Pittman v. Larson Distributing Co.

• Decision Date: 12 June 1986
• Docket Number: No. 84CA0239,84CA0239
• Parties: Ned PITTMAN, Plaintiff-Appellant, v. LARSON DISTRIBUTING COMPANY, a Colorado corporation; John L. Larson, Sr., and Robert G. Fitzsimmons, Defendants-Appellees. . I
• Court: Colorado Court of Appeals

Page 1379

724 P.2d 1379

Ned PITTMAN, Plaintiff-Appellant, v. LARSON DISTRIBUTING COMPANY, a Colorado corporation; John

L. Larson, Sr., and Robert G. Fitzsimmons,

Defendants-Appellees.

No. 84CA0239.

Colorado Court of Appeals,

Div. I.

June 12, 1986.

Rehearing Denied July 10, 1986.

Certiorari Denied (Larson) Sept. 29, 1986.

Berger & Rothstein, P.C., David Berger, Commerce City, for plaintiff-appellant.

Towey & Zak, Edward B. Towey and Deborah A. Sperlak, Denver, for defendants-appellees.

KELLY, Judge.

Plaintiff, Ned Pittman, brought this action against the defendants, Larson Distributing Company (the company) and its employees, John Larson and Robert Fitzsimmons, seeking damages arising out of the termination of his employment contract. The defendants' motion for a directed verdict at the close of the plaintiff's case was granted and the action was dismissed. Pittman argues on appeal that there was sufficient evidence concerning his claims for breach of contract, wrongful discharge, fraud, conspiracy, and slander to submit the claims to the jury. We agree and reverse in part.

Pittman was hired by Robert Fitzsimmons, the carpet division manager of Larson Distributing Company, to work as a carpet salesman. Fitzsimmons agreed to give Pittman all accounts in a specified area of the Denver territory and to pay him 17% of gross profits on sales. Pittman testified that the employment was to be "permanent."

Pittman sold large volumes of merchandise and earned substantial commissions in the first ten months of his employment. At the beginning of the next fiscal year, the company, acting through Larson and Fitzsimmons, reduced Pittman's commission to 15%. There was evidence that the reason for the reduction in commission was that Larson was upset that Pittman earned more money than he did as owner of the company. Pittman protested the reduction, but continued to work. His earnings continued to increase. Beginning the third year, over Pittman's protest, his commission was again reduced, this time to a sliding rate, depending upon sales volume. Also, several of Pittman's accounts, including some he had developed himself, were given to other salesmen. These salesmen were paid 17% even though Pittman had been earning a lower commission on them.

After the second reduction in commission, Pittman consulted an attorney concerning his employment with the company, and a letter from Pittman's attorney was delivered to Fitzsimmons and Larson making demands for back payment of commissions and for restoration of territory. The letter concluded by requesting a response within five days, and stating that commencement of an action had been authorized if it should become necessary.

The company thereupon terminated Pittman's employment, and Pittman began looking for a new job in the same industry. In response to inquiries from a factory representative of a supplier to the company, Fitzsimmons stated that the reason Pittman had been terminated was because he "spent too much time in the office and on the telephone" rather than calling on customers. In response to inquiries from a customer, Fitzsimmons stated that Pittman had been terminated because he "wasn't doing as good a job."

The test applicable for determining the propriety of a directed verdict is stated in Safeway Stores, Inc. v. Langdon, 187 Colo. 425, 532 P.2d 337 (1975), quoting Nettrour v. J.C. Penney Co., 146 Colo. 150, 360 P.2d 964 (1961), as follows:

" 'In passing upon a motion for a directed verdict the trial court [as well as an appellate court] must view the evidence in the light most favorable to the party against whom the motion is directed. Every reasonable inference to be drawn from the evidence presented is to be considered in the light most favorable to such party. A motion for directed verdict can only be granted where the evidence, when so considered, compels the conclusion that the minds of reasonable men could not be in disagreement and that no evidence, or legitimate inference arising therefrom, has been received or shown upon which a jury's verdict against the moving party could be sustained.' "

Moreover, a motion for a directed verdict in a jury trial admits the truth of the adversary's evidence and of every favorable inference of fact which may legitimately be drawn from it, Salstrom v. Starke, 670 P.2d 809 (Colo.App.1983). Once a plaintiff makes out a prima facie case, even though the facts are in dispute, it is for the jury, not the judge, to resolve the conflict. Romero v. Denver & Rio Grande Western Ry. Co., 183 Colo. 32, 514 P.2d 626 (1973).

