Johnston v. Panhandle Co-op. Ass'n

• Decision Date: 26 June 1987
• Docket Number: No. 85-676,85-676
• Citation: 408 N.W.2d 261,225 Neb. 732
• Parties: , 107 Lab.Cas. P 55,815, 2 IER Cases 1080 John R. JOHNSTON, Appellant and Cross-Appellee, v. PANHANDLE COOPERATIVE ASSOCIATION, a Corporation, Appellee and Cross-Appellant.
• Court: Nebraska Supreme Court

Page 261

408 N.W.2d 261

225 Neb. 732, 107 Lab.Cas. P 55,815, 2 IER Cases 1080

John R. JOHNSTON, Appellant and Cross-Appellee, v. PANHANDLE COOPERATIVE ASSOCIATION, a Corporation, Appellee and Cross-Appellant.

No. 85-676.

Supreme Court of Nebraska.

June 26, 1987.

Syllabus by the Court

1. Declaratory Judgments. A declaratory judgment action is sui generis and may involve questions of both law and equity.

2. Declaratory Judgements. Whether a declaratory judgment action is to be treated as an action at law or in equity is to be determined by the nature of the dispute.

3. Appeal and Error. In reviewing questions of law, this court has an obligation to reach an independent conclusion with respect to such issues without regard to the findings of the trial court.

4. Employment Contracts: Termination of Employment. When employment is not for a definite term, and there are no contractual or statutory restrictions upon the right of discharge, generally, an employer may lawfully discharge an employee whenever and for whatever cause it chooses without incurring liability.

5. Employment Contracts. The fact that an employment contract was for an indefinite duration does not preclude job security provisions of an employee handbook from becoming a part of the employment contract.

6. Employment Contracts. If the language of an employee handbook constitutes an offer definite in form which is communicated to the employee, and the offer is accepted and consideration furnished for its enforceability, the handbook provision becomes part of the employment contract.

7. Employment Contracts: Case Disapproved. In the case of unilateral contracts for employment, where an at-will employee retains employment with knowledge of new or changed conditions, the new or changed conditions may become a contractual obligation. To the extent that Mau v. Omaha Nat. Bank, 207 Neb. 308, 299 N.W.2d 147 (1980), suggests that a handbook issued after an employee is hired cannot become part of that employee's contract, it is disapproved.

8. Employment Contracts. Generally, an agreement to give permanent employment simply means to give a steady job of some permanence, as distinguished from a temporary job or temporary employment.

9. Employment Contracts: Due Process. To have a property interest in employment, a person must have a legitimate claim of entitlement to it. Generally, an employee at will has no such reasonable expectation of continued employment or legitimate claim of entitlement to it.

Robert G. Simmons, Jr., of Wright, Simmons & Selzer, Scottsbluff, for appellant and cross-appellee.

Robert P. Chaloupka of Van Steenberg, Brower, Chaloupka, Mullin & Holyoke, Scottsbluff, for appellee and cross-appellant.

KRIVOSHA, C.J., and BOSLAUGH, WHITE, HASTINGS, CAPORALE, SHANAHAN, and GRANT, JJ.

HASTINGS, Justice.

The plaintiff, John R. Johnston, appeals the judgment of the district court for Scotts Bluff County dismissing his petition for declaratory judgment at the close of all the evidence. Plaintiff filed the declaratory judgment action to determine whether he was still employed by the defendant, Panhandle Cooperative Association (Co-op).

The plaintiff was hired by the Co-op in 1970 as the company's auditor or controller. He worked for the Co-op until October 25, 1984, when his employment was terminated after he and the defendant's general manager disagreed over inventory procedures.

The district court dismissed plaintiff's petition for declaratory judgment and made the following findings: There was no express or implied contract of employment; the conduct involved was not outrageous and did not violate any public policy; the plaintiff did not voluntarily resign; the defendant's general manager was authorized to discharge the plaintiff; and the plaintiff was terminated without good cause.

The plaintiff appeals, alleging that the court erred in finding that he was not still an employee of the defendant; in finding that he could be dismissed without cause, when the defendant asserted before trial that the plaintiff had resigned; in finding that there was an employment at will; and in finding that the plaintiff's discharge was not against public policy. In its cross-appeal defendant alleges that the court erred in determining that no cause existed for plaintiff's termination of employment.

The record reveals the following. Before Johnston was hired by the defendant, he worked for a company that performed audits on cooperative associations in Nebraska and Wyoming. In 1970 he was hired by the defendant, Co-op, to be in control of its administrative staff and, as Johnston testified, to be in charge of "[a]nything that pertained to money," including accounting procedures.

