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Lee v. Jenkins Brothers

decided: June 15, 1959.


Author: Medina

Before HAND, MEDINA and BURGER, Circuit Judges.

MEDINA, Circuit Judge.

Bernard J. Lee appeals from a judgment dismissing his complaint in two consolidated actions against Jenkins Brothers, a corporation, and against Farnham Yardley, to recover pension payments allegedly due under an oral agreement by Yardley on behalf of the corporation and for his own account, made in 1920. Lee's case consisted only of his own testimony and the trial judge held that there was no issue for the jury, as the claim was barred by the Connecticut Statute of Frauds and, as to the corporate defendant, was unsupported by proof that the agreement was authorized.

For the purposes of clarity and organization we shall first state our decision on the various law points involved in this interesting case. The discussion of the legal questions will follow a description of the factual background of the controversy. As the case may be reviewed by the Supreme Court we shall treat each of the important and controlling questions of law raised at the trial.

(1) First, we hold that Lee's testimony presented no issue of fact on which reasonable men could differ on the subject of the making of the alleged agreements, and that therefore the dismissal of the complaints in both actions was proper.

(2) Assuming, arguendo, that there was evidence sufficient to support a finding that Yardley promised Lee a pension of not to exceed $1500 at the age of 60, even if not employed by Jenkins at that time, we find that, while there is no proof of actual authority, the combination of circumstances here present would, if we assume such a promise was made, make the question of apparent authority an issue for the jury.

(3) With respect to the applicability of the Connecticut Statute of Frauds to Yardley's alleged oral promise, we conclude that it is probable that Connecticut would hold: (a) that Yardley was being held to answer for "the debt, default, or miscarriage of another" whether or not there was a binding obligation on the part of the corporation; and (b) that the requirement that the promise be in writing, if it cannot be performed within one year, is complied with because of Lee's alleged complete performance.

The following is a summary of Lee's testimony. At the time of the alleged contract Lee was in the employ of the Crane Company, a large manufacturer of valves, fittings and plumbing supplies, at the company's Bridgeport plant. He had been with the Crane Company for thirteen years and had risen to the post of business manager, earning a salary of $4,000 per year. In December, 1919, the Crane Company agreed to sell its Bridgeport plant to Jenkins Brothers, a New Jersey corporation and a defendant in one of these actions. The transaction was consummated June 1, 1920 when Jenkins took over Crane's Bridgeport plant.

According to Lee's testimony this was the first venture into the manufacturing phase of the business for Jenkins, which was formerly content to be merely a customer of Crane. Jenkins was therefore extremely anxious to secure competent personnel, particularly the old Crane employees, in order to insure as smooth a transition as possible in view of the change to a relatively inexperienced management.

With this in mind Charles V. Barrington, Vice President of Jenkins in charge of manufacturing, approached Lee in February, 1920, in an attempt to induce him to join Jenkins. Lee, however, was reluctant to do so. He felt his prospects with Crane were good and he had accumulated thirteen years of pension rights under the Crane Company plan which he did not want to give up. Some time after this conversation but before June 1, 1920, Barrington arranged a meeting for Lee at his hotel suite in Bridgeport with the co-defendant Yardley, president of Jenkins, chairman of the board of directors, a substantial stockholder, son-in-law of Mr. Jenkins, and co-trustee of the Jenkins estate. Present at this meeting besides Lee and Yardley were Barrington and his wife. However, at the time of the trial in October, 1957, only Lee was alive to describe the conversation.*fn1

Yardley convinced Lee of his fine prospects with Jenkins, of the company's need for him as assistant to Barrington, and allegedly made a promise on behalf of Jenkins and a promise on his own behalf with respect to Lee's pension rights. Since the content of these promises is so vital to the determination of the various aspects of this case, we set out in full the various versions of the conversation with Yardley as given by Lee.

First, Lee testified:

"As far as the pension that I had earned with Crane Company he said the company [Jenkins Brothers] would pay that pension (and) if they didn't or, if anything came up, he would assume the liability himself, he would guarantee payment of the pension; and in consideration of that promise I agreed to go to work for Jenkins Bros. on June 1, 1920."

"The amount of the pension referred to by Mr. Yardley was a maximum of $1500 a year and that would be paid me when I reached the age of 60 years; regardless of what happened in the meantime, if I were with the company or not, I would be given a credit for those 13 years of service with the maximum pension of $1500."

Later Lee put it this way:

"Mr. Farnham Yardley said that Jenkins would assume the obligation for my credit pension record with Crane Company and, if anything happened and they did not pay it, he would guarantee it himself."

"Mr. Yardley's words were 'regardless of what happens, you will get that pension if you join our company.'"

Finally, Lee summarized his position:

"My claim is that the company through the chairman of the board of directors and the president, promised me credit for my 13 years of service with Crane Company, regardless of what happened I would receive a pension at the age of 60, not to exceed $1,500 a year. If I was discharged in 1921 or 1922 or left I would still get that pension. That is what I am asking for."

This agreement was never reduced to writing.

Lee's prospects with Jenkins turned out to be just about as bright as he had hoped. He subsequently became vice president and general manager in charge of manufacturing and a director of the company. At that time he was receiving a salary of $25,000 from Jenkins, $8,000 more from an affiliate, plus an annual 10 per cent bonus. In 1945, however, after 25 years with Jenkins, Lee was discharged at the age of 55 and his pension rights under the company's established plan were settled in full.

In 1950 the payments under the alleged pension agreement became due. Although nothing was paid under this agreement Lee waited until 1955 to institute suit against Jenkins, joining Yardley eight and one-half months later.

The Crane Company pension plan prior to June 1, 1920, to which Lee said Yardley "referred," was a gratuitous or voluntary one whereby male employees could be retired by the company at 60 or apply for retirement at 65, if they had 25 years of service. Under the plan each employee would receive 2% of his salary for each year of service at retirement, with a maximum pension of $1500 a year. Lee admits it was a condition of eligibility under the Crane plan that the employee had to be in the employ of the company at the time of his retirement.

Although at the start of operations on June 1, 1920 Jenkins did not have a pension plan, it soon adopted one effective as of June 1, 1920 incorporating all the features of the Crane plan. The 350 former Crane employees, including Lee, who transferred over to Jenkins were all given credit under the Jenkins plan for service with the Crane Company. Lee, however, asserts that Yardley's promise was not fulfilled by the adoption of the Jenkins plan since he had been assured of pension payments "regardless of what happened." Moreover, although Jenkins revised its plan in 1932 and Lee voluntarily took coverage thereunder, all this he claims was "over and above" the rights promised by Yardley. Lee, a member of the pension committee, admits no other employee was given such pension rights.

Jurisdiction of these two actions is based on diversity of citizenship and hence the United States District Court sitting in Connecticut was bound to apply Connecticut law including its ...

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