Roberts v. Mills, 184 N.C. 406 (1922)

Nov. 22, 1922 · Supreme Court of North Carolina
184 N.C. 406


(Filed 22 November, 1922.)

1. Employer and Employee — Master and Servant — Contracts—Consideration — Bonus—Supplementary Contracts.

An offer of a bonus by an employer to such, of Ms employees working for wages by tbe week, as would continue to work for a designated period of months, is a supplementary contract to that by the week, and becomes binding on the promissor, without express agreement by the employee, when the latter continues to work under the inducement offered.

*4072. Same — Discharge of Employee — Damages—Quantum Meruit.

Where an employee by the week continues to work during the period for which his employer has offered a bonus, and is discharged without lawful excuse by the employer before the ending of the term, he is entitled to recover his weekly wage, under his contract relating thereto, to the time of his discharge, and upon his supplementary contract for the bonus to that time upon a quantum, meruit, the question as to whether the employer had a reasonable ground to discharge his employee being for the jury upon conflicting evidence.

3. Same — Husband and Wife.

Where the employees of a manufacturing plant, working for a bonus under the promise of their employer, are husband and wife, living together in the tenant house on the company’s premises, the discharge of the husband accompanied with an order to leave the premises he was occupying with his wife, is an implied discharge of his wife also.

Appeal by plaintiffs from Finley, J., at March Term, 1922, of MeckleNbueg.

Tbe plaintiffs brought this action to recover $46.70, alleged to be due for wages for work for the week ending 13 September, 1920, and for the recovery of $191.83 bonus, and for $553.60 claimed as damages for breach of contract of employment, the same being wages for the period from 13 September, 1920, to 25 December, 1920, at the rate of pay theretofore earned by plaintiff and his wife.

It was admitted that the plaintiffs were in the employment of the defendant working in his cotton mill during January, 1920, and had been employed theretofore for probably two years; that during the early part of January, 1920, the following notice was posted by the defendant in his mill: “15 January, 1920. On 15 November we posted notice stating that we had made preliminary estimate of our accounts for the year 1919, sufficiently definite to warrant our announcing that on 29 December we would make an increase of 10 per cent in the wages of all mill operatives, and also would again pay the 5 per cent bonus at Christmas time in 1920. We have now completed our accounts for 1919, and find that it is possible for us to not only advance wages 10 per cent, which was done on 29 December, but also to pay 10 per cent bonus at Christmas time in 1920 instead of 5 per cent bonus. Therefore, a 10 per cent bonus will be paid at Christmas time in this year to those who have been continuously in the company’s employ since this present month of January. Mays Mills, Incorporated. Maysville, N. C.”

The defendant admitted the claim for $46.70 for wages earned in the week prior to 13 September, 1920, and tendered an offer of judgment for this amount, but denied the right of either of the plaintiffs to recover on account of the claim for bonus or for unearned wages on account of *408alleged breach of contract of employment. The court below gave judgment for the $46.70 admitted by the defendant, and held that neither of the plaintiffs was entitled to recover on the other claims.

From the above judgment the plaintiffs appealed.

Marvin L. Rich and J. F. Flowers for plaintiffs.

Tillett & Guthrie for defendants.

Clark, O. J.

This case presents, for the first time in this Court, the construction of the effect of an offer by employers to extend a bonus to employees provided they remain a specified length of time, which offer is accepted by the employee entering upon his employment upon such inducement. Should the employee fail to execute his part of the agreement by remaining for a specified time, or is dismissed for failure to do efficient work, or for any other good cause he forfeits his claim to the bonus offered. The question here presented is, Can the employer arbitrarily terminate such agreement at any time without legal and sufficient cause.

