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24948 - Prescott v. Farmers Telephone Cooperative, Inc.

Shearouse Adv. Sh. No. 19
S.E. 2d

THE STATE OF SOUTH CAROLINA

In The Supreme Court

David M. Prescott, Respondent,

v.

Farmers Telephone

Cooperative, Inc., Petitioner.



ON WRIT OF CERTIORARI TO THE COURT OF

APPEALS



Appeal From Sumter County

Linwood S. Evans, Jr., Special Circuit Court Judge



Opinion No. 24948

Heard April 21, 1999 - Filed June 1, 1999



REVERSED

William E. Durant, Jr., and Michael M. Jordan, of

Schwartz, McLeod, Durant, and Jordan, of Sumter, for

petitioner.

J. Edward Bell, III, of Bell & Moore, of Sumter, for

respondent.

Robert L. Widener and Richard J. Morgan, of McNair

Law Firm, of Columbia, for amicus curiae South

Carolina Telephone Association.

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PRESCOTT v. FARMERS TELEPHONE





Benjamin A. Johnson and Stephen M. Cox, of Robinson,

Bradshaw & Hinson, P.A., of Rock Hill, for amici curiae

The South Carolina Chamber of Commerce and The

South Carolina Manufacturers Alliance.





BURNETT, A.J.: The Court granted a writ of certiorari to review

the decision of the Court of Appeals in Prescott v. Farmers Tel., Coop., Inc., 328

S.C. 379, 491 S.E.2d 698 (Ct. App. 1997) (Stilwell, J., dissenting). We reverse.





BACKGROUND



Respondent David M. Prescott (Prescott) brought this wrongful

discharge action against his former employer, Petitioner Farmers Telephone

Cooperative, Inc. (FTC). Prescott alleged various causes of action, including

breach of an employment agreement, breach of the implied duty of good faith and

fair dealing, defamation, intentional interference with an economic relationship,

and promissory estoppel. He also sought specific performance of the employment

contract. The trial court granted FTC summary judgment on all claims except

defamation. Prescott appealed.





The Court of Appeals affirmed in part, reversed in part, and

remanded. Id. In relevant part, the Court of Appeals held FTC's employment

handbook did not alter Prescott's status as an at-will employee and, thereby, FTC

could terminate Prescott without cause. Id. The Court of Appeals also held

alleged oral assurances by Prescott's supervisors created a jury issue as to

whether Prescott had a contract of employment with FTC requiring termination

to be for cause. Id. The issue on the writ of certiorari concerns this second

ruling.





FACTS



In March 1972, Prescott was hired by FTC as a lineman. Over time,

he was promoted. In 1992, Prescott was terminated for lying.







Thereafter, Prescott filed this lawsuit. By way of deposition, Prescott



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PRESCOTT v. FARMERS TELEPHONE





testified he received an employee handbook several months after he was hired.1

He stated it was his understanding from the employee handbook and through

discussions with three supervisors that, "[a] s long as you do your job, keep your

nose clean, that you'd have a job at Farmers Telephone right on." Prescott

testified he interpreted "keeping your nose clean" as "don't go out there and get

into trouble and do things you're not supposed to be doing."





At the hearing on FTC's motion for summary judgment, Prescott

presented his affidavit to the trial court. In this affidavit, Prescott asserted, at the

time he was hired, FTC officials told him he would have a job with FTC "as long

as [he did his] job, [kept his] nose clean." He stated he interpreted this to mean

"that my employment would continue so long as I performed my employment

duties and refrained from engaging in misconduct." Prescott further stated,

during the years following his hire, supervisors reiterated the same statement.

According to Prescott, FTC issued a new employee manual in 1988.2 Even after

its issuance, Prescott's supervisors told him "as long as you do your job, keep

your nose clean, that you'd have a job at Farmers Telephone." According to

Prescott, he was hired as an employee of definite duration who could only be

terminated for cause and, over his twenty-year employment, his status was orally

confirmed by supervisors, in spite of any statements to the contrary in

employment manuals.





FTC denied these allegations, responding the 1988 employee

handbook contained a disclaimer which stated all employees are at-will and may

be terminated at any time without notice.




1 According to Prescott, the 1972 handbook specifically provided employees

could only be terminated for cause. Since this handbook does not appear in the

Appendix, the Court will not consider the effect of the document. Rule 209(h),

SCACR (appellate court will not consider any fact which does not appear in the

[Appendix]); see also Zaman v. South Carolina State Bd. of Medical Examiners,

305 S.C. 281, 408 S.E.2d 213 (1991) (where record provides no factual basis, the

Court will not consider the issue).





2 The Appendix indicates FTC issued an employee handbook in 1979 and a

document entitled "Personnel Policies" in 1988.

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PRESCOTT v. FARMERS TELEPHONE





ISSUE



Did the Court of Appeals err by holding the oral statement by

Prescott's supervisors created a jury issue as to whether Prescott's

status as an at-will employee was altered?





