## Facts

- Orville E. Fortune worked as a salesman for National Cash Register Company (NCR) under a written contract terminable “at will” by either party on written notice.
- Compensation included a fixed weekly salary and a bonus commission system tied to “bonus credits” for sales in Fortune’s assigned territory, whether or not he personally made the sale.
- Under the plan, Fortune’s entitlement depended on whether he was assigned the territory at the date of order, the date of delivery/installation, or both.
- Fortune had long serviced First National Stores and played a major role in securing a large 1968 order for cash registers and related equipment that generated substantial bonus credits.
- After the order was placed, NCR removed Fortune from his prior position/territory and placed him in a different job with significantly reduced bonus potential; NCR paid only part of the bonus Fortune claimed.
- Fortune alleged NCR acted to deprive him of bonus compensation connected to the First National sale, asserting contract-based claims for bonus payments and a quantum meruit claim for the value of his services.
- A Superior Court jury found for Fortune on all counts; the Appeals Court reversed; the Supreme Judicial Court granted further appellate review.

## Issues

1. Whether an employment-at-will contract includes an implied covenant of good faith and fair dealing that limits termination decisions.
2. Whether the evidence permitted a finding that NCR terminated or effectively removed Fortune in bad faith to avoid paying commissions/bonuses on the First National sale.
3. Whether Fortune’s claims were barred because he did not use the contract’s notice/grievance procedure.
4. Whether a contractual two-year limitations clause barred the action when the employer did not plead it.

## Decision

- The Supreme Judicial Court reversed the Appeals Court and reinstated the Superior Court judgment for Fortune.
- The court held that a written at-will employment contract contains an implied covenant of good faith and fair dealing, and termination not made in good faith can breach the contract.
- The court held the evidence was sufficient for the jury to find NCR acted in bad faith by removing Fortune when it became apparent he would receive substantial bonus compensation, for the purpose of depriving him of commissions.
- The court held Fortune was not barred from recovery by failing to follow the contract’s notice and grievance procedure.
- The court declined to consider NCR’s contractual limitations defense because NCR failed to raise the limitation period in its answer.

## Legal Principles

- Every contract includes an implied covenant of good faith and fair dealing; a party may not act to destroy or injure the other party’s right to receive the contract’s benefits.
- The at-will power to terminate is constrained by the implied covenant; an employer may not terminate (or effectively strip duties/territory) in bad faith to deprive an employee of compensation already earned but unpaid under the compensation plan.
- When evidence supports an inference that termination or reassignment was timed and motivated to avoid paying commissions tied to past services, the claim may be submitted to the jury as a contract breach.
- Contractual grievance procedures do not necessarily bar judicial relief for bad-faith breach, particularly when the procedure is not clearly applicable to the dispute.
- A contractual limitations period operates as an affirmative defense that is waived if not properly pleaded.

## Conclusion

The court held that at-will employment does not permit an employer to act in bad faith to withhold commission-based compensation connected to work already performed; because the jury could find NCR removed Fortune to avoid paying substantial bonuses, and NCR’s procedural defenses failed, the verdict for Fortune was reinstated.


Fortune v. Nat'l Cash Register Co., 373 Mass. 96, 364 N.E.2d 1251 (1977)