In this case the evidence of the plaintiff was uncontradicted that he saw the notice of the offer of a bonus of 10 per cent posted in the mill, and thereby he was induced to stay and work until he could draw the bonus; that before the offer of the bonus was made he intended to quit, and would have done so but for its being raised to 10 per cent. His wife and coplaintiff makes the same allegation. There was evidence that the work of the plaintiffs was entirely satisfactory to the employers. He testified that there was no complaint of the work of himself and wife. The foreman, J. D. Norwood, under whom the plaintiff worked, testified that the character of his work was good; that he had no occasion to complain of it, and if there had been any complaint it would have been made to him, and that he had received no complaint in regard to it. He also testified that he had known the plaintiff some four years, and his general reputation was good, and his general reputation as a workman in a cotton mill was good. The witness Robinson, who discharged the plaintiff at the direction of the superintendent, Dawson, stated that he had known Roberts and wife since 1917, and that the work of both was satisfactory to the company. In short, the evidence is that the work of the plaintiff and his wife was entirely satisfactory, and that their discharge was not caused by any dissatisfaction with their work, but because of criticism which Seth Roberts is alleged to have made outside the mill of an officer, but which he denied. Welsh, the chief executive of the mill, testified: “I gave instructions to have Roberts discharged, and my reasons were that he was critical of an officer of the law we had employed there to keep the place clean. I had no other reason.”

*409Tbe plaintiff objected to all tbe testimony relative to tbe matters tbat occurred outside tbe mill and tbat were not in any way connected with bis work, and excepted to tbe refusal of tbe court to exclude sucb testimony. Tbe plaintiffs contend tbat tbe 10 per cent bonus offered was a part of tbe stipulated compensation for work to be performed, and tbat tbe defendant would bave no right to discharge tbe plaintiffs for tbe reason assigned, and thereby defeat tbe plaintiffs in their purpose to remain in tbe mill and work according to tbe offer contained in tbe notice as to all who remained continuously in its employment until Christmas. - They also contended tbat tbe allegations of the conversation outside tbe mill, if true, which they denied, did not authorize their discharge by tbe defendant, there being no complaint as to their work; tbat tbe defendant could not discharge them without any legal reason authorizing them to do so, and tbat in effect they did this, and are liable to tbe plaintiffs for 10 per cent of tbe wages earned at least up to tbe time of tbe discharge as a part of tbe stipulated compensation for tbe work actually done.

Tbe plaintiff also excepted because tbe court instructed tbe jury tbat if they believed tbe evidence and found tbe facts in accordance therewith to answer tbe first issue “No,” and to save trouble tbat be would answer it for them “No.”

There was conflicting evidence as to tbe conversation on account of which tbe plaintiff Eoberts was discharged, and we need not in this case pass upon tbe question whether there was sufficient ground for' discharge for whether there was sucb conversation was a disputed issue of fact, upon which tbe jury alone was competent to pass. Tbe language which, tbe witnesses for tbe defendant testified tbat tbe male plaintiff used, and for using which was discharged, was as follows: Tbe witness Welsh testified tbat be “gave instructions to bave Eoberts discharged, and bis reason was tbat be was critical of an officer of tbe law tbat tbe company bad employed to help keep tbe place clean; tbat be bad no other reason.”

L. E. Parker, witness for tbe defendant, testified tbat be was an employee of tbe mill and superintendent of tbe Sunday School there, and be beard Eoberts, on 20 August, 1920, state, in tbe presence of other employees, “Ob, bell, tbe way they bave Sunday School now they bave not a fitten place to go to. Tbe Bible did not teach us to bave Sunday School tbe way they do; tbat tbe way it was one man should speak at a time and tbe way they bad Sunday School there, it was not fitten to go to, all chattering at one time.” Tbe witness says be told Mr. Brymer about tbat conversation, and Welsh, tbe vice president and general manager, bad Eoberts discharged. Brymer also testified tbat be was a deputy sheriff, and be bad arrested some boys 16 and 17 years old and summoned them to court; tbat on Monday morning thereafter, some *410of these boys being in the crowd, and the matter being mentioned, the plaintiff Roberts spoke up and said: “I consider that a dirty trick for you to be out that time of night bothering the boys. It was not your damned business.” The witness says he told Welsh about this conversation of Roberts. Welsh stated that Parker and Brymer had made the above reports to him and he gave orders to have Roberts discharged.

