Gitelson v. Du Pont

• Citation: 215 N.E.2d 336,17 N.Y.2d 46,268 N.Y.S.2d 11
• Parties: , 215 N.E.2d 336 Samuel GITELSON, Respondent, v. Edmond DU PONT et al., as Copartners doing business under the Name of Francis I. Du Pont & Company, et al., Appellants.
• Decision Date: 17 February 1966
• Court: New York Court of Appeals

Page 11

268 N.Y.S.2d 11

17 N.Y.2d 46, 215 N.E.2d 336

Samuel GITELSON, Respondent, v. Edmond DU PONT et al., as Copartners doing business under

the Name of Francis I. Du Pont & Company, et al.,

Appellants.

Court of Appeals of New York.

Feb. 17, 1966.

Raymond P. O'Keefe, John F. X. Peloso and Daniel Hirsch, New York City, for appellants.

Bernard Furman, New York City, for respondent.

BURKE, Judge.

The plaintiff, a former employee of the defendant (Du Pont), brought this suit to recover an amount standing to his credit in the defendant's retirement fund, made up of payments made by Francis I. Du Pont and Company, stockbrokers, to a bank as the trustee of their employees' retirement fund (the Fund). The Fund was administered under a plan by a three-man board (the Board) on which three Du Pont partners sat. Under article VI of the plan former employees who were discharged for dishonesty lost all rights to the amounts theretofore credited to their account in the Fund.

On this appeal from an order of the Appellate Division which affirmed a judgment of the Supreme Court entered in favor of the plaintiff after a nonjury trial, it is the defendants' position that since the Board found that Gitelson was discharged for 'dishonesty' he is not entitled to receive any payment from the Fund. We think the evidence before the Board and the terms of the pension plan (arts. VI and VII) compel agreement.

The interpretation and construction of such documents as contracts and trust instruments are matters properly treated as questions of law and are reviewable by this court (see Cohen and Karger, Powers of the New York Court of Appeals, pp. 461--462; New Era Homes Corp. v. Forster, 299 N.Y. 303, 86 N.E.2d 757, 22 A.L.R.2d 1338).

Article VII of the pension plan which is before us and which is the instrument governing the rights of the plaintiff states that The Board is vested with the Sole authority to determine all matters relating to an employee's right to receive retirement payments. There can be no doubt that the question of whether or not an employee has been dismissed for dishonesty is one that is a 'related matter incidental' to his right to receive a pension and also one 'related' to the operation of the plan. The rights of the plaintiff under the plan are contract rights and are limited by the provisions of the contract. Surely if we are to enforce the contract which the plaintiff must rely on, we cannot close our eyes to the fact that, according to its terms, the rights of a former employee to receive pension payments are lost when the Board has found that he does not qualify for them because he has been discharged 'for dishonesty.' Here the Board has determined that the plaintiff was dismissed for dishonesty and, by the provisions of article VII, 'The determination of the Retirement Board as to all such matters shall be conclusive.'

A pension fund with provisions similar to the plan was so construed in the case of Menke v. Thompson, 140 F.2d 786, 791 (8th Cir., 1944). There the claimants of pension rights were denied recovery on the ground that the pension board had ruled them ineligible to receive a pension under the provisions of the fund. It was held that the burden was upon the claimant to show that the board's ruling was motivated by bad faith, or arrived at by fraud or arbitrary action. The same reasoning has been adopted by this court in Pasternack v. Diamond, 3 A.D.2d 422, 423, 161 N.Y.S.2d 277, 278 (1st Dept.), affd. 5 N.Y.2d 770, 179 N.Y.S.2d 864, 154 N.E.2d 141 and in cases in our courts, as well as in those of other jurisdictions (Burgess v. First Nat. Bank, 219 App.Div. 361, 220 N.Y.S. 134; Korb v. Brooklyn Edison Co., 258 App.Div. 799, 15 N.Y.S.2d 557; McNevin v. Solvay Process Co., 32 App.Div. 610, 53 N.Y.S. 98; Doobin v. Kelly, 5 Misc.2d 123, 86 N.Y.S.2d 555; Bailey v. Rockwell Spring & Axle Co., 13 Misc.2d 29, 175 N.Y.S.2d 104; Molburg v. Hunter Hosiery, 102 N.H. 422, 158 A.2d 288, 81 A.L.R.2d 1063; Hurd v. Illinois Bell Tel. Co., D.C., 136 F.Supp. 125; Siegel v. First Pennsylvania Banking & Trust Co., D.C., 201 F.Supp. 664). The rule then is that, without a showing of such dereliction on the part of the Board, its decision is final and conclusive. As noted above an employee's right to receive payment under the plan is a conditional contract right and when the plaintiff became a party to the contract by taking employment under it he was bound by these conditions. In this respect the courts below have failed to justify their reversal of the Board's decision by demonstrating that it was arbitrary or capricious, that it was a product of bad faith, or even that there was insufficient evidence before the members of the Board at the time that they made their decision. On the contrary, the facts in the record support the Board's action.

The circumstances surrounding the termination of the employment and the denial of the claim commenced in May, 1957. At that time the plaintiff, an officer manager of one of appellant's branch offices, requested a leave of absence, stating that he was required to appear before the Securities and Exchange Commission on matters not...