DISCUSSION





South Carolina has long recognized the doctrine of employment at

Will. Pursuant to this doctrine, "a contract for permanent employment, so long as

it is satisfactorily performed which is not supported by any consideration other

than the obligation or service to be performed on the one hand and wages to be

paid on the other, is terminable at the pleasure of either party." Shealy v. Fowler,

182 S.C. 81, 87, 188 S.E. 499, 502 (1936). At-will employment is generally

terminable by either party at any time, for any reason or for no reason at all.

Todd v. South Carolina Farm Bureau Mut. Ins. Co., 276 S.C. 284, 278 S.E.2d 607

(1981), appeal after remand, 283 S.C. 155,321 S.E.2d 602 (Ct. App. 1984), writ

granted in part, 285 S.C. 84, 328 S.E.2d 479 quashed, 287 S.C. 190, 336 S.E.2d 472

(1985); Culler v. Blue Ridge Elec. Coop. Inc., 309 S.C. 243, 245, 422 S.E.2d 9t, 92

(1992) (doctrine of employment at-will in its pure form allows an employer to

discharge an employee for good reason, no reason, or bad reason without

incurring liability). The termination of an at-will employee normally does not give

rise to a cause of action for breach of contract. Hudson v. Zenith Engraving Co.,

Inc., 273 S.C. 766, 259 S.E.2d 812 (1979).





Although this Court has recognized exceptions to employment at

will,3 the doctrine remains in force in South Carolina. We find the policy of

employment at-will provides necessary flexibility for the marketplace and is,

ultimately, an incentive to economic development. Accordingly, we affirm and




3 See Small v. Springs Industries, Inc., 292 S.C. 48t, 357 S.E.2d 452

(1987) (employer may not discharge employee in violation of procedures set forth

in employee handbook); Ludwick v. This Minute of Carolina, Inc., 287 S.C. 219, 337

S.E.2d 213 (1985) (an at-will employee may not be discharged in violation of a

clear mandate of public policy); Moshtaghi v. The Citadel, 314 S. C. 316, 443 S.E.2d

915 (Ct. App. 1994) (an at-will employee may not be terminated for exercising

constitutional rights).

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PRESCOTT v. FARMERS TELEPHONE





adhere to the employment at-will doctrine in South Carolina.





Of course, an employer and employee may choose to contractually

alter the general rule of employment at-will and restrict their freedom to

discharge without cause or to resign with impunity. See Small v. Springs

Industries, Inc., 292 S.C. 481, 357 S.E.2d 452 (1987) (employment at-will limited by

employer's issuance of employee handbook setting forth progressive discharge

procedures); Weber v. Perry, 201 S.C. 8, 21 S.E.2d 193 (1942) (employee is not at

will where he provides consideration in addition to the provision of services).





General contract law provides that a "contract exists when there is

an agreement between two or more persons upon sufficient consideration either

to do or not to do a particular act." Carolina Amusement Co., Inc. v. Connecticut

Nat. Life Ins. Co., 313 S.C. 215, 220, 437 S.E.2d 122, 125 (Ct. App. 1993), quoting

Benya v. Gamble, 282 S.C. 624, 628, 321 S.E.2d 57, 50 (Ct. App. 1984). A contract

may arise from oral or written words or by conduct. Gaskins v. Blue Cross-Blue

Shield of South Carolina, 271 S.C. 1011 245 S.E.2d 598 (1978).





In the employment context, we have already recognized that a

contract altering the at-will arrangement may arise, in part, from the oral

statement of the employer. In King v. PYA/Monarch, Inc., 317 S.C. 385, 453 S.E.2d

885 (1995), we held a written employment agreement which stated employment

was at-will was modified by the issuance of a written reprimand and a

supervisor's oral statement that two other warnings would be required before the

employee could be terminated.4 Applying this law and general contract

principles, we hold the at-will status of an employee may be altered by an oral

contract of definite employment.





In order to prove the existence of a definite contract of employment,

the employee must establish all of the elements of a contract. Most employment

agreements are unilateral. Small v. Springs Industries, Inc., supra. A unilateral

contract has the following three elements: 1) a specific offer, 2) communication of

the offer to the employee, and 3) performance of job duties in reliance on the


4 We have also recognized oral employment contracts where the employee

provides consideration in addition to the provision of services. Weber v. Perry,

201 S.C. 8, 21 S.E.2d 193 (1942). When this occurs, the employment is no longer

at-will.

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PRESCOTT v. FARMERS TELEPHONE







offer.5 82 Am.Jur.2d Wrongful Discharge § 84 (1992).





"An offer is the manifestation of willingness to enter into a bargain,

so made as to justify another person in understanding that his assent to that

bargain is invited and will conclude it." Carolina Amusement Co., Inc. v.

Connecticut Nat. Life Ins. Co., supra, at 220, S.E.2d at 125, quoting Restatement

(Second) of Contracts § 24 (1981). "The offer identifies the bargained for

exchange and creates a power of acceptance in the offeree." Carolina

Amusement Co., Inc. v. Connecticut Nat. Life Ins. Co., supra, at 220, S.E.2d at 125,

quoting Restatement (Second) of Contracts § 29 (1981).





