Hilgenberg v. Iowa Beef Packers, Inc.

• Decision Date: 04 March 1970
• Docket Number: D,No. 53887,No. 21666,P,No. 22099,21666,22099,53887
• Citation: 175 N.W.2d 353
• Parties: Gene HILGENBERG et al., Plaintiffs-Appellees in Caselaintiffs-Appellants in Case, v. IOWA BEEF PACKERS, INC., a Iowa Corporation, Defendant-Appellant in Caseefendant-Appellee in Case.
• Court: Iowa Supreme Court

Page 353

175 N.W.2d 353

Gene HILGENBERG et al., Plaintiffs-Appellees in Case No. 21666, Plaintiffs-Appellants in Case No. 22099, v. IOWA BEEF PACKERS, INC., a Iowa Corporation, Defendant-Appellant in Case No. 21666, Defendant-Appellee in Case No. 22099.

No. 53887.

Supreme Court of Iowa.

March 4, 1970.

As Modified on Rehearing May 5, 1970.

P. L. Nymann, Dakota City, Neb., and George F. Davis, of Sifford, Wadden & Davis, Sioux City, for defendant-appellant-appellee.

Malcolm D. Young and William E. Naviaux, Omaha, Neb., and White & McMartin, Harlan, for plaintiffs-appellees-appellants.

SNELL, Justice.

Two cases by the same plaintiffs against the same defendant were consolidated for trial and appeal.

Plaintiffs are former foremen and supervisory employees, as distinguished from hourly workers, employed by defendant Iowa Beef Packers, Inc. Defendant will be referred to as IBP.

The issues involve different benefits claimed by plaintiffs, i.e., right to a bonus for the fiscal year 1965 and the right to exercise a stock option. They stem from the same general program of developing and retaining key personnel.

We will first consider the bonus issue.

In the fall of 1963 IBP purchased lands and business of Iowa Pork, Inc., situate in Perry, Iowa, whereupon IBP made considerable changes and improvements in the operation of the plant, various employees taking part therein. Each plaintiff had been employed on an hourly basis. The testimony of each of the plaintiffs was substantially similar, and to the effect that the Perry plant manager M. R. (Bob) Gardner, since deceased, had asked each at different times to assume a supervisory capacity; that each employee had then asked about pay, and had been told separately that supervisors were paid weekly (in most instances $136.50) instead of hourly; that uniformly these shifts from hourly to weekly pay schedules would have resulted in a substantial reduction in income for each employee. Plaintiffs were reluctant to accept. Mr. Gardner, being so informed, had then said that each employee would receive as an ameliorative for the cut a bonus along with other fringes, each plaintiff understanding (vaguely and variously) that the bonus would be a percentage of their respective salaries, according to plant profits pooled for the bonus-paying purposes. No employee was told of the precise percentage according to which this promised bonus would be computed. Plaintiffs were from time to time told that a fund was being set aside for payment of bonuses.

Defendant offered evidence that weekly earnings of all plaintiffs were not reduced by promotion.

Plaintiffs separately accepted the change in position and remained in defendant's employment until October 23, 1965.

By agreement dated October 22, 1965, effective at the close of business on Saturday, October 23, 1965, defendant IBP sold the Perry plant and business to Oscar Mayer and Co., Inc. The evidence shows that the sale was at a substantial profit to IBP. Defendant's report showed a profit of $1,297,900.00.

The 'Agreement of Sale' provided:

'1. Sale of Property and Purchase Price. In consideration of the payment of the purpose price of $4,300,000 by purchaser to seller, receipt of which is hereby acknowledged, seller hereby sells to purchaser and, in consideration of the representations, warranties and covenants hereinbelow made by seller, purchaser hereby purchases from seller, the following described property (herein sometimes referred to collectively as the Sold Property):

'A. Real Property

'* * *

'B. Chattel Property

'* * *

'C. Intangible Property

'* * *

'(c) The right to hire all present employees of the plant and the buying stations to the exclusion of seller; * * *.'

The 'Sellers' Covenants' included the following:

'It will use its best efforts to assist purchaser in retaining the present personnel of the plant and the buying stations and will not itself, for a period of 18 months from the date hereof, hire, or retain on its payroll, any of such personnel.'

The 'General Assignment and Conveyance' to Oscar Mayer & Co., Inc., included:

'(c) The right to hire all present employees of the plant and the buying stations to the exclusion of seller.'

The 'Representations and Warranties' of the seller provided (except for a union contract not involved here):

'The seller is not a party to * * * (ii) any pension, profit-sharing or bonus plan for any employee of the plant; (iii) any written or oral employment contract or arrangement with any employee of the plant which is not terminable at will; * * *.'

