The Court finds that the two (2) payments in question were a loan from the Plaintiff to the Defendants. Next, the Court finds that the Plaintiff's claim is barred by Gen. Obligations Law §5-701 (Statute of Frauds). A half-day trial was conducted.

N.E.S. Energy, Inc., the Plaintiff, wrote two checks to the Anthony and Karrie Mazzarro, the Defendants, pro se. Anthony was employed by the company as General Manager from 1996 until 2007. The company's then principal owner, Phillip Bonsignor, is Anthony's uncle. Karrie Mazzarro also worked for a short period with the company, as did Anthony's mother (Phillip's sister), and Phillip's children. The first check, $13,650.00, dated December 7, 2001, was payable to Anthony and Karrie Mazzarro; the second check, $16,200.00, dated February 26, 2002, was payable to Anthony Mazzarro only. Written in the first check's memo space was "loan for new home;" the second check had no notation. Because the check copies were issued directly from the bank which possesses the originals, there was no question that the memo notation existed when the Defendants cashed the check, although they did not recall seeing it. There was no dispute that the checks were issued, and that the money was received by the Defendants. The money was used as a down payment for the Defendants' new home because the family, including the uncle, believed that the Defendants needed to move their family from the crime ridden neighborhood in which they resided. At a family dinner, the uncle said "you find a new house, I will help you out" with the down payment. Plaintiff claimed that the money was given as a loan, [*2]to be repaid by deductions from Anthony's Christmas bonuses which were paid each year depending on company profits. Anthony and his mother believed that when the uncle said "I will help you out" he meant that any money would be a gift. Yet, Anthony and his mother admitted that neither the words "gift" nor "loan" were used during the conversation with the uncle. The mother testified it was "presumed" to be a gift. There is no dispute that subsequently three deductions were taken from Anthony's annual bonuses: the first deduction of $1,000.00, the second year deduction of $1,000.00, and a third year deduction of $1,500.00. The dates of the deductions were not provided by either party. In 2007, the uncle, uncertain about the company's financial future, called several family members together and suggested they find better paying jobs. The deductions stopped when Anthony left the company in 2007. Anthony testified that the deductions did not begin until a new owner joined the company and then, upon discovering the checks, questioned the Plaintiff about the payments to the Defendants. Only then did the "gift" convert to a "loan" and deductions began. Both parties agreed that, except for the canceled checks, there were no other written documents between the parties.

General Obligations Law 5-701, the Statute of Frauds states, in pertinent part, that

Every agreement, promise or undertaking is void, unless it or some note or memorandum thereof be in writing, and subscribed by the party to be charged therewith, or by his lawful agent, if such agreement, promise or undertaking... by its terms is not to be performed within one year from the making thereof or the performance of which is not to be completed before the end of a lifetime.

An alleged oral agreement to pay money in installments is an "agreement that is not to be performed within one year," subject to the Statute of Frauds, when the installment payment obligation exceeds one year. 72 Am.Jur.2d, §24, Statute of Frauds, July 2010. However, where the time of payment under the agreement is indefinite or dependent upon a contingency that may happen within one year, the agreement does not fall within the "agreement not to be performed within one year" provision. Id. The Court of Appeals has interpreted this section as barring those agreements that "have no possibility in fact and law of full performance within one year." ABKCO Music v Montague, slip opinion, (SupCt, NYCounty, 2008). As long as the agreement may be "fairly and reasonably interpreted" such that it may be performed within a year, the Statute of Frauds will not act as a bar however unexpected, unlikely, or even improbable that such performance will occur during that time frame. Id. Open ended agreements with no set time for repayment do not violate the Statute of Frauds. Constantini v Bimco Industries, 125 AD2d 531, 510 NYS2d 136 (2d Dep't, 1986). Where there is absolutely no possibility in fact and law of full performance by both parties within one year, the Statute of Frauds bars enforcement of an oral contract. Americana Petroleum Corp. v Northville Industries Corp, 200 AD2d 646, 606 NYS2d 906 (2d Dep't 1994).

At the outset, this Court finds the testimony of both the Plaintiff and Defendants credible. That is, when the uncle said, "I will help you out," it is conceivable that one could presume, and that the Defendant believed, that the statement meant the money was a gift. However, the December 2001 check clearly had written upon it "loan for new home." Although the second check had no such notation, there is no reason to believe that the second check, written by another employee, also was not a loan. Having established the nature of the money to be a loan, [*3]the Court must evaluate the applicability of the Statute of Frauds.

Although there are similarities between this case and ABKCO Music and Records, supra , the loan here is of a different character. In ABKCO, loan repayment was to be made upon demand. That is, the ABKCO loan was open-ended with no set time for repayment. As held by that court, the loan could have been paid within one year, thus the Statute of Frauds was not a bar. Similarly, in Constantini, supra , the loan agreements were open-ended, with no set time for repayment. The loan in the instant significantly differs in that a payment schedule, which could not be completed within one (1) year, was put forth by the Plaintiff.

In this case, the uncle stated that the repayment was to be made by taking deductions from Anthony's Christmas bonuses. Plaintiff accountant confirmed that he was told by the uncle that repayment of the money was to be made by deductions from Anthony's Christmas bonuses. There was no testimony that repayment was to be made on demand as were the cases in ABKCO and Constantini, supra . Quite contrary, Plaintiff issued the loans with the understanding that payments were to be made each December, or thereabout. This installment arrangement is supported by the three (3) subsequent deductions made by the Plaintiff from Anthony's bonuses. Further, with three deductions each being $1,000.00 to $1,500.00, there was no expectation that the full amount of each loan would be deducted from the immediately succeeding Christmas bonus. Otherwise stated, there was no expectation that the December 2001 loan would be paid from the 2001 Christmas bonus, therefore its first repayment installment would not have been until December 2002, clearly beyond the one (1) year performance period; and the same analysis can be applied to the February 2002 loan in that the installments would exceed the one (1) year performance period.Thus, there was no agreement which was expected to be, or which could reasonable and fairly be interpreted as being capable of being, performed within one (1)year. It was clear from the testimony that Defendants' had no financial means to repay the $29,850.00 loan. It was the uncle who suggested to family members they find more secure employment. That is when Anthony left the Plaintiff's employ. There was absolutely no possibility, based upon the facts herein, that full performance could have been accomplished within one year.

Accordingly, based upon the above, it is hereby

ADJUDGED, that the December 7, 2001, $13,650.00 check payable to Anthony and Karrie Mazzarro was a loan; and it is further

ADJUDGED, that the February 26, 2002, $16200.00 check payable to Anthony Mazzarro was a loan; and it is further

ADJUDGED, that N.E.S. Energy, Inc., issued the loans, without interest, with repayment installments to occur by deducting repayments from Anthony Mazzarro's annual Christmas bonus; and it is further

ADJUDGED, that by making such loan repayment terms, the loans were not open-ended nor payable on demand; and it is further

ADJUDGED, that N.E.S. Energy, Inc., established a repayment schedule which could not be performed within one (1) year of the making of the loans; and it is further

ADJUDGED, that N.E.S. Energy, Inc.'s claim is barred by General Obligations Law §5-701; and it is further

ORDERED, that the complaint is dismissed. [*4]

Entered

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Judge