This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
If the time of performance is fixed only by reference to the happening of a future event which, in the ordinary course of nature, cannot happen inside of a year, the contract is within the statute. Thus a contract in the spring of one year to raise potatoes during the following year, and to deliver them ;1 or a contract to buy a colt when it is four2 or five3 months old, the contract being made when the period of gestation begins, and such period being so long that in the natural course of events the addition of four or five months thereto would carry it beyond the year are all held to be within this clause of the statute. Contracts which are intended by the parties as permanent arrangements, but which may be discharged within the year by some change of circumstances, are held by many courts not to be within this clause of the statute. Thus a contract by a railway company to keep up a switch for one as long as he needs it;4 or to keep up cattle-guards on A's land as long as the railroad is operated over such land;5 or to pay half the expenses of erecting gates and maintaining a watchman at the intersection of a steam railway and an electric railway,6 have none of them been held to be within this clause of the statute. The theory on which they are decided is that within the year the railway may change its location, go out of business, and the like, and thus discharge the contract. This reasoning is not followed by all the courts, however. Thus an oral agreement to stop cars permanently at a given point was held to be within the statute.7 A contract of insurance is generally held not to be within this clause of the statute of frauds,8 even if by its terms the insurance is to be in force for more than one year, as for three9 or five10 years. This rule rests on the theory that a loss may happen within the year, discharging the contract. If the contract of insurance is to be in force a year,11 or is to be renewed from year to year,12 the statute clearly has no application. The courts are not unanimous on the foregoing propositions, however. The Massachusetts, courts distinguish between contracts in which the happening of the event within the year prevents full performance and those in which it leaves the contract fully performed.13 Other authorities seem to make the same distinction, holding that discharge within the year, as distinguished from performance, does not keep the statute from applying to contracts whose performance is to be postponed beyond the year.14
1 Johnston v. Bowersock, 62 Kan. 148; 61 Pac. 740; Standard Oil Co. v. Denton (Ky.), 70 S. W. 282; Linscott v. Mclntire, 15 Me. 201; 33 Am. Dee. 602; Lyon v. King, 11 Met. (Mass.) 411; 45 Am. Dec. 219; Peters v. Westborough, 19 Pick. (Mass.) 364; 31 Am. Dec. 142; Blanding v. Sargent 33 N. H. 239; 66 Am. Dec. 720; Blake v. Voigt, 134 N. Y. 69; 30 Am. St. Rep. 622; 31 X. E. 256; Lockwood v. Barnes, 3 Hill (X. Y.) 128; 38 Am. Dec. 620.
2 Estey v. Aldrich, 46 X. H. 127: Blake v. Voigt, 134 X. Y. 60; 30
Am. St. Rep. 622; 31 X. E. 256.
3 Johnston v. Bowersock, 62 Kan. 148; 61 Pac. 740.
4 Roberts v. Rockbottom Co., 7 Met. (Mass.) 46.
5 Standard Oil Co. v. Denton (Ky.). 70 S. W. 282.
6 Meyer v. Roberts, 46 Ark. 80; 55 Am. Rep. 567.
1 Pitkin v. Noyes, 48 X. H. 294; 97 Am. Dec. 615; citing Emery v. Smith, 46 X. H. 151.
2 Butler v. Shehan, 61 111. App. 561.
3 Groves v. Cook, 88 Ind. 169; 45 Am. Rep. 462.
4 Warner v. Ry., 164 U. S. 418; reversing, 54 Fed. 922; Sweet v. Lumber Co., 56 Ark. 629; 20 S. W. 514.
5 Arkansas, etc., Ry. v. Whitley, 54 Ark. 199; 11 L. R. A. 621; 15 S. W. 465.
6 Richmond, etc., Ry. v. R. R., 96 Va. 670; 32 S. E. 787.
7 Pitkin v.R. R., 2 Barb. Ch. (N. Y.) 221; 47 Am. Dec. 320.
8 Franklin v. Ins. Co., 20 Wall. (U. S.) 560; Commercial Fire Ins. Co. v. Morris, 105 Ala. 498; 18 So. 34; Emery v. Ins. Co., 138 Mass. 398; Croft v. Ins. Co., 40 W. Va.
508; 52 Am. St. Rep. 902; 21 S. E. 854.
9 Sanford v. Ins. Co., 174 Mass. 416; 75 Am. St. Rep. 358; 54 N. E. 883.
10Wiebeler v. Ins. Co., 30 Minn. 464; 16 N. W. 363.
11 Howard Ins. Co. v. Owen, 94 Ky. 197; 21 S. W. 1037; Sanborn v. Ins. Co., 16 Gray (Mass.) 448; 77 Am. Dec. 419.
12 Phoenix Ins. Co. v. Ireland. 9 Kan. App. 644; 58 Pac. 1024; First Baptist Church v. Ins. Co., 19 N. Y. 305; s. c, 28 N. Y. 153.