership in the proposed clothing store. This was not, however, written but the employee proceeded with the agreement and moved together with his family to setup a store in Detroit. The employee received his promise salary but not the promised stock transfer.  After several discussions between the parties, the employee received from defendants’ lawyers a memorandum which replaced their previous agreement by reducing the stock transfer to 10%. The memorandum contained the typewritten names of the individual defendants. The employee rejected the proposal and eventually filed suit. The defendants moved for accelerated judgment based upon the statute of frauds. The trial court granted since the statute of frauds defeats the employee’s claims that an agreement existed between the parties because the alleged agreement could not be performed in less than a year. On appeal, the employee asserted that the individuals' typewritten names listed in the memorandum attached to the complaint could properly satisfy the signature requirement of the statute of frauds. The individuals denied signing the memorandum and also denied ever seeing the document.

ISSUE:

Did the memorandum satisfy the requirement of the statute of frauds?

ANSWER:

Yes.

CONCLUSION:

The court concluded that the issue was one of fact and that the trial court erroneously decided the factual issues on its own. In the event that the employee could not show that the memorandum satisfied the statute of frauds, the court concluded that the employee could proceed on the alternative theory of promissory estoppel because factual issues existed to support the theory. As a buyer, plaintiff had been receiving $ 25,000 annually. Accordingly, if it is true that the employee was to receive an annual increase in pay of plus ownership interest in the business, one could say that this promise should reasonably have induced action on the employee’s part to accept the corporation’s offer. The employee left his former employment as a buyer, moved himself and his family to the Detroit area, set up and then, subsequently, ran the corpor’ clothing store, hence it is reasonable to believe that, in fact, the promise "produced reliance" on plaintiff's part. The court also determined that the employee should be permitted to prove his case under a theory of quantum meruit.

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