Hablas v. Armour and Company, 16028.

• Decision Date: 09 September 1959
• Docket Number: No. 16028.,16028.
• Citation: 270 F.2d 71
• Parties: L. J. HABLAS, Appellant, v. ARMOUR AND COMPANY, a Foreign Corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

270 F.2d 71 (1959)

L. J. HABLAS, Appellant, v. ARMOUR AND COMPANY, a Foreign Corporation, Appellee.

No. 16028.

United States Court of Appeals Eighth Circuit.

September 9, 1959.

COPYRIGHT MATERIAL OMITTED

J. F. X. Conmy, Bismarck, N. D. (Conmy & Donahue, Bismarck, N. D., was with him on the brief), for appellant.

E. T. Conmy, Fargo, N. D. (Conmy & Conmy, Fargo, N. D., and D. R. Kanzler, Chicago, Ill., were with him on the brief), for appellee.

Before SANBORN, VAN OOSTERHOUT and MATTHES, Circuit Judges.

VAN OOSTERHOUT, Circuit Judge.

This is an appeal by plaintiff, L. J. Hablas, from final judgment dismissing his complaint against defendant, Armour and Company, for damages for fraud and tortious discharge.¹ Plaintiff, as a result of the termination of his employment by defendant, has lost all rights in defendant's pension fund, except the right to the return of his contributions.

Jurisdiction is based upon diversity of citizenship and the requisite jurisdictional amount.

Plaintiff was continuously employed by the defendant from 1910 until his discharge on July 15, 1955, except for a period of approximately two years during which he was engaged in military service during World War I. Defendant in 1911 established the Armour and Company Pension Fund. On December 12, 1912, plaintiff became a participant in, and a contributor to, such fund. In 1925 the original pension plan was superseded by Armour and Company Employees' Pension Fund, and in 1945 defendant afforded its employees additional benefits through Armour and Company Employees' Supplemental Pension Fund. Plaintiff was a participant in all of said plans and paid all contributions required of him until his discharge.

Defendant, at the time the various pension plans were put into operation, furnished its employees, including plaintiff, with printed booklets setting out the terms of the pension trust and the applicable rules and regulations. Plaintiff admits receiving such booklets. He testified that he read the booklet on the first plan, and knew it contained the provision that employees remained subject to discharge at will. Plaintiff, at the time he became a participant in the 1911 pension plan, signed an agreement which reads in part:

"I hereby agree to become a contributor to, and participate in, the Armour & Company Pension Fund.

"I * * * understand that the employment obtained under this application may be terminated at the pleasure of either employer or employe without previous notice."

The 1925 pension trust provides that the pension fund shall consist of such sums of money as Armour and Company, or any of its subsidiaries, may from time to time contribute to it, the contributions of employees, and the earnings derived from investment of monies belonging to the fund. Pensions are to be paid only out of the pension fund. The income, capital, and surplus of Armour and Company shall not be liable for the payment of pensions. The management and distribution of the fund shall vest in and be controlled by trustees. The agreement, among other things, specifically provides:

"* * * Neither the creation of said Fund, nor any act, promise or representation, either by any of the officers, directors or employees of Armour and Company, or of any of its subsidiary or affiliated companies or corporations, shall confer any legal rights or privileges upon any employe or pensioner, other than set forth in these rules and regulations, nor give to any employe the right to be retained in the service. All employes remain subject to discharge as always, in the same manner and to the same extent as if the Fund had never been created.

* * * * * *

"In case of voluntary resignation, or dismissal, of any employe from the service of Armour and Company, or any of its subsidiary or affiliated companies or corporations, all contributions made by him or her to the Pension Fund, less any amount which he or she may be owing to Armour and Company, or any of its subsidiaries or affiliated companies or corporations, shall be returned without interest, and such employe\'s interest in the Fund shall thereupon cease."

Provisions of the 1945 Supplemental Pension Fund plan are in substance the same as the provisions just referred to. On September 28, 1945, the plaintiff signed and delivered to the trustees a statement reading as follows:

"I have received the Trustees\' letter of Sept. 21st, 1945 with regard to the establishment of the Armour and Company Employes\' Supplemental Pension Fund — also the Trust Agreement embodying the rules and regulations governing the Fund. This document embodies the terms and conditions under which I become a participant in and a contributor to the Armour and Company Employes\' Supplemental Pension Fund."

