Plowman v. Indian Refining Co.

• Decision Date: 19 August 1937
• Docket Number: No. 837-D.,837-D.
• Citation: 20 F. Supp. 1
• Parties: PLOWMAN et al. v. INDIAN REFINING CO.
• Court: U.S. District Court — Eastern District of Illinois

20 F. Supp. 1

PLOWMAN et al. v. INDIAN REFINING CO.

No. 837-D.

District Court, E. D. Illinois.

August 19, 1937.

Sumner & Lewis, of Lawrenceville, Ill., and Acton, Acton & Baldwin, of Danville, Ill., for plaintiffs.

Walter T. Gunn, of Danville, Ill., Fred W. Gee, of Lawrenceville, Ill., and James T. Nielsen, of Chicago, Ill., for defendant.

LINDLEY, District Judge.

Thirteen persons and the administrators of five deceased persons brought this suit, alleging that defendant, in 1930, made separate contracts to pay each of the individual plaintiffs and each of the deceased persons whose administrators sued, monthly sums equal to one-half of the wages formerly earned by such parties as employees of the defendant for life. Each of the claimants had been employed for some years at a fixed rate of wages, usually upon an hourly basis but payable monthly or semimonthly.

The theory of plaintiffs is that on July 28, 1930, (with two exceptions), the vice-president and general manager of the refinery plant called the employees, who had rendered long years of service separately into his office and made with each a contract, to pay him, for the rest of his natural life, a sum equal to one-half of the wages he was then being paid. The consideration for the contracts, it is said, arose out of the relationship then existing, the desire to provide for the future welfare of these comparatively aged employees and the provision in the alleged contracts that the employees would call at the office for their several checks each pay-day.

Most of the employees were participants in group insurance, the premiums for which had been paid approximately one-half by the employee and one-half by the company, and, according to plaintiffs, their parts of the premiums were to be deducted from their payments as formerly. This procedure was followed.

The employees were retained on the pay roll, but, according to their testimony, they were not to render any further services, their only obligation being to call at the office for their remittances. Most of them testified that it was agreed that the payments were to continue throughout the remainder of their lives. But two testified that nothing was said as to the time during which the payments were to continue. As to still others the record is silent as to direct testimony in this respect.

The payments were made regularly until June 1, 1931, when they were cut off and each of the employees previously receiving the same was advised by defendant's personnel officer that the arrangement was terminated.

Defendant does not controvert many of these facts, but insists that the whole arrangement was included in a letter sent to each of the employees as follows:

"Confirming our conversation of today, it is necessary with conditions as they are throughout the petroleum industry, to effect substantial economies throughout the plant operation. This necessitates the reducing of the working force to a minimum necessary to maintain operation. In view of your many years of faithful service, the management is desirous of shielding you as far as possible from the effect of reduced plant operation and has, therefore, placed you upon a retirement list which has just been established for this purpose.

"Effective August 1, 1930, you will be carried on our payroll at a rate of $____ per month. You will be relieved of all duties except that of reporting to Mr. T. E. Sullivan at the main office for the purpose of picking up your semi-monthly checks. Your group insurance will be maintained on the same basis as at present, unless you desire to have it cancelled." (Signed by the vice-president.)

It contends and offered evidence that nothing was said to any employee about continuing the payments for his natural life; that the payments were gratuitous, continuing at the pleasure and will of defendant; that the original arrangement was not authorized, approved, or ratified by the board of directors, the executive committee thereof, or any officer endowed with corporate authority to bind the company; that there was no consideration for the promise to make the payments; and that it was beyond the power of any of the persons alleged to have contracted to create by agreement or by estoppel any liability of the company to pay wages to employees during the remainders of their lives, if they did not render actual services. Defendant admits the payments as charged and the termination of the arrangement on June 1, 1931.

The employees assert that there was ample authority in the vice-president and general manager to make a binding contract of the kind alleged to have existed; that, irrespective of the existence or nonexistence of such authority, the conduct of the company in making payment was ratification of the original agreement and that defendant is now estopped to deny validity of the same.

Plaintiff Kogan, an employee aged 72, testified that for some years prior to July 28, 1930, he had been employed as a drill pressman and in general repair work in the machine shops; that on July 28, 1930, he talked to Mr. Anglin, the vice-president and general manager, in the latter's private office; that Anglin said then that the oil industry was in a deplorable condition; that the management found it necessary to cut down expenses, and therefore, to lay off certain employees; that the witness was to be relieved of his duties, but that he would receive one-half of his salary and would be retained upon the pay roll; that this was being done because of the witness' many years of services; that the company did not desire to discharge him without further compensation; that he would be excused from all labor and required only to report to the main office to get his checks; that the company would carry his insurance in accord with previous practice; and that he would have all the privileges of hospitalization and in other respects of regular employees. The witness said he expressed his preference to work, but was told that that was impossible. He says that he was told that the arrangement was permanent, that is, for as long as he lived; that he would receive a letter confirming this conversation, which he should keep; that his labor would end on July 31, 1930; that he received the letter within a day or two; that thereafter he reported regularly at the office and obtained the checks until May 29, 1931, when he was told by the personnel department that the check then received would be the last one. This action, he said he was then told, was taken because of the necessity for further retrenchment. He testified that he sought no other employment; that nothing was said to him about working or not working for other parties, and that when he received the letter he kept it without comment or objection.

Other claimants testified substantially the same. Beanblossom said that he was told that the layoff was by the direction of the president; that he was still on the pay roll but that he would have no work to do; that the arrangement would last all his life; and that if conditions improved he would probably get his job back. Gibson testified that nothing was said about the time during which the payments would continue but that he inferred that they were for life. Teufel testified that nothing was said about how long the payments would continue. Stout, Robb, Plowman, McClure, Smith, and Courter testified substantially as did Kogan. Reeves testified that he was told he was given a pension for life; Kendall that he was in the hospital when he heard about the arrangement with other men and sent his nurse to ask for his payments and that thereafter he received checks until June 1, 1931. Mrs. Burrell testified that her husband was deceased; that he received the letter previously mentioned and the payments, until June 1, 1931. Mrs. Hoth and Mrs. Baker testified similarly concerning their husbands. Plaintiffs offered no testimony as to any conversations between any of the deceased men and the manager. Mr. and Mrs. Hooks, son-in-law and daughter of Davenport, one of the deceased employees, testified that Wells, the plant superintendent, came to their house and said that he preferred to talk to them rather than to Davenport because the latter was not then well; that the company was desirous of making a "settlement" with him for half salary for the remainder of his life. They directed him to talk to Davenport.

In behalf of defendant, the assistant secretary testified that there were no minutes showing any corporate action with regard to the arrangement and that there was nothing in the records of the corporation, in by-laws, resolution or minutes authorizing, directing, or ratifying the payments or giving anybody authority to make the...