McManigal v. Hiatt

36 N.W.2d 651, 240 Iowa 541, 1949 Iowa Sup. LEXIS 344
CourtSupreme Court of Iowa
DecidedApril 5, 1949
DocketNo. 47349.
StatusPublished
Cited by4 cases

This text of 36 N.W.2d 651 (McManigal v. Hiatt) is published on Counsel Stack Legal Research, covering Supreme Court of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McManigal v. Hiatt, 36 N.W.2d 651, 240 Iowa 541, 1949 Iowa Sup. LEXIS 344 (iowa 1949).

Opinion

Mulroney, J.

— In the Spring of 1940, Fay McManigal and E. L. Hiatt became engaged in the farm machinery business in Glenwood, under an oral partnership arrangement. The business was, to a certain extent, a side line for both partners as Mc-Manigal was a farmer, farming four hundred forty acres of land, and Hiatt was a garageman, having the Ford agency in Glen-wood. The farm machinery business Tvent foiward for the next few years with McManigal doing the selling and using his farm for demonstration purposes and Pliatt furnishing storage space and doing the office work and using his garage for that purpose. For about three years the business progressed satisfactorily and amiably and it showed some profit.

When war was declared and rationing became effective McManigal, as a salesman,, became unnecessary to the partnership business. There was some talk between the partners as to a change in their relationship with the result that on October.29, 1943, a contract of dissolution was executed, by the parties which in part stated: . .

“Whereas, it is the desire of the parties, as of this date, to terminate and dissolve the partnership, and
“Whereas, the total partnership assets on this date consist of a deposit in the Glenwood State Bank, in the amount of $1324.88, deposited in the account of the H. & M. Tractor Company, and
“Whereas, the individual share of the first and second parties •in said partnership is fifty per cent each.
“Now, Therefore, each of the parties acknowledge an equal division of the partnership property, and each receipts the other for his fifty per cent share therein in full of each party’s interest therein. .
■ • “Noio,-Therefore, in consideration of the above, it is hereby •agreed that the partnership known as the H. & M. Tractor Company be and the same is hereby dissolved and terminated as of this date, with the right on the part of the first party [Hiatt] *543 to continue in business for a short time under the partnership name, for the purpose of renegotiating contracts, any opérations thereafter' by first party to be in the name of the Hiatt Motor Company, and with the understanding tha-t hereafter no business shall be conducted by either of the parties as a partnership or in the name of the H. & M. Tractor Company as a partnership.
“In consideration of the above, the first party further agrees that hereafter the second party [McManigal] shall work as -a salesman in the sale of tractors and machinery in the conduct of the first party's business as an individual, and the second party is to receive for his services fifty per cent of the net profits derived by first party from the transaction. ■
. - “In consideration of the above, -it is further agreed between the parties that as long as any business relationship exists between-the parties under this contract, the second party may purchase of the first party for his own use and not for resale-, any of the tractors and machinery sold and dealt in by the first party, at the invoice price to first party.”

On the day of dissolution McManigal ordered a tractor from Hiatt which was delivered to him the following February, when he had obtained the ration board’s consent, and for which he paid Hiatt the wholesale price.

The first dispute between .the two ex-partners arose in January of 1944 when McManigal drove to .Omaha and picked up a disk at O’Shea-Rogers Tractor & Equipment Company which had been ordered by Hiatt for one of his customers. Hiatt insisted that McManigal bring the disk to the garag’e. McManigal refused and subsequently Hiatt accepted McManigal’s check for the wholesale price of this disk.

In the Fall of 1944, Hiatt was allocated two Woods Brothers corn pickérs by the O’Shea-Rogers Company of Lincoln. Mc-Manigal and one A. C. Buck had each obtained ration board certificates of eligibility for the purchase of a corn picker. When the first one arrived Hiatt delivered it to Buck. McManigal immediately filed a suit against Hiatt and Buck, alleging the picker was his, and he obtained an injunction against the use of the picker.

*544 Three days later the other picker arrived and it was sold to McManigal at wholesale price and McManigal dismissed his suit. On the same day this picker was delivered to McManigal, Hiatt caused to be served on McManigal a notice to the effect that all relationship of employment or business relationship between them was at an end because McManigal had abandoned the employment provisions of their contract of October 29, 1943; because no employment was ever engaged in under said contract ; because the provision for employment ivas for an indefinite period of time and therefore subject to termination at any time with or without causebecause no business relationship had in fact existed between them for many months; and because Mc-Manigal had recently started suit against Hiatt and his customer and therefore interfered with his business.

On April 21, 1945, McManigal filed his petition for declaratory judgment alleging that by said contract, for an additional and valuable consideration other than the services to be performed thereunder, the defendant employed the plaintiff permanently to act as salesman in the sale of tractors and farm machinery, upon a fifty per cent commission basis, and with other privileges as set out in said contract. The petition set forth the claim of Hiatt as embodied in the notice which Hiatt had served on McManigal and the prayer was that the court declare “the present and future rights, status and legal relations of the parties with respect to the claims * * * asserted, and with respect to future rights, obligations and privileges of plaintiff and defendant under the contract.” '

Defendant’s answer, in effect, alleged the employment provision cf the contract was not a provision for permanent employment and was cancellable at will; that the contract was not ambiguous and could not be varied by parol evidence; that even if the contract did provide for permanent employment the defendant had good cause to discharge the plaintiff; and that any declaration in favor of plaintiff would not settle the controversy and therefore declaratory relief ivas inappropriate. The trial court held the contract ivas not for permanent employment, and' could therefore be terminated without cause and that the controversy was one that was not subject to declaratory relief since a declaration in plaintiff’s favor would not settle the controversy.

*545 I. Plaintiff first contends the contract was a contract for his permanent employment by the defendant and as such it could only be terminated by the defendant for cause. He supports this contention- by an argument that contracts for permanent employment, not terminable except for cause, are valid when supported by consideration additional to the services incident to the employment. Plaintiff then goes on to argue that an additional consideration is present in this case in that the dissolution left Hiatt with the franchise or agency agreement with O’Shea-Rog'ers Company of Lincoln for the handling of Ford-Ferguson equipment in Mills county.

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Bluebook (online)
36 N.W.2d 651, 240 Iowa 541, 1949 Iowa Sup. LEXIS 344, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcmanigal-v-hiatt-iowa-1949.