*1 part; part; and reversed 25, modified Argued affirmed March entry with consistent new decree of a for the and remanded September August 19, denied opinion reconsideration this 350-760, petition No. denied Case for review 352-667, December Case No. allowed Appellants- CO. TRANSIT ROSE CITY al, et Cross-Respondents, al, v. CITY PORTLAND OF et Respondents-Cross-Appellants. 760)
(No. Respondents- CITY PORTLAND OF et al, Cross-Appellants, CO. v. ROSE TRANSIT CITY Appellants-Cross-Respondents, 352-667) al, (No. et BOWEN, Defendant, DIVISION CHARLES C. TRANSIT UNION No. AMALGAMATED Defendants-Respondents. et al,
James H. and Clarke K. Port- Drummond, Gerard land, argued the cause for respondents-cross-appel- lants. With them on the briefs were Marian C. Rushing, former Portland City Attorney; John Osburn, W. Portland City Attorney; Kell, Alterman, Runstein, Thomas & Kell; Dezendorf, Spears, & Lubersky Camp- bell and ; Rives, Bonyhadi & Drummond, Portland. argued and filed the cause Swink, Portland, Don G. defendants-respondents. the brief Department Kopp Cohen, and M. Robert E. David Washington, amicus filed brief C., D. a Justice, Secretary Brinegar, curiae on behalf Claude S. Transportation of America. of the With United States Acting Irving Assistant Jaffe, them on the brief were Joseph Attorney Sallyanne Payton, A. Blun- General, Washington, don and Arthur R. D. C. Silen, Presiding Judge, Before and Fort and Lusk, Foley, Judges. FOLEY, J. appeal
This is
aris
a consolidated
two cases
ing
city
of Portland of
out
termination
a
City
mass transit franchise
Rose
Transit
awarded to
(Rose
case)
City).
(the
Co.
The first case
franchise
brought by
City
Landport
was
Rose
Transit Co.
(the Companies)
declaratory judgment pro
Co.
as a
ceeding against
city
(the
seeking
City)
of Portland
declaring
a decree
that the
had breached the terms
by unilaterally
of the mass
and im
transit franchise
properly terminating
Tri-County
franchise;
Metropolitan Transportation
Oregon (TriM
District of
et), ‹
municipal corporation, subsequently
became
party
(the
case)
defendant. The second case
brought by
declaratory
and Tri-Met as a
judgment proceeding seeking
setting
a decree
parties’
pension rights
regard
various
liabilities
employes,
to various classes of
both
active
retired.
‹
Tri-County
Trans.,
App 288,
See Horner’s Market
v.
Or
(1970).
467 P2d
256 Or
The union a City, ployes some union, of the of Rose some members pension case. The in the named as defendants were not, agreed stages, as consolidated tried cases were parties, by stipulation before the trial court of the jury. sitting without a THE CASE
I. FRANCHISE Factual background City granted first an exclusive fran-
In 1936 the Company opera- for the the Portland Traction chise to city of the mass on the streets tion of transit vehicles 20-year period. for a this franchise was Portland; expired Traction in 1956 and The Portland franchise system transferred Portland Traction was City City granted then Rose the Rose Transit Co.; temporary, City of a series short-term, the first permits. revocable incorporated
During Landport Co. City. wholly subsidiary of Rose All Rose owned City’s personal, eventually real and assets, both were Landport transferred to leased back Rose City. Landport, City all times and Portland At Rose wholly of Portland Traction were owned subsidiaries Transit Co. agreement City
In 1962 between Rose City 10-year franchise, was reached on effective new, January adopted 1, 1963. Portland Council August the franchise as on Ordinance No. 115674 Throughout period and, 1962. of the franchise, since fact, War, after the Second World Portland system continually mass transit was faced with de- creasing ridership continually on one hand and in- creasing on fares the other. provision pursuant to a 15, 1968,
On November application Rose filed for its franchise, *9 third the 12,1968, fare increase. On December Portland City requested on the Council deferred action fare terminating adopted and a resolution the increase purportedly “for cause,” franchise in accordance with City began Section 23 of said franchise. The thereafter proceedings system. August the to take over On City company 1969 the tendered the revenue certifi- purportedly provided in cates, the as franchise, payment system; City rejected for the transit Rose the August City Landport tender. On Rose and complaint declaratory judgment filed for the in the seeking, judicial franchise case, alia, inter declara- validly tion that the 1962franchise was not terminated City or revoked on December 12, the 1968. On August City 22, 1969, the and Tri-Met filed their answer and a counterclaim in the franchise case in they prayed which for a declaration the court that validly the franchise had been terminated, that the Companies accept should certificates, revenue the that Companies required convey system, were the and asking, among requests, other that the court set a fair City properties. and reasonable value Rose the City, Landport On November 30, 1969, Rose City Understanding the executed Memorandum of (hereinafter agreement), called take-over which recited Companies City that the would turn over the the possession (but to) Companies’ not the title real property, plant equipment, on that December operation 1, 1969, the would commence system. agree- Portland mass transit take-over parties proceed ment further that recited would to trial in both the franchise and the retirement cases, of the parties’ determination judicial therein a
seeking the franchise agree- under and liabilities various rights A document labor contracts. ment and the various wherein Tri-Met then all parties executed by the take-over under obligations assumed the City’s agreement. the issues trial on after 3, 1972,
On August a decree which court entered the circuit raised, termi- validly franchise was adjudged it that franchise was under fair value nated, that were and Tri-Met pres- $2,975,782.65, interest sum, up without ently obligated pay Tri-Met was obli- decree, to the date of and that cash in cash. gated Upon proper same pay were tender to Eose City Landport, *10 to the City title to the obligated to convey properties or its designate. from all Companies appeal portions
decree while the and Tri-Met from City cross-appeal the decree which contend portion they of provides interest. post-decree
Scope review of
Both the and Tri-Met contend that this City court’s the Purtland power City to review Council’s action in the termination of is limited the franchise to a determination council acted reasonably and in faith to good protect public interest; they contend that this cannot court facts or deter retry the mine if this in its substantively was, view, the correct decision for the council to make. Both the and Tri-Met contend that these matters are within the sole of discretion do council. We A fran city agree. is chise a contract between a and city a franchisee.
