Simmons v. Hitt

CourtCourt of Appeals of Tennessee
Writing for the CourtSHRIVER
Citation546 S.W.2d 587
Decision Date27 February 1976
PartiesEarl SIMMONS et al., Plaintiffs-Appellees, v. Billy HITT et al., Defendants-Appellants.

Page 587

546 S.W.2d 587
Earl SIMMONS et al., Plaintiffs-Appellees,
v.
Billy HITT et al., Defendants-Appellants.
Court of Appeals of Tennessee, Middle Section.
Feb. 27, 1976.
Rehearing Denied June 25, 1976.
Certiorari Denied by Supreme Court Nov. 29, 1976.

Charles W. Bone, Goodall & Bone, Gallattin, for plaintiffs-appellees.

F. Clay Bailey, Jr., Dearborn & Ewing, Nashville, for defendants-appellants.

Page 588

OPINION

SHRIVER, Judge.

This suit involves a non-contributory profit sharing pension plan and the right of the plaintiffs to recover contributions made by the employer for their benefit and, particularly, a provision of such plan whereby it is provided that an employee leaving the employment of the employer and entering into direct competition with the employer forfeits his benefits under the plan.

The case came on for hearing on February 13, 1975 before Chancellor C. Allen High, without the intervention of a jury, on the pleadings, exhibits, testimony of witnesses in open court and the entire record and resulted in a Memorandum Opinion, implemented by a Final Decree in favor of the plaintiffs, awarding judgment for the plaintiff Earl Simmons in the amount of $6,323.05; a judgment in favor of Gene Pike for a total of $6,035.90; and a judgment in favor of plaintiff Joe Smith for a total of $3.759.68, from which judgment and decree the defendants have appealed and have assigned errors.

The Proceedings Below

The original complaint herein was filed on May 17, 1973 and, in pertinent part, alleges that plaintiff Earl Simmons became an employee of B. Hitt Electric Company in May 1958 and continued as such employee until June 1972, and was a participant in the profit sharing plan in question here. It is further averred that plaintiff Joe Smith became an employee of B. Hitt Electric Company in April 1956 and continued until 1961 when he left the employment for a brief three month period, returning at the request of defendant Billy Hitt and, after said return, Joe Smith continued as an employee until July 1972. He also was a participant in the profit sharing plan. It is further alleged that plaintiff Gene Pike became an employee of B. Hitt Electric Company and the Jim Hitt Electric Company on the 14th day of November, 1965, and continued as such employee until his retirement on the 2nd day of May, 1971, and was a participant in the profit sharing plan in question.

It is averred that Billy Hitt, James R. Hitt and Maxine C. Hitt are defendants in their capacity as Trustees of the B. Hitt Electric Company Profit Sharing Plan.

Certain provisions of the said profit sharing plan are alluded to and discussed in the bill of complaint and it is alleged that, by letter dated April 17, 1973, the individual plaintiffs were notified by defendant Billy Hitt, as Chairman of the Administrative Committee of the B. Hitt Electric Company Profit Sharing Plan, that their benefits which had previously accrued were being revoked because of a term in the profit sharing plan providing that the right to receive such benefits would be terminated if the participant entered the employment of a competitor.

(The Chancellor found that the foregoing allegations were sustained by the record and we concur.)

It is alleged that the foregoing provisions terminating the benefits of a participant who entered into a competitive business amounts to an unlawful and unjust restraint from engaging in a lawful profession, trade or business, and, therefore, plaintiffs seek the judicial declaration of the Court that said provisions violate public policy and are void.

Certain allegations as to mismanagement of the fund were made but are no longer insisted on.

It is further alleged that the terms and conditions of the profit sharing plan were never fully explained to the plaintiffs and that this was a violation of their rights and a violation of the duties of the Trustees of the fund.

The prayers of the bill are:

(1) For process;

(2) For a decree declaring that the attempted revocation of the benefits of plaintiffs in the plan is void as against public policy;

(3) For an accounting of the fund by the Trustees;

Page 589

(4) That the profit sharing plan be abolished and the individual plaintiffs be allowed to receive immediately all of their accrued benefits under the plain, or, in the alternative, that the Court appoint independent and responsible Trustees or a receiver for said trust funds to manage same in accordance with the guidelines of the Court.

(5) For recovery of attorneys' fees and the costs of this cause.

Counsel for the appellants state that the parties have agreed and that the allegation of mismanagement of the fund is not an issue and have stipulated the respective financial interests of the plaintiffs in the plan at the time they left the employment of the Electric Company.

