Court Opinion

ID: 5775690
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:40:34.9995+00
Date Added: 2024-06-11T08:41:52.857393
License: Public Domain

McGrrvERN, J. (dissenting).
I fear the majority misconstrue the nature and purpose of the contract. We have here no ordinary master-servant relationship. An application of the general rules applicable to that relationship lends no substantial support to a solution of the problem presented by this appeal. Here, we have an executive employment contract, on a high echelon, of a former owner of a successful enterprise sold by him to the defendant, simultaneously with the contract of employment. The sale and the employment contract are one. A “ package deal”. So regarded by the briefs and by the concessions on oral argument. They were integral and indivisible. There would have been no bargain, no acquisition, save for the promises of enduring employment. “ So read in the context of their execution, these two documents are not separate, distinct and unrelated as the petitioner would have it, but rather they are two transactionally integrated pieces of a single larger agreement having as its purpose the securing of appellant’s employment by the petitioner.” (Matter of ITT Avis v. Tuttle, 27 N Y 2d 571, 576, dissenting opinion of Burke, J.) It follows, if the employment contract is breached, the plaintiff is entitled to damages, as prayed for in his complaint.
And the trial court has found a breach of the employment agreement.
In my view, we should not reject out of hand this result achieved by the trial court. ‘ ‘ Evaluations and determinations *219reached de novo at the appellate level, amounting, in effect, to complete redeterminations of basic issues, are usually best avoided. (Cf. Power v. Falk, 15 A D 2d 216, 218, supra; Kundla v. Symans, 9 A D 2d 1021.) ” (Conklin, v. State of New York, 22 A D 2d 481, 483.)
Yet the majority have not only reversed the trier of the facts, they have dismissed the plaintiff’s complaint.
To the contrary, I believe the Trial Judge properly found a breach of the employment contract. (See 6 Williston, Contracts [3d ed.], § 863, p. 275; Converse v. Schmidlapp, 264 App. Div. 381, affd. 290 N. Y. 834.) And this finding warrants damages (Lauer v. Raymond, 190 App. Div. 319, 327).
The testimony of the defendants’ witnesses not only leaves unchallenged but confirms the claim of the plaintiff Rudman that he was induced to enter into the dual agreements by the promises of the representatives of Cowles that he was to be the “ number one man * * * in over-all charge of the editorial aspects of the test book division ” to be created by Cowles upon consummation of the acquisition agreement. The endeavor of the defendants to insulate the acquisition agreement against a finding of a breach of the employment agreement is not persuasive. At the very least, the record establishes plaintiffs were induced to enter into the transaction by material misrepresentations which even if not fraudulent, were actionable. (See Dennerlein v. Martin, 247 N. Y. 145; Converse v. Schmidlapp, supra, and Lauer v. Raymond, supra.)
Prior to the execution of the formal agreements, Cowles’ representatives told plaintiff Rudman that he would be “ the editor in charge ’ ’ of the test book operation and the 11 number one man” in the test book division. Furthermore, although the employment agreement required the employment of plaintiff Rudman for only a period of five years, with an option to defendant Cowles to renew for a further period of five years, the plaintiff Rudman was told and wras led to believe that his employment would be a “ permanent marriage ” until his normal retirement age.
Although the great expectations of Rudman may be viewed askance, we cannot disregard his reasonable and justifiable expectation as to the nature of the position which he was to enjoy under the employment agreement, at least for the period of time specifically designated therein, together with its concomitant prestige and status.
True, his duties were spaciously described as “ executive and administrative services * * * assigned to him by the Company’s [Cowles’] Board of Directors ”. Yet, nothing in *220this generalized description gives any intimation that his duties were to be other than the duties of ‘ ‘ the number one ’ ’ man in charge of the editorial division of the test book division. The ambiguous description of the services fully warranted receipt of the objectionless testimonial admissions of the defendants relating to these duties. I perceive no obscurities in the nature of the promises made to plaintiff Jack Rudman, what he was led to believe, and the defendants’ breach of these promises.
The evidence reveals that, notwithstanding the promise that he would be the number one editor in charge, he was directed to relinquish his editorial privileges, or alternatively subject his views to the editorial judgment of a relatively young and inexperienced woman, earning less than half of his salary, who possessed no comparable status in the organization. The destruction of his editorial privileges may not be justified on the theory that Mrs. Klagsbrun was an alter ego of the senior executives, whose supervision he agreed upon. This theory ignores the realities of the situation, even assuming that this young woman was acting under the authorization of her immediate superior, one David Whitney, whose status was that of a vice-president of the test book division, College Publishing Corporation, just as plaintiff Rudman was. In this connection, it must be noted that Whitney’s salary was about the same as Rudman’s, but unlike Rudman, Whitney did not have an employment agreement or any previous experience in the test book field.
