Wilson v. Westinghouse Elec. Corp., 43225

• Decision Date: 09 January 1975
• Docket Number: No. 43225,43225
• Citation: 85 Wn.2d 78,530 P.2d 298
• Parties: Chester G. WILSON, Petitioner, v. WESTINGHOUSE ELECTRIC CORPORATION, Respondent.
• Court: Washington Supreme Court

Page 78

85 Wn.2d 78

530 P.2d 298

Chester G. WILSON, Petitioner, v. WESTINGHOUSE ELECTRIC CORPORATION, Respondent.

No. 43225.

Supreme Court of Washington, En Banc.

Jan. 9, 1975.

Reed, McClure, Moceri & Thonn, P.S., William R. Hickman, Seattle, for petitioner.

Karr, Tuttle, Koch, Campbell, Mawer & Morrow, John F. Kruger, James R. Dickens, Michael R. Sorensen, Seattle, for respondent.

FINLEY, Associate Justice.

This is an action to determine whether plaintiff Wilson is entitled to pension benefits, paid and to be paid, at rates which due to defendant's error in computation are in excess of the benefits to which plaintiff is entitled by the actual terms of the pension plan. Defendant Westinghouse sought to recover all overages paid. The trial court held, essentially upon an estoppel theory, that Westinghouse (1) was not entitled to recover the overages already paid, and (2) must continue to pay the pension benefits at the higher rate. The Court of Appeals affirmed the trial court's judgment that the plaintiff is entitled to retain all overages actually paid, but reversed the judgment insofar as it ordered the defendant to continue to pay the benefits as originally computed. We affirm the Court of Appeals.

The facts are as follows: the plaintiff had been employed by defendant Westinghouse for nearly 41 years when, on October 23, 1968, he met with and was informed by his immediate supervisor, J.E.D. Morris, that his services were being terminated.

At this same meeting, Morris suggested that plaintiff apply for early retirement benefits, for which he would qualify on November 25, 1968, when he would attain age 60. The monthly early Retirement benefit payments are lower than the monthly Ordinary retirement payments, which begin only upon attaining age 65. However, from an actuarial viewpoint, the total amount to be received under either plan should be the same since the downward adjustment for the early retirement benefits is designed to reflect the fact that they will be paid over a longer period of time. Morris told plaintiff that his pension, at the early retirement rate, would be approximately $750 per month.

Plaintiff subsequently elected to apply for early retirement benefits. In accordance with company procedure, plaintiff, as well as the supervisor of the Westinghouse pension lan administration, and an industrial relations representative of the company all signed a document entitled 'Early Retirement Notice'. This document reflected the computations made by an employee of Westinghouse and specified that monthly payments in the amount of $788.28 would be paid from December 1, 1968, to November 30, 1970. Thereafter, plaintiff was to be paid $650.78 per month. Westinghouse thereupon issued a 'Certificate of Westinghouse Pension Benefits' to plaintiff confirming these figures. All computations were done by Westinghouse.

Westinghouse commenced monthly payments in the designated sum of $788.28 on December 1, 1968. However, in February, 1970, Westinghouse discovered that it had made a clerical error in computing plaintiff's benefits and advised plaintiff that, as correctly computed, plaintiff should receive benefits of $625.37 per month from December 1, 1968, to November 30, 1970, and thereafter, plaintiff should receive $487.87 per month. Plaintiff's benefits were accordingly reduced to the corrected amount. The excess benefits paid by Westinghouse totaled $2,443.65.

At the time plaintiff's employment was terminated, Westinghouse provided personnel procedures whereby an employee whose position was being terminated could seek to have the company locate another position for him in a different capacity. Because plaintiff elected to receive the Early and higher retirement benefits, he was precluded by the terms of the retirement plan from invoking the company procedure for obtaining employment in a different capacity. Plaintiff did spend a short time searching for employment with other companies, but this endeavor was limited to positions that offered a salary roughly equivalent to that which he earned at Westinghouse. He was unsuccessful and consequently did not obtain full-time employment until after Westinghouse discovered its computational error. At that time plaintiff accepted employment with another company at a salary approximately two-thirds of that which he received at Westinghouse.

Essentially, two issues are presented: (1) whether Westinghouse having made and discovered an error in its computation of plaintiff's pension benefits, is estopped (a) from seeking restitution as to the overages already paid and (b) from seeking reformation as to benefits accruing subsequent to discovery of its error; and (2) whether reformation is inapplicable under the circumstances because of a lack of a mutual mistake.

We will now consider the first issue: whether Westinghouse is estopped from seeking (a) restitution and (b) reformation. The principle of equitable estoppel is based upon the reasoning that a party should be held to a representation made or position assumed where inequitable consequences would otherwise result to another party who has justifiably and in good faith relied thereon. Under Washington law, three elements must be established before an equitable estoppel may arise: (1) an admission, statement, or act inconsistent with the claim afterwards asserted; (2) action by the other party on the faith of such admission, statement or act; (3) injury to such other party resulting from permitting the first party to contradict or repudiate such admission, statement, or act. Kessinger v. Anderson, 31 Wash.2d 157, 196 P.2d 289 (1948); Dorward v. ILWUPMA Pension Plan, 75 Wash.2d 478, 452 P.2d 258 (1969); Shafer v. State, 83 Wash.2d 618, 521 P.2d 736 (1974).

In this case, the first element is clearly established since Westinghouse originally represented that plaintiff's benefits would be $788.28 per month for two years and thereafter $650.78 per month, only to subsequently retract that statement and announce instead that the benefits would be $625.37 and $487.87 per month respectively.

The second element is likewise clearly established since the plaintiff, on the faith of the accuracy of the representations, elected to accept the early retirement benefits and elected not to pursue other options for employment.

With respect to the third requirement, I.e., that plaintiff prove injury or prejudice, it is necessary to distinguish between (1) the excess benefits Already paid, and (2) the excess benefits which Westinghouse refuses to pay that have accrued since discovery of the error and which will continue to accrue unless reformation is granted.

We agree with the...