Embry v. Hargadine, McKittrick Dry Goods Co. PDF

Citation Embry v. Hargadine, McKittrick Dry Goods Co., Court of Appeals of Missouri, 127 Mo. App. 383, 105 S.W. 777 (1907). Facts ​ The plaintiff, Embry, was employed by the defendant company under a written contract that expired on December 15, 1903. His annual salary was $2,000. ​ O...

Citation Embry v. Hargadine, McKittrick Dry Goods Co., Court of Appeals of Missouri, 127 Mo. App. 383, 105 S.W. 777 (1907). Facts ​ The plaintiff, Embry, was employed by the defendant company under a written contract that expired on December 15, 1903. His annual salary was $2,000. ​ On December 23, 1903, Embry approached McKittrick, the president of the company, demanding a renewal of his contract. He stated that if a new contract was not made immediately, he would leave the company. ​ McKittrick responded with words to the effect of, “Go ahead, you’re all right. Get your men out, and don’t let that worry you.” ​ Embry continued working for the company based on this exchange but was later dismissed on March 1, 1904, without cause, after being told his services were no longer required due to cost-cutting measures. ​ The company contended that no contract renewal had been made and argued that McKittrick never intended to reemploy Embry during their exchange. Procedural History ​ Embry sued the company for breach of contract. ​ The trial court found in favor of the defendant. ​ Embry appealed the decision to the Missouri Court of Appeals. Issue Did the conversation between Embry and McKittrick on December 23, 1903, constitute a binding contract of reemployment? Rule A binding contract is formed if the words or actions of one party would lead a reasonable person to believe that a contract was made, regardless of the unexpressed intentions of the other party. The focus is on outward expressions rather than subjective intent. Application ​ Reasonable Interpretation: The court determined that McKittrick’s words, “Go ahead, you’re all right,” could reasonably be interpreted by Embry as an agreement to reemployment. Embry acted on this understanding by continuing his work. ​ Subjective Intent Irrelevant: McKittrick’s internal, unexpressed intention not to renew Embry’s contract was deemed immaterial. The decisive factor was how McKittrick’s outward expressions would be perceived by a reasonable person. ​ Ambiguity in Language: The court noted that if McKittrick intended not to make a binding commitment, his response should have been clearer and less susceptible to misunderstanding. ​ Objective Theory of Contracts: The court emphasized that contracts are judged by outward expressions of intent, not undisclosed, subjective intentions. Embry’s reliance on McKittrick’s statements was justified under this doctrine. Reasonable Interpretation 1.​ "We think no reasonable man would construe that answer to Embry’s demand that he be employed for another year, otherwise than as an assent to the demand, and that Embry had the right to rely on it as an assent." 2.​ "McKittrick must have answered as he did for the purpose of assuring appellant that any apprehension was needless, as appellant’s services would be retained by the respondent." Subjective Intent Irrelevant 1.​ "The inner intention of parties to a conversation subsequently alleged to create a contract cannot either make a contract of what transpired, or prevent one from arising, if the words used were sufficient to constitute a contract." 2.​ "The law imputes to a person an intention corresponding to the reasonable meaning of his words and acts. It judges his intention by his outward expressions and excludes all questions in regard to his unexpressed intention." Ambiguity in Language 1.​ "If McKittrick intended not to employ Embry by what transpired between them according to the latter’s testimony, yet if what McKittrick said would have been taken by a reasonable man to be an employment, and Embry so understood it, it constituted a valid contract." Objective Theory of Contracts 1.​ "If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to the other party’s terms." 2.​ "The words or acts, judged by a reasonable standard, manifest an intention to agree. It is immaterial what may be the real, but unexpressed, state of his mind on the subject." Holding The Missouri Court of Appeals reversed the trial court’s decision, holding that the conversation between Embry and McKittrick constituted a valid and binding contract of reemployment. Conclusion The case was remanded for further proceedings consistent with the appellate court’s opinion. Key Takeaways 1.​ The objective theory of contracts dictates that the formation of a contract depends on how a reasonable person interprets the words or actions of the parties, not their hidden intentions. 2.​ Employers must be explicit when rejecting demands for reemployment or contracts to avoid creating binding obligations through ambiguous language. 3.​ A reasonable reliance on statements made during contract negotiations can lead to enforceable agreements.