Stauter v. Walnut Grove Products

• Decision Date: 17 June 1971
• Docket Number: No. 54356,54356
• Citation: 188 N.W.2d 305
• Parties: Merie L. STAUTER, Appellee, v. WALNUT GROVE PRODUCTS, Division of W. R. Grace Co., Appellant.
• Court: Iowa Supreme Court

Page 305

188 N.W.2d 305

Merie L. STAUTER, Appellee, v. WALNUT GROVE PRODUCTS, Division of W. R. Grace Co., Appellant.

No. 54356.

Supreme Court of Iowa.

June 17, 1971.

Neiman, Neiman, Stone & Spellman, Des Moines, and Shaw & Shaw, Pocahantas, for appellant.

Edward S. White, Carroll, and Gray & Gray, Rockwell City, for appellee Bruce M. Snell, Ida Grove, of counsel on the brief.

REES, Justice.

Defendant appeals from judgment entered on a jury verdict awarding $24,375 damages to plaintiff on plaintiff's suit for breach of an alleged oral lifetime contract of employment.

In 1962 plaintiff and two brothers organized a corporation for the purpose of engaging in the sale and distribution of farm fertilizer. They bought their product from an organization in Belmond, Iowa, and resold it to farmers in the area of their place of business in Fonda, Iowa. After the enterprise had been in operation for about two years, the plaintiff and his associates were approached by representatives of the defendant with an offer to purchase the business, which offer to purchase embraced and included an agreement on the part of the defendant to employ plaintiff as plant manager for an initial annual salary of $5,000 which was to be increased eventually to $10,000 annually, the plaintiff contending his employment was to continue indefinitely as long 'as he kept up on his job'.

At the close of plaintiff's evidence, defendant moved for a directed verdict in its favor, which motion was overruled. After the verdict of the jury had been returned defendant moved for judgment notwithstanding the verdict, which in essence reasserted the grounds urged in support of the motion for directed verdict. Following the overruling of the motion for judgment notwithstanding verdict, defendant moved for a new trial, alleging the damages were excessive and unsupported by the evidence, and that the court committed certain errors in the conduct of the trial which are hereinafter referred to. The motion for new trial was overruled, and defendant appeals.

Generally, defendant asserts trial court erred:

(1) In allowing plaintiff to amend his petition after the close of the evidence.

(2) In failing to sustain defendant's motions for directed verdict.

(3) In failing to sustain defendant's motion for judgment notwithstanding the verdict.

(4) In failing to sustain defendant's motion for a new trial.

(5) In failing to submit certain instructions requested by defendant.

Defendant specifically contends when an employment contract is subject to the employee competently performing and the employer in good faith becomes dissatisfied with employee's services and discharges him, the court cannot substitute its judgment for that of the employer.

Defendant also contends the agent for the defendant had no implied or express authority to enter into a lifetime employment contract with plaintiff, and further contends the alleged contract is unenforceable for lack of mutuality because one of the parties is not liable for non-performance and the contract is at most one for employment terminable at will by either party without incurring liability.

The defendant further asserts plaintiff failed to offer any proof of attempts on his part to find other employment and to mitigate his damages and that the amount of damages fixed by the jury is not sustained by the record evidence.

Finally defendant contends evidence of plaintiff in support of the alleged oral contract was inadmissible under the statute of frauds.

The business of the plaintiff and his associates was sold on March 1, 1964 for $5,200 and on the same date plaintiff began his employment with defendant as plant manager at the Fonda, Iowa, plant. Plaintiff's brother and sister were also employed at the Fonda plant. Plaintiff alleged as a part of the sale of the business there was an oral agreement to employ him at a starting salary of $5000, which would be increased to $10,000 per year as the business developed, with the arrangement to continue for as long as plaintiff desired to be employed and as long as he was competent and maintained satisfactory production levels. He was discharged from his employment on December 6, 1966.

I. We first consider the contention the trial court erred in permitting plaintiff to amend his petition, and in connection therewith take note of rule 88, Rules of Civil Procedure, which provides,

'The court, in furtherance of justice, may allow later amendments, including those to conform to the proof and which do not substantially change the claim or defense'.