Defendants in their Answer deny that the forfeiture provisions of the plan are invalid or in restraint of trade and violative of public policy, saying that the plaintiffs made no contribution to the plan and that each plaintiff contacted customers of the defendants immediately prior to leaving defendants' employment and that plaintiffs, upon leaving, immediately commenced doing work for these customers, hence, that the plaintiffs were in direct violation of the provisions of the agreement against entering into direct competition with the defendant employers, the penalty for such conduct being the loss of benefits under the plan.

Chancellor's Memorandum

The Chancellor in his Memorandum Opinion found:

That the Profit Sharing Plan was established December 31, 1958; employees to begin receiving benefits thereunder when they reached age fifty; if discharged for dishonesty or disloyalty he forfeited the entire amount in his account; that at the end of each year Participants would have a vested non-profitable interest in five percent of the amount in his account; that the...

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9 practice notes
  • Kendrick v. Kendrick
    • United States
    • Court of Appeals of Tennessee
    • November 16, 1994
    ...921 Hunley v. Hunley, App. No. 88-206-II, slip op. at 7, 13 T.A.M. 52-4, 3 T.F.L.L. 3-20, (Tenn.Ct.App. Nov. 23, 1988); Simmons v. Hitt, 546 S.W.2d 587, 592 (Tenn.Ct.App.1976). Accordingly, an overwhelming majority of state courts now treat pension rights as marital property. Grace G. Blumb......
  • Adcock v. Firestone Tire & Rubber Co., No. 3-83-0037.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Middle District of Tennessee
    • August 6, 1985
    ...with the firm and, as such, became a binding term of the employer/employee contractual agreement. Similarly, in Simmons v. Hitt, 546 S.W.2d 587, 592 (Tenn.App.), cert. denied, (Tenn.1976), the Tennessee Court of Appeals held that unfunded pension and retirement plans5 are not merely gratuit......
  • Tennessee U.D.C. v. Vanderbilt University
    • United States
    • Supreme Court of Tennessee
    • May 3, 2005
    ...149 Tenn. at 282, 259 S.W. at 558; Hooton v. Nacarato GMC Truck, Inc., 772 S.W.2d 41, 46 (Tenn.Ct.App.1989); Simmons v. Hitt, 546 S.W.2d 587, 591 In order to identify the conditions attached to the gift from the Tennessee U.D.C. to Peabody College, we must first determine which contract or ......
  • Musto v. American General Corp., No. 3-85-0546.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Middle District of Tennessee
    • August 23, 1985
    ...Similarly, the modification of a contract requires a bargained-for exchange supported by consideration. In Simmons v. Hitt, 546 S.W.2d 587, 592 (Tenn.App. 1976), the Tennessee Court of Appeals held that unfunded pension and retirement plans are not merely gratuities offered by the employer,......
  • Request a trial to view additional results
9 cases
  • Kendrick v. Kendrick
    • United States
    • Court of Appeals of Tennessee
    • November 16, 1994
    ...921 Hunley v. Hunley, App. No. 88-206-II, slip op. at 7, 13 T.A.M. 52-4, 3 T.F.L.L. 3-20, (Tenn.Ct.App. Nov. 23, 1988); Simmons v. Hitt, 546 S.W.2d 587, 592 (Tenn.Ct.App.1976). Accordingly, an overwhelming majority of state courts now treat pension rights as marital property. Grace G. Blumb......
  • Adcock v. Firestone Tire & Rubber Co., No. 3-83-0037.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Middle District of Tennessee
    • August 6, 1985
    ...with the firm and, as such, became a binding term of the employer/employee contractual agreement. Similarly, in Simmons v. Hitt, 546 S.W.2d 587, 592 (Tenn.App.), cert. denied, (Tenn.1976), the Tennessee Court of Appeals held that unfunded pension and retirement plans5 are not merely gratuit......
  • Tennessee U.D.C. v. Vanderbilt University
    • United States
    • Supreme Court of Tennessee
    • May 3, 2005
    ...149 Tenn. at 282, 259 S.W. at 558; Hooton v. Nacarato GMC Truck, Inc., 772 S.W.2d 41, 46 (Tenn.Ct.App.1989); Simmons v. Hitt, 546 S.W.2d 587, 591 In order to identify the conditions attached to the gift from the Tennessee U.D.C. to Peabody College, we must first determine which contract or ......
  • Musto v. American General Corp., No. 3-85-0546.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Middle District of Tennessee
    • August 23, 1985
    ...Similarly, the modification of a contract requires a bargained-for exchange supported by consideration. In Simmons v. Hitt, 546 S.W.2d 587, 592 (Tenn.App. 1976), the Tennessee Court of Appeals held that unfunded pension and retirement plans are not merely gratuities offered by the employer,......
  • Request a trial to view additional results

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