Savage v. Spur Distributing Co.

• Decision Date: 09 December 1949
• Citation: 228 S.W.2d 122,33 Tenn.App. 27
• Parties: SAVAGE v. SPUR DISTRIBUTING CO., Inc.
• Court: Tennessee Court of Appeals

Page 122

228 S.W.2d 122

33 Tenn.App. 27

SAVAGE v. SPUR DISTRIBUTING CO., Inc.

Court of Appeals of Tennessee, Middle Section.

Dec. 9, 1949.

Certiorari Denied by Supreme Court March 17, 1950.

Jay Evans, Nashville, for plaintiff in error.

Judson Harwood, Wilson Sims, and Bass, Berry & Sims, all of Nashville, for defendant in error.

FELTS, Judge.

This is an action for damages for breach of an alleged employment contract. At the close of plaintiff's evidence the trial judge directed a verdict for defendant and dismissed the action. Plaintiff appealed in error and insists that the evidence made a case for the jury upon one or another of the theories on which he sought a recovery.

His first theory, stated in the first count of his declaration, is that he and defendant made a contract by which it employed him as its assistant secretary at a salary of $3,600 per year and a bonus of at least $600 per year, and bound itself to continue such employment permanently, or so long as the position was available and he was able to perform and did perform the work satisfactorily; and that defendant discharged him, breached its contract, and became liable for the damages sued for.

The evidence tended to prove these facts. Plaintiff lived in Pittsburgh, Pennsylvania, and was employed as an accountant by Price-Waterhouse, a firm of accountants in that city. They had been doing work for defendant, and through them he learned that there was soon to be a vacancy in the accounting department of defendant's Nashville office. On or about April 25, 1946, he came to Nashville and applied for the position.

He discussed the matter with defendant's vice president, Mr. Hines, and its secretary Mr. Peterson. He asked whether the position would be temporary or permanent. They told him that it would be permanent and he would have it as long as he performed the work satisfactorily and that he would be paid a salary of $300 a month and a bonus to be determined by the company's earnings. They also discussed the possibilities of increases in the salary, and plaintiff understood from them that there might be such increases and that his bonuses would exceed the bonuses he had been receiving from Price-Waterhouse, which were $600 per year.

As a result of this discussion the secretary, Mr. Peterson, employed plaintiff to be his assistant to take charge of defendant's accounting department. There was no written contract but only the oral understanding reached in their discussion. Plaintiff began work June 9, 1946, and later moved his family to Nashville. He was paid his moving expenses and was paid his salary each month and a bonus of $150 at the end of 1946. There was no evidence as to the earnings of the company.

He continued to receive his salary each month until October 20, 1947, when he was discharged by Mr. Knestric, who had succeeded Peterson as secretary. He was given a month's salary in advance in lieu of notice, and his discharge slip gave this explanation: 'Reorganization of Secretary's Office which decentralized the duties performed by this employee.' But it appears there had been some disagreement between him and the new secretary, which might have been the cause of his discharge. He then established here an accounting business of his own and has been earning as much as his salary was.

We think there was no evidence of any breach of contract. There was no contract for employment for any definite time. It was an indefinite hiring, merely a promise by defendant to employ plaintiff permanently as long as he did the work satisfactorily. But there was no counter-promise by him to work for it for any length of time. He was free to quit any time--to accept other employment whenever he chose. It is a general principle that unless both parties are bound neither is bound. Canton Cotton Mills v. Bowman Overall Co., 149 Tenn. 18, 257 S.W. 398; Combs v. Standard Oil Co., 166 Tenn. 88, 93, 59 S.W.2d 525; other cases cited in Annotation, 135 A.L.R. 675.

The general rule in the United States is that such an indefinite hiring is a hiring at the will of both parties and may be terminated by either at any time. Combs v. Standard Oil Co., supra; American National Ins. Co. v. Jackson, 12 Tenn.App. 305, 308: cf: Earle v. Illinois Cent. R. Co., 25 Tenn.App. 660, 677, 167 S.W.2d 15, 26, certiorari denied 317 U.S. 680, 63 S.Ct. 161, 87 L.Ed. 546.

Such a contract for permanent employment means nothing more than that the employment is to continue indefinitely subject to the continuing satisfaction of both parties and may be terminated at the will of either party. Combs v. Standard Oil Co., supra; for other cases see Annotations, 35 A.L.R. 1432; 135 A.L.R. 646; 161 A.L.R. 706. "A contract of employment for an indefinite term may, in the United States, be terminated at the will of either party. A contract for permanent employment where the consideration is paid wholly or partly in advance, as by the relinquishment of a claim for personal injuries, or which is supported by a consideration other than the promise to render services, is not such an indefinite contract as to come within the rule. But a contract for permanent employment, so long as it is satisfactorily performed, which is not supported by any consideration other than the obligation of service to be performed on the one hand and wages to be paid on the other, is terminable at the pleasure of either party." Combs v. Standard Oil Co., supra, 166 Tenn. 90, 59 S.W.2d 526.

There is a line of cases where the employee paid his employer in advance a valuable consideration in addition to his promise to render the services for the wages paid, such as a release of a claim for damages for personal injuries (East Tennessee, V. & G. R. Co. v. Staub, 75 Tenn. 397), or the giving up of a competitive business. Carnig v. Carr, 167 Mass 544, 46 N.E. 117, 35 L.R.A. 512, 57 Am.St.Rep. 488. In such cases it is said that the employee purchased an option for permanent employment terminable only at his will. 35 Am.Jur., Master and Servant, Sec. 25, p. 431.

Plaintiff likens this case to the Staub, Carr, and like cases. He insists that he gave up his former employment and had the expenses of moving his family here, of finding living quarters, and of buying a home here at an inflated price; and that these things constituted an additional advance consideration sufficient to support a contract for permanent employment--sufficient to purchase an option binding defendant to employ him so long as he remained able and chose to continue the employment.

These things, however, do not appear to have been mutually understood by the parties as any part of the agreed exchange or consideration. Defendant's offer was only for plaintiff's services as its assistant secretary. This was the only consideration moving to it. These other things were of no benefit to it. At most they were merely a detriment to him incident to preparing himself to accept its offer--only the same sort of detriment that ordinarily results to any employee who leaves one employment and goes elsewhere to accept another.

Some cases do hold that such a detriment in itself is a sufficient consideration to bring the case within the rule of the Staub, Carr, and like cases. In the latter class of cases, however, the employee not only sustained a detriment to himself but also passed a benefit to his employer. We think the better view, and the one supported by the weight of...