Moody v. Bogue, 2-65283

CourtCourt of Appeals of Iowa
Writing for the CourtHeard by OXBERGER; PER CURIAM; SNELL
Citation310 N.W.2d 655
PartiesGary MOODY, Plaintiff-Appellee Cross-Appellant, v. R. A. BOGUE and Hi-Way Products, Inc., Defendants-Appellants Cross-Appellees.
Docket NumberNo. 2-65283,2-65283
Decision Date30 June 1981

James R. Swanger and David H. Goldman of Rogers, Phillips & Swanger, Des Moines, for defendants-appellants cross-appellees.

Thomas L. McCullough of the McCullough Law Firm, Sac City, for plaintiff-appellee cross-appellant.



Defendants, R. A. Bogue and Hi-Way Products, Inc., appeal from a judgment awarding plaintiff, Gary Moody, damages for breach of an oral employment contract. Defendants assert (1) there was no substantial evidence to support trial court's finding that defendants failed to notify plaintiff of intended reductions in compensation in advance of the actual reductions; (2) since defendants did so notify plaintiff, the employment contract was effectively modified; (3) plaintiff, by continuing to work for defendants in 1977, after receiving reduced compensation, consented to the reductions in bonus amounts; (4) the stated amount of each bonus was contingent upon plaintiff doing a good job, and this determination was within the sole discretion of the employer; and (5) it was error to hold Bogue individually liable because the sole employer was the corporation. Plaintiff, in his cross-appeal, contends trial court erred in determining that there was no independent consideration sufficient to support a lifetime employment contract. Plaintiff also contends that defendants raised the issue of modification for the first time on appeal. We affirm in part and reverse in part.

In 1969, defendant Bogue left the employ of Pittsburgh-Des Moines Steel Company to take a job with GOMACO in Ida Grove. A supplier of Pittsburgh-Des Moines Steel learned that Bogue was leaving that company and asked him to become its distributor. Bogue and a major shareholder of GOMACO (Godbersen) decided to form a partnership to distribute aluminum handrails and possibly structural steel for such supply companies. Bogue approached plaintiff, a draftsman in the bridge sales department of Pittsburgh-Des Moines Steel and offered him a job overseeing the new material supply business. Bogue offered Moody a salary of $9,000 per year, which was more than his salary at Pittsburgh-Des Moines Steel, plus a bonus of 10% of the pre-tax profits. Moody accepted the offer and commenced working for the new business, Hi-Way Products, on December 1, 1969. The business was untried and speculative, but Moody was told that the employment would be permanent and ongoing. Moody sold his house in Des Moines, his wife quit her $5,000 per year job, and they moved to Ida Grove. Subsequently, Bogue purchased Godbersen's interest and, in October, 1970, asked Moody if he wanted to come along with Bogue and Hi-Way Products. Moody, having failed to induce Bogue to enter into a 50-50 partnership with him, came to work as an employee of Bogue's business for $750 per month plus 20% of the profits if he continued to do a good job. Bogue incorporated Hi-Way Products on October 1, 1971, with an investment of $10,000 capital. As it turned out, pirating their former employer's business became highly profitable, and Moody's income, salary plus bonus, rose from $10,379.59 in 1970 to $59,849.47 in 1975. In addition to these amounts the company paid over $20,000 into Moody's pension fund.

In 1976, Bogue, as president and owner of the company, purchased a D-X filling station in Ida Grove and assigned the responsibility of overseeing the property and business to Moody. Moody felt that he was already busy enough without having to take on the extra responsibility, but reluctantly proceeded to look after the books and records of the filling station. Bogue loaned $14,500 to the filling station operator without consulting Moody and with the knowledge that the local bank would not make the loan. The operator wrote unauthorized checks, went broke and took bankruptcy before the end of the year. Hi-Way lost $12,000 in the transaction and, in November of 1976, Bogue advised Moody that the $12,000 loss was being deducted from his annual bonus. Moody and his wife were unhappy with the bonus cut and met with Bogue in his office. Bogue said that he was paying too much for the amount of work Moody was doing, that Moody refused to accept management responsibilities, and that there would be no bonus if he was only going to be a draftsman and a bookkeeper. The business relationship between Moody and Bogue deteriorated during the year of 1977. Bogue continued to find fault with the way Moody was handling his job and, by the end of 1977, advised Moody that the bonus would be $12,533.69, which represented approximately four percent of the company profit before taxes. Moody was dissatisfied and told Bogue that it was not in accordance with their agreement. Bogue replied that if Moody was unhappy with that amount, he would be paid nothing. Bogue gave Moody the bonus check and asked him to hold it for a week or ten days to assist the cash flow in the company account. Moody hesitated and was annoyed. Bogue then told Moody that he thought the only thing Moody was interested in was the money, and that Moody should straighten out his attitude or leave his keys on the desk and depart. Bogue told Moody to think it over and if he wanted to come back to let Bogue know the first of the year. Moody left his keys and cashed the bonus check. His last day on the job was December 14, 1977.

