Court Opinion

ID: 3999830
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:56:57.700607+00
Date Added: 2024-06-11T13:56:03.686512
License: Public Domain

I am unable to concur in the foregoing opinion. The sole question is whether certain bonus payments made by the appellant employer to the respondent, a local sales manager, were gratuities or whether they constituted, by an implied agreement, a part of the latter's annual salary. The majority seem to concede that these payments, so far as the years 1916, 1917 and 1918 were concerned, amounting to $50, $200 and $400, respectively, were "possibly" nothing more than gratuities. They conclude, however, that the payments made in subsequent years, being of substantial size and of regular occurrence and increasing amounts, constituted such a course of dealing as to raise an implied agreement to continue them from year to year and in such amounts as, taken in connection with the fixed or stated salary, would be reasonable in the light of the services rendered and the results accomplished thereby. It will be noted that there was no change in the course of dealing from 1916 down to 1929; the only change was that the amounts kept increasing. This is made the basis of the implied agreement.
Now, I take it that the most potent factor in determining the character of these payments is the intention of the parties. That intention is best divined from what they themselves said and did. The bonuses were sent at or about the time of the Christmas holidays. With one exception, they did not await the annual closing of the company's books, when the amount of profits could be definitely ascertained, but resulted rather from an estimate, fairly deducible of course, of what the business had done during the current year. The bonus checks were regularly accompanied by personal letters from Mr. Reilly, the president of the corporation. *Page 162 
In order to understand the spirit in which they were written, we will quote them:
"My Dear Fred: —                        January 16, 1923.
"I take very great pleasure in handing you the enclosed with which goes my very best wishes to you and family.
"I enclose herewith a letter to Mr. Spencer.
                    "Yours very truly, "REPUBLIC CREOSOTING COMPANY, "P.C. Reilly, President."
"Dear Fred: —                        December 24th, 1926.
"Christmas is here again and it reminds me the Indianapolis office should send to our Seattle associates a souvenir of the Holiday period. It is unnecessary for me to say it gives me a great pleasure to do so.
"A most Happy Christmas to you and family.
                    "Yours very truly, "P.C. Reilly."
"December 24, 1927.
"With the enclosed goes my very best wishes for a Merry Christmas and Happy New Year.
                                    "Sincerely, "P.C. Reilly."
"December 24, 1928.
"With the enclosed goes my best wishes to you for a very happy Christmas and New Year.
"I feel that 1929 shall be an enlarged and prosperous year for Seattle.
                    "Sincerely, "By P.C. Reilly, President."
"January 4, 1930.
"I enclose herewith the bonus checks for yourself, Miss Caughlin, Mr. Sullivan and Mr. Tollefson, which please distribute to them.
                           "Yours very truly, "P.C. Reilly."
On three of these exhibits, introduced by respondent, are notations indicating that respondent received *Page 163 
$1,500 in 1923, $3,000 in 1927, and $3,150 in 1928. At the same time, the exhibits also show, by notations thereon, that other employees were receiving bonus payments varying from $50 to $150. If the reasoning of the majority be correct, then it would seem that the bonuses paid the other employees, being small in amount, were mere gratuities, while those paid at the same time to the respondent were based upon an implied agreement to pay them. I can not follow that reasoning.
Turning now to respondent's attitude with reference to these payments, we have also a series of letters written in longhand by him. They are too numerous to quote seriatim. A few will suffice.
They are all of the same general tenor.
"My Dear Mr. Reilly:                       Dec. 30, 1924.
"I have just received your kind and generous Christmas remembrance and I can not fully convey to you my appreciation of it and the spirit in which it was given.
"I trust that this year will entirely obliterate any doubts in your mind as to myself and this plant, and you may be sure a one hundred percent effort will be made for the success of this branch and the Company.
"With best wishes to yourself and family for happiness and prosperity in 1925.
                            "Sincerely yours, "Fred Powell."
"My Dear Mr. Reilly:                       Dec. 29, 1925.
