Bowman v. State Bank of Keysville

Citation331 S.E.2d 797,229 Va. 534
Decision Date14 June 1985
Docket NumberNo. 820901,820901
Parties, 119 L.R.R.M. (BNA) 3095, 54 USLW 2017, 102 Lab.Cas. P 55,510, 1 IER Cases 437 Betty P. BOWMAN, et al. v. STATE BANK OF KEYSVILLE, et al. Record
CourtVirginia Supreme Court

John S. Graham, III, Richmond (Caroline Lowdon Lockerby, Browder, Russell, Morris & Butcher, Richmond, on briefs), for appellants.

Wm. Rosenberger, Jr., Lynchburg, Jay T. Swett, Charlottesville, (McGuire, Woods & Battle, Charlottesville, on briefs), for appellees.

Present: All the Justices.

COMPTON, Justice.

Virginia adheres to the common-law rule that when a contract calls for the rendition of services, but the period of its intended duration cannot be determined by a fair inference from its provisions, either party is ordinarily at liberty to terminate the contract at will upon giving reasonable notice of intention to terminate. Stonega Coal and Coke Co. v. Louisville and Nashville R. R. Co., 106 Va. 223, 226, 55 S.E. 551, 552 (1906). This appeal presents a unique situation under the foregoing employment-at-will doctrine.

We have consolidated for review two damage suits brought by separate employees of a state bank who were also stockholders of the bank corporation. We awarded the plaintiffs appeals from orders entered in February 1982, in which the trial court sustained defendants' demurrers to virtually identical motions for judgment.

A demurrer admits the truth of all material facts that are properly pleaded. Under this rule, the facts admitted are: "(1) facts expressly alleged, (2) facts which are by fair intendment impliedly alleged, and (3) facts which may be fairly and justly inferred from the facts alleged." Ames v. American National Bank, 163 Va. 1, 37, 176 S.E. 204, 215 (1934) (footnote omitted). We shall recite the facts in accordance with those principles.

Plaintiffs Betty P. Bowman and Joyce T. Bridges sued the State Bank of Keysville as well as Reginald H. Pettus, William C. Ward, S.H. Brookes, John F. Lyle, Thomas S. McKenzie, Jr., Daniel G. Van Clief, and Ralph J. Davis, individually. Plaintiff Bowman had been employed by the Bank in various positions for eight years until her termination on July 13, 1979. At that time, she was a bookkeeper for the Bank. Plaintiff Bridges was terminated on the same day and had been in the Bank's employ for 18 years. She was head bookkeeper for the Bank when terminated. At all times pertinent to this controversy, plaintiff Bowman and plaintiff Bridges owned five and six shares, respectively, of the Bank's common stock.

The individual defendants, except defendant Davis, were members of the Bank's nine-person Board of Directors at times pertinent to this litigation. Pettus was chairman of the Board as well as the Bank's attorney. Ward was president of the Bank. Davis was a vice president of NB Corporation.

Prior to February 8, 1979, the Bank's management commenced negotiations with officials of NB which culminated in the execution of an agreement providing for merger of the Bank into a subsidiary of NB and conversion of each share of common stock of the Bank into 25 shares of common stock of NB. A special meeting of shareholders was scheduled for June 26, 1979. The Board had a proxy statement prepared and mailed to each stockholder of record. The plaintiffs alleged that the proxy statement was false and misleading, in violation of federal securities laws and laws of the Commonwealth. The plaintiffs also alleged that the Bank, through its Board and management, solicited proxies in a manner that violated state and federal securities laws. The plaintiffs assert that defendant Davis participated in the foregoing illegal activity.

The defendants knew there was opposition to the merger and that the vote of stockholders on the merger would be extremely close. Several days before the special meeting, plaintiff Bowman was informed by Ward, in the presence of Davis, that Davis and the members of the Board were aware of her opposition to the merger. Bowman was told that if her shares were not voted in favor of the merger and the merger was not consummated her employment with the Bank would be terminated. She was also advised at the time that if the merger was approved, but her shares were not voted in favor of the merger, her vote against the merger would have "a definite adverse effect on her job."

Shortly before the date of the special meeting, plaintiff Bridges was given essentially the same information by Ward, in the presence of Davis, that was conveyed to Bowman. Bridges was told that if she refused to vote for the merger she would not continue to be employed by the Bank, if the merger failed, or by the resultant entity, if the merger were consummated.

