This is an action for damages arising out of a contract of employ
Plaintiff, an employee of defendant, claims that she was discharged by defendant without cause contrary to a provision of an employment contract existing in April 1955 when her employment was terminated. The primary and decisive question presented is whether the evidence, viewed most favorably to plaintiff, was sufficient to establish that the employment contract, of the type she claimed, embodied a provision securing her against dismissal except for cause.
The evidence so viewed could have established that plaintiff was a long time, faithful, and dedicated employee of defendant, a nonprofit fraternal benefit insurance society. The society was established in 1917, its membership being limited to those baptized in the Lutheran faith or affiliated with a Lutheran church organization. Its primary activity is issuing benefit certificates providing for payment of benefits in case of death or disability to its members. It is not represented as a commercial enterprise, but rather as a religiously orientated and motivated fraternal association designed “to aid the Lutheran Church in extending the Lutheran faith, to foster patriotism, loyalty, justice, charity, and benevolence, * * * to encourage industry, saving, thrift, * * * to give aid in case of poverty, sickness, accident, or other misfortunes, * * * and otherwise to promote the spiritual, intellectual and physical welfare of its members.” As provided in its bylaws, its management is vested in a Board of Directors elected by the General Convention, an Executive Committee, and the usual officers elected by the Board, each and all being subject to the General Convention in which is vested final authority. J. A. O. Preus, one-time governor of Minnesota, was its first secretary-treasurer and has been chairman of the Board for 40 years. During the period in question, Herman L. Ekern was president until 1951 when he was succeeded by Carl F. Granrud, who is presently serving in that office. Lorenz Jost, who became plaintiff’s immediate superior, has been treasurer from 1955 to 1959 and for 10 years prior thereto he was comptroller. During the period of plaintiff’s employment and at least prior to 1931, all
In 1922 plaintiff became a part-time employee and in 1928 she was employed full time. At first she was assigned duties of a stenographer, bookkeeper, and auditor of accounts. In 1930 she was assigned the title of cashier and assistant to the corporation officer in charge of personnel. In 1945 she became personnel supervisor, and in 1951 she was designated cashier, personnel director, and office manager. For many years, prior to and up to the time her request for a leave of absence was granted, she had, under the supervision of a corporate officer, general duties and responsibility for payroll accounting; for writing checks including payroll checks; for supervising the switchboard operators and the receptionist; and for the total employment function including recruiting, interviewing, testing, selecting, employing, counseling, assigning, and supervising personnel under her charge. Although not a corporate officer under defendant’s bylaws, she had advanced to an executive status in duties and responsibilities as well as salary which, in 1954, had reached $7,300 per year. As a part of her duties she assisted her corporate supervisor in recording, if not in formulating, the employment policies of defendant as they were developed and established. She kept current a book in the nature of an office manual entitled “Control Copy of Personnel Policies and Practices of Lutheran Brotherhood,” hereinafter referred to as exhibit Y. Although designated a copy, only one such manual existed. She also prepared various editions of an employee’s handbook and employee’s bulletins containing such parts of the employment policies and practices of defendant as were published for direct communication and distribution to employees.
Exhibit Y, a 42 page loose-leaf paper-covered booklet, was compiled with the knowledge and authority of her immediate corporate supervisor. As the title suggests and the “index” confirms, it was a manual used by plaintiff and perhaps other supervisors. The subjects
Sometime in 1931 President Ekem met with the then 30 to 50 employees to announce the formulation of a retirement plan called the “Home Office Retirement Program”. In explaining the benefits to the employees and urging them to approve the same he is quoted as saying that “there would be no dismissals as long as people showed willingness to work and the ability and wanting to learn” and that “there was chances for advancement and people could have a job as long as they wished until retirement.” He was further quoted as saying that defendant “was one of the finest companies to work for and as long
In 1931 or 1932, when defendant was experiencing the effects of the general economic depression, plaintiff and other employees, upon defendant’s solicitation for funds to strengthen its borrowing capacity, purchased a “few hundred” dollars of unsecured, interest bearing “surplus notes”.
