Bader v. Alpine Ski Shop, Inc., 84-50-A

• Decision Date: 13 March 1986
• Docket Number: No. 84-50-A,84-50-A
• Citation: 505 A.2d 1162
• Parties: Hilton H. BADER v. ALPINE SKI SHIP, INC., et al. ppeal.
• Court: Rhode Island Supreme Court

Page 1162

505 A.2d 1162

Hilton H. BADER v. ALPINE SKI SHIP, INC., et al.

No. 84-50-Appeal.

Supreme Court of Rhode Island.

March 13, 1986.

Gerald C. DeMaria, Higgins Cavanagh & Cooney, Providence, for plaintiff.

Peter J. McGinn, Normand G. Benoit, Tillinghast Collins & Graham, Providence, for defendants.

OPINION

BEVILACQUA, Chief Justice.

This is a civil action to recover damages for breach of an employment contract executed between the plaintiff Hilton H. Bader and the defendant J & T, Inc., ¹ a Rhode Island corporation, on October 15, 1961. The plaintiff brought an action on July 18, 1979, in Superior Court seeking past damages and an accounting in order to determine future earnings to which he was allegedly entitled under the original contract. The case was tried before a Superior Court justice sitting with a jury. The jury returned a verdict for the plaintiff in the amount of $354,985. The defendants filed a motion for a new trial which was conditionally granted, and a new trial was ordered unless the plaintiff agreed to a remittitur, reducing the award to $219,491. The plaintiff did not agree to the remittitur, and both parties subsequently filed appeals to this court.

The record reveals that sometime in 1961, Mr. Harold Jacober, principal officer of J & T, Inc., which operated a store known as the Gob Shop in Providence, Rhode Island, decided to expand the store's inventory to include skis and ski-related merchandise. At that time, the Gob Shop was involved primarily in the sale of surplus military materials and work clothing. To that end Mr. Jacober, on behalf of J & T, Inc., and plaintiff entered into an employment contract on October 15, 1961. Pursuant to the terms of the contract, plaintiff was to be paid an annual salary of $6,500. In addition, he was to receive an annual bonus payment of 50 percent of the net profits in excess of $6,500 of the ski department. Under the terms of the contract, this arrangement would "continue in existence during the profitable operation of the department known as the 'Ski Shop.' " The contract also specified that it would remain in effect as long as the ski department remained in operation, wherever located, either by J & T, Inc., or any other corporation of which J & T, Inc., was the owner.

From its inception in 1962 the ski shop was very profitable. The plaintiff managed the ski shop which entailed purchasing all the inventory, and interviewing, hiring, and training the staff. As a consequence of its success, the ski department was made a separate corporation under the name of Alpine Ski Shop, Inc., in 1964. Mr. Jacober was an officer and a director and held 50 percent of the stock; Mrs. Jacober held the remaining 50 percent. As the business expanded, the Alpine Ski Shop, Inc., of East Greenwich was formed. Mr. Jacober owned 50 percent of the stock and was an officer and a director. In 1969 Alpine Ski Shop of Attleboro, a Massachusetts corporation, was formed. Mr. Jacober owned 50 percent of the stock and was also an officer and a director of that corporation.

Pursuant to the contract, plaintiff had an option to purchase up to 40 percent of the ski department at the original cost. This option had to be exercised within five years of the date the contract was formed. The testimony indicates that sometime in 1965 and 1966 negotiations took place between the parties regarding the option clause. As a result of these negotiations, sometime in 1966 plaintiff began to receive a percentage of the net sales instead of 50 percent of the net profits as provided for in the agreement. The plaintiff testified that he was not aware of this change in the method of computing his bonus. This arrangement continued until July 1, 1972. From July 1, 1972 until March of 1979, plaintiff received a salary of $15,000 per year and was removed as the manager and made a salesman. In March of 1979, plaintiff was discharged after a series of incidents involving his behavior with other employees. At trial plaintiff testified that he did not complain about his compensation between 1972 and 1979 because he relied upon the original contract and Mr. Jacober's apparent good faith.

During the course of the trial, the evidence established that the three Alpine stores were separate corporations with different shareholders and capitalization. However, the stores made common purchases of inventory and advertisements. Adjustments were made at the end of each year so that each corporation paid its percentage of the inventory and advertisement costs. The stores also shared employees, but the common employees received compensation from the particular corporation that they worked for at the time.

