Youngman v. Nevada Irr. Dist.

• Decision Date: 29 January 1969
• Court: California Supreme Court
• Parties: , 449 P.2d 462, 70 L.R.R.M. (BNA) 2509 William YOUNGMAN et al., Plaintiffs and Appellants, v. NEVADA IRRIGATION DISTRICT et al., Defendants and Respondents. Sac. 7829.

Page 398

74 Cal.Rptr. 398

70 Cal.2d 240, 449 P.2d 462, 70 L.R.R.M. (BNA) 2509

William YOUNGMAN et al., Plaintiffs and Appellants, v. NEVADA IRRIGATION DISTRICT et al., Defendants and Respondents.

Sac. 7829.

Supreme Court of California,

In Bank.

Jan. 29, 1969.

Neyhart, Grodin & Beeson, Neyhart & Grodin, Edward C. Pinkus and Joseph R. Grodin, San Francisco, for plaintiffs and appellants.

Minasian, Minasian & Minasian, Paul R. Minasian, and David H. Minasian, Oroville, for defendants and respondents.

MOSK, Justice.

Plaintiffs in this action are William Youngman, an employee of the Nevada Irrigation District, and Local 1245 of the International Brotherhood of Electrical Workers (hereafter IBEW), which represents employees of the district. Defendants are the district and its directors. Plaintiffs filed a complaint asserting that the district's employees were entitled to salary increases in 1965 on the basis of merit, that the district had entered into an implied and an express contract to grant such increases, but that it had refused to do so. Defendants filed a demurrer specifying both general and special grounds, and it was sustained by the trial court without leave to amend. Plaintiffs appeal from the ensuing judgment.

The first amended complaint sets forth five causes of action. The first cause of action asserts that there is an implied contract between plaintiffs and the district under which defendants were required to grant the salary increases; the second alleges that because of certain representations made by the district during wage negotiations with the IBEW and relied upon by plaintiffs, the district is estopped from refusing to grant the increases. In the third cause of action Youngman avers that he is bringing the action on behalf of other employees of the district who are similarly situated. The fourth alleges an express oral contract based upon a representation to Youngman by an authorized employee of the district that annual increases would be granted, and the fifth is based on an estoppel because of this representation.

Plaintiffs pray for a judgment declaring that Youngman, and the district's other employees were entitled to a one-step merit increase in 1965 and thereafter, and an order requiring defendants to take all steps necessary to grant the wage increases. ¹

Defendants demurred to the complaint on the ground that it did not state facts sufficient to constitute a cause of action. The demurrer also asserted that the complaint was uncertain in that plaintiff had indicated no legal authority for binding the district by implication, that it did not disclose facts showing the existence of an agreement between plaintiffs and defendants ² or the terms thereof, that the 'personnel policies and practices' referred to in the complaint were mere conclusory recitals left to surmise, and that the counts were inconsistent.

The demurrer was sustained on the grounds that the complaint did not indicate 'wherein the defendants under the circumstances alleged herein, could be bound by implication' ³ and that the oral agreement alleged in the fourth cause of action 'does not comply with the legal requirements for procedures to be followed by an irrigation district in entering into a contract.' We conclude that these grounds are insufficient to justify sustaining the demurrer and the trial court erred in sustaining the demurrer as to the first four causes of action.

In considering the sufficiency of a pleading, we are bound by the rule that on appeal from a judgment entered on demurrer, the allegations of the complaint must be liberally construed with a view to attaining substantial justice among the parties. (Code Civ.Proc., § 452.) Even as against a special demurrer a plaintiff is required only to set forth the essential facts of his case with reasonable precision and with particularity sufficient to acquaint a defendant with the nature, source and extent of his cause of action. (Smith v. Kern County Land Co. (1958) 51 Cal.2d 205, 206, 209, 331 P.2d 645.) If there is any reasonable possibility that the plaintiff can state a good cause of action, it is error to sustain a demurrer without leave to amend. (MacLeod v. Tribune Publishing Co. (1959) 52 Cal.2d 536, 542, 343 P.2d 36; Lemoge Electric v. County of San Mateo (1956) 46 Cal.2d 659, 664, 297 P.2d 638.)

