204 F. 537 | 6th Cir. | 1913
This suit was brought in the lower court by defendant in error, George B. Norcross, against plaintiff in error, the Carpenter Steel Company, to recover $43,600 as damages for breach of a contract of employment by wrongfully discharging him therefrom. It resulted in a verdict and judgment for $3,000.
The company is a corporation engaged in the manufacture and sale of the higher grades of steel at Reading, Pa. A large portion of its output is sold to manufacturers of automobiles, and of parts thereof. Norcross was in its employ in the dual capacity of salesman for the states of Ohio, Michigan, and Indiana, possibly the most important territory covered by the company, with headquarters at Cleveland, Ohio, and of manager of its branch warehouse located at that place. In both positions he had a number of employés under him. At the time of his discharge he had been in its employ for over four years, under three successive contracts of employment. The terms of the first two were for two years each, the first beginning January 1, 1906, and the second, January 1, 1908. The third and last one, then in course of performance, was for five years, beginning January 1, 1910. It was entered into November 10, 1909. The discharge took place January 15, 1910, in the middle of the first month after the beginning of this term. At first Norcross’s position was that of salesman merely. He became manager, also, during the first term, to wit, on July 7, 1907, when the branch warehouse was first established. On the occasion of each renewal he received an increase in salary. Plis salary during the second term was 8350 per month. By the last contract it was provided that he should receive 85,000 per year, payable monthly, and 3.20 of 10 per cent, of the net annual income of the company, to the extent of $25,000, which, if it amounted to that, and there was a reasonable probability that it would, would yield him additionally $3,750, payable semiannually. He received, in addition to his salary, his personal expenses; reimbursement for each month’s expenses being made on the tenth day of the succeeding month. The last contract, in its enlargement of the term of employment and its increase of compensation, bespoke', that his services were regarded as highly valuable. It was testified that during his employment he had brought business to it amounting to as much as $1,250,000.
The defense to the suit was that he had been guilty of such miscom duct as to justify his discharge; the particular misconduct relied on as constituting the justification being specified in defendant’s pleadings. That relied on in its original answer, filed May 6, 1910 — the suit having been brought March 2, 1910 — happened subsequent to the beginning of the then contract of employment and just previous to the discharge. In an amended answer, filed nearly a year afterwards and just before the trial, to wit, on April 29, 1911, it set up, in addition, misconduct that happened prior to the beginning thereof, but during the previous terms, mainly during the second or immediately preceding one. The former tniscond- was the sole basis of the discharge. The claim was that the latter was not then known.
To entitle plaintiff in error to a reversal, it is essential that, under the evidence, it was not possible for a fair-minded man to find that the defendant in error had not been guilty of the particular misconduct, alleged or that it was not such as to justify his discharge.
Possibly the same rule, and none other, should apply where the misconduct relied on happened under a prior contract of employment of which that then in force may be said to be a renewal. The necessities of this case, however, do not call for a decision of this question, and it will be disposed of on the basis that this consideration does not affect its disposition.
In Wood, Master and Servant, p. 208, the law is stated thus:
“Misconduct prejudicial to the master’s interests, although not exlii biting moral turpitude, is a good cause for the discharge of a servant. And conduct exhibiting moral turpitude, although productive of no damage to the master’s interests, is a good ground for terminating the contract. Mere misconduct, not amounting to insubordination, or exerting a bad influence over other servants, or producing injury to the master’s business, or members at the master’s family, is not enough to warrant the discharge of a servant. The misconduct must be gross or such as is incompatible with the relation, or pernicious in its influence, or injurious to the master’s business.”
“In order to .justify a master in discharging a servant the servant must-have been guilty of conduct that amounts to a breach of some express or implied provision of the contract of hiring. Anything less than that will not amount to a legal justification or excuse. The mere fact that he has been guilty of improper or unbecoming conduct, or that he has, in some slight matters, been guilty of a violation of his master’s orders, will not warrant his discharge; but his conduct must have been such as to involve moral turpitude and his insubordination must have been willful and such as is inconsistent with the relation which he holds to the master and the duties he owes him.”
