No. 89-157
IN THE SUPREME COURT OF THE STATE OF MONTANA 1989

RAY T. SPERRY, plaintiff andAppellant,-vsMONTANA STATE UNIVERSITY, Defendantand Respondent.

APPEAL FROM: ~istrict Court of the ~ighteenth ~udicial ~istrict, In and for the County of

### all at in, The Honorable ThomasOlson,Judgepresiding.

COUNSELOF RECORD:
ForAppellant: Lineberger & ~arris; DouglasD. ~arris, Bozeman, Montana For Respondent: Dorothy L. Brownlow;Moore, OIConnell,~efling and Moon, Bozeman, Montana

Submitted on ~riefs:Aug. 3, 1989 Decided: August 30, 1989Justice Fred J. Weber delivered the Opinion of the Court.

The plaintiff, Ray V. Sperry, brought this action to recover "conversion compensation" allegedly due him as a result of a contract conversion that took place in 1967 at Montana State University. After a bench trial, the District Court for the Eighteenth Judicial District,Gallatin County, entered judgment for Montana State University. From this judgment,Mr. Sperry appeals. We affirm. The issues are: 1. Did the District Court err in concluding that the retirement agreement entered into between MSU and Mr. Sperry constituteda complete waiver and release of all claimshe is

now asserting? 2. Is Mr. Sperry's claim barred by the doctrine of laches? Mr. Sperry was employed at Montana State University (MSU) from 1965 throughMarch 31, 1986,retiring as Director of Continuing Education. At the commencement of his employment with MSU, and for the next two years, the terms of a written contract known as the "Montana 12 Contract" governed his employment. The Montana 12 Contracts allowed employees to take an eighth quarter leavewith pay for research,travel

or any other reason approved by the Board of Regents. Employeeswere required to work sevenquartersbefore eligibility for eighth quarter leave accrued. They were also allowed to accumulate two quarters, a total of sixmonths. In 1967, the Board of Regents ordered MSU to terminate the Montana 12 Contract and convert to a one-year contract. Mr. Sperry's contract was converted to a fiscal year contract. At that time his annual salary was increased by $1000, from $7800 to $8800,which constituted a 13% increase in pay. Mr. Sperry signed an agreement acknowledging andaccepting the change from a Montana 12 Contract to a fiscal contract which stated that "all accumulated eighth quarter leave" had been taken, and he waived claim to any future eighth quarter leave. From 1967 until retirement in 1986, Mr. Sperry signed nineteen individual annual employmentcontractswith MSU, all of which stated the term of the employment and the agreed salary for thatyear. None of these contractsmentioned any conversion compensation due. Conversion compensation arose from the replacement ofMontana 12 Contractswith the annual contracts as compensation for the additional time worked without leave. Mr. Sperry now contends he reached an oral agreement with MSU entitling him to conversion compensation amounting to an additional 10% increase inpay. InApril, 1983,Mr. Sperrywrote a letter toMichael F. Malone,Dean of Graduate Studies,todiscusspossibilities of early retirement and requesting a salary adjustment for the last threeyears. The essence of his proposal stated:

Before seriously considering an early retirement, it is imperative thatmy final average three year salary be increased significantly. As you know, according to Regents guidelines, my current salary isbelow their guidelines.

# . . [Tlhe total cost to the University formy proposal would be insignificant. The firstyear savings to MSUwould be $7,708.00. Reflecting a total costof between $5,000.00 and $6,000.00 for the three contractperiods. 

# . . [I]propose the following salary schedule: 1983-84 

## -- $37,000.00 (actual cost to MSU 

## - $29,393.00)

1985-86 

## -- $43,000.00 (9month contract, July 1, 1985-March 30, 1986)He wrote a follow-up letter in December, 1986 which stated:

My original correspondence requested a three year salary adjustment beginning the current academic year. The primary reason was to increasemy last three years salary for early retirement purposes. MSU rejected his original offer, soMr. Sperry submitted the following request and schedule inhis letter: 1) Fiscal year 84-85, I receive a Regents contract with my raise equal to the average MSU faculty raise for thisperiod. 2) Beginning July 1, 1985, I receive a Regents contract to the end of March 30, 1986 (9 months)

