This rеview concerns two declaratory judgment proceedings between the City of Portland and the Tri-County Metropolitan Transportation District of Oregon (Tri-Met) on the one hand and Rоse City Transit Co. and Landport Co., Inc., on the other. In the first case, which has been denominated the franchise case
(Rose City Transit v. City of Portland,
In the pension case the Court of Appeals affirmed the trial court in holding that Rose City and Land- *591 port were liable to continue pension and disability payments to retired and eligible-to-retire union employees. The court also affirmed the trial court’s holding that Eose City and Landport had no pension obligations to union and nonunion employees who were not retired or eligible to retire. The Court of Appeals reversed that portion of the triаl court’s decree which held that Eose City and Landport were liable for pension benefits for nonunion retired employees and nonunion employees eligible to retire.
We granted review in the pension case only. The review was limited to the issue of the liability of Eose City and Landport with regard to the pension rights of the nonunion employees who were retired or eligible to retire.
The complex background of this litigation is detailed in the opinion of the Court of Appeals. In 1936 the Portland Traction Company commenced оperation of a mass transit system in Portland under a 20-year franchise. In 1946 Portland Traction and the union entered into a working agreement which included proyisions for pensions for eligiblе employees. Disability provisions were added to the agreement in 1950. In 1956 the Portland Traction System was transferred to Eose City Transit Co. In 1958 Landport Co. was created as a wholly ownеd subsidiary of Eose City. All assets of Eose City were transferred to Landport and subsequently leased back to Eose City. The union pension agreement, initiated by Portland Traction, was assumed by Eоse City and remained in force, with certain changes and increases in benefits, until 1969, when the City began operation of the mass transit system pursuant to its termination of Eose City’s franchise in 1968. At all timеs Landport, Eose *592 City, and Portland Traction were wholly owned subsidiaries of Portland Transit Company and will be referred to as “the companies.”
Commencing in 1946, Portland Traction, and later Rose City, began a consistent policy of providing pension and disability payments to nonunion employees. As stipulated by the parties:
“During the period of April 1, 1946, through November 30, 1969, all employees not members of the Transit Union who had the age and service requirements then applicable to Transit Union members who retired after service with Portland Traction аnd Rose City, received pension and/or disability payments at least equal to those paid to retired employees who were members of the Transit Union.”
These payments werе made pursuant to resolutions by the board of directors.
As noted above, the trial court held, and the Court of Appeals agreed, that the companies were liable for pension payments to union employees who had retired or were eligible to retire and met the eligibility requirements of the union contract. Rose City Transit v. City of Portland, supra at 410-417. However, the Court of Apрeals held that the trial court erred in finding that the companies were also liable for pension payments to nonunion employees who were retired or eligible to retirе. Rose City Transit v. City of Portland, supra at 417-420. The Court of Appeals held that there was insufficient evidence that a unilateral contract had been created between the companies and the nоnunion employees.
This court has held that the adoption of a pension plan is an offer for a unilateral contract. In
*593
Taylor v. Mult. Dep. Sher. Ret. Bd.,
“Oregon has joined the ranks of those rejecting thе gratuity theory of pensions and has held that contractual rights to a pension can be created between the employee and the employer.”
Thus an employeе pension or disability plan may be viewed as “an offer to the employee which may be accepted by the employee’s continued employment, and such emplоyment constitutes the underlying consideration for the promise.”
McHorse v. Portland General Electric,
For an employer to become liable under a pension plan, it must be shown (1) that the employer has adoptеd a plan to pay retirement benefits, (2) the employee knows of the plan, and (3) the employee is eligible for benefits under the plan:
“* * * [W]here the employer has a fixed pension plan and the employee knows of it and continues in the employment in the honest belief that he will be the recipient of such plan, the employee may enforсe his right to a pension * * West v. Hunt Foods, Inc., 101 Cal App 2d 597, 603,225 P2d 978 (1951).
See Taylor v. Mult. Dep. Sher. Ret. Bd.,
supra;
McHorse v. Portland General Electric,
supra;
Jacoby v. Grays Harbor Chair & Mfg.,
77 Wash 2d 911,
In the instant case there is no controversy with regard to the eligibility of the nonunion retired employees and the nonunion employees eligible to retire.
Wе also find that the companies have adopted a “plan” to pay retirement benefits to the concerned *594 nonunion employees. As noted above, from, 1946 the cоmpanies, by resolution, paid pension and/or disability payments at least equal to the union benefits to every nonunion employee who met the age and service requirements applicable to the union. Thus, the companies established a custom of over 22 years of paying pension benefits to nonunion employees. This evidence should be contrasted with that presented in West v. Hunt Foods, Inc., supra. There, the California court held that it was incumbent upon the plaintiff to prove the existence of an established pension plan. Evidence thаt the defendant had paid some benefits to only six of several hundred persons employed over a period of 25 years fell “far short of showing that the employer had a fixed plan for retiring employees.” 101 Cal App 2d at 603. In the instant case, on the other hand, the evidence clearly shows that the companies adopted a plan for nonunion еmployees to provide benefits at least equal to those received by union employees.
A more difficult problem is presented with regard to whether the employeеs knew of the plan to pay pensions or disability benefits. No eligible nonunion employees testified on this point. One nonunion employee testified that he was aware of the plan and knew of no employees who had not received benefits under the plan. However, at the time of his testimony he was in a high management position and not among the group of employees eligible for benefits under the plan. His testimony does not indicate whether he gained his knowledge prior to assuming his management position.
We feel that the abоve evidence is sufficient to support the conclusion that the nonunion employees had knowledge of the plan. In
Hunter v. Sparling,
*595
87 Cal App 2d 711,
“The fact that the precise terms of the formula were not known to plaintiff is immaterial as long as such terms were capable of ascertainment by the сonduct of the parties or otherwise.” 87 Cal App 2d at 725.
In the instant case the parties have stipulated that every nonunion employee from 1946 to 1969, a period of over 22 yеars, received a pension upon retirement. Pension plans, disability benefits, and health insurance are extremely important today to all workers, whether in the management hierarchy or at the union level. In fact, because of taxes, such benefits could become more important than salaries or salary increases. It is inconceivable to us that a nonunion employee working for a company that has consistently granted pensions to every other coworker for a period of 22 years would not know of the рlan. Certainly such an inference is permissible from all the facts in this case, and the conclusion of the trial court was to that effect.
We believe that the evidence in this case supports the conclusion that the nonunion employees knew of the plan and are therefore entitled to benefits from Hose City and Landport.
Affirmed as modified.