The plaintiffs executed their proxy cards in favor of the merger against their will, under duress, and out of fear of losing their jobs. At the special meeting, 2008 shares of the Bank's common stock, including the plaintiffs' 11 shares, were voted in favor of the merger proposal. This was eight votes more than the number necessary to constitute the required two-thirds majority for approval of the plan.

Two days after the special meeting, the plaintiffs wrote a joint letter to the Bank president. They stated that their proxies were invalid, illegally obtained, "improper and null and void." Accordingly, they wrote, only 1997 votes were cast in favor of the merger, less than the votes necessary for approval.

On July 6, 1979, the Bank Board voted to abandon the merger. The merger was aborted, according to the plaintiffs' allegations, because the defendants feared that the illegal activities involved in obtaining the proxies of stockholders, including the plaintiffs, would be discovered. Six days later, the Board, by a five to four vote, decided to discharge the plaintiffs from their employment with the Bank. Directors Pettus, Brookes, Lyle, McKenzie, and Van Clief voted for termination while Ward voted against discharge.

On July 13, plaintiff Bowman was summoned to Ward's office. Pettus informed her of the Board's action and notified her that her employment was terminated. On the same day, Pettus called plaintiff Bridges by telephone, gave her the same information, and terminated her employment. These suits were filed five months later.

In their respective motions for judgment, the plaintiffs seek compensatory and punitive damages. In one count, the plaintiffs seek recovery against the Bank and the named directors for improper discharge from employment. In another count, the plaintiffs seek damages against the named Board members and defendant Davis for tortious interference with contractual relations.

On appeal, defendants assert that the trial court properly sustained the demurrers. The Bank and defendant directors, relying on the employment-at-will doctrine, assert that a contract of employment for an indefinite period is terminable at any time, after reasonable notice, by either party for any reason or no reason at all. These defendants contend that there is nothing in the contracts of employment from which an inference can be drawn that the plaintiffs were employed for a definite period of time. According to the argument, the employees agreed to furnish services as bookkeepers for a certain sum of money, not for a definite time, and the employer agreed to pay for the performance of the services, but not for a definite time. In addition, these defendants say that if any change is to be made in the common-law doctrine of employment at will to cover the facts of these cases, the change should be made by the General Assembly and not this Court. They point to exceptions to the doctrine already provided by the legislature for employees who are physically handicapped, Code § 40.1-28.7, employees who file safety or health complaints, Code § 40.1-51.2:1, and employees who exercise rights under the Workers' Compensation Act, Code § 65.1-40.1.

The plaintiffs, contending the trial court erred in sustaining the demurrers, say they recognize the force and validity of the employment-at-will doctrine in Virginia. Accordingly, they assert, they did not seek reinstatement in their positions with the Bank. Nevertheless, they argue, the employment-at-will rule has exceptions which temper its harsh application, and they urge the Court to invoke one of those exceptions in these suits for damages.

The plaintiffs note that it is not contested, for purposes of this proceeding, that they were performing their jobs in a satisfactory and capable manner. They point out that the reasons for their discharges had nothing to do with their job performance or their status as employees. The plaintiffs note their discharges were premised solely upon the proper exercise of their protected rights as shareholders. Thus, the plaintiffs assert, the question for decision is not whether the employment-at-will doctrine as it exists in Virginia should be altered, but whether this employer can, with absolute immunity, discharge these employees in retaliation for the proper exercise of rights as stockholders, a reason which has nothing to do with the employees' job performances. In sum, the plaintiffs assert that the Bank and the named Board members, by actions which violated securities and corporation laws, sought to influence the exercise of protected shareholder rights by bringing pressure to bear on the vulnerable employee relationship, and that the employment-at-will rule does not protect the defendants from such conduct. We agree.

Virginia has not deviated from the common-law doctrine of employment-at-will set forth in the Stonega Coal case, supra. See, e.g., Wards Co. v. Lewis & Dobrow, Inc., 210 Va. 751, 756, 173 S.E.2d 861, 865 (1970); Plaskitt v. Black Diamond Trailer Co., 209 Va. 460, 164 S.E.2d 645 (1968); Title Ins. Co. v. Howell, 158 Va. 713, 718, 164 S.E. 387, 389 (1932). * And we do not alter the traditional rule today. Nonetheless, the rule is not absolute. The unique facts of ...

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