Plaintiff's employment with defendant originated in Chicago. There was no written contract of employment. No fixed term of employment was agreed upon. Plaintiff as a witness testified, "I knew that I could quit whenever I wanted to and that they could discharge me whenever they wanted to. I knew that." Plaintiff in his brief admits that his employment was for an indefinite period.

Under defendant's pension plans employees are eligible for retirement at age 60. Plaintiff was discharged² by defendant's vice president, St. John, at defendant's home office in Chicago on July 15, 1955. At the time plaintiff filed his complaint he thought that he was 57 years of age at the time of his discharge and so alleged, but he has now established that he was 59 years of age at the time of his discharge. The plaintiff has not yet received refund of the contributions which he has made and to which he is entitled, because he has refused to sign the release required by the trustees.

Plaintiff's cause of action is based upon two theories, to wit:

1. Plaintiff was induced to continue in defendant's employment by fraudulent representations to the effect that his employment would continue until he reached retirement age; and

2. Plaintiff was tortiously discharged.

The case was tried to a jury. At the close of plaintiff's evidence and again at the close of all of the evidence, defendant moved for a directed verdict upon the following grounds, among others:

"First: There is a total failure and a total absence of proof to support the material allegations of plaintiff\'s complaint or to show any right of recovery.

"Two: There is no sufficient testimony to show fraud or fraudulent representations on the part of the defendant which would entitle the plaintiff to any recovery against the defendant.

"Three: There is no sufficient testimony to show that any authorized agent of the defendant made any representations to this plaintiff that were fraudulent or false or any such representations that he could rely upon as constituting a representation or an agreement or promise to continue his employment until he reached retirement age or any promise with knowledge of its falsity or without any intention of performing it.

* * * * * *

"Six: That the undisputed testimony shows plaintiff\'s employment was for an indefinite time and at will and with the right to quit in the plaintiff and the right to discharge in the defendant so there was no wrongful or unlawful discharge."

The court overruled the motions for a directed verdict and submitted the case to the jury. Verdict was returned for the plaintiff. Thereupon, defendant filed a timely motion, pursuant to Rule 50(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A., for judgment in accordance with its motion for directed verdict. That motion was sustained, the court stating:

"The Court, being of the opinion that plaintiff\'s evidence was insufficient as a matter of law to sustain any judgment in his favor, concludes that a verdict in defendant\'s favor should have been directed."

The judgment previously entered upon the verdict was vacated, and plaintiff's action was dismissed with prejudice. This appeal is from such dismissal.

If the evidence is insufficient to support a judgment for the plaintiff on both of the theories advanced by the plaintiff, the trial court's judgment of dismissal must stand. We shall separately consider the theories advanced by the plaintiff in support of his contention that the dismissal of his cause of action was erroneous, considering first the fraud issue.

Plaintiff's theory is that he was induced to continue in the defendant's employment by fraudulent representations made by defendant's officers and employees implying that he would be retained as an employee until he became entitled to retirement pay, that said representations in the form of promises were false and made without any intention of fulfilling them and were made with the intention of deceiving plaintiff, and that plaintiff relied on such representations and was deceived thereby to his detriment.

The parties are in disagreement as to which law governs, plaintiff urging that North Dakota law applies while defendant contends that Illinois law controls.

The conflict of laws rule of the state in which the Federal District Court sits must be applied in diversity cases. 28 U.S.C.A. § 1652; Klaxon Co. v. Stentor Electric Mfg. Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477. Since this case was tried in North Dakota, the conflict of laws rules of that state must be applied. Restatement of Conflict of Laws, § 377, Note 4, provides, "When a person sustains loss by fraud, the place of wrong is where the loss is sustained, not where fraudulent representations are made." The Restatement rule has been generally recognized and followed. Davis v. Guy F. Atkinson Co., 9 Cir., 222 F.2d 824; Smyth Sales, Inc. v. Petroleum Heat & Power Co., Inc., 3 Cir., 128 F.2d 697. We have found no North Dakota cases on the choice of law rule as applied to fraud cases. The North Dakota court in a tort case based on negligence followed the usual rule that the law of the place of injury governs. Mann v. Policyholders' Nat. Life Ins. Co., 78 N.D. 724, 51 N.W....