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Carter v. Kaskaskia Comm. Action Agency

DECEMBER 20, 1974.




APPEAL from the Circuit Court of Marion County; the Hon. RAYMOND O. HORN, Judge, presiding.


This is an appeal from a judgment of the Circuit Court of Marion County entered on January 24, 1974, after a non-jury trial. The court ordered the defendant to pay the plaintiff the sum of $3760.

The plaintiff brought an action against the defendant, a not-for-profit corporation engaged in the performance of social and human services under programs of the Federal government, based on an alleged violation of a contract of employment. The defendant denied the factual occurrences of any violation and further argued that there is no common law right of the plaintiff to employment and that the employment, being for an indefinite term, was terminable at will, and therefore the plaintiff had no right to action on being discharged.

The plaintiff did not maintain that he was not discharged for cause but rather premised his case on the theory that the defendant had adopted a "Personnel Policy Manual," which thereby became a contract binding on both parties and that the procedures set forth therein were not followed in effecting the complained of discharge.

The defendant argued that this was not a contract and in the alternative that, even if it were, there had been substantial compliance therewith, such compliance satisfying all reasonable requirements.

The issue presented for review is whether or not the plaintiff was lawfully discharged as an employee of the defendant. We hold that he was illegally discharged and affirm the ruling of the trial court.

The defendant, Kaskaskia Community Action Agency, is a not-for-profit corporation, whose purpose is to improve the lot of the poor by attempting to create job opportunities and develop abilities to take advantage of such opportunities. This is done with the guidance of the Department of Labor and, for the most part, with funds allotted by the U.S. Government. Ivan Carter, the plaintiff, and one Mary Ann Smith, were employed by the defendant agency as "Manpower Director" and "Assistant Manpower Director," respectively, the former having started work in 1967 and Mary Smith in 1968. The employment of the plaintiff by the defendant was terminated on February 14, 1972, and that of Mary Smith on May 22, 1972.

There were no written contracts of employment and no evidence of any oral contracts with reference to tenure. During July of 1971 the executive director of the defendant agency compiled a book of procedures which was entitled "Personnel Policy Manual" (hereinafter referred to as Manual) and reviewed it with the employees, who accepted it. Later it was approved by the board of directors of the agency. Included in the Manual, among many other personnel-type items, are procedures for grievances, disciplinary action including dismissal, and review thereof. The review of a dismissal consisted of the possibility of appeal to the personnel committee and then to the board of directors by an employee who thought his dismissal was not justified. The plaintiff and Mary Smith presented their cases to both of these reviewing bodies. The plaintiff presented his case to the personnel committee and was invited to a meeting of the board of directors, but there was a fact issue decided by the trial court as to whether or not he left the meeting before his case was considered.

The trial court in its decision stated:

"The court cannot substitute its opinion over that of a Board of Directors unless there is a clear and arbitrary unlawful act."

On this basis he determined that there was sufficient compliance with the rules in the case of Mary Smith and that her action should fail. On the other hand, in the case of the plaintiff, the trial court determined "the action of the Board at the meeting of February 14, 1972, was void, illegal and of no force or effect."

It must be decided whether or not the procedures for dismissal set forth in the Manual after being adopted by the board of directors became a contract binding on both parties. The plaintiff's cause of action is based upon rights supposedly granted by the adoption of the Manual. The plaintiff argues that this Manual became part of the employment contract or, in the alternative, that by its representations the defendant is estopped from denying the plaintiff the rights contained in the policy. Unless the plaintiff acquired some right to a grievance hearing, it would seem that he could be discharged at the will of the employer.

• 1 As a proposition of law, the contract must be enforceable by both parties bound to it: i.e., there must be mutuality of obligation. To determine whether there was mutuality of obligation, it is necessary to examine the Manual itself. This document contains provisions concerning both the employer and the employees. It provides that professional employees will be expected to give 30 days' notice before resigning or lose their right to vacation pay. Certain paragraphs provide a method whereby employees would be given grievances procedures; thus, it would appear that there was mutuality of obligation. There seems to be no question that, as far as the capability of the parties to contract is concerned, the Board of Directors adopted the policy contained in the Manual.

The question then becomes whether the plaintiff assented to the proposed modification. It has been determined that, when the term of employment is at the will of the parties, continuing to work not only constitutes assent but also consideration for any modification of the original contract. (Gishen v. Dura Corporation (Mass. 1972), 285 N.E.2d 117; Robinson v. Phillips Petroleum Co. (1936), 175 Okla. 640, 54 P.2d 322; Trainer v. Laird (1936), 320 Pa. 414, 183 A. 40.) Thus, it appears that the plaintiff not only assented to ...

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