The purchaser did not assume any of the claimed obligations of the seller involved in these cases.

It is quite obvious that the right to retain key personnel was one of the assets sold by IBP at a substantial profit.

Defendant's fiscal year ended October 30, seven days after the effective date of the sale.

Defendant refused to pay bonuses for 1965. Some of the plaintiffs received a bonus for 1964.

Defendant offered evidence and argues that prior to 1964 there had been a 'bonus arrangement', but that after 1964, with the creation of a new 'compensation committee', the entire compensatory system of defendant, including bonus arrangements, was overhauled, resulting in December 1964 in the termination of all of the company's 'commitments' to pay bonuses; that thereafter all bonuses were purely 'discretionary', according to: performance of individual recipient, profits of particular plant, and decisions of the compensation committee; that this new policy was announced and known to each of these plaintiffs as of December 1964. Some plaintiffs testified that they had even then been given assurances by Gardner that they would receive bonuses for 1965. There is no claim that any employee ever agreed to any change that would waive his right to a compensating bonus.

Defendant argues finally, even if there were an agreement to pay bonuses, still defendant was not liable to pay them inasmuch as: (a) their extent was neither definite nor computable; (b) eligibility therefor depended upon the particular employee's being an 'active employee' at the (i) end of the fiscal year, October 30, and (ii) at distribution time in December, and the employment of these plaintiffs ceased one week prior to October 30, 1965, and hence they are disqualified.

The evidence showed that defendant for the fiscal year 1965 had allocated although not segregated the sum of $14,175 for the payment of these bonuses.

I. The trial court submitted to the jury 3 special verdicts. They were as follows with the jury's answers:

'Special Verdict No. 1--Have plaintiffs established an agreement for a wage bonus that is definite and computable? Answer 'yes' or 'no'. Answer: Yes.

'If 'no', skip to Special Verdict No. 4. If 'yes', answer Special Verdicts 2 and 3 and 4.

'Special Verdict No. 2--What is the total amount that was agreed to be paid as wage bonuses to all of these plaintiffs for the fiscal year ending October 30, 1965? Fill in amount. Answer: '14,175.00.

'Special Verdict No. 3--Have the plaintiffs established that they were eligible under agreement with the defendant for payment of a wage bonus for the fiscal year ending October 30, 1965? Answer 'yes' or 'no'. Answer: Yes.'

Special Verdict No. 4 related to stock options discussed infra.

Judgment was entered upon the bonus verdicts. The trial court computed the apportionment of the judgment and entered judgment in favor of the individual plaintiffs with interest from January 1, 1966. The trial court computed the interest to March 15, 1969.

The actual apportionment mathematically is not challenged.

The appellant relies upon two assigned errors for reversal: (a) that there was no evidence to support the finding of the jury and judgment of the trial court that defendant had agreed to pay a wage bonus that was definite and computable; and (b) the evidence affirmatively showed that plaintiffs were not eligible for a bonus according to the policy set by the compensation committee for bonus payments given after December 1964. Appellant thus raises two distinct issues: First, that defendant made no enforceable commitment to pay bonuses; second, that even if it did, still these plaintiffs have not shown themselves entitled to this commitment.

Appellant's primary argument seems centered about the first contention, with almost sole emphasis being on the last phrase thereof, viz: that the commitment--if any--was not so 'definite and computable' as to allow the jury to base its finding upon other than mere conjecture and speculation. The sole citation for this proposition is Drake v. Block, 247 Iowa 517, 74 N.W.2d 577. Hence, while appellant might admit the existence of such a commitment, still it is argued that it must fail for indefiniteness. As appellant says: 'Where, though a bonus or profit-sharing plan is contemplated by an employer and employees, no definite amount has been agreed upon and all matter concerning amount of bonus rests solely and exclusively with employer who has no fixed plan or schedule to be followed in determining amount of bonus, and such bonuses as were paid follow no set plan or percentage of salary paid, such understanding as to a bonus is too indefinite and uncertain to permit recovery of a bonus.' This is essentially the principle stated in Drake, supra.

The case before us is clearly distinguishable from the Drake case. In Drake the contract of employment was unilateral and there was no evidence from which any bonuses due plaintiffs might be computed. In the case before us there was evidence of a promise to pay a bonus as an inducement to accept different work and a different method and rate of payment. Plaintiffs accepted and performed accordingly. There was evidence (uncontradicted) that the bonus would be compensatory for the change. There was evidence that IBP had allocated $14,175 for the payment of these bonuses.

The jury accepted plaintiffs' version of the...