Matthews v. Federal Land Bank of St. Louis

• Decision Date: 21 October 1986
• Docket Number: No. 50636,50636
• Citation: 718 S.W.2d 220
• Parties: Mary MATTHEWS, Plaintiff-Respondent, v. The FEDERAL LAND BANK OF ST. LOUIS, Federal Intermediate Credit Bank of St. Louis, and St. Louis Bank for Cooperatives, Defendants-Appellants.
• Court: Missouri Court of Appeals

Page 220

718 S.W.2d 220

Mary MATTHEWS, Plaintiff-Respondent, v. The FEDERAL LAND BANK OF ST. LOUIS, Federal Intermediate Credit Bank of St. Louis, and St. Louis Bank for Cooperatives, Defendants-Appellants.

No. 50636.

Missouri Court of Appeals,

Eastern District,

Division Three.

Oct. 21, 1986.

Robert W. Stewart, St. Louis, for defendants-appellants.

Kenneth V. Bryne, Clayton, for plaintiff-respondent.

KAROHL, Judge.

Defendants, the employer, appeal verdict and judgment for their former employee, Mary Matthews. The verdict and judgment in the trial court was in favor of Matthews in the sum of $50,000 actual and $50,000 punitive damages on her claim based on fraudulent misrepresentation which led to her dismissal.

Defendants jointly participated in operating the Farm Credit Banks of St. Louis (hereinafter "FCB"). FCB is a part of the Farm Credit System which is composed of a series of banks and associations which, while charted under Federal law, are owned by their borrower-members and operated on a cooperative basis. Their function is to serve the unique credit needs of farmers, ranchers, and aquatic producers and harvesters. Three separate types of institutions make up the system: (1) the Federal land banks and the local Federal land bank associations, (2) the Federal intermediate credit banks and the local credit associations, and (3) the banks for cooperatives. The Farm Credit Act of 1971, 12 U.S.C. § 2001, et seq., Pub. L. 92-181, December 10, 1971, 85 Stat. 583, is a complete legislative revision of the farm credit laws and the statutory basis for the farm credit system. A description of the background and history of the development of these banks may be found in the legislative history of the Farm Credit Act of 1971. H.R. No. 92-593, 92d Cong., 1st Sess. reprinted in 1971 U.S. Code Cong. & Ad. News 2091, 2096 et seq. Each defendant is a federally chartered instrumentality of the United States. The Farm Credit Administration is an independent agency in the executive branch of the government. The Farm Credit Administration supervises and regulates defendant banks. Jointly defendant banks operate a credit union for their employees. Plaintiff Matthews was the only employee of the credit union when discharged.

Mary Matthews began working for the Farm Credit Banks of St. Louis as a secretary-receptionist in 1978. Upon employment, she received a copy of the employee handbook from FCB. In February, 1980, Matthews was promoted to the position of credit union administrator, a position she held until the time of her discharge on September 30, 1982. She was responsible for maintaining all records, providing loan counseling, preparing loan applications, and performing all accounting and bookkeeping duties. She reported to defendants' office of personnel on an administrative basis and to the Credit Union Board President, functionally. During the time that Matthews was credit union administrator, Virginia Perrin served as President of the Credit Union Board.

In May, 1982, Matthews requested a leave of absence to spend the summer at home with her son who was ill. Matthews asked Mr. Bowns, Vice-President of Personnel, if FCB would grant a leave of absence. Bowns affirmed that leaves were available and Matthews would need to apply through her supervisor. Matthews applied through Virginia Perrin, who discussed the request with Mr. Schaeffer in personnel. He was successful in finding a temporary replacement for Matthews and Perrin then presented the request to the Credit Union Board.

FCB granted Matthews a leave of absence effective June 1, 1982. She was to return either at the end of August or at the end of September. After the decision to grant the leave was made, but before it was accepted by Matthews, she asked Perrin if her benefits were protected while she was on leave. Perrin answered yes, however, Matthews was to use her accrued annual leave prior to beginning her leave of absence. This was a condition contained in the handbook. At trial, Perrin testified that she told Matthews to check with personnel for all other details of the leave of absence. Matthews testified that Perrin assured her that her seniority, benefits, and career were protected. Both Matthews and Perrin stated that the question of whether an employee can convert an unpaid leave of absence to sick leave with pay was neither asked nor answered.