The record also reveals that Mr. Jacober was part owner in two other Rhode Island businesses, Heirling of Switzerland, Ltd., and Heirling Boot Sales. The plaintiff sought to introduce evidence concerning the profits earned by these companies claiming that he was entitled to a percentage of profits under the contract; however the trial justice determined that these companies were not subject to the original contract.

On appeal the parties raise the following issues: (1) whether the contract was terminable at will by either party; (2) whether the statute of limitations barred plaintiff's cause of action; (3) whether the trial justice erred in not allowing plaintiff to introduce evidence of defendant's investment in the two Heirling businesses and the net profits derived therefrom; (4) whether the trial justice was correct in allowing plaintiff to recover a percentage of profits from the Alpine Ski Shops of Attleboro and East Greenwich; (5) whether the trial justice was correct in granting a remittitur; and (6) whether the trial justice was correct in limiting the prejudgment interest.

I

The plaintiff contends that the contract between the parties is neither for an indefinite period nor terminable at will. The plaintiff relies on the terms of the contract wherein it states: "[w]hen and if the ski shop becomes unprofitable, either party may terminate the employment for any reason * * * ." The plaintiff contends that only if the ski shop becomes unprofitable can the contract be terminated.

Relying upon the language of the contract and the testimony of the witnesses, the trial justice ruled that the contract in the present case was for an indefinite period and therefore was terminable at will. He further ruled that the contract was terminated in March 1979 when plaintiff was discharged.

In Powless v. Pawtucket Screw Co., 116 R.I. 158, 162, 352 A.2d 643, 646 (1976), this court, in deciding whether an oral employment contract was terminable at will, stated that where the duration of a contract is uncertain, it is for an indefinite term and therefore terminable by either party at will.

In reviewing the specific language of the contract at issue and the testimony relative thereto, we conclude that since the contract was for an indefinite period and there was no intent on the part of the parties to have an eternal contract, it was therefore terminable at will by either party.

Accordingly, we hold that the trial justice's decision was correct and find that there was sufficient evidence to support his determination.

II

The defendants allege that the statute of limitations bars plaintiff's suit because the last bonus payment that plaintiff received was for the fiscal year 1970-1971 which was tendered to him in September 1972. The defendants state that no bonus was paid to plaintiff after that date. However, the record reveals that plaintiff received bonus payments in August or September after the fiscal year had ended. Because of this, plaintiff could have reasonably anticipated the receipt of a bonus payment in 1973. The testimony further indicates that plaintiff consistently relied upon a statement made by defendant Jacober sometime in 1965-1966 that plaintiff would never have to worry about a job.

The trial justice determined that the validity of the statute-of-limitations defense raised by defendant was a question of fact for the jury. In his opinion, the statute-of-limitations issue was dependent upon whether the contract was breached, and if so, when. Where the evidence raises questions of fact under the statute of limitations, such questions should be submitted to the jury. See Personal Finance Co. v. Franco, 72 R.I. 85, 90, 48 A.2d 355, 358 (1946); Stedman v. Hinman, 67 R.I. 123, 128, 21 A.2d 10, 13 (1941).

In Stedman the plaintiff sued the defendant administrator for payment on a promissory note that was executed by the decedent. In dispute was the date of the last interest payment made by the decedent which would determine whether the plaintiff had filed suit within the six-year statute of limitations. The court stated:

"It was for the jury to say in the first instance whether or not they believed (the plaintiff). If they believed him, the defendant's plea of the statute of limitations would have been ineffective * * * if they did not believe him, such plea would have constituted a valid defense to plaintiff's claim."

Likewise, in the case at bar, if the jury chose to believe plaintiff that the contract was breached in September 1973, then the statute-of-limitations defense would fail because plaintiff filed suit in July 1979, well within the allotted time. However, if the jury believed defendants that the contract was breached, if at all, in 1972, then the defense of the statute of limitations would succeed in barring plaintiff's action.

After our review of the record, we find that plaintiff's cause of action accrued in September 1973, the time when he could have reasonably anticipated a bonus. See G.L.1956 (1969 Reenactment) § 9-1-20. ² This statute is applicable since the jury could have reasonably believed that plaintiff was not aware of the termination of his bonus payments. Thus, since plaintiff's complaint was filed on July 18, 1979, it was within the six-year limit set forth in §...