Smith v. Ford Motor Co., 67

• Docket Nº: No. 67
• Citation: 289 N.C. 71, 79 A.L.R.3d 651, 221 S.E.2d 282
• Case Date: January 29, 1976
• Court: United States State Supreme Court of North Carolina

Page 282

221 S.E.2d 282 289 N.C. 71, 79 A.L.R.3d 651 Jack D. SMITH
v.
FORD MOTOR COMPANY et al. No. 67. Supreme Court of North Carolina. Jan. 29, 1976.

Hatfield & Allman by Weston P. Hatfield and R. Bradford Leggett, Winston-Salem, for plaintiff.

Hudson, Petree, Stockton, Stockton & Robinson by J. Robert Elster and W. Thompson Comerford, Jr., Winston-Salem, for defendant Ford Motor Co.

Womble, Carlyle, Sandridge & Rice by W. P. Sandridge, Jr., Winston-Salem, for defendants Cloverdale Ford, Inc., Thomas Keesee, Sr., and James K. Dobbs.

Page 288

LAKE, Justice.

The complaint alleges that, after its incorporation, Cloverdale adopted the contract of 18 May 1971 concerning the plaintiff's employment as its president and general manager. Although a corporation may not technically ratify a contract made on its behalf prior to its incorporation, since it could not at that time have authorized such action on its behalf, it may, after it comes into existence, adopt such contract by its corporate action, which adoption may be express or implied, and thereby become liable for its performance. McCrillis v. A & W Enterprises, Inc., 270 N.C. 637, 155 S.E.2d 281 (1967); Robinson, N.C. Corporation Law (2d ed. 1974) §§ 2--4.

Thus, under the allegations of the complaint which, for the purpose of this appeal must be deemed true, Cloverdale became liable as a party to the contract. However, the contract of employment upon which the plaintiff relies, which was made by him a part of his complaint, contains no provision whatever as to the duration of such employment. 'Where a contract of employment does not fix a definite term, it is terminable at the will of either party, with or without cause, except in those instances in which the employee is protected from discharge by statute.' Still v. Lance, 279 N.C. 254, 182 S.E.2d 403; Strong, N.C. Index 2d, Master and Servant, § 10. There is no such statutory protection applicable to the plaintiff in this case. Consequently, Cloverdale committed no breach of its contract when it terminated the plaintiff's employment even if, as the plaintiff [289 N.C. 81] alleges, there was no 'just cause' for such termination. The complaint, therefore, does not state a claim against Cloverdale upon which relief can be granted and there was no error in dismissing the action as to Cloverdale.

As to the defendants Keesee and Dobbs, it is alleged in the complaint that these defendants 'joined with and conspired with the defendant Ford Motor Company, to wrongfully terminate the employment of the plaintiff'; that after the plaintiff had converted the dealership into a profitable one, these defendants, realizing that the option granted by the agreement of 18 May 1971 for the purchase of their stock in Cloverdale for its book value would result in a great loss to them, wilfully, wrongfully and maliciously broke their said contract with the plaintiff; that they caused a letter to be written to the plaintiff demanding that he discontinue his activities on behalf of the Ford Dealer Alliance; that they caused a meeting of the board of directors of Cloverdale to be called and thereat they caused a vote to be taken which 'wrongfully and unlawfully terminated the employment of the plaintiff.'

In his petition to this Court for certiorari and in his brief, the plaintiff contends, 'It was clearly alleged in the Complaint that the sole inducement for the termination of (the plaintiff's) employment was to sever his ownership rights in (Cloverdale).' He further states that the termination of the plaintiff's employment by the Board of Directors of Cloverdale 'was motivated and consummated for the reason that the defendants Dobbs and Keesee, after seeing how successful this particular dealership was, did not want to be placed in a position wherein they would have to sell their stock at book value, but rather, wanted to create a situation wherein their own ownership rights would be enhanced.' Again, the plaintiff asserts that his 'stock rights were interlocked with his continuing employment.'

A fatal difficulty with the plaintiff's contentions concerning his action against the defendants Keesee and Dobbs is that they are contrary to the provisions of the contract of 18 May 1971, which the plaintiff attached to and made part of his complaint. As noted above, the action of Cloverdale in terminating the plaintiff's employment by it was not a breach of that contract. Furthermore, the termination of his employment by Cloverdale did not terminate any right of the plaintiff to acquire stock in Cloverdale owned by Keesee and Dobbs.

