No. 87-173
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
GORDON JULIAN,
Plaintiff and Appellant,
-vs-
MONTANA STATE UNIVERSITY, DENNIS G.
BROWN and EDWIN H. ABBOTT, individually,
Defendants and Respondents.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Joseph Gary, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
McKinley Anderson, Rozeman, Montana
For Respondent:
Roger N. Flair, Legal Counsel, MSU, Bozeman, Montana
Submitted on Rriefs: Sept. 10, 1987
Decided: December 11, 1987
Filed: DEC 11 1 8
97
Mr. Justice William E. Hunt, Sr., delivered the Opinion of
the Court.
This is an appeal from the District Court, Eighteenth
Judicial District, Gallatin County. Appellant was awarded
the sum of $6,978 as installments due him under an early
retirement contract with the defendants. Both parties were
denied attorney fees and costs.
A£ firmed.
The issues on appeal are as follows:
1. Did the District Court err in concluding that the
Montana Wage Protection Act, B 39-3-201 et seq., MCA, did not
apply to the sununer appointments given the plaintiff?
2. Did the District Court err in finding that no breach
of the August 9, 1984 contract occurred?
3. Did the District Court, by requiring that both
parties perform according to the contract, err by requiring
specific performance of a contract for personal service?
4. Did the court err in finding that the defendants
acted in good faith and with fair dealing?
The following facts are undisputed.
At all times relevant to this action plaintiff Gordon
Julian was employed as a professor of chemistry in the
chemistry department of defendant Montana State University.
Plaintiff Julian and defendants entered into an agreement
dated August 9, 1984 concerning plaintiff's early retirement.
The agreement provided Julian with sununer appointments for
the three years preceding his retirement on June 30, 1987;
appointed him chairman of the search committee employed in
filling his vacancy; and assured him that subject to funding
and need, the Chemistry Department would try to hire him on a
"one-third time, temporary" basis after his retirement. On
August 21, 1984 defendant Abbott, head of plaintiff's
chemistry department, sent plaintiff a memo assuring him that
every effort would be made to see that plaintiff was given
post retirement employment as specified in the August 9
agreement.
Plaintiff was given summer appointments for 1984 and
1985 and was paid. He received a similar appointment in
1986. In July, 1986, defendant Dean Brown requested that
Julian write a draft resignation letter as required by
University policy. The letter Julian tendered was
substantially different than the agreement of August 9, 1984.
In a memo dated August 4, 1986 defendant Brown requested that
plaintiff resubmit a letter that would better reflect the
terms of the August 9, 1984 agreement. Plaintiff responded
by requesting clarification of University policy. In reply
to this request Dr. Abbott sent the following to appellant:
The purpose of this memo is to clarify the spirit
in which our agreement of August 9, 1984 was
reached. While I am not able to promise you
post-retirement employment, the department has been
hiring temporary instructors every year for quite a
long time. I expect that such money will continue
to be available and I will make every effort to see
to it that you have at least three years of
part-time post-retirement employment.
Receiving the draft letter, defendant Brown, being
concerned that if he paid plaintiff for July, 1986, he would
be accepting the new terms, stopped payment on plaintiff's
July pay.
Plaintiff did not discover his check was being withheld
until August 11, 1986, the normal payday. Plaintiff
immediately telephoned Dean Brown who informed him that he
was holding plaintiff's pay until the resignation problems
could he worked out. When Dean Brown tried unsuccessfully to
set up a meeting with the plaintiff, he continued to withhold
plaintiff's pay. Plaintiff made no effort to meet with or
otherwise contact Dean Brown or Dr. Abbott but instead filed
this lawsuit on September 11, 1986.
The District Court determined that the contract involved
was not an employment contract covered under the Montana Wage
Protection Act, 39-3-201 et seq., MCA, but was instead a
contract in which the summer appointments were consideration
for the plaintiff's early retirement. The District Court
also found that defendant Brown's actions in withholding
plaintiff's pay were reasonable and in good faith and that
they did not breach the contract. The District Court held
that no cause of action lay against Dean Brown or Dr. Abbott
as individuals but only against Montana State University.
Julian appeals.
Although not presented formally as an issue in the
appellant Julian's brief, it appears that Julian contends the
Court erred in not deciding the case under the provisions of
the Montana Wage Protection Act (MWPA). We hold that there
was no error. The pertinent code section reads as follows:
(1) Every employer of labor in the state of
Montana shall pay to each employee the wages earned
by such employee in lawful money of the United
States or checks on banks convertible into cash on
demand at the full face value thereof, and no
person - - labor - - perfo-rmed may
for whom has been
withhold from any employee any wages earned or
unpaid for a longer period than 10 business days
after the same are due and payable. ..