The plaintiff testified that he did not make the statement that the Sunday School was an unfit place for people to go to. He says that in regard to the boys, he stated to defendant’s witness, “I don’t care if these boys are arrested for gambling, but why do they think they should have a chain-gang sentence? Most of the boys work at night and sleep Saturdays and don’t care to go to bed, and were out there for pastime mostly, and furthermore, they did not bother you.”

The judge, upon this conflicting evidence, instructed the jury that “If the jury believed- the evidence, and find the facts in accordance therewith, then answer the first issue No.’ ” The defendant was entitled to have the jury pass upon the evidence and find the truth of the allegation; and further, whether it justified the discharge of the plaintiff from their employment, on which matter we do not need to express an opinion until the facts are found as to what was said.

In 34 Cyc., 1650, it is said that when there is a reward offered, “When the plaintiff has performed part of the service and is prevented by the offerer, or by those for whose acts he is responsible, from completing the work he is entitled to the whole reward, or at least to a compensation on a quantum meruit.”

It has become a very general policy with large employers of labor to offer a bonus or additional compensation to employees who shall render continuous and efficient service for a specified period of time. This is not a gratuity or gift, but is an offer on the part of the employer, with whom the offer originates in order to procure efficient and faithful service and continuous employment, and when the employee enters upon the service upon that inducement it becomes a supplementary contract of which he cannot be deprived without sufficient cause. In Payne v. U. S., 269 Fed., 873, it is held by the Court of Appeals of the District of Columbia that “A bonus is not a gift or gratuity, but a sum paid for service or upon a consideration, in addition to or in excess of that which would ordinarily be given.”

In Kennicott v. Wayne Co., 16 Wall., 471, the Court approved the following definition from Webster: “It is not a gift or gratuity, but a sum paid-for services, or upon a consideration in addition to or in excess of that which would originally be given.”

In Youngsberg v. Lamberton, 91 Minn., the Court held that “where one party agreed to render service to the other for a year for a fixed *411salary and received as a bonus a percentage of tbe business of bis employer at a specified time, tbe employee, if discharged, bad a right of action accrued up to that time for tbe profits or bonus earned.”

Tbe posting of tbe notice and offer of a bonus for continuous work under tbe circumstances above set out, payable on tbe following Christmas, was a proposal on tbe part of tbe mill and tbe acceptance by tbe plaintiff by setting in to work until tbe end of tbe year, made a contract, provided be did bis work satisfactorily, and tbe discharge of tbe plaintiff, unless for sufficient cause, would amount 'to a breach of tbe contract, and was a wrongful discharge. Tbe defendant could not relieve himself of payment of tbe bonus earned up to that time unless tbe discharge was upon sufficient cause.

In 2 Labatt Master and Servant, 1323, sec. 452, it is held that such bonus is a part of tbe stipulated compensation, and in note 3 it says: “Where it was agreed that tbe servant was to receive a gift of twenty pounds if be remained to a certain date, it was held that tbe jury was entitled to take this into account in assessing tbe amount of damage recoverable for wrongful dismissal.”

In 26 Oyc., 1308, it is said: “When tbe parties mutually terminate a contract of employment before tbe expiration of tbe term, a bonus already earned is recoverable.” Tbe posting of tbe notice was an offer to tbe employees then in tbe mill that if they would remain until tbe end of tbe year they would have tbe 10 per cent bonus. Tbe plaintiffs accepted this offer in good faith, and in good faith entered upon tbe performance of their contract resulting from their acceptance, and tbe employer was liable at least to tbe extent of a quantum meruit if they discharged tbe employee without sufficient cause. Even, therefore, if tbe parties bad agreed to terminate tbe relationship existing between them, tbe employee would-be entitled to tbe bonus earned; 26 Oyc., 1308, above set out. If they were wrongfully discharged under tbe authority of 2 Labatt M. & S., 1323, above quoted, they were entitled to have tbe bonus earned.

Certainly tbe plaintiffs were entitled to have tbe jury pass upon tbe fact whether tbe discharge was justified by their conduct. If tbe jury believed tbe testimony of tbe plaintiffs, their contract, based upon tbe notice and their acceptance of tbe offer therein contained, was breached by tbe defendant without cause.