When Johnston was first hired by the defendant, Co-op, there was no written agreement drawn up. Sometime after Johnston was hired, the Co-op started a policy of annually providing some salaried employees, including Johnston, with a written statement setting out the employee's salary and commission rate for the coming year. In 1975, the Co-op prepared an "Employee Handbook of Personnel Policies for Panhandle Cooperative Association," which was periodically updated. It contained information about employee benefits, insurance, and vacations, as well as general procedures.

Carl Montgomery was the Co-op's director of the food division, a position on the same managerial level as Johnston's. In 1982 the Co-op's general manager became ill, and Montgomery acted as interim general manager or president. Johnston testified that he and Montgomery had disagreements at times, but generally got along all right. Montgomery testified that his relationship with Johnston was strained. The Co-op's personnel manager testified that he had observed considerable rivalry and animosity between Johnston and Montgomery. The chairman of the Co-op's board of directors said that he had observed jealousy or a power struggle between the two men. An accountant who worked under Johnston's supervision stated that Johnston and Montgomery had a very strained relationship.

The Co-op's general manager died in September 1984. Johnston and Montgomery both applied for the position, and sometime in September of 1984 the Co-op's board of directors selected Montgomery for the job.

On October 24, 1984, Johnston delivered to Montgomery's office a financial statement containing information for the fiscal year 1984 annual report, including information on inventory.

Earlier, in the spring of 1984, some new members of the Co-op's board of directors had requested that a more accurate inventory be taken. The external auditors suggested changes in inventory procedures, and the board authorized that they be used. The board chairman testified that the inventory issue was a "little touchy" with the board.

After reviewing the financial statement that Johnston prepared in October of 1984, Montgomery noticed a change in the inventory procedures used by Johnston, which he, Montgomery, considered to be a violation of his orders not to change procedures without his prior consent.

The next day, Montgomery called Johnston in to discuss the financial statement and accused Johnston of changing the inventory without Montgomery's knowledge. It was during this conversation that Johnston was terminated. According to Johnston's testimony, Montgomery said that they should quit playing accounting games and suggested that Johnston seek other employment. Johnston asked, "Effective when," and Montgomery replied, "Right now." According to Montgomery's testimony, he and Johnston "exchanged words" and then Montgomery asked, "Bob [Johnston's nickname], do you think we ought to continue? Maybe we ought to call it quits." Montgomery said that Johnston replied, "When do you want to?" Montgomery answered, "Let's do it now. I'll pay you through November," and Johnston said, "You'll pay me a hell of a lot more than that."

Shortly after this occurred, the Co-op's attorney wrote a letter to Johnston's attorney, stating that it was the Co-op's position that Johnston resigned his position as controller of the company.

This was a declaratory judgment action tried to the court by agreement of the parties. A declaratory judgment action is sui generis and may involve questions of both law and equity. OB-GYN v. Blue Cross, 219 Neb. 199, 361 N.W.2d 550 (1985). Insofar as fact questions are concerned in a declaratory judgment action, those issues may be tried and determined as in other civil actions. Neb.Rev.Stat. § 25-21,157 (Reissue 1985). All orders, judgments, and decrees under the declaratory judgments act may be reviewed as other orders, judgments, and decrees. Neb.Rev.Stat. § 25-21,155 (Reissue (1985). Whether a declaratory judgment action is to be treated as an action at law or in equity is to be determined by the nature of the dispute. Boren v. State Farm Mut. Auto. Ins. Co., 225 Neb. 503, 406 N.W.2d 640 (1987).

Although plaintiff seeks damages for loss of wages and benefits under the terms of his prior employment, the basic issue in this case relates to the status of the parties; i.e., does an employee-employer relationship still exist? To determine this question it is necessary to determine whether a contract for permanent employment in favor of plaintiff existed. This is a question of law, and we have an obligation to reach an independent conclusion with respect to issues such as that without regard to the findings of the trial court. OB-GYN v. Blue Cross, supra.

Johnston's first and third assignments of error both involve the question of what kind of employment he had with the Co-op. Therefore, they will be discussed together. It is well established in Nebraska that when employment is not for a definite term, and there are no contractual or statutory restrictions upon the right of discharge, an employer may lawfully discharge an employee whenever and for whatever cause it chooses without incurring liability. Jeffers v. Bishop Clarkson...