Possibly the matter may be put thus: The servant owes the master the duty of faithfulness, whether expressed in the contract of employment or not. It is an implied, if not an express, term thereof. It follows that any conduct on his part which amounts to unfaithfulness or which witnesses an unfaithful disposition, or better, perhaps, a disposition which is likely to issue in unfaithfulness, is misconduct calling for a discharge. It is, no doubt, because conduct involving moral turpitude witnesses such a disposition that it is such misconduct as to justify a discharge. It is in the light of these general principles that this case is to be disposed of.
At that show the company had a small booth and made an exhibit of tlie articles, not very many, which it had for sale to the automobile trade. The insubordination complained of was, not attending at the booth pursuant to direction, and not keeping an appointment with its general manager at its New York office on the afternoon of Tuesday, the 11th. If it be assumed that such insubordination was sufficient to justify the discharge, there was such contrariety in the testimony as to whether Norcross had been in fact directed to attend at the booth, and such an explanation of his failure to keep the appointment as to require a submission of the matter of insubordination to the jury. It is not contended otherwise. The real complaint as to his conduct on this occasion has to do with his dissipation. It took the form of excessive drinking, association with loose women, and visiting a gambling resort. The conduct, of a similar character to this, relied on, in the amended answer, as having happened under the previous term, of service, consisted of drinking to excess. That he so conducted himself on the occasion of this show and that he had at times during the previous term' of service indulged in excessive drinking was admitted. The only question is as to whether such misconduct justified his discharge. It was to such an extent that possibly, ordinarily, it would have to lie held that it amounted to a justification. Norcross’ position in regard thereto was this: He so conducted himself in furthering the business of the company. It helped it along for him to furnish entertainment, and entertainment of this character, to the purchasing agents of its customers in the automobile trade. He could not do this without
“My principal object in going to the New York show was to meet my friends, the company’s friends from out here, at a time when they would be free, and to entertain them in such manner as would best suit them. Now I know these people, otherwise we would not be doing the business that we are. I knew what these people wanted to see, and I showed it to them and there were not six hours during my stay that I was not with some good customer. That I can prove. Perhaps I overdid the thing, in which case I am sorry.”
There was substantial evidence=evidence fit to induce conviction in support of this position. In view of it, it cannot be said that it was the duty of the lower court to hold as a matter of law that the company had a right to discharge him. If his position was true, such conduct was regarded by it as beneficial and not prejudicial to it, and it was indulged in at its instance, and could not, therefore, justify his discharge. That he seems to have liked to so conduct himself, and that at times he was unable to stand up, and had to resort to Turkish baths, and a six weeks’ stay at Muldoon’s, the latter with the company’s consent, but, possibly, without its knowledge as to the true cause thereof, to keep himself in condition, did not make it otherwise. Possibly had he indulged more moderately he could have done better by the .company, but everything points in the direction that, as it was, he was doing quite well by it. Possibly, also, had he continued in its service, a time might have come when his ability to serve it would have been so impaired by such a course of life that it would have been under no obligation to continue him in its employ. As to this no opinion is expressed. It is certain that it cannot be said as a matter of law that such a time had arrived when he was discharged. Until then, at least, the company had no right to discharge him, without first changing its attitude towards such conduct, and notifying him thereof. It is due to the company, perhaps, to say that there was substantial evidence to the effect also that this method of securing business — i. e., by entertaining the purchasing agents in such ways — is largely resorted to in the automobile trade, and, further, that, whilst the evidence was to the effect that it was approved by certain of its officers and agents, superior in authority to Norcross and for whose actions it was responsible, the evidence does not 'trace knowledge thereof home to its president and board of directors. It is probable that it was because the president first became aware of such conduct on the part of Norcross on the occasion of the New York show, and was so shocked thereby that he came to be discharged, though, according to Norcross’ uncontradicted testimony, on his return from Muldoon’s the president took him to dinner in New York and ordered champagne, as he had done at other times, when entertaining him at