While on leave of absence, prior to September 1, 1982, Matthews called Perrin to request an extension of leave from August 31, until September 30, 1982. After arranging for the continuation of a temporary replacement, FCB approved Matthew's extension. Subsequently, Matthews became ill and her doctor recommended gallbladder surgery. On September 10, 1982, she scheduled the surgery for September 28th and called FCB requesting that her accumulated sick leave of 406.06 hours be added onto her leave of absence in such part as necessary and effective October 1, 1982. Perrin and Schaeffer informed Matthews by phone that her leave could not be extended beyond September 30, 1982. FCB then notified her by letter of September 22, 1982, that her leave of absence would not be extended and requested her resignation. Matthews immediately replied by letter that she was requesting sick leave and not a further leave of absence. Her letter was not answered directly. FCB terminated Matthews by letter dated September 30, 1982, effective at 4:30 P.M. on September 30, 1982.

Matthews requested in a letter dated October 14, 1982, a meeting with Perrin and Schaeffer to clarify the situation; this meeting was held on October 29, 1982. At this meeting Matthews was told that an employee could not switch from unpaid leave of absence to sick leave with pay. In exchange for a general release, FCB offered Matthews a lump sum payment of her sick leave for which ordinarily she would be ineligible to receive under bank policy. Matthews refused the offer and filed suit. Matthews' petition contained three counts: (I) wrongful discharge under an employment contract; (II) violation of the service letter statute; and (III) fraudulent misrepresentation. Only Count III was submitted to the jury.

Employer contends four points on appeal: (1) plaintiff did not prove all the elements of fraudulent misrepresentation; (2) plaintiff has no cause of action sounding in tort because her discharge was under an employment contract; (3) defendants are not subject to punitive damages because they are instrumentalities of the federal government; and (4) plaintiff's proof of damages is limited by law to those sustained during the contract employment period. We affirm the award of actual damages and reverse the judgment of punitive damages.

Employers' first point on appeal alleges that Matthews failed to establish by sufficient evidence the elements necessary to submit and prevail upon a fraudulent misrepresentation theory under Missouri law. To prevail on this theory she was obliged to prove:

(1) a false, material representation;

(2) the speaker's knowledge of its falsity or his ignorance of its truth;

(3) the speaker's intent that it should be acted upon by the hearer in the manner reasonably contemplated;

(4) the hearer's ignorance of falsity of the statement;

(5) the hearer's reliance on its truth and the right to rely thereon; and

(6) proximate injury.

Huttegger v. Davis, 599 S.W.2d 506, 511 (Mo. banc 1980). See also, Ackmann v. Keeney-Toelle Real Estate Co., 401 S.W.2d 483, 488 (Mo. banc 1966).

Matthews pleaded in Count III, that defendants by and through their servants and employees stated and represented to her that a personal leave of absence: (1) protected her job, her employment and her career; (2) protected all of plaintiff's existing benefits, including seniority, retirement, pension, thrift plan, vacation and sick leave; and (3) protected plaintiff's right not to be discharged except for good cause. Matthews alleges that said statements were false and were known to be false or were recklessly made without any knowledge of their truth or falsity. She contends that the statements were made with the specific intent that she would act upon these statements concerning the personal leave of absence. Matthews alleges that she was ignorant of the truth or falsity of the representations. She alleges the right to rely on the statements and representations and in fact did so to her detriment.

In determining whether Matthews made a submissible case, we review the evidence that bears upon the elements of fraud in the light most favorable to the plaintiff giving her the benefit of all reasonable inferences which may be adduced from the transcript. Ackmann, 401 S.W.2d at 488. At trial, Matthews testified that upon requesting her leave of absence from Mrs. Perrin, she asked if her seniority, benefits and career were protected. Mrs. Perrin replied in the affirmative. The only condition was the requirement to first exhaust her annual leave. At trial Perrin indicated that she was aware that Matthews wanted to return to the FCB and to continue her career. Prior to Matthews leave of absence, Mrs. Perrin was unaware of the contents of a supervisor's manual even though she was President of the Credit Union and Matthews reported to her. Mrs. Perrin was responsible for the decision to terminate Matthews. The supervisor's manual did provide that sick leave could not be used to extend a leave of absence. The Farm Credit Administration is charged with the responsibility of supervising defendants. The Farm Credit Administration requires that defendants utilize a district personnel policy manual and employee handbook. 12 C.F.R. § 612.2000 (1982). "Appropriate management and supervisory personnel shall be provided with a copy of the policy manual for guidance in managing human resources.... The policy manual(s) should address ... employee benefits." (emphasis ours) 12 C.F.R. § 612.2020 (1982). Matthews testified at trial that she made her decision to take a...