On appeal from the Superior Court, Chancery Division, Monmouth County.
J. H. Coleman, R. S. Cohen and Gruccio. The opinion of the court was delivered by R. S. Cohen, J.A.D.
Citizens Bank of New Jersey (Citizens) and Gerald Libertelli entered into a five-year employment contract in July 1983, under which Libertelli was to serve as the bank's president, chairman of the board and chief executive officer. In November 1985, the board of directors terminated Libertelli's employment with the bank. Citizens then brought this action for a declaration of the rights and obligations of the bank and Libertelli under the employment contract. Libertelli counterclaimed for breach of contract, fraud and libel. The trial court denied Citizens' motion for summary judgment on its claims and for dismissal of Libertelli's. We granted leave to appeal and now reverse the denial of Citizens' motion for summary judgment with respect to Libertelli's termination, but affirm the denial of Citizens' motion to dismiss Libertelli's claim for libel.
Citizens argues that it was entitled to terminate Libertelli at its pleasure, pursuant to N.J.S.A. 17:9A-112. This statute, which is a part of the Banking Act of 1948, provides:
Subject to removal by the Board of Directors at its pleasure, or by the Commissioner pursuant to section 249, each officer shall hold office from the time of his election or appointment until the first meeting of the board of directors, following the next annual meeting of stockholders, at which officers are elected or appointed.
This provision applies to all New Jersey banks. N.J.S.A. 17:9A-2. It has never been interpreted or applied in any reported New Jersey decision, and the legislative history of the Banking Act provides no insight into its meaning. However, we may refer to the National Bank Act, which dates from the Civil War and similarly permits the board of directors of a nationally chartered bank to appoint a president, cashier, and other officers and to "dismiss such officers or any of them at pleasure, and appoint others to fill their places." 12 U.S.C. § 24, Fifth. Also, the Federal Reserve Act of 1913 permits the board of directors of a Federal Reserve Bank to appoint officers and employees "and to dismiss at pleasure such officers and employees." 12 U.S.C. § 341, Fifth.
Cases applying these federal statutes have uniformly held that the phrase "at pleasure" authorizes the board of directors to dismiss officers at any time, for any reason, and without liability for breach of contract or wrongful discharge. McGeehan v. Bank of New Hampshire Nat. Ass'n., 123 N.H. 83, 455 A.2d 1054 (N.H.1983); Kemper v. First Nat. Bank in Newton, 94 Ill.App. 3d 169, 49 Ill.Dec. 799, 418 N.E. 2d 819 (Ill.1981); Armano v. Federal Reserve Bank of Boston, 468 F. Supp. 674 (D.Mass.1979); Van Slyke v. Metropolitan Nat. Bank, 155 Minn. 319, 193 N.W. 470 (Minn.1923); Rankin v. Tygard, 198 F. 795 (8 Cir.1912). Provisions in bank officers' contracts for a specified term of employment are void as against the public policy embodied in the federal statute. McGeehan, supra, 455 A.2d at 1055.
The New Jersey Banking Act of 1948 was enacted against the background of the federal statutes and their settled interpretation. Like the federal legislation, N.J.S.A. 17:9A-112 authorizes the board of directors of a New Jersey bank to terminate its officers at its pleasure.*fn1 The bank contends it had
ample justification to terminate Libertelli, while Libertelli asserts that his termination was unfounded. We need not consider these contentions. The statute plainly authorizes the board to terminate Libertelli without cause and without incurring liability for breach of contract or wrongful discharge. The statutory authority is severely limited if its exercise can create liability for damages. If the Legislature meant to preserve the removed officer's contract rights, it would have used language unlike the federal statutes' to do so. It did just that for officers of non-bank corporations in N.J.S.A. 14A:6-16(1), which authorizes the board of directors to remove any appointed officer "with or without cause," but provides that removal without cause "shall be without prejudice to [the officer's] contract rights, if any."
Libertelli makes three other arguments. The first is that his firing violates the covenant of good faith and fair dealing implicit in his employment contract. See Palisades Properties, Inc. v. Brunetti, 44 N.J. 117, 130 (1965); Einhorn v. Ceran Corp., 177 N.J. Super. 442, 449 (Ch.Div.1980) aff'd o.b. 185 N.J. Super. 8 (App.Div.1982). We disagree. The statute, in its express policy favoring a bank's freedom to discharge its officers, converts Libertelli's employment contract into a hiring at will. New Jersey courts have not invoked the implied covenant of good faith and fair dealing to restrict the authority of employers to fire at-will employees. See Woolley v. Hoffman La Roche, Inc., 99 N.J. 284, 290-292 (1985). Cf. Pugh v. See's Candies, Inc., 116 Cal.App. 3d 311, 171 Cal.Rptr. 917 (Ct.App.1981). The covenant should not be applied to revive a contractual term of employment invalidated by a legislatively-imposed provision for free terminability.
Libertelli also alleges that he was fired because he insisted on following sound and lawful banking practices and would not go along with the ...