According to 2 Labatt, p. 1323, tbe so-called bonus was “a part of tbe stipulated compensation,” and tbe defendant having accepted tbe benefit of tbe continued labors of tbe plaintiffs could not deprive them of tbe bonus earned up to that time by discharge from their employment without legal and sufficient grounds. Tbe offer, in accordance with tbe notice, was tbe payment of 10 per cent additional to tbe regular wages *412for those wbo should remain in their service until the following December, and it should have been submitted to a jury whether that contract was breached by the defendant. The fact that the plaintiffs were at liberty to quit work whenever they chose does not alter the case, for by the terms of the offer, which was accepted by the plaintiffs, the latter would lose the bonus of 10 per cent if they Voluntarily left the work before the end of the year. It was, therefore, a breach of the contract if the defendant discharged them and prevented the performance of their part of the contract without cause that would justify the termination of their contract of employment. The jury must first find the facts and then it would be a question of law whether the conduct of the male plaintiff was sufficient ground for his discharge.

The subject is nowhere more fully and clearly discussed than in Zwolanek v. Mfg. Co., 150 Wisconsin, 517, in which it is held that “an offer by an employer to permit his employees to participate in its surplus earnings, provided they were in the regular employ of the employer for 4,500 hours during 100 consecutive weeks, was in the nature of an offer of a reward for constant and continuous service. Such contract may be made orally, or in writing, either to a particular person or class, or to any and all persons complying with its terms. Until the acceptance of such offer by beginning the performance of the service required, it is merely a proposition; but when the offer, including its terms and conditions, is accepted by performance before it lapses or is revoked, it becomes a binding contract, subject to the laws governing contracts generally. Performance of such service constitutes an acceptance; and thereafter the offer cannot be revoked so as to deprive a person who has acted on the faith thereof of compensation. Where a person performing part of the service for which a reward is offered is prevented by the offerer, or those for whose acts he is responsible, he is entitled to the whole reward, or at least compensation on a quantum meruitIn that case the Court, in speaking of this system of offering bonuses to retain experienced labor in their employment for a certain length of time upon the promise of extra compensation, says that such custom, which is now beginning to be very generally adopted, is beneficial to the employer as well as to the employee. This is self-evident, for it is the employer and not the employee who makes the offer, and who continues or discontinues it as he may find it to his interest. The Court in that case says very pertinently of this system: “It tends to induce employees to remain continuously in the employ of the same master, and to render efficient service, so as to minimize the probability of discharge. It also tends to relieve the employer of the annoyance of hiring and breaking in new men to take the place of those who might otherwise voluntarily quit, and to insure a full working force at times when jobs are plentiful and *413labor is scarce; to allow tbe employer in such case to repudiate liability on tbe ground stated would come perilously near conniving at tbe participation of a fraud; and no court should say tbat in sucb case tbe by-law merely affected tbe corporation and not third parties. If tbe corporation desires to have their so-called ‘by-laws’ affect only tbe corporation and its shareholders, then they should refrain from exploiting them to third persons for tbe purpose of inducing sucb persons to act in reliance thereon.

“We regard this law as being simply tbe offer of a reward to employees for constant and continuous service. Tbe defendant made an offer of extra or additional compensation to any employee who performed a certain number of hours service within a given period; provided net profits were, earned, and provided tbe employee did not quit or was not discharged before a stated time. A reward is a sum of money or other compensation offered to tbe public generally, or to a class of persons for tbe performance of a designated service. 34 Cyc., 1730.”

In tbat case tbe Court further said: “It is not necessary tbat tbe person performing this service for which a reward is offered should give notice to tbe offerer tbat be accepts tbe offer; for in sucb case tbe party making tbe offer impliedly dispenses with tbe actual notice and tbe doing of tbe act completes tbe contract,” citing numerous cases. “While tbe mere offer, not assented to, does constitute a contract, an acceptance of tbe terms of an offer of reward by any person who complies therewith by performing this service creates a complete and valid contract, provided tbe performance takes place prior to tbe withdrawal of tbe offer. Acting upon an offer, and complying with its terms and conditions, constitutes an acceptance. Wilson v. Stump (103 Cal., 255), 42 Am. St., 111,” citing a large number of cases to tbe same effect.

