UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

LOGISTICS TRANSPORTATION COMPANY,
INCORPORATED,
Plaintiff-Appellant,

v.                                                                No. 96-2750

TIMBER TRUCKING COMPANY,
INCORPORATED,
Defendant-Appellee.

Appeal from the United States District Court
for the Eastern District of Virginia, at Richmond.
James R. Spencer, District Judge.
(CA-96-391-3)

Argued: December 4, 1997

Decided: April 27, 1998

Before NIEMEYER, Circuit Judge, WILSON, Chief United States
District Judge for the Western District of Virginia, sitting by
designation, and JONES, United States District Judge for the
Western District of Virginia, sitting by designation.

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Reversed and remanded by unpublished per curiam opinion.

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COUNSEL

ARGUED: David Gant Shuford, LECLAIR RYAN, P.C., Richmond,
Virginia, for Appellant. Samuel Vernon Priddy, III, SANDS,
ANDERSON, MARKS & MILLER, Richmond, Virginia, for Appel-
lee. ON BRIEF: Steven W. Morris, LECLAIR RYAN, P.C., Rich-
mond, Virginia, for Appellant. Albert M. Orgain, IV, Allan M.
Heyward, Jr., Henry C. Spalding, III, SANDS, ANDERSON,
MARKS & MILLER, Richmond, Virginia, for Appellee.

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Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

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OPINION

PER CURIAM:

In this appeal from a grant of summary judgment, the plaintiff-
appellant contends that the district court erred in deciding that recov-
ery under the contract at issue was barred because the written memo-
randum lacked an essential term of the contract. We hold that the
statute of frauds does not bar an action on this contract, and reverse.

I

Logistics Transportation Company, Inc. ("Logistics"), the plaintiff
below and the appellant here, is a corporation which acts as a broker
or agent for motor carrier transportation services. On February 9,
1994, it entered into a written "Agency Agreement" with Timber
Trucking Company, Inc. ("Timber"), a corporation in the trucking
business. The Agency Agreement provided, among other things, that
Logistics was to solicit and obtain new business for Timber.

Before the Agency Agreement was signed, a third entity, Manches-
ter Tank Company ("Manchester"), a manufacturer of propane tanks
in Petersburg, Virginia, asked Logistics to locate a new motor carrier
for its freight. Logistics introduced Manchester to Timber, and at the
time Timber and Logistics signed the Agency Agreement they were
in the process of negotiating with Manchester for its business. In
anticipation of securing such business, Timber and Logistics provided
in their Agency Agreement that Timber would pay Logistics a five

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percent commission on Manchester's trucking business. For all other
business, the Agency Agreement directed that Logistics would
receive an eight percent commission. The Agency Agreement also
provided that either party might terminate "this agreement" for cause
or otherwise by seven days written notice.

On April 29, 1994, Manchester, Timber and Logistics entered into
a written agreement (the "Manchester Agreement"). The preamble
recited that it was a "long-term contract . . . for the purpose of moving
finished and raw products within the eastern United States and Can-
ada." The Manchester Agreement provided that Manchester was to
pay Timber $1.65 per loaded mile, with a minimum charge per load
of $250 and drop charges of $35 per occurrence. Timber was to main-
tain six to eight trailers at Manchester's facility at all times, and
Logistics was to serve as Timber's "transportation agent," dispatch
loads, monitor fuel costs and the quality of service on a regular basis,
and "settle all disputes" between Timber and Manchester. The Man-
chester Agreement had a term of five years.

At Logistics' request, the amount of commission that Timber was
to pay to Logistics was omitted from the Manchester Agreement in
order to keep the figure secret from Manchester.

The relationship between Timber and Logistics continued until
March of 1996, during which Logistics received a commission of five
percent of the amount paid by Manchester. At that time Timber wrote
Logistics giving seven days notice of the termination of the Agency
Agreement. Thereafter, Logistics received no further commissions
from the Manchester business.1 As a result, Logistics filed the present
action against Timber in state court, which Timber removed, based on
diversity jurisdiction, to the district court below. Logistics claimed
that Timber had breached the Manchester Agreement by refusing to
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1 The record does not reflect whether Logistics performed any services
under the Manchester Agreement after receiving notice of termination of
the Agency Agreement. At oral argument, counsel for Timber repre-
sented that Manchester has acquiesced in Logistics' forced removal from
the business relationship. Presumably, therefore, Logistics has not
incurred further cost of performance, although it has lost any anticipated
profit under the contract.

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pay further commissions, and also asserted causes of action on
implied contract and quantum meruit.

After limited discovery in the case, Timber moved for summary
judgment in its favor, relying on the Agency Agreement's seven-day
termination clause, and contending that notice under this provision
also canceled Logistics' right to commissions under the Manchester
Agreement.

The district court granted summary judgment to Timber, but on the
sole ground that the statute of frauds made the Manchester Agreement
unenforceable since it could not be performed within a year. The
court held that because the writing lacked an essential term -- the
compensation for Logistics -- it was insufficient as a written memo-
randum. Following summary judgment, Logistics moved for recon-
sideration on the ground that the statute of frauds had not been argued
by the parties. However, the district court denied Logistics' motion
for reconsideration and this appeal followed.