381 granted right is streets nse the “When imposed accepted incident and and all conditions right performed, license a mere it ceases contract, he to the and constitutes a and becomes a valid grant right. is for the vested The consideration public from said to which the derives be the benefit The condi- the tions of the franchise. use exercise binding, therein the same as the terms are municipality and other on the contract, both company, exist- the ing and their successors. The laws part place at the time and contract form a * * *” (Footnotes omitted.) of it. 12 McQuülin, Municipal Corporations (3d 1970). § ed 34.06 Top Accord, Owensboro v. Vision Cable Co. Ky., (Ct Ky App 1972), 487 283 cert SW2d denied (1973). US See Public v. Portland, Market Co. (1943). gen- 171 Or P2d 522, 130 138 P2d See erally, § 36 Am Jur2d Franchises 728-30, I6; Pond, (4th 1932). § Public Utilities ed 283-84, 120 Since the franchise has all the incidents of a con rights parties tract, the and liabilities of the to that contract are evaluated in standard contract terms, with exception. City Joseph one Joseph notable v. Water Co., Works (1910), 57 Or 111P 586,591, P 864, 112 states: is a rule of “It construction if the that, terms they of the franchise are doubtful, are to be con- strictly against grantee strued liberally public.
favor of the granted unequivocally is not What nothing passes by
is impli- withheld, except necessary carry cation, what into *11 grant. the effect [Citations obvious intent of the omitted.]” Copeland City
See
Waldport,
also,
v.
1932). actions review Our general principles. light these franchise is in power of this court the in which area The other question arises in judgment is in helow review the to proper placed on the value our consideration of the urge the action below that and Tri-Met ties. he review must and that our an action at law support the there was evidence limited to whether proceeding finding. that the contend equity must review this court in was a suit Viewing proceedings in their de the the issues novo. they equitable entirety, in conclude that were we de novo. and review the case nature cause” the Termination “for franchise ordinance states: 23 of the franchise Section for the franchise continue effect “This shall period (10) years effec- after same becomes of ten paragraph inas this unless sooner terminated tive, provided. right “The shall have revoke Council any upon terminate franchise at for cause this time (6) Company prior least six months notice at writing; lapse expenditure, or and no of time, any thing give other deemed shall be Com- pany any right in interest or the continuance vested of this franchise. during period specified “In the event Company
in Section 21 hereof the fair does not earn a profit projection operations and a into its succeeding (2) two indicates a con- months, stipu- of such earn same, tinuance failure to lated in Section, said and it is determined Company and that it would Council practicable, possible public he or in the interest to deficiency by cure the an increase in fare schedules, required elimination of some or routes reduction in then, service, combination thereof, Company under such circumstances, *12 writing to (6) notice give may months’ six then its fran- surrender City elects to that it the Council sys- transportation operations of a cease and chise tem hereunder.” Section under of the franchise In its termination by city given as follows: council was the the “cause” “* * * increases [F] fare that cause or the reasonably present con- cannot level above the tinue 35^ good public and indefinitely of as a matter possible in- future with increase that such interest, patron- loss such additional creases will result in age city economically within the mass transit service to render the as unreasonable, and unfeasible public despite public to the and the benefit need the city a property the from rea- owners of and to the transit service. sonable
¿Í# [*] [*] # [*] J5 complaint answering the amended third Later, in City upon Companies, and Tri-Met elaborated the the original (1) continued the reasons for termination: company operation made service eco- would have bus elderly nomically poor; unavailable the the (2) operation continued would been eco- such have nomically system; (3) transit destructive of the City’s existing operation, such under Rose continued policies, system would have caused transit to be- depreciated, undercapitalized come obsolete so system at end of term could the franchise system. operated not thereafter be a mass transit first that “for contend cause” only in the franchise can mean termination in event company. agreement of breach The franchise support does not this conclusion. 26 of the Section provides specifically company franchise if the provisions violates contained in the fran- notify company of such vio- chise will the council days give company period will lation and within the cure such violation. Failure cure 30-day period to declare a for- enable will of the franchise. The feiture and revocation existence adequately protects in the Section 26 event company breach without resort Section 23. *13 supports interpreta the Eelevant case law also something tion “for cause” means other than by company. example, breach R. the For in J. Cardinal App2d Rptr Ritchie, Co. v. 218 Cal 32 Cal 124, 545 (1963), agreement court sales in the construed a which agent’s employment company a sales with the could be reviewing agreement, terminated for the cause. After concluded: court “* * * phrases just [T]hese [for cause, for good cause] for cause or have been found to dif- be precision largely ficult to define with and be depending upon in their relative connotation, * * * particular circumstances of each case. apprehend “We concept nucleus this at the of ‘good ingredients of or ‘cause’ cause’ the essential * * * grounds good of reasonable faith. opinion right “We are of the a to terminate good ‘for upon cause’ or ‘for cause’ means reason- * * * grounds assigned good able right faith. Such a wholly since it ‘is not controlled the will * * * promisor of himself’ and since it does not permit invoking the one ‘to it withdraw from agreement [his] pleasure’ at... own unrestricted * * * arbitrary is not invalid as an and absolute power App2d (First to cancel.” 218 Cal at 144-46. ours.) two brackets Similarly, in Quick v. Southern Churchman Co., (1938), 171 Va 199 489 SE the court con cluded : ‘just ‘good
“It is obvious that cause’ or cause’ right to legal synonymous cause. with is not independently legal exists cause cancel for a legal contract can terminate contract. One cause. No notice therefor. required after of time is extension ‘just cause’ hand, other On the certainty. legal ‘good reduced to a cause’ cannot he circumstances relate to the effective, it must To he grounds upon must it is based which relied on. an should not be abuse and there reasonable, be right. fair and honest It must be a conferred good part regulated on faith reason, cause or party exercising power. party limits It just upon good faith, based exercise to the fair arbitrary distinguished grounds from an power. To this it includes causes outside extent, legal causes. “* * * [T]he hold that such clause decisions legal grounds,
permits
upon other than
cancellation
good
upon
power
faith
fair
when the
exercised
grounds. [Citations omitted.]”
and reasonable
Helsby
Casualty
Hospital
also
See
v.
Paul
St.
Company,
(D
1961),
Supp
F195
Minn
aff’d
(8th
1962);
F2d
Elec.,
Cir
Local
R. &
United
*14
Supp
(D
M.
Co.,
Wkrs. v. General Elec.
172 F
53 Mass
1959); Cook,
Revenue, v.
Commissioner
Consoli
(1945).
dated Cases, 209
189
Ark
SW2d 897
See
generally,
§
Am
968-69,
17
Jur2d
Contracts
495. Other
public necessity
general
cases
indicated
have
that
public
good
of the
welfare
can
cause.
constitute
See
O’Hagen
Adjustment,
Zoning
App3d
v. Board
19 Cal
Rptr
(1971);
Ladage,
151, Cal
Smith v.