The allowance of such amendments to pleadings is largely in the discretion of the trial court. A. C. Nelson Auto Sales v. Turner, 241 Iowa 927, 931, 44 N.W.2d 36, 38; Terpstra v. Schinkel, 235 Iowa 547 552, 17 N.W.2d 106, 109. In the Terpstra case, Supra, this court said,

'It is too well settled to admit of the citation of authorities that under the practice prevailing in this state, the allowance of amendments at almost any stage of a trial is the rule and the refusal of such privilege is the exception. * * * We think that Rule 88 of the Rules of Civil Procedure was so drawn as to perpetuate the authority of the trial court in the liberal allowance of amendments.'

The record before us establishes plaintiff had originally pleaded the alleged contract was to continue 'for as long as the said Merle L. Stauter desired to be thus employer and as long as he was able to competently perform the services which he undertook to do under said contract.' The amendments permitted by the court at the close of plaintiff's evidence were,

(1st) 'and as long as the production of the plant under his management was maintained at a satisfactory level', and

(2d) 'that the said plaintiff desired to continue in his employment for the rest of his working life and that the damages which he claims in this action are based upon loss of income resulting from his improper discharge.'

Defendant contends the effect of the amendments is to make a jury question out of a proposition that should properly have been the subject of a directed verdict in defendant's favor. It argues the issue as to whether plaintiff 'competently performed' is not a jury question, but that the addition of the 'satisfactory production level' amendment narrowed the issue from a non-jury question to one of fact for the jury.

Defendant contends the effect of the amendment was to create a jury question where one did not previously exist. We shall discuss this contention further in Division II Infra.

We are unable to perceive how the amendments substantially changed the plaintiff's claim. In the initial petition plaintiff claimed right to employment for so long as he competently performed the services which he undertook as manager of the plant. The addition of the factor of maintenance of satisfactory levels of production does not amplify the original claim. Indeed, it would appear to us the maintenance of production levels would be inherent as one of the several services plaintiff alleged he promised to perform.

Having in mind the liberal construction given to rule 88, R.C.P., we find the trial court did not abuse its discretion in permitting the amendment to the plaintiff's claim.

II. In support of its contention the case was improperly submitted to the jury, defendant asserts the trial court erred in submitting a determination of the validity of the employer's discharge of the plaintiff, and argues when an employment contract is subject to the employee performing competently, and the employer in good faith discharges him, the court cannot substitute its own judgment of the standard of performance for the employer's judgment.

The oral contract contended for by plaintiff embraced the understanding that 'plaintiff was to be employed as long as he was able to Competently perform the services.' (Italics supplied). The amendment merely pleaded the employment was to continue as long as production was maintained at a satisfactory level, which, it seems to us, would necessitate competent performance of services.

Assuming the terms of the contract are as the plaintiff alleges, the competence of the performance of his managerial duties was a key factor in judging performance. This is not a contract under the terms of which the employee serves only to the satisfaction of the employer. In Starkweather v. Emerson Manufacturing Co., 132 Iowa 266, 272, 109 N.W. 719, 722, a case involving a written employment contract, the court said,

'The instructions quoted were also wrong in submitting the question to the jury as to whether or not plaintiff's services were in fact unsatisfactory. A jury may have inferred from this that it was to determine the character of the service as to being satisfactory or otherwise. If defendant was in good faith dissatisfied that was sufficient, although its dissatisfaction may have been unreasonable'.

The foregoing statement from the Starkweather case is what the defendant argues before us here. However, it appears there has been a distinction made between cases involving termination of employment for reasons of incompetency, and those involving discharge because of employer dissatisfaction. See 53 Am.Jur.2d, Master and Servant, § 51, pp. 126--127. And, in 56 C.J.S. Master and Servant § 54(b), p. 462, we find,

'Where the contract provides that the employer can terminate the employment if not satisfied with the services rendered, the question whether or not the services were satisfactorily performed is a question to be determined by the employer and not by the jury. However, the question whether the asserted dissatisfaction as a ground for discharge is in good faith or feigned is for the jury where there is evidence tending to show that the discharge was due to reasons other than dissatisfaction.'

See also LaFontaine v. Developers and Builders, Inc., 261 Iowa 1177, 156 N.W.2d 651, and annotation 49 A.L.R. 472.

Where the grounds for discharge are alleged to...