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07/20/77 ORVILLE E. FORTUNE v. NATIONAL CASH

July 20, 1977

ORVILLE E. FORTUNE
v.
THE NATIONAL CASH REGISTER COMPANY



Norfolk. Contract. Writ in the Superior Court dated June 15, 1971. The action was tried before Brogna, J. After review by the Appeals Court, the Supreme Judicial Court granted leave to obtain further appellate review.

Hennessey, C.j., Kaplan, Wilkins, Liacos, & Abrams, JJ.

SYLLABUS BY THE COURT

Contract, Performance and breach, Contract of employment.

The opinion of the court was delivered by: Abrams

A written contract for employment at will contained an implied covenant of good faith and fair dealing, and a termination not made in good faith constituted a breach of the contract. [100-105]

In an action to recover certain commissions allegedly due as a result of the sale of cash registers, evidence warranted a finding that termination of the plaintiff's employment as a salesman was not made in good faith. [105-106]

A salesman whose contract for employment at will was terminated in bad faith was not barred from recovery of a commission allegedly due him by the fact that he failed to follow a notice and grievance procedure set forth under the contract. [106-108]

In an action to recover certain commissions allegedly due the plaintiff from his employer, this court did not consider the employer's contention that the plaintiff was barred from recovery because he failed to bring his suit within two years after the cause of action accrued as required by his employment contract where the employer did not raise the limitation period in its answer. [108]

Orville E. Fortune (Fortune), a former salesman of The National Cash Register Company (NCR), brought a suit to recover certain commissions allegedly due as a result of a sale of cash registers to First National Stores Inc. (First National) in 1968. Counts 1 and 2 of Fortune's amended declaration claimed bonus payments under the parties' written contract of employment. The third count sought recovery in quantum meruit for the reasonable value of Fortune's services relating to the same sales transaction. Judgment on a jury verdict for Fortune was reversed by the Appeals Court, Fortune v. National Cash Register Co., 4 Mass. App. Ct. 386 (1976), and this court granted leave to obtain further appellate review. We affirm the judgment of the Superior Court. We hold, for the reasons stated herein, there was no error in submitting the issue of "bad faith" termination of an employment at will contract to the jury.

The issues before the court are raised by NCR's motion for directed verdicts. *fn1 Accordingly, we summarize the evidence most favorable to the plaintiff. H.P. Hood & Sons v. Ford Motor Co. 370 Mass. 69, 71 (1976).

Fortune was employed by NCR under a written "salesman's contract" which was terminable at will, without cause, by either party on written notice. The contract provided that Fortune would receive a weekly salary in a fixed amount plus a bonus for sales made within the "territory" (i.e., customer accounts or stores) assigned to him for "coverage or supervision," whether the sale was made by him or someone else. *fn2 The amount of the bonus was determined on the basis of "bonus credits," which were computed as a percentage of the price of products sold. Fortune would be paid a percentage of the applicable bonus credit as follows: (1) 75% if the territory was assigned to him at the date of the order, (2) 25% if the territory was assigned to him at the date of delivery and installation, or (3) 100% if the territory was assigned to him at both times. The contract further provided that the "bonus interest" would terminate if shipment of the order was not made within eighteen months from the date of the order unless (1) the territory was assigned to him for coverage at the date of delivery and installation, or (2) special engineering was required to fulfil the contract. In addition, NCR reserved the right to sell products in the salesman's territory without paying a bonus; however, this right could be exercised only on written notice.

In 1968, Fortune's territory included First National. This account had been part of his territory for the preceding six years; he had been successful in obtaining several orders from First National, including a million dollar order in 1963. Sometime in late 1967, or early 1968, NCR introduced a new model cash register, Class 5. Fortune corresponded with First National in an effort to sell the machine. He also helped to arrange for a demonstration of the Class 5 to executives of First National on October 4, 1968. NCR had a team of men also working on this sale.

On November 27, 1968, NCR's manager of chain and department stores, and the Boston branch manager, both part of NCR's team, wrote to First National regarding the Class 5. The letter covered a number of subjects, including price protection, trade-ins, and trade-in protection against obsolescence. While NCR normally offered price protection for only an eighteen-month term, apparently the size of the proposed order from First National caused NCR to extend its price protection terms for either a two-year or four-year period. On November 29, 1968, First National signed an order for 2,008 Class 5 machines to be delivered over a four-year period at a purchase price of approximately $5,000,000. Although Fortune did not participate in the negotiation of the terms of the order, *fn3 his name appeared on the order form in the space entitled "salesman credited." The amount of the bonus credit as shown on the order was $92,079.99.

On January 6, 1969, the first working day of the new year, Fortune found an envelope on his desk at work. It contained a termination notice addressed to his home dated December 2, 1968. Shortly after receiving the notice, Fortune spoke to the Boston branch manager with whom he was friendly. The manager told him, "You are through," but, after considering some of the details necessary for the smooth operation of the First National order, told him to "stay on," and to "eep on doing what you are doing right now." Fortune remained with the company in a position entitled "sales support." *fn4 In ...


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