Humana, Inc. v. Fairchild

603 S.W.2d 918, 1980 Ky. App. LEXIS 348
CourtCourt of Appeals of Kentucky
DecidedFebruary 29, 1980
StatusPublished
Cited by13 cases

This text of 603 S.W.2d 918 (Humana, Inc. v. Fairchild) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Humana, Inc. v. Fairchild, 603 S.W.2d 918, 1980 Ky. App. LEXIS 348 (Ky. Ct. App. 1980).

Opinion

COOPER, Judge.

This is an appeal from a judgment for the appellee/employee against the appellant/employer in an action for breach of contract. The issues are whether the evidence warranted such a finding, and whether the trial court committed numerous errors prejudicial to the appellant.

In September of 1975, the appellee, John Fairchild, entered into an agreement with the appellant, Humana, Inc., whereby he was to act as director of personnel at St. Joseph's Infirmary, a hospital owned and operated by the appellant. Under the agreement, the appellee was to begin working for the appellant on October 6, 1975. The exact nature of the contract, whether it was a contract for a fixed term of one year or a contract terminable at will, is disputed by the parties. On January 6, 1976, the appellant asked the appellee to resign. Again, the evidence is disputed as to whether such resignation was voluntary or procured under duress. Such is the substantive basis for the appellee’s action against the appellant.

Specifically, he alleged that his contract with the appellant was for a fixed ‘term of one year, and the actions of the appellant clearly breached the contract. Furthermore, he alleged that his resignation was not voluntary, but procured under duress. This action was tried and judgment entered by the trial court pursuant to a jury verdict on November 21, 1978. The appellant was found to have breached the contract and damages were awarded to the appellee. It is from this judgment that the appellant appeals.

Firstly, the appellant argues that the evidence failed to show that a contract for a *920 fixed term was entered into. In effect, it argues that the contract was terminable at will by either side. The only written evidence pertaining to the contract’s existence was a letter of September 25, 1975, to the appellee from an agent for the appellant setting forth various conditions and terms of the contract. The letter stated, in part, that the appellee’s salary was to be $18,500 per annum. Notwithstanding the ruling of the Court of Appeals in Putnam v. Producers’ Live Stock Marketing Ass’n, 256 Ky. 196, 75 S.W.2d 1075 (1934), the appellant argues that stating a salary in terms of a specific amount “per year” or “per annum” should not raise the presumption that a one year contract has been entered into. Effectively, it urges this Court to overrule Putnam. We reject this argument, finding it unnecessary to reach the question of whether Putnam is valid in the light of modern employment practice.

Here, there was no instruction on the part of the trial court that a salary stated in terms of an amount per year or per annum would raise a presumption that a one year contract existed. On the contrary, there was ample evidence presented that an oral agreement had been reached between the appellee and the appellant’s agent that there was to be a definite one year contract with a specified amount. Part of this evidence was the fact that the appellee had rejected an offer at the last minute from another corporation to assume his position with the appellant. It seems highly unlikely that the appellee would have been induced to reject a previous offer had not the appellant’s offer included at least a one year commitment. Such is the substance of the appellee’s testimony. Consequently, there was sufficient evidence for the trier of fact, here the jury, to believe that the contract entered into was for the fixed term of one year.

Secondly, the appellant argues that the appellee’s resignation was voluntary. It contends that the hospital administrator’s threat made to the appellee to the effect that if he did not resign he would be fired was not duress as a matter of law. It relies on the ruling of the Court of Appeals in Redmon v. McDaniel, Ky., 540 S.W.2d 870 (1976). Specifically, it cites the language that in the area of contractual agreement “it is not duress to threaten to do what one has a legal right to do, nor is it duress to threaten to take any measure authorized by law and the circumstances of the case.” Id. at 872.

Admittedly, a mere threat by an employer to fire an employee unless the employee resigns is not, on its face, duress. Here however, the appellee testified that more than a mere threat was involved: he testified the hospital’s administrator informed him that if he did not resign, bad references would be given to any future employer. Appellant denies that such statements were made. Therefore, this was a question of fact for the jury. Assuming the truthfulness of the appellee’s stated facts, the Redmon case is clearly distinguishable. There, Redmon wrote the resignation letter and submitted it to his em-p.loyer. He sought to resign rather than be fired in light of his own admission of misconduct. The only threat was to fire Red-mon if he did not resign. Here, the duress did not arise from the threat to fire the appellee, but rather arose from the threat to furnish bad references. The substance of the testimony indicated the appellee was anything but an incompetent or “bad” employee. On the contrary, there was substantial evidence that the appellee was perhaps too efficient and too competent for his superiors.

The appellant argues that if such threats were made, the appellee should have refused to resign and sought an adequate remedy at law. Ordinarily, a threat to breach a contract does not constitute duress unless there is no adequate remedy at law. See 25 Am.Jur.2d, Duress and Undue Influence, § 19. Here, there was substantial evidence that had the appellee refused to resign, he would have suffered irreparable harm. The evidence established that even with his resignation and the threat of bad references removed, the ap-pellee had extreme difficulty in securing *921 another job. Whether duress was involved in the appellee’s resignation was a question of fact to be determined by the jury. For although the Redmon, supra, decision establishes the principle that a mere threat to exercise a legal right is neither duress nor coercion, it also further establishes the principle that such a threat must be made in good faith. The Redmon court defined a threat made in good faith as one “made in the honest belief that valid grounds exist to justify the action threatened.” Redmon, supra, at p. 872. Accordingly, the jury had the right to determine whether the alleged threats made by the hospital’s administrator were made in good or bad faith.

The remaining issues raised by the appellant relate to numerous rulings by the trial court during the trial and at the submission of the case to the jury. Firstly, the appellant argues that it was prejudicial error for the trial court to allow the jury to rehear a part of the appellee’s direct testimony concerning the oral statements and agreements entered into regarding the length and terms of his employment. Appellant’s argument is twofold: it contends that if such direct testimony were replayed for the jury, then the court was obligated to play the cross-examination testimony as well.

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Bluebook (online)
603 S.W.2d 918, 1980 Ky. App. LEXIS 348, Counsel Stack Legal Research, https://law.counselstack.com/opinion/humana-inc-v-fairchild-kyctapp-1980.