Hill v. American Co-Operative Ass'n , 195 La. 590 ( 1940 )

This is an appeal from a judgment on a purported contract of employment.

The plaintiff, D.G. Hill, Jr., instituted this suit against the American Cotton Co-operative Association seeking to recover the sum of $5,611.15 and legal interest which he claims is due him as the balance due on a contract of employment between the defendant Association and the plaintiff. In his petition the plaintiff alleges that the defendant Association is a Delaware corporation doing business in the State of Louisiana; that the defendant is indebted unto the plaintiff in the sum of $5,611.15, together with legal interest from April 22, 1938; that for many years the plaintiff has served as comptroller of the defendant corporation, having been annually elected by the board of directors of the corporation at an annual salary of $10,000; that by resolution of the board of directors of May 23, 1937 he was elected comptroller for the ensuing year at an annual salary of $10,000; that his election by the board of directors constituted a contract between the parties under which plaintiff was to perform the duties of comptroller for the year beginning April 22, 1937, at an annual salary of $10,000; that he was summarily dismissed without cause on June 30, 1937, while performing the duties of comptroller; that he protested the dismissal and offered to continue his services which was rejected by the defendant; that he received on account of his annual salary the sum of $4,388.85 and there is now due him the sum of $5,611.15. In his prayer the plaintiff asked for judgment for $5,611.15 and legal interest from April 22, 1938. The defendant in its answer denies being indebted to the plaintiff and avers that the plaintiff was employed as comptroller at a salary on the basis of $10,000 per year but not employed by the year so that the defendant had the right to dismiss the plaintiff at any time. The defendant denied that the plaintiff was summarily dismissed without cause and averred that the defendant exercised its right to terminate the services of the plaintiff. The defendant asked that plaintiff's suit be dismissed. The plaintiff in a supplemental petition alleges that he was elected comptroller by the board of directors on April 23, 1937, for the ensuing year at an annual salary of $10,000 as should appear by the minutes of the corporation. The plaintiff alleges that he did not have access to the minutes of the corporation at the time this suit was filed but if the minutes failed to show that the plaintiff was elected for the ensuing year then the minutes do not correctly set forth the action taken by the board of directors and the election of the plaintiff as comptroller for the ensuing year is correctly set forth in a circular letter issued by the secretary of the corporation of date May 21, 1937, wherein it is stated that the plaintiff was elected for the ensuing year. The plaintiff alleged that if the minutes of the board of directors do not correctly set forth the contract the error in the minutes is not the fault of the plaintiff. Upon trial of the case the lower court rendered judgment in favor of the plaintiff as prayed for and the defendant has appealed.

The minutes of the board of directors show that the plaintiff was elected comptroller on May 16, 1935, for the ensuing year. The minutes show that the plaintiff was elected on April 23, 1936, comptroller for the ensuing year. The minutes of April 23, 1937, with reference to the employment of the plaintiff as comptroller states: "D.G. Hill, Jr., was nominated for the office of Comptroller. There being no other nominations, upon motion duly made, seconded, and unanimously carried, D.G. Hill, Jr., was elected Comptroller of the Association and was declared duly elected to said office." The notice under date of May 21, 1937, sent out by the secretary of the defendant corporation to various associations affiliated with the defendant corporation notifying them of the election of the officers stated to the effect that the plaintiff was one of the officers elected for the ensuing year. It is provided in the by-laws of the defendant corporation that the board of directors shall elect the president, vice-presidents, secretary and treasurer who shall hold their offices until the next annual meeting of the stockholders. It is provided that the general manager, comptroller and legal counsel shall be appointed by the board of directors to serve during the pleasure of the board. The by-laws of the corporation authorize the board of directors to make, alter and change the by-laws by majority vote of the directors. The by-laws authorize the board of directors to elect all the officers of the Association, to employ all employees and to fix the compensation of the officers and employees. The testimony of Mr. E.F. Creedmore, vice-president and general manager of the corporation, is to the effect that it was his understanding that the plaintiff was elected for the ensuing year. Mr. Creedmore stated that he was elected for the ensuing year and that Mr. Hill was likewise elected at the same time for the same period of time. The plaintiff testified that he had been working for the corporation for a number of years and was elected assistant treasurer in 1930 at a salary of $10,000 per year and was elected comptroller in 1935 for a year and 1936 for a year at a salary of $10,000 per year. The plaintiff testified that he had been working for this corporation since 1921 and was elected every year for a term of a year to an office in the corporation until the date of his dismissal.

The plaintiff contends that the sole issue presented is whether or not the defendant entered into a contract for the period of a year with the plaintiff. The plaintiff takes the position that under the facts and circumstances in this case the contract of employment was for the period of one year and the defendant did not have the right to terminate it without being liable for the balance due the plaintiff under the contract.

