McInerney v. Charter Golf, Inc.

• Decision Date: 22 May 1997
• Docket Number: No. 80248,80248
• Parties: , 223 Ill.Dec. 911, 65 USLW 2762, 12 IER Cases Dennis McINERNEY, Appellant, v. CHARTER GOLF, INC., Appellee.
• Court: Illinois Supreme Court

Page 1347

680 N.E.2d 1347

176 Ill.2d 482, 223 Ill.Dec. 911, 65

USLW 2762, 12 IER Cases [PG1478]

Dennis McINERNEY, Appellant, v. CHARTER GOLF, INC., Appellee.

No. 80248.

Supreme Court of Illinois.

May 22, 1997.

[223 Ill.Dec. 912] [176 Ill.2d 483] Robert P. Sheridan, Chicago, for Dennis J. McInerney.

F. Thomas Hecht, Hopkins & Sutter, Chicago, for Charter Golf, Inc.

Justice HEIPLE delivered the opinion of the court:

Is an employee's promise to forgo another job opportunity in exchange for a guarantee of lifetime employment sufficient consideration to modify an existing employment-at-will relationship? If "yes," must such an agreement be in writing to satisfy the requirements of the statute of frauds? These questions, among others, must be answered in plaintiff Dennis McInerney's appeal from an order of the appellate court affirming a grant of summary judgment in favor of the defendant, Charter Golf, Inc. Although we conclude that a promise for a promise is sufficient consideration to modify a contract-even an employment contract-we further conclude that the statute of frauds requires that a contract for lifetime employment be in writing.

The facts are uncomplicated. This case comes to us on a grant of summary judgment, so our review is de novo (Barnett v. Zion Park District, 171 Ill.2d 378, 385, 216 Ill.Dec. 550, 665 N.E.2d 808 (1996)), and we will consider "the pleadings, depositions, and admissions on file, together with the affidavits, if any," to determine whether a genuine issue of material fact exists (735 ILCS 5/2-1005(c) (West 1994)). From 1988 through 1992, Dennis McInerney worked as a sales representative for Charter Golf, Inc., a company which manufactures and sells golf apparel and supplies. Initially, McInerney's territory included Illinois but was later expanded to include Indiana and Wisconsin. In Intending to inform Charter Golf of his decision to accept the Hickey-Freeman offer of employment, McInerney called Jerry Montiel, Charter Golf's president. Montiel wanted McInerney to continue to work for Charter Golf and urged McInerney to turn down the Hickey-Freeman offer. Montiel promised to guarantee McInerney a 10% commission on sales in Illinois and Wisconsin "for the remainder of his life," in a position where he would be subject to discharge only for dishonesty or disability. McInerney allegedly accepted Charter Golf's offer and, in exchange for the guarantee of lifetime employment, gave up the Hickey-Freeman offer. McInerney then continued to work for Charter Golf.

[223 Ill.Dec. 913] 1989, McInerney allegedly was offered a position as an exclusive sales representative for Hickey-Freeman, an elite clothier which manufactured a competing line of golf apparel. Hickey-Freeman purportedly offered McInerney an 8% commission.

In 1992, the relationship between Charter Golf and McInerney soured: Charter Golf fired McInerney. McInerney then filed a complaint in the circuit court of Cook County, alleging breach of contract. The trial court granted Charter Golf's motion for summary judgment after concluding that the alleged oral contract was unenforceable under the statute of frauds because the contract amounted to an agreement which could not be performed within a year from its making. The appellate court affirmed, but on a wholly different ground. No. 1-94-1764 (unpublished order under Supreme Court Rule 23). The appellate court held that the putative contract between McInerney and Charter Golf suffered from a more fundamental flaw, namely, that no contract for lifetime employment even existed because a promise to forbear another job opportunity was insufficient consideration to convert an existing employment-at-will relationship into a contract for lifetime employment.

This court accepted McInerney's petition for leave to appeal (155 Ill.2d R. 315), and for the reasons set forth below, we affirm on other grounds.

ANALYSIS

Employment contracts in Illinois are presumed to be at-will and are terminable by either party; this rule, of course, is one of construction which may be overcome by showing that the parties agreed otherwise. Duldulao v. St. Mary of Nazareth Hospital Center, 115 Ill.2d 482, 489, 106 Ill.Dec. 8, 505 N.E.2d 314 (1987). As with any contract, the terms of an employment contract must be clear and definite (Duldulao, 115 Ill.2d at 490, 106 Ill.Dec. 8, 505 N.E.2d 314) and the contract must be supported by consideration (Ladesic v. Servomation Corp., 140 Ill.App.3d 489, 491, 95 Ill.Dec. 12, 488 N.E.2d 1355 (1986); Martin v. Federal Life Insurance Co., 109 Ill.App.3d 596, 602, 65 Ill.Dec. 143, 440 N.E.2d 998 (1982); Heuvelman v. Triplett Electrical Instrument Co., 23 Ill.App.2d 231, 235, 161 N.E.2d 875 (1959)).

