Court Opinion

ID: 9444121
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:42:39.552841+00
Date Added: 2024-06-11T17:29:43.728487
License: Public Domain

JOHNSEN, Circuit Judge
(concurring specially).
I do not feel that the written promise of the employer to pay a bonus, as set forth in the majority opinion, can properly be said to have made the bonus here a mere gratuity, as the court holds, because the employee “was not required to and did not undertake to remain in defendant’s employ for any definite time nor to do or refrain from doing anything that he was not under his terms of employment required to do or refrain from doing.”
The instrument submitted by the employer for the employee’s signature promised to pay a bonus to the employee for the year 1935, on the condition that net profits would exist for the year, and on the consideration that the employee had remained in the service of the employer throughout that period. An examination of the more recent decisions will show, I think, that the present general view is — and soundly so — that, on *834such an offer, if the employee remains in the service of the employer throughout the year, he has earned the right to the bonus as additional compensation for his services, and, if the business has net profits for the year, the employer owes him such additional compensation as a contractual obligation from accepted offer. See Am.Jur., Master and Servant, § 71, pp. 501, 502.
Also, since the bonus plan amounted to a compensation arrangement, the right to the benefit thereof, upon the same condition and consideration as it was initiated, was impliedly renewed and continued as to each succeeding year of employment, until some notice of its withdrawal or some modification of it was appropriately effected. Cf. Leidigh v. Keever, 5 Neb., Unoff., 207, 97 N.W. 801; Laubach v. Cedar Rapids Supply Co., 122 Iowa 643, 98 N.W. 511. And there is no contention here by the employer that the plan, whatever its legal nature or effect might be, had existence only for the year 1935.
On the basis of what I have said, the employee then would ordinarily have a legal right to maintain the present action. But there is a further provision in the instrument, to the effect that the employee has waived the right to an audit of the employer’s books in relation to the bonus payment, and also that an acceptance of the amount tendered by the employer as representing 2 per cent of the net profits for the year should constitute a complete release of any claim against the employer on account of the bonus right. These provisions, as in any other situation of waiver or release, are not entitled to be escaped in equity, except upon clear and convincing proof of fraud on the part of the employer in the payments made and in the employee’s acceptance of their correctness at the time. The evidence here is not such, it seems to me, as to enable the employee to claim bad faith on the part of the employer in the payments made or to entitle the employee to escape the effect of the acceptance which he has made of them.
This leaves only the two years 1949 and 1950 to be considered, for which the employee was paid no bonus. As to 1949, the evidence shows that during that year the employee had had a protracted illness and that the employer had agreed to pay him his regular salary throughout this period but had made it clear that under these circumstances the employee would not be eligible for any bonus that year. The employee’s acceptance of these salary checks, to which he was not entitled, upon this basis, necessarily amounted to a modification of whatever right he might otherwise have had to bonus compensation for that year. And as to 1950, during which the employee was discharged for cause, he was without any right to recover a bonus, under the provision of the instrument that, in case he was discharged during course of the year, “he shall have no claim to the said bonus of two per cent (2%) of the net profits.”
On this special basis, I feel that the employee has not established his right to any accounting or recovery, and I would affirm the judgment of the trial court upon this ground.