# . During this period the contract would include an average faculty increase. I also receive an additional 

## 4 years contract salary based upon the current contract. Succinctly, I receive 14 times my contracted salary paid to me in 9 months instead of 12 months. During this period, Iwould continue to earn sick leaveand vacation time. 3) In the event a universally applied incentive is offered,all MSU employees opting for early retirement, the above agreement would not prejudiceme. In the conclusionof his letter,he stated:

If a satisfactory arrangement is reached between the University and myself, I will offer a statement agreeing not to pursue 

### - a 

### - past 

### - wage greivance. [sic] (~mfisisadded. )
In a third letter,Mr. Sperry wrote a revisedproposal, changing only the second provision's term of "1/2 year" to "1/3"and "1 1/2" to "1 1/3If. He restatedhis agreement "not topursue apastwage grievance" if "the [proposed] agreement is reached." After an agreement was reached, Mr. Sperrlr wrote a formal resignation letter on February 9, 1984, to heeffective as ofMarch 31, 1986. These letters of correspondence comprise the "retirement agreement," which is central to thisdispute. Oneyear after agreementon the terms of retirement,Mr. Sperry for the first time sought conversion compensation from MSU in a letter to the Vice President for Academic Affairs, Dr. Stuart Knapp. He contended that at the time of the 1967 conversion,he was offered a 23% salary increase,received a 13% increase, and 10% is still due and owing as conversion compensation. Applied retroactively, this amounts to nearly $30,000of conversion compensation. I Did the District Court err in concluding that the retirement agreement entered into between MSU and Mr. Sperry constituted a complete waiver and release of all claimshe is

now asserting? The District Court made the followingpertinent findings of fact and conclusionsof law:

Findina of Fact: #7: OnMay 11, 1967,plaintiff signed an agreement 

### - by which he accepted the stated terms on the change ofperiod of employment.

# .. #8: Although alleged, no oral agreement with 

### - Robert McCall, plaintiff's supervisor, was established with particularity. #9: Plaintiff 

### - accepted 19 subsequent post-conversion employmentcontracts. #lo: In the subsequent 19 years after conversion, 

### - plaintiff failed to pursue defendant's grievance procedures for any shortage in his salary since 1967. #11: In January and February 1984, plaintiff 

### - negotiatedwith defendant's Michael P. Malone, thenacting vice-president for academic affairs, for an early retirement. #12: On February 9,1984, plaintiff confirmed in a 

### - memorandum that he found the financial considerations acceptable. In addition, he further stated that his was an official resignation from the university effective March 31, 1986. #13: As part of the consideration of his retire

### - ment, defendant increased plaintiff

### 's final pay to $45,370 for a nine-month period, and plaintiff agreed to "not pursue any past wage grievances". #14: Defendant fully complied with all the terms - and conditionsof the retirementagreement. #15: At no time during plaintiff's retirement Gotiation discussions with defendant did he informdefendanthe claimed additional compensation due him from his conversion in 1967, 13 years previously. Conclusion of Law: #2: Plaintiff accepted the terms set forth in the 

### - 1967-68 employment contract without written formal concern as to deferred compensation. The retirement aareement entered into between plaintiff and

-~~

- - defendkt constitutes 

### -- a full waiver and release of any claims plaintiff 

### --- may have had againstdefendant arisina from salarv or waaes due to plaintiff as a --- - dresult of his emplgyment iith defendant. #4: Plaintiff is not entitled to any additional 

### - compensation for his employment at MSU. (Emphasis added.

On appeal, Mr. Sperry contends his own oral testimony

was sufficient to establish conversion compensationwas due. He contends thathis direct supervisor indicatedhis increase in pay did not include the conversion compensation, but promised he would receive that additional salary increase at
a later date. Mr. Sperry testified that the only person who would have known of the alleged oral contractwas his directsupervisor, Robert McCall. Mr. McCall died in 1971. Mr. Sperry did not raise the issue of conversion compensation until February 1985, one year after signing the retirement agreement. MSU contends there was no such agreement, and any such claimwaswaived when he accepted the terms of the retirement agreement. Waiver is an equitable doctrine, applicable when there is an intentional or voluntary relinquishment of a known right, claim or privilege, or such conduct as warrants an inference of the relinquishment of such right. State v. Statczar (Mont. 1987), 743 P.2d 606, 44 St.Rep. 1668;Kelly

v. Lovejoy (1977),172Mont. 516, 565 P.2d 321. Release is defined as the abandonment of a claim to the party against whom it exists and may be gratuitous or for consideration. It is fundamental that an effective release can be consummated without resort to a particular form of words, for "all that isnecessary is that the words show an intention to discharge." (Citations omitted.) Melo v. National Fuse and Powder Co. (D.Colo. 1967), 267 F.Supp. 611. Tobe enforceable,a releasemust at aminimum be unambiguous, explicit, and unequivocal. Simonson v. Travis (Utah 1986), 728 P.2d 999, 1002. In Montana, the law of contracts governs releases. Westfallv. Motors Ins. Corp.