“It is manifest tbat tbe statute of frauds has no application to tbe case. Until tbe offer is accepted by beginning performance there is no contract, executory or otherwise. When it is accepted by beginning work tbe obligation is fastened upon tbe defendant to pay what is due under it, and it is not essential tbat tbe employee should inform the employer tbat be relied on tbe offer in undertaking tbe work.”

Tbe Court further held tbat while as a general proposition tbe party making an offer of a reward may withdraw it before it is accepted, tbe offerer of a reward must be held to tbe exercise of good faith and cannot arbitrarily withdraw tbe offer without sufficient cause. Tbe employee, by accepting sucb offer by beginning work, is not obligated to serve a specified time. Tbe penalty is tbat if be quits work, or is discharged for legal cause, be forfeits tbe bonus, for tbe terms of tbe employment are express tbat it must be continuous employment for tbe time specified, *414and there is an implied agreement that during employment be shall in good faith render efficient service and not give legal and sufficient ground for discharge.

It is true the wife in this case was not in terms expressly discharged, /but peremptory order was given to the husband to get out of the house immediately, and this reasonably implied that his wife should go, too. At least, the management so understood it, for they made no demur to her leaving on that ground.

It appears in this case that the contract for employment was by the week, and hence either party could terminate it at the end of any week. The offer of a bonus and its acceptance by entering upon the work was a. supplementary contract for a reward in consideration of the employee remaining in the service for the specified time. It did not change the terms of the contract of employment by the week, but by this agreement the employee, if he failed to remain the specified time, forfeited all claims to the bonus, and on the other hand, if the employer discharged the employee without good and sufficient cause, he was liable to the employee for the bonus lost thereby. Inasmuch as the employee knew that the employment could be terminated at the end of any week, he is entitled, upon such violation of the supplementary contract for continuous service, upon a quantum meruit, for the length of time he served at the rate of 10 per cent on the wages earned up to that date, according to the employer’s offer. The employee is not entitled to recover damages for the wages for the unexpired time for the contract of employment was terminable at the end of any week, nor can he recover the bonus for the unexpired time for the bonus for continuous employment was based upon the continuance of the service, which under his contract the employer could terminate. He is entitled to recover if discharged without legal and sufficient cause the bonus of 10 per cent up to the time of the discharge, for that is the extent of the wrong done him by wrongful discharge.

In this case it should have been left to the jury to determine whether the alleged conversation took place at all, and if so, whether it was good and sufficient cause for the discharge. If it was not, then the plaintiff and his wife are entitled to recover upon a quantum meruit for the bonus up to the time they were wrongfully discharged.

The system of offering bonuses for continuous employment has been adopted by many employers, in their own interest, as well as being a step towards a better understanding between employers and employees. The enforcement of such contract can work no harm to employers, for they can discontinue the practice by failing at any time to renew such offers. Some years ago the hours of employment in industrial establishments in this State, especially in the cotton mills, were unlimited *415by law. By statute tbe hours have been reduced to 60 per week, and most, if not all, of the larger cotton mills voluntarily have reduced this to 56 hours, and also increased the rate of compensation as this defendant has done. The employment of children of any age was formerly permissible, but now is restricted by law. Although there has been no legislation requiring it, many of the factories, at least the most prosperous ones, are fitting up their tenement houses with lights, water, and sewerage, and many have established facilities for attendance on the public schools and church. The adoption of the system of offering a bonus in addition to the regular pay for continuous employment is part of the same system for the amelioration of the dealings between these companies and their employees.

The employee being liable to a forfeiture of all bonus if he quits before the specified time, it would be a breach of faith and, as one of the authorities above quoted says, “perilously near the perpetration of a fraud,” if the employer were not liable for a breach of such supplementary contract on his part to the extent at least of payment of the bonus earned up to the time of the discharge, upon a quantum meruit basis, when he has discharged the employee for whatever motive if the ground was not legal and sufficient for termination of the offer of extra compensation for continuous service in the employer’s service.

New trial.