George v. School District. No. 8R, Umatilla Cty.
7 Or. App. 183, 490 P.2d 1009 (1971)
Rule of Law:
An employment contract that specifies a total salary for a multi-year term is presumed indivisible, even if it itemizes amounts for base and extra duties, unless language or circumstances clearly indicate the parties intended it to be severable. The duty to mitigate damages does not require a wrongfully terminated employee to accept alternative employment that would risk waiving a reasonably pursued claim for a specific remedy like reinstatement.
Facts:
- In 1968, Robert George, a teacher and football coach, signed a three-year employment contract with School District No. 8R.
- The contract stated a total annual salary of $11,300 for a three-year term.
- A provision in the contract itemized this total salary as a $9,300 'Base Salary' and $2,000 for 'Extra Duties: Athletics'.
- In February 1969, after one year of the contract, the school board terminated George from his position as football coach due to the team's poor performance.
- In March 1969, the district notified George that his salary for the remaining two years of the contract would be reduced by the $2,000 previously allocated for his coaching duties.
- George informed the district that he would continue to teach only if he received the full salary stated in his contract.
- The school district treated George's conditional acceptance as a refusal to work and hired another person to fill his teaching position.
Procedural Posture:
- Robert George filed a declaratory relief action against School District No. 8R in an Oregon state trial court.
- The trial court ruled in favor of George, awarding him money damages for the 1969-70 academic year and ordering his reinstatement for the 1970-71 academic year.
- School District No. 8R, as appellant, appealed the trial court's judgment to the Court of Appeals of Oregon.
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Issue:
Does a school district breach a three-year employment contract by unilaterally reducing a teacher's salary after removing an 'extra duty' assignment, where the contract specifies a total annual salary but also itemizes the amounts for base pay and extra duties?
Opinions:
Majority - Schwab, C.J.
Yes. A school district breaches a three-year employment contract by unilaterally reducing the teacher's salary because such a contract is indivisible unless proven otherwise. The court determined that the divisibility of a contract depends on the intention of the parties. Here, the contract's plain language specified a three-year term for a total salary of $11,300, with no indication that the 'extra duties' portion was for a shorter duration. The court found that extrinsic evidence, including school board minutes and a failure to establish a contrary custom and usage, supported the interpretation of a single, indivisible agreement. Therefore, the district's attempt to reduce George's salary was a material breach of the contract. Although the district breached the contract, the court held that reinstatement was not an available remedy under the governing statute, which limits wrongfully discharged teachers in this type of district to 'ordinary legal remedies,' meaning money damages. Finally, the court found that George's duty to mitigate did not require him to accept another full-time contract, as doing so would have constituted an undue risk to his reasonably-pursued claim for reinstatement.
Analysis:
This case provides a key precedent on the interpretation of employment contracts, establishing a strong presumption that a contract for a total salary over a fixed term is indivisible. It places the burden on the employer to make the contract explicitly severable if it wishes to retain the flexibility to alter duties and reduce pay accordingly. The decision's analysis of mitigation is also significant, as it clarifies that a plaintiff's duty to minimize damages is limited by reasonableness. A plaintiff is not required to abandon a good-faith, albeit ultimately unsuccessful, claim for a specific remedy like reinstatement by taking actions that would waive that claim.
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