397 Ill
(1947).
336,
We conclude the term “for cause” as used that City in 23 of the Section not franchise does limit the only upon to termination breach or some other viola- by Companies. tion of the contract the term While the any right of cause” the notion Of “for does exclude City at it does not will, the to terminate the franchise right provisions of the limit that to cases of breach contrary, by City. used, the as here franchise Rose On meaning opinions “for cause” has delineated in quoted “public from in- above, which we have may terest” such cause. as contended If, be Companies, “for mean cause” were construed to thing same as “for Section 23 would be sur- breach,” plusage, expressly governs cases of Section adopt breach. construction which we The harmonizes Sections 23 and 26. Companies contend that the court im
properly pur excluded extrinsic as to the evidence ported meaning phrase “for cause” in the franchise. counsel for ad However, during ambiguity mitted trial there was no agreement. ambiguity, franchise an Absent extrinsic possible meanings evidence as to term is not admissible. › Companies argue that the three additional supra,
reasons, termination of the contract should not been have considered the trial court on the ground improper that such reasons an were addition of new claims. The trial court concluded estopped giving was not from additional reasons and (1) (2) furthermore, that reasons do not raise grounds beyond additional for termination those stated city in the motion for termination made at council › However, it should be noted that the evidence was admitted upon only phrase under the Rule and review reflects that the “for cause” was added in the final draft of agreement, the franchise being present any prior draft. The most that can be con cluded from only this is that the term “for cause” was meant ability be a limitation on the to terminate “at will.”
387 Railway v. meeting. Co. stated The basic rule is (1877): McCarthy, L Ed 693 24 258, 267-68, 96 US party gives conduct for his reason “Where a a anything touching in a con- involved and decision begun, troversy, litigation has after cannot, he upon change ground, put an- his conduct his per- He is other and consideration. different estopped from He is mitted thus to mend his hold. *” * * doing principle it settled of law. City Co., Ins. 69 Or Accord, Queen Ward v. reaso,n (1914). however,
P
for this
is
rule,
equitable;
courts hold that it would be unfair for
ground
party
to
its
and assert other reasons
shift
previously
which it had
waived. Eaid v. National
Casualty
(1927).
Co.,
Valuation of City gives Section 25 of the franchise option purchase the assets of the follow ing termination: City may acquire purchase,
“The condemn or any any portion lawful manner all or other property, plant equipment and used the real Company operations under this franchise. in its price paid property, for the real
“The to be plant equipment which the has indicated, writing, acquire, its desire to shall be the fair plant property, equipment as value of the real period (6) day of con- months’ six of the last * * * operations 24. to in referred Section tinued ip w »(cid:127) tF w tF plant property, of the real “Fair valuation designated for its equipment acquisition has which the upon the fair value shall be based equipment, property, plant and reduced the real the obligation any encumbrance lien, amount of agree City may Company which the by stockholder not be determined assume, but shall expectation profits and shall investment or include unexpired sum for the value of portion of this franchise. *17 pro- spite this that,
The contend of they “just compensation” and are entitled to vision, payment compensation for such must include intangible including certain assets the value of training employe preparation, routes taken, schedule “going-concern” and this view- other values. While point might agreement to correct in the of be absence agreement contrary, here alone con- the franchise question compensation. trols the In Albrecht v. 91 L Ed States, United 599, 603, US 67 S Ct (1947), the Court said: “* * * prohibit The Fifth does not Amendment agreeing from be- landowners and the Government just compensation to what is tween themselves as * # * property for taken. Nor does it bar them embodying agreement from in a contract # # # Rapid
In a case similar to the one
bar,
at
Honolulu
Company
(9th
[HRT] Dolim,
Transit
v.
459 F2d 551
Cir),
per-
(1972),
cert denied
the franchise
would be intangibles. good or other will franchise, value of the property purchase city under the to The decided was un- that the clause HRT contended franchise taking provided for HRT’s constitutional since it just payment property public com- without use argument: rejected pensation. appeals this The court of *“* * disregards fact that HRT there City. ‘taking’ This was not a uni- no here power of its of eminent lateral exercise domain. property acquire right HRT’s upon price its was not based a certain at agreement power upon between take, but parties. HRT’s which Thus there was no event to rights The trans- attached. asserted constitutional range ‘passed of the Fifth had out of the action ‘Parties, situation where Amendment’ and was a bargain tions does supposedly w -\i- n «* “* * * jf. w between with [*] strip doctrine due themselves state regard unconstitutional as to federal their own compensation.’ governments interests, condi- indispensable long acknowledged power of this private employ [to remedies available citi- enforcing contract]. zens in “Nor alternatives to the does the fact that the to HRT in 1921 were unattrac- franchise available agreement tive render the a coerced one. The ac- *18 (Foot- ceptance of HRT of free was an act choice.” omitted.) note 459 F2d at 553. Orgel, the in 2 above, Consonant with Valuation Under (2d 1953), § ed Domain 200 author 59, 60, Eminent the grantor sets of forth the rule that the the franchise may stipulate arriving compensation the for terms at taking. placed upon
The the assets of value the Com- panies must from be derived the terms of the contract,
391
law.
general principles
condemnation
not from
upon
Companies’
Mtr.
reliance
the
Thus,
Lines),
case,
a condemnation
(5th Ave. Coach
N.Y.
410,
NE2d
219
212,
NY2d
18
52,
273 NYS2d
modified
(1966),
“Generally plant speaking, machinery, equip- may tools be said to be the machinery, place well as the where such ment as carrying operated equipment on tools and are * * * engaged. in which he is the business “ apparatus, tools, means fixtures, ‘Plant appliances, necessary carry trade, on etc., operation process.’ [Citations mechanical omitted.]” Bonbright, Orgel, supra § II
Accord, 206; at Property (1937). definition, Valuation See fran- is no indication 1100-02, CJS Plant. There any- agreement “plant” chise refers word thing tangible other than assets. limited to
We conclude that are agree- compensation provided for in franchise agreement compensation to ment and limits property, equip- plant fair of the real value *19 392 include terms, its not, by sepa which value does
ment,
intangibles. fi
for
rate compensation
tangible property fl
Valuation of
the Companies
For
of this appeal,
purposes
trial
with the
court
disagreement
have narrowed their
on
main areas:
the value
the issue of valuation
two
fi As noted
upon
supra,
Companies’ reliance
Mtr. of
(5th
212,
Lines),
52, 18 NY2d
219
of N.Y.
