Murphree v. Alabama Farm Bureau Ins. Co.

• Decision Date: 20 January 1984
• Parties: 115 L.R.R.M. (BNA) 3682 Larry MURPHREE v. ALABAMA FARM BUREAU INSURANCE COMPANY. Richard STOVER v. ALABAMA FARM BUREAU INSURANCE COMPANY. 82-1173, 82-1174.
• Court: Alabama Supreme Court

Page 1218

449 So.2d 1218

115 L.R.R.M. (BNA) 3682

Larry MURPHREE v. ALABAMA FARM BUREAU INSURANCE COMPANY.

Richard STOVER v. ALABAMA FARM BUREAU INSURANCE COMPANY.

82-1173, 82-1174.

Supreme Court of Alabama.

Jan. 20, 1984.

Rehearing Denied April 20, 1984.

John L. Sims, Hartselle, for appellants Larry Murphree and Richard stover.

Norman W. Harris, Decatur, for appellee.

FAULKNER, Justice.

Appellants, Larry Murphree and Richard Stover, appeal from trial court decisions granting summary judgments in favor of defendants, Farm Bureau Insurance Company (Farm Bureau) and Federated Life Insurance Company, in actions alleging both breach of contract and fraud. We affirm the decision in Murphree's case and reverse the decision in Stover's case.

In February 1980, Murphree answered an advertisement in the Decatur Daily newspaper which referred to a "Career Opportunity for sales representative with Alabama Farm Bureau Insurance." On March 3, 1980, Murphree commenced employment with Farm Bureau as an insurance agent. Murphree testified that his employment contract with Farm Bureau was partially written and partially oral. The written part included an agent's handbook, a production schedule, and various other documents. The oral part concerned various oral communications between Murphree and Ms. Jean Wood, a district manager for Farm Bureau. Murphree's case is particularly concerned with an alleged oral representation made by Ms. Wood to Murphree that he would be entitled to employment with Farm Bureau so long as he complied with a particular production schedule. On February 2, 1982, Farm Bureau terminated Murphree's employment, allegedly for "attitude and lack of life production."

Richard Stover was hired as an insurance agent by Farm Bureau on July 19, 1982. Stover testified that his employment agreement was also partially written and partially oral. The written part included the production schedule and various other documents. The oral part included representations by Farm Bureau to Stover that he would be compensated by commissions and Stover's agreement with Farm Bureau that he would move to Athens, Alabama (his sales territory), from his home in Decatur, Alabama. On November 2, 1982, Farm Bureau terminated Stover's employment for "failure to relocate to Territory."

Murphree, on October 27, 1982, and Stover, on November 29, 1982, filed complaints against Farm Bureau Insurance Company and Federated Life Insurance Company, both alleging breach of contract and fraud. The defendants filed answers generally denying the allegations of the complaints, and discovery followed in both cases.

On January 21, 1983, the defendants filed a motion for summary judgment in both cases, based on the ground that, since no specific term of employment was stated or could be inferred from Murphree's or from Stover's contract, Murphree and Stover were employees-at-will of defendants, and, thus, could be terminated at any time. The trial judge granted defendants' motions on April 12, 1983. Instead of applying the employment-at-will doctrine, however, the trial judge ruled:

"The requirements for a contract of permanent employment to be binding, as it was held in Alabama Mills, Inc. v. Smith, 186 So. 699 (Ala.Sup.Ct.1939) and more recent cases following the above, include the requirement that it is necessary to show a valuable consideration supplied by the employee other than services to be rendered for which he is to be paid. The plaintiff has not done this."

Murphree and Stover then filed motions for new trials which were denied. These appeals followed.

Appellants' basic argument on appeal is that the trial court erred in granting the summary judgment motions, since there was evidence that each appellant supplied a valuable consideration to support a permanent employment contract.

The state of the law concerning permanent employment contracts is summarized by Justice Maddox in Scott v. Lane, 409 So.2d 791, 794 (Ala.1982), as follows:

"In United Security Life Insurance Co. [v. Gregory, 281 Ala. 264, 201 So.2d 853 (1967) ], this Court quoted the following passage from National Union Life Insurance Co. [v. Ingram, 275 Ala. 310, 154 So.2d 666 (1963) ],:

" 'In regard to a contract for life employment, the majority rule seems to be that two elements must be shown to exist before such a contract can be held enforceable. First, it must appear that there was a consideration of substantial value, independent of any service to be performed, and in making that determination the courts inquire into the actual value of the consideration. Second, where the promisor is a corporation, in the absence of ratification or estoppel, it must appear that the individual or individuals who acted on behalf of the corporation had actual, as opposed to implied, authority to bind the corporation. Alabama Mills [Inc.] v. Smith, 237 Ala. 296, 186 So. 699; Chesapeake & Potomac Tel. Co. of Baltimore City v. Murray, 198 Md. 526, 84 A.2d 870; Heaman v. E.N. Rowell Co., 261 N.Y. 229, 185 N.E. 83; Carney v. New York Life Ins. Co., 19 A.D. 160, 45 N.Y.S. 1103, affirmed 162 N.Y. 453, 57 N.E. 78; Rennie v. Mut. Life Ins. Co. of N.Y., 1 Cir., 176 F. 202; * * * [further citations omitted].' "

Furthermore, this court has stated:

"[O]rdinarily, in the absence of additional express or implied stipulations as to duration, a contract...