Court Opinion

ID: 5348690
Source: CourtListenerOpinion
Date Created: 2022-01-08 06:29:47.156605+00
Date Added: 2024-06-11T08:29:41.708041
License: Public Domain

Glennon, J. (dissenting).
I dissent from the conclusion reached by the majority. Facts sufficient to sustain plaintiff’s cause of action are set forth in the record.
The plaintiff was in the employ of W. T. Grant Company, at New Bedford, Mass. Under date of July 6, 1932, he received a letter from Fred F. Taylor, who was the sales, advertising and merchandise manager of McLellan Stores Company, wherein he was offered a position as buyer. The letter read, in part, as follows: “ The position of buyer with the McLellan Stores Company, of course does not rate with the Grant outfit, but with Fred Powdrell at the head of the organization, things are looking brighter for those of us here in the office, and while the salary is small, the position should have a future to it. Our buyers average drawing account for the month is $400, and we have a bonus plan similar to the one that is now in force with the W. T. Grant Co., and I believe that with the organization we are building here, that our company is going to go over in a big way next year and there is an opportunity for a man to double his drawing account on this bonus plan.” Later he talked with Mr. Taylor in New York, who advised him, in substance, that a bonus fund made up of twelve and one-half per cent of the operating earnings of the company, would be distributed among the executives, department heads and buyers in proportion to their salaries. Based upon that promise plaintiff accepted a position as buyer on August 1,1932.
*279Prior to the time plaintiff entered upon his employment, under date of March 16, 1932, the following resolution was unanimously adopted by the stockholders:
“ The general outline of a plan to distribute as a bonus to New York Office Employees of the Company, twelve and one-half per cent (12|%) of the net profits made on the common stock of the Company for the calendar year of 1932, after deducting all expenses, preferred dividends, taxes, amortization, depreciation and all other charges, said employees to be designated by the management or the Board of Directors and their participation therein to be on a pro-rata basis in accordance with salaries paid to them, was presented and discussed, after which, upon motion duly seconded and carried, it was unanimously
“ Resolved, that said Bonus Plan so presented be and hereby is approved.”
Before the plan was voted upon by the stockholders it was approved by the directors and then afterward referred back to the executive committee which acted for the board of directors.
It is quite apparent that the purpose of the plan was to supply a real incentive to the employees who were to share in it to increase the net profits of the company. This plan was modeled after that of the W. T. Grant Company. In answer to a question as to how it was to operate, Mr. Fred A. Powdrell, who was the acting president of the McLellan Stores Company in 1932, and also a director at the time of the trial, when called as a witness by the defendant, said in part: “ Well, I think we followed as near the lines we could with the Grant plan, as near as possible, because we had experience with that company, and it had been very successful.” The witness further stated that he knew that the plaintiff was going to be employed by the company, having been so advised by Mr. Taylor. Later, on redirect examination by defendant’s counsel, he was asked: “ Did you ever instruct Mr. Taylor how to explain the bonus plan to Mr. Noyes? A. No. Both men w.ere very familiar with our Grant plan.” The plaintiff does not assert that he had any knowledge of the fact that prior to the time he entered the employ of McLellan Stores Company the resolution of the stockholders concerning the bonus plan was adopted. There is no claim on the part of the defendant that he was informed that the resolution was confined to the year 1932. However, I believe that it tends to support plaintiff’s contention that in offering the position to him Mr. Taylor did not exceed his authority as manager, when he promised plaintiff that he was to receive a drawing account of $400 a month and also was to share in the “ bonus plan similar to the one that is now in force with the W. T. Grant Co.” During the year *2801932 the company sustained a loss of upwards of $1,000,000, with the result that there was no “ opportunity for a man to double his drawing account on this bonus plan.”
I have set forth these facts somewhat at length for the purpose of giving a background to the events which later happened.
McLellan Stores Company filed a petition in bankruptcy on January 12, 1933, and the Irving Trust Company was appointed receiver. On the twenty-sixth of the same month the Irving Trust Company was appointed trustee. At the time the petition in bankruptcy was filed McLellan Stores Company operated a chain of 278 department stores throughout the United States. The defendant trustee continued the operation of 234 of the stores. One James B. Simpson acted as representative of the trustee. He was exceedingly successful in handling the business of the bankrupt. All creditors were paid in full together with interest. In fact, the trustee retained the .business of the bankrupt as a going concern until May 15, 1935, when all the assets of the bankrupt, with the exception of a fund which was retained as a reserve for claims which might arise, such as we have here, were turned over to the McLellan Stores Company.
If we adopt the figures given by Mr. Simpson upon his examination before trial, we find that in 1934, after allowing depreciation, taxes, amortization and other non-recurring charges, there was a net profit in the operation of the business of $1,343,843.28, and for the first three months of 1935 the net profit was $12,257. About three or four weeks after Mr. Simpson took charge of the business, Mr. Noyes (plaintiff) said: “ I remember he told us that we were to know that we were now employees of the Irving Trust Company. In other words, there was to be no change at all in our standing or in the set-up. We were to go right on in our work just exactly as we were doing it for the McLellan Stores Company. The only difference was we were now employed by the Irving Trust Company instead of the McLellan Stores Company.” In connection with this statement it should be noted that the order of the Federal court, which authorized the trustee to continue the business, permitted it to “ preserve any and all leases and/or contracts made by the bankrupt.” It is argued by the plaintiff, and properly so, that the jury was fully warranted in concluding that the defendant was authorized to continue plaintiff’s contract of employment and actually did so.
There is considerable testimony in the record to indicate that Mr. Simpson knew that it was customary to pay a bonus to buyers employed in the chain stores business. Mr. McLellan, who was chairman of the board of directors of McLellan’s Stores before the *281bankruptcy, and became president after, when called as a witness in behalf of the defendant, said in part: “ Mr. Simpson had been in the chain store business with the F. & W. Grand Company and with Schulte United, and he knew it was customary to pay bonuses to buyers.” In addition thereto he said that, while Mr. Simpson had not been in the chain store business, “ he was trustee in bankruptcy for several chain store companies.” On being asked, “ Q. And if he should say that he never knew of any such custom, would you be surprised?” Mr. McLellan replied, “ Very much surprised, very much surprised, from what I knew of Mr. Simpson. He was a very able fellow, very.” Furthermore, he testified in substance that at the time Mr. Simpson took charge of the bankrupt, the bonus plan was explained to him. He said in answer to a question: “ Well, I told him that we usually gave a bonus at the end of the year if the company made money. He said: ‘ Well, that’s all out for the present anyway.’ ” However, Simpson failed to disclose to the plaintiff and his fellow employees that they were not to share in the profits pursuant to the promises which had been made. Had he done so the probabilities are that the defendant would not have been in a position to have inserted in its report to the United States District Court that “ The morale of the organization had to be maintained at a high peak.”
I do not believe there is much force to the argument advanced by the defendant that the plaintiff did not make a demand for his share of the profits until March, 1935. During the period of his employment, the first year that there was an actual net profit, as we have seen from the figures, was 1934. The amount thereof could not have been ascertained until the early part of January, 1935.
Since the questions presented by this record are primarily questions of fact rather than of law, it seems unnecessary to discuss the authorities relied upon by the majority as they are not applicable to this case.
I vote to affirm.
Judgment and order reversed, with costs, and the complain! dismissed, with costs.