Ave. Coach
273 NYS2d
410,
,
349,
741,
NE2d
274 NYS2d
18 NY2d
It is noted in I Valuation (1937), 160-61 that: * * * present property “If of the would the loss *# * acquiring a its owner virtual
warrant replica, at may property properly then be valued * * replica disputed But in most the cost of its *. appraisals, property ration- would owner ally replace duplicate, an exact but it, not with substitute, rather with a new or which would different otherwise satisfactory or either more less be * * * present property. Moreover, than his even 1,606,206.25 New buses 195,000.00 Old buses 2,900.00' Junk buses 15,800.00 Autos and trucks Shop 130,112.40 mach. and tools 28,717.00 lift, Washers, bus fuel tanks 12,300.00 Fare box vaults and stands equip. 40,000.00 and office Furn. mise, equip. 7,500.00 Radios and stop signs 6,650.00 Bus Mise, tangible 19,017.00. assets
$2,975,782.65 to find if, coincidence, he were able rare against probabilities identic wanting are all his twin, acquire option His it. best available will be to or or more newer, modern, secure more adaptable, substitute. replacement “Under circumstances, these cost
* * * accepted cannot be without revision measure of value. A further allowance must be inferiority superiority pres- made for the property property. ent appraisals, substitute In most property question, being old and would obsolescent, be inferior the new substi- inferiority tute, and the adverse value this must replacement be deducted from cost new. This de- generally, though inaccurately, duction is ‘depreciation.’ called # * *” Bonbright goes on to note at 185:
* * Depreciation should now refer to the present difference between the worth of the old present and obsolescent asset and the worth of the *21 hypothetical, new and modern asset. “* * * popular [T]he ‘phys- distinction between depreciation ical’ and ‘functional’ is a antithe- false Any depreciation physical sis. of a far asset, so by appraiser, it need considered be an is at once physical and functional.” Reynolds Dept. Accord, Metals v. Rev., 258 Or (1970); Orgel, 119-20, 477P2d supra P2d 888, § at Appraisal 57, 199; Schmutz, Condemnation Hand (1963). book 56 complete
A review of all the evidence introduced in relation to prop- valuation of the Center Street only unnecessarily erties lengthen would serve this opinion. Briefly, buildings question we note that the trolley were constructed around repair 1912 for use as property barns, that the had been modernized for use repair as bus but testimony facilities, that was there there they antiquated of date. While and out still were satisfactory buildings testimony were still was also trial court’s operation that the conclude use, we bus depreciation and finding percent was correct of 78 should affirmed. be equipment
B. Office upon placed $40,000 trial court a value machinery equipment. and While office furniture, greatly, testimony we are of the witnesses differed persuaded the market items testified that value by nearly approximates the true witness one more placed affirm the valuation the trial value. We upon equipment court the items of furniture, office machinery. parties
Status Companies argue the trial court failed that distinguish relationships in the the difference be- Companies city tween the and the of Portland on one Companies hand and the on the other. Tri-Met Their basic contention is that valuation formula provided application no has to a take- franchise financing over in which the is done Tri-Met. The agreement take-over assert negotiated only with the Tri-Met suc- rights ceeds to no under it.
Paragraph agreement H of the take-over ex- pressly provides that the is authorized to transfer system provided to Tri-Met the entire bus that Tri-Met binding agreement first enters into valid and with *22 City, Landport whereby Rose and Tri-Met agrees perform City’s agree- “assumes and to all of the obligations ments agreement, and in and under this and agrees joined party pending to be as a defendant in the pro- Companies this contend that
franchise suit.” The only obligations and that on the of Tri-Met vides side any obligations Companies of their are relieved disagree. Paragraph 20 of the exhibit thereunder. We agreement provides that the to attached the take-over binding agreement upon and and the exhibit “shall be respective of the successors and to, inure assigns benefit Paragraph parties thereto.” D of the agreement system provides valuation of bus shall be consistent with the franchise. use provisions govern clearly franchise to the valuation is City. express terms of the benefit Under the agreement, take-over as a Tri-Met, successor to the City, provision. receives the of this benefit Tri-Met city position of Portland stand in the identical regard relationship to their with Rose Landport.
Urban Mass Act Transit
Throughout Companies the franchise case the consistently contend that the Urban Mass Transit Act requires they compensated going- of be for the They concern value their franchise. maintain that “just compensation” going-concern must include value. statutory provision upon by relied (e) (1970): § is 49 USC 1602 “No provided financial assistance shall be under chapter any' this agency public body State or local or purpose, directly thereof for the or in- directly, acquiring any purchasing interest in, property facilities or private other a of, mass * * * * * * transportation company (3) just unless adequate compensation paid will be such companies acquisition of their franchises or property required by applicable extent State * * or local laws *.” *23 of this statute citation the mere from is clear It only law Congress requires and local that state compen- adequate just and amount of determine the overriding federal law as to is not that there sation, adequately “just compensation.” This conclusion legis- supported by and the the relevant both cases Safeway history of Act. Suburban lative See South (7th Chicago, City F2d 535, Inc. v. Lines, (1963). Cong, 1969); Rep 1st 88th Sess 82, Cir S No. Oregon requires alreády law concluded We have “going-concern” compensation in this case no for value statutory requirement has met. so been the federal interest issue August specific on case, 3, 1972, In the franchise performance City of the and was decreed favor against City Landport Rose and Tri-Met as vendees City required Landport It to vendors. Rose convey title to the assets involved transfer City designate upon proper or its cash tender of what determined to the fair value as of Decem the court be ber which sum found to 1, 1969, was $2,975,782.65, be up August “without interest of this decree,” date City 1972. Thus the and Tri-Met had 3, the use system transit from December take-over August payment purchase date, until without 3,1972, price, interest or rent. (cid:176)
City proper and Tri-Met contend that it was provision allow no interest because was made payment agree of interest under the take-over system that the ment; bus and that since obsolete; (cid:176) By agreement possession, operating of all the assets system City local transit was transferred to the from Rose Landport Thereafter, as of December 1969. effective De 1, 1969, possession cember transferred to Tri-Met. paying assist in interest,
federal aid is not available impact on defendants would severe. Defendants be plaintiffs cite such as received, other benefits avoid longer being possibility ance of a bus no strike, system required to run a bus risk of such face the operation, plaintiffs urge an that none of but the bene appear any way fits to be in with commensurate nearly equipment rental of of traction $3,000,000worth money. – or interest on such amount *24 It is there no was contract between the true parties expressly covering impliedly com- interest, pensation period or rental for the after the transfer possession. of Both the franchise and the take-over agreement subject. are silent on that equitable principle
It is a well-settled
that a
purchaser
possession
property
pay
in
of
must
com
pensation or rental
in the form of interest on the
purchase money
money
paid,
until the
is
absent
express agreement
contrary. Bembridge
to the
v.
