Tobin v. General Motors Corp., Docket No. 5468

• Decision Date: 28 May 1969
• Docket Number: No. 1,Docket No. 5468,1
• Citation: 169 N.W.2d 644,17 Mich.App. 475
• Parties: Leo W. TOBIN, Jr., Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, Defendant-Appellee
• Court: Court of Appeal of Michigan — District of US

Page 644

169 N.W.2d 644

17 Mich.App. 475

Leo W. TOBIN, Jr., Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, Defendant-Appellee.

Docket No. 5468.

Court of Appeals of Michigan, Division No. 1.

May 28, 1969.

Released for Publication Aug. 22, 1969.

George B. Wells and Morton Fisher, Detroit, for appellant.

George W. Coombe, Jr., Detroit, for appellee.

Before LESINSKI, C.J., and FITZGERALD and V. J. BRENNAN, JJ.

FITZGERALD, Judge.

Leo W. Tobin, Jr., joined the AC Spark Plug Division of General Motors Corporation as an engineer in 1949. He rose rapidly in the organization and by his severance in 1960 he was earning in excess of $50,000 a year.

A perquisite of his employment was participation in the General Motors bonus plan and the General Motors stock option plan. Under the bonus plan, he was awarded benefits for 1957, 1958 and 1959, each subject to being 'earned out'. For the years 1958, 1959 and 1960, he was granted stock options and other credits, also subject to being 'earned out' under the terms of the plan. The combined value of these benefits was alleged to be in excess of $50,000.

In 1960, due to a reassessment of the situation, plaintiff no longer continued with the company (plaintiff uses the phrase, 'employment was terminated'; defendant, the term 'he resigned to seek greener pastures elsewhere').

To say that the phraseology of the plans is complicated is an understatement. This sample, also cited by the trial court, details the important provisions of the bonus plan and a like provision in the stock option plan.

Section 6 of the bonus plan provides:

'The Bonus and Salary Committee shall have discretion with respect to the determination of each bonus award.'

The section also provides:

'Upon final determination of bonus awards by the Committee, each award of $1,000 or less (cash or stock of equivalent award value) shall be paid at the time of award. Each award of more than $1,000 shall be paid in annual instalments of 20% Or $1,000, whichever is greater, the first such instalment at the time of award, and the remaining instalments in January of each succeeding year (until the full amount of the award in paid) if earned out by the beneficiary by continuing service to the Corporation, at the rate of 1/12th of the amount of the first instalment for each complete month of service beginning with January of the year of the determination, except that if it shall be determined that a beneficiary has acted or conducted himself in a manner inimical or in any way contrary to the best interests of the Corporation, such beneficiary shall lose any right to receive any portion of any instalment or amount that would otherwise have been earned out subsequent to the first of the month in which such act or conduct first occurred, provided that no instalment or amount delivered or paid prior to the date of such determination shall be required to be returned. The determination as to whether any act or conduct of a beneficiary is inimical or in any way contrary to the best interests of the Corporation shall be made by the Bonus and Salary Committee under such procedure as may from time to time be prescribed by the Committee and shall be made in the absolute discretion of the Committee. Any determination so made, including any determination of the time at which such act or conduct first occurred, shall be conclusive.'

Section 8(a) states:

'If it shall be determined that a beneficiary who was permitted to retain his rights to earn out his unearned bonus awards upon termination of employment has, after such termination of employment, engaged, directly or indirectly, in any activity which is in competition with any activity of the Corporation or any subsidiary or has, either prior to or after such termination of employment, otherwise acted or conducted himself in a manner inimical or in any way contrary to the best interests of the Corporation, such beneficiary shall, unless otherwise determined, lose any right to earn out his unearned bonus awards as of the first of the month in which such competitive activity or such act or conduct first occurred.'

Plaintiff had no connection with defendant after 1960 and, in February, 1961, accepted employment with the Ford Motor Company as an executive assistant to the vice-president of manufacturing. Thereupon, General Motors determined that he had lost his right to earn out the remaining bonus awards and would not be receiving any more of the credits under the stock option plan.

Plaintiff sued for recovery of the unpaid bonus awards and undelivered stock credits. Defendant moved for summary judgment ¹ which was granted. The lower court found no genuine issue of material fact and found it unnecessary to consider whether plaintiff was barred by the 3-year limitation in the plans or whether plaintiff had released defendant due to acceptance of a settlement in January, 1961, wherein plaintiff accepted a check for $1,237.50 'in full settlement of bonus awards in accordance with and subject to the terms and conditions of the General Motors Bonus Plan'.

The controlling question here, as below, was whether sections 6 and 8(a) of the bonus plan and section 5(c) of the stock option plan are void as being violative of public policy as constituting an unreasonable restraint on competition.

On the general subject of summary judgments, and leading up to its decision, the trial court stated as follows:

'On oral argument, defendant claimed entitlement to accelerated judgment on the grounds of expiration of the applicable period of limitation of right of recovery and release. Those theories aside for the moment, defendant further claims entitlement to a judgment for the reason that '* * * there is no genuine issue as to any material fact in this action and that defendant is entitled to a judgment as a matter of law. * * *'

'That latter claim must be tested by reference to all of the documents which have been filed in this case; particularly, the pleadings, admissions, stipulations, and affidavits. For motion-decision purposes all of the plaintiff's well-pleaded allegations of fact are taken as true and relevant contractual documents are construed strictly and against the draftor.

'At the risk of over-simplification, it can be said that it is defendant's theory that, assuming the truth of all of the plaintiff's well-pleaded factual allegations, still: (a) There is no Genuine issue of Material fact; and, (b) Defendant is entitled to a judgment on the law.

'On the other hand, plaintiff asserts: (a) There...