Mansfield v. Lang
| Decision Date | 04 February 1936 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | ARTHUR J. MANSFIELD v. E. COPELAND LANG & another. SAME v. CONSOLIDATED PRESS COMPANY. |
November 8, 1935.
Present: RUGG, C.
J., CROSBY, PIERCE DONAHUE, & QUA, JJ.
Contract, What constitutes, In writing, Construction, Validity, Novation Performance and breach, Of employment. Frauds, Statute of. Corporation, Officers and agents. Agency, What constitutes.
A written contract between A and B for the organization of a corporation of which B and his associates would have stock control, and A would be manager for a term not defined, and a contemporaneous letter from B to A fixing the term of A's employment at not less than three years if the business should be successful under his management, were construed to be parts of a single contract binding B to warrant A's employment by the proposed corporation for three years subject to the condition of successful management; and such contract was not illegal as against public policy.
It was not shown that after the making of a contract between A and B for A's employment by a corporation to be formed, the corporation assumed B's obligation to A or that A intended to release B therefrom, and there was no novation discharging B.
Where A and B made a contract providing for the formation of a holding corporation for two existing corporations and for the management by A of the "combined companies" for a certain period on condition that the
"business" of the two corporations should be successful under his management, A could be found to have performed if the business of the corporations as a whole was successful though that of one of the two corporations considered separately was not.
In an action arising from the discharge of the plaintiff as manager of a corporation by its directors on the asserted grounds of his poor management, insubordination and misappropriation of small amounts of its funds, with conflicting evidence on those issues and evidence that the asserted reasons for the discharge were not the real reasons, the jury could find that the plaintiff had been discharged without just cause.
An alleged contract by B and others for the employment of A for the term of three years, evidenced by a writing signed by B only, by force of G.L.
(Ter. Ed.) c. 259 Section 1, Fifth, did not bind the others without proof that B signed as their agent. One cannot act as agent of a corporation before its organization.
TWO ACTIONS OF CONTRACT. Writs dated September 17, 1931. The actions were tried in the Superior Court before Walsh, J.
L. S. Nicholson, for the defendants. S. R. Wrightington, for the plaintiff.
These actions of contract were tried together before a jury. At the conclusion of the evidence the trial judge allowed motions filed by the defendants Ralph D. Leonard and Consolidated Press Company for directed verdicts, and the plaintiff duly excepted thereto. The judge refused to direct a verdict for the defendant Lang subject to his exception. Lang also excepted to certain instructions to the jury, which found for the plaintiff against him in the sum of $8,616. Lang filed a motion for a new trial, which was denied subject to his exception. The exceptions of the plaintiff in both cases, and the exceptions of the defendant Lang in the first case are before this court on a joint bill of exceptions.
It appears from the record that the plaintiff was engaged in the publishing and printing business in Boston, being the manager and controlling stockholder of two Massachusetts corporations the Mansfield Printing Company and the Columbus Press, Inc. The defendants Leonard and Lang owned a majority of the stock of The Melrose Free Press Inc., which published a weekly newspaper in Melrose and carried on and conducted a commercial printing department, and which owned the Melrose Free Press Building Company, a corporation owning the real estate where the business was carried on. In the spring of 1930 conferences took place between the parties relative to combining the various corporations in one holding company under the management of the plaintiff. An agreement (Exhibit 3) recited that it was made "this third day of June, 1930, by and between Arthur J. Mansfield, of Newton, Massachusetts, and E. Copeland Lang, of Belfast, Maine" and that "Whereas, it is the desire of said parties to form a Holding Company, to acquire their said interests, thus effecting a unified control of the said Corporations under the management of said Mansfield; Now, therefore, . . . it is mutually covenanted and agreed" that a corporation should be organized and the parties should transfer to the new corporation their majority holdings in the existing corporations; that "Mansfield is to undertake the active management of the combined Companies, the headquarters of which will be located in the Free Press Building, Melrose, Massachusetts, and he is to take up his residence in Melrose, not later than September 1st, 1930, although his active management may commence July 1st, 1930, or at some other date to be mutually agreed upon"; that On the same date Lang signed and delivered to the plaintiff a letter (Exhibit 2) which stated: "Confirming the understanding reached at the conference between us in company with Mr. Fyler and Dr. Leonard . . . last evening, I wish to say that we readily accede to your request for a Gentleman's Agreement whereby you may be assured that if the Melrose Free Press and the Mansfield Printing Co. business is successfully carried on under your management, your tenure will be at least three years and I may add my hope and belief that it will be for a very much longer period." The defendant Consolidated Press Company was organized pursuant to this agreement.
The first meeting of the incorporators was held on June 27, 1930, and the incorporators were Ralph D. Leonard, Arthur J. Mansfield and Edwin W. Flyer, who were then elected directors. By-laws adopted at this first meeting did not provide for the removal of an officer. On July 1, 1930, the plaintiff started work at Melrose, and he made arrangements to purchase a house there and he and his family moved from Newton to Melrose. The charter of the Consolidated Press Company was issued under date of July 12, 1930. The second meeting of the incorporators was held on August 20, 1930, at which Lang and Mrs. Maude M. Johnson were elected directors. On the same date the first meeting of the directors was held, all the directors except Mrs. Johnson being present. At this meeting Lang was elected president, Dr. Leonard vice-president, the plaintiff treasurer, and Fyler clerk, and the following vote was adopted: "On motion duly seconded it was voted to appoint Arthur J. Mansfield to act as General Manager and to pay him a salary of $6,000.00 per annum." The directors also passed certain votes respecting the issuance of the capital stock of the new corporation in exchange for stock of The Melrose Free Press Inc., the Mansfield Printing Company, and the Columbus Press, Inc. At a meeting of the directors on August 3, 1931, the following vote was adopted: "On motion duly made and seconded, it was voted that whereas, having for more than a year attempted without success to secure the effective cooperation of Arthur J. Mansfield, Treasurer and General Manager of this Company and its subsidiaries, and because of his failure to successfully manage the subsidiary companies, and because of recent use of the company's funds and specific insubordination, that should Arthur J. Mansfield take any exception to the action of this Board in assuming that his verbal resignation tendered on May 20th was not still available as of this date, effective immediately, and for the reasons stated, he be and is hereby discharged from further connection with this company." Prior to this vote various disagreements had arisen between the parties. The plaintiff tendered performance after being notified of his discharge, and later sought other employment and brought the present actions to leftover the difference between what he was able to earn during the remainder of the alleged term and the alleged salary. The answer in each case set forth, in addition to a general denial, defences of the statute of frauds, resignation, and justifiable discharge. The important questions in the cases are (1) whether there was an employment agreement for three years which was legally binding and enforceable against any one or all of the named defendants, and (2) if there was, whether it was justifiably terminated.
There was evidence that, after considerable negotiations between the parties the two papers, Exhibits 2 and 3, bearing the same date, June 3, 1930, were written and signed by Lang; that the letter was written at the plaintiff's request; that both papers were delivered to the plaintiff at the same time and that the plaintiff did not sign Exhibit 3 until after he had received Exhibit 2. It could have been found on these facts that these two instruments constitute a single contract between the parties. Oakes v. Baker, 244 Mass. 186 . Bresky v. Rosenberg, 256 Mass. 66 , 75. Fellows v. Fairbanks Co. 205 App Div. (N.Y.) 271. In order to interpret the contract, the instruments entered into by the parties should be read together. Skilton v. R. H. Long Cadillac La Salle Co. 265 Mass. 595 , 597. Am. Law Inst. Restatement: Contracts, Section 235 (c), and cases cited. Construing the instruments together,...
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