Furthermore, unlike Rudman, Whitney’s compensation was not directly tied to the performance of the test book division, College Publishing Corporation. At best, Whitney was an executive of parallel stature with Rudman. He was not a senior executive of Cowles, and defendants made no effort to show that Wliitney was such within the meaning of the agreement. Whether Whitney was or was not a director of College Publishing Corporation is of little significance. Even if Whitney enjoyed the alleged status as the head of the Cowles education division, which he seemingly did not, he was not empowered to alter plaintiff’s agreed-upon status. And the evidence is that Gilbert Maurer was the head of this division. In any event, .the education division was merely an ephemeral, unincorporated grouping, without officers or directors, quite different from the corporate structure, to which the agreement definition refers.
In short, under the agreement, Maurer also had no right to subject Rudman to the supervision of Whitney, much less both. When he did so, he, not Rudman, was “ disrupting the organization 55 and denying the plaintiff the promised privileges *221of Ms office, which was to be that of the number one editor in charge of the test book division. Not unjustifiably, Rudman was led to believe as chief editorial man he would be in the top management of the testing subsidiary and the link to the top management of the parent organization. Even if it was contemplated that plaintiff was to be under the supervision of a senior executive, such duty did not include an obligation to relinquish the status of being the principal and number one editor in charge of the test book division. To argue otherwise would be to make valid an otherwise illusory consideration, the sustainment of which would permit the perpetration of a fraud—a denial of the quid pro quo which led to the execution of the acquisition and employment agreements.
I find it difficult to understand how plaintiff’s insistence on being accorded the promised privileges of office can be converted into a valid claim of “insubordination” justifying his discharge. Plaintiff’s duty to co-operate with fellow employees did not include an obligation to extinguish his right to be “ in overall charge of the test book division”; and such delay as may have ensued in the delivery of sections of the manuscript, referred to in the majority opinion, as also plaintiff’s objection to a restructuring of the organization so as to derogate from the prerogatives rightfully his, and demeaning his promised status, must be considered as but the sequel to the disturbed relationship, initiated by defendants’ prior breach of their obligation to plaintiff.
It may well be that the differences between plaintiff and defendants arose from a personality disharmony which ultimately led to the defendants’ belief that he would be unassimilable in their organization. If this be true, it does not follow that the defendants are entitled to strip the plaintiffs of their property rights, acquired under the acquisition agreement, and retain them with impunity. Neither does it follow, because they guessed wrong as to the digestibility or assimilability of the plaintiff Jack Rudman that they may deprive him of his rights under the employment agreement.
In my view, the record and the concessions made by the defendants compel the conclusion that the defendants breached the employment agreement, and consequentially must respond appropriately for their unlawful retention of the fruits of the acquisition agreement.
Lastly, this case is essentially one in equity and requires equitable considerations. These equitable considerations, under all the circumstances, lead me to believe that a proper disposition requires (1) a modification of the judgment of the' third *222cause of action so as to sustain the finding of liability by the defendants for a breach of the employment agreement, but a present deletion of the damages found, (2) a finding that, as an alternative to the rescission prayed for in the first cause of action, the plaintiffs are entitled to monetary damages, such as they may be, as prayed for in the second cause of action, and (3) that this case be remitted for further proof with respect to the damages properly allowable for breach of hoth the acquisition and employment agreement.
This disposition is believed to be the proper one because plaintiffs have obviously received the major portion of the quid pro quo bargained for under the acquistion agreement, and the equities do not lend themselves to relief in the form of rescission as requested in the first cause of action. There is a paucity of evidence in respect of damages sustained and the extent of a proper allowance required to be made in mitigation because of the breach of the employment agreement, as also the extent of the unjust enrichment of defendants, arising from the consequential breach of the acquisition agreement.
So far as the eleventh counterclaim of the defendants is concerned, I am in agreement with the view of the majority opinion that it should be dismissed for the reasons stated therein.
Capozzoli, Markewich and McNally, JJ., concur with Eager, J. P.; McGiverh, J., dissents in part in opinion.
Judgment, Supreme Court, New York County, entered on August 18, 1969, so far as appealed from, modified, on the law and the facts, to dismiss plaintiffs’ third cause of action and to dismiss the defendants’ eleventh counterclaim, and the judgment is otherwise affirmed, without costs and without disbursements; and the trial court having dismissed plaintiffs’ first and second causes of action, plaintiffs’ complaint is dismissed, without costs.