Carpenter Steel Co. v. Norcross

• Court: U.S. Court of Appeals — Sixth Circuit
• Citation: Carpenter Steel Co. v. Norcross, 204 F. 537 (6th Cir. 1913)
• Decision Date: 11 April 1913
• Docket Number: 2,285.
• Parties: CARPENTER STEEL CO. v. NORCROSS.

204 F. 537

CARPENTER STEEL CO. v. NORCROSS.

No. 2,285.

United States Court of Appeals, Sixth Circuit.

April 11, 1913

W. D Turner and M. B. & H. H. Johnson, all of Cleveland, Ohio, for plaintiff in error.

Carpenter Young & Stocker, W. H. Boyd, and D. C. Westenhaver, all of Cleveland, Ohio, for defendant in error.

Before WARRINGTON and DENISON, Circuit Judges, and COCHRAN, District judge.

COCHRAN District Judge.

This suit was brought in the lower court by defendant in error George B. Norcross, against plaintiff in error, the Carpenter Steel Company, to recover $43,600 as damages for breach of a contract of employment by wrongfully discharging him therefrom. It resulted in a verdict and judgment for $3,000.

The sole error assigned is the refusal by the court, at the close of all the evidence, to give a peremptory instruction to the jury to find for defendant, to which refusal it duly excepted.

The company is a corporation engaged in the manufacture and sale of the higher grades of steel at Reading, Pa. A large portion of its output is sold to manufacturers of automobiles, and of parts thereof. Norcross was in its employ in the dual capacity of salesman for the states of Ohio, Michigan, and Indiana, possibly the most important territory covered by the company, with headquarters at Cleveland, Ohio, and of manager of its branch warehouse located at that place. In both positions he had a number of employes under him. At the time of his discharge he had been in its employ for over four years, under three successive contracts of employment. The terms of the first two were for two years each, the first beginning January 1, 1906, and the second, January 1, 1908. The third and last one, then in course of performance, was for five years, beginning January 1, 1910. It was entered into November 10, 1909. The discharge took place January 15, 1910, in the middle of the first month after the beginning of this term. At first Norcross's position was that of salesman merely. He became manager, also, during the first term, to wit, on July 7, 1907, when the branch warehouse was first established. On the occasion of each renewal he received an increase in salary. His salary during the second term was $350 per month. By the last contract it was provided that he should receive $5,000 per year, payable monthly, and 3.20 of 10 per cent. of the net annual income of the company, to the extent of $25,000, which, if it amounted to that, and there was a reasonable probability that it would, would yield him additionally $3,750, payable semiannually. He received, in addition to his salary, his personal expenses; reimbursement for each month's expenses being made on the tenth day of the succeeding month. The last contract, in its enlargement of the term of employment and its increase of compensation, bespoke that his services were regarded as highly valuable. It was testified that during his employment he had brought business to it amounting to as much as $1,250,000.

The defense to the suit was that he had been guilty of such misconduct as to justify his discharge; the particular misconduct relied on as constituting the justification being specified in defendant's pleadings. That relied on in its original answer, filed May 6, 1910-- the suit having been brought March 2, 1910-- happened subsequent to the beginning of the then contract of employment and just previous to the discharge. In an amended answer, filed nearly a year afterwards and just before the trial, to wit, on April 29, 1911, it set up, in addition, misconduct that happened prior to the beginning thereof, but during the previous terms, mainly during the second or immediately preceding one. The former misconduct was the sole basis of the discharge. The claim was that the latter was not then known.

To entitle plaintiff in error to a reversal, it is essential that, under the evidence, it was not possible for a fair-minded man to find that the defendant in error had not been guilty of the particular misconduct alleged or that it was not such as to justify his discharge.

