Savage v. Spur Distributing Co.
1949 Tenn. App. LEXIS 122, 228 S.W.2d 122, 33 Tenn. App. 27 (1949)
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Rule of Law:
A contract for 'permanent employment' is considered an indefinite hiring terminable at the will of either party, unless the employee provides consideration in addition to the services they agree to perform. An employee's actions of quitting a prior job and relocating are not sufficient additional consideration to alter the at-will nature of the employment.
Facts:
- Plaintiff was employed as an accountant in Pittsburgh, Pennsylvania.
- He learned of a vacancy in the accounting department of Defendant’s Nashville office and applied for the position around April 25, 1946.
- During discussions, Defendant's officers told Plaintiff the position would be 'permanent' as long as he performed the work satisfactorily.
- An oral agreement was reached for a salary of $300 per month plus a bonus, with no definite term of employment specified.
- In reliance on the offer, Plaintiff quit his job, moved his family from Pittsburgh to Nashville, and began work for Defendant on June 9, 1946.
- On October 20, 1947, Defendant discharged Plaintiff, citing a 'Reorganization of Secretary’s Office.'
Procedural Posture:
- Plaintiff filed an action for damages against Defendant in the circuit court for breach of an alleged employment contract.
- At the close of the plaintiff’s evidence during the trial, the trial judge granted a directed verdict in favor of the defendant.
- The trial court dismissed the plaintiff's action.
- Plaintiff appealed in error to the Court of Appeals of Tennessee.
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Issue:
Does an employer's oral promise of 'permanent' employment, where the employee provides no additional consideration beyond the services to be performed, create an enforceable contract for a definite term rather than an at-will employment relationship?
Opinions:
Majority - Felts, J.
No. An oral promise of 'permanent' employment, without additional consideration from the employee, creates an indefinite hiring that is terminable at the will of either party. The court reasoned that the general rule in the United States is that an indefinite hiring is a hiring at will. For a contract of permanent employment to be enforceable as anything other than at-will, the employee must provide valuable consideration in addition to the services they perform. The court distinguished this case from those where employees provided such consideration, like releasing a legal claim or giving up a competing business. The Plaintiff's actions of quitting his former job and moving his family were merely detriments incidental to preparing for new employment, not a bargained-for benefit to the employer, and thus did not constitute the required additional consideration to make the promise of permanent employment binding.
Analysis:
This case strongly affirms the doctrine of at-will employment and clarifies the narrow scope of the 'additional consideration' exception. It establishes that ordinary sacrifices made by an employee to accept a new job, such as relocating or forgoing other opportunities, do not transform an otherwise indefinite employment arrangement into a contract for a fixed term. The decision requires a clear, bargained-for exchange that provides a distinct benefit to the employer—beyond the employee's labor—to overcome the presumption of at-will employment. This precedent makes it significantly more challenging for employees to enforce oral promises of 'permanent' or 'lifelong' employment in court.
