Mace v. Conde Nast Publications, Inc.

• Decision Date: 19 December 1967
• Citation: 237 A.2d 360,155 Conn. 680
• Court: Connecticut Supreme Court
• Parties: Angelina MACE et al. v. The CONDE NAST PUBLICATIONS, INC.

Page 360

237 A.2d 360

155 Conn. 680

Angelina MACE et al. v. The CONDE NAST PUBLICATIONS, INC.

Supreme Court of Connecticut.

Dec. 19, 1967.

Morgan P. Ames, Stamford, for appellant (defendant).

Donald F. Zezima, Stamford, with whom, on the brief, were John C. Macrides and Gerald J. Sullivan, Stamford, for appellees (plaintiffs).

Before ALCORN, HOUSE, THIM RYAN and COVELLO, JJ.

ALCORN, Associate Justice.

Twenty former employees of the defendant and the executrix of a deceased former employee brought this action seeking to recover, under their employment contract with the defendant, severance pay with interest, which they claimed was due them and unpaid since the termination of their employment on April 1, 1961. The defendant's answer admitted only that the plaintiffs were employees to and including March 31, 1961. In addition, the defendant pleaded six special defenses, alleging, severally, an accord and satisfaction, a novation, waiver, estoppel, laches, and the Statute of Limitations. The trial court sustained a demurrer to the defense of the Statute of Limitations, and the case was tried to a jury, which returned a verdict for the plaintiffs. The defendant's motion to set aside the verdict was denied. The defendant has appealed from the judgment on the verdict, assigning error in the ruling on the demurrer, in the court's refusal to set aside the verdict, and in the charge. None of the issues raised by the special defenses of accord and satisfaction, waiver, estoppel, and laches is involved in the appeal.

We consider first the error assigned in the ruling on the demurrer. The material allegations of the complaint, which is dated January 6, 1965, are that the plaintiffs were employees of the defendant for some time prior to March 31, 1961; that before that date the defendant had contracted to pay them severance pay, graduated according to the length of employment, whenever the employment of any of them was terminated because of suspension or merger of business or permanent reduction of staff; that they had continued to work for the defendant in reliance on this agreement; and that the defendant had terminated their employment for the stated reasons on March 31, 1961.

The defendant pleaded, in its sixth special defense, that the action was barred by General Statutes § 52-596, which provides that '(n)o action for the payment of remuneration for employment payable periodically shall be brought but within two years after the right of action accrues.' The plaintiffs demurred on the ground that the statute was inapplicable because they sought 'lump sum severance payments and not weekly or monthly wages.' The court ruled that the demurrer was '(s)ustained for the reason that § 52-596 does not apply.'

The ruling was correct. We have described severance pay as 'a kind of accumulated compensation for past services and a material recognition of their past value'; Willets v. Emhart Mfg. Co., 152 Conn. 487, 490, 208 A.2d 546, 548; or as 'a form of compensation for the termination of the employment relation, for reasons other than the displaced employees' misconduct, primarily to alleviate the consequent need for economic readjustment but also recompense him for certain losses attributable to the dismissal.' Adams v. Jersey Central Power & Light Co., 21 N.J. 8, 13, 120 A.2d 737, 740; McGowan v. Administrator, 153 Conn. 691, 693, 220 A.2d 284; see also Brannigan v. Administrator, 139 Conn. 572, 577, 95 A.2d 798. Under neither description would severance pay amount to 'the payment of remuneration for employment payable periodically.

The errors assigned in the charge are tested by the claims of proof in the finding. State v. Mallette, 153 Conn. 584, 587, 219 A.2d 447. The issues between the parties as disclosed by the finding were as follows: The defendant had conducted the 'Vogue Pattern Service' since 1934, and the plaintiffs had been permanent employees in this department of the defendant's business. The defendant had issued to each employee a handbook containing provisions for severance pay reciting that '(w)hen a permanent employee is terminated because of suspension of business, merger of business, or permanent reduction of staff, severance pay will be paid' on the basis of a schedule specifically set forth. In 1961, the business of Vogue Pattern Service was failing, and the defendant, on January 20, 1961, entered into a licensing agreement under which the Butterick Company, hereinafter called Butterick, would carry on the Vogue Pattern Service. The agreement provided that Butterick would offer employment to all personnel then employed by the defendant in designated departments on terms and conditions substantially the same as those then offered by the defendant; that Butterick would offer these employees the opportunity of participating in its own pension plan, waiving a three-year eligibility requirement, but that Butterick would be under no obligation to grant any past service credit for any employment by the defendant; and that Butterick's obligation to pay separation pay would arise only if the employment was terminated after specified dates. The defendant assembled the plaintiffs and announced the agreement to them at a meeting three days later. They were then told that, if they were employed by Butterick, they would be eligible for all benefits available to Butterick employees and that Butterick, in determining eligibility for benefits, would give them full credit for benefits accrued by reason of their length of service with the defendant under its retirement plan. They were told, in substance, that the agreement with Butterick would enable the Vogue Pattern Service to continue and would avoid the necessity of the defendant's terminating the plaintiffs' employment which would otherwise be necessary owing to the defendant's declining business. They were also told that, since they would still be working for Vogue Pattern Service if they chose to work for Butterick, they would not be entitled to severance pay from the defendant. The defendant asked them to go on the Butterick payroll and told them that an employee who did not do so would receive no severance pay.

It was the defendant's claim that all plaintiffs decided to accept the new arrangement and to go on the Butterick payroll and that, on April 1, 1961, they were transferred accordingly. Each received final pay slips from the defendant without demanding or receiving severance pay. From and after April 1, 1961, they continued to do their same type of work in the same location and were paid by Butterick.

It was the claim of the plaintiffs, on the other hand, that they never knew of the...