Case Name: John L. Douglass, App'lt, v. The Merchants' Insurance Company of New York, Resp't
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1890-02-25
Citations: 29 N.Y. St. Rep. 944
Docket Number: 
Parties: John L. Douglass, App’lt, v. The Merchants’ Insurance Company of New York, Resp’t.
Judges: 
Reporter: New York State Reporter
Volume: 29
Pages: 944–946

Head Matter:
John L. Douglass, App’lt, v. The Merchants’ Insurance Company of New York, Resp’t.
(Court of Appeals, Second Division,
Filed February 25, 1890.)
(Corporations—Employment op secretary-—Removal.
Plaintiff had served as secretary for defendant for twenty-four years at an annual salary, and on January 19, 1885, was removed from office by the directors, and brought this action for the salary for the remaining part of the current year. In 1850 the board had adopted a by-law, of which the secretary had knowledge, providing that the officers should hold their offices during the pleasure of the board of directors, and until the appointment of a successor, etc. Held, that the by-law entered into the contract of employment, and the power of removal reserved by it was properly exercised.
■Appeal from judgment of the general term of the supreme ■court in the first judicial department, affirming judgment in favor .of the defendant.
Wm. W Badger, for app’lt; Francis Lynde Stetson, for resp’t.
Affirming 9 N. Y. State Rep., 302.

Opinion:
Bradley, J.
The plaintiff on or about the 1st day of January, 1857, went into the service of the defendant as secretary, at the yearly salary of $1,500; his salary, from time to time changed, was on the 1st of January, 1884, increased to $4,500 a year. He continued as such secretary in the service of the defendant at that .annual salary until January 19, 1885, when he was, by the board of directors of the defendant, removed from the office of secretary. .He, having been paid up to February 1st, brought this action to •recover as damages a sum equal to the salary for the residue, or .eleven months, of the then current year. This claim is made for -the alleged reason that he was in the defendant's service from year to year; and that the defendant could not, without liability to him for damages, discharge him from its service until the end •of any year upon which he had entered in such service. When .a party enters into service of another at a stipulated annual compensation or salary and continues beyond a year, the presumption is that he does so on the same terms. Huntingdon v. Claffin, 38 N. Y., 182; Vail v. Jersey Little Falls Co., 32 Barb., 564; Ranck v. Albright, 36 Pa. St., 367; Tatterson v. Suffolk Mfg. Co., 106 Mass., 56.
There is no evidence that the original hiring was for a year, other than in the fact that the plaintiff's salary was annual. The plaintiff, for his evidence in that respect, relied solely upon -the admission in the defendant's answer. By the answer it is .alleged that a by-law of the defendant, known to the plaintiff, was part of the contract of employment under which he went into and continued in its service. This by-law was adopted and went into effect in 1850, and provided that " the president, vice-president, . secretary, surveyor and clerks, shall respectively hold their offices during the pleasure of the board of directors, and until the appointment of a successor either permanent or pro tern, and no officer or clerk shall be removed without a concurrence of a majority of the whole board of directors." A new edition of the by-laws, including this one, was printed and issued in 1861, under the direction of a committee, in a book in which appeared the name of the plaintiff as secretary. The plaintiff had or was chargeable with knowledge of this by law, and it may be assumed that it constituted part of the contract of his employment under which he served as secretary of the defendant. And the main question is, whether the defendant had the right in the manner mentioned in the by-law, without cause, to terminate the plaintiff's service as secretary before the end of the current year, and not subject itself to liability to him for damages as for breach of contract. It is urged on the part of the plaintiff that he was in service under a contract for a year, and that the by-law was not in the way of making such a contract effectual; and when made, the pleasure of removal could be exercised to take effect only at the expiration of the year.
In Soldiers' Orphan Home v. Shaffer, 63 Ill., 243, cited in support of that proposition, the plaintiff's charter provided that the trustees might remove any officer or employee if the interests of the institution required the removal. The plaintiff there was by special contract hired for a year, and the court held that a corporation loses its general power of removal contained in its charter if it makes a special contract. It may be observed that in the case cited, the power of removal was not unqualified or to be exercised at pleasure. And Martino v. Commerce Fire Ins. Co., 15 J. & S., 520, it was held that the by-laws of the defendant, providing that officers, clerks, etc., should be elected during the pleasure of the board, did not deny to the defendant the power, by special contract, to overcome it or set it aside.
It may be assumed for the purposes of the question that this is within the power of the board which creates the by-laws, and that when it appears that a special contract is made by such board, in terms which indicate an inteht of the parties to exclude from it the operation of the by-laws having relation to the right of terminating service, such contract of employment may not be subject to it - The employment of the plaintiff does not come within that proposition. He went into the defendant's service upwards of twenty-eight years before the time of his removal. There does not appear to have been any special contract as to term of service. The compensation was designated as a yearly salary, which the plaintiff in his complaint alleges was payable in monthly or quarterly installments. This would indicate that his service for a year was contemplated, and the terms would presumptively be the same each subsequent year except so far as modified by the parties, and without some reserved right of termination it may be assumed that his service was not terminable without cause until the end of any current year. Williams v. Byrne, 7 Adol. & Ellis, 177.
But here was no special contract which indicated any purpose to abridge the right of removal at pleasure given by the by-law, which entered into the contract of employment, and subject to which the plaintiff went into and continued in the defendant's service until this reserved power was exercised. Hór is, it seen that this right oí removal was qualified in respect to the time of its exercise. Our attention is called to but very little judicial authority upon this question. In Hunter v. Sun Mut. Ins. Co., 26 La. Ann., 13, the plaintiff was employed by the defendant for one year from in February, 1869, which he served, and on the expiration of that term he was employed by the defendant for another year. He was discharged in April of the second year without cause, and brought his action to recover damages for alleged breach of the contract. There was a by-law of the defendant, in terms, giving the right to remove its officers at pleasure. It was there held that the officer so employed was presumed to have known of the existence of the by-law, that it was part of the contract, and the law governing their rights in that respect, and "therefore the plaintiff knew the precarious tenure of his position " and was not entitled to recover.
In Smith v. Buffalo Street R. R. Co.. 35 Hun, 204, the question as to the right to discharge an employee within the term arose upon a provision in the contract that the employer might discharge him "at any time." It was held that- the right to discharge him was unqualified. In the present case the power of removal at any time must be deemed to have been reserved in the contract of employment. And it seems to have been properly exercised. It was done at a meeting of the board of directors by concurrence of a majority of the whole board, and a secretary pro tern, was then appointed, and he was made permanent secretary on the tenth of the following month. Ho question was made on the trial as to the regularity of the meeting of the board at which, the removal was made. Hor does there appear in the record any support for the contention that it was not a meeting at which the removal may have been accomplished.
The judgment should be affirmed.
All concur.