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Toussaint v. Blue Cross & Blue Shield

Supreme Court of Michigan

December 5, 1978, Argued ; June 10, 1980, Decided

Docket Nos. 60917, 60907


 [*595]  [**883]   Charles Toussaint was employed in a middle management position with Blue Cross and Walter Ebling was similarly employed by Masco. After being employed five and two years, respectively, each was discharged. They commenced actions against their former employers, claiming that the discharges violated [***34]  their employment agreements which permitted discharge only for cause. A verdict of $ 72,835.52 was rendered for Toussaint and a verdict of $ 300,000 for Ebling whose discharge left him ineligible to exercise a stock option. Different panels of the Court of Appeals reversed Toussaint and affirmed Ebling.

In Toussaint we reverse the judgment of the Court of Appeals and reinstate the jury verdict; we affirm Ebling.

 [*596]  I

In Lynas v Maxwell Farms 1 this Court said that "[c]ontracts for permanent employment or for life have been construed by the courts on many occasions. In general it may be said that ] in the absence of distinguishing features or provisions or a consideration in addition to the services to be rendered, such contracts are indefinite hirings, terminable at the will of either party". (Emphasis supplied.)

The Court of Appeals in Toussaint read Lynas as requiring reversal and said "a [***35]  contract for permanent employment or employment for life is a contract for an indefinite period and terminable at the will of either party" and "cannot be made other  [**884]  than terminable at will by a provision that states that an employee will not be discharged except for cause". 2 (Emphasis supplied.)

Another panel held that Ebling's bargaining for an agreement that he would not be discharged if he was doing his job removed his case "from the general rule that a contract for indefinite employment is terminable at will," and brought it within the exception mentioned in Lynas 3 for "distinguishing features or provisions [***36]  or a consideration in addition to the services to be rendered". 4

Lynas indicates, our colleague states, and we  [*597]  agree, that the "general" rule there set forth concerning the terminability of a hiring deemed to be for an indefinite term is not a substantive limitation on the enforceability of employment contracts but merely a rule of "construction".

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408 Mich. 579 *; 292 N.W.2d 880 **; 1980 Mich. LEXIS 227 ***; 115 L.R.R.M. 4708; 109 Lab. Cas. (CCH) P55,888


Subsequent History: Rehearing denied by Toussaint v. Blue Cross & Blue Shield of Mich., 409 Mich. 1101, 1980 Mich. LEXIS 1447 (1980)

Prior History:  [***1]   79 Mich App 429; 262 NW2d 848 (1977).

 79 Mich App 531; 261 NW2d 74 (1977).

Ebling v. Masco Corp., 79 Mich. App. 531, 261 N.W.2d 74, 1977 Mich. App. LEXIS 802 (1977)Toussaint v. Blue Cross Blue Shield, 79 Mich. App. 429, 262 N.W.2d 848, 1977 Mich. App. LEXIS 786 (1977)

Disposition: The decision of the Court of Appeals is reversed in Toussaint, and the matter is remanded to the Wayne Circuit Court with instruction to reinstate the verdict. The decision of the Court of Appeals is affirmed in Ebling.


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