In January 1954 plaintiff’s husband was elected Potentate of Zuhrah Temple of the Shrine. Shortly thereafter she advised President Granrud that her responsibilities to' her husband and his office would entail time away from her job, and she mentioned the possibility of a leave of absence. President Granrud discouraged that possibility. There were absences from time to time and her superiors criticized her for this. During the year she persisted in urging a leave in conversations with President Granrud and Mr. Jost, and on the last occasion she requested either a leave of absence or a respectable retirement income. On October 8, 1954, the Executive Committee granted her a 6 months’ leave of absence without pay. She went on leave October 18.
Her services up to this point were completely satisfactory to defendant, her only difficulty having been a failure to complete a
During the period of her leave of absence she made herself available as required for special work, maintained her professional interests and associations, and kept abreast of developments in the personnel field. She worked from time to time on evenings and Saturdays and was paid one-half month’s salary at her annual rate. A personnel director was hired, and he occupied that position when plaintiff returned on April 18, 1955.
A week before plaintiff’s leave expired she telephoned Mr. Jost to verify the date of her return. He told her that there was no opening in personnel but that he had another position for her. Prior to her return, President Granrud and Mr. Jost on numerous occasions suggested to the personnel director that he would not want plaintiff back in his department. At the time of plaintiff’s return the personnel director could have used experienced help. Upon her return plaintiff was offered the position of counter clerk and receptionist. She said this was a “shock” to her and she would have to think it over. Mr. Jost told her she could discuss it with President Granrud if she liked. After
It is plaintiff’s contention that, before 1930, there existed a unilateral employment contract between plaintiff and defendant arising out of an offer by words and conduct of defendant, and an acceptance by plaintiff’s entering upon and performing her duties as an employee. She claims that, through a similar manifestation of intention, the original contract of employment at will was modified by a provision that she could be dismissed only for cause. The specific terms are that she was promised if she continued her faithful service or forbearance from seeking other employment, purchased the required minimum of life insurance, participated in the retirement plan, loaned money to defendant, or did any or all of the foregoing, defendant would then continue to keep her and discharge her only for cause. She contends that the authorized promise or offer securing her against dismissal without cause was extended by the speech of President Ekem and was also reduced to writing and continuously reiterated in exhibit Y; that the words were given meaning and the character of a contractual promise by the acts of the parties, the character of defendant’s operation, the
Lastly, she asserts that, by refusing to give her such a position on her return, and dismissing her when she declared her willingness to accept a clerk or receptionist position if nothing else was available, she was thus dismissed without cause in violation and breach of a binding unilateral contract. She claims damages for lost salary and retirement benefits.
It is the position of defendant that no such contract ever existed. It is claimed that the speech of President Ekem was merely a statement of company policy, and was in no way intended to be any sort of contractual promise; further, that Ekern did not have authority to make any such offer as plaintiff claims. Exhibit Y is asserted to be little more than a collection of plaintiff’s own notes, not binding in any way upon defendant; that it was at most a collection of company policies and intentions; and in no way was it a promise or offer which could form the basis of a contract embodying the provision claimed.
It is further contended by defendant that there was no contract granting plaintiff security from dismissal without cause, as there was no consideration given by plaintiff that was demanded in return for any such promise by defendant. Plaintiff’s vote for and participation in the retirement plan, purchasing the notes and insurance, and remaining on her job were acts of her own free will, and not done in reliance on or as an acceptance of any promise of immunity from discharge without cause.
At the close of the evidence, defendants’ motion for a directed verdict was denied. The case was submitted to the jury on all issues
Defendant then moved for judgment notwithstanding the verdict, or, in the alternative, for a new trial. The court granted the motion for judgment notwithstanding the verdict, and also, in the event of a reversal on review, granted a new trial for various errors in instructions and insufficiency of evidence.
In a comprehensive memorandum attached to the order, the court explicitly outlined the basis for its order. The court determined that the evidence in plaintiff’s favor was clearly insufficient to establish the basic elements of an offer, acceptance, and consideration for the kind of contract claimed by her. The speech of Ekem in 1931 was held not to be a promise but only a declaration of policy. The court stated that even if it were construed as a promise it could not be an offer, the acceptance of which would create a contract of the kind claimed, for it was not in its terms conditional upon any act or forbearance on the part of plaintiff.