II

Logistics argues on appeal that the district court should not have
decided the case sua sponte based on the statute of frauds, since doing
so denied Logistics the opportunity to respond and present evidence
on the issue. As Logistics points out, prior notice would have allowed
Logistics to present evidence of possible defenses to the statute of
frauds.2

While a remand would be proper on this procedural ground,3 we
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2 Although it is not clear from this record, Logistics might have shown
that a factual question existed as to whether Timber was estopped from
asserting the statute of frauds, on the ground that Logistics changed its
position in reliance upon the contract. See T... v. T..., 224 S.E.2d 148,
152 (Va. 1976). The presence of a genuine issue of material fact in this
regard would have precluded summary judgment. Fed. R. Civ. P. 56(c).
3 Summary judgment cannot be granted on a ground not argued without
the requisite ten days notice afforded by Fed. R. Civ. P. 56(c). Judwin
Properties, Inc. v. United States Fire Ins. Co., 973 F.2d 432, 436 (5th
Cir. 1992). The statute of frauds had been pleaded by Timber in its
answer, but not asserted in its motion for summary judgment.

                    4
believe that the direct answer to the appeal is that the district court
erred in its analysis of the applicability of the statute of frauds.
Accordingly, we will reverse on that basis.

The Manchester Agreement was a triparte contract. Each of the
three parties had certain defined responsibilities. The consideration to
be paid by Manchester to Timber was expressly set forth, in the form
of $1.65 per loaded mile, with certain minimum and drop charges.
What was not set forth in the writing was the portion of that payment
to be received by Logistics. The district court held that this provision
was an essential term of the agreement, and without it, there was not
a sufficient memorandum of the contract, within the meaning of the
statute of frauds.

We hold, however, that the omission of the amount of Logistics'
commission was not, under these circumstances, a violation of the
statute of frauds.

III

The purpose of the statute of frauds is to prevent frauds based upon
oral proof of purported contracts. See Drake v. Livesay, 341 S.E.2d
186, 188 (Va. 1986).4 The written memorandum required to satisfy
the statute of frauds is not the contract itself, but must be sufficient
to assure that such a contract does exist and thus serve the purpose
of the statute. Id. The writing must set forth the essentials of the
agreement, and the contract's consideration is frequently character-
ized as an essential element, at least where it is executory. See 4 Sam-
uel Williston & Walter H. E. Jaeger, A Treatise on the Law of
Contracts § 570 (3d ed. 1961 & Supp. 1997).5
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4 Since this is a diversity case, we must apply the forum state's conflict
of laws rules. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496
(1941). The district court and the parties assumed that Virginia law
applies. The traditional view is that the forum's statute of frauds is to be
applied, where, as in Virginia, the statute operates only to affect the
enforceability of the contract, and not its validity. See Stein v. Pulaski
Furniture Corp., 217 F. Supp. 587, 590-91 (W.D. Va. 1963).
5 The Virginia statute of frauds contains the proviso that "[t]he consid-
eration need not be set forth or expressed in the writing, and it may be

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However, it is clear that a missing term of a memorandum may be
supplied by a separate related document, even if the separate docu-
ment is unsigned. See Jordan v. Mahoney, 63 S.E. 467, 468 (Va.
1909); Restatement (Second) Contracts § 132 cmt. c (1979). The
Agency Agreement, although unsigned by Timber, is thus available
to supply the missing term of Logistics' commission under the Man-
chester Agreement.

Under Virginia law, it is necessary that the signed paper refer to the
unsigned writing "in clear and distinct terms." American Indus. Corp.
v. First & Merchants Nat'l Bank, 219 S.E.2d 673, 676 (Va. 1975). As
stated by the Virginia Supreme Court in its fullest exposition of the
issue:

           It is well settled that where the memorandum of the bargain
           between the parties is contained in separate pieces of paper,
           and these papers contain the whole bargain, they form
           together such a memorandum as will satisfy the statute, pro-
           vided the contents of the signed paper make such reference
           to the other written paper, or papers, as to enable the court
           to construe the whole of them together as constituting all the
           terms of the bargain. But if it be necessary to produce parol
           evidence in order to connect a signed paper with others
           unsigned, by reason of the absence of any internal evidence
           in the contents of the signed paper to show a reference to or
           connection with the unsigned papers, then the several papers
           taken together do not constitute a memorandum in writing
           of the bargain so as to satisfy the statute. It is not necessary
           that the signed paper should refer to the unsigned paper as
           such. It is sufficient to show that a particular unsigned
           paper, and nothing else, can be referred to, and parol evi-
           dence is admissible for that purpose.
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proved (where a consideration is necessary) by other evidence." Va.
Code Ann. § 11-2 (Michie 1993). While there is no Virginia authority on
point, statutes similar to Virginia's nevertheless have been construed to
require the memorandum to state the consideration, where the contract
involved bilateral promises, and the consideration in question was the
defendant's promise. See, e.g., Reid v. Diamond Plate-Glass Co., 85 F.
193, 203 (6th Cir. 1898).

                    6
Darling v. Cumming, 23 S.E. 880 (Va. 1896) (citations omitted).

Here the signed writing, the Manchester Agreement, does not
expressly refer to the unsigned writing, the Agency Agreement. How-
ever, it does show substantial connection with it. Both documents
relate to Logistic's agency duties in relation to Timber's trucking
business, and both refer to Manchester as a customer for that busi-
ness.

The two agreements are certainly separable in that the Agency
Agreement involved a range of possible relationships and the Man-
chester Agreement was particularized as to one client, Manchester.
However, while the sufficiency of the relationship between writings
is always a matter of degree under the statute of frauds, Williston,
supra, § 583, we find the two writings here are sufficiently connected
to provide a memorandum that satisfies the statute of frauds.

In summary, we hold that the statute of frauds does not bar Logis-
tics' claim. Accordingly, we reverse the grant of summary judgment
and remand the case to the district court for a determination of the
parties' rights under the contract.

REVERSED AND REMANDED

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