Howard v. . Daly
61 N.Y. 362 (1875)
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Rule of Law:
When an employment contract is repudiated by the employer, the employee's remedy is an action for damages for breach of contract, not a suit for wages under a theory of constructive service. The employee is not required to tender performance after repudiation but has a duty to mitigate damages, and the employer bears the burden of proving a failure to mitigate.
Facts:
- Mr. Daly, a theater manager, made a written proposal to engage the services of Ms. Howard, an actress, for the year.
- On April 13, 1870, Howard signed an acceptance of the proposal and placed it in Daly's letter-box at the theater, a recognized place for depositing such documents.
- In late August or early September 1870, Howard noticed that posters for the upcoming theatrical season did not include her name in the company list.
- After her written inquiry went unanswered, Howard met with Daly in person at the theater.
- During their meeting, Daly handed Howard a letter stating he had no engagement with her and verbally told her that he had not engaged her and knew nothing about her acceptance.
- Daly unequivocally refused to recognize the existence of the contract or allow Howard to perform.
- After being rejected by Daly, Howard made efforts to procure other theatrical employment but was unsuccessful.
Procedural Posture:
- The plaintiff, Howard, sued the defendant, Daly, for breach of an employment contract.
- The case was tried before a referee, who acted as the court of first instance.
- The referee found in favor of Howard, concluding a valid contract existed and that Daly had breached it.
- Daly, as appellant, appealed the referee's decision to the Commission of Appeals of the State of New York, where Howard was the appellee.
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Issue:
When an employer repudiates an employment contract at or before the start of performance, must the employee thereafter tender performance to maintain an action for breach of contract?
Opinions:
Majority - Dwight, C.
No. When an employer repudiates an employment contract, the employee is not required to make a formal tender of services to maintain an action for damages. The law discards the fiction of 'constructive service,' which would require an employee to remain idle to sue for wages; instead, the proper cause of action is for damages resulting from the breach. A definitive refusal by the employer to perform obviates the need for the employee to engage in the 'barren form of offering to render the service.' The employee's duty after such a breach is to be ready and willing to perform at the time of repudiation and thereafter to use reasonable care to mitigate damages by seeking similar employment. The burden of proof is on the defendant employer to show that the employee has found other employment or that similar employment was offered and declined. Since Daly offered no such proof in mitigation, Howard is entitled to recover the full amount of her stipulated compensation as damages.
Analysis:
This decision is significant for formally rejecting the doctrine of 'constructive service' in New York employment law, clarifying that a wrongfully discharged employee's remedy is for damages, not for unearned wages. It establishes the modern framework for such cases: the employee has an immediate cause of action upon repudiation, the measure of damages is the contract salary, and the employee has a duty to mitigate. Critically, the case shifts the burden of proof regarding mitigation to the breaching employer, requiring them to demonstrate that the employee could have found comparable work, which remains the standard in most jurisdictions today.