A. Consideration

Although the rules of contract law are well-established and straightforward, a conflict has emerged in the appellate court decisions on the subject of consideration in the context of a lifetime employment contract. Several decisions have held that a promise of lifetime employment, which by its terms purports to alter an employment-at-will contract, must be supported by "additional" consideration beyond the standard employment duties. Heuvelman, 23 Ill.App.2d at 235-36, 161 N.E.2d 875; Koch v. Illinois Power Co., 175 Ill.App.3d 248, 252, 124 Ill.Dec. 461, 529 N.E.2d 281 (1988); Ladesic, 140 Ill.App.3d at 492-93, 95 Ill.Dec. 12, 488 N.E.2d 1355. These cases have held that an employee's rejecting an outside job offer in exchange for a promised guarantee of lifetime employment is not sufficient consideration to alter an employment-at-will relationship. Heuvelman, 23 Ill.App.2d at 236, 161 N.E.2d 875; Koch, 175 Ill.App.3d at 252, 124 Ill.Dec. 461, 529 N.E.2d 281; Ladesic, 140 Ill.App.3d at 492-93, 95 Ill.Dec. 12, 488 N.E.2d 1355. The premise underlying these cases is that the employee simply weighs the benefits of the two positions, and by accepting one offer the employee necessarily rejects the other. As such, these cases have reasoned that the employee has not given up anything of value, and thus there is no consideration to support the promise of lifetime employment. Koch, 175 Ill.App.3d at 252, 124 Ill.Dec. 461, 529 N.E.2d 281; Ladesic, 140 Ill.App.3d at 492-93, 95 Ill.Dec. 12, 488 N.E.2d 1355.

One case, however, has taken issue with this analysis. In Martin v. Federal Life Insurance Co., the appellate court held that an enforceable contract for lifetime employment was formed when an employee relinquished a job offer in exchange for a promise of permanent employment from his current employer. Martin v. Federal Life Insurance Co., 109 Ill.App.3d 596, 601, 65 Ill.Dec. 143, 440 N.E.2d 998 (1982). The Martin court recognized that there was consideration in an exchange of promises: the employer promised to give up his right to terminate the employee at-will, and in exchange the employee agreed to continue working for his current employer and to forgo a lucrative opportunity with a competitor. Martin, 109 Ill.App.3d at 601, 65 Ill.Dec. 143, 440 N.E.2d 998.

What is consideration? Under the prevailing view, embodied in the Restatement (Second) of Contracts, consideration is the bargained-for exchange of promises or performances, and may consist of a promise, an act or a forbearance. Restatement (Second) of Contracts § 71 (1981). Thus, a promise for a promise is, without more, enforceable. Restatement (Second) of Contracts § 79, Comment a, at 200 (1981). In past cases, this court has recognized this basic precept, i.e., mutual assent and an exchange of promises provides consideration to support the formation of a contract. See, e.g., Patton v. Carbondale Clinic, 161 Ill.2d 357, 372, 204 Ill.Dec. 203, 641 N.E.2d 427 (1994); Steinberg v. Chicago Medical School, 69 Ill.2d 320, 13 Ill.Dec. 699, 371 N.E.2d 634 (1977) (holding that any act or promise which is of benefit to one party or disadvantage to the other is sufficient "consideration" to support a contract).

While this court has never directly addressed the specific requirements to establish a permanent employment contract, it has held more generally that the employment relationship is governed by the law of contract. Existence of an employment contract, express or implied, is essential to the employer-employee relationship. A.J. Johnson Paving Co. v. Industrial Comm'n, 82 Ill.2d 341, 350, 45 Ill.Dec. 126, 412 N.E.2d 477 (1980). As with any contract, it is not possible for a contract of employment to exist without consent of the parties. M & M Electric Co. v. Industrial Comm'n, 57 Ill.2d 113, 119, 311 N.E.2d 161 (1974). Indeed, this court held in Duldulao, 115 Ill.2d at 490, 106 Ill.Dec. 8, 505 N.E.2d 314, that an employee handbook or other policy statement creates enforceable contractual rights governed by the traditional requirements for contract formation.

In the instant case, Charter Golf argues that an employee's promise to forgo another employment offer in exchange for an employer's promise of lifetime employment is not sufficient consideration. But why not? The defendant has failed to articulate any principled reason why this court should depart from traditional notions of contract law in deciding this case. While we recognize that some cases have indeed held that such an exchange is "inadequate" or "insufficient" consideration to modify an employment-at-will relationship, we believe that those cases have confused the conceptual element of consideration with more practical problems of proof. As we discussed above, this court has held that a promise for a promise constitutes consideration to support the existence of a contract. To hold otherwise in the instant case would ignore the economic realities underlying the case. Here McInerney gave up a lucrative job offer in exchange for a guarantee of lifetime employment; and in exchange for giving up its right to terminate McInerney at will, Charter Golf retained a valued employee. Clearly both parties exchanged bargained-for benefits in what...