Rankin v. Kellam

¶1This case is before us on an appeal from a summary judgment granted by the trial court.

¶2The suit was originally filed by the plaintiffs below, and the appellants here, who are some of the former employees of Texas Broadcasting Corporation, in Hi-dalgo County, Texas. Their suit was to recover certain profit sharing funds that they allege had accrued to them during their employment with the appellee, Texas Broadcasting Corporation. Appellees, defendants below, are the Texas Broadcasting Corporation and the individual Trustees of the KTBC Profit Sharing and Incentive Trust. The case was removed to Austin after the district court in Hidalgo sustained appellees’ pleas of privilege.

¶3*307The undisputed facts are summarized as follows: Texas Broadcasting Corporation was organized in June 1947, to own and operate radio and television properties. In 1958, the Company acquired KRGV, a radio and television station broadcasting from Weslaco, Texas. The Company operated KRGV until November 1961, at which time it sold the station. Appellants were employees of Texas Broadcasting Corporation at Weslaco, Texas during the time the station was owned by the Texas Broadcasting Company.

¶4In 1956 and before the Texas Broadcasting Company purchased KRGV, it voluntarily instituted a profit sharing plan for the benefit of its employees. The plan took the form of a trust with Trustees appointed by the Company to administer the plan in accordance with the terms and provisions thereof.

¶5The Company has made contributions to the trust in accordance with the terms of the plan in each year since the inception of the plan. Employees make no contribution whatsoever. According to the terms of the trust no amounts contributed by the Company or any other assets of the trust can ever revert to the Company.

¶6On July 1, 1958, ninety-nine employees of KRGV became employees of the Texas Broadcasting Corporation, seventy of whom were eligible for participation and did participate in the plan. Following the sale of KRGV in November of 1961, the Company had in its employ 119 employees, 95 of whom were participating in the plan.

¶7After KRGV was acquired, the employees employed by the Company at Weslaco, including appellants, became eligible for participation and did participate, as provided, in the plan. Accordingly, accounts were set up in the names of each eligible employee, including appellants herein, and credits made to such accounts in accordance with the plan.

¶8When each of the employees of the Company at Weslaco, including appellants, became a participant in the plan, he was given a copy of the plan. Thereafter, in accordance with the requirements of the plan, each participant was given an annual statement showing the financial condition of the plan for that fiscal year.

¶9Prior to the sale of KRGV by the Texas Broadcasting Company an announcement was made to all employees of KRGV that the sale was contemplated and that the Company would retain the employment of those who desired to remain, however the employment would be in Austin. Only two employees of KRGV accepted the Company's offer. All of the other employees, including appellants, terminated their employment.

¶10As stated above, a group of employees whose tenure with the Company terminated, brought this suit for what they allege is their pro rata share of the funds in the plan.

¶11The trial court granted appellees’ motion for summary judgment and denied the various motions of appellants hereinafter discussed.

¶12We affirm the judgment of the trial court.

¶13Appellants’ first six points of error, briefed together, complain of the action of the trial court in failing to grant their motion for summary judgment and in granting appellants’ in that appellants’ accounts were liquidated and established and appellees failed as a matter of law to show any right to these accounts; error of the court in failing to establish that each appellant is a. beneficiary cestui que trust with title to their respective accounts and that appellees, as a matter of law have failed to plead an affirmative defense or superior title to the accounts; that the pleadings before the court including the trust instrument established as a matter of law that appellee Texas Broadcasting Corporation does not have any right or title to the accounts of appellants ; “other” beneficiary appellees have not as a matter of law plead or established any title to the accounts of appellants; that *308Trustee appellees have not as a matter of law plead or established any right, title or interest in the accounts of the appellants.

¶14We overrule these points. Points of error seven and eight will be discussed later in this opinion.

¶15Section 4-2(a) of Article IV entitled “Leaving Employer’s Service” is as follows:

“(a) Before Ten Years of Service. A Participant who leaves the service of the Employer (other than by reason of death, retirement, permanent disability, or authorized leave of absence) prior to completion of ten (10) years continuous employment subsequent to July 1, 1947, shall receive nothing.”

¶16Article IV is entitled Payments to Participants and Beneficiaries.1

¶17Section (b) of Section 4 — 2 of Article IV entitled “after Ten Years of Service” sets out a schedule of the percentages of the fund recoverable for successive years after ten. See foot note No. 1.

¶18Section 11-1 entitled “Employment non-contractual is as follows:'

“Termination of Employment. The employer may terminate the employment of any Participant as freely and with the same effect as if this plan were not in effect.”

¶19Section S — 2(j) states:

“The Trustees shall have absolute power … to construe and interpret this agreement.”

¶20Section 5-2 states:

“[The Trustees] determination on all matters relating to the Plan shall be conclusive and binding upon all persons having or claiming to have any interest hereunder.”

¶21The portions of the plan quoted above raise two questions, one, the construction *309of the plan as relates to the appellant employees, the other, the authority of the Trustees to interpret the plan.

