Stearns v. Emery-Waterhouse Co.
596 A.2d 72 (Me. 1991)

  • Emery was a hardware wholesaler that also franchised “Trustworthy” brand retail hardware stores (they also owned a few Trustworthy stores directly).  The president of Emery (Hildreth) met with Stearns to discuss hiring him to run some of their retail stores.
    • Stearns already had a job with another company, and was worried that he might have a hard time finding work if Emery fired him.
  • Hildreth made an oral contract with Stearns for five years guaranteed employment with a guaranteed salary of $85k.  This contract was never put in writing.  Stearns quit his job, moved to Maine, and began working for Emery.
  • After two years, Emery moved him out of his position as manager into another, lesser job at only $68k.  After 6 months, this new position was dissolved and Stearns was fired.  He sued.
  • The Trial Court found for Stearns, on the basis of promissory estoppel, and Restatement of Contracts §139.  Emery appealed.
    • Emery contended that it had a defense under the Statute of Frauds because of Stearns’ detrimental reliance.
  • The Appellate Court reversed.
    • The Appellate Court found that the principle of equitable estoppel, based on a promisor’s fraudulent conduct, can avoid application of the Statute of Frauds, and that this principle applies to a fraudulent promise of employment.
      • The Court felt that Emery was acting in good faith, and they weren’t trying to screw with Sterns.  Therefore, equitable estoppel didn’t apply.
      • They also felt that promissory estoppel does not permit avoidance of the Statute in employment contracts that require longer than one year to perform.
    • The Court noted that Stearns did not allege fraud, and that he was compensated for the time he worked at Emery.  Therefore, the action on the basis of breach of contract was barred by the Statute of Frauds.
      • Statute of Frauds is a legislated Statute.  Promissory estoppel is simply common law.  When a Statute comes into conflict with a common law, the Statute always wins.
      • The Statute of Frauds requires that certain contracts, including contracts longer than one year, must be evidenced in writing.
      • Since the Statute of Frauds was enacted 200+ years prior to the doctrine of promissory estoppel, should it still trump the common law?
      • Compare the decision in this case with that of Hoffman v. Red Owl Stores, Inc. (133 N.W.2d 267 (Wis. 1965))  In that case, Hoffman was able to successfully argue promissory estoppel because there was never a contract formed!  Here, there were more definite terms, more definite reliance, and an actual contract, yet Stearns loses because the Statute of Frauds makes oral contracts unenforceable.