Exhibit Y was held to be equally unavailable as a foundation for such contract as plaintiff claims. It was not a written declaration related to Ekern’s speech for such statements had been in existence for about a year prior to the speech and it must be considered separately in context with the full contents of the manual and its use as a mere recital of general policy, not a promise. The court stressed the lack of plaintiff’s reliance on the discharge provisions of exhibit Y, noting that she failed to point it out to new employees, and that she neither considered it nor treated it as a fundamental employee-employer contractual provision in performing her personnel duties.
The court then found that, even if an offer were assumed arguendo, there could not have been acceptance by plaintiff as no acts were required of her that could have constituted legal consideration for the offer. The court dismissed promissory estoppel, saying that the case had not been tried on that theory and that an essential prerequisite of that doctrine, the existence of a promise, was lacking.
On her appeal, plaintiff makes several assignments of error. On the pivotal issue presented they are that the trial court erred in holding the evidence insufficient to establish an offer, acceptance, and consideration sufficient to make any promise of defendant, if existent, binding. Those dealing with the court’s order granting a new trial need not immediately concern us.
In addressing ourselves to the determinative question we must keep uppermost in our minds that plaintiff does not claim a general contract between defendant and all employees; her entire claim is predicated upon a unilateral contract granting job security and arising out of a promise to her and an acceptance by her.
We must also have in mind certain fundamental principles basic to the law of contracts. The task of outlining the essential requirements of law for the formation of an informal contract, and analysis of the. practical problems of contractual definition of the basic elements, were recently undertaken in Baehr v. Penn-O-Tex Oil Corp.
“* * * Unfortunately, contract, like most of the basic terms constituting the intellectual tools of law, is conventionally defined in a circular fashion. By the most common definition, a contract is a promise or set of promises for the breach of which the law gives a remedy or the performance of which the law recognizes as a duty. Restatement, Contracts, § 1; 1 Williston, Contracts (3 ed.) § 1; see, 17 C. J. S., Contracts, § 1. This amounts to saying that a contract is a legally enforceable promise. 1 Corbin, Contracts, § 3; 12 Am. Jur., Contracts, § 2. But a promise is legally enforceable only if it is a contract. Thus nothing less than the whole body of applicable precedents suffices to define the term ‘contract’.
“Although the definition of contract does not help much in determining what expressions shall be held to impose legal obligations, it does direct attention to a promise as the starting point of inquiry. Both in popular and legal usage, a promise is an assurance, in whatever form of expression given, that a thing will or will not be done. Webster’s New International Dictionary (2 ed.) (1947) p. 1980; Holmes, The Common Law, p. 299. While we must take care to distinguish between statements meant to express merely present intention and those meant to give an assurance as to a future event, McCarty v. Nelson, 233 Minn. 362 , 370,47 N. W. (2d) 595 , 599; In re Estate of Sick-mann,207 Minn. 65 ,289 N. W. 832 ; Carlson v. Krantz,172 Minn. 242 ,214 N. W. 928 , 54 A. L. R. 545, this involves no more than the common difficulty of seeking precise meaning in the usually imprecise, and often careless, expressions of ordinary colloquy.
“However, the fact that a promise was given does not necessarily mean that a contract was made. It is clear that not every promise is legally enforceable. Much of the vast body of law in the field' of contracts is concerned with determining which promises should be legally enforced. On the one hand, in a civilized community men must be able to assume that those with whom they deal will carry out their undertakings according to reasonable expectations. On the other hand, it is neither practical nor reasonable to expect full performance of every assurance given, whether it be thoughtless, casual and gratuitous, or deliberately and seriously made.
