Pullman Co. v. Ray

Hammond, J., filed the following dissenting opinion. In Heckler v. Balto. & Ohio R. Co., 167 Md. 226 , 173 A. 2d 12 , 14, this Court, in refusing effect to an alleged lifetime contract because its terms were not sufficiently definite, said this: “Holding as we do that the declaration alleges that the settlement was made by the corporation itself, we have not found it necessary to discuss the question whether a contract of employment made in settlement of a damage suit for personal injuries incurred in the service of a corporation, by an agent with apparent authority to settle the claim, is an exception to the general rule as to the necessity for express authority to make a contract for life employment. This question is ably discussed in F. S. Royster Guano Co. v. Hall (C. C. A. 4th) 68 F. 2d 533 . There a number of cases are cited which recognize such an exception.” ²⁸² In C. & P. Telephone Co. of Baltimore City v. Murray, 198 Md. 526 , 84 A. 2d 870 , this Court held that in the absence of a consideration in addition to the promise to work, a lifetime contract could not be made by a company employee or officer without the proof of definite authority to make such a contract under a by-law or resolution of the board of directors.

The Court found in the Murray case that there was no independent consideration. However, the Court went on to say: “If the employee has purchased permanent or life employment for a valuable consideration additional to the services which he has contracted to render, a discharge without good cause may constitute a breach of contract.” The Court continued: “Many Courts in this country have held that a contract by which a corporation, in consideration of the release of a claim against it for damages, agrees to give the claimant permanent employment, is valid and enforceable, and is equivalent to life employment or employment for such length of time as the employer has work which the employee is able and willing to perform in a satisfactory manner ... it has been held that where an injured employee is induced to sign a release of his claim for damages on condition that he be given permanent employment, and the contract is clear and definite, the employer is estopped to deny the authority of the officer who made the promise, on the equitable principle that an employer should not retain the advantage or benefit arising from the promise and at the same time' deny the authority of the officer who made it.” The Court found that a settlement of a claim was an independent and additional consideration. Having clearly pointed out the road to be travelled by a legal vehicle factually equipped to use it, the Court, in the instant case, when confronted with such a vehicle, refuses it access to the road previously clearly marked and shunts it off onto, what seems to me, an archaic, unrealistic and illogical path, totally unsuited to it, and which unjustly penalizes the appellee in the prosecution of his bona fide claim. ²⁸³ All of the Courts which apply what I conceive to be the correct rule, namely, that settlement of a personal injury claim by a corporation may, in the ordinary course of business, include a contract of life employment, recognize the so-called general rule applied in the Murray case under the facts the Court there found. They deny the applicability of the general rule to cases where the facts are like those in the case before us and explain why a different rule should there be applied.

Some of the cases rely on the theory of apparent authority, some on the theory that a corporation which has received the benefits of a contract is properly and equitably estopped to deny the authority of the officer who made it. I think that the facts in this appeal justify invoking both theories. McNabb, as District Superintendent in Baltimore, was the company, as far as Ray was concerned. Ray was certainly justified, when he made the contract with McNabb, in thinking that he was making it with the company.

The board of directors meant nothing to him and he would not be bound by by-laws or board resolutions in the absence of actual knowledge of them. Restatement, Agency, 167 b. McNabb, as District Superintendent, undoubtedly could make settlements of personal injuries which involved, in dollars and cents, far more money than would be represented by the settlement which was made with Ray. The facts which I think justify finding estoppel are referred to hereafter.

A leading case which supports the appellee is F. S. Royster Guano Co. v. Hall, (C. C. A. 4th) 68 F. 2d 533, 535 (referred to in the Heckler case). There the plaintiff lost his right arm, received in settlement $700.00 and was put back to work at the same rate of wages he had been receiving. The company official who dealt with him was one Baynard, the Superintendent of the Charlotte plant, and the contract, as found by the Court, was for the payment of the sum of $700.00 and a lifetime job for top wages for common labor. The Circuit Court of Appeals for the Fourth Circuit, speaking through Judge Parker, pointed out that the plaintiff surrendered, ²⁸⁴ for the small sum of $700.00, his claim of damages for the loss of an arm, and said: “The case is radically different, therefore, from one where nothing is given or surrendered in consideration of the promise of permanent employment. . . .