"The Christmas check was most generous and I am sure you know it was fully appreciated — together with your kind wishes to myself and the family, for all of which we thank you.
"I realize quite well that this was not a good year for the Seattle plant but the outlook for next year is better we think and will strive for a good result.
"We are all looking forward to another visit from you, out west, and hope that it will materialize, and that your family can accompany you. A wonderful *Page 164 
summer could be had on the West Coast and would like to assist in planning such a trip.
"With best wishes to you and your family for the New year.
                            Sincerely yours, "Fred Powell."
"Dear Mr. Reilly:                               12/31/27.
"I want to thank you many times for your Christmas greetings and check. The amount was indeed generous and I want you to know it is appreciated from the bottom of my heart.
"With very best wishes to you and all the Reillys for 1928, I am,        Sincerely yours,
"Fred Powell."
"Dear Mr. Reilly:                          Jan. 12, 1930.
"I wish to acknowledge receipt of, and thank you for, Christmas check.
"Miss Caughlin, Mr. Sullivan and Mr. Tollefson also desire me to express their appreciation and thanks.
                           Yours very truly, "Fred Powell."
It seems to me that these letters indicate clearly that these bonus payments were in no sense considered obligatory. Undoubtedly, they were given in appreciation of service in the past and to stimulate increased effort in the future. Undoubtedly, too, they continued with such unfailing regularity as to create a hope, amounting to an expectant certainty, that they would not suddenly stop. But I see no element of contract, express or implied, in the situation. If there is, then every department store that sees fit to reward its employees with a bonus at Christmas would be subjecting itself to the risk of establishing a procedure fraught with results that they never contemplated.
Respondent makes the contention that his total salary consisted of two parts: (1) the fixed monthly amount considered as a "drawing account," and (2) the deferred salary, determined at the end of the year. *Page 165 
As evidence of the fact that that was the arrangement and understanding between the parties, respondent offered in evidence a letter written by appellant's president under date of December 2, 1929, reading as follows:
"I told you when West I would look into the matter of giving you a larger drawing account. Dating from October 1st we will make it $100 a month larger than heretofore, and to cover the months of October and November I enclose you check for $200.
                        "Yours very truly, "REPUBLIC CREOSOTING COMPANY, "P.C. Reilly, "President."
This letter, it must be remembered, was written December 2, 1929, long after the implied agreement was established according to respondent's contention, and but a year before the relationship between the parties came to an end. It is but a single, isolated letter out of many years of correspondence. One flake does not constitute a snowstorm, nor is a course of dealing established by a single letter. Though the term "drawing account" may have been somewhat inapt to designate and describe a fixed and total salary, it is not inconsistent with the idea that respondent was employed at a fixed and determined amount for the year, payable monthly, and that the matter of Christmas bonuses, both as to certainty and amount, depended entirely upon the donor and not upon the expectant hope of the donee.
But assuming all that respondent contends for in his interpretation of this one letter, it still does not create an obligation to do anything more than what is contained therein. There is, of course, no contention that there was any express agreement to pay a bonus, and if there was an implied agreement to pay it, there still was no certainty of detail upon which it could rest. *Page 166 
It still remained discretionary with Mr. Reilly as to how much the company could afford to, and cared to, give. If respondent's contention be upheld, then the company could never safely allocate its earnings to any sort of building program that it might entertain, or to any of the many different kinds of expansion that the growth of its business warranted. The company would be compelled to divide its earnings each year among its various sales managers and such of its employees as it had theretofore preferred.
When the respondent left appellant's employ, he was earning a fixed salary of $6,200 per year. He quit voluntarily in December, 1930. Presumably, he had his reason for so quitting. He undoubtedly thought that he could better himself, even at the salary that he was getting. He is not prevented from associating himself with a rival concern, bringing to it the value of his experience with the appellant. The very purpose of the bonus, so far as continued service with the appellant is concerned, is defeated under the majority opinion. The employer may content itself that it has been generous, but may doubt whether it has been altogether wise.
I must dissent from the conclusion and result reached by the majority. *Page 167