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De Pova v. Company.

decided.: April 2, 1958.


Author: Goodrich

Before GOODRICH, McLAUGHLIN and HASTIE, Circuit Judges.

GOODRICH, Circuit Judge.

This is an appeal from a judgment for the defendant entered at the close of the plaintiff's case in a suit for the breach of an employment contract. The case is in federal court by virtue of diversity jurisdiction only and matters of state law are, as a matter of course by now, settled by the appropriate state authorities. The defendant is a New Jersey corporation; the case was tried in the District of New Jersey; important operative facts occurred in New York and Pennsylvania. If there are conflict of laws questions involved, the New Jersey rule governs. Klaxon Co. v. Stentor Electric Mfg. Co., 1941, 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477.

Since judgment was rendered against the plaintiff at the end of his case he has, on this appeal, the benefit of all the evidence in his favor and such inferences as may fairly be drawn therefrom. In stating the facts of the case we taken his evidence as true, but only, of course, for the purpose of this appeal. To win finally the plaintiff will have to prove his case to the satisfaction of the trier of the fact whether court or jury.

The plaintiff, Herman A. De Pova, was employed by the defendant in 1954 for a year. The arrangement was concluded at a conference in New York between the plaintiff and Lowell Birrell, at that time a director and chairman of the Executive Committee of the defendant company. The plaintiff was to work at $20,000 per year, compensation retroactive to January 1, 1954, until Birrell "was satisfied I was worth more." Plaintiff went to work for the company beginning, as he was directed to do, by making a survey to see why the company was losing instead of making money. He made frequent reports to Birrell and, in August of 1954, summarized his findings before the Board of Directors at the request of Virgil Dardi, the Chairman. The plaintiff was requested at this meeting and was authorized by the Board to assume the duties of Dardi's assistant and general manager. Thereafter, under his supervision the company's position began to improve. The plaintiff was able to report in December of 1954 that the defendant company would be operating profitably at the end of the first quarter of 1955. This proved to be true.

The plaintiff continued his work for the defendant in 1955. In March of that year he was offered an advantageous contract of employment with a concern called Erie Forge and Steel Company. He discussed this offer with Dardi who said he would propose to Birrell an increase in the plaintiff's salary for the remainder of 1955 to $35,000 per annum plus ten per cent of the net operating profits. Following this conversation, a meeting was held in Birrell's suite in a New York hotel. Birrell approved of the tentative arrangement, expressed pleasure with the plaintiff's conduct of the company affairs and added that the plaintiff should be given some options on stocks in companies that Birrell represented at the time. This last item has no significance in this lawsuit. It is mentioned only as part of the complete approval which plaintiff's work for the defendant met with on the part of the Acting President-Chairman of the Executive Committee of the Board of Directors and the Chairman of the Board of the company.

The plaintiff never got his increased compensation. The plaintiff never got his promised ten per cent of the net operating profits.Birrell resigned as Director and Chairman of the Executive Committee in August, 1955. Plaintiff was discharged by the defendant in the middle of October, 1955, and was not paid any salary for the final two and one-half months of that year. There is no evidence that the Board of Directors passed upon his discharge and no minute of the Board reflecting any action relating to the discharge. The plaintiff was told that the business had been sold to another company.

So much for the facts from the plaintiff's point of view. Now we turn to the legal questions.

I. Was There Any Breach of a Contract of Employment?

The defendant's argument hints at a lack of tenure for the plaintiff alleging that he was asked to come in for a survey of defendant's operations, that the contract was indefinite as to length and, therefore, he was dischargeable at will. But there is direct testimony from the plaintiff that he was originally hired for a year. He says so, in so many words. Furthermore, his compensation was fixed on an annual, not a per diem, basis. See 1 Williston, Contracts § 39, at 106-09 (rev. ed. 1936).

We now turn to the year 1955. The plaintiff continued to work for the company and was paid on the same basis as he had been before. Dardi, on December 20, 1954, wrote the plaintiff that he looked "forward to working with you in 1955." We think there is enough here to justify the trier of the fact to come to the conclusion that the plaintiff had an annual contract for the year 1955. See id. § 90, at 255. In that case he should be entitled to recover the difference between what he was promised and what he got.

This amount should include at least the unpaid portion of his original $20,000 salary.The defendant, however, says that this claim is not open to the plaintiff on the pleadings. We do not find this position to be maintainable and we think that a reading of the complaint will show that.

Does "what he was promised" include the increased compensation which Birrell agreed to give him at that meeting in New York?

Under the above analysis of this case, the only problem involved as to this question is whether consideration could be found for the additional pay to a man on an annual contract who has not reserved his freedom to ...

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