Multiple Documents Held Sufficient to Satisfy Statute of Frauds, Employer Bound by Salary Continuation Agreement

Multiple Documents Held Sufficient to Satisfy Statute of Frauds, Employer Bound by Salary Continuation Agreement

      In a recent decision from the Kentucky Supreme Court, it affirmed and applied the rule that the statute of frauds may be satisfied by a combination of written instruments. Baumann Paper Co., Inc. v. Kenneth Holland, No. 2016-SC-000511-DG, 2018 WL 2979413 (Ky. June 14, 2018).

      Holland had been an employee of Baumann Paper, commencing employment in in 1971 and ending with early retirement in September 2013, his early retirement being consequent to certain heart problems. In 1987, Baumann had terminated its (apparently defined benefit) pension plan and substituted a variety of options including a salary continuation agreement (“SCA”). An SCA agreement had been signed by Holland and Baumann pursuant to the signature of the corporate secretary, Mitchell Baumann. However, Fred Baumann, the corporate president, did not sign the SCA. The agreement had, however, been approved by Baumann’s Board of Directors, and it had directed that the corporate president sign same. That resolution read:

IT is hereby resolved that Baumann Paper Co., Inc. approves the Non-qualified Salary continuation (sic) Agreement, dated August 12, 1987 which had been executed by Kenneth Holland and the president of Baumann Paper Co., Inc. on behalf of Baumann Paper Co., Inc., and subject to ratification.

      When Holland sought to collect under the SCA, Baumann Paper argued that there existed no enforceable agreement, and that the statute of frauds barred its enforcement. Holland argued that the various writings were sufficient to satisfy the statute of frauds which, generally, requires that any agreement which is not to be performed within the year must be in a signed writing. KRS § 371.010.

      The Supreme Court, affirming the Court of Appeals, held that the combination of the signed SCA and the corporate resolutions adopted in connection therewith were sufficient to satisfy the statute of frauds.

Though the SCA lacked Fred Baumann’s signature, the corporate resolution and the SCA signed by the corporate secretary satisfy the statute of frauds. Separate writings may form the memorandum of contract required by the Statute of Frauds. *3.

      The Court also found that the corporate secretary had implied authority to, on behalf of the corporation, sign the SCA.

      The case was remanded to the trial court to make findings of fact regarding the breach of contract, the extent of Holland’s disability, damages, and a fraud claim.