Hickman v. Winston County Hosp. Bd.

CourtSupreme Court of Alabama
Citation508 So.2d 237
Parties, 107 Lab.Cas. P 55,794 Linda HICKMAN v. WINSTON COUNTY HOSPITAL BOARD, a Corporation, et al. 85-893.
Decision Date22 May 1987

Jackie O. Isom, Hamilton, for appellant.

Walter Joe James, Jr., of James & Lowe, Haleyville, for appellees.

TORBERT, Chief Justice.

This appeal involves the tort of intentional interference with business or contractual relations. Linda Hickman, the plaintiff below, appeals from the trial court's granting of a directed verdict in favor of the defendants at the close of the plaintiff's evidence. The only issue involved in this appeal is whether the plaintiff made out a prima facie case of intentional interference with business or contractual relations.

As this Court stated in Rose v. Miller & Co., 432 So.2d 1237, 1239 (Ala.1983):

"In considering the propriety of a directed verdict, our function is to view the evidence in a light most favorable to the non-moving party. If, by any interpretation, it can support a conclusion in favor of the non-moving party, we must reverse. Herston v. Whitesell, 374 So.2d 267 (Ala.1979). A directed verdict is proper only where there is a complete absence of proof on an issue material to the cause of action or where there are no controverted issues of material fact upon which reasonable persons could differ. Caterpillar Tractor Co. v. Ford, 406 So.2d 854 (Ala.1981)."

Our recent decision in Gross v. Lowder Realty Better Homes & Gardens, 494 So.2d 590 (Ala.1986), outlined the tort of intentional interference with business or contractual relations. The elements required to make a prima facie case of this tort were clearly enumerated in Lowder Realty, Inc. v. Odom, 495 So.2d 23, 25 (Ala.1986):

"(1) The existence of a contract or business relation; (2) defendant's knowledge of the contract or business relation; (3) intentional interference by the defendant with the contract or business relation; and (4) damage to the plaintiff as a result of defendant's interference. However, defendant has an opportunity to prove justification as an affirmative defense to plaintiff's claim."

In Alcazar Amusement Co. v. Mudd & Colley Amusement Co., 204 Ala. 509, 513, 86 So. 209, 212 (1920), this Court said, "A third party who, with knowledge of the existence of a valid contract between others, interferes with its performance ... commits a tort...." (Emphasis added.) We have not addressed directly whether an employer can be liable for tortious interference with the contract he has with his employee. The Supreme Court of South Carolina, in Ross v. Life Ins. Co. of Virginia, 273 S.C. 764, 765, 259 S.E.2d 814, 815 (1979) (discussing an employer-employee relationship), clearly stated:

"Moreover, the South Carolina cases recognizing a cause of action for tortious interference with a contract have been limited to situations where an action was brought against third persons rather than parties to the contract. See, e.g., Smith v. Citizens & Southern National Bank of S.C., 241 S.C. 285, 128 S.E.2d 112 (1962); Keels v Powell, 207 S.C. 97, 34 S.E.2d 482 (1945). We decline to extend the doctrine in this case. Ryan v. Brooklyn Eye and Ear Hospital, et al., 46 A.D.2d 87, 360 N.Y.S.2d 912 (1974); Prosser, The Law of Torts, 934 (4th Ed.1971)."

Other authorities agree that an employer cannot be liable for tortious interference with its own contract with its employee. Rao v. Rao, 718 F.2d 219 (7th Cir.1983); Martin v. Platt, 179 Ind.App. 688, 386 N.E.2d 1026 (1979); Appley v. Locke, 396 Mass. 540, 487 N.E.2d 501 (1986); Gram v. Liberty Mut. Ins. Co., 384 Mass. 659, 429 N.E.2d 21 (1981); Hein v. Chrysler Corp., 45 Wash.2d 586, 277 P.2d 708 (1954). "The defendant's breach of his own contract with the plaintiff is of course not a basis for the tort." Prosser and Keeton, The Law of Torts, § 129, at 990 (5th ed. 1984). Breach of contract does not give rise to an action for the tort of intentional interference with business or contractual relations. See Hudson v. Venture Industries, Inc., 147 Ga.App. 31, 33, 248 S.E.2d 9, 11 (1978), affirmed, 243 Ga. 116, 252 S.E.2d 606 (1979). Indeed, the very nature of this tort precludes its application to a party to the contract. Therefore, the trial court did not err when it directed a verdict in favor of Hickman's employer, defendant Winston County Hospital Board.