"Any conduct from which a reasonable person in the offeree's

position would be justified in inferring a promise in return for a requested act ...

amounts to an offer." Carolina Amusement Co., Inc. v. Connecticut Nat. Life Ins.

Co., supra, at 220, S.E.2d at 125, quoting Broadway. Jeffers, 185 S.C. 523, 530-31,

194 S.E. 642, 645 (1938). To be binding, an offer must be definite. In addition, it

must "be one which is intended of itself to create legal relations on acceptance."

McLaurin v. Hamer, 165 S.C. 411, 420, 164 S.E. 2, 5 (1932).





Construing all ambiguities, conclusions, and inferences in the

evidence in favor of Prescott,6 we find Prescott failed to establish FTC made an

offer to alter his at-will employment status. The alleged offer, "[a]s long as you do

your job, keep your nose clean, that you'd have a job at Farmers Telephone right

on" is not sufficiently explicit to constitute an offer to limit termination to just

cause. We conclude a reasonable person in Prescott's position would construe

the statement as praise or encouragement, or even "puffery," rather than as an

offer of definite employment. Vague assurances of job security, even if repeated,

do not give rise to contractual rights. See Broussard v. Cad Inc.-Fed., 780 F.2d

162 (1" Cir. 1986) (representation "if [employee] did a good job he would have

long-term employment" is not express undertaking to guarantee employee could


5 A unilateral contract is one "in which there is a promise on one side only;

the consideration on the other side being executed." McMahan v. McMahon, 122

S.C. 336, 340, 115 S.E. 293, 294 (1922).





6 In ruling on motions for summary judgment, the court must construe all

ambiguities, conclusions, and inferences arising from the evidence against the

moving party. True v. Monteith, 327 S.C. 116, 489 S.E.2d 615 (1997).

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PRESCOTT v. FARMERS TELEPHONE





be discharged only for good cause); Eyerman v. Mary Kay Cosmetics, Inc., 967

F.2d 213 (6th Cir. 1992) (discussions concerning nursing homes for retired

directors and other retirement benefits and representative's question "if

[employees] wanted to receive a Cadillac every two years for the rest of their

lives," were insufficient to constitute promise to alter at-will contract); Chastain v.

Kelly-Springfield Tire Co., 733 F.2d 1479 (11th Cir. 1984) (statement by employer

that "jobs was (sic) secure; that we could continue on like we had been ... [i]f we

did our jobs, kept our noses clean, didn't make waves and not sell to Goodyear

and Kelly accounts" was not intent to offer lifetime employment); Rowe v.

Montgomery Ward & Co., 473 N.W.2d 268, 273 (Mich. 1991)(employee based just

cause employment on supervisor's statement as long as you sold, you would have

a job at the store; oral statements creating a contract to terminate only for cause

"must be based on more than an expression of an optimistic hope of a long

relationship"); Lawson v. Boeing Co., 792 P.2d 545 (Wash. App. 1990) (repeated

oral promises alleging guaranteed position. so long as employee's job performance

met a certain level was insufficient to create material fact of employment

contract).7





Since Prescott failed to establish FTC offered him definite

employment, he failed to establish the existence of a contract which altered his

status as an at-will employee.8 Accordingly, the Court of Appeals erred in

reversing the trial judge's order granting summary judgment to FTC on Prescott's

cause of action for breach of an employment agreement.





We dispose of FTC's remaining arguments pursuant to Rule

220(b)(1), SCACR, and the following authorities: Issue VIII: Townsend v. City o

Dillon, 326 S.C. 244, 486 S.E.2d 95 (1997)(an issue not ruled upon by trial court is

not preserved for appeal); Taylor v. Medenica, 324 S.C. 200, 479 S.E.2d 35 (1996) (a

party may not argue one ground at trial and an alternate ground on appeal);

Zaman v. South Carolina State Bd. of Medical Examiners, supra (record must


7 We refer to these cases solely for purposes of illustration.





8 Prescott asserts the alteration of his employment status is a non-issue

because he was hired as a term employee. We disagree. Since there is a

presumption of at-will employment, it is necessary to consider whether an offer

alters the presumption, regardless of whether the offer occurs at the initial hire or

during the employment.

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PRESCOTT v. FARMERS TELEPHONE





show issue was raised to trial court); Germain v. Nichol, 278 S.C. 508, 299 S.E.2d

335 (1983) (appellant has burden of providing the Court with a sufficient record

upon which Court can make a decision).9







REVERSED.





TOAL, A.C.J., MOORE, WALLER, and Acting Associate

Justice George T. Gregory, Jr., concur.






9 As to FTC's argument Prescott failed to appeal the trial judge's description

of the oral statement as "merely vague oral remarks about job security," we find

Prescott clearly presented this issue in his brief to the Court of Appeals.

p.24