Court Opinion

ID: 5775689
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:40:34.994285+00
Date Added: 2024-06-11T08:41:52.854475
License: Public Domain

Eager, J. P.
The plaintiffs and defendants appeal from a judgment entered upon the decision of a Special Referee, the defendants appealing from that part of the judgment awarding a recovery to plaintiff Rudman on the third cause of action, and the plaintiffs cross-appealing from that part of the judgment dismissing the first and second causes of action, awarding a recovery to defendants upon their eleventh counterclaim and limiting plaintiffs’ recovery on the third cause of action to a sum less than that demanded.
The plaintiff (Rudman) was employed by defendant Cowles Communications, Inc. (the Company) “ to perform such executive and administrative services in the educational publishing operations of-Company or its wholly owned subsidiaries as shall from time to time be reasonably assigned to him by the Company’s Board of Directors and subject to the instructions, direction and control of senior executives of the Company ”. The employment was by written agreement, dated June 30, 1966, and the term of employment as therein stated was from *215July 1, 1966 to June 30, 1971. Eudman, by paragraph 2 of the employment agreement, expressly agreed to “ faithfully, conscientiously and diligently serve the Company * * * to the best of his ability”; to “ devote substantially his entire time and attention, except during reasonable vacation periods ’ ’ to the affairs of the company; and to ‘1 dq nothing in any way inconsistent with his duties to, or adverse to the interests of, the Company.”
It is true as pointed out by the dissent that the contract for the employment of Eudman was part of a transaction involving a sale to the Company of the publishing business of plaintiffs. Although the other writing and extrinsic circumstances may be considered in the matter of a construction of the employment contract, full effect must be given to the plain and unambiguous terms thereof and to the relationship thereby established.
Contrary to his explicit contractual obligations, Eudman, on assuming the duties of his employment, adopted and persisted in a course of conduct conflicting with the duly authorized suggestions and reasonable directions of his senior executive, Maurer. In spite of the fact that he well understood that it was the direction of Maurer and in the interests of the Company, that he co-operate with his fellow employee Whitney in the affairs of the educational publishing division of the Company, Eudman adopted a hostile attitude toward Whitney and Whitney’s assistant, ultimately refusing to work with them. It became his duty to prepare and furnish within a reasonable time sections of the manuscript for a college board entrance exam book, and initially he undertook this responsibility. Subsequently though, and without justification,, he refused and failed to prepare and deliver sections thereof.
As expressed in an October 4,1966 letter addressed to Maurer, he arbitrarily took the position that the plan of basic organization of the education division of the Company was 11 irrevocably unacceptable ” to him. His letter was uncompromising and disputatious in tone and there is no proper support for the finding, implicit in the trial court’s decision, that there was thereafter a failure on the part of the Company to “at least try to iron out, if possible, any difficulties or misunderstandings that might have existed on either side.” Subsequent to October 4, Maurer and Eudman did indeed have a conversation and discussed the matters in controversy and subsequently Eudman was given every opportunity to comply with the terms of the employment agreement. However, he continued in his refusal to work with Whitney in the corporate interests, *216including in the matter of manuscripts and materials for the college board entrance exam book and on certain other books and tests being published by the Company.
It is settled law that an employer generally is entitled to direct how an employee shall perform his duties, and in :so doing the employer is entitled to consult his own convenience as well as the interest of his business. So long as such directions are not unreasonable (and there can be no claim of unreasonableness here), the employee is bound to obey them, and it is no answer to a charge of disobedience for an employee to say that some other method of doing the business was better than that which the employer chose. (See Macauley v. Press Pub. Co., 170 App. Div. 640, 643-644, affd. without opn. 222 N. Y. 696.)
Here, Rudman in effect assumed the dictatorial attitude that the education division of the Company would be required to be operated under his terms or he would not co-operate in the work of the division. We find no justification whatever for his attitude and his conduct immediately prior to and after October 4, 1966; his conduct constituted insubordination to those executives in positions of authority over him in the Company’s affairs.