(3) Provisions of this section do not apply to any
professional, supervisory, or technical employee
who by custom receives his wages earned at least
once monthly. (Emphasis supplied.)
Section 39-3-204, MCA.
Appellant argues that the monies received by him for his
summer appointments were clearly wages paid to him as an
employee of Montana State University. The term wages is
defined by $ 39-3-201 (5), MCA, as "any money due an employee
from the employer ... and shall include... gratuities of
any kind." Appellant argues that if this compensation was
not wages in the traditional sense, it was certainly a
gratuity thus falling within the definition in the statute.
This argument is not compelling. The record shows that
the sununer appointments were intended by both parties to be
consideration in support of appellant's promise to retire
early. It was certainly not a gratuity. The District Court
found that the appellant was not under any obligation to
perform services in addition to those he would normally have
performed as a tenured professor at the University. When a
district court finding is supported by substantial credible
evidence, this Court will not overturn it. Searight v.
Cimino (Mont. 1986), 718 P.2d 652, 653, 43 St.Rep. 810, 812;
Rose v. Rose (1982), 201 Mont. 86, 91, 651 P.2d 1018, 1020.
Dr. Abbott testified that the University did not expect
any services from Julian outside those normally required of a
tenured professor, nor was Julian given any. All that was
expected was Julian's retirement. Appellant testified that
he felt an obligation to be on campus but his contract did
not require it. We agree with the District Court's finding
that appellant was under no obligation to perform services
for respondent.
The District Court was correct in not applying the MWPA.
The statute specifically states that "no person - - for whom
labor has been performed" may withhold wages from an
employee. Section 39-3-204 (1), MCA. No labor was performed
by the appellant here. Appellant's summer appointments were
not ordinary contracts for services within the meaning of the
MLJPA. The appointments were consideration supporting the
retirement contract. The summer appointments cannot be
focused upon to the exclusion of the rest of the contract.
The whole of a contract is to be taken together so as to give
effect to every part if reasonably practicable. Bender v.
Rookhuizen (Mont. 1984), 41 St.Rep. 1418, 1422, 685 P.2d 343,
346. Under the specific facts of this case, the District
Court was reasonable in construing the contract as it did.
Appellant argues vigorously that if we affirm the
District Court on this point we effectively overturn our
decision in Hammill v. Young (1975), 168 Mont. 81, 540 P.2d
971. In Hammill, this Court held that 41-1301(2), R.C.M.
1947, now S 39-3-201 (3), does not exclude professionals from
protection of the Act but only excludes them from the section
that requires bi-monthly payments of wages. Since
disposition of this issue does not hinge upon the
interpretation of a wage contract under the MWPA but rather
upon a contract for early retirement, we are not disturbing
the Hammill decision.
Appellant additionally contends that if he was not
employed during his summer appointments as defined in the
MWPA then he could not use those appointments to increase his
retirement pay under the Teachers Retirement Act, S 19-4-101,
et seq., MCA. Thus the purpose of the contract would be
defeated. Because we are not interpreting the Teachers
Retirement Act we need not decide whether appellant was
employed for purposes of his retirement plan.
Appellant next challenges the sufficiency of the
evidence upon which the District Court found that there was
no breach of the contract by the respondents. We affirm the
District Court on this issue.
The District Court in its conclusion of law stated that
Dean Brown was acting reasonably when he temporarily withheld
Julian's July and August, 1986, installments until he
received a resignation letter more similar to the 1984
agreement. The court also found that this action did not
constitute a breach of the 1984 contract.
Appellant argues that respondents breached the contract
when they did not pay appellant for his 1986 summer
appointment. Because their actions touched the fundamental
purpose of the contract, appellant argues, they committed a
material breach. See Rogus v. Relyea (1979), 184 Mont. 1, 8,
601 P.2d 37, 41.
Although the nonperformance of a material contractual
obligation is generally a breach, there are instances where
such nonperformance is justified or excused. Section 251 of
the Restatement (Second) of Contracts (1979) states the
following:
(1) Where reasonable grounds arise to believe that
the obligor will conunit a breach by non-performance
that would of itself give the obligee a claim for
damages for total breach under § 243, the obligee
may demand adequate assurance of due performance
and may, if reasonable, suspend any perforn~ancefor
which he has not already received the agreed.
exchange until he receives such assurance.