The first cause of action alleges the following: for several months prior to January 1, 1965, the IBEW, which is suing on its own behalf and on behalf of its members who are employees of the district, discussed future wages with defendants. During this period the district maintained for all classifications of employees a salary schedule, which established five steps within each employee's classification, each step providing a higher wage rate. It was the 'announced practice' of the district to review each employee's situation annually and to advance the employee to the next step if his performance merited advancement. By this means, a satisfactory employee could reach the top wage rate for his classification after five years. 'Said practice is contained in Personnel Policies adopted by the District after discussion and negotiation with the IBEW, and disseminated to its employees.'

Youngman was employed by the district in April 1963 as a Utility Foreman Grade III and in April 1964 he was advanced one step and his salary raised commensurately 'in accordance with said practice of annual step increases for merit.' The other employees of the district, with few exceptions also received advancement. On the basis of the 'practices and commitments described' Youngman was due for review and advancement another step in April 1965 since he had performed satisfactory service, but defendants refused to advance him or any other employee and have arbitrarily and capriciously discontinued the 'previously published, announced and effected practice of annual review for merit step increases.'

Finally it is alleged that 'by reason of the foregoing practice, conduct, salary schedules and Personnel Policies, there has existed and continues to exist between the District and each employee an implied agreement by the District to review and advance employees one step within their respective classifications on or about their employment anniversary date in that year * * * and to pay those employees who were advanced the salary specified for such step. * * *'

Defendants insist that the trial court properly sustained the demurrer to the first cause of action because the district has only such powers as are expressly granted by statute or necessarily included in the exercise of the powers granted (Moody v. Provident Irr. Dist. (1938) 12 Cal.2d 389, 394, 85 P.2d 128; Bottoms v. Madera Irr. Dist. (1925) 74 Cal.App. 681, 702, 242 P. 100), and no specific authority is granted by statute permitting the district to enter into an implied contract.

The district is a public agency organized under sections 20500 et seq. of the Water Code. ⁴ Under section 21185 the board may employ agents and employees, prescribe their duties, and fix their salaries. The district may make contracts necessary to carry out its purposes (§ 22230) and perform all acts necessary to carry out the functions accorded to it by statute (§ 22225). The Water Code prescribes no formal requirements for the consummation of an employment contract by the board.

It has been said that the essential difference between an implied and an express contract is the mode of proof. (Silva v. Providence Hospital of Oakland (1939) 14 Cal.2d 762, 773, 97 P.2d 798.) That is, the terms of an express contract are stated in words, while those of an implied agreement are manifested by conduct. (Civ.Code, §§ 1620, 1621.)

There seems little doubt that the general provisions giving the district the power to enter into contracts of employment without specifying any formal requirements for such contracts were intended to apply to both implied and express contracts since the only significant difference between the two is the evidentiary method by which proof of their existence and terms is established. Governmental subdivisions may be bound by an implied contract of there is no statutory prohibition against such arrangements. (County of Sonoma v. City of Santa Rosa (1894) 102 Cal. 426, 431, 36 P. 810; see City of Pasadena v. County of Los Angeles (1953) 118 Cal.App.2d 497, 500, 258 P.2d 28; Nash v. City of Los Angeles (1926) 78 Cal.App. 516, 520--522, 248 P. 689.)

In pleading a cause of action on an agreement implied from conduct only the facts from which the promise is implied must be alleged. (See 2 Chadbourn, Grossman & Van Alstyne, Cal.Pleading, § 1011, p. 159.) Here the first cause of action alleges that the district had an 'announced practice' to grant annual wage increases, that this 'practice' was adopted 'after negotiation' with the IBEW, that the employees were aware of the 'practice,' and that the district had complied with its 'practice' in the prior year. While not a model of precise pleading, these allegations appear to set forth circumstances from which could be found an implied agreement, reached after negotiation with the IBEW, that the district would grant yearly increases. Therefore, the allegations of the first cause of action are sufficient to withstand a general demurrer. ⁵

The third cause of action merely incorporates by reference the allegations of the first and adds allegations necessary to assert a class suit by Youngman on behalf of his fellow employees similarly situated. There is no claim that this action is improperly brought as a class suit or that the allegations of the third cause of action are defective for reasons other than those discussed above with reference to the first cause of action. It follows, therefore, that the general demurrer to the third cause of action was also improperly sustained.

Most of the allegations of the first cause of action are incorporated in the fourth, which...