(1963),
Miller,
peculiar vendor the relation between character of fiduciary reciprocal type rela purchaser. and tionship A purchaser agreement. created acquires equitable land and in the an interest purchase unpaid equitable in the vendor an price. interest contrary, any stipulation to the Absent purchaser profits terest possession right possession rents and or the has right to in land and the vendor a price. unpaid purchase fruits of
on mutually exclusive are the interest right part upon of either no to have —there is McGlinchy, Sayre v. 360; both. Hoehler v. 20 Or Mohney, Howard, P 197; 30 Or Burkhart v. omitted]. [Additional citations Or *25 very early recognized principle
“This court the McGlinchy, finding pur- supra. in Hoehler In v. the price, unpaid purchase chaser liable for the the court said: “ presents plaintiff ‘The record the case of as a possession his
vendor who has delivered the of at the property purchaser the defendant as original time, or near when the contract thereto, was has continued to made, which defendant the enjoy without molestation ever since. Nor is only this all: he has profits, received the rents and purchase money. but has also held the equity keep is not that he should nor both, It according ordinary to the course of business may ex- labor he have transactions. Whatever pended property for his on the own benefit inequi- and it sounds value; to increase its enjoy plaintiff’s prop- should table he the that erty during nothing. all this time for think We having equitable, in the it is more after been enjoyment receiving'its of rents and estate, the profits, pay in- defendant should the that the ” at terest.’ 235 Or 408-09. weight authority up of summed The court follows: * “* * gross inequity, of In the absence some weight judicial predominant it seems to be the
n opinion
jurisdiction
equitable
in
that to
of
courts
purchaser
enjoyment
pos-
accord
beneficial
liability
session without
for interest on the detained
purchase money
inequitable.”
II. THE PENSION CASE Factual background
Although predecessor Transit and Bose its companies operated bargaining agree under collective many years, ments with its workers for over 25 provision agreement first for an such 1946. † Prior to appeared pensions all date were † agreements regarding pensions All with which we are con noncontributory. cerned herein are what are denominated employer “Where the alone all makes contributions to the plan paying agreed employee wages in addition to his * * *” salary, plan ‘noncontributory.’ Patterson, is called
Legal Expectations (1960). Protection of Private Pension
401 strictly con- and were board directors voted frequency. 15 Section as to amount trolled provided: contract 1946 years of with the
“Any employee service with 20 employed actively on March Company, who was if still (or thereof, months three 1946 within 31, employee) and payroll active as an carried on the Regu- Security retires under Social who thereafter Company retirement from the shall receive lations, provision pay per to be this month, $20.00 qualifies Company under effect until permanent retirement Retirement Act or a Railroad plan adopted.” appeared substantially provision
A identical commencing April one-year 1947. The 1, contract different somewhat contained contract, however, language: years twenty (20) Any employe
“Par. 16. with actively Company em- who service with (3) ployed (or within three on March payroll as on the months if still carried thereof, employe) retires an and who thereafter active Security regulations from under shall receive Social per Company pay retirement $40.00 granted pay This retirement will not be month. employes Railroad Retirement receive those who benefits.” commencing April
The annual contract again contained different clause: a somewhat Any years employe
“Par. 16. of service with 20 Company, actively employed with the on who was (or if thereof, March months 31, within three payroll employe), still carried on the as an active Security thereafter under who retires Social regulations, or Railroad Retirement whose annuity Security total Rail- under Social and/or eighty ($80.00) road than Retirement is less dollars per Company month, shall receive from retire- pay produce total retirement
ment sufficient to *27 Security, annuity Railroad Retirement from Social eighty ($80.00) per Company dollars of agreed that no back month. It is understood and pay any any ex-employe employe to or for shall accrue prior April period 1949.” 1, agreement April The of contained 1, 1950, provided except identical clause that the dollar amount right employe prior accrued to $100, no April of and 1952 were 1950. contracts 1, respects of 1950. identical in all with the contract agreement April again altered the 1, 1953, provisions: retirement (a) Any employe years
“Par. 13. with 20 Company actively em- service with who was ployed (or on months March within three payroll if carried on the as an thereof, still active employe), and thereafter who retires under Social Security regulations, Railroad Retirement and/or supplemental pay retirement from the shall receive Company Sixty ($60.00) in the Dollars amount per apply employes This month. shall in all operations Company except of the the Interurban System. “(b) employes In the of retired from case System Company’s Interurban contribution produce shall be in an that will amount a combined per' including retirement benefit of month, $140.00 Railroad benefits. Retirement
“(c) payments shall be due all retired These persons receiving pay, now retirement effective provided beginning the above with the amounts, April, persons subsequently month of and to retiring Security under Railroad Social or Retire- regulations. ment “(d) agreed It is understood and that no back pay any employe ex-employe shall accrue to any period prior April 1953.” provisions essentially unchanged remained These through only change 1965. The occurred substance agreement employe the 1954 in which was re- quired years to have 20 or more of continuous service company. requirement continuity with the This appeared subsequent in all contracts. operated
In 1956 Portland had which Traction, city split both the interurban and into lines, two wholly divisions: Rose Transit Co. a owned sub- sidiary of Portland Traction and Portland Transit operation city commenced lines division, while operation Portland Traction continued of the inter- employes city urban division. After all in the negotiated solely lines division their contracts with *28 City employes working Rose Transit Co., while those in the interurban division received benefits under the Railroad Retirement Act. The interurban contract with Portland Traction made no reference retirement benefits. All labor contracts after 1956 with Rose the City to, Transit Co. no contained reference Railroad Retirement. provided
The 1965 contract that all union em- ployes retiring on or after November 1, 1965, would per receive month in $65 retirement benefits. The 1968 provided contract retiring for two raises: Those before per November 1, 1965, received a 5 cent raise effective November 1,1968, another raise in the same dollar May amount on 1, 1969. These two increases also applied employes retiring to those 1, after November agreement, receiving 1965, who, under the 1965 were per Finally, agreement $65 month. provided the of 1968 employes retiring that on or after November 1, 1968, per would receive pay. month $150 in retirement provided 1968 contract also the that union and the investigate pension plan company funded would which discussed at next contract would the labor be negotiations. The contract standard contained provisions changes agreement providing no operate for continuous would to reduce the service employes amount received retired as March 31, pay any and that back would accrue to em- 1954, no ploye ex-employe any period prior April for or 1, 1953. agreements bargaining
