Tash v. Houston

• Decision Date: 30 March 1977
• Docket Number: Docket No. 27547
• Citation: 254 N.W.2d 579,74 Mich.App. 566
• Parties: Dorothy Marie TASH, Plaintiff-Appellant, v. Kenneth HOUSTON, Defendant-Appellee. 74 Mich.App. 566, 254 N.W.2d 579
• Court: Court of Appeal of Michigan — District of US

Page 579

254 N.W.2d 579

Dorothy Marie TASH, Plaintiff-Appellant, v. Kenneth HOUSTON, Defendant-Appellee.

Docket No. 27547.

74 Mich.App. 566, 254 N.W.2d 579

Court of Appeals of Michigan.

March 30, 1977.

Rehearing Denied May 9, 1977.

Released for Publication June 21, 1977.

[74 MICHAPP 567] Donald E. Smith, Corunna, for plaintiff-appellant.

R. Duncan MacDonald, Flint, for defendant-appellee.

[74 MICHAPP 568] Before CAVANAGH, P. J., and MAHER and BEASLEY, JJ.

MAHER, Judge.

Plaintiff appeals from an order granting defendant's motion for summary judgment. We reverse.

Plaintiff's complaint alleged that she was an employee of Local 326 of the UAW from October 15, 1971 until January 3, 1972. She worked under the supervision of defendant, the president of the local. The complaint alleged that defendant discharged her as an employee on January 3, 1972, because she spurned his sexual advances. Plaintiff contends that her discharge was a tortious interference with her contract of employment for which defendant should be held liable.

Defendant's answer denied that he had proposed sexual relations with plaintiff and asserted that plaintiff's poor work led to her discharge. Defendant then moved for summary judgment under GCR 1963, 117.2(1), for plaintiff's failure to state a claim upon which relief can be granted.

When summary judgment is sought on the grounds that plaintiff has failed to state a claim upon which relief can be granted, the legal sufficiency of the complaint is challenged. Borman's v. Lake State Development Co., 60 Mich.App. 175, 230 N.W.2d 363 (1975). All well pleaded allegations must be taken as true, and the pleadings alone should be considered. Wynn v. Cole, 68 Mich.App. 706, 243 N.W.2d 923 (1976). Defendant submitted an affidavit with his motion under GCR 1963, 117.2(1), and in ruling for defendant the trial court accepted as true the statement in the affidavit that one of defendant's functions as president of the local is the hiring and firing of secretaries. Utilization of this statement about defendant's role in [74 MICHAPP 569] personnel decisions was error. Nevertheless, since plaintiff has not argued that the statement was not true or that the court should not have used it, but instead argues that it does not deprive her claim of legal validity, we choose not to reverse the order on this ground. To do so would be unnecessary, for we agree with plaintiff that, even if defendant was authorized to hire and fire employees of the local, her complaint stated a claim upon which relief could be granted.

Plaintiff's complaint did not allege that her employment was for any specified term. It can therefore be assumed that the employment relationship was terminable at will by either plaintiff or the local. Although there is some authority for holding that there can be no liability for interference with at will employment, see 1 Harper & James, The Law of Torts, § 6.7, p. 494, the majority position is to the contrary. Prosser states:

"(T)he overwhelming majority of the cases have held that interference with employments or other contracts terminable at will is actionable, since until it is terminated the contract is a subsisting relationship, of value to the plaintiff, and presumably to continue in effect." Prosser, Law of Torts (4th ed.) § 129, pp. 932-933.

An analogous question was presented in Truax v. Raich, 239 U.S. 33, 36 S.Ct. 7, 60 L.Ed. 131 (1915), in which Raich, an at will employee of Truax, challenged an Arizona statute which limited the employment of persons who were neither "native born citizens" of the United States nor qualified electors. In answer to the assertion that Raich had no property interest at stake, because he was an at will employee, Justice Hughes wrote:

"It is said that the bill does not show an employment [74 MICHAPP 570] for a term, and that under an employment at will the complainant could be discharged at any time, for any reason or for no reason, the motive of the employer being immaterial. The conclusion, however, that is sought to be drawn, is too broad. The fact that the employment is at the will of the parties, respectively, does not make it one at the will of others. The employee has manifest interest in the freedom of the employer to exercise his judgment without illegal interference or compulsion and, by the weight of authority, the unjustified interference of third persons is actionable although the employment is at will." 239 U.S. at 38, 36 S.Ct. at 9, 60 L.Ed. at 134.

