Court Opinion

ID: 9736372
Source: CourtListenerOpinion
Date Created: 2023-08-26 18:54:07.346292+00
Date Added: 2024-06-11T18:27:06.278895
License: Public Domain

Digges, J.,
dissenting:
Reluctantly, I find myself compelled to enter a dissent from the majority opinion. I do this for two reasons: i. Sotera, the executive vice-president and chief operating officer of Volos, did not establish that his dismissal by the chairman of the board, Flanders, was pretended, capricious or mercenary; and ii. appellee did not prove that he was entitled to the damages which were awarded.
I do not quarrel with the basic legal principles that the majority has utilized, nor generally with the correctness of the statement of facts as set forth in their opinion; instead my divergence is with the application of those facts to the law. It is not necessary to repeat the factual pattern but rather I will briefly focus on the pertinent details of the dispute, all of which revolve around what occurred on April 6, 1970. Immediately prior to that date Sotera, upon returning from a short vacation, made an appointment to see Flanders on Monday morning, April 6, to discuss the corporation’s financial status as well as Volos’ annual stockholders’ meeting scheduled for that afternoon. Flanders did not keep this appointment but around noon phoned the appellee and instructed him to attend the shareholders’ meeting. Sotera verified this communication at the trial.
“Q. Did he [Flanders] tell you to be present at the stockholders’ meeting?
A. He commanded that I be present . . .” (emphasis added).
Appellee failed to attend this meeting but rationalized his absence when he testified:
“The reason that I did not appear at the annual *178meeting was really a culmination of many things that had taken place over the past two or three months, and I felt as though it would be to the detriment of the company if I were not prepared to answer questions which might be raised from the floor.
Q. What questions, in particular?
A. As to the financial condition of the company; as to the future of the company; as to the position of our subsidiary Reine; as to the position of our future, period.”
Sotera agrees that he was directed to attend the meeting so he could answer shareholder inquiries and he does not contend that his boss had suggested that these responses should be untruthful or evasive. At the meeting itself the chairman was closely questioned about the absence of the general manager, Sotera. The minutes relate the following:
“Another stockholder inquired as to why Mr. Sotera and Mr. Biemiller [corporation treasurer] were not present at the annual meeting of stockholders. The Chairman stated that he had directed them to be present, as he was leaving his office, by telephone, but when he arrived at the Company’s offices, neither Mr. Sotera nor Mr. Biemiller were present. Upon investigation, he found they had advised the staff that they would not return until the following morning. Another stockholder inquired as to what, if any, action the Chairman proposed to take as a result of the unauthorized absence of the executive vice president and treasurer of the Corporation. The Chairman said that he was considering several alternatives, including dismissal, but wanted to reserve an opinion until he had an opportunity to talk with Mr. Sotera and Mr. *179Biemiller to determine why they were not present.” (Emphasis added.)
That evening Flanders sent a telegram to Sotera which terminated his position with Volos “for cause” under paragraph 4 of appellee’s employment contract (set out in the majority opinion).
The real issue here is whether the dismissal of appellee, the operating head of Volos, resulted from Flanders’ honest dissatisfaction with the general manager or if the discharge was “capricious, mercenary, or the result of a dishonest design.” Ferris v. Polansky, 191 Md. 79, 59 A. 2d 749 (1948). The pertinent law with which the majority apparently agrees, was well set out by Chief Judge Bruñe for the Court in Stamatiades v. Merit Music, 210 Md. 597, 614, 124 A. 2d 829 (1956). He said:
“Though much is left to the discretion of the party to whom the thing or service must be satisfactory, and the judgment of a court is not to be substituted for the honest, even though misguided, judgment of the party, his judgment must be exercised honestly and in good faith.” (Emphasis added.)
Using this as a rationale the majority, in their opinion, stated that the “question of whether the dissatisfaction of Volos was ‘real and not pretended, capricious or mercenary’ is for the trier of fact. If tried before the court without a jury, we will not set aside the judgment of the trial court on the evidence unless clearly erroneous. Maryland Rule 886.” The implication here is that this always is a question to be decided by the trier of fact. I am of a contrary view. Even assuming these questions may normally be ascertained by the trier of fact, once the facts are undisputed or if reasonable minds would not differ in the determination of the issues, then the propriety of the dismissal becomes a matter of law. In the case here, it is conceded that Sotera was “commanded” to attend the shareholders’ meeting. That being true, no issue on *180this point was presented for the trial judge to decide. But the majority may contend that even though there was no factual dispute, Judge Proctor still had the obligation, as trier of fact, to determine whether the dismissal was “capricious, mercenary, or the result of a dishonest design,” in light of appellee’s failure to appear. Ferris v. Polansky, supra. However, I am persuaded that if reasonable minds would not differ about the result, then likewise this becomes a matter of law. And here it cannot properly be argued that reasonable minds would differ on the conclusion that the chief operating officer’s unexcused and arrogant absence from the annual stockholders’ meeting did not justify his swift dismissal by Flanders.
In contrast the trial judge’s opinion, which my colleagues now approve, said:
“It is my judgment that Sotera in not being at the stockholders meeting exercised good judgment. If he had been there and the questions had been put to him which were put to Flanders and he had given honest answers, there would have been a rebellion at the stockholders meeting. As it was in his actions, Flanders with the assistance of counsel was able to hush up the stockholders and hope for a better day.” (Emphasis added.)
