Compton v. Shopko Stores, Inc.

• Decision Date: 07 February 1980
• Docket Number: No. 77-441,77-441
• Parties: Herbert D. COMPTON, Plaintiff-Respondent, v. SHOPKO STORES, INC., a Foreign Corporation, Defendant-Appellant.
• Court: Wisconsin Supreme Court

Page 720

287 N.W.2d 720

93 Wis.2d 613

Herbert D. COMPTON, Plaintiff-Respondent, v. SHOPKO STORES, INC., a Foreign Corporation, Defendant-Appellant.

No. 77-441.

Supreme Court of Wisconsin.

Argued Dec. 4, 1979.

Decided Feb. 7, 1980.

This is an appeal by Shopko Stores, Inc., defendant-appellant, from a judgment which determined that Herbert D. Compton, plaintiff-respondent, a former employee, was entitled to participate in the Executive Bonus Plan of Shopko. Judgment was entered awarding Compton damages in the amount of $6,637.71, plus costs and disbursements.

Frederick C. Wieting and Evrard, Duffy, Holman, Faulds & Peterson, Green Bay, on brief; Joseph P. Holman, Green Bay (argued), for defendant-appellant.

Vivi L. Dilweg, Donald J. Wall and Liebmann, Conway, Olejniczak, Jerry & Dilweg, S. C., Green Bay, on brief; Gregory B. Conway, Green Bay (argued), for plaintiff-respondent.

HANSEN, Justice.

Compton was employed by Shopko in various executive capacities from April, 1968, until the date of his discharge. Shopko had unilaterally established an Executive Bonus Plan. Under the terms of the plan, those executives employed by the company at the close of its fiscal year received bonus payments in accordance with the provisions of the plan. The fiscal year for Shopko ended on the last Sunday in February.

Compton had participated in the bonus plan for the fiscal years 1969-1970 to 1973-1974, both inclusive. He was discharged for good cause on December 27, 1974. The 1974-1975 fiscal year of Shopko ended on February 22, 1975. Shopko decided that Compton was not an employee of the company at the close of the 1974-1975 fiscal year and hence he did not receive an executive bonus payment for that fiscal year.

Trial of the case was to the court and the trial court found that Compton was an employee of Shopko on February 22, 1975, and therefore was entitled to the benefits of the bonus plan for the fiscal year 1974-1975.

The issues on appeal are: (1) Whether Compton had been effectively discharged on December 27, 1974, or remained an employee of the company until February 22, 1975; and (2) if he was not employed on February 22, 1975, was he nevertheless entitled to participate in the Executive Bonus Plan for the 1974-1975 fiscal year.

The general rule is that findings of fact by the trial court will not be upset on appeal unless they are against the great weight and clear preponderance of the evidence. Preston v. Schaefer, 89 Wis.2d 1, 7, 8, 277 N.W.2d 794 (1979); Beasley v. Konczal, 87 Wis.2d 233, 239, 275 N.W.2d 634 (1979). However, in the case at bar the essential facts are undisputed, and this court has repeatedly held that on review this court is not bound by a finding of the trial court which is based upon undisputed evidence when that finding is essentially a conclusion of law. Teledyne Industries, Inc. v. Milwaukee, 65 Wis.2d 557, 566, 223 N.W.2d 586 (1974); Browndale International v. Board of Adjustment, 60 Wis.2d 182, 199, 208 N.W.2d 121 (1973), cert. denied, 416 U.S. 936, 94 S.Ct. 1933, 40 L.Ed.2d 286 (1974); WXIX, Inc. v. Scott Heat. & Air Cond. Co., 38 Wis.2d 278, 281, 156 N.W.2d 451 (1968); Boutelle v. Chrislaw, 34 Wis.2d 665, 673, 150 N.W.2d 486 (1967). It is our opinion that in this case the finding of the trial court is based upon undisputed evidence and therefore such finding is essentially a conclusion of law.

We first review the provisions of the Executive Bonus Plan as they applied to all employees in the applicable executive classification. Secondly, we consider the provisions of the plan as they applied to the particular case of Compton.

At the time Compton was employed by Shopko in April, 1968, the Executive Bonus Plan constituted a verbal commitment by the company. It entitled certain qualified executives, of which Compton was one, to share in the profits of the company if they were employed by the company at the end of the fiscal year. The bonus share was based on a percentage of salary, from zero to fifty percent, depending on the outcome of the year's performance of the company. It was entirely funded from company profits.

