Henkel v. Educational Research Council of America

• Decision Date: 17 March 1976
• Docket Number: No. 75-524,75-524
• Citation: 45 Ohio St.2d 249,344 N.E.2d 118,74 O.O.2d 415
• Parties: , 74 O.O.2d 415 HENKEL, Appellee, v. EDUCATIONAL RESEARCH COUNCIL OF AMERICA, Appellant.
• Court: Ohio Supreme Court

Page 249

45 Ohio St.2d 249

344 N.E.2d 118, 74 O.O.2d 415

HENKEL, Appellee, v. EDUCATIONAL RESEARCH COUNCIL OF AMERICA, Appellant.

No. 75-524.

Supreme Court of Ohio.

March 17, 1976.

Syllabus by the Court

In the absence of facts and circumstances which indicate that the agreement is for a specific term, an employment contract which provides for an annual rate of compensation, but makes no provision as to the duration of the employment, is not a contract for one year, but is terminable at will by either party.

On September 15, 1970, appellee, Ruth A. Henkel, filed a complaint in the Cleveland Municipal Court against appellant, Educational Research Council of America (hereinafter Research Council), a nonprofit educational service organization. The complaint alleged:

'1. Plaintiff and defendant entered into a written agreement, the offer of which is attached hereto and marked Exhibit A, whereby defendant agreed to employ plaintiff as a Research Assistant in Science at an annual salary of $10,800.00. Plaintiff communicated her acceptance in writing to the offer.

'2. Plaintiff started her employment on April 1, 1969, and has performed all the terms of said contract required to be performed by her but defendant terminated plaintiff's employment as of July 31, 1969, all to plaintiff's damage in the sum of $7,200.00.

'WHEREFORE, plaintiff prays judgment against defendant for the sum of $7,200.00, plus interests and costs.'

The written offer from the Research Council to appellee, embodied in a letter dated March 11, 1969, and signed by Ted F. Andrews, Director of Science, stated:

'Dr. George Baird, Executive Director of the Educational Research Council of America, has authorized me to offer you a position as Research Assistant in Science, effective April 1, 1969, at an annual salary of $10,800.

'May I have your written reaction to this proposition at an early date.'

Appellee asserts that the foregoing offer, and the facts and circumstances surrounding the tender and acceptance thereof, created a contract of employment for one year.

On February 14, 1974, the cause was tried before a judge of the Cleveland Municipal Court. Appellee, and Dr. George Baird, president and executive director of the Research Council, testified. The deposition of Dr. Andrews was read into the record. The trial court granted appellee a judgment of $7,200 plus costs. Upon appeal, the judgment was affirmed.

The cause is now before this court pursuant to the allowance of a motion to certify the record.

Dale D. Powers, Cleveland, for appellee.

Squire, Sanders & Dempsey, James P. Murphy and Thomas J. Baechle, Cleveland, for appellant.

PAUL W. BROWN, Justice.

The Court of Appeals, in affirming the trial court's judgment for appellee, stated:

'* * * ordinarily, a hiring for a specified sum per year imports a hiring for a year.'

Relevant Ohio case law, cited by the parties, does not support that conclusion. Nor do the decisions of courts in other states. The modern rule is that in the absence of facts and circumstances which indicate that the agreement is for a specific term, an employment contract which provides for an annual rate of compensation, but makes no provision as to the duration of the employment, is not a contract for one year, but is terminable at will be either party.

In Bascom v. Shillito (1882), 37 Ohio St. 431, the plaintiff was first employed on a monthly basis at a salary of $75 per month, and later, at $1,100 per year, effective March 1, 1875. The plaintiff testified that he applied for the increase in salary, and wanted his situation made more permanent. On July 31, 1875 he was discharged.

The single issue presented upon appeal was the refusal of the trial court to charge the jury as requested by the plaintiff. The requested charge was ruled proper by this court, and reflected in the syllabus:

'Where one rendering service for another under a monthly employment, says to his employer that he desires to have his employment made more permanent, and thereupon a specified amount per year is agreed upon, payable in semi-monthly installments, a hiring for a year may be inferred. Express words that the employment should continue for a year are not essential.'

Three factors coalesced in the Bascom case: the plaintiff's employment on a month-by-month basis, with compensation paid monthly; a desire by the plaintiff that his employment be made more permanent; and, thereafter, an oral agreement providing increased compensation at a specified sum per year.