From the evidence in this case the vice-president and general manager of the corporation, the secretary of the corporation and the plaintiff all interpreted the contract to be for the period of one year. This interpretation placed on the contract is corroborated by the fact that the salary of the plaintiff was $10,000 per year. In other words, the salary of the plaintiff was not based on an amount for each month but on a yearly basis. This interpretation of the contract is further corroborated by the fact that for a number of years previous to the one involved in this suit the plaintiff was employed by this corporation by the year. The board of directors were invested with the authority to change the by-laws of the corporation. The evidence shows the board of directors had for a number of years employed the plaintiff on a yearly basis. The by-laws in question are mere rules of conduct which could be set aside at any time by the board of directors by the provisions therein as it was imposed on the defendant corporation for its own benefit and convenience and the board of directors would clearly have the power to disregard its own rules. Martino v. Commerce Fire Insurance Company, 47 N YSuper.Ct. 520. From the circumstances and facts in this case the contract of employment was undoubtedly for the period of one year. Since the contract was for the period of one year the defendant corporation is liable for the balance due on the contract. Dart's Statute, Section 1115 and 1109, Act No. 250 of 1928, §§ 35, 29; Fletcher, Cyc. on Corporations, Section 1814; Daspit v. D.H. Holmes Co., Ltd., 120 La. 86, 44 So. 993; Russell v. White Oil Corporation, 162 La. 9, 110 So. 70.

The defendant contends that the resolution of the board of directors employing the plaintiff provided no definite term of employment, which remains without successful impeachment, and in the absence of a definite term the contract is terminable at the will of either party. We have already determined the plaintiff was employed for the period of one year. Counsel for the defendant cites in support of his contention the case of Russell v. White Oil Corporation, 162 La. 9, 110 So. 70. The case is not applicable because the employment involved therein was not for a definite period of time.

The counsel for the defendant contends that under the by-laws of the corporation even had it so desired the board of directors could not have made a contract with the comptroller employing him for a stipulated time but the board of directors had to make such contract of employment subject to the termination of employment at the pleasure of the board of directors. Counsel cites in support of this contention Hunter v. Sun Mutual Insurance Company of New Orleans, 26 La.Ann. 13; Fowler v. Great Southern Telephone Telegraph Company, 104 La. 751, 29 So. 271. The cited cases are not pertinent because in those cases the board of directors did not have authority to alter the by-laws which were adopted by the stockholders.

Counsel for the defendant contends that even if the facts show that the board of directors purported to employ the plaintiff for one year and the board had the power to make the contract, that such contract would be a nudum pactum and not enforceable because there is no evidence to show the plaintiff bound himself to work for the defendant for one year. In support of this contention the counsel cites Pitcher v. United Oil Gas Syndicate, 174 La. 66, 139 So. 760; Cloverland Dairy Products, Inc. v. Grace, 180 La. 694, 157 So. 393, and United Carbon Company v. Interstate Natural Gas, Inc., 176 La. 929,147 So. 37. In the case of Pitcher v. United Gas Oil Syndicate, supra, the employment was for an indefinite period and it could be terminated at the will of either party. The case of Cloverland Dairy Products Co., Inc. v. Grace, supra, involves a continuing contract for an indefinite period of time. In the case of United Carbon Company v. Interstate Natural Gas Company, Inc., supra, no contract of employment is involved.

In the case of Dunbar v. New Orleans Metal Bed Company,145 La. 779, 82 So. 889, 892, it is stated: "According to the Civil Code, and numerous decisions of this court interpreting it, if a laborer (or clerk), hired for a certain time, be sent away, without any serious ground of complaint, before the time has expired, he is entitled to recover the whole of the ``salaries' that he would have received, had the full term of his service arrived. C.C. art. 2749. The right of action for the entire amount called for by the contract arises immediately, and the employer by whom he is discharged has no power, as a condition precedent to paying him, thereafter to require that he work out the term for which he was employed. Sherburne v. Orleans Cotton Press, 15 La. 360. Nor is his right of recovery under his first employment affected by the fact that he engages his services for the unexpired term to another employer. Shea v. Schlatre, 1 Rob. 319. Nor is it necessary that he should tender his services to the employer by whom he was discharged, or put him in default, since the whole amount of the salary called for by his contract becomes due and exigible upon and by reason of his discharge. Tete v. Lanaux, Ex'r, 45 La.Ann. 1343, 14 So. 241; Curtis v. Lehmann Co., 115 La. 40, 38 So. 887; Daspit v. D.H. Holmes Co. 120 La. [86] 92, 44 So. 993; Camp v. Baldwin-Melville Co., 123 La. [257] 258, 48 So. 927."

For the reasons assigned, the judgment appealed from is affirmed at appellant's cost.

On Rehearing.