“The test that has been developed by the common law for determining the enforceability of promises is the doctrine of consideration. This is a crude and not altogether successful attempt to generalize the conditions under which promises will be legally enforced. See, Ballantine, Is the Doctrine of Consideration Senseless and Illogical?, 11 Mich. L. Rev. 423, Selected Readings on the Law of Contracts, p. 588. Consideration requires that a contractual promise be the product of a bargain. However, in this usage, ‘bargain’ does not mean an exchange of things of equivalent, or any, value. It means a negotiation resulting in the voluntary assumption of an obligation by one party upon condition of an act or forbearance by the other. See, Ames, Two Theoriesof Consideration, 12 Haxv. L. Rev. 515; Id. 13 Harv. L. Rev. 29, Selected Readings on the Law of Contracts, p. 320. Consideration thus insures that the promise enforced as a contract is not accidental, casual, or gratuitous, but has been uttered intentionally as the result of some deliberation, manifested by reciprocal bargaining or negotiation. In this view, the requirement of consideration is no mere technicality, historical anachronism, or arbitrary formality. It is an attempt to be as reasonable as we can in deciding which promises constitute contracts. Although the doctrine has been criticized, 1 Chitty, Contracts (21 ed.) par. 80, p. 40; Pound, An Introduction to the Philosophy of Law, p. 236, et seq., no satisfactory substitute has been suggested. It is noteworthy that the civil law has a corresponding doctrine of ‘causa’ which, to the eye of a common-law lawyer, is not much different than consideration. Lorenzen, Causa and Consideration in the Law of Contracts, 28 Yale L. J. 621, Selected Readings on the Law of Contracts, p. 565.
“Consideration, as essential evidence of the parties’ intent to create a legal obligation, must be something adopted and regarded by the parties as such. Suske v. Straka,229 Minn. 408 ,39 N. W. (2d) 745 ; Nybladh v. Peoples State Bank,247 Minn. 88 ,76 N. W. (2d) 492 ; 12 Am. Jur., Contracts, § 75; 17 C. J. S., Contracts, § 74. Thus, the same thing may be consideration or not, as it is dealt with by the parties. Holmes, The Common Law, p. 292. In substance, a contractual promise must be of the logical form: ‘If . . . (consideration is given) . . . then I promise that . . .’ Of course, the substance may be expressed in any form of words, but essentially this is the logical structure of those promises enforced by the law as contracts. See, e. g., Hartung v. Billmeier,243 Minn. 148 ,66 N. W. (2d) 784 .”
It should be emphasized, as plaintiff correctly urges, that in a unilateral contract “the exchange for the promise is something other than a promise”,
1
when the promise takes the form of an offer it is the promisee’s performance of all or part of the acts requested. Such performance ordinarily indicates acceptance as well as furnishing the
Applying these principles to the present case, it appears that no. such contract as plaintiff relies upon existed. If, at the time that she returned from her leave of absence, there was a provision of her employment contract that she should not be dismissed without cause, it needs to have been based upon some promise or offer by her employer, the acceptance of which became binding through passage of consideration. Examination of the evidence in the case pertaining to each of these facets of a contract reveals insufficient support for plaintiff’s claim.
The usual employer-employee relationship is terminable at the will of either; the employer can summarily dismiss the employee, the employee is under no obligation to remain at the job. Brown v. Safeway Stores, Inc. (E.D.N.Y.)
Modification of “at will” hirings by an enforceable contractual agreement that the employee shall be discharged only for cause is quite a familiar provision of collective bargaining agreements between unions representing a group of employees and an employer. See, Rowan v. K. W. McKee, Inc.
The large volume of evidence covering, as it must, the many contracts between the parties unquestionably permitted the jury to infer, and therefore to find, that President Ekern in his speech did indicate that no employee would be dismissed without cause and that he did in fact, at some occasion or occasions, make an unequivocal statement to that effect. Further, such a statement appears without dispute in exhibit Y. But, can it be said that the evidence indicates more than that such was the consistent policy of defendant? We think not. The question is rather one of intention to make such a promise as an offer and to be bound by it. We can and must seek that intent “by applying the words used, with all their reasonable implications, to the subject matter as the parties themselves, under all the surrounding circumstances, must have applied, used, and understood them.” Hartung v. Billmeier,
Ekem’s speech, made to a group of some 30 to 50 employees, does not contain the indicia of intent to contract. He was discussing a pension plan, which would eventually inure to the employees’ benefit, and asking their approval. The remarks in the record show that he was extolling the qualities of Lutheran Brotherhood as a place to work and
There are other circumstances negativing an intent to make an offer. The scarcity of employment and the economic instability of the years tend to show that Lutheran Brotherhood was giving its employees something rather than demanding something. The timing, the informal nature of the statements, and in fact the terms of the retirement plan itself make it more likely that Ekem was telling the employees of the Brotherhood’s policies and plans designed for their benefit; not making a blanket offer of job security to all employees in exchange for faithful service and approval of the pension plan.