The general provisions of the bonus plan remained essentially the same from the date of Compton's employment in 1968 until his discharge in December, 1974. However, as the company grew and the number of employees eligible to participate in the plan increased, the provisions of the plan were gradually reduced to writing. An Executive Group Manual, dated September 1, 1973, was prepared and distributed to all of the personnel in the executive group, including Compton. The manual included written rules and regulations as to qualifications for receiving the bonus. The manual stated, "The Executive Bonus Plan is probably the most meaningful and should represent an important part of the total annual compensation paid." It also set forth the pay range for the executive group as follows: "The pay ranges for each position in the Executive Group reflect total compensation to include salary, bonus and automobiles." From time to time changes were made in the Executive Group Manual, but these changes only pertained to the methods of arriving at the amounts to which persons in the executive bonus group would be entitled. These changes were distributed to the executives. The verbal rule of the company that required an executive in the Executive Bonus Plan to be employed at the end of the fiscal year in order to be eligible for the bonus for that year was not contained in the Executive Group Manual. In June, 1974, the rule was confirmed in writing and under date of June 19, 1974, was distributed to all employees, including Compton. The written rule specifically stated, "Bonus payments shall not be made to any person not employed at the end of the fiscal year." The written rule thus reduced to writing the policy or rule of the company which had been effective since before Compton became an employee of the company.

We now set forth the facts relating to the individual situation of Compton. He had participated in the Executive Bonus Plan continually from the close of the 1969-1970 fiscal year. He knew that an executive had to be employed with the company at the end of the fiscal year in order to be eligible for the bonus for that year.

During the years with the company, Compton's executive responsibilities and salary had increased. He had become director of the catalog showrooms, and his responsibilities included preparing a budget and seeing to it that the department operations fell within the budget. In September, 1974, he was told that the catalog showroom was not operating within the budget. He was informed by the president of Shopko that his performance was substandard and that sales were below budget.

On December 27, 1974, Compton was called into the office of the president. The president informed him that the figures showed a $313,000 loss in the tenth fiscal period, and showed a continuous financial substandard performance. Compton was informed that he was dismissed as of that date, and his personnel action form stated as the reason for dismissal, "one position higher than his capabilities" and "(l)acked leadership qualities."

At the time of his termination on December 27, 1974, Compton was given severance pay in the amount of $4,178.64, which amounted to about eight weeks' pay. This amount was determined on the basis of his longevity with the company, although at the time Shopko had no written policy in regard to severance pay. He was also given a check in the amount of $1,044.66, representing two weeks' vacation pay. The severance pay check stated it was severance pay; however, the legend on the check stub stated, "8 weeks severance pay for period 12/29/74 thru 2/22/75." The check stub on the vacation pay check stated "2 weeks vacation pay for w/e 3/1/75 and w/e 3/8/75." Medical insurance was deducted through January 1, 1975. A wage and income tax statement issued by Shopko for Compton reflected 1975 wages, tips and other compensation in the amount of $5,223.30, which is the sum of the severance pay and vacation pay checks given to Compton. The checks for the severance pay and vacation pay were given to Compton on December 27, 1974, and cashed by him on December 30, 1974.

After his employment at Shopko was terminated on December 27, 1974, Compton could no longer perform any duties for Shopko. He testified that he was free to seek other employment the following day and did, in fact, secure employment with another company within two or three weeks after he was discharged by Shopko.

The fiscal year 1974-1975 ended on February 22, 1975. Participants in the Executive Bonus Plan were paid a bonus for the fiscal year 1974-1975 equal to 25 percent of their salary. Compton did not receive a bonus for the fiscal year 1974-1975. The trial court found that Compton was an employee of Shopko on February 22, 1975, and therefore was entitled to an executive bonus payment for the fiscal year 1974-1975.

I.

In the instant case, the undisputed facts show that Compton was discharged by Shopko on December 27, 1974, for good cause, and did not perform any services for Shopko after that date. At the time of his termination, he was given severance pay which amounted to approximately eight weeks' pay, plus two weeks' vacation pay. Federal, state and social security taxes were deducted from this severance pay and were reported on the 1975 W-2 forms issued to Compton by Shopko. The trial court concluded that all incidents of employment were attached to the severance pay, and the severance pay extended his employment with Shopko to February 22, 1975. This is a conclusion of law, and therefore this court is not limited in its review by the finding of the trial court.

Shopko argues that the trial court erred as a matter of law because Compton was discharged for good cause on December 27, 1974, and did not and could not perform any services for Shopko after that date; therefore his...