When the continuous refusal to comply with lawful and reasonable directions of an employer reaches such proportions as to be deleterious to the employer’s interests, is inconsistent with continuance of the basic employer-employee relationship, and effectively stalls the conduct of important and duly authorized business affairs, then the disobedience is a breach of duty, and like other breaches, entitles the employer to rescind the employment contract. The opinionated insistence upon doing things in his own way, rather than as the employer reasonably directs, is not the employee’s prerogative. (See Wood, Master and Servant [2d ed.], p. 226.) “The defendant, in making the contract, did not abdicate its position as master nor waive control of its business ” (Jerome v. Queen City Cycle Co., 163 N. Y. 351, 357. See, also, Speiden v. Innis, Speiden & Co., 216 App. Div. 408; Beardsley v. Nieblo Mfg. Co., 231 App. Div. 152, 157). Certainly, a corporation is entitled to protect itself from the consequences of a division within its ranks.
Accordingly, Maurer acted within his authority, and we find that he acted in good faith in the interests of the Company when, on January 12,1967, he terminated the employment agreement with Rudman. The dismissal was fully in accordance with the terms of the agreement which provided that 1 ‘ the Company may, at its option, terminate this Agreement on *217ten (10) days’ notice, in the event Bndman violates the provisions of Paragraph 2 hereof [hereinbefore referred to] or in the event Budman otherwise commits a material breach of this Agreement by failing to perform the obligations undertaken by him hereunder. In such event, the Company shall be obligated to pay Budman the compensation due him up to the date of termination only.” Under the circumstances, there is no valid support for plaintiffs’ third cause of action maintained to recover damages for breach of the employment agreement.
Furthermore, we conclude that the Beferee improperly awarded a recovery to defendants upon their eleventh counterclaim. The Beferee awarded a recovery on this counterclaim in the sum of $1,347.42 on the ground that clause 11(1) of the agreement of sale amounted to “a warranty that the total tax liabilities of Old College Publishing [Budman’s former company] and its subsidiaries would not exceed $9,013.81, and that the warranty extended to the statements that were to be delivered [after the closing]. Since the taxes thereafter paid amount to $10,361.23, which is $1,347.42 over the amount warranted ”, he directed a recovery of such sum against the plaintiffs Budman as sellers.
The sellers (Budman and his wife) had delivered to the purchasing company a consolidated balance ysheet through April 30,1966 and the agreement provided that ‘ ‘ no later than 30 days after Closing Date, a consolidated balance sheet of the Companies as of the Closing Date, together with a related consolidated statement of profit and loss and surplus for the period from May 1,1966 to the Closing Date ” shall be delivered to the Company. Then it was agreed that the consolidated statement, to be so delivered, ‘ ‘ shall contain no material adverse changes from the aforesaid consolidated balance sheet as of April 30, 1966 and the aforesaid related statement of profit and loss and surplus for the period from November 1, 1965 to April 30,1966. ’ ’ Under the circumstances, and in accordance with the agreement of the parties, this was merely a representation by the sellers that the June 30 statement would not contain any “material adverse changes” from the consolidated balance sheet before the parties at the time of contracting.
In essence, the sellers agreed that they had not misrepresented the financial condition of their company and that they would do nothing to prejudice the buyers between the sale and closing. Considering the balance sheets as a whole, it is clear that the $1,347.42 increase in actual tax payments over the estimated figure did not represent a “material adverse” change in the *218current liabilities of the sellers’ company, nor was it established that the comparatively small change in current liabilities arose between the time of the sale and the closing. In summary, the plaintiffs’ agreement did not amount to a warranty of conformance of the statement to be delivered following the closing (i.e., the June 30, 1966 statement) with the April 30, 1966 statement, and we conclude that the evidence does not establish the right of the Company to recover on the eleventh .counterclaim.
Findings by the Referee inconsistent herewith are reversed and annulled and new findings made as indicated herein. The judgment herein should be modified, on the law and the facts, to dismiss plaintiffs’ third cause of action and to dismiss the defendants’ eleventh counterclaim, and judgment should be otherwise affirmed, without costs and disbursements on the appeal; and the trial court having properly dismissed plaintiffs ’ first and second causes of action, the plaintiffs ’ complaint should be dismissed without costs.