This quotation from Truax v. Raich, supports the proposition that an at will employee has a significant interest in his continued employment that will be protected against illegal interference by third persons. It also points out the most difficult obstacle facing plaintiff as she attempts to convince this Court that she has stated a cause of action against defendant. The employment relationship between plaintiff and the local was terminated by defendant, but as president of the local it is one of defendant's functions to both create and terminate employment relationships. The "freedom of the employer to exercise his judgment" is, in fact, defendant's freedom to exercise his judgment to determine whether the local's interests are served by continuation or termination of plaintiff's employment. The local must, of necessity, act through its agents. However, defendant, as the local's agent, is not protected by any privilege for acts he performs in his own interest rather than for his principal's interests. See Restatement of Agency (2d), §§ 343, 345, comment b, and § 346, comment b.

Morgan v. Andrews, 107 Mich. 33, 64 N.W. 869 (1895), the first Michigan case to recognize the tort [74 MICHAPP 571] of contract interference, discussed an analogous situation. Plaintiff Morgan, an inventor, had a contract with a corporation for construction of a machine to make dress stays. The contract gave the corporation the right to reject the machine should it be considered unsatisfactory. When the corporation rejected the machine, Morgan brought suit against defendant Andrews, a stockholder in the corporation and its manager. The Court rejected Andrews' argument that his relationship with the corporation precluded any liability for his interference with the corporation's contracts. Justice Long wrote:

"Counsel argues, however, that the defendant stands on the same footing with Glover & Bowling, because he was interested in the corporation, and was manager, and had an interest in the machine. There was no contract relation between plaintiff and the defendant. By the terms of the contract, it was the right of Glover & Bowling to reject the machine if not satisfactory; but defendant had no right to reject, or to unlawfully and maliciously interfere with the acceptance of it by Glover & Bowling. The fact that defendant, Andrews, had an interest in the business as a stockholder would give him the undoubted right to express his opinion freely about the machine; but this action is framed upon his malicious and willful fraud and deceit in inducing the rejection. It was upon these lines that the court below let the case go to the jury, as the court charged that defendant had the right to express freely his convictions about the machine, and could be held liable only on the theory that, without good cause, and actuated by ill will and malice towards plaintiff, he sought to injure him by inducing Glover & Bowling to reject the machine." 107 Mich. at 39-40, 64 N.W. at 871. (Emphasis supplied.)

This 19th century case may be the only reported Michigan decision to consider a corporate official's liability for interference with corporate contracts. [74 MICHAPP 572] More recent decisions from other jurisdictions indicate that the Court's position in Morgan v. Andrews remains good law.

Many cases begin their analysis by citing the English case, Said v. Butt, 3 K.B. 497 (1920). In dictum, Judge McCardie of the English court offered this observation:

"But the servant who causes a breach of his master's contract with a third person seems to stand in a wholly different position. He is not a stranger. He is the alter ego of his master. His acts are in law the acts of his employer. In such a case it is the master himself, by his agent, breaking the contract he has made, and in my view an action against the agent under the Lumley v. Gye principle must therefore fail, just as it would fail if brought against the master himself for wrongfully procuring a breach of his own contract * * *. ¹

"I hold that if a servant acting bona fide within the scope of his authority procures or causes the breach of a contract between his employer and a third person, he does not thereby become liable to an action of tort at the suit of the person whose contract has thereby been broken." 3 K.B. at 505-506.

The privilege of corporate officials to interfere with the corporation's contracts is sometimes viewed as absolute, see, e. g., Greyhound Corp. v. Commercial Casualty Insurance Co., 259 App.Div. 317, 19 N.Y.S.2d 239 (1940), but most often courts follow Said...