## Facts

- J.B. Sedberry, Inc., a Tennessee corporation, distributed hammer mills and employed Charles William Akers (chief engineer) and William Gambill Whitsitt (assistant chief engineer) under separate written five-year employment contracts that included salary plus a percentage of net profits.
- Mrs. M.B. Sedberry, the corporation’s president and controlling shareholder, actively directed the business and guaranteed performance under Akers’s contract.
- In 1950, amid financial difficulties, Akers and Whitsitt met in person with Mrs. Sedberry in Tyler, Texas.
- During the September 29, 1950 conference, Akers and Whitsitt offered to resign on ninety days’ notice, conditioned on receiving all amounts due under their existing contracts during that ninety-day period.
- Mrs. Sedberry did not expressly accept the resignation offers during the meeting and continued discussing business operations and future plans as if the employment relationship would continue.
- On October 2, 1950, Mrs. Sedberry sent telegrams purporting to accept the resignations effective immediately.
- Akers and Whitsitt responded that their resignation offers were no longer open and that the telegrams constituted wrongful termination of their contracts.
- The employees filed consolidated equity actions seeking damages for breach of their fixed-term contracts; the chancery court found for the employees and awarded damages for the unexpired contract terms, reduced for mitigation.
- The employer and Mrs. Sedberry sought appellate review, disputing whether a resignation occurred and challenging aspects of the damages calculation.

## Issues

1. Whether the employees resigned, or instead were wrongfully discharged when the employer sent telegrams purporting to accept resignations after an in-person meeting.
2. Whether an offer to resign made face-to-face remained open after the conversation ended so that it could be accepted by later telegram.
3. If there was a breach, what measure of damages applied to fixed-term employment contracts, including salary, profit-percentage compensation, mitigation, offsets, and interest.

## Decision

- The Tennessee Court of Appeals affirmed the decree in favor of Akers and Whitsitt.
- The court held that Mrs. Sedberry did not accept the resignation offers during the face-to-face conference and that the offers lapsed when the conversation ended.
- Because no offer remained open on October 2, the telegrams could not operate as acceptances and instead constituted a unilateral termination of the contracts.
- The employees were entitled to damages for wrongful discharge, measured by compensation due under the unexpired contract terms, subject to mitigation and the court’s rulings on offsets and interest.

## Legal Principles

- An offer made in a face-to-face conversation ordinarily must be accepted before the conversation ends, unless circumstances clearly indicate the offer will remain open longer.
- An offer may be treated as rejected or terminated when the offeror may reasonably infer from the offeree’s words or conduct that the offeree does not intend to accept or to continue considering acceptance.
- A later communication cannot accept an offer that has lapsed; a purported “acceptance” sent after lapse is ineffective to form an agreement to terminate.
- Wrongful discharge in breach of a fixed-term employment contract permits recovery of contract damages for the unexpired term, reduced by amounts earned or reasonably obtainable through mitigation.
- Contractual profit-sharing components of compensation are recoverable as part of expectancy damages when supported by the contract’s terms, subject to proof and applicable deductions.

## Conclusion

The court treated the employer’s delayed telegram as an ineffective attempt to accept an expired, in-person resignation offer, and held that the telegrams instead effected a wrongful discharge that breached the employees’ fixed-term employment contracts, supporting an award of damages for the unexpired terms subject to mitigation and related adjustments.


Akers v. J.B. Sedberry, Inc., 286 S.W.2d 617 (Tenn. Ct. App. 1955)