Toussaint v. Blue Cross Blue Shield of Michigan, Docket No. 28888

• Decision Date: 08 November 1977
• Docket Number: Docket No. 28888
• Parties: Charles TOUSSAINT, Plaintiff-Appellee, v. BLUE CROSS BLUE SHIELD OF MICHIGAN (formerly Michigan Hospital Service), a Michigan Corporation, Defendant-Appellant. 79 Mich.App. 429, 262 N.W.2d 848
• Court: Court of Appeal of Michigan — District of US

Page 848

262 N.W.2d 848

Charles TOUSSAINT, Plaintiff-Appellee, v. BLUE CROSS BLUE SHIELD OF MICHIGAN (formerly Michigan Hospital Service), a Michigan Corporation Defendant-Appellant.

Docket No. 28888.

79 Mich.App. 429, 262 N.W.2d 848

Court of Appeals of Michigan.

Nov. 8, 1977.

Rehearing Denied Dec. 19, 1977.

Released for Publication March 7, 1978.

[79 MICHAPP 431] Long, Preston, Kinnaird & Avant by Joseph F. Page, III, Detroit, for defendant-appellant.

Charles Gottlieb, Detroit, for plaintiff-appellee.

Before RILEY, P. J., and BASHARA and MAHINSKE, ^* JJ.

BASHARA, Judge.

Defendant appeals from a jury verdict awarding damages to plaintiff. Plaintiff claimed that his termination from defendant's employ was wrongful and in breach of the employment contract.

At trial, plaintiff testified that at the time he was hired a person in defendant's personnel department stated that plaintiff would remain employed until retirement at age sixty-five, unless discharged for cause. Numerous exhibits were placed in evidence, two of which were defendant's employee's guidelines manual and a supervisor's manual. Plaintiff claimed that the provisions of [79 MICHAPP 432] those manuals constituted part of the terms of his employment contract. The contract, except for the manuals, was entirely oral.

Plaintiff's theory of the case is rather nebulous as it relates to the term of the employment contract. Frequently plaintiff referred to an employment for life, while at one point in his testimony he stated that he was to be employed until he reached age sixty-five. In response, defendant asserted that under Michigan law, employment for life, absent the existence of special consideration, is an employment at will, terminable at any time with or without cause.

At the conclusion of plaintiff's case in chief the defendant moved for a directed verdict. The trial judge requested that the defendant first present its case, whereupon an opportunity would be given to make the motion with the same effect as if made at the conclusion of plaintiff's proofs. Defense counsel acquiesced, made the motion for directed verdict subsequent to the jury's retiring for deliberations, and the motion was denied.

The motion for directed verdict raised the statute of frauds as a defense. ¹ The trial judge stated that in his discretion the defense was not properly raised and not available to the defendant. Defense counsel stated that he did not raise the statute as a defense because the claim that the employment was for a specified term was not raised until plaintiff gave testimony at trial.

It is defendant's contention that the policy manual[79 MICHAPP 433] provisions did not constitute legally enforceable contract terms. Further, defendant claims that plaintiff's allegation as to permanent employment, under Michigan law, creates an employment at will, terminable at any time with or without cause. Therefore, defendant, as a matter of law, has no liability to plaintiff based upon breach of contract.

Alternatively, defendant contends that if plaintiff sought to establish an employment for a specified term exceeding one year, the statute of frauds precludes plaintiff's recovery. As a corollary, defendant claims that the denial of its motion for directed verdict was erroneous.

We must determine whether the distribution of policy and procedure manuals by an employer to an employee at the inception of the employment relationship can constitute terms which are contractually binding.

As with contracts generally, a contract of employment must be the result of a voluntary act, importing the mutual intent of the parties to be bound by its terms and provisions. See McDonald v. Boeing, 43 Mich. 394, 5 N.W. 439 (1880). Where, as in this case, there is no written evidence of mutual intention, the formation of the contract and its terms are necessarily a question to be resolved by the trier of fact.

