Hadden v. Consolidated Edison Co. of New York, Inc.
| Decision Date | 30 June 1977 |
| Citation | 58 A.D.2d 154,396 N.Y.S.2d 210 |
| Parties | Gerald R. HADDEN, Plaintiff-Appellant, v. CONSOLIDATED EDISON COMPANY OF NEW YORK, INC., Defendant-Respondent. |
| Court | New York Supreme Court — Appellate Division |
Victor J. Herwitz, New York City (Michael J. Kopcsak, New York City, with him on the brief), for plaintiff-appellant.
James M. Leonard, New York City, of counsel (McHugh, Heckman, Smith & Leonard, New York City) for defendant-respondent.
Before MURPHY, P. J., and KUPFERMAN, LANE and MARKEWICH, JJ.
Plaintiff-appellant, then employed by defendant-respondent, proceeding in accordance with the terms of defendant's Pension Plan, opted on January 23, 1968, to invoke its provision for "early retirement," which provided a lessening of benefits payable thereunder. Defendant's Trustees began payment in February, 1968, but, in January, 1970, terminated the payments. Plaintiff has sued for reinstatement of the payments. Defendant has counterclaimed for disgorgement by plaintiff of moneys and other benefits received by plaintiff, in violation of company policy, from outsiders in business relationships with defendant as to which plaintiff had exercised a degree of influence. Plaintiff was successful on a motion for summary judgment, as was defendant on its counterclaims. The Court of Appeals reversed and remanded for trial of a narrowly limited issue: "Was Con Edison's waiver of its right to discharge Hadden before his retirement, knowingly induced by Hadden through material misrepresentation?" 34 N.Y.2d 88, 100, 356 N.Y.S.2d 249, 258, 312 N.E.2d 445, 451 *. The facts, as disclosed on the motions for summary judgment, having been fully set forth in the decision of the Court of Appeals, will not be repeated here other than sketchily, except for those portions we deem essential to our conclusion.
Plaintiff, a vice president of defendant and its superintendent of construction after 37 years of employment, was discovered by Luce, chief officer of defendant, to have been engaged in a conference with a public official and others for corrupt purposes, and which involved a bribe offer suggested by plaintiff. An investigation was ordered. Taxed with the accusation, plaintiff admitted it on January 6, 1968. He admitted to no other reprehensible act. Plaintiff then applied in his own handwriting on January 23 for early retirement, with reduced payments. He was entitled to do this by the Plan's own provisions, still being an employee, undischarged as of that time, and having attained the requisite age and years of service. On January 26, again meeting with Luce, plaintiff indicated that he wished to apply for a supplemental pension in consideration of his years of service. As stated at Trial Term, "supplemental retirement benefits were not a matter of right . . . but of discretion with the pension committee." Plaintiff then asked what would happen if he withdrew his early retirement election. He was told that, if he did so, he would be discharged forthwith and forfeit all his pension rights. He did not withdraw the elections, the application was processed, and payments began and continued until January 1970. In the interval, evidence had been given by plaintiff under a grant of immunity, and by others, at a criminal trial resulting from investigation of the corrupt meeting in which plaintiff had participated, and the full extent of his improper conduct had come to light. Defendant's Trustees took action as follows:
"RESOLVED, That in the exercise of its authority and responsibility under the Company's Pension Plan for Retirement for Age as set forth in Article VII thereof, the Board of Trustees hereby interprets the Plan as providing that the Company has the right to suspend and terminate pension payments to a former officer when it becomes aware, following the termination of his employment, of facts which if known to it prior to such termination would have resulted in a termination by the Company for cause and a consequent loss of pension rights by the officer in question; and it was further RESOLVED, That the Board of Trustees is of the view that the case of Mr. Gerald R. Hadden is such a case as is described in the preceding resolution and therefore directs that no further payments be made to Mr. Hadden pursuant to the Company's Pension Plan for Retirement for Age."
Payments ceased forthwith, and plaintiff sued. When the case reached the Court of Appeals, defendant's first two main defenses were rejected: that the Pension Plan itself authorized the terminating resolution of the Trustees, and that plaintiff's disloyalty and misconduct constituted failure of consideration. As to the first, it was held by the Court of Appeals (pages 93-95, 356 N.Y.S.2d pages 252-253, 312 N.E.2d pages 447-448) that no authorization for the resolution existed either explicitly or implicitly, and that machinery provided in the Plan for its modification had not been availed of. "However viewed, the board's action is unauthorized by the Pension Plan" page 95, 356 N.Y.S.2d page 254, 312 N.E.2d page 448.
page 95, 356 N.Y.S.2d page 254, 312 N.E.2d page 448. "If the party in default has substantially performed, the other party's performance is not excused" page 96, 356 N.Y.S.2d page 255, 312 N.E.2d page 449. "In the present case, Hadden's consideration supporting Con Edison's promise to pay pension benefits is his 37 years of continued service . . . Weighing the factors involved we find that Hadden's performance has been substantial . . ."; further, "that an analysis of the various factors involved leads to the conclusion that despite Hadden's financial dealings with contractors, Con Edison obtained substantially what it had bargained for in offering a Pension Plan long and continuous employment" pages 97-98, 356 N.Y.S.2d pages 255-256, 312 N.E.2d pages 449-450. It is observed specifically in a footnote that "the Plan in question here has no statement requiring 'faithful' or 'loyal' service" page 95, 356 N.Y.S.2d page 254, 312 N.E.2d page 449.
The flavor of what the Court of Appeals had to say about the first two defenses may be experienced fully only by reading the entire text of the opinion. The foregoing sampling is given for the purpose of emphasizing what the issue for trial herein did not embrace. It had nothing to do with the reason assigned by the Trustees for their unauthorized action, amounting to post-employment discharge for cause, and it had nothing to do with absence of consideration for the pension because of conduct considered disloyal to the company. The Court of Appeals summarized the factual issue presented by the new third defense, remanded for trial: page 93, 356 N.Y.S.2d page 252, 312 N.E.2d page 447. And also: "We do find merit . . . in Con Edison's final contention that it should be permitted to rescind the agreement whereby it waived its right to discharge Hadden, if it is established that the waiver was induced by Hadden's fraudulent misrepresentations" page 98, 356 N.Y.S.2d page 257, 312 N.E.2d page 450. The threshold question, then, is whether Luce and Hadden actually reached an agreement that Hadden would not be discharged and, if so, whether that agreement was induced by an untruthful statement by Hadd to Luce that the extent of Hadden's improper conduct was limited to his participation in the corrupt conference concerning a bribe.
At this juncture we point out that we find no merit in plaintiff's contention that he was disadvantaged by defendant's failure to assert, by way of amendment to its answer, the additional affirmative defense afforded by the new turn given to the case by the Court of Appeals. There was no element of surprise once the opinion of our highest court came down and, as to absence of a bill of particulars which could have been demanded upon formal assertion of the defense, its place was taken by the information elicited by the full examination afforded plaintiff. The defense of rescission was as fully and fairly in the case as though formally pleaded and the particulars thereof furnished by way of a bill, and evidence taken thereunder was properly admissible.
After trial, the court found that Luce had agreed not to discharge Hadden for cause but...
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Hadden v. Consolidated Edison Co. of New York, Inc.
...he had received no such gifts or payments, Con Edison forebore from discharging Hadden. The Appellate Division majority (58 A.D.2d 154, 158, 396 N.Y.S.2d 210, 213), in modifying, found: "Proof of concealment there was, but not of an agreement not to discharge", and concluded: "It is a contr......