All of collective between Companies provided, the union and the form one another, if franchise of the agreement terminated, would also terminate operation by company. of the of cessation date terminated the franchise in litigation liability for over retirement benefits was commenced on October 1969. The took 22, over possession system agree- under the take-over ment on December 1969. On 1, Tri-Met date, same Amalgamated and Division Transit entered Union agreement into a memorandum in which Tri-Met adopted working all the terms and conditions of wage agreement previously by entered into City. agreement union provided with Nose This hourly wage, some increases in but did not make changes agreement in retirement benefits. This ran through from December In June 1971. *29 October union and Tri-Met entered into agreement, July another to retroactive 1, 1971, categories which pay various pro- of retirement were Paragraph vided. agreement 4 of Section 9 of that provided: declaratory judgment “A pending suit is in the * * * County
Multnomah Circuit Court to deter- City Employees rights Betired, Bose mine City City Employees Em- Bose Qualified, Bose City employees ployees former Bose and other Wage Agreement, Working and covered liability City against Co., Transit Bose and Landport and Transit Co., Portland Co., Inc., disability pay retirement and Charles Bowen for C. agree- provisions of this other and for benefits. rights prejudice position to or are ment without declaratory judgment any party and of are not a waiver or modification of to the suit
any rights therein asserted.” August
On trial entered a court holding City decree in the retirement case, that Bose Landport jointly severally and and were liable and continuing duty monthly pay- pension had a to make employes, ments all retired union to to all retired non- employes, union and to all those union and non-union employes eligible who were to retire as of the date City. City Landport of the take-over Bose and duty, pro were found not have to rata otherwise, or provide pension payments employes, to those union eligible and non-union, who were not to retire as of the City take-over date. Tri-Met and the were found to be jointly severally and continuing liable and have a duty provide pension disability and benefits all employes eligible those who were not to retire on No- vember 30, 1969. The City court found also Bose Landport right had no of contribution from Tri- or payments Met toas made or be employes, to made to their former Bose Landport duty did not have a to fund, ac- provide or celerate, payment otherwise in advance for any pension disability benefit under they which parties were held appeal liable. Both from portions various of this decree.
406 Transit Act
Urban Mass 1964 of Companies Mass insist that Urban obliga expressly provides that all Transit Act of 1964 eligible pensions, to and tions for retire retired, for by eligible be those not must assumed retire, to statutory provision upon is 49 and Tri-Met. The relied (c) (1970): §USC 1609 any of under shall condition assistance
“It be a equitable that and section 1602 of this title fair arrangements as determined made, are Secretary protect of em- the interests Labor, of to protective ployees affected such assistance. Such arrangements being limited include, shall without necessary may (1) provisions for be such to, (in- preservation rights, privileges, of and benefits benefits) cluding pension rights and continuation of bargaining agreements existing or under collective (2) collective bar- otherwise; continuation of the (3) rights; gaining ployees against worsening protection em- of individual positions of with their employment; (4) respect employment of assurances to their employees acquired of mass trans- to portation systems reemployment priority employees (5) paid laid terminated or off; arrange- training retraining programs. Such protecting provisions individual ments shall include worsening employees against positions their respect employment in no with to their which shall provide those benefits less than established event * * * pursuant for this title. The contract specify granting any such assistance shall arrange- protective terms and conditions (Emphasis supplied.) ments.” history legislative support cases and The relevant strictly the conclusion matters are that Secretary of decide, that, event, Labor statutory provision intended be worker- protective, company-protective. v. See Kendler 1968); Rep (3d No. 82, Cir S F2d Wirtz, Cong supra News 2583-85 Ad & at US Code 28; (1964). not intended the Act was conclude We any pension liabilities relieve the they might incurred. have
Oregon and statutes Constitution applicable provisions The A. upon Companies place reliance considerable upon Oregon provision statu
a and of the Constitution tory they argue provisions to shift serve which pension obligations and to the question provision in is Tri-Met. constitutional § 13 of Art XI: ‡
“Notwithstanding provisions 20, of section 2 and section Article and sections I, 10, VI, Article any city, Article when 9, XI, Constitution, of this county, political public agency or mu- subdivision, nicipal corporation responsibility for assumes operation system, public transportation of a city, county, political public agency or subdivision, municipal corporation equitable make fair and shall arrangements protect employes interests of protective employes and retired affected. Such arrangements may being without limited include, provisions may necessary to, such for the be preservation (in- rights, privileges and benefits cluding rights pay- pension continuation of bargain- benefits) existing ment of under collective ing agreements, or otherwise.” provisions: ORS 267.235 has similar operating public acquires “When an the district equi- transportation system, table fair and it shall make arrangements protect the interests of em- ‡ through 1965, adopted by people No Created HJR vember 1966. system.
ployes employes of Such and retired protective arrangements shall not hut include, shall be limited to: “(1) rights, privileges and Preservation rights including continuation of
benefits, existing payment under collective benefits, bargaining agreements, otherwise; bargaining
“(2) of collective Continuation rights; against
“(3) employes Protection of individual worsening respect positions their of their with employment; and “(4) persons employment em- Assurance system acquired
ployed by transportation mass persons previously priority reemployment to employed.”
ORS 237.015states:
“Notwithstanding provisions of law to the other contrary, partici- public employer when who pating Employes’ System in the Public Retirement operation responsibility of a assumes public system transportation Ar- section under *32 Oregon employer ticle of the XI, Constitution, that may membership Em- from in Public exclude the ployes’ System any employes, Retirement all employes, public transportation class of of the system.”