(19621,140Mont. 564, 374 P.2d 96. We conclude that Mr. Sperry's signing of nineteen, one-year contracts and cashing paychecks over the past nineteen years without complaint of no conversion compensation, in combination with his acceptance of the retirement agreement and his promise not to pursue a past wage grievance, constitutea complete waiver and release.An Alaskan Supreme Court holding is comparable to the

case at bar. In that case, the note maker raised no objection to the credit union's alleged failure to collect interest according to the terms of the loan agreement. This continued for a three-year period, when each lot subject to security agreementwas sold,despite the facthewas required to sign the deed to complete the sale of each lot. For each sale,he had an opportunity to examine the ledger sheet that showed how the escrow company intended to disburse the proceeds of each sale. The court held he waived his right to assert that the credit union breached the loan agreement by failing to collect intereston the sale of each lot. Jackson

v. Nangle (Alaska1984), 677P.2d 242, 249. In the same way, Mr. Sperry signed his pay checks for nineteen years with knowledgeof any increasesand decreases, but without raising objection regarding the lack of any conversioncompensation. We conclude that there exists substantial credible evidence to support the District Court's conclusion thatMr. Sperry's signing of the retirement agreement waived and released his right to any wage claims. We affirm the District Court on this issue. I1 Is Mr. Sperry's claim barred by the doctrine of laches? On appeal, MSU contendsMr. Sperry's claim is barred by laches. Although thiswas not apart of the findings of fact and conclusions of law of the District Court, the defense of laches was asserted in the Final Pre-Trial Order, so it is subject to reviewby thisCourt. Mr. Sperry testified thathis direct supervisor indicated his increase inpay did not include the conversion compensation,but promised he would receive that additional salary increase at a laterdate. MSU contendsMr. Sperry received a13% increase, which included his conversion compensation,and there was no promise by anyone topay him further increases. The only person other than Mr. Sperry, who would have known of the alleged oral contractwas his direct supervisor, RobertMcCall. Mr. McCall died in 1971. Yet, the only time Mr. Sperry brought the issue of conversion compensation to the attention of anyone else at MSU was in his February 1985 letter to Michael F. Malone, long after Robert McCall's death, and after completing the retirementagreement. He did not raise the issue againuntil after he retired. MSU contends thatMr. Sperry's claim for such conversion compensation is now barred by the equitable doctrine of laches. We agree. Laches exists where there has been an unexplainable delay of such duration or character as to render the enforcement of an asserted right inequitable. Brabender v. Kit Mfg. Co. (1977), 174 Mont. 63, 67-68, 568 P.2d 547, 549. Where a party is actually or presumptively

aware of his rights but fails to act, laches is appropriate. Claytonby Murphy v. Atlantic Richfield Co. (1986),221Mont. 166, 170, 717 P.2d 558, 561. A party isheld to be aware of their rights where the circumstanceshe or she knows of are such as to put an ordinarily prudent person on inquiry. Johnsonv. Estate of Shelton (Mont. 1988), 754P.2d 828, 831, 45 St.Rep. 887, 891. Mr. Sperry asks for a retroactivewage increase for the last nineteen years of his employment. He does not allege thathewas unaware of this claim during that time. We hold Mr. Sperry's claim is barred by the doctrine of laches. Although MSU argues that Mr. Sperry's claim is also barred by the statute of limitations,we find itunnecessary to discuss that issue in light of our holding on laches. Furthermore, we will not address Mr. Sperry's contentions thatMSU breached the implied covenantof good faith and fairdealing. This Court will not address on appeal an issue not presented to the District Court. Wyman v. DuBray I~and Realty (Mont. 1988), 752 P.2d 196, 45 St.Rep. 621. Affirmed.