## Facts

- Vincent Chiodo owned and managed Bear River Telephone Company, which expanded substantially under his management.
- Chiodo agreed to sell the company to General Waterworks Corporation in exchange for General Waterworks stock, conditioned on Chiodo’s ten-year employment as Bear River’s manager at $12,000 per year.
- The written employment agreement guaranteed a ten-year term but did not specify standards of conduct or express grounds for termination.
- About three years into the term, General Waterworks caused Chiodo to be discharged.
- General Waterworks asserted the discharge was for cause, alleging (1) insubordination and insolence, (2) cheating through payroll practices, and (3) disloyalty.
- Chiodo denied wrongdoing and offered explanations, including that staffing decisions were in the company’s interest and that he refused to cancel an insurance policy based on his judgment and perceived obligations.
- After a bench trial, the court found no just cause for discharge and awarded Chiodo the present value of seven years’ salary ($81,264.99) plus $6,500 due on a retirement policy.

## Issues

1. Whether an employer may terminate a definite-term employment contract, silent on termination grounds, without proving just cause, and whether the employer proved such cause here.
2. Whether damages equal to the present value of the remaining term’s salary plus retirement-policy amounts were proper, including whether mitigation reduced recovery.

## Decision

- The Utah Supreme Court affirmed the judgment for Chiodo.
- The court held General Waterworks failed to carry its burden to prove just cause for mid-term discharge.
- The court upheld damages for the discounted value of the remaining salary and the retirement-policy amount.

## Legal Principles

- A contract of employment for a stated term is not terminable at will; the employer must show justifiable cause to discharge before the term ends.
- In definite-term employment, courts imply duties of honest, faithful, and loyal service, but termination requires proof of a substantial breach, not mere friction or disputed business judgments.
- Appellate review generally defers to the trial court’s credibility determinations and fact findings absent clear error.
- When a long-term employment agreement is part of the consideration for the sale of a business, it may function as deferred compensation for the sale; this supports full expectancy damages when the employer breaches.
- Future salary may be awarded as a lump sum discounted to present value; mitigation may be treated as impractical on the facts and does not automatically bar recovery.

## Conclusion

The court enforced the ten-year managerial employment promise as part of the sale transaction, ruling that General Waterworks did not prove a substantial breach amounting to just cause and affirming an award of present-value salary for the unexpired term plus retirement benefits.


Chiodo v. Gen. Waterworks Corp., 17 Utah 2d 425, 413 P.2d 891 (Utah 1966)