The misconduct mainly, if not solely, relied on and set forth in the amended answer was of a different character. It had to do with a $1,000 fund placed in his hands as manager of the Cleveland warehouse to meet its expenses. He was informed of its establishment and of his appointment as manager thereof by letter of July 5, 1907, inclosing a check for $1,000, payable to his order as manager. By the letter he was directed to open an account in a certain Cleveland bank in the name of “the Carpenter Steel Company, by George B. Nor-cross, Manager,” and to deposit to the credit of the account remittances from it and such payments as he might receive in actual currency from customers, to use the funds placed at his disposal “to pay the expenses of conducting the warehouse,” and to render a monthly account in such form as might thereafter be prescribed by the accounting department. He so deposited the check and subsequent remittances. There seem to have been no currency payments by customers. He made payments on account of warehouse expenses and rendered monthly accounts down to and including January 1, 1910. These accounts showed the remittances and warehouse expenses during the month, and gave the balance after deducting the latter from the former, which was always termed “balance on hand.” Shortly after the receipt of each account, almost always on the 10th of the month, the company remitted to him the amount of the expenses of the preceding month, which, added to the balance reported on hand, would bring the amount up to $1,000. The misconduct complained of in relation to this fund was that he at times used portions thereof for his own benefit in paying life insurance premiums, and otherwise, and out of it made advances to employes under him and to customers and made no report of such use and advances. It followed from this, it is claimed, that he was guilty of insubordination, embezzlement, and untruthfulness. The insubordination consisted in not adhering to the direction contained in the letter of July 7, 1907, establishing the warehouse and creating the fund; the embezzlement, in appropriating portions thereof to his own and others’ uses; and the untruthfulness, in stating that he had certain balances on hand which he did not in fact have.
In valuing this conduct — determining the effect to be given to it several things are to be taken into consideration. Norcross’ position was one of high grade, and much was left to his discretion and judgment. He was hut slightly hampered by directions. That contained in the letter of July 5, 1907, is the only direction which the record discloses that was erer given to him during the course of his employment. In the case of Park Bros. & Co., Ltd., v. Bushnell, 60 Fed. 583, 9 C. C. A. 138, it was held that misconduct which would justify the discharge of a mere clerk or tvorkman might not justify the discharge of a servant of a much higher grade. The letter contained no express prohibition against the use of the fund for any other purpose than paying the expenses of conducting the warehouse. The amount provided for that purpose, to wit, $1,000, was nearly twice as much as was
Again, as already intimated, the accounting department, in prescribing the form of the monthly statement, directed Norcross to take credit for each mouth’s warehouse expenses, whether paid or not. Pursuant to this direction, he frequently so did. The vouchers for such credits were sent in when they were paid and they gave the date of payment thereof. Often the dates of payment so shown would he after the company had remitted that month’s expenses and just after they were received by Norcross. To an observant person this would suggest the possibility, if not indicate the fact, that until the receipt of the remittance, notwithstanding the statement as to balance on hand might indicate otherwise, that Norcross did not in fact have enough on hand to meet the credits.
It must be accepted, therefore, that the company knew that Nor-cross was using the words “balance on hand,” not in their strict sense, but in the sense of what he was accountable for, and that he was using this fund for other purposes than paying warehouse expenses, at least, in making advances to employes under him. This it knew whilst these things were transpiring. It made no complaint thereof, and, notwithstanding it, it engaged him for the additional and enlarged term at the increased salary. The only thing which it can be said that it did not then know is that he was making advances of portions o.f the fund to himself. Thereby, as to the particulars of which it was aware, it condoned the past and authorized him to continue to act as he had done. But its conduct goes further than this: It is evidential that Norcross in the first instance did not do wrong in these particulars in acting as he did. Upon the discharge and the settlement of this account, it became fully aware of his conduct in relation to this fund. It made no complaint thereof at that time, and it was nearly a year before it set it up as a defense. So setting it up was purely an afterthought, and most likely came from counsel rather than from it. Its delay in so doing is likewise evidential of the fact that there was nothing in Norcross’ conduct in relation to this fund that was a justification for his discharge. The one thing in his conduct in relation thereto that is most subject to criticism was his advancing portions thereof to himself for his own use. We would not he understood as viewing lightly the use by a servant of funds intrusted to his care by
The judgment of the lower court is affirmed.