Jago v. Miller Fluid Power Corp.

615 N.E.2d 80, 245 Ill. App. 3d 876, 185 Ill. Dec. 785, 1993 Ill. App. LEXIS 876
CourtAppellate Court of Illinois
DecidedJune 11, 1993
Docket2-92-0653
StatusPublished
Cited by17 cases

This text of 615 N.E.2d 80 (Jago v. Miller Fluid Power Corp.) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Jago v. Miller Fluid Power Corp., 615 N.E.2d 80, 245 Ill. App. 3d 876, 185 Ill. Dec. 785, 1993 Ill. App. LEXIS 876 (Ill. Ct. App. 1993).

Opinion

JUSTICE COLWELL

delivered the opinion of the court:

Plaintiff, Robert Jago, appeals the circuit court’s order dismissing his amended complaint with prejudice. Plaintiff sued defendant, Miller Fluid Power Corporation, alleging breach of an employment contract and promissory estoppel following defendant’s termination of his employment. The trial court dismissed both counts and plaintiff appeals. On appeal, plaintiff contends the complaint contained sufficient facts to state the causes of action alleged. We affirm.

Plaintiff’s complaint alleges that defendant hired him as regional plant manager of its Bethlehem, Pennsylvania, plant. The terms of the agreement were set forth in a letter from Thomas Parker, defendant’s director of human resources, to plaintiff, dated April 11, 1990. The letter states that plaintiff would receive a base salary of $45,000 per year. It further states:

“In addition to the above compensation, you will also participate in our management incentive program, that can contribute up to an additional 20% of your base salary, prorated on a 7/i2 ratio for the balance of 1990. Each year thereafter, you will be participating on a full year basis.”

Defendant closed the Bethlehem plant in the fall of 1990. Defendant then offered plaintiff the position of manager of manufacturing and industrial engineering at its plant in Bensenville, Illinois. Plaintiff received a letter dated November 29, 1990, from Frank Cushman, defendant’s vice-president of operations, confirming the job offer. This letter provided that plaintiff’s salary would be “$55,000 per year” and that his “participation in any future management bonus will remain the same.” Cushman also wrote, “I will expect you to report to your new position in Bensenville permanently on Monday, January 7, 1991,” and “I am confident you will make a significant contribution to help Miller Fluid Power achieve its growth plans in the next several years.”

Plaintiff accepted the offer by signing and returning the letter. He left his wife and family in Pennsylvania and moved to Illinois. Defendant terminated his employment on June 15,1991.

In count I, plaintiff alleged that the November 29 letter incorporated by reference the April 11 letter and that these two documents constituted an employment contract for a term of at least one year. In count II, plaintiff alleged that he moved to Illinois in reliance on defendant’s promise of long-term employment. Defendant filed a motion to dismiss. Defendant contended that the contract was terminable at will and could not give rise to a cause of action for either breach of contract or promissory estoppel. The trial court agreed and dismissed the action with prejudice.

On appeal, plaintiff first contends that count I stated a cause of action for breach of an employment contract. Plaintiff acknowledges the general rule that, absent a contrary intention, an employment contract is terminable at will by either party. (See Duldulao v. St. Mary of Nazareth Hospital Center (1987), 115 Ill. 2d 482, 489.) He contends, however, that when read together the provision in the November 29 letter for an annual salary, the incorporation by reference of the April 11 letter providing for participation in the bonus plan “on a full year basis,” the reference to reporting for work “permanently,” and the allusion to contributing to defendant’s growth plans for “the next several years” demonstrate the parties’ intention to establish a minimum term of employment of at least one year.

In reviewing the granting of a motion to dismiss, this court must accept as true all well-pleaded facts. (Ogle v. Fuiten (1984), 102 Ill. 2d 356, 360.) A court should not dismiss a cause of action on the merits unless it clearly appears that no set of facts can be proved which would entitle the plaintiff to recover. Ogle, 102 Ill. 2d at 360-61.

In general, an employment contract is terminable at will by either party unless the contract itself specifies a different durational term. (Duldulao, 115 Ill. 2d at 489; Palmateer v. International Harvester Co. (1980), 85 Ill. App. 3d 50, 52, rev’d on other grounds (1981), 85 Ill. 2d 124.) A hiring at a monthly or annual salary, if no duration is specified, is considered to be at will. Owens v. Second Baptist Church (1987), 163 Ill. App. 3d 442, 445-46; Buian v. J.L. Jacobs & Co. (7th Cir. 1970), 428 F.2d 531, 533; Annot., 93 A.L.R.Sd 659, 664 (1979).

In this case, there is no question that the November 29 letter lacks an express durational term. The mere reference to an annual salary is insufficient to convert a contract at will into one for a term of one year. Plaintiff further contends, however, that the reference to a bonus calculated “on a full year basis” is further evidence of the parties’ intent to create a one-year contract.

Defendant initially contests plaintiff’s reliance on the April 11 letter, contending that the November 29 letter is unambiguous and must therefore be interpreted without regard to extrinsic evidence. We note, however, that the latter letter does not purport to embody the parties’ entire agreement, but specifically refers to extrinsic documents by stating that plaintiff’s “participation in any future management bonus will remain the same.” The parties to a contract may incorporate by reference another document if that intention is clearly shown on the face of the contract. (Wilson v. Wilson (1991), 217 Ill. App. 3d 844, 853.) Here the contract does not contain any bonus provisions, but clearly refers to some prior understanding between the parties. While the November 29 letter refers to some other agreement, it is not entirely clear that the April 11 letter is the one. In reviewing the dismissal of the complaint, however, we must accept this allegation as true.

Even assuming that the November 29 letter incorporates the April 11 letter, it does not establish the parties’ intention to create a one-year contract. In Mann v. Ben Tire Distributors, Ltd. (1980), 89 Ill. App. 3d 695, 697, the court held that a provision for a bonus to be calculated annually did not indicate an intention to establish an employment term of one year. The court stated, “A time span for financial reckoning is not to be equated with duration of employment, although it may be fractionalized in determining any pro rata portion of bonus which might become due for the period of actual employment.” (89 Ill. App. 3d at 697.) The provision at issue in this case is similar to the one at issue in Mann. The fact that plaintiff’s bonus was to be calculated yearly does not indicate an intention to establish an employment term of one year.

Similarly, the reference to reporting to work “permanently” does not establish the parties’ intention to abrogate the presumption of an employment-at-will relationship. Generally, a contract for “permanent” employment is indefinite and considered to be terminable at will. Martin v. Federal Life Insurance Co. (1982), 109 Ill. App. 3d 596, 602; Justice v. Stanley Aviation Corp. (1974), 35 Colo. App. 1, 4, 530 P.2d 984, 986.

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Bluebook (online)
615 N.E.2d 80, 245 Ill. App. 3d 876, 185 Ill. Dec. 785, 1993 Ill. App. LEXIS 876, Counsel Stack Legal Research, https://law.counselstack.com/opinion/jago-v-miller-fluid-power-corp-illappct-1993.