A genus one labeled circle tree is a tree with its vertices on a circle, such that together they can be embedded in a surface of genus one, but not of genus zero. We define an e-reduction process whereby a special type of subtree, called an e-graph, is collapsed to an edge. We show that genus is invariant under e-reduction. Our main result is a classification of genus one labeled circle trees through e-reduction. Using this we prove a modified version of a conjecture of David Hough, namely, that the number of genus one labeled circle trees on n vertices is divisible by n or n/2. Moreover, we explicitly characterize when each of these possibilities occur.