I

Pittman contends that the trial court erred in ruling that his employment contract with the company was terminable at will. He argues that his evidence made a prima facie case of permanent employment for jury consideration. We agree.

It is ordinarily for the jury to ascertain the meaning of "permanent" used in an oral employment contract in the light of all the circumstances surrounding the making of the agreement. Lucacher v. Kerson, 355 Pa. 79, 48 A.2d 857 (1946). Nevertheless, in the absence of special consideration or an express stipulation as to the duration of employment, a contract for permanent employment is no more than an indefinite general hiring terminable at the will of either party. Lampe v. Presbyterian Medical Center, 41 Colo.App. 465, 590 P.2d 513 (1978); Justice v. Stanley Aviation Corp., 35 Colo.App. 1, 530 P.2d 984 (1974). Special consideration includes, among other circumstances, the acceptance by the employee of lower pay, and the employer's acquisition of the expertise and customer contacts of an experienced salesman. Beeler v. H & R Block of Colorado, Inc., 487 P.2d 569 (Colo.App.1971) (not selected for official publication) (lower pay); Fletcher v. Agar Mfg. Corp., 45 F.Supp. 650 (W.D.Mo.1942) (experience and customer contacts). See also Annot., 60 A.L.R.3d 226 at 264 (1974); 56 C.J.S. Master & Servant § 8.

Pittman testified that his oral contract was for "permanent" employment, that he took an initial cut in pay when he began work for the company, and that he brought to the company substantial customer contacts and experience. These circumstances could have been found by the jury to represent special consideration so that the employment was not terminable at will.

Apparently influenced by Thacker v. American Foundry, 78 Cal.App.2d 76, 177 P.2d 322 (1947), the trial court ruled that Pittman was required to prove that he had been "importuned, induced, or in any way persuaded" to leave his former employment and that he failed to do so. Without addressing the applicability of such a rule, we note that, if such a showing were required, there is ample evidence in the record to demonstrate inducement. Hence, there was sufficient evidence to show that the contract was not terminable at will and the issue should have been submitted to the jury.

II

Pittman next contends that the trial court erred in holding that, because the contract was terminable at will, he had accepted by acquiescence the alterations by the defendants of the accounts and rate of commission. Because the question of the terminability at will of the contract must be submitted to the jury, the question of Pittman's acceptance of a new contract of employment must also be resolved by the jury.

A contract for employment terminable at the will of either party may be supplanted by new terms of employment accepted by acquiescence. Linder v. Midland Oil Refining Co., 96 Colo. 160, 40 P.2d 253 (1935). When the defense to an action by an employee for wages is that, subsequent to the hiring, the parties made a new contract with different terms, the burden of proving the new agreement rests upon the employer. See Western Air Lines, Inc. v. Hollenbeck, 124 Colo. 130, 235 P.2d 792 (1951); Lyman v. Schwartz, 13 Colo.App. 318, 57 P. 735 (1899).

As suggested by Linder, supra, whether the employee protested contract changes is an important factor in determining whether the employee has acquiesced in a new contract by continuing to work.

Here, Pittman testified that he protested the changes in his commission and territory. This evidence tends to controvert the implication of consent raised by Pittman's continuing to work. Hence, the issue is for jury resolution in the event it finds the employment contract to be terminable at will.

Moreover, in addition to the evidence of Pittman's protests, there is evidence that he was coerced into continuing to work under the new contract terms. Pittman testified that, when he requested that Fitzsimmons restore his commissions, "I was told not to tell anyone and, however, if I did attempt to leave or go anywhere, he would black-list me down, and he would hurt me as much as he possibly could."

The threat of blacklisting an employee in an industry is a form of coercion that constitutes duress as a matter of law, and formation of an employment contract under such duress is ineffective. See Mayerson v. Washington Manufacturing Co., 58 F.R.D. 377 (E.D.Pa.1972), citing Restatement of Contracts § 493 (1932). In Colorado, such blacklisting is a misdemeanor. See §§ 8-2-110 and 8-2-111, C.R.S. Accordingly, the jury could reasonably have found that coercion negated any inference of consent to a new contract raised by the fact that Pittman continued working.

The defendants argue that it is the custom of the industry to make changes in commission and territory without the consent of the employee and that this custom was incorporated in the original contract. According to the defendants, even in the light most favorable to Pittman, the evidence establishes the existence of this industry custom and, given the parties' silence on the issue, the custom was incorporated into the contract by operation of law. Thus, say the defendants, it is immaterial whether the contract was terminable at will. We disagree.

Absent contrary provisions in the agreement, parties who contract on a subject matter concerning...