Summary
In Watson v. Gugino (204 N.Y. 535) the same question came before the Court of Appeals, and the rule of the Martin case was applied.
Summary of this case from Marshall v. Sackett Wilhelms Co.Opinion
Argued February 20, 1912
Decided March 8, 1912
Thomas E. Boyd, Henry W. Willis and Gordon F. Matthews for appellant.
Edward C. Randall for respondent.
The learned justices of the Appellate Division held that the action was not brought by one stockholder against another to recover for corporate losses, and that the covenant of the defendant to devote his whole time and attention to the business of the corporation was personal to the plaintiff. They also held in effect that said covenant required the defendant to continue with the corporation for a reasonable time, and that it was a question of fact for the jury to decide "whether the agreement was broken by the defendant to the damage of the plaintiff." ( 140 App. Div. 33.)
The defendant claims that while the corporation was not bound by the agreement entered into between its promoters before it was organized it had the power when incorporated to ratify the contract, which, on the happening of that event, became its property so far as it applied to the corporate business and could be enforced by it or against it. He further claims that just before the corporation was formed the plaintiff owned an interest in the copartnership assets worth $3,400 and had the sum of $400 in money, while at the same time the defendant had an interest in the copartnership assets worth $6,800 and had the sum of $800 in money; that pursuant to the contract between the promoters of which the corporation is presumed to have had knowledge, as soon as it was incorporated they transferred to it their respective interests in the firm property and paid over to it said sums of money; that the corporation promptly accepted said transfers, employed the promoters, who were also the incorporators, at the salaries provided, and thus adopted the contract and made it its own; that the promoters' agreement thereupon became the property of the corporation and imposed upon it a corresponding liability; that the legal interest of the promoters therein then ceased and in the place of such interest and of the property and money transferred they simply owned shares of stock in the corporation; that thenceforward their sole interest was that of stockholders, and that for any subsequent breach by either of the provisions relating to corporate matters the only remedy of the other was through the corporation in an action brought by it, or if it refused to act, or was under hostile control, by a representative action brought by one stockholder in behalf of all, the corporation being made a party defendant.
Much could be said in support of this theory, but a majority of the judges prefer not to consider it, as the order appealed from must be reversed in any event upon another ground.
The covenant sued upon is as follows: "The said Carmelo Gugino further agrees to devote his whole time and attention to the said corporation business, and is to receive the weekly salary of twenty dollars." It is to be observed that no period of service was specified, and even if the stipulation as to "the weekly salary" implies a hiring by the week it would not aid the plaintiff.
The effect of a general contract of hiring, no time being specified, varies in different jurisdictions. In England it is presumed to be a hiring for a year regardless of the nature of the service, unless there is a custom relating to the subject and it appears that the contract was made with reference to the custom. ( Fawcett v. Cash, 3 Nev. Man. 177; Littey v. Elwin, 2 Ad. El. 742; Davis v. Marshall, 4 L.T. [N.S.] 216.) In some states a stipulation as to the method of payment, such as weekly, monthly or yearly, is held to denote the period of service contracted for. ( Tatterson v. Suffolk Mfg. Co., 106 Mass. 56; Franklin Mining Co. v. Harris, 24 Mich. 116; Beach v. Mullin, 34 N.J. Law, 343.) In this state the rule is settled that unless a definite period of service is specified in the contract, the hiring is at will and the master has the right to discharge and the servant to leave at any time. In Martin v. New York Life Ins. Co. ( 148 N.Y. 117) the defendant employed the plaintiff to take charge of its real estate department at a salary of $5,000 a year. Subsequently his salary was raised to $6,500 and finally to $10,000 a year, payable monthly. We held that the hiring was at will and that the contract could be terminated at any time by either party. Judge BARTLETT, speaking for the court, adopted the language used by Mr. Wood in section 136 of his work on Master and Servant, as follows: "The rule is inflexible, that a general or indefinite hiring is prima facie a hiring at will; and if the servant seeks to make it out a yearly hiring, the burden is upon him to establish it by proof. A hiring at so much a day, week, month or year, no time being specified, is an indefinite hiring, and no presumption attaches that it was for a day even, but only at the rate fixed for whatever time the party may serve. * * * A contract to pay one $2,500 a year for services is not a contract for a year, but a contract to pay at the rate of $2,500 a year for services actually rendered, and is determinable at will by either party. Thus it will be seen that the fact that the compensation is measured at so much a day, month or year does not necessarily make such hiring a hiring for a day, month or year, but that in all such cases the contract may be put an end to by either party at any time, unless the time is fixed, and a recovery had, at the rate fixed for the services actually rendered." (p. 121.)
This rule was deliberately adopted, all the judges concurring, to settle the differences of opinion which had prevailed in the lower courts. It applies to the contract before us and must control the decision of this appeal, unless the theory of the Appellate Division is correct, that the covenant, under the circumstances, means a hiring for a reasonable time. No authority was cited by the learned court in support of this position. As the contract is in writing, it is presumed to express all that the parties intended. No parol evidence was offered to explain any latent ambiguity. No contract can be implied, because the express contract covers the entire subject-matter. There is nothing in the context to enlarge the covenant, and no stipulation inconsistent with a hiring at will. Even when the contract is read in the light of the surrounding circumstances that the defendant had much experience in the business and the plaintiff none, it does not change the hiring from an unspecified into a specified period of service, or to one for a reasonable time. The other attending circumstance that the interest of the defendant in the business was double that of the plaintiff was doubtless regarded as enough to hold him in his position as manager. When the parties contracted for a hiring at will it is presumed that they meant a hiring at will, and that if they had intended a hiring for a reasonable time they would have said so. Whether the covenant was personal to the plaintiff or finally passed to the corporation, either party could end the service at any time. The right of the master to discharge and of the servant to leave was absolute.
We find no error in the record that justified the action of the Appellate Division, and their order must, therefore, be reversed, and the judgment of the Trial Term affirmed, with costs in both courts.
CULLEN, Ch. J., GRAY, HAIGHT, WERNER, HISCOCK and COLLIN, JJ., concur.
Order reversed, etc.