Gibson v. International Harvester Co.

• Decision Date: 07 February 1983
• Docket Number: Civ. A. No. 81-2438.
• Citation: 557 F. Supp. 1000
• Parties: Jimmie Sue GIBSON, Plaintiff, v. INTERNATIONAL HARVESTER COMPANY, Defendant.
• Court: U.S. District Court — Western District of Tennessee

557 F. Supp. 1000

Jimmie Sue GIBSON, Plaintiff, v. INTERNATIONAL HARVESTER COMPANY, Defendant.

Civ. A. No. 81-2438.

United States District Court, W.D. Tennessee, W.D.

February 7, 1983.

Norman P. Hagemeyer, Memphis, Tenn., for plaintiff.

William F. Kirsch, Jr., Memphis, Tenn., for defendant.

ORDER

HORTON, District Judge.

This is an action involving defendant International Harvester's non-contributory retirement plan in which the plaintiff, Jimmie Sue Gibson, seeks to be awarded survivor benefits under the plan. The defendant filed a counterclaim seeking return of funds it alleges were paid to plaintiff by mistake. Jurisdiction of this Court is based on diversity of citizenship pursuant to 28 U.S.C. § 1332. The case was tried, without a jury, on November 2, 1982.

The issue in this case is whether the plaintiff is entitled to survivor benefits despite her husband's death prior to the effective date specified by the retirement plan. Defendant contends the eligibility requirements had not been met, that the effective date had not arrived and the right to the benefits could not have vested in the plaintiff prior to her husband's death. The plaintiff presents several theories, including an estoppel argument, that would render the plan effective despite the plain language of the plan itself. The Court is compelled to find in favor of the defendant in the original complaint but finds that the defendant is estopped from asserting the counter-claim.

The facts in this case are, for the most part, undisputed. The plaintiff, Mrs. Gibson, is the widow of George Gibson, who retired from International Harvester in 1970 after 20 years with the company. At the time of Mr. Gibson's death, on March 30, 1980, the couple had been married 39 years. For approximately 10 years prior to his death Mr. Gibson received benefits under the International Harvester Non-Contributory Retirement Plan.

Defendant's retirement plan had a "Spouse Option" under which retirees could elect to take a reduced monthly payment beginning at age 60 in return for the retiree's spouse receiving continued payments after the retiree's death. The plan provided that a retired employee must make the election in the month of his 60th birthday and that the election would become effective on the first day of the month following his 60th birthday. The plan included specific language making it clear that the election of the spouse option "shall be revoked automatically" upon the death of the retiree prior to the effective date. Since Mr. Gibson's 60th birthday was in March, 1980, the effective date of any election by Mr. Gibson was, under the plain language of the plan, April 1, 1980.

Following Mr. Gibson's retirement in 1970, he received a letter dated August 3, 1970, from the company notifying him that he had been favorably considered for retirement benefits and that he could elect the spouse option at a later date. The letter also stated:

If you elect this option, it will become effective on the first of the month following your 60th birthday and will result in a reduced benefit to you, in order to provide a continuation of pension benefits to your surviving spouse after your death.

On February 1, 1980, the defendant again wrote Mr. Gibson a letter outlining the availability of the spouse option. The letter explained that if the option was elected it would result in a reduction in his monthly life income benefits to $190.75 and that if he predeceased his wife she would receive $104.91 per month. According to the letter, Mr. Gibson had until March 10 to elect the option, and if elected, "it would become effective April 1, 1980 provided you have been married for at least one year at that time."

The testimony of Mrs. Gibson indicated that her husband wasted little time in responding to the letter. He filled out the enclosed form marking the section indicating that he elected to exercise the survivor benefit option.¹ He had the form notarized, although he was not required to do so, and personally walked to the post office to mail the form back to the company, where it was marked received by the employee pension department on February 14, 1980. (Technically, under the plan, the election could not have been made until March, the month Mr. Gibson turned 60. However, there has been no contention that this factor alone would have any impact on Mrs. Gibson's eligibility.)

The next correspondence from the company to Mr. Gibson was dated February 18, 1980. That letter stated that the company had received the election form and was "pleased to extend the Spouse Option protection to you and your wife." However, the letter went on to state that the option "will become effective on April 1, 1980."

Medical records introduced at trial indicate that during this period of time Mr. Gibson, who had undergone triple by-pass surgery in 1972, was experiencing recurring angina pain. On March 25, one week before the effective date of the survivor benefits option, Mr. Gibson entered the hospital. After some tests were conducted, Mr. Gibson was discharged on March 29, following a diagnosis of arteriosclerotic heart disease. He died at home early in the afternoon the following day, March 30, less than 36 hours before the effective date of the spouse option.

Mrs. Gibson was notified by letter dated April 9, 1980, that she was entitled to receive the survivor's benefits and was subsequently sent three monthly checks² before the company realized that Mr. Gibson had died prior to the effective date of the spouse option and Mrs. Gibson was not entitled to the payments. After International Harvester cut off her survivor benefits, and following unsuccessful attempts to have them reinstated, Mrs. Gibson filed suit in this Court.

Plaintiff has argued that all of the traditional elements of a valid contract between Mr. Gibson and the company had been completed by February 18, 1980, when Mr. Gibson was notified by letter that his election of the spouse option had been received and accepted. It is plaintiff's contention that only the passage of time from February 18, 1980, to April 1, 1980, remained for the contract to be valid and that the mere passage of time is not a legally valid condition precedent to a conditional contract.

The Court must disagree with plaintiff's interpretation of the contract. It is clear from a reading of the plan and the correspondence that the contract was not conditioned on the mere passage of time as plaintiff asserts. For the survivor benefit option to become effective on April 1, 1980, Mr. Gibson had to meet all of the eligibility requirements of the plan, both he and his wife had to still be living and, above all, he had to accept reduced lifetime benefits. The requirements were not met and Mrs. Gibson acquired no rights to the benefits.

Another argument made by plaintiff is that when the company stated in its correspondence that the option would be "effective" April 1, 1980, it was only referring to the date that the reduction in Mr. Gibson's benefits would take place. In other words, under such a construction, Mrs. Gibson was entitled to survivor benefits upon the death of her husband at any time after February 18, 1980, but Mr. Gibson would not have his lifetime benefits reduced, had he lived, until April 1, 1980. Such a construction is clearly...