Summary
In Kovachik v. American Automobile Asso. (1958), 5 Wis.2d 188, at 190, 92 N.W.2d 254, this court in construing an employment contract stated, `Turning to the contract, it not only claims nothing to show an intention to permit termination only for cause, but on the contrary we think it affirmatively authorizes termination at will on three days' notice.
Summary of this case from Matthew v. American Family Mut. Ins. Co.Opinion
September 12, 1958 —
October 7, 1958.
APPEAL from a judgment of the municipal court of Kenosha county: URBAN J. ZIEVERS, Judge. Reversed.
For the appellant there was a brief by Cavanagh, Mittelstaed, Sheldon, Heide Hartley of Kenosha, and oral argument by William A. Sheldon.
For the respondent there was a brief by Robert E. Newman and Lawrence S. Ruetz, both of Kenosha, and oral argument by Mr. Newman.
Action for damages for breach of an employment contract. In 1948 a division of the defendant American Automobile Association (referred to as the "club") employed plaintiff to solicit memberships. A written contract was executed, in which the club agreed to employ plaintiff, to provide him with office space and equipment, and to pay him weekly, as full compensation, commissions on money collected during his term of employment; and plaintiff agreed to devote his full time and best efforts toward obtaining memberships, to observe all rules and regulations prescribed by the club, to contact the office daily, etc. No term of employment was specified.
Six years later, by letter dated July 8, 1954, and received by plaintiff the following day, the club gave plaintiff notice of termination of his employment effective July 12, 1954. The letter stated that plaintiff's refusal to discontinue outside automobile insurance activities had made the step necessary. Plaintiff thereupon commenced this action for damages for breach of the contract of employment. He conceded that all commissions earned by him had been paid. The trial court held that the contract was terminable by the employer only on breach by the employee, and submitted the case to a jury, which rendered a special verdict that the defendant was not justified in terminating the employment, and that plaintiff's damages were $8,500. From judgment entered on the verdict defendant appeals.
We construe the contract of employment as terminable at will, without cause, on three days' written notice. Therefore its termination on such notice gave rise to no cause of action for damages, plaintiff having been paid all commissions earned by him. Accordingly, the judgment must be reversed and the complaint dismissed.
1. This court has long been committed to the proposition that a hiring at some specified amount per week, per month, or per year will be construed as a contract for an indefinite hiring only, which may be terminated at the will of either party, in the absence of facts or contractual provisions showing a contrary intent. Milwaukee Corrugating Co. v. Krueger, 184 Wis. 139, 144-152, 198 N.W. 394; Brooks v. National Equipment Corp. 209 Wis. 198, 200, 244 N.W. 598; Nelson v. La Crosse Trailer Corp. 254 Wis. 414, 417, 37 N.W.2d 63. The same is true, a fortiori, of a contract such as the present one, where the compensation takes the form of commissions based on money collected rather than on a specified period of time.
2. Turning to the contract, it not only contains nothing to show an intention to permit termination only for cause, but on the contrary we think it affirmatively authorizes termination at will on three days' notice. Following is the pertinent provision:
"Both parties agree that this agreement shall cease immediately upon breach of any of its conditions and may be canceled by either party upon three (3) days' written notice. Notice of cancellation may be delivered personally or mailed to the last home address given by representative to the club, and this agreement shall be canceled three (3) days after the mailing of the above-mentioned notice."
The first sentence quoted deals with two different situations, and provides (1) that the contract shall terminate immediately on breach, and also provides, separately, (2) that it may be terminated by either party on three days' written notice. If, as contended by appellant, the provision for cancellation on notice applies only in case of breach, the preceding provision for immediate cessation upon breach would be surplusage. Other things being equal, a construction which gives effect to every word of the contract should be preferred to one which results in surplusage. Knuth v. Fidelity Casualty Co. 275 Wis. 603, 607, 83 N.W.2d 126. The cancellation provision cannot be construed as only establishing procedure for effectuating the immediate termination specified to occur on breach, for it says that either party may cancel on three days' notice, whereas normally on breach only the wronged party may terminate.
Our interpretation is fortified by the fact that respondent's contrary construction could make the contract binding on both parties for the duration of the plaintiff's working life or defendant's operating existence, in the absence of breach. It is most unlikely that either party intended to be bound for a period of such potential length.
We consider the terms of the contract so clear that there is no occasion to apply the rule that ambiguities in a contract are to be construed against the party by or for whom it was drafted.
3. There is no evidence in the record of extrinsic facts showing that the parties intended to make a contract terminable only for cause. Appellant argues that the statement in the club's letter giving him notice of termination, that his refusal to discontinue his outside automobile insurance activities made the termination necessary, shows that defendant believed the contract to be terminable only for cause. We cannot interpret it as anything but a courteous and natural statement of the reason for exercising an undoubted right to terminate at will. Were it otherwise, a letter of that sort written by one party six years after making the contract could hardly qualify as persuasive evidence of a mutual understanding on the earlier date contrary to that set forth in the written instrument.
By the Court. — Judgment reversed, with directions to dismiss the complaint.
MARTIN, C.J., and CURRIE, J., took no part.