Page 289

The [289 N.C. 82] provision of the contract on which the plaintiff bases his contention in this respect reads:

'Sixty (60) months after the commencement of business by the corporation, (Keesee, Dobbs and Goodwin) grants an option To said corporation (i.e., Cloverdale) to purchase not less than all of the capital stock owned by (Keesee, Davis and Goodwin) at book value for cash, such book value to be determined according to the method outlined in Section 3(b) above. The exercise of this option By the corporation shall be evidenced in writing delivered to (Keesee, Davis and Goodwin) at its principal office in Memphis, Tennessee.' (Emphasis added.)

This provision of the contract of 18 May 1971 is not a contract of sale but a grant of an option to purchase. The option is not granted to the plaintiff but to Cloverdale. At no time did the plaintiff have a controlling stock interest in Cloverdale or control of its board of directors. On the contrary, the complaint makes it clear that control of Cloverdale was at all times in Keesee, Dobbs and Goodwin. If they did not wish a transfer of their stock to Cloverdale at book value to occur, they could prevent such transfer by the exercise of their control over Cloverdale whether or not the plaintiff remained in its employ. Furthermore, such option is not contingent upon the plaintiff's employment by Cloverdale but upon the mere passage of 60 months from the commencement of business by Cloverdale. The option remains in effect notwithstanding the plaintiff's discharge.

Under the caption 'UNSATISFACTORY MANAGEMENT,' the contract of 18 May 1971, which the plaintiff made part of the complaint, provides:

'The parties hereto agree that if (the plaintiff), in his position as President and General Manager of the Corporation (i.e., Cloverdale), shall prove to be unsatisfactory in the opinion of (Keesee, Dobbs and Goodwin) And James W. Davis, Or the Ford Motor Company From the standpoint of profits earned or the manner of operation of the Corporation, the employment of (the plaintiff) as President and Manager may be terminated by the Corporation. Upon such termination (the plaintiff) agrees to sell to James W. Davis the capital stock owned by him at book value of such stock at the end of the month preceding such termination and for cash.' (Emphasis added.)

[289 N.C. 83] It will be observed that the provision in the contract for the sale of the plaintiff's stock to Davis is contingent upon 'such termination,' i.e., a termination for the reason that the plaintiff proved to be 'unsatisfactory' to a combination of Keesee, Dobbs, Goodwin and Davis, or to Ford 'from the standpoint of profits earned or the manner of operation of the Corporation.' It does not appear that this was the reason for the termination of the plaintiff's employment by Cloverdale. On the contrary, the complaint alleges that this was not the cause of such termination.

Thus, the complaint negates the plaintiff's contention that the motive of Keesee and Dobbs in causing Cloverdale to terminate the plaintiff's employment was to deprive the plaintiff of any ownership interest in Cloverdale or any option to increase such ownership interest. Accordingly, we find no error in the judgment of the Superior Court dismissing the action as to the defendants Keesee and Dobbs.

As to Ford the substance of the complaint is: (1) Ford knew the plaintiff had a contract with Cloverdale, a Ford dealer, for employment by it, terminable at the will of Cloverdale; (2) the plaintiff was performing well his duties under that contract and, as a result, Cloverdale was prospering and was a successful dealer in Ford products; (3) but for the 'wrongful, malicious and unlawful interference' by Ford therewith, this employment would have been continued by Cloverdale; (4) Ford 'wrongfully, maliciously, and unlawfully exerted pressure' upon Cloverdale to terminate the plaintiff's employment; (5) the sole reason for Ford's interference with the

Page 290

employment relation between the plaintiff and Cloverdale was the plaintiff's refusal to discontinue his personal participation in the Ford Dealer Alliance, 'a group of Ford dealers who had gathered together for the purpose of protecting their own interest in transactions with the defendant Ford Motor Company'; (6) due to pressure so exerted upon it by Ford, Cloverdale terminated the plaintiff's employment; and (7) thereby, the plaintiff was damaged.

Ford, by its motion to dismiss, says that, even though this be true, the courts of this State cannot give the plaintiff and relief against Ford. The Superior Court and the Court of Appeals so held. We reach a different conclusion.

For the purpose of the motion by Ford to dismiss, we treat the allegations of the complaint as true. Sutton v. Duke, [289 N.C. 84] 277 N.C. 94, 176 S.E.2d 161 (1970). We also take into account the provisions of Ford's Franchise Agreement with Cloverdale. Rule 12(b) GS 1A--1. Assuming that, pursuant to Rule 12(b), the Superior Court considered Ford's motion to dismiss as a motion for summary judgment, which does not appear from the record, there is nothing in the record to indicate that the parties were given reasonable opportunity to present all material pertinent to such a motion as Rule 12(b) requires. Furthermore, the pleadings present genuine and material issues of fact between the...