Case Name: McNEVIN v. SOLVAY PROCESS CO.
Court: New York Supreme Court, Appellate Division
Jurisdiction: New York
Decision Date: 1898-07-26
Citations: 53 N.Y.S. 98
Docket Number: 
Parties: McNEVIN v. SOLVAY PROCESS CO.
Judges: 
Reporter: West's New York Supplement
Volume: 53
Pages: 98–106

Head Matter:
(32 App. Div. 610.)
McNEVIN v. SOLVAY PROCESS CO.
(Supreme Court, Appellate Division, Fourth Department.
July 26, 1898.)
Master and Servant—Pension Fund—Right to Participate.
An employer voluntarily established a fund for the support of its employés when disabled from certain causes, and by a set of rules provided •that it was a gift, and remained the employer’s property, and under its absolute control, until actually paid over; that there was no obligation to pay any portion of its earnings into the fund, and on dismissal the amount credited to the dismissed employe should be paid to him, but the employer might retain it for a certain period, and pay him the income therefrom; that an employs could not demand payment of his share except when it was adjudged payable by the employer’s trustees, whose decision was final. Seld, that a discharged employé had no right to the portion of the fund credited to him, where the trustees had determined he was not entitled to payment thereof.
Green and Ward, JJ., dissenting.
Appeal from Onondaga county court.
Action by James McNevin against the Solvay Process Company. There was a judgment for plaintiff, and defendant appeals from the judgment and from an order denying a motion for a new trial.
Reversed.
Argued before HARDIN, P. J., and FOLLETT, ADAMS, GREEN, and WARD, JJ.
William G. Tracy, for appellant.
P. J. Ryan, for respondent.

Opinion:
FOLLETT, J.
This action was begun May 14, 1897, to recover $52.54, alleged to be due from the defendant to the plaintiff as his share of a pension fund established by the defendant for the benefit of a class of its employés. The defendant is a domestic corporation engaged in manufacturing at the city of Syracuse, N. Y., and emnloys in its business between 2,000 and 3,000 persons. The plaintiff entered the service of the defendant June 18, 1890, and continued therein until April 6, 1895, when he was discharged. January 1, 1892, the defendant established what is known as a "pension fund" for the benefit of a class of its employés, and at the same time established a set of rules and regulations providing how the fund should be established, for whose benefit, how administered, and how applied for the benefit of the employés entitled to participate therein. The employés are paid stipulated wages, and no part of the fund is derived from their wages, or contributed to by them, but it is voluntarily created by the defendant setting apart a portion of its profits belonging to its shareholders, which, through the action of the corporation, are voluntarily relinquished for the benefit of its employés, pursuant to the scheme set forth in the printed rules and regulations. In the first article of the rules and regulations it is stated that "the object of these funds is to provide a means of support when, by reason of accident, sickness, or advanced age labor must cease." By the second article it is provided that the funds shall be and remain the sole property of the defendant, and absolutely subject to the control of its trustees, and that in no case can an employé demand payment of the sum credited to his account, except when the defendant shall adjudge the account to be payable, in whole or in part, in accordance with the rules and regulations established. By the third article the sums set apart are expressly declared to be gifts, and that the sums allotted to the employés remain the property of the defendant until they are actually paid over to the employés. And by the fourth article it is provided that the fund is to remain under the sole control of the defendant's trustees, who are authorized to decide all questions concerning the rights of employés in the fund without appeal. By the fifth article it is provided that the trustees shall be under no obligation to set apart, during any year, any portion of its earnings as part of the pension fund, unless it shall be found that the profits of the year are sufficient to enable it to do so after discharging the obligations of the defendant, including dividends to its shareholders. There is no limit as to the amount of dividends which may be declared to shareholders. By the ninth article it is provided that final payment of an account of an employé shall be made in case he has retired from actual service after attaining the age of 55 years, or after attaining the age of 50 years, having served the defendant 20 years, or after 25 years' service without condition as to age. It is also provided that in case an employé is discharged without a cause of dissatisfaction, and especially if on account of the necessity of diminishing the number of employés, the amount credited to such employé shall be paid according to the rules and regulations established. By the same article it is provided that the defendant, instead of paying over the amount in cash, may purchase an annuity for the benefit of the employé. By the eleventh article it is provided that in case an employé leaves defendant's service for any cause, including dismissal, the trustee may keep back the whole or part of his account for a period not exceeding five years, on condition of paying him the income upon the sum, the sum to remain as security for the performance by the employé of his engagement not to injure the defendant after leaving its service by disclosing its processes. By the twelfth article it is provided that, in case an employé dies in the service of the defendant, the sum standing to his credit shall be paid to his widow, children, family, or personal representative, as may be determined by the defendant's trustees.
It is conceded that this pension fund has been created voluntarily, and is a gift by the defendant, and the question upon which this case turns is whether, when a sum is credited to an employé on the pass book furnished by the defendant, the employé has a vested right in the sum so credited, or whether, under the terms by which the fund is established, the employé acquires no vested right until the gift is completed by actual payment to the employé. It must be conceded at the outset that a person or a corporation proposing to give a sum for the benefit of any person or any set of persons has the right to fix the terms of his bounty, and provide under what circumstances the gift shall become vested and absolute. Under the regulations established, it seems to me that none of the employés have a vested interest in any part of this fund, even though credited upon their pass books until the gift is completed by actual payment. Until that time it is an inchoate gift. The articles provide that an employé cannot, in any case, demand payment of the sum credited to his account, except when the defendant shall adjudge the account to be payable, in whole or in part, according to the rules and regulations established; and it is also provided that the sums credited shall remain the property of the defendant until actually paid, and that the fund shall be and remain under the sole control of the defendant's trustees, who are authorized to decide all questions concerning it without appeal. In this case the defendant's trustees decided, after a hearing of the plaintiff, that the plaintiff was not, when the action was begun, entitled to payment of any portion of the fund credited to him, and it seems to me that under the terms of the gift this decision is final, unless, within the discretion of the defendant's trustees, it shall be modified in the future. In case it shall be held that this plaintiff had a vested right in the fund credited to his account, it would necessarily follow that it might be reached by his creditors through proceedings supplementary to execution, and thus the very object of creating the fund would be destroyed. If it be held that this plaintiff had a vested right in this fund when he ceased to be employed by the defendant, it would follow that every other employé who had left the service of the defendant from any cause would have a vested right in this fund, which might be appropriated by his creditors. It seems to me that the scheme by which tills fund is created is simply a promise on the part of the defendant to give to its employés a certain sum in the future, with an absolute reservation that it may at any time determine not to complete the gift, and, if it does so determine, an emnloyé has no right of action to recover the sum standing to his credit on the books of the pension fund. Whether the disposition and management of this fund may or may not be the subject of control in an equity action, in case it should be alleged and proved that the defendant's trustees were squandering the fund, or were guilty of bad faith in its management, is a question not before the court, this being a simple legal action to recover the sum standing to the plaintiff's credit on the theory that when he left the employment of the defendant he acquired an absolute vested right in the sum credited, which he has the right to recover.
The judgment and order should be reversed, and a new trial granted, with costs to the appellant to abide the event. All concur, except GREEN and WARD, JJ., dissenting.