While there we find that inconsistencies, are the legislative history provisions, taken as whole, of these city they indicates were enacted to enable Portland to receive funds under Mass Tran- Urban sit and were intended to Act relieve the any pension obligations. from B. history Legislative 1. Constitutional amendment
The constitutional amendment was introduced in original ver- 13. 1965 as House Joint Resolution worded iden- subsections, sion of 13 contained five HJR (1) through tically (c), § to 49 subsections USC 1609 (5), the resolution set out above. Amendments to except deleted all of the five subsection subsections concerning (1). Testimony the reso- and statements legislature lution in both houses of the indicate that primary purpose permit the amendment was city of Portland funds to receive under the Urban Judiciary Mass Transit Act. Minutes, See House Com- mittee, 19,1965 March at State 2; Minutes, Senate April Tapes, Federal Affairs at Committee, 20,1965 6; April Oregon floor HJR H debate, State R, 8,1965, testimony concerning Archives. there is While some possible assumption Companies’ pension of the obli- gations by City, find that these statements we are merely primary qualifica- purpose incidental tion for federal funds. There was no intent to state that pension obligations must take over the Companies; reading a more consistent of the amend- may ment is that the Tri-Met take over these pension obligations necessary. if
2. ORS 267.235 language appears ORS 267.235 originally introduced form of House Bill ultimate ly Oregon enacted Laws ch 643.As introduced, portion referring rights of HB 1808 had wording (e), § the identical as 49 USC 1609 subsections (1) through (4), (5) set out above; subsection had change been deleted. There was no in this section of testimony bill as introduced and no or floor dis inquiry cussion way. that aids the court’s We *33 conjunction conclude this statute, with the con only stitutional was intended amendment, to enable under the city funds federal Portland receive Act. Mass Transit Urban
3. ORS 237.015 originated 1438, Bill from House
This statute testimony Oregon ch 54. Laws enacted as some witnesses with inconsistencies on this bill exhibits obligated city indicating of Portland would be that the Companies. obligations any pension of the to take over purpose of statu this that the basic find However, we tory provision Act, Transit Mass relates to Urban House Minutes, witnesses. as indicated several See Minutes, Affairs, 4, 1969; March Committee on Urban Committee, March and Industries Senate Labor purpose statute was 1. evident at existing bring provisions and the the constitutional harmony Employes’ provisions Retirement into Public required that take over should it be pension obligations Companies; otherwise, of the jeopardized. Urban Mass funds would Transit be § find no Art XI sum, In we intent Oregon 267.235or 237.015to trans- Constitution, ORS obligations any pension Companies from the to the fer City. agreements look themselves to We must continuing obligation pay pensions. find who has eligible-to-retire employes Retired and union Vesting A.
The trial court found that under the collective bar- gaining agreements with entered into the unions the continuing pension liability had a to those employes eligible union who had retired who were to retire. *34 pensions of that demonstrates record
The during paid employes funded but were not retired were operating year Com- revenues. each current out of funding panies argue of evidenced that this lack recognition con- to no future was be was a that there vesting pension liability tinuing of and thus no must not and “funded” benefits. The terms “vested” be confused: ‘vesting’ may term be used in a broad
“The of circumstances indicate combination sense to plan, gives terms of a covered em- which, the nonforfeitable ployee right payable to benefits a all to him or to his from contributions attributable ** *” Legal service. Protection Pri- Patterson, Expectations (1960). vate Pension plan pursuant “A ‘funded’ one is to which con- (and past) regu- tributions for current service are larly (trustee person transferred to a third insurer) who is to fund as source accumulate a a payment employee to each at and after his retire- plan ment. An ployer one unfunded is the em- which any segregated does not set aside for assets payment though of retirement income, even it may adopt bookkeeping a device to indicate its surplus purpose.” accumulation for that Patter- supra son, at 15. question vesting apart must be considered from any provisions made to fund their obligations.
McHorse v. Portland
Electric,
General
268 Or (1974),
Supreme
“* * * [I]n employee where the situation precedent becoming has satisfied conditions all eligible plan, under benefits a rea- the better right employee soned a vested view is that the has * * *” 331. the benefits. 268 Or Vallejo Similarly, Rico, Porto v. American R. Co. of (1st 1951), 188 F2d wherein the collective bar Cir gaining agreement obligated company to maintain system pension, a retirement the court stated: with
“* * # only it consistent to hold the obli- gation age obliged merely employee through qualifies runs each who company
and service and system maintain and no ** * more. give meaning obligatory pension sys- “To to this *35 appellants qualified tem, the must be considered pensions satisfying upon require- entitled to age [Citations omitted.]” ments as and service. 188 F2d at 516. (1955); 42 Annotation, 461,
See ALR2d 475 Patterson, supra at 60. employes meeting
We find that those union required age and service conditions for retirement do right pensions. question have a vested to their The next by Companies, right, raised however, is whether this beyond vested or otherwise, extends the term of the agreement. bargaining Continuity
B. of benefits Companies earnestly contend retire provided by ment benefits the contract do not extend past the termination date of said contract. We conclude that in eligible- case this the benefits to the retired and employes beyond to-retire do, in extend fact, the final sup date of the contract. This we is conclusion, believe, ported by the terms of the contracts themselves, case law, relevant various items extrinsic evidence.
413 1. Terms contracts speak repeatedly in terms The contracts themselves pay. · interpretation one
of “retirement”
normal
pay
give
provision
is that the
will con
would
snch a
during
involved.
tinue
the retirement
individual
example,
Corp. Quill,
For
York
v.