The fair meaning of the promise was that defendant would furnish plaintiff employment so long as he might live at the highest rate of wages which it paid for common labor, with the implied provisos that he perform the work assigned him satisfactorily and that defendant continue in business.” The Court pointed out that ordinarily, the general manager of a business does not have authority to enter into contracts for life employment, but quotes Judge McDermott in General Paint Corp. v. Kramer, (C. C. A. 10th) 57 F. 2d 698, 703 , as follows: “We recognize that there are instances when such contracts are and should be upheld, as, for example, where, as an incident to a settlement for personal injuries, it is agreed to employ the injured one in some capacity not involving managerial responsibility.” Judge Parker went on to testify to the wisdom of the rule as follows: “The wisdom of this exception to the general rule is manifest. Such contracts providing employment to laborers who have been injured in the service of the employer do not interfere in any substantial way with the employer’s control over his business. They are reasonable, in that they enable the employer to obtain release from claims for damages which may prove expensive to him, while providing a livelihood to employees who have been injured in his service and who , because of such injury, may have difficulty in finding employment elsewhere. ... It is to be noted that in the case at bar, the defendant, while denying the validity of the contract upon which the jury has found that the release was obtained, has pleaded that release, as well as the statute of limitations, in bar of plaintiff’s right to recover for his injury.

If these pleas should be sustained, and at the same time validly be denied to the contract of which defendant has thus ²⁸⁵ had the benefit, the injured employee would be without remedy.” Judge Parker, for the Court, found that it would be hard to imagine anyone whose authority to make it would be “more readily assumed than a superintendent in general charge of the plant where the injury was sustained”, and said again, “but there is more here showing the authority of the superintendent with respect to this settlement than merely the general authority which usually pertains to that position. Someone made a settlement with plaintiff for his injuries and obtained a release. Plaintiff testified that it was the superintendent who did this; and, as stated above, the verdict of the jury must be interpreted as a finding that this was the fact. The defendant cannot accept the fruits of a settlement and then assert that the agent who made it had no authority to settle.

We do not mean to say that acceptance and reliance upon a release is, in the absence of knowledge, a ratification of the settlement as made; but it is a recognition of some authority to settle in the one who has obtained it, and the question which remains is as to the extent of that authority. The question here, then, is narrowed to this: Whether, under the circumstances disclosed, the superintendent in charge of the local business of the defendant, whose authority to settle a claim for personal injuries has been recognized, was clothed with apparent authority to bind the employer by a contract of permanent employment as one of the terms of the settlement. We think that this question must be answered in the affirmative. For cases in which a similar result has been reached see........” (Citing cases).

As the Court found, to paraphrase Judge Parker, McNabb made a settlement with the plaintiff which included a job for life, in consideration of forbearance to sue, and the statute of limitations is now a complete protection to the company. I do not think that the appellant which has accepted the fruits of this settlement for twenty-five years can now assert that the agent ²⁸⁶ who made it had no authority to settle. It is impossible for me to believe that a reasonable man would not inevitably find from the facts proven that the company either knew or must be presumed to have known of the settlement. Ray’s injuries were extremely serious.

He suffered the loss of his right leg, a skull fracture, fractures of his left leg and right arm, and other injuries over practically his entire body. No money was paid in settlement of these very serious injuries; no suit was ever filed seeking any. This alone would put the company on notice. All the Pullman Company paid was the hospital expenses, amounting to some $1,040.00, and weekly sums while Ray was unable to work, of about $10.00 per week, or some $440.00.

In addition, they purchased him an artificial leg, and thereafter, from time to time, three other artificial legs. All of this was done for an employee of no particular skill or value to the company who had worked for it only seven months before the injury. Yet, the District Superintendent in Baltimore promised this new employee a lifetime job. He worked as a diagram messenger for over twenty years.

The duties of a diagram messenger are to meet the various trains and to take to, and receive from, the Pullman conductor the schedules of seat and berth occupancy. The Pullman