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Savage v. Spur Distrib. Co. - 33 Tenn. App. 27, 228 S.W.2d 122 (1949)

Rule:

Unless both parties are bound neither is bound. An indefinite hiring is a hiring at the will of both parties and may be terminated by either at any time. A contract of employment for an indefinite term may, in the United States, be terminated at the will of either party. A contract for permanent employment where the consideration is paid wholly or partly in advance, as by the relinquishment of a claim for personal injuries, or which is supported by a consideration other than the promise to render services, is not such an indefinite contract as to come within the rule. But a contract for permanent employment, so long as it is satisfactorily performed, which is not supported by any consideration other than the obligation of service to be performed on the one hand and wages to be paid on the other, is terminable at the pleasure of either party.

Facts:

Plaintiff Savage, a former employee  of defendant Spur Distribution Co., brought an action that sought damages for breach of an alleged employment contract; inter alia, it alleged: that he and Spur made a contract by which Spur employed him as its assistant secretary at a salary of $3,600 per year and a bonus of at least $600 per year; that Spur bound itself to continue such employment permanently, or so long as the position was available; that Savage was able to perform and did perform the work satisfactorily; and that the employer discharged him, breached its contract, and became liable for damages. alleged that he had even moved from another state to take this job with Spur. There was no written employment contract. Savage was discharged with an explanation that Apur's department was being reorganized. The state circuit court directed a verdict for defendant Spur and dismissed Savage's complaint. 

Issue:

Did Spur breach the employment contract?

Answer:

No

Conclusion:

The Tennessee appellate court affirmed the trial court's decision directing a verdict for Spur, declaring that: (1) there was no evidence of any breach of contract where there was no contract for employment for any definite time; (2) a contract for permanent employment meant that the employment was to continue indefinitely subject to the continuing satisfaction of both parties and could be terminated at the will of either party. But there was no counterpromise by Savage work for Spur for any length of time. He was free to quit any time -- to accept other employment whenever he chose. It is a general principle that  unless both parties are bound neither is bound.; and (3) where the former employee's salary was fixed at a monthly rate, he was not hired on a year to year basis.

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