Case ID: ad_107/html/0358-01.html
Source: Caselaw Access Project
Author: {"author": "Rich, J.: Hirschberg, P. J. (concurring) :", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

William D. Baker, Respondent, v. D. Appleton & Company, Appellant.
    
      Master and servant—when a contract of employment by the year is transferred from a firm to a corporation — a discharge by a receiver of the corporation will sustain an action by the employee against a new corporation assuming the obligations of the insolvent one — effect of the direction of a verdict at the request of both parties.
    
    One William D. Baker was on November 16. 1883, employed by the firm of D. Appleton & Go. by the year, beginning December 1, 1883, at an annual salary of §5,;000. Baker continued with said firm until March, 1897. when the said firm transferred to the corporation of D. Appleton & Co. all its assets, business and property, subject, however, to the payment of the business indebtedness of said firm. The corporation retained Baker for the balance of the year 1897 without any agreement between him and it as to his compensation or the duration of the term of his employment, and at the end of the year credited him upon its books with the precise sum which the firm of D„ Appleton & Co. had agreed to pay him as annual salary, such credit being designated as “ salary for the year.” Baker thereafter continued in the employ of the corporation, rendering the same services at the same compensation, without any new arrangement or agreement as to his compensation or as to the duration of his employment until March -21, 1900, when the corporation of D. Appleton & Co. passed into the hands of a receiver who, on that day, discharged Baker. On September 24, 1900, a second corporation known as D. Appleton & Co. was incorporated, to whom the said receiver transferred all the assets and property of the first corporation known as D. Appleton & Co., “Subject, nevertheless, to the payihent of the business indebtedness of this Company and of J. Hampden Dougherty as Receiver of this Company, all of which indebtedness, principal and interest, the party of the second part hereby assumes and covenants to pay as a part of the consideration for this sale and conveyance.”
    
      
      Held, that the facts justified a finding that Baker’s original employment by the firm of D. Appleton & Co. was for one year, viz., from December 1, 1883, to December 1, 1884, and that such contract was continued from year to year by the said firm;
    That upon the transfer of the business of said firm to the first corporation of D Appleton & Co. such contract of employment was assumed by it and was renewed by it from year to year; that it was in force at the time when Baker was discharged by the receiver;
    That the second corporation of D. Appleton & Co., when it succeeded to the first corporation of that name, had assumed liability for the damages sustained by Baker in consequence of the breach of his contract of employment, caused by the receiver’s act in discharging him.
    When a verdict is directed by the court, after both parties have requested such direction, and the unsuccessful party has not asked to go to the jury, the decision of the trial justice upon the facts hag the same conclusive effect upon appeal as if the verdict had been found by the jury upon submission of the case to them. All facts and inferences necessary to support the judgment, which could fairly have been derived from the proof given, must be deemed to have been found in favor of the successful party.
    Appeal by the defendant, D. Appleton & Company, from a judgment of the Supreme Court in favor of the plaintiff, entered in the office of the clerk of the county of Westchester on the 24th day of December, 1902, upon the verdict of a jury rendered by direction of the court, and also from an order entered in said clerk’s office on the 18th day of December, 1902, denying the defendant’s motion for a new trial made upon the minutes.
    
      William V. Rowe [ William F. Corliss with him on the brief], for the appellant.
    
      Jabish Holmes, Jr., for the respondent.
   Rich, J.:

This is an appeal from a judgment of the trial court in favor of the plaintiff, entered upon the direction of a verdict at the close of plaintiff’s case and from an order denying defendant’s motion for a new trial. Prior to November, 1888, William H. Appleton, Daniel Sidney Appleton, William W. Appleton and Daniel Appleton were engaged in business as copartners under the- firm name and style of D Appleton & Co., and the plaintiff, who had been the manager of the business of the copartnership at Chicago, Ill., was, on the 16th day of November, 1883, employed by William H. Appleton by the year beginning December 1, 1883, at an annual salary of $5,000 and transferred to the city of New York. He continued with the copartnership firm till March, 1897, when the corporation of D. Appleton & Co. was formed. After that he remained in the employ of the corporation at the same compensation, and continued to render the same services, with no new (or actual) arrangement or agreement, however, as to his compensation or the duration of the term of his employment. On or about March 21, 1900, the corporation of D. Appleton & Co. passed.into the hands of a receiver, who, on that day, discharged the plaintiff and terminated his employment.. On September twenty-fourth of that year the defendant was incorporated under the laws of the State of New York, and in October said receiver transferred to the defendant in this action all of the assets and property of the corporation that came into his possession, Subject, nevertheless, to the payment of the business indebtedness of this Company and of J. Hampden Dougherty as Receiver of this Company, all of which indebtedness, principal and interest, the party of the second part hereby assumes and covenants to pay as a part of the consideration for this sale and conveyance.” The plaintiff brings this action to recover the unpaid salary accruing during the year 1900, subsequent to his discharge, upon the theory that his original employment by the firm of D. Appleton & Co. was for one year — from December 1, 1883, to December 1, 1884—and that such contract was continued from year to year, and that m each successive year thereafter he continued in the employ of the firm and first corporation, rendering the same services and receiving the same compensation: At the close of the evidence counsel for the defendant moved for the dismissal of the complaint upon the ground that there was no proof of an original hiring by the firm of D. Appleton & Co. of the plaintiff for a term of one year; that there was no proof of the hiring by the corporation of D. Appleton & Co., organized in 1897, of the plaintiff for a term of one year ; that there was no evidence upon which a presumption of either, law or fact could be based as to such hiring' by the corporation, which motion was denied and exception taken. Defendant then moved for the direction of a verdict in its favor. The plaintiff also moved for the direction of a verdict. This motion was granted, to which ruling and the denial of his motion counsel for defendant excepted, but did not request the court to submit any question to the jury.