The facts in Bascom, and the syllabus based thereon, do not support the proposition advanced by the Court of Appeals. Bascom involved application to an oral contract of the principle that employment contracts which are silent as to the term of employment are to be interpreted in light of all relevant circumstances, including 'proof of the periods at which payments were to be made, the character of the employment, custom, the course of dealing between the parties, or other fact which may throw light upon the question.' Bascom, at pages 433-434. The court in Bascom quoted with approval portions of the trial court's charge to the jury consonant with that principle, including the following:

"* * * (t)he issue presented was purely one of fact; that it was for the jury to say whether that which took place between the parties, as detailed by the evidence, constituted a hiring for a year; that it was a question of intention, to be determined with reference to all the circumstances and facts of the case; that the jury should consider the previous relationship of the parties, all that was said between Colclesser and plaintiff at each interview, and determine from these and all the circumstances whether it was the intention of the parties that there should be a yearly hiring."

And further:

"* * * (a) contract for a year will not be implied unless it was definitely agreed upon between the parties. * * * (I)f the jury find that nothing was said as to the duration of the service, the defendants were entitled to dissolve the relationship between the plaintiff and defendants at the end of any month."

Our decision in Bascom was subsequently cited in Kelly v. Carthage Wheel Co. (1900), 62 Ohio St. 598, 57 N.E. 984. There, the plaintiff, Kelly, was a practical wheelmaker, and the defendant, a corporation, was the owner of a plant for the manufacture of buggy and wagon wheels. Kelly offered his services to the defendant by letter, stating, in part:

'In making this agreement or contract, I will want you to guarantee me $3,000.00 per year, a proportion of this amount to be paid me each pay day and a settlement to be made at the end of each year, and if I should make more than the above guarantee, the difference be paid me at the end of each year when settlement is made.'

Kelly's offer was orally accepted by the defendant prior to May 1, 1892, upon which date Kelly entered the defendant's service. Kelly remained so employed for 18 months, until November 3, 1893, when he was discharged. Kelly sued, alleging a wrongful discharge prior to the expiration of his contract of employment.

This court reversed a judgment for the defendant, declaring in paragraph one of the syllabus:

'In order to constitute a contract of employment for a year, it is not essential that the agreement shall contain express words of employment for that specific period. The intention of the parties in this respect, as in all others, must be gathered from the whole instrument, or agreement.'

Paragraph three added:

'Where, under such contract, the employe is continued in the same service of the employer after the expiration of the year without any new or different arrangement, a contract for another year, upon the same terms, arises by implication of law; and when, before the end of that year the employee is discharged without justifiable cause, a right of action accrues to him against the employer for breach of the contract.'

[344 N.E.2d 121] At pages 610-612, 57 N.E. at page 986, the court expounded upon these statements of law:

'We * * * are disposed to adopt the construction of the contract advocated by the plaintiff, which, on the trial was, and here is, that under it his employment was for at least one year; and that, having continued in such employment after the end of the first year without any new arrangement, a contract arose for the second year upon the same terms. There seems to be a want of harmony in the decisions in regard to the effect of a contract of hiring at a specified rate of compensation per year, some holding that such stipulation imports a hiring for a year, and others the opposite. We find it unnecessary here to consider that question. It is settled that express words that the contract shall continue for a year are not essential to constitute an employment for that period. Bascom v. Shillito, 37 Ohio St. 431. And, in the interpretation of contracts of this kind, as well as of all others, none of their provisions should be ignored or overlooked, that serve to indicate the intention of the parties. The language of the contract in question, by which the defendant agreed to guarantee to the plaintiff the sum of $3,000 per year, is not an agreement to insure a compensation at a specified rate per year, but is an undertaking that the plaintiff shall receive the gross sum of $3,000 for a year; and the further language that a portion of this sum shall be paid to the plaintiff 'each pay day and a settlement to be made at the end of each year,' and that, if the plaintiff should make more than the sum so guaranteed the difference should be paid to him 'at the end of each year,' plainly imports that the settlements referred to should embrace the transactions of an entire year, through which the employment was to extend, and amounts to a contract for such employment during that year. * * *

'It is generally accepted as an established rule that, where there is a contract of hiring for a year...