Plaintiff contends that the avowed Christian principles of Lutheran Brotherhood, its aims and policies, all point to the reinforcement of the promise made by Ekem. A more logical conclusion from the evidence is that his quoted statements and conduct were a testimony of the Christian precepts which were guidelines for company policies and principles, not a separate contractual obligation.
That a similarly worded policy was to be found in exhibit Y supports this conclusion. Although found among some serious employment terms, it was also accompanied with matters of a trivial nature. The title “Control Copy of Personnel Policies and Practices of Lutheran Brotherhood” suggests that the booklet was only a collection of general policies, not an offer of contractual character. The fact that the dismissal provision was not included in the Employee’s Manual, given to new employees explaining important personnel regulations, indicates that plaintiff did not consider it as a provision of her employment relationship. There is no showing that she ever called this provision to the attention of any employee in discharging her duties as personnel director. The fact that it was not important enough to be included in the employee’s handbook or employee’s bulletins indicates forcefully that during its entire existence it was not regarded as a contractual offer to all employees, but merely as a policy guide for supervisory personnel.
Plaintiff claims, however, that as to her this statement in the manual
We have long recognized that an offer becomes binding in a unilateral contract when the consideration, the act or forbearance given in exchange, is performed. But what is given must be that which is asked. As we stated in Suske v. Straka,
“The consideration for a promise, whether it be some benefit accruing to one party or some detriment suffered by the other * * * or something else * * * must be something which both parties to the contract have adopted and regarded as such.”
In Stern v. Miner,
“* * * Many things may constitute the consideration for a contract. It is the fact that they are the intended consideration that imports them into a contract.”
Here, there is no showing in the evidence that defendant, either through Ekem’s speech or exhibit Y or by acts or conduct, manifested an intent to accept any act or forbearance as consideration sufficient to work its policy of no dismissal without cause into a contract.
Plaintiff contends that the offer was a continuing one — ever-present in exhibit Y — and accepted by her daily through the years of devoted service, and the performance of various acts of purchasing insurance, the surplus notes, and approving the pension plan. She asserts that the subsequent practical construction of the policy of no dismissal without cause over the period of time between 1931 and 1954 reinforced the intent to become bound by it.
It is not questioned that defendant consistently followed its policy. However, plaintiff erroneously cites cases dealing with modification and subsequent construction of already existing contracts. The question here is whether there was any contract term at all to the effect that plaintiff would be dismissed only for cause. As regards her, the parties had given no construction. Practical construction is helpful in
However, following a statement of intention with consistency is not a substitute for contractual relationship. The fallacy in plaintiff’s argument lies at its very foundation. Numerous authorities are called upon to buttress plaintiff’s contentions about subsequent meaning and construction of contractual terms. However, where the basic essentials of the kind of contract claimed are lacking there is nothing to interpret. Plaintiff has failed to show that her employment contract, “You work for us and we will pay you,” terminable at will, was ever changed into one of “You work for us and we will pay you and not dismiss you without cause.”
This is not to say that such a contract would be unenforceable. Dismissal for cause is a frequent provision of union contracts. It is not invalid for indefiniteness, as is a “lifetime” contract such as we examined in Skagerberg v. Blandin Paper Co.
supra,
and Degen v. Investors Diversified Services, Inc.
Nor should we be misconstrued as saying that, if there had been such a contract as plaintiff claims, she would not have had job security guaranteed until the minimum retirement age provided by the retirement plan.
We are merely concerned here with a provision allegedly protecting plaintiff against dismissal without cause. There might be any number of valid causes assignable for dismissal, and the length of employment does not enter into the question here. While there is ample evidence to sustain a finding that plaintiff was dismissed without legal cause, no cause of action therefor can exist unless there is a preexisting contractual protection against such action. When all ramifications of the testimony favorable to plaintiff are considered, there exists much too nebulous and feeble a basis upon which to rest such a significant limitation on defendant’s discretionary authority to dismiss employees inherent in the kind of contract claimed by plaintiff.
Affirmed.
Notes
Hartung v. Billmeier,
Restatement, Contracts, §§ 5, 21; Dybvig v. Minneapolis Sanatorium,
Restatement, Contracts, § 20,
comment
a; Stong v. Lane,