Bell v. Midland Nat. Life Ins. Co.

• Decision Date: 13 April 1960
• Docket Number: No. 9707,9707
• Citation: 78 S.D. 349,102 N.W.2d 322
• Parties: J. J. BELL, Plaintiff and Appellant, v. MIDLAND NATIONAL LIFE INSURANCE COMPANY, Defendant and Respondent.
• Court: South Dakota Supreme Court

Page 322

102 N.W.2d 322

78 S.D. 349

J. J. BELL, Plaintiff and Appellant, v. MIDLAND NATIONAL LIFE INSURANCE COMPANY, Defendant and Respondent.

No. 9707.

Supreme Court of South Dakota.

April 13, 1960.

Loucks, Oviatt & Bradshaw, Watertown, for plaintiff and appellant.

Austin & Hinderaker and W. A. Hackett, Watertown, for defendant and respondent.

BIEGELMEIER, Judge.

Plaintiff Bell was originally employed as actuary of defendant in 1921 and also served as director, vice president and later president continuously until March 1, 1947; by reason of some disagreement he was not then re-elected as president or actuary. He continued as a member of the Board of Directors until, under a written agreement with other Board members, he was elected in 1947 as chairman of the Board, an office created for this purpose. His compensation was fixed at $3,600 per annum which included his services as consulting actuary. This action was ratified at the succeeding stockholders' meeting; plaintiff was annually re-elected as such chairman and served until January 31, 1951, when his employment ended. He requested he be placed on retirement pension at his attained age of 61 and be paid a pension under a Retirement Plan adopted in 1948, which was refused, resulting in this action. While it was undisputed that Bell's services were to be available to the Company in the capacity of consulting actuary as may be required by the officers and Board of Directors, the trial court found that he presided only at four quarterly meetings of the Board each year and was only consulted on two occasions as consulting actuary involving two days in proposals for the possible acquisition of other insurance companies; that he was furnished office space by defendant and that he was paid a salary of $300 a month during that time. The evidence is undisputed that plaintiff was available and consulted at other times by other officers and directors. The court further found that at the February 1948 stockholders' meeting the directors were authorized to put into effect pension and group life insurance plans for the benefit of officers, home office employees and agents; that at the February 1948 meeting of the Board of Directors the defendant adopted a Retirement Plan consisting of 21 printed pages in a book introduced in evidence as an exhibit and made a part of the findings; that after the adoption of this Plan a Council provided for by Art. 24 was appointed, held a meeting and, among other things, presented a list of employees who were eligible to be included and participate in the Plan, listing their names and past service credits (monthly retirement annuity); included in this list was the name of the plaintiff J.J. Bell and a computation of his past service credit for the monthly retirement annuity of $112.50; that these minutes were presented to the executive committee of the Board of Directors and, under authority granted by the bylaws, were approved; that the defendant-company in June 1948 began to deduct $10 a month from the $300 monthly compensation of plaintiff as his contribution to the Plan and continued so to do until February 1951 during which time defendant withheld a total of $370; that when plaintiff's services were terminated in 1951 he requested that he be placed on a pension at age 61; that based upon his contributions under the Plan plaintiff was entitled to a present service credit referred to as future service credits in the Plan's General Description sufficient to pay a pension of $10.03 a month; that under the Plan, if plaintiff were entitled to past service credits the additional pension would be $81.28 per month. From these, and another finding hereafter adverted to, the trial court entered conclusions of law that plaintiff was entitled to the $10.03 monthly pension based on the present service credits; that there was no consideration for any agreement to establish past service credits and no amount due with reference to them; that plaintiff did not change his position in reliance upon any promise of defendant to pay a pension on past service credits. A judgment was entered in accord with the conclusions awarding a money judgment for accrued present pension credits and ordering further payments to be thereafter made by defendant of $10.03 a month. From the part of this judgment which denied the plaintiff a pension based on the past service credits plaintiff appealed. Defendant claims that:

A. After March 1, 1947, plaintiff was at no time a full-time employee and that the Plan provided pensions only for full-time employees. A clause of the Plan stated that the word employee did not apply to a member of the Board of Directors as such. The record shows that plaintiff was elected chairman of the Board; his compensation was fixed at $3,600 a year for which his services were also to be available to the Company as consulting actuary; that he was consulted by the officers and Board of Directors and was furnished an office during the period of from August 1, 1947, to January 31, 1951; the public financial statement of the Company listed him as an officer and director; the home office retirement Council provided for in Clause 24 of the Plan listed him as eligible to participate under the group life insurance Plan as an employee with employment of 25 years as of April 1, 1948 and a policy was issued to him as an 'Employee'. This policy defined an employee as 'a full-time salaried employee of the Company * * * and does not include a part-time or temporary employee'. This evidence requires the conclusion that plaintiff was a full-time employee employed from 1921 to 1951 except for the period of from March 1, 1947, to August 1, 1947. Defendant's second contention is as follows:

B. At the time the Plan was put into effect on January 1, 1948, plaintiff was not entitled to any past service credit as he had no years of continuous service completed on that date. This contention cannot be sustained. The effective date of the Plan was January 1, 1948; it stated that employees who had completed or shall hereafter complete two years of continuous service with the Company shall be qualified to participate in the Plan. Clearly, plaintiff met this requirement as thereafter he did complete over two years of continuous service as an employee and theretofore had completed such service and he was a full-time employee at the date the Plan went into effect. The Plan did not require two years of continuous service immediately prior to its adoption; it required only that employees be present or future full-time salaried employees with two years continuous service with which requirement plaintiff qualified. There is another reason for this conclusion. The Plan (Clause 24) created a Council to supervise and administer it with 'authority and power to make binding constructions and interpretations of its provisions'; Clause 5 provided: 'The Council * * * shall in its uncontrolled discretion determine whether persons employed * * * have the qualifications of employees within the meaning of this Retirement Plan' and Clause 28 that it 'be given a liberal interpretation'. The court found that this Council named plaintiff as an employee eligible to participate in this Plan with a computation of past service credit for a monthly retirement annuity of $112.50, which action was approved by the Executive Committee of the Board May 10, 1958. The Council's construction of the Plan was within its provisions and purpose. The undisputed evidence and this finding show that plaintiff is entitled to the past service pension payable out of any contributions to that fund.

Being eligible to participate in the Plan and having been declared so to be by the Council, the record further shows the plaintiff continued in his employment during which time deductions among others of $10 a month were made from his salary by the treasurer of defendant-company for an item headed 'Pension'. This deduction was provided for in Clause 7 of the Plan. It appears that the trial court sustained an objection to admitting in evidence plaintiff's 'Employee earning record' showing these facts as to plaintiff, defendant's objection being that these facts were already conceded. The evidence showed and the answer admitted that these amounts were deducted. Defendant tendered these amounts into court declaring the treasurer had no authority to deduct them. This part of the answer stated that 'Plaintiff was not a full-time employee of the Defendant * * * so that he did not qualify under said Plan'; that these deductions made over an extended period should be refunded to plaintiff and tendered them back to him. The answer further stated that negotiations were...