We cannot say, as a matter of law, that the trier of fact could not find that the policy manual provisions were made part of the employment contract. There is no claim by the defendant that the jury's finding on this issue of fact was contrary to the great weight of the evidence. Consequently, it must remain undisturbed.

However, only a clear preponderance of the evidence will sustain a finding of mutual intent to [79 MICHAPP 434] incorporate the provisions of an employer's policy manual into an employment contract. Such manuals often describe the business purpose and scope of the enterprise's product line or services so as to acquaint the new employee with the employer. Those aspects of the business, as well as many operating policies deployed in the management of an enterprise, require flexibility of amendment or discontinuation if management is to have the ability to cope with rapid changes in the economic environment. This Court is loath to destroy that essential flexibility by sustaining a finding of vested employee rights in such manuals, absent supporting evidence that such was the mutual intent of the parties.

We must also determine whether, as a matter of law, an employee can sustain a claim for damages from wrongful discharge where the contract of employment is at will. It is our conclusion that he cannot, absent some claim of special consideration ² passing from the employee to the employer or that the discharge contravenes some settled public policy. ³

The principle is well established in Michigan that a contract for permanent employment or employment for life is a contract for an indefinite period and terminable at the will of either party. Adolph v. Cookware Company of America, 283 Mich. 561, 278 N.W. 687 (1938), Lynas v. Maxwell Farms,279 Mich. 684, 273 N.W. 315 (1937). An employee under such a contract may be terminated with or without cause, the decision being [79 MICHAPP 435] solely within the determination of the employer. Percival v. General Motors Corp., 539 F.2d 1126 (CA8, 1976), applying Michigan law, McLaughlin v. Ford Motor Co., 269 F.2d 120 (CA6, 1959).

Even if the jury found that the provisions of defendant's policy manuals were part of the employment contract, the judgment could not be sustained if the contract was terminable at will. This perforce follows from the mutual ability of the employer and employee to end the contract at any time, i. e., the operative force of the contract terms ceases when the continuation of the contract is terminated. Therefore, a contract of indefinite duration cannot be made other than terminable at will by a provision that states that an employee will not be discharged except for cause.

Thus, if plaintiff's recovery is to be sustained, it must be premised upon a jury finding that the oral contract was for a specified term. Any other conclusion would lead to the legally incongruous result that a contract terminable without cause is actionable for damages if the jury finds no cause for an employee's discharge. Further, this Court has held that even an arbitrary and capricious discharge is not actionable under a contract terminable at will. Hernden v. Consumers Power Co., 72 Mich.App. 349, 249 N.W.2d 419 (1976).

Whether the parties intended that an employment contract be made for a specified term is a question of fact. Paxson v. Cass County Road Commission, 325 Mich. 276, 38 N.W.2d 315 (1949). Here, that question was apparently resolved by the jury in plaintiff's favor. It, therefore, becomes necessary for us to determine whether defendant properly raised the defense of the statute of frauds, since an employment contract for a term exceeding one year comes within the statute. Ambrose v. Detroit [79 MICHAPP 436] Edison Co., 367 Mich. 334, 116 N.W.2d 726 (1962), Commercial Factors Corp. v. Zephyr Awning Corp., 353 Mich. 251, 91 N.W.2d 511 (1958).

We start with the basic principle that the statute of frauds is an affirmative defense, which must be specifically pleaded. 1963 GCR 111.7, Trisch v. Fairman, 334 Mich. 432, 54 N.W.2d 621 (1952). Although defendant did not raise the statute as an affirmative defense in his pleading, our inquiry does not end there. Two aspects of this case lead us to conclude that the defense was properly raised, notwithstanding the apparent omission.

In Downing v. Underwood, 216 Mich. 401, 185 N.W. 777 (1921), the Supreme Court, in deciding that the statute of frauds defense was not properly raised, stated:

"The plea was the general issue; there was no notice under it of the defense of the...