¶22With respect to the construction of the plan as it relates to appellant employees, they maintain that the requirement of ten years of service before any participation pertains only to those employed during the “regular course” of business. That when the Company sold Station KRGV terminating their employment as above described that such was a transaction “outside the regular course” of business bringing into operation Article XII of the plan entitled “Modification and Termination.”2 This Article states, among other things, that the employer may modify and amend the plan but that such power must not be exercised retroactively so as to impair the rights of participants insofar as they relate to past contributions to the trust, nor shall any such amendment divest any participating employee of any credit theretofore entered to his account. This Article further states that the Employer may discontinue the plan by giving the required notice or the plan may be discontinued upon other contingencies including that of merger with another corporation not assuming the obligation. Should such come to pass, the plan provides that each participant then an employee shall be assigned his full account whereupon the Employer and Trustees shall be fully acquitted and discharged from any further duties or liabilities to those particular participants. Appellants cite cases that state when the legal title merges with the equitable title the trust terminates. From this they argue that in the “regular course of business” the legal title merges with the equitable title after ten years due to the provisions of Sec. 4-2(a), supra, however that the above mentioned Article XII of the Plan provides for such a merger and termination of the trust upon contingencies “outside the regular course of business.” That in view of the fact that the plan provides that each of the accounts of *310the appellants were liquidated and determined as of June 30 of each year,3 they are due the amounts prayed for.

¶23Appellants contend that in view of the provisions outlined above the accounts of participants were “irrevocably settled.” This is true only to the extent that according to the plan they could never revert to the Company, but they were not so settled in the sense that the full amount of the account in a participant’s name was vested when credited. Only that portion of each account was vested which complied with the provisions of Article IV which requires the 10 year service before any vesting occurs. Then follows a table setting out the percentage of the fund allocable for years of service succeeding ten. This section specifically provides that:

“The amount to which any participant shall be entitled should his employment be terminated under this Section shall be known as his vested interest.”

¶24In Sec. 12-2 of Article XII the forfeiture provision of Sec. 4 — 2 is mentioned and held not to apply to any participant leaving the service of the Company where the Employer has failed to make contributions as required by the plan without discontinuing the trust. By specifically stating in what situation such forfeiture provision does not apply coupled with the fact that such exception to the forfeiture provision is included in a section of Article XII evokes the Expressio unius rule. See 53 T.J.2d, Section 142, p. 205.

¶25Upon becoming a participant, an employee becomes a contingent beneficiary of the trust to the extent of the value of his account. This occurs after one year of service. The amount in his account which vests upon his termination of employment, is however, determined by the vesting provisions of Article IV. While no amount in the fund can revert to the Employer, the plan provides that the unvested portion of an account forfeited by reason of early termination of employment is distributed ratably to the accounts of the remaining participants. Where a participant, such as each of the appellants, leaves the services of the Employer for reasons other than death, retirement, or disability or leave of absence, and who has been continuously employed for less than 10 years, nothing has vested in him. Appellants therefore, who were with the Company only three years are not entitled to any of the funds in question. Any other construction of this plan would be strained and artificial.

¶26As stated above, in addition to the construction of the plan in issue, we come to the question of the authority of the Trustees to interpret the plan. 38 Tex.Jur.2d, Master and Servant, Section 32, is as follows :

“A plan for employees’ pensions, disability benefits, or death benefits that is maintained by the employer without exacting contributions from the employees is a charitable enterprise in its nature. Therefore, under such a plan, the terms and conditions on which employees shall be entitled to participate, *311as prescribed by the employer, conclusively govern the determination of a suit by the employee or his personal representative to recover from the fund. These terms and conditions may include a provision that an extra-forum determination of any claim to participate in the fund shall be final and conclusive, and an employee has then no right to complain of its decision in the absence of fraud or bad faith on the part of those who administer the fund. In any event, the construction placed on the rules regulating the disposition of the fund will be adopted by the court unless that construction should conflict with law and public policy.” Citing cases.

¶27The Trustees have interpreted the plan so as to require ten years of service before any employee is entitled to any portion of the fund. In Aston v. Magnolia Petroleum Co., Tex.Civ.App., 241 S.W.2d 306, writ refused, Judge Culver then speaking for the Ft. Worth Court of Civil Appeals, held that where an employee’s benefit fund is established by the employer with no contributions made by the employees, the decisions of the authorized committee regarding the amounts of benefits due employees’ beneficiaries is final and binding on all parties and is not subject to attack in the courts in the absence of actual fraud and bad faith. Also see cases cited in the above-mentioned section of Tex.Jur.2d.

¶28All parties to the suit at bar agree that the plan in question is subject to the provisions of the Texas Trust Act, Art. 7425b-l et seq., Vernon’s Ann.Civ.St. While the abovementioned cases cited make no mention of whether the plans outlined therein were subject to the Texas Trust Act, we have neither been shown any reason, nor have we been able to find one that would preclude the rule in the Aston case, above, from being applied here. Therefore, we hold that the Trustees had the authority to interpret the Act as the}' have done.

¶29Appellants’ seventh and eighth points of error respectively are that of the trial court in denying their motion for discovery and production of documents under Rule 167 and the error of the court in sustaining the objection of appellees to certain interrogatories submitted under Rule 168.

¶30We overrule these points.

¶31Nowhere in their brief or in their oral argument before this Court do appellants contend that any fact issues were to be determined by the trial court. While they assign error to the courts denying their motion for discovery and production of documents and the error of the court in sustaining appellees’ objections to certain interrogatories submitted by them, we are in no way appraised of the purpose of the information sought, in what manner they have been damaged by the court’s action or in what way the trial court abused its discretion in the matter.

¶32Inasmuch as we hold that the only issue before the trial court was an issue of law and that the court correctly ruled on this issue we sustain his summary judgment and affirm this case.

¶33Affirmed.