Oldenkott v. American Electric, Inc.

Decision Date08 January 1971
Citation14 Cal.App.3d 198,92 Cal.Rptr. 127
CourtCalifornia Court of Appeals Court of Appeals
PartiesCarl O. OLDENKOTT, Plaintiff and Respondent, v. AMERICAN ELECTRIC, INC., Defendant and Appellant. Civ. 10106.

Paul, Hastings, Janofsky & Walker, Oliver F. Green, Jr., and Douglas C. Conroy, Los Angeles, for defendant and appellant.

Robert E. Krause, Long Beach, for plaintiff and respondent.

OPINION

COUGHLIN, Associate Justice.

Defendant appeals from a judgment awarding plaintiff $79,055.56 as damages for breach of a contract of employment.

Plaintiff was an inventor of fasteners which are a type of locking device to keep nuts intact on bolts; had obtained two patents on these fasteners; and also had filed a patent application respecting them, which was pending.

On December 29, 1967 defendant, by contract in writing, employed plaintiff as manager of its division known as Oldenkott Fasteners, at a salary of $2,500 per month, for the term of two years, which might be extended an additional two years at the option of plaintiff. Simultaneously, by a contract in writing, plaintiff granted defendant the right and license to manufacture, sell, produce, distribute and use the fasteners covered by his patents and the pending application for patent, which were known as the Oldenkott fasteners. Plaintiff's duties as manager were to promote the sale of the fasteners; establish new accounts; and arrange sources of supply to service these new accounts.

On July 19, 1968 defendant terminated plaintiff's employment. Thereupon plaintiff sued defendant to recover damages, alleging termination of his employment was an anticipatory breach of contract. Defendant asserted it was authorized by the terms of the contract to terminate plaintiff's employment because of his failure to comply therewith, and also because of his refusal to perform duties assigned him by defendant. The case was tried by a jury which found in plaintiff's favor and awarded him damages in the sum of $85,000. Pursuant to stipulation, the amount of the award was reduced to its agreed present value, the sum of $79,055.56.

Defendant, on appeal, presents its contentions in an opening brief and in an 'Additional Brief' filed with permission of this court.

In its opening brief defendant seeks reversal on the grounds: (1) the verdict is against the 'weight of the evidence' which showed plaintiff was discharged justifiably; (2) the trial court erred in refusing to instruct the jury recovery, if any, should be limited to the balance due on the original two-year term of the contract; and (3) misconduct of plaintiff's counsel which deprived defendant of a fair trial.

The contention the verdict of the jury is against the 'weight of the evidence' on the issue whether plaintiff was discharged unjustifiably does not present an issue subject to appellate determination. The 'weight of the evidence' to support a verdict is a matter subject to exclusive determination by the jury. (Thompson v. City of Long Beach, 41 Cal.2d 235, 246, 259 P.2d 649; Shields v. Shields, 200 Cal.App.2d 99, 102, 19 Cal.Rptr. 129.)

Assuming defendant's attack upon the 'weight of the evidence' to support the verdict, in substance, is an attack upon the sufficiency of the evidence to support the verdict, it is without merit.

Defendant contends, in effect, the evidence establishes as a matter of law it was entitled to terminate the contract under a provision thereof authorizing such because of plaintiff's inefficiency and failure to meet standards of performance and conduct normally expected of executive employees having his position or responsibility; and also was justified in terminating the contract because of plaintiff's insubordination in failing to comply with the requests of his superiors.

The contention plaintiff's inefficiency and failure to meet the standards of performance and conduct expected of him is premised on the claim during the six and one-half months he was employed defendant had not received a single order for fasteners. However, there is substantial evidence establishing defendant's officers refused to cooperate with plaintiff in any sales program; refused to give him realistic price lists for the sale of fasteners in large quantities, which were essential to promote sales; and countermanded instructions which plaintiff intended to provide a sales force and an advertising campaign. The evidence, directly and by inference, supports the conclusion any asserted inefficiency or failure to meet the standards of performance normally expected of an executive in plaintiff's position was attributable to conduct on the part of defendant's officers rather than to plaintiff.