It is the well-settled law of this State that when a verdict is directed by the court, after both parties have requested such direction, and the unsuccessful party has not asked to go to the jury, the decision of the trial justice upon the facts has the same conclusive effect upon appeal as if the verdict had been found by the jury upon submission of the case to them. (Adams v. Roscoe Lumber Co., 159 N. Y. 176.) All facts and inferences necessary to support the judgment, which could fairly have been derived from the proof given, must be deemed to have been found in favor of plaintiff, and our inquiry is limited, on this branch of the case, to the determination of whether such findings are justified by the evidence to an extent sufficient to support the judgment. (Davis v. True, 89 App. Div. 319.)

If the action were between the plaintiff and the firm of D. Appleton & Co. there would be no ground for contention, but it is claimed that, granting this, the evidence is insufficient to charge the defendant with the knowledge imputable to the firm, and does not furnish a sufficient or proper foundation for such conclusions of law or fact as is necessary to establish the liability of defendant in this action, and the question thus presented for our consideration is whether the evidence justified the conclusion reached by the trial justice that there was an existing yearly contract between the first corporation of D. Appleton & Co. and the plaintiff, which was renewed yearly during the existence of such corporation and operative and in force at the time of plaintiff’s discharge, and if so, whether the damages sustained by plaintiff by its breach were assumed by defendant when it succeeded the first corporation.

As between the plaintiff and the firm the latter were chargeable with knowledge of the contract made by the plaintiff with one of its members, to the extent of fixing the liability of the firm for damages resulting from its breach. Although the question presented is a close one and not entirely free from doubt, we are of the opinion that the liability assumed by the corporation was not limited to the payment of the existing indebtedness of the firm it succeeded. A fair construction of the instrument under which the property of the firm was transferred to the corporation charges the corporation, as matter of law, with knowledge of existing contracts of the firm, and the obligations and liabilities attaching to such contracts were assumed by the corporation. As to such contracts the effect of the transfer and execution of the instrument referred to was to substitute the corporation in the place of the firm-, with all the knowledge. that the firm had or was chargeable with regarding them and with all the liabilities arising therefrom that rested upon the firm.

The corporation became charged with knowledge of the plaintiff’s original contract; that it had been renewed from year to year ; that he was then in the employ of the firm under a yearly contract expiring on December 1, 1897, at an annual salary of $5,000, and his retention after that date, under the circumstances disclosed by the evidence, renewed the existing yearly contract which became operative and binding upon both parties until December 1, 1898.

. The contract was on each December first thereafter renewed by the retention of plaintiff at the same rate of compensation, and at the time of his discharge was an existing valid contract by the- provisions of which he was entitled to employment by the corporation until December 1, 1900, and to compensation for his services during that period of time at the rate of $5,000 per year.

It necessarily follows that his discharge without justifiable cause-on March 21, 1900, was a breach of the contract, and for the damages resulting therefrom the first corporation was liable. This obligation and liability the defendant assumed when it succeeded the first corporation.

The learned trial justice was justified in directing a verdict for the plaintiff; the judgment is supported by the evidence, and the order appealed from .must be affirmed, with costs.

Bartlett and Woodward, JJ., concurred; Jerks, J., not voting.

