Kilkenny, Labrecque and Leonard.
Defendant Van Vlaanderen Machine Company appeals from a judgment of the Law Division awarding damages of $37,000 to plaintiff under an employment contract. The action was dismissed as to the codefendant Peter Van Vlaanderen.
Plaintiff was a business consultant specializing in marketing and sales. Defendant manufactured printing presses as well as other machinery. Sometime around November 1965 it entered into discussions which, eventually, led to its retention of plaintiff as a management consultant.
The terms of the agreement between the parties were set forth in a letter, dated February 15, 1966, addressed by plaintiff to Peter Van Vlaanderen, the company's vice-president. It recited:
This letter is to confirm our understanding in which you have agreed to engage me to provide business diagnosis and interim management for one year at $52,000.00. Fee to be paid monthly in advance. Out of pocket expenses to be reimbursed monthly. Extraordinary expenses, e.g. travel, to be agreed upon in advance.
Apart from my normal practice, I have agreed to release you from this contract three months from this date if at that time you do not find my work profitable. If this should occur, it is agreed that my fee will be $15,000.00 plus expenses. Otherwise the contract is to continue for one year. (Emphasis added.)
It was accepted by Peter Van Vlaanderen on behalf of the company on March 7, 1966.
The parties worked under this agreement until May 16, 1966, when Peter Van Vlaanderen telephoned plaintiff and told him his work was of no benefit to the company, its officers were unsatisfied and "we want to call it off." By then defendant had already paid plaintiff $15,000 plus his expenses. Plaintiff thereafter commenced the present action.
Defendant urges that (1) the contract between the parties was one for personal satisfaction, and therefore defendant
was not required to show a reasonable basis for its decision to terminate its relationship with plaintiff; (2) the court erred in charging the jury that the burden rested upon defendant to prove that the contract was not profitable; (3) the court erred in failing to recharge the jury when questions it propounded to the court indicated that the jury was confused, and (4) the court wrongfully excluded testimony as to the purpose behind the contract's provision that $15,000 was to be due plaintiff if the contract was abrogated three months after its inception.
Defendant argues that the contract was one of personal satisfaction, which permitted it unilaterally to cancel. Not so. The contract created an employment relationship covering a one year period, but subject to termination, at defendant's option, three months after its date if defendant did not find plaintiff's services to be profitable. The right to dissolve the contractual relationship was thus a conditional one. A personal satisfaction contract, so called, generally involves a subject matter which concerns the personal taste, fancy or feeling of another, who is thus made the sole judge of the quality of the performance. 17 Am. Jur. 2d, Contracts § 366, p. 808 (1964). However, contracts which promise performance in the form of results to the satisfaction of another are in a different category and as to them, the New Jersey rule is that the party claiming dissatisfaction must act honestly and in good faith. Grobarchik v. Nasa Mortgage and Investment Co. , 117 N.J.L. 33, 34 (Sup. Ct. 1936); Williams v. Hirshorn , 91 N.J.L. 419 (Sup. Ct. 1918). Gerisch v. Herold , 82 N.J.L. 605, 607-608 (E. & A. 1911). This comports with the majority rule. See 17 Am. Jur. 2d, Contracts § 366, at 808-809 (1964). See also 5 Williston, Contracts (3d ed. 1961) § 675A, at 206-207; § 675B, at 210.
The contract here evidenced an intent that the continuation of plaintiff's relationship with defendant was not to be subject to the sole and unbridled discretion of defendant's officers but was to ...