It is not important that the company did not know of the misconduct at the time of the discharge, or that other misconduct was made the basis of the discharge. It is sufficient that he had been guilty of the misconduct alleged, and that it was such as to justify his discharge. This is well settled. Main, if not sole, reliance is had on the misconduct which it was alleged in the amended answer Norcross had been guilty of prior to the beginning of his then contract of employment, which it is claimed was not known at the time of his discharge, and was not made the basis thereof, and which the company was somewhat belated in bringing to the attention of the court by amended answer, and to only a portion thereof. It is assumed that it is not possible for the fact that this misconduct did not happen under the contract of employment in force at the time of the discharge, but under the previous ones, to affect the matter. It was stated in oral argument that it was well settled that it could not. But I find no authorities dealing with just such a situation. Authorities may be found which determine the effect of misconduct prior to any service.

They lay down that the general rule is that misconduct to justify a discharge must be misconduct in the service, and that, in order to justify a discharge on the ground of misconduct prior to service, the servant must have been guilty of a 'moral fraud' in concealing it from the master when entering into the service. Wood, Master and Servant, p. 212.

Possibly the same rule, and none other, should apply where the misconduct relied on happened under a prior contract of employment of which that then in force may be said to be a renewal. The necessities of this case, however, do not call for a decision of this question, and it will be disposed of on the basis that this consideration does not affect its disposition.

But, before dealing with this misconduct, that set up in the original answer and the other portion of that set up in the amended answer, which is of a similar character to that set up in the former, should be noticed. There is sufficient uncertainty as to whether reliance is not also had thereon to require that it should be. And preliminary thereto a word or two should be said as to the nature of the misconduct which the law makes a justification for a discharge. It is certain that conduct involving moral turpitude, willful insubordination, or habitual neglect is such misconduct as to justify a discharge. An early case limited justification thereto. But it is now well settled that any conduct which is prejudicial or likely to be prejudicial or injures or has a tendency to injure the master is misconduct that warrants a discharge. 20 A. & E.Enc.of Law, p. 27; 26 Cyc.pp. 988, 990.

In Wood, Master and Servant, p. 208, the law is stated thus:

'Misconduct prejudicial to the master's interests, although not exhibiting moral turpitude, is a good cause for the discharge of a servant. And conduct exhibiting moral turpitude, although productive of no damage to the master's interests, is a good ground for terminating the contract. Mere misconduct, not amounting to insubordination, or exerting a bad influence over other servants, or producing injury to the master's business, or members of the master's family, is not enough to warrant the discharge of a servant. The misconduct must be gross or such as is incompatible with the relation, or pernicious in its influence, or injurious to the master's business.' And again on page 220 the matter is put thus:

'In order to justify a master in discharging a servant the servant must have been guilty of conduct that amounts to a breach of some express or implied provision of the contract of hiring. Anything less than that will not amount to a legal justification or excuse. The mere fact that he has been guilty of improper or unbecoming conduct, or that he has, in some slight matters, been guilty of a violation of his master's orders, will not warrant his discharge; but his conduct must have been such as to involve moral turpitude and his insubordination must have been willful and such as is inconsistent with the relation which he holds to the master and the duties he owes him.'

Possibly the matter may be put thus: The servant owes the master the duty of faithfulness, whether expressed in the contract of employment or not. It is an implied, if not an express, term thereof. It follows that any conduct on his part which amounts to unfaithfulness or which witnesses an unfaithful disposition, or better, perhaps, a disposition which is likely to issue in unfaithfulness, is misconduct calling for a discharge. It is, no doubt, because conduct involving moral turpitude witnesses such a disposition that it is such misconduct as to justify a discharge. It is in the light of these general principles that this case is to be disposed of.

The misconduct relied on in the original answer consisted of dissipation and insubordination in the city of New York on the occasion of an automobile show held there, beginning Saturday evening, January 8, 1910, and ending Saturday evening, January 15th, on which day the discharge took place.

At that show the company had a small booth and made an exhibit of the articles, not very many, which it had for sale to the automobile trade. The insubordination complained of was, not attending at the booth pursuant to direction, and not keeping an appointment with its general manager at its New York office on the afternoon of Tuesday, the 11th. If it be assumed that such insubordination was sufficient to justify the discharge,...