Shirley v. Lin

• Decision Date: 31 March 1989
• Citation: 548 So.2d 1329
• Parties: Sheridan W. SHIRLEY, et al. v. Gerald H. LIN. Gerald H. LIN v. Sheridan W. SHIRLEY and Sheridan W. Shirley, M.D., P.A. 87-1034, 87-1079.
• Court: Alabama Supreme Court

Page 1329

548 So.2d 1329

Sheridan W. SHIRLEY, et al. v. Gerald H. LIN.

Gerald H. LIN v. Sheridan W. SHIRLEY and Sheridan W. Shirley, M.D., P.A.

87-1034, 87-1079.

Supreme Court of Alabama.

March 31, 1989.

Rehearing Denied June 2 and July 14, 1989.

Atley A. Kitchings, Jr. and Craig A. Alexander of Lange, Simpson, Robinson & Somerville, Birmingham, for appellants/cross-appellees.

Susan S. Wagner of Berkowitz, Lefkovits, Isom & Kushner, Birmingham, for appellee/cross-appellant.

HORNSBY, Chief Justice.

This case involves an action for breach of an alleged five-year employment contract. The jury returned a verdict in favor of the plaintiff, Dr. Gerald Lin, and against the defendants, Sheridan W. Shirley, M.D., and "Sheridan W. Shirley, M.D., P.A." (hereinafter "the P.A."), the professional association through which Dr. Shirley practiced medicine. The jury awarded damages in the amounts of $25,000 against Dr. Shirley individually and $25,000 against the P.A. Dr. Shirley and the P.A. filed motions for J.N.O.V. and new trial, which were denied. They appealed and Dr. Lin cross-appealed.

The facts of this case are briefly summarized below. Defendant Dr. Shirley is a solo practitioner, specializing in urology. He is the sole stockholder and president of the P.A. The record indicates that Dr. Shirley, contemplating retirement, communicated with Dr. Lin, also a specialist in urology, about coming to work at the P.A. and eventually taking over his practice. Subsequent negotiations culminated with a letter prepared by Dr. Shirley on November 7, 1984, and signed by Dr. Shirley and by Dr. Lin. Dr. Lin began working with Dr. Shirley on December 3, 1984, and their relationship ended on December 1, 1985, after a disagreement concerning their respective rights and obligations under the employment agreement.

The issues presented by the defendants, Dr. Shirley and the P.A., are as follows: I.) whether the trial court erred in holding, as a matter of law, that the writing at issue constituted an enforceable employment contract for a definite term of five years; II.) whether the evidence is sufficient to sustain the jury's finding that Dr. Shirley individually was a party to the employment contract; and III.) whether the evidence is sufficient to sustain the jury's finding that the defendants, rather than Dr. Lin, repudiated the contract. Dr. Lin raises the fourth issue in this case: IV.) whether the trial court erred in its instructions to the jury concerning the measure of damages.

I. We first consider the defendants' assertion that the trial court erred in holding as a matter of law that the letter of November 7, 1984, constituted an enforceable employment contract for a definite term of five years. ¹ The defendants maintain that "In accordance with our various correspondences and conversations, we agree to the following:

the duration of the contract was intended to be indefinite and that the relationship was intended to be terminable at will. The portion of the contract relating to the duration of Dr. Lin's employment provides as follows:

1. For the first year, you [Dr. Lin] will receive a salary in the amount of $70,000.00. The second year's salary will be $90,000.00 from which will be deducted $10,000.00 to fund your equity purchase of the P.A. The net salary, of course, will be $80,000.00.

"....

"At the beginning of the third year of your employment, the ratios of ownership will be as follows:

Third year: Dr. Shirley 60%, Dr. Lin 40%

Fourth year: Dr. Shirley 55%, Dr. Lin 45%

Fifth year: Dr. Shirley 50%, Dr. Lin 50%"

(Emphasis added.)

The rule is well settled that if a contract does not specify a duration of employment, it is considered terminable at will and may be terminated by either party for any cause or for no cause. Hickenbottom v. Preferred Risk Mutual Ins. Co., 514 So.2d 881, 882 (Ala.1987); Selby v. Quartrol Corp., 514 So.2d 1294, 1295 (Ala.1987); Smith v. Reynolds Metals Co., 497 So.2d 93, 95 (Ala.1986). However, contracts of employment that do specify a definite period terminate by their own terms at the end of such period and may not be terminated at the will of either party. See Northrop v. Kirby, 454 F.Supp. 698, 701 (N.D.Ala.1978).

