Division of Labor Law Enforcement v. Transpacific Transportation Co.

• Decision Date: 25 April 1977
• Citation: 137 Cal.Rptr. 855,69 Cal.App.3d 268
• Parties: , 82 Lab.Cas. P 55,095 DIVISION OF LABOR LAW ENFORCEMENT, etc., Plaintiff and Appellant, v. TRANSPACIFIC TRANSPORTATION COMPANY, Defendant and Respondent. Civ. 38412.
• Court: California Court of Appeals Court of Appeals

Page 855

137 Cal.Rptr. 855

69 Cal.App.3d 268, 82 Lab.Cas. P 55,095

DIVISION OF LABOR LAW ENFORCEMENT, etc., Plaintiff and Appellant, v. TRANSPACIFIC TRANSPORTATION COMPANY, Defendant and Respondent.

Civ. 38412.

Court of Appeal, First District, Division 2, California.

April 25, 1977.

Lazar, Jabin, Herbert, Ball & Joseph, by Lelia H. Jabin, Los Angeles, Cal., for plaintiff and appellant.

Frolik, Filley & Schey by Walter M. Schey, San Francisco, Cal., for defendant and respondent.

KANE, Associate Justice.

The Division of Labor Law Enforcement ('Division') appeals from an adverse judgment to recover wages for its assignors, former employees of respondent Transpacific Transportation Company ('Transpacific').

The basic facts are not in dispute. Prior to November 30, 1970, all of the Division's assignors were employees of Transpacific. At that time, Japan Line accounted for about 65 percent of Transpacific's activities as a steamship agency. After Transpacific's attempt to negotiate a more satisfactory arrangement with Japan Line failed, it was advised that effective December 1, 1970, Japan Line would open its own San Francisco office. Accordingly, Transpacific in July and August 1970 advised its employees of a pending reduction in its work force as of November 30, and that Japan Line wished to employ many of them. On November 30, 1970, Transpacific reduced its 80-person work force. Eleven of these began to work for Japan Line on December 1, 1970, as a result of their earlier acceptance of Japan Line's offers of employment.

Between 1958 and 1973, Transpacific usually paid its salaried employees a bonus of 10 percent ¹ of the annual salary. The bonus was authorized by Transpacific's overseas shareholders in December and usually paid in mid--December, ² separately from the mid-month salary payment to the employees then with the company. Each bonus check was accompanied by a letter designating the check variously as a Christmas gift or bonus.

On December 15, 1970, Transpacific paid the usual 10 percent bonus. None of the employees who had been terminated on November 30, 1970, received a bonus; 14 subsequently assigned their claims to the Division. ³

All of the Division's assignors were clerical and non-executive employees of Transpacific. Each was hired on an at-will basis. Although Transpacific's past practice of paying an annual Christmas bonus was mentioned during pre-employment interviews, It was emphasized that the payment of future bonuses was contingent on the decision of the company's shareholders; indeed, that there was no guarantee whatsoever that bonuses in the future would be paid. The record also contains affirmative evidence that the Division's assignors would have accepted employment with respondent even if there had been no mention of a bonus; ⁴ that they would not have quit earlier even if there had been no year-end bonus; that they would not have expected a bonus had they left respondent's employment prior to November 30, 1970; and that no demand as to bonus would have been made had respondent not given one to its remaining employees. Finally, the record discloses that while all the complaining employees assumed that the payment of a bonus was based on the fiscal year, the bonus was in fact always paid on a calendar year basis and was payable only to those still employed on the date of declaration.

The Division's complaint against Transpacific alleged four causes of action and sought equitable relief. The first cause of action was founded on express contract to pay a bonus; the second, on penalties due for late payment of wages pursuant to Labor Code, section 203; the third on implied contract; and the fourth on promissory estoppel. ⁵

After receiving extensive (and in many instances conflicting) evidence, and after hearing the legal arguments of the parties, the trial court, sitting without a jury, found Inter alia that the assignors, when hired, were advised that Christmas bonuses paid in the past had been gifts; that Transpacific made neither an express nor an implied promise to pay bonuses to its employees; that a condition precedent to any future bonuses was an employment relationship existing with respondent at the time of the payment of the bonus; that the assignors had no vested right to the bonus prior to its announcement by respondent; and that the termination of the assignors' employment was due to legitimate business reasons rather than any malice or desire to avoid paying the Christmas bonus. ⁶ In accordance therewith, the trial court rendered judgment on all counts in favor of respondent. On appeal it is contended that the judgment should be reversed because (1) the trial court failed to make special findings as requested by the Division, and (2) certain portions of the findings are not supported by sufficient evidence. An analytical review of the record in conjunction with the pertinent legal principles compel the conviction that neither of appellant's contentions is well taken and as a consequence the judgment of the trial court must be upheld.

