Johnson v. Kahrs

Where the owners of a pharmacy contracted with another to become the manager for a stated monthly salary until such time as the net profits reached $5000, when he should become a partner, and the contract contained a provision that it could be dissolved by the owners, after thirty days' notice, for such misconduct of the person so contracted with as in the opinion of the owners was detrimental to the business, a petition by the owners against the person so contracted with for injunction and general relief, alleging that they had elected to dissolve the contract because of such person's misconduct detrimental to the business, and had tendered him a month's salary in advance, but disclosing that the required thirty days' advance notice was not given, did not state a cause of action, and the court erred in not dismissing the petition on general demurrer.

No. 15168. JUNE 6, 1945. On October 2, 1944, James Kahrs and William R. Johnson, individually and trading as Vermillion's Pharmacy, filed a petition in Chatham superior court, against Earl C. Johnson, which as amended alleged substantially the following: On May 10, 1944, the petitioners as owners of Vermillion's Pharmacy, located in Savannah, Georgia, entered into an agreement with the defendant, whereby the latter was to act as manager of the business at a salary of $260 per month until the business showed a net profit of $5000, at which time he was to become a partner and receive two thirds of the net profits of the business. The contract provided that the agreement could be dissolved by mutual consent of the parties, or upon giving 30 days' written notice, in the event of misconduct of the defendant which in the opinion of both petitioners was detrimental to the business. The petition set forth that the defendant did not devote his whole time and attention to the business and had other employment, and that the profits of the business had not reached $5000. Also, there was an allegation to the effect that the defendant had declined to properly keep up the stock of goods and had threatened to liquidate the stock on hand. On September 29. 1944, the petitioners gave him notice in writing of the dissolution of the agreement because of his misconduct in the operation of the business, and at the same time sent him a check in the sum of $260, constituting one month's salary which he would have received during the thirty days required under the agreement. Also, they directed him to turn over the business to a new manager, who had been employed to take charge of the business, but he refused to do so. The petition further alleged that the conduct of the defendant was detrimental to the operation of the business, and that the petitioners would suffer irreparable loss unless the defendant, who was insolvent, be enjoined. Copies of the contract, the notice given to the defendant, and a letter directing that the business be turned over to the new manager were attached as exhibits. The prayers were: (a) for process, (b) for injunction to restrain the defendant from interfering with the operation of the business, and (c) for general relief.

The exception is to an order overruling a demurrer on general and special grounds, interposed by the defendant. The first ground of demurrer is that the allegations of the petition do not set forth a cause of action against the defendant. The petition shows that prior to the alleged termination of the contract, the defendant was not given the 30 days' notice as provided therein; but counsel for the petitioners insist that the clause as to notice was substantially complied with by sending him a notice and a check for a month's salary in advance, and that the agreement was "thereby terminated" as of that day. This reasoning would probably be sound if the provision for notice was merely to insure the defendant 30 days in which to seek other employment in the event that the contract was dissolved. Webb v. PullmanCo., 57 Ga. App. 772, 775 (196 S.E. 477). However, other rights of the defendant are here involved. The clause providing for him to become a partner in the business when the net profits reached $5000 made the contract something more than one of mere employment. The employment contract was coupled with an opportunity to become a partner in the business.

Whether the defendant was entitled to the required notice before the contract could be terminated, depends upon the construction of the language providing for the agreement to be dissolved "because of misconduct of [the defendant], which, in the opinion of both of [the petitioners], is detrimental to said business." If this clause empowered the petitioners to dissolve the contract without giving the required 30 days' notice, merely because they were of the opinion that the defendant had done something detrimental to the business, then the defendant could have no complaint. But under the terms of this contract it covered more than simple employment. Suppose the defendant by successful operation of the business had brought the profits right up to, but just barely under the sum ($5000) which would have made him a partner; under such circumstances, could the petitioners without giving the required notice have then dissolved the contract, even though they in good faith believed that he had done something detrimental to the business; or, under such circumstances, could they have terminated the agreement merely because they concluded that he had done something detrimental to the business, regardless of how arbitrary or fantastical their reasoning might have been, or how fastidious and difficult to please they might have been? We think not. Merely sending him a check for a month's salary in advance and notifying him of the termination of the agreement, did not dispense with the requirement to give him 30 days' notice. Had the stipulated notice been given, he might have been able to convince the petitioners that their deductions as to his conduct were wrong. At least this was a right due him under the terms of the contract. "Where a forfeiture is dependent upon the giving of a certain written notice, if it be such as can be enforced, it must appear that the notice was given in compliance with the contract both as to time and contents, and that the default occurred." Georgia Railroad Banking Co. v. Haas, 127 Ga. 187, 190 (56 S.E. 313, 119 Am. St. R. 327, 9 Ann. Cas. 677); Felton Beauty Supply Co. v.Levy, 198 Ga. 383 (31 S.E.2d 651, 155 A.L.R. 647).

The alleged notice which was given three days before the suit was filed, stating that a check was inclosed for a month's salary and that the agreement "is hereby terminated . . as of this day . . due to your misconduct," was insufficient to show a compliance with the petitioners' part of the contract. Accordingly, the petition failed to allege a cause of action, and the trial court erred in overruling the general demurrer.

Judgment reversed. Bell, C. J., Jenkins, P. J., and Wyatt,J., concur. Duckworth, J., dissents.