Moody subsequently wrote to Bogue expressing his willingness "to continue working for you and the company as in accordance with our agreement and bargain" and making a demand for the amounts he believed were owed him for 1976 and 1977. When Bogue did not respond to this letter, Moody filed suit for breach of contract. On May 23, 1980, trial court determined that there was no enforceable lifetime employment contract, but that the plaintiff was entitled to $12,000 for breach in 1976 and $49,201.06 for breach in 1977. This appeal followed.

I. Scope of Review. Since this is an action at law, our review is on assigned error only. Iowa R.App.P. 4. Trial court's findings of fact have the effect of a special verdict and are equivalent to a jury verdict; if supported by substantial evidence they are binding upon us and the judgment will not be disturbed on appeal. Iowa R.App.P. 14(f)(1). "A finding of fact is supported by substantial evidence if the finding may reasonably be inferred from the evidence." Briggs Transportation Co. v. Starr Sales Co. 262 N.W.2d 805, 808 (Iowa 1978). The record is reviewed in the light most favorable to the judgment. Ambiguities are construed to uphold rather than defeat the judgment. Pillsbury Co. v. Ward, 250 N.W.2d 35, 38 (Iowa 1977). The substantial evidence rule limiting review of a law action tried to the court, however, does not preclude inquiry into whether, conceding the truth of the findings of facts, the conclusions of law drawn therefrom are correct. Keith v. Community School District of Wilton in the Counties of Cedar and Muscatine, 262 N.W.2d 249, 255 (Iowa 1978).

II. Preservation of Error. We initially address plaintiff's contention that defendants raised the issue of modification for the first time on appeal and conclude it is without merit. "(Where the) parties proceed without objection to try an issue, even though not presented by the pleadings, it amounts to consent to try such issue and it is rightfully in the case." Arthur Elevator Co. v. Grove, 236 N.W.2d 383, 391 (Iowa 1975). We find the issue of modification of bonus amounts was tried to the court below. Evidence was taken, without objection, on whether Moody was informed by Bogue of intended changes in the bonus arrangements; trial court made findings on the issue and drew conclusions of law. The fact that defendant filed no motions for directed verdict, judgment notwithstanding the verdict, new trial, or enlargement of findings does not mean that there are no appealable questions preserved for presentation on appeal. Iowa Civ.P. 179(b); Murphy v. Adams, 253 Iowa 235, 111 N.W.2d 687 (1961) (supreme court reviewed sufficiency of evidence to support trial court's finding that a contract was ambiguous, and trial court's consequent error in applying the law pertaining to construction of contracts).

III. Lifetime Employment Contract. Plaintiff further argues that trial court erred in determining there was insufficient additional consideration to support a lifetime contract entitling him to recovery of salary after the year 1977. We find no error.

Generally, a contract for permanent (as opposed to temporary) employment that is indefinite as to time of duration, and one wherein the employee merely promises to perform services, is terminable at will by either party, with or without cause. Stauter v. Walnut Grove Products, 188 N.W.2d 305, 311 (Iowa 1971). See also Hanson v. Central Show Printing Co., 256 Iowa 1221, 1224, 130 N.W.2d 654, 656 (1964); Lewis v. Minnesota Mutual Life Insurance Co., 240 Iowa 1249, 1259, 37 N.W.2d 316, 322-24 (1949); Faulkner v. Des Moines Drug Co., 117 Iowa 120, 122, 90 N.W. 585, 586 (1902). However, where consideration in addition to services is provided by the employee, "a contract for permanent or lifetime employment is valid and enforceable and continues to operate so long as the employer remains in business and has work for the employee once the employee performs competently. (citations omitted)" Stauter, 188 N.W.2d at 311. With the additional independent consideration, the contract is enforceable even though the promisee has the right to terminate at any time. Collins v. Parsons College, 203 N.W.2d 594, 598 (Iowa 1973). Further, the additional consideration need not move to the employer or promisor. Id. at 599.

The cases have not been unanimous in deciding what constitutes legally sufficient additional...

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