This Court also recognizes the general rule that " '[i]t is the province of the court, not the jury, after due consideration of the whole [contract] to determine if uncertainty and ambiguity exist in its terms.' " Hill Air of Gadsden, Inc. v. City of Gadsden, 467 So.2d 230, 232 (Ala.1985) (quoting Aetna Life Ins. Co. v. Hare, 47 Ala.App. 478, 486, 256 So.2d 904, 911 (1972) (emphasis omitted)). See also P & S Business, Inc. v. South Central Bell Telephone Co., 466 So.2d 928, 931 (Ala.1985). The mere fact that the parties assert opposing interpretations of a particular provision does not of itself establish an ambiguity. Upton v. Mississippi Valley Title Ins. Co., 469 So.2d 548, 554 (Ala.1985). Furthermore, this Court will not strain to interpret a contract provision that is free from ambiguity, nor will we insert ambiguities into an otherwise unambiguous provision by twisting its construction. ERA Commander Realty, Inc. v. Harrigan, 514 So.2d 1329, 1334 (Ala.1987); P & S Business, supra, at 931.

The trial court in the present case determined as a matter of law that the provisions of the contract concerning the length or duration of Dr. Lin's employment were unambiguous and clearly stated a term of employment of five years. In light of the clear wording of the contract, we find no error with this determination.

The defendants also assert that the ambiguous nature of the contract terms concerning Dr. Lin's salary for the third, fourth, and fifth years of his employment and the price Dr. Lin was to pay for his equity in the P.A., make the contract too vague and indefinite to enforce. We disagree.

The essential elements of a contract are as follows: an agreement, consideration, two or more contracting parties, a legal object, and capacity. See Freeman v. First State Bank of Albertville, 401 So.2d 11, 13 (Ala.1981); and Curacare, Inc. v. Pollack, 501 So.2d 470, 471 (Ala.Civ.App.1986), cert. quashed, 501 So.2d 472 (Ala.1986). These elements are present in this case.

To the extent that the terms of a contract are ambiguous, as a general rule such terms are nevertheless considered sufficiently certain if they are capable of being rendered certain or have been rendered certain by the performance of the parties under the contract. See 56 C.J.S. Master and Servant, § 6(c), at 68-69 (1948). The meaning of such terms is a question of fact for the jury, to be decided by the surrounding facts and circumstances. Hall v. Integon Life Ins. Co., 454 So.2d 1338, 1342 (Ala.1984); Medical Clinic Board of the City of Birmingham-Crestwood v. Smelley, 408 So.2d 1203, 1206 (Ala.1981).

In the present case, the contract provided for Dr. Lin to receive $70,000.00 his first year, and $90,000.00 his second year, less $10,000.00 to fund his equity purchase of the P.A.. Whether Dr. Lin's salary was to continue to be $90,000.00 for the remaining three years and whether $10,000.00 was to be deducted each of the next three years to fund his equity purchase are questions that the trial court properly sent to the jury. While ambiguous, these terms are such that their meaning can be ascertained from the surrounding circumstances, and they do not render the contract unenforceable. Thus, we find no error with the trial court's finding as a matter of law that the contract was enforceable and specified a definite term of employment of five years.

II. Dr. Shirley further asserts that the evidence is insufficient to sustain the jury's finding that he, individually, was a party to the employment contract. Dr. Shirley argues that he was merely the agent of the P.A. and cannot be held personally liable for breach of the employment contract.

The general rule in Alabama concerning the liability of an agent for the breach of a contract entered on behalf of a disclosed principal is that the agent binds either the principal or himself to the contract, but not both. See Mobile Ins., Inc. v. Smith, 441 So.2d 894, 897 (Ala.1983); and Gillis v. White, 214 Ala. 22, 22, 106 So. 166, 167 (1925). If the agent fails, for lack of authority, to bind the principal, then he is personally liable on the contract. Gillis, 214 Ala. at 22, 106 So. at 167. If the agent succeeds in binding the principal, then he will not be held personally liable unless there is clear evidence that he intended to substitute or superadd his personal liability for or to that of the principal. See Mobile Ins., 441 So.2d at 897; and Sealy v. McElroy, 288 Ala. 93, 104, 257 So.2d 340, 350 (1972)). Where the evidence is conflicting as to whether the agent intended to give his personal guarantee of performance on the contract, the question is one for the jury to decide. B & M Homes, Inc. v. Hogan, 376 So.2d 667, 676 (Ala.1979); Lutz v. Van Heynigen Brokerage Co., 199 Ala. 620, 630, 75 So. 284, 288 (1917).

The evidence in the present case concerning whether the parties intended that Dr. Shirley be personally liable on the contract is disputed. The record shows that the name and address of the P.A. were printed across the top of the contract; however, the record also shows that, rather than signing the contract as the agent of the P.A., Dr. Shirley signed the contract in his own name. This Court has recognized that the fact that an agent signs a contract in his own name can, in and of itself, create personal liability for the agent. See B & M Homes, 376 So.2d at 676; and Lutz, 199 Ala. at 629, 75 So. at 288. In addition, the contract in this case, which was drafted by Dr. Shirley, is replete with references to Dr. Shirley, both individually and in conjunction with the P.A., such as "we are pleased to know that you will become associated with our practice...," "we agree to the following...," "I [Dr. Shirley] will be responsible to the Association and will use...