Mendelson v. Blatz Brewing Co.

• Decision Date: 08 March 1960
• Citation: 101 N.W.2d 805,9 Wis.2d 487
• Parties: Fredric MENDELSON, Appellant, v. BLATZ BREWING CO., a corporation, et al., Respondents.
• Court: Wisconsin Supreme Court

Page 805

101 N.W.2d 805

9 Wis.2d 487

Fredric MENDELSON, Appellant, v. BLATZ BREWING CO., a corporation, et al., Respondents.

Supreme Court of Wisconsin.

March 8, 1960.

Fisher & Fisher, Janesville, for appellant.

Dougherty, Ryan & Campbell, Janesville, for respondents.

CURRIE, Justice.

The complaint alleges a conspiracy on the part of the respondents Grimm and Harrison to perpetrate two unlawful acts. The first unlawful act charged is that of causing the plaintiff's removal as general manager of the corporation to further a scheme of the defendants wholly unrelated to that of promoting the welfare of the corporation. The second is that of coercing the plaintiff by economic duress to sell his stock in the corporation to the respondents for much less than its fair market value. If the allegations of the complaint are sufficient to spell out a cause of action in either respect, the complaint is not demurrable on the ground of failure to state a cause of action.

A conspiracy to cause a breach of contract is actionable. Martens v. Reilly, 1901, 109 Wis. 464, 84 N.W. 840; Holsinger v. Herring, 1920, 207 Iowa 1218, 224 N.W. 766; and Falstaff Brewing Corporation v. Iowa Fruit & Produce Co., 8 Cir., 1940, 112 F.2d 101. The Holsinger Case defines a civil conspiracy as follows 'Conspiracy 'is a combination of two or more persons by some concerted action, to accomplish some unlawful purpose or to accomplish by unlawful means some purpose not in itself unlawful.'' [207 Iowa 1218, 224 N.W. 769.] This is substantially the same definition as set forth in Martens v. Reilly, supra, 109 Wis. at page 473, 84 N.W. at page 843. As pointed out in the latter case the word 'unlawful' employed in such definition is not confined to criminal acts but includes all wilful, actionable violations of civil rights.

The plaintiff's employment by the corporation at a salary of $9,000 per year established a contractual relationship between them. The complaint fails to allege that such employment was for any fixed period, and, therefore, it must be assumed for purposes of the demurrer that it was terminable at will by either party. However, the weight of authority is to the effect that a cause of action is maintainable for a wrongful interference by a third party with an employment relationship terminable at will. Annotations entitled, 'Liability for procuring breach of contract,' 84 A.L.R. 43, 60, and 26 A.L.R.2d 1227, 1258. Prosser, Torts (2d ed.), p. 726, sec. 106, states the law on this point as follows:

'However, eminent legal writers to the contrary notwithstanding, the overwhelming majority of the cases have held that interference with employments or other contracts terminable at will is actionable, since until it is terminated the contract is a subsisting relation, of value to the plaintiff, and presumably to continue in effect. The possibility of termination does, however, bear upon the issue of the damages sustained, and it must be taken into account in determining the defendant's privilege to interfere.'

Wisconsin has aligned itself with the majority in holding that a cause of action is maintainable for unlawful interference with an employment contract terminable at will. Johnson v. Aetna Life Ins. Co., 1914, 158 Wis. 56, 147 N.W. 32.

4 Restatement, Torts, p. 49, sec. 766, states that 'one who, without a privilege to do so, induces or otherwise purposely causes a third person not to perform a contract with another * * * is liable to the other for the harm caused thereby.' (Emphasis supplied.) The respondents contend that they, because of their position as majority stockholders, enjoyed a position of absolute privilege when they caused the corporation to dispense with the plaintiff's services as general manager. The cases of Vassardakis v. Parish, D.C.N.Y. 1941, 36 F.Supp. 1002, and Tye v. Finkel stein, D.C.Mass.1958, 160 F.Supp. 666, directly pass upon such issue of privilege where an employee of a corporation is discharged at the instigation of a corporate stockholder or executive.

In Vassardakis v. Parish, supra, one count of the complaint alleged that the defendant Myers, who was an officer and director of the corporation which had employed the plaintiff, induced the defendant Parish, who was the president and sole stockholder of such corporation, to discharge the plaintiff. Such count further alleged that in so doing Myers was pursuing a scheme of his own to secure control of the corporation. It was contended in behalf of Myers that he was immune from liability because of his privileged position as an officer and director of the corporation. The court denied the defendants' motion for summary judgment and stated (36 F.Supp. at page 1005):

'Whether or not Myers was acting with justification and in furtherance of the interests of the corporation and within the general scope of his authority or for personal wrongful motives ought to be determined by the evidence produced at a trial.'

The fact situation in Tye v. Finkelstein, supra, was that the defendant majority stockholder procured the discharge of the plaintiff as an employee of the corporation, and the plaintiff sought to hold the defendant liable in damages. The court denied the defendant's motion for summary judgment. It was determined that the plaintiff could hold the defendant liable for substantial damages, even though the employment contract was terminable at will, if the plaintiff could prove that the defendant instigated the discharge without justification. The court in its opinion stated (160 F.Supp. at page 668):

'The plaintiff must establish that instead of acting 'within the privilege,' the defendant acted outside of it, that is to say, from 'an improper motive.' It might be to the company's advantage to break the contract. It is not enough to show that defendant knew, or intended, that plaintiff would be harmed thereby, or even that he was gratified by such a prospect. I hold that 'malice' will not suffice to destroy a privilege unless it is shown to have been the sole motive.'

Prosser, Torts (2d ed.), p. 738, sec. 106, points out that a defendant, who otherwise would stand in a position of privilege in causing a termination of contract, enjoys no privilege if his object is to put pressure upon the plaintiff and coerce him into complying with the defendant's wishes in some collateral matter. In the instant complaint it is alleged that the respondents brought about the plaintiff's discharge in order to further their improper scheme of acquiring his stock in...