This statement is both distressing and ill conceived. The purpose of shareholder meetings is not to present a facade of good health which hides a cancerous disease and the courts should not perpetuate such deceitful acts. Indeed, a major purpose of these meetings should be to present the real owners of the business with an accurate picture of the corporation in both its successes and failures, so that matters requiring their consideration can be intelligently decided. It is definitely my feeling that Sotera, by failing to attend this meeting, to say the least, exercised bad judgment. If the company w^s in serious financial straits then it was his duty as general manager *181and executive vice president to so inform the shareholders. While upheavals may generally be frowned upon there is no merit to the trial judge’s conclusion that Sotera’s absence prevented a rebellion. Rather his absence obstructed the stockholders from obtaining the knowledge, to which they were entitled, of Volos’ dire economic problems; in fact, the minutes of the meeting record their dissatisfaction with the information they received. One does not cure a malady by failing to recognize its existence. The best cure would seem to be full disclosure of all symptoms as well as the possible corrective action necessary for recovery. If Sotera’s presence at the meeting would have precipitated unrest, so be it. Unrest is certainly preferable to ignorance which could ultimately lead to the company’s demise.
Given this employment contract in which Sotera is subject to the direction of Flanders and which permits dismissal “for cause,” the conceded failure of the chief operating officer to attend the annual stockholders’ meeting, as was expressly required, constituted insubordination of such magnitude that reasonable minds would not differ in concluding that the firing was justified. If this refusal to attend the meeting be insufficient cause for terminating Sotera’s employment, then I cannot conceive of any failure by an employee to carry out his employer’s directives as warranting dismissal.
My second divergence with the majority is whether Sotera has proved that he is entitled to the damages which were awarded. My colleagues quote Atholwood Development Co. v. Houston, 179 Md. 441, 445-47, 19 A. 2d 706, 708-09 (1941) for the controlling law. In that case the Court said:
“The measure of damages in an action for wrongful discharge is prima facie the employee’s salary for the remainder of the period of employment. But the employer may undertake to mitigate the damages by showing that the employee has earned wages from other employ*182ment, or that he could have secured other employment by using proper effort. The general rule is well established in this state that a wrongfully discharged employee is entitled to recover damages to the extent of the stipulated salary for the stipulated period, less the amount he actually earned during the period, or the amount he might have earned after his discharge by the exercise of reasonable diligence in seeking other employment in the same or similar business. What constitutes reasonable diligence is a question of fact depending upon the circumstances of each particular case. The manner in which a person of ordinary diligence would presumably act under similar circumstances is the standard by which the court should determine whether this duty was properly performed. If a discharged employee sits supinely idle with folded hands, he cannot insist upon the full payment of his wages. He should try to dimmish the loss resulting from the breach of contract by making such efforts to secure employment as an average person would make at that particular time and place.” (Citations omitted.)
I totally agree with this statement but I differ in applying the admitted facts to this law. When Sotera was fired on April 6, 1970, he and Biemiller waited less than two weeks before they organized Cosmetic, Inc., through which they acted as consultants for pharmaceutical manufacturers. This business venture failed several months later with Sotera losing $7,000 or $8,000 and thereafter he promptly accepted a salaried job in New York.
Appellee emphasizes that he was unable to find employment in the interval between his dismissal from Volos and the formation of Cosmetic, Inc. However, it certainly cannot be claimed that his failure to find employment in these scant few days demonstrated sufficient effort which justified the cessation of the search. *183Instead it is my view that Sotera thought he could succeed in this new company and devoted his time to this pursuit; but to no avail. What the trial court permitted and the majority affirmed was the tenuous concept that Volos should become an insurer against the failure of Sotera’s new enterprise. In this case, appellee is given the incredible option of going into business for himself and when unsuccessful, being allowed to recover damages based on his original dismissal. It is my conclusion that from the time Sotera formed Cosmetic, Inc. and expended his energies on this consulting firm, Volos ceased to be responsible for any further damages. The language of Chief Judge Cardozo speaking for the Court of Appeals of New York in McClelland v. Climax Hosiery Mills, 169 N. E. 605, 252 N. Y. 347 (1930) is apposite here.
“The statement is made not infrequently, in treatise and decision, that a servant wrongfully discharged is ‘under a duty’ to the master to reduce the damages if he can. The phrase is accurate enough for most purposes, yet susceptible of misunderstanding if emphasized too sharply. American Law Inst. Restatement of the Law of Contracts, § 336. The servant is free to accept employment or reject it according to his uncensored pleasure. What is meant by the supposed duty is merely this, that, if he unreasonably rejects, he will not be heard to say that the loss of wages from then on shall be deemed the jural consequence of the earlier discharge. He has broken the chain of causation; and loss resulting to him thereafter is suffered through his own act. It is not damage that has been caused by the wrongful act of the employer.” (Emphasis added.)
In this case appellee broke “the chain of causation” when he began the operation of Cosmetic, Inc. The fact that Sotera did not actually diminish his damages because of a poor business venture does not affect Volos’ liability; *184appellant should not under these circumstances be the guarantor of Sotera’s prosperity.
I would reverse the judgment of the trial court.