The contention defendant also was authorized to terminate plaintiff's employment because of his insubordination is premised upon the claim the evidence dictates the conclusion he refused to deliver to defendant's office a copy of the pending application for patent, and also refused to produce a 'secret agreement' between himself and a Japanese organization known as the Kyodo Group which held a license to use his patent rights in Japan. There is substantial evidence supporting the conclusion plaintiff did not refuse to furnish defendant with a copy of the pending patent application; a copy of the application had been submitted to defendant's attorney and by the latter returned to plaintiff's patent attorney; plaintiff suggested to defendant's officers they obtain a copy of the application from his attorney, and authorized them to do so; and there was no secret agreement between plaintiff and the Kyodo Group.

In light of the foregoing, and also in light of other evidence in the record, defendant's contention the evidence is insufficient to support the finding implied in the verdict plaintiff's discharge was unjustified is without merit. To the contrary, there is adequate substantial evidence supporting an implied finding plaintiff was discharged unjustifiably and his discharge was an anticipatory breach of the contract.

Defendant's contention the court erred in refusing to instruct the jury plaintiff was entitled to recover damages, if at all, only for the balance of the original two-year term of employment is premised upon the claim the option for the additional two-year term should not be considered in computing the damages.

Plaintiff testified, if his contract had not been terminated he intended to exercise the option extending the term for an additional two years; he was 42 years of age; and he was in good health.

In support of its position, defendant cites the decision in Schmidt v. Beckelman, 187 Cal.App.2d 462, 468--471, 9 Cal.Rptr. 736. Reliance upon this decision is misplaced because it involves an action for damages for breach of an option to purchase real property, and holds the 'harshly rigid' rule of damages prescribed by Civil Code section 3306 for breach of an agreement to convey real property, i.e., in case of bad faith damages may be awarded on the basis of the 'difference between the price agreed to be paid and the value of the estate agreed to be conveyed', does not apply until the option is exercised. The rule of damages applicable to the case at bench is not that prescribed by Civil Code section 3306.

The court instructed the jury respecting the measure of damages in accord with the rule stated by this court in Erler v. Five Points Motors, Inc., 249 Cal.App.2d 560, 562, 57 Cal.Rptr. 516; and also instructed, for the purpose 'of determining the 'total unexpired term of the contract' you may, if you find that Mr. Oldenkott would have exercised the option provided for in the employment contract, consider the term of such contract to be for a period of four years', which followed the rule stated and applied in Detroit Graphite Co. v. Hoover, 1 Cir., 41 F.2d 490, 494, and Dixie Glass Co. v. Pollak (Tex.Civ.App.), 341 S.W.2d 530, 541.

In Schmidt the optionee did not attempt to exercise his option. In the case at bench defendant prevented plaintiff from exercising his option by terminating his employment; because of defendant's action, the initial term of employment never would be completed. (Cf. gen. Buxbom v. Smith, 23 Cal.2d 535, 541, 145 P.2d 305; Navarro v. Jeffries, 181 Cal.App.2d 454, 461, 5 Cal.Rptr. 435.) Directing itself to a similar situation, the court in Dixie Glass Co. v. Pollak, Supra, (Tex.Civ.App.), 341 S.W.2d 530, 541, said:

'A substantial provision of the contract breached by appellant was the option of appellee to extend it. When the contract was breached time had not arrived for the exercise of the option. When appellant repudiated the contract, he deprived appellee of this contract right. Too, since appellant had repudiated the contract and discharged appellee, it would be useless for appellee to exercise the option. The law does not require a useless act. We think the fact there were options in the contract in favor of appellee is one element to be considered by the jury in determining damages, that is, the jury could consider the probability of the exercise of the options in determining the length of the term.'

The decision in Schmidt, although holding the measure of damages prescribed by Civil Code section 3306 does not apply to an action for damages on account of the breach of an option to purchase real property where there never was an election to exercise the option, also held the measure of damages in an action for breach of such an option is that prescribed by Civil Code section 3300, i.e., the amount which will compensate the party aggrieved for all of the detriment proximately caused by the breach. Actually defendant's anticipatory breach of contract was the cause of damage resulting (1) from the loss of employment for the balance of the original term at the rate of compensation agreed upon, and (2) from the loss of employment for the additional two-year term, subject to his...

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