Hirschberg, P. J. (concurring) :

I concur in the view of this case which has been adopted by Mr. Justice Rich. The leading cases in the Court of Appeals on the duration of an indefinite contract of hiring are Adams v. Fitzpatrick (125 N. Y. 124) and Martin v. Insurance Co. (148 id. 117). In the Martin case it was held that an original hiring where no time was specified was only a hiring at will notwithstanding the agreement was for the payment of compensation at a yearly rate. In the Adams case it was held that where there was a hiring for the fixed period of a year, it would be presumed on continuance in the employment after the expiration of the year, without further agreement, that the parties had assented to renew the engagement for a like period. This is m harmony with the. prior decisions of the courts in this State, and the rule asserted has been often followed. ( Wallace v. Devlin, 36 Hun, 275 ; Dean v. Woodward, 52 id. 421, 432; Ball v. Stover, 82 id. 460; Lichtenhein v. Fisher, 87 id. 397; Hotchkiss v. Godkin, 63 App. Div. 468; Brightson v. Claflin Co., 84 id. 557.) Under these decisions it cannot be doubted that when the members of the firm incorporated their business in March, 1897, the firm was under a legal obligation to retain the plaintiff in its service that year, being the fourteenth consecutive year of his employment, under no other contract 'than an agreement for the first year as a fixed and definite period and at an annual salary renewed from year to year by continuance in the service without change in the terms of the employment. As the firm then ceased doing business, it is equally beyond doubt that it remained under a legal obligation to make good to him whatever loss might be sustained by reason of the deprivation of employment nine months before the expiration of the term.

It is conceded that the corporation in March, .1897, on taking over the property and business of the firm, duly assumed its business obligations. The form of the assumption is not disclosed by the record, the parties having stipulated on the trial in general terms that the transaction was accomplished in this way: '' The firm of D Appleton & Company wrote a letter to the corporation offering to sell and transfer to that corporation all its assets, business and property subject to the payment of the business indebtedness of said firm, and the corporation passed a resolution agreeing to purchase the assets, business and so forth of the firm subject to such indebtedness of said firm to be assumed by the corporation.” The corporation retained the plaintiff for the year 1897 without any agreement between him and it, and credited him upon their boobs at the end of the year the precise sum which the firm had agreéd to pay him as annual salary and credited it to him as “ salary for the year.” In view of the nature of the plaintiff’s services, and the importance to both parties of an engagement for some definite period; in view of the fact that the' transfer of the business was practically only the continuance, of it by the same men and with the same capital, although in an altered form; in view of the fact that the plaintiff’s services were continued with the. corporation during' the remainder of the year 1897 and during subsequent years precisely the same both in scope and compensation as they had been rendered for years to the firm; and in view of the manifest object of "the general stipulation as to the terms of the transfer of the business, I do not think a court would be warranted in narrowing the expression of “the business indebtedness of said firm” to the mere debts as such which may have been recorded upon the- books, but that, on the contrary, it may be readily found as a fact that the language used, whatever it may have been, was intended and understood by the parties' to embrace the contract obligations of the firm incident to and connected with the conduct of its business, including the firm’s business contract with the plaintiff.. That contract was presumably of equal benefit to the contracting parties, and, in the absence of anything indicating a contrary intent, the right to the exclusive control of the plaintiff’s services for the balance of the year 1897 may possibly have been deemed to have been included among “ the assets, business and so forth of the firm ” which the corporation acquired by its" purchase.

If the corporation thus acquired and assumed the plaintiff’s contract with the firm to complete the employment for the year 1897 (as it certainly did carry it out in fact) I cannot see why, at the end of that year, the corporation was not in the same position logically as if it had made the bargain with the plaintiff for that year’s work. It assumed his contract whatever the terms may have been, and could not, without inquiry, deny knowledge of the nature and extent of the terms. It was chargeable, in any event, with the knowledge of such facts as inquiry would have disclosed. ( Williamson v. Brown, 15 N. Y. 354; Reed v. Gannon, 50 id. 345 ; Ellis v. Horrman, 90 id. 466; Fruhauf v. Bendheim, 127 id. 587.) If at the end of the year 1897, the corporation desired that the plaintiff should continue his services at will instead of under an annual contract, good faith required that some notice or announcement should have been given or made of the change, but he was kept until the receivership in 1900, credited on the books each year with the same annual salary, and on his discharge in that year was clearly entitled to claim whatever loss might result to him during the remainder of the year by reason of that act.

That the defendant corporation was created for the purpose of reorganizing the business of the first corporation and that on the purchase of the property of that corporation from the receiver it expressly assumed all its liabilities of whatever nature, is beyond dispute. The facts are so set forth in the complaint and, not being denied in the answer, are to be regarded as admitted.

Bartlett and Woodward, JJ., concurred.

Judgment and order affirmed, with costs;