Skagerberg v. Blandin Paper Co.
266 N.W. 872, 197 Minn. 291, 1936 Minn. LEXIS 842 (1936)
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Rule of Law:
A contract for 'permanent employment' is terminable at the will of either party unless the employee provides valuable consideration in addition to the services for which they are compensated. Actions that are merely incidental to accepting employment, such as foregoing other job opportunities or relocating, do not constitute such additional consideration.
Facts:
- R. Skagerberg was a consulting engineer with a successful practice earning approximately $200 per week.
- Blandin Paper Co. had previously employed Skagerberg and was planning a major plant expansion.
- Skagerberg received an offer for an associate professor position at Purdue University, a fact known to Blandin Paper Co.
- Upon receiving the Purdue offer requiring an immediate response, Skagerberg called an officer at Blandin Paper Co.
- The Blandin officer orally offered Skagerberg 'permanent employment' at $600 per month if he would reject the Purdue offer and agree to purchase the home of Blandin's power superintendent.
- Relying on this offer, Skagerberg rejected the Purdue offer, moved to Grand Rapids, and began working for Blandin.
- Skagerberg later entered into a contract to purchase the superintendent's home as an 'accommodation' to the departing superintendent.
- After approximately two years of satisfactory performance, Blandin Paper Co. discharged Skagerberg from his employment.
Procedural Posture:
- R. Skagerberg (plaintiff) sued Blandin Paper Co. (defendant) in a Minnesota trial court for wrongful discharge after filing an amended complaint.
- Blandin Paper Co. filed a general demurrer to the complaint, arguing it failed to state a valid legal claim.
- The trial court sustained the demurrer, dismissing Skagerberg's lawsuit.
- Skagerberg (appellant) appealed the trial court's dismissal to the Minnesota Supreme Court.
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Issue:
Does an employee's rejection of another job offer, relinquishment of an existing business, and agreement to purchase a coworker's home as an accommodation constitute sufficient additional consideration to make an oral contract for 'permanent employment' an enforceable contract for a definite term rather than an at-will agreement?
Opinions:
Majority - Julius J. Olson, Justice.
No, the employee's actions do not constitute sufficient additional consideration to alter the at-will nature of a contract for 'permanent employment.' The general rule is that the term 'permanent employment' in a service contract creates an indefinite hiring terminable at the will of either party. An exception exists when an employee provides valuable consideration separate from and in addition to the services rendered, essentially 'purchasing' the employment. Here, Skagerberg's alleged items of additional consideration are insufficient. Rejecting the Purdue offer and giving up his consulting practice are merely incidental to accepting new employment, as nearly every desirable employee must forgo other opportunities. Furthermore, Skagerberg's own letter states that the purchase of his coworker's house was an 'accommodation to him,' not a bargained-for benefit for Blandin Paper Co. These actions do not rise to the level of consideration seen in precedent cases, such as releasing a personal injury claim or selling a competing business to the employer.
Analysis:
This decision reinforces the strong presumption of at-will employment and clarifies the narrow scope of the 'additional consideration' exception for contracts of 'permanent employment.' The court establishes a high bar for what constitutes sufficient additional consideration, distinguishing between actions that are truly bargained-for, independent benefits to the employer (like releasing a legal claim) and those that are merely the ordinary incidents and sacrifices of taking a new job. This holding makes it significantly more difficult for employees to enforce oral promises of job security based on having given up other opportunities. It signals to future courts that the consideration must be substantial and not a natural consequence of the employee's decision to accept the position.
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