Nonetheless, corporate officers or employees may individually commit the tort of intentional interference with business or contractual relations to which their corporation or employer is a party. See Nottingham v. Wrigley, 221 Ga. 386, 144 S.E.2d 749 (1965) (corporate officers in their personal capacities held liable for procuring the termination of plaintiff's employment with their corporation). However, courts have held that this tort cannot be maintained against officers or employees of a corporation unless those persons were acting outside their scope of employment and were acting with actual malice. Swager v. Couri, 77 Ill.2d 173, 32 Ill.Dec. 540, 395 N.E.2d 921 (1979); Martin v. Platt, supra; Gram v. Liberty Mut. Ins. Co., supra; Nola v. Merollis Chevrolet Kansas City, Inc., 537 S.W.2d 627 (Mo.Ct.App.1976). As the Supreme Court of Illinois put it, "[T]o be tortious, a corporate officer's inducement of his corporation's breach of contract must be done 'without justification or maliciously.' " Swager, 77 Ill.2d at 190, 32 Ill.Dec. at 546, 395 N.E.2d at 927.

The Supreme Judicial Court of Massachusetts has explained "malice" in the context of this tort:

"Because Gosselin and Fisher were acting within the scope of their employment responsibilities, Gram acknowledges that each was privileged to act as he did unless he acted out of malevolence, that is, with 'actual' malice.... The rule assigning liability to corporate officials only when their actions are motivated by actual, and not merely implied, malice has particular force because 'their freedom of action directed toward corporate purposes should not be curtailed by fear of personal liability.'


"Malice may be shown by the proof of facts from which a reasonable inference of malice may be drawn. The line between a proper inference and unwarranted conjecture is not easily drawn. The answer depends on the evidence in each case and on what the trier of fact may reasonably infer from that evidence."

Gram, 384 Mass. at 663-64, 429 N.E.2d at 24.

The Supreme Court of Oregon in Wampler v. Palmerton, 250 Or. 65, 76-77, 439 P.2d 601, 607 (1968), stated:

"So long as the officer or employe acts within the general range of his authority intending to benefit the corporation, the law identifies his actions with the corporation. In such a situation the officer is not liable for interfering with a contract of the corporation any more than the corporation could be liable in tort for interfering with it."

Therefore, the trial court was correct when it held that defendants James Kenneth Reed, associate administrator of Burdick-West Hospital, and Truby Jack, Hickman's supervisor, were not liable as agents of the Hospital Board.

Defendants Reed and Jack could still be held individually liable for intentional interference with Hickman's business or contractual relations with the hospital if Hickman proved a prima facie case. There still remains the question of whether the burden is on the plaintiff in order to make out a prima facie case to show that the employee defendants were not operating within the scope of their authority or whether the defendants must assert as a defense that they were acting within the scope of their authority. The Supreme Court of Oregon has stated:

"The interest protected by the interference with contract action is the interest of the plaintiff in not having his contract rights interfered with by intermeddling strangers. However, so long as the person inducing the breach of a corporate contract is an officer or employe acting for the benefit of the corporation and within the scope of his authority, the plaintiff cannot show that this interest was invaded and therefore cannot maintain an interference with contract action."

Wampler, 250 Or. at 77, 439 P.2d at 607. Although the Supreme Court of Oregon has never explicitly addressed the question of where this burden should lie, the above quotation indicates that the plaintiff's tort action depends upon a showing by the plaintiff that the defendant officer or employee was acting outside the scope of his authority.

Other courts have placed the burden upon the plaintiff to show that the defendant was acting outside the scope of his authority.

"In light of these policies, Illinois law requires--to state a cause of action against corporate officers for interfering with their corporate principal's contract--the allegation of facts which, if true, establish that the officers induced the breach to further their personal goals or to injure the other party to the contract, and acted contrary to the best interest of the corporation."

George A. Fuller Co. v. Chicago Col. of Ost. Med., 719 F.2d 1326, 1333 (7th Cir.1983) (emphasis in original).

In Worrick v. Flora, 133 Ill.App.2d 755, 272 N.E.2d 708 (1971), the Appellate Court of Illinois, Third District, put the burden on the plaintiff to show that the defendant officer was "acting other than in accord with his usual and customary duties in behalf of the corporation." 133 Ill.App.2d at 758, 272 N.E.2d at 711. "It is our conclusion that so long as a fellow employee is acting in accord with the interest of the employer no personal liability can devolve upon him." 133 Ill.App.2d at 759, 272 N.E.2d at 711.

We must look at the evidence in the light most favorable to the plaintiff in order to see if she produced at least a scintilla of evidence of each of the elements of this tort as to defendants Reed and Jack.

Plaintiff produced evidence that she was employed by the Winston County Hospital Board at Burdick-West Hospital as a supply clerk and floor supervisor. Testimony...

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