Before determining whether the trial court's failure to make special findings constituted reversible error, we call to mind the general rules pertaining to the necessity and scope of findings. To begin with, we observe that section 632 of the Code of Civil Procedure provides in broad terms that 'Where findings are required, they shall fairly disclose the court's determination of all issues of fact in the case.' The case law interpreting this section, however, specifies that the rule calling for findings of fact Requires a finding of ultimate rather than evidentiary facts (Hayward Lbr. Co. v. Construction etc. Corp. (1952) 110 Cal.App.2d 1, 3, 241 P.2d 1054). This is so because under well settled law the findings of ultimate facts include by necessary intendment the findings on all intermediate evidentiary facts necessary to sustain them (Jay v. Dollarhide (1970) 3 Cal.App.3d 1001, 1032, 84 Cal.Rptr. 538). Since the trial court must find only the ultimate facts necessary to support the judgment upon the essential issues which are presented by the pleadings (Forman v. Hancock (1934) 3 Cal.App.2d 291, 296, 39 P.2d 249), our task is limited to a determination whether the facts found by the trial court are adequate to adjudicate the essential elements of the challenged causes of action.

Prior to addressing this fundamental issue, we reiterate that appellant predicated its theory of recovery partly on a contractual basis (express and implied in fact contract to pay bonuses to the assignors), partly on the equitable doctrine of promissory estoppel. As frequently underlined, the vital elements of a cause of action based on contract are mutual assent (usually accomplished through the medium of an offer and acceptance) and consideration. As to the basic elements, there is no difference between an express and implied contract. While an express contract is defined as one, the terms of which are stated in words (Civ. Code, § 1620), an implied contract is an agreement, the existence and terms of which are manifested by conduct (Civ. Code, § 1621). As the cases explain, both types of contract are identical in that they require a meeting of minds or an agreement (Desny v. Wilder (1956) 46 Cal.2d 715, 735, 299 P.2d 257). Thus, it is evident that both the express contract and contract implied in fact are founded upon an ascertained agreement or, in other words, are consensual in nature, the substantial difference being in the made of proof by which they are established (Caron v. Andrew (1955) 133 Cal.App.2d 412, 417, 284 P.2d 550). While an implied in fact contract may be inferred from the conduct, situation or mutual relation of the parties, the very heart of this kind of agreement is an intent to promise. As the court put it in Mulder v. Mendo Wood Products, Inc. (1964) 225 Cal.App.2d 619, 632, 37 Cal.Rptr. 479, 488, 'The true implied contract consists of obligations arising from a mutual agreement and Intent to promise where the agreement and promise have not been expressed in words.' (Emphasis added.)

Promissory estoppel, appellant's alternative theory of recovery, is based upon the equitable doctrine that a promisor is bound when he should reasonably expect a substantial change of position (act or forbearance) in reliance on his promise if injustice can be avoided only by the enforcement of the promise (Rest., Contracts, § 90; ⁷ Graddon v. Knight (1956) 138 Cal.App.2d 577, 582, 292 P.2d 632; Wade v. Markwell &amp Co. (1953) 118 Cal.App.2d 410, 419, 258 P.2d 497; 1 Witkin, Summary of Cal.Law (8th ed., 1973), § 189, pp. 174--175). The doctrine of promissory estoppel, which is recognized in California and has been applied in a variety of factual situations, has three basic elements: (1) promise; (2) reliance; and (3) injury (Henry v. Weinman (1958) 157 Cal.App.2d 360, 366, 321 P.2d 117; Blatt v. University of Southern California (1970) 5 Cal.App.3d 935, 943, 85 Cal.Rptr. 601). The existence of these elements constitute a question of fact as does the existence of an implied in fact contract (General Motors Accept. Corp. v. Gandy (1927) 200 Cal. 284, 253 P. 137; Henry v. Weinman, supra; Medina v. Van Camp Sea Food Co. (1946) 75 Cal.App.2d 551, 556, 171 P.2d 445).

When viewed and analyzed in light of the foregoing principles, the record leaves no doubt that the trial court made findings on the crucial ultimate facts of both the implied contract and the promissory estoppel causes of action, and as a consequence its refusal to make the requested special findings was proper.

Thus, it appears that by reviewing and evaluating a host of evidence the trial court found that although respondent had paid Christmas bonuses as a gift in the past, it made neither an express nor an implied promise to pay any bonus to its employees. This finding of the trial court cannot be interpreted other than as a finding of ultimate fact which must be deemed to have...