This rule was developed to give a party recourse in
instances where the other party's actions give rise to a
reasonable belief that he will not perform but do not rise to
the level of anticipatory repudiation. See Restatement
(Second) of Contracts 5 251 conunent a (1979). In Montana,
the standard for anticipatory breach is high. "A repudiation
or renunciation must be entire, absolute and unequivocal to
support an action for anticipatory breach." S.T.C., Inc. v.
City of Billings (1975), 168 Mont. 364, 373, 543 P.2d 374,
379. The District Court found that appellant's actions did
not rise to the level of an anticipatory breach and we agree.
But we also agree with the District Court that appellant's
actions caused a reasonable belief in respondents that he may
not have performed on the contract.
Several jurisdictions have adopted Restatement (Second)
of Contracts $ 251 comment a (1979). See, e.g., L. E.
Spitzer Co., Inc. v. Barron (Alaska 1978), 581. P.2d 213;
Carfield & Sons, Inc. v. Cowling (Colo. Ct. App. 19801, 616
P. 2d 1008; Jonnet Develop. Corp. v. Dietrich Industries (Pa.
Super. Ct. 1983), 463 A.2d 1026; Juarez v. Hamner (Tex. Ct.
App. 19841, 674 S.W.2d 856. We find L. E. Spitzer Co. to be
directly on point. In that case Spitzer and Barron had
entered into a joint venture on a construction project.
Spitzer presented Barron with a handwritten document
ostensibly containing terms of an earlier oral agreement.
Both agreed the document should be reduced to proper legal
form and signed. Barron was later presented with the written
agreement but which contained terms materially different from
the oral contract. Barron shut down the construction and
later talked to Spitzer who denied any difference between the
oral and written contract. The Alaska Supreme Court held
that Spitzer's material alteration of the contract indicated
an unwillingness to perform that gave Barron reasonable
grounds to suspend performance until he received adequate
assurances from Spitzer. I. E. Spitzer Co, 581 P.2d at 217.
,
In the instant case appellant Julian returned a
resignation letter containing terms substantially different
from those in the 1984 agreement. Respondent Dean Brown then
sent a memo requesting a letter that better reflected the
August, 1984, language. He also put a hold on appellant's
third contract installment. Appellant was informed on August
11, 1986 that his pay was being withheld because of the
resignation letter. Although Dean Brown made efforts to
discuss the problems, appellant made no effort to contact
respondents, nor did he submit a new resignation letter but
instead filed this lawsuit. Even though the District Court
found no anticipatory breach on the part of appellant,
respondents were justified in withholding his pay until they
could be assured he would comport with the 1 9 8 4 agreement.
We hold that there was sufficient evidence to find that
respondents did not breach the contract.
Appellant's third issue on appeal is not meritorious.
Appellant argues that because his contract was one for
personal services the District Court could not enforce it
through specific performance. Section 2 7 - 1 - 4 1 2 ( I ) , MCA,
states:
The following obligations cannot be specifically
enforced: (1) an obligation to render personal
service or to employ another therein;
Appellant specifically attacks items 2 and 3 of the 1984
agreement. Item 3 of the contract would require the
respondent to offer post-retirement employment to the
appellant if feasible. This provision does not obligate
Julian to accept any such position if he does not wish. No
personal service is actually required of the appellant.
Item 2 appears to require some service as chairman of
the search committee for his replacement, but is more
difficult to interpret. The clause states:
2. During the third and final year of this
agreement you will serve as chairman of the search
committee for the biochemistry vacancy created by
your retirement.
Appellant essentially argues that the word "will" equals
"must," therefore requiring appellant's personal service as
chairman. It is clear on the record, however, that this
provision was never meant to obligate the appellant in any
way. Instead it only allows the appellant an opportunity or
gives him a right to serve as chairman. It does not require
it. We therefore affirm the District Court on this issue as
well.
Appellant lastly contends that there was sufficient
evidence to find the respondents had breached the implied
covenant of good faith and fair dealing by withholding
appellant's summer installment in order to coerce him into
submitting a resignation letter. We do not agree. There is
nothing on the record to indicate that the respondents were
acting maliciously in their steps to obtain a resignation
letter they thought was required by University policy.
Respondents did not breach their contract. The record
shows that they dealt with each problem in a fair and
reasonable manner and at all times tried to adhere to the
1984 agreement. For those reasons we affirm the holding of
the District Court on this issue.
Affirmed. /