Hanson v. Central Show Printing Co.
1964 Iowa Sup. LEXIS 683, 256 Iowa 1221, 130 N.W.2d 654 (1964)
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Rule of Law:
A contract for permanent employment, life employment, or employment until an employee chooses to retire is considered an indefinite hiring terminable at the will of either party unless it is supported by consideration beyond the employee's performance of services.
Facts:
- Harry Hanson, a skilled pressman, had been employed by the defendant-corporation for many years prior to 1959.
- In the autumn of 1959, Hanson received an offer for a steady job with another company, Stoyles Printing Company.
- Concerned about the seasonal nature of his work with the defendant, Hanson discussed his job security with the company president, G. C. Yenz.
- On October 21, 1959, Yenz provided Hanson with a signed letter stating: 'I will guarantee you 40-hours work per week thru out the entire year each year untill you retire of your own choosing.'
- In reliance on this letter, Hanson decided to remain with the defendant-corporation instead of accepting the other job offer.
- Hanson continued to work for the defendant for two more years.
- On October 21, 1961, the defendant-corporation discharged Hanson without cause.
Procedural Posture:
- Harry Hanson (plaintiff) filed a lawsuit against the defendant-corporation in the trial court for breach of an employment contract.
- The case proceeded to trial.
- At the close of the plaintiff's evidence, the defendant moved for a directed verdict.
- The trial court granted the defendant's motion and entered a judgment in its favor.
- Hanson (appellant) appealed the trial court's judgment to this court.
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Issue:
Does a written promise of employment 'untill you retire of your own choosing' create an enforceable long-term contract when the only consideration provided by the employee is forgoing another job opportunity?
Opinions:
Majority - Thompson, J.
No. A contract for permanent employment is not an enforceable long-term contract without additional consideration beyond the employee's services, and forgoing another job is not sufficient additional consideration. The court held that the general rule treats contracts for permanent employment or other indefinite terms as terminable at will by either party. For such a contract to be binding, there must be good consideration in addition to the services to be rendered. The court rejected Hanson's argument that giving up the opportunity to take another job constituted this additional consideration. Citing extensive precedent, the court reasoned that forgoing other employment is merely an 'incident necessary' for an employee to place themselves in a position to perform the work, not a bargained-for price paid to the employer for the promise of permanent employment. The court distinguished this from cases where valid consideration was found, such as when an employee releases a legal claim against the employer or gives up a competing business. Therefore, the agreement was merely an indefinite hiring terminable at will.
Analysis:
This decision strongly reinforces the doctrine of at-will employment, establishing a high bar for an employee to prove an enforceable contract for permanent employment. It clarifies that merely forgoing other job opportunities, a common occurrence when accepting or continuing employment, does not constitute the 'additional consideration' required to overcome the presumption of at-will employment. The ruling protects employers from being bound to indefinite employment terms based on general assurances unless they receive a distinct, independent benefit from the employee in exchange for that promise. Future cases involving claims of permanent employment will require employees to demonstrate a more substantial and independent form of consideration, such as the release of a tort claim or the sale of a competing business to the employer.