in New
Omnibus
(1947),
189 Misc
“* * * [A] commitment ‘for the lives of the * * * employees’ pensioned is normal and ordi- nary meaning pension plan employees, mistakenly specified. unless some other intent [*] # #
“The conclusion at I which have arrived is prevalent public conception also in accord with the * * *” contemplated by system. pension of what is Likewise, Broadhurst v. Fall River, Mass (1932), NE 169, 179 the court stated: “* * * [and] A amount, is definite in * * during pensioner lasts the life of the Finally, supra Patterson, at 3 notes: pension plan provides pay-
“A is one that for the employees money period- ment retired of sums of *36 ically throughout employee.” life of the the Reg (b) (1) (i) § (1972). also, See Treas 1.401-1 Companies they cite various cases which con- support position tend pension rights the that cannot beyond extend the term of the contract. See Local · At oral argument, counsel for the stated in response question legal to a that he felt there was no difference pension plan plan. between a and a retirement We will use the interchangeably. two terms Lab Co., Electric 28 CCH
UAW, v. Federal CIO Pacific (D 1955); ¶ v. Hauser 69,274 Cas Conn 89, 187-188, (D Supp Company, 299 F Kirk Farwell, & Ozmun, 1969). there discussion of vested However, Minn was no pension rights the in Local in Hauser court 586 and rights contract con vested under the would found that closing past company. of a tinue the business Publishing Co., v. Press 20 NJ 537, 120 Owens by discharged (1956), A2d 442 suit which involved employes against employer pay an to recover severance allegedly bargaining expired due under an collective agreement, correctly sets forth status of vested pension rights. pay held The court severance compensation agree form of and thus survived the ment: right pay only course, “Of can to such ‘arise’
during providing, so subsistence of the contract right and not after its once but thus termination; being comes into will it survive termination * * agreement. *”20 NJ at 548. Brooklyn Eagle, (1959). See also, Lab Inc., 32 Arb 156 A similar U.A., result was reached in U., International Imp. Supp A. & A. Wkrs. v. Indus., Inc., 251F Defiance (ND 1966): 650, 653-54 Ohio generally recognized “It is axiom parties agreement contract law that to an re- are obligations upon completion lieved of their mutual fully applicable contract is not to collective bargaining agreements. For instance, severance pay, pay, pension rights may vacation survive bargaining agreement. employees the collective are compensation deemed to have earned deferred during term of the contract. As a result, the company’s obligation payment often extends well beyond the termination date.” rights In may sum, we conclude that once vested
415 bargaining collective his when employe by be the lost agreement expires. (cid:181) evidence Extrinsic
2. that evidence extrinsic introduced parties The controversy. n in of view this both points supported not would produced mass of evidence Reviewing the take However, particular we useful. be particularly (cid:181) away bargained certain Companies the union claim that The rights employes. if these note that in fact of the We of these bargained change rights away, no force or could be of the were principles, vested retirement contract Under established effect. pensioner’s rights may Chem consent. not altered without the be 383, Pittsburgh Glass, Ct L Ed US 92 S 30 ical v. Workers (1971). Moreover, of the contracts a close examination 2d 341 themselves workers rights changes any retired in the reflects that example, For the contract. were in accordance with the under the Railroad Retire referred to retirement contract plan plan under that would ment and indicated that retirement temporary pension system. This the does diminish alter vested alternative rights provides workers, pension these but rather for arrangements. pension bargaining Companies demands further contend that the payment pension referred to of the unions in which following pen- employe death, and, the the his reduced life of payments wife, an that these were not sion to his are admission agree proposed change that the for life. We do not affects continuity provides pension; rather, it alternatives coverage. U., U.A., In International A. A. I. v. additional & W. (6th Co., 1973), Am. Brass 475 F2d 682 Cir Anaconda held that an effort language court disputed a union to effect a clarification of position meaning as not a waiver of its to the language the the present dispute. in record in the case indicates that increasing company union, since had faced resistance to pensions Any sug- were, fact, in idea these for life. gested change by 1968, apart sought from the additional benefits attempt union, clarify pension be should seen an rights, not as an admission that the was not for life. n be made of contention Mention should dealings prior all between union Portland Traction City are to the take-over Rose Transit immaterial. We agree. amply Traction, do not The facts demonstrate that Portland Co., Landport wholly Transit are Rose all owned sub Furthermore, upon sidiaries of Portland Transit Co. the trans- note of Exhibit 16 which includes a Eose official’s forecast of that would have total pension payments *38 in be made for the by ten-year periods company the future; extending beyond these covered reports periods both and franchise the current labor contract term. these This that believed that suggests company the termination of the obligations did not with the expire working agreement.
Also of
is the
them
importance
way
parties
selves performed
under
As
agreement.
noted,
Portland Traction
in
supra,
into two divisions
split
1956:
City
took
Transit,
Eose
which
over the city lines,
and Portland
Traction, which continued
interurban
division. The
con
interurban
did not have a
employes
tract with Portland
after
Traction
1956 that provided
retirement
benefits.
Eose
continued
City
Yet
making
retired
of Portland
payments to the
employes
Traction
after
expiration
agreement.
the 1954-56
practical
often of
interpretation
dispositive
importance
the intent and
determining
purposes
obligation
incurred by the
N.L.R.B. v. Uni
parties.
Services,
versal
Inc.
Associates,
and
F2d
585
579,
(9th Cir 1972); see, 3 Corbin, Contracts 249-62,
§
City
fer o£ the
City,
assets from Portland Traction to Rose
Rose
operations
employes
took over all the
and
of Portland Traction.
City
employes
pay
Rose
notified the
it
that
would
them on the
paid by
same terms and
as
conditions
had been
Portland Traction
and the labor
thereafter
contracts
executed between Rose
and the union are
with
identical
the contracts executed before
except
1956,
employes
that all references
to interurban
were
Moreover,
stipulation
deleted.
that
introduced into evidence stated
receiving
employes
pension
benefits were former em-
ployes
acknowledged
City,
of Portland Traction or Rose
pension
disability payments
by
made
Rose
or Portland
monthly operating
Traction were
expenses,
treated as
and made
representations
other references to certain acts and
of Portland
dealings
Traction.
proper.
Consideration of all
since 1946 was
235 Or
Co.,
Oil
(1960).
v.
also, Perkins
Standard
See
(1963).
Non-union retire em retired held non-union
The trial court
ployes
eligible
employes
were
*39
or
retire
non-union
Companies
paid
entitled to
benefits to
the
be
on the
of an
unilateral contract. The
basis
enforceable
Companies
no
contract
assert that there was
unilateral
proved.
Companies
employer
that when an
concede
(1)
(2)
adopts
plan
pay
retirement benefits
a
to
employes
plan
(3)
the
their
know of the
continue
employment
they
eligible for benefits
until
become
plan,
under the
the
of modern
has been
trend
decisions
pay
to find a contract to
benefits either under what is
compensation theory
termed a deferred
or under a
theory.
Companies
the
unilateral contract
However,
plan
merely
that where there was
but
the
assert
no
payment of
retirement,
a sum at the time of
and where
showing
employes
is no
of
there
the
that
knew
“plan”
employment
and continued their
in reliance on
legal liability
“plan,”
part
is
there
no
on the
employer
pay
to
retirement benefits. The
present
then claim in
case that
was a failure
there
“eligible”
proof,
of
no
non-union retirees
i.e., that
employes
non-union
testified at the trial and
“* * * [t]here
not one item of evidence
was
remotely suggesting
of Portland Trac-
that officials
City
representation
tion or
to a
one
Rose
ever made even
single
employee
non-union
that
would be
he
paid
par-
a retirement benefit if were to follow a
he
ticular
of
Nor
course
action
the future.
was there
any
any
employee
evidence that
individual
knew or
plan
understood there
would
which
confer a
upon
comply
retirement benefit
him should he
with
employment.”
certain conditions
such
continued
point
of
and Tri-Met
to no evidence
non
or reliance n but
employes’ knowledge
argue
union
that:
* *
employer
[I]f an
follows
consistent
pattern
paying pensions
employees,
of
the em-
ployees’ right
payment
upon
vests
to such
com-
pliance with the
of
terms
the offer.”
propos
support
cite six
Tri-Met
eases in
of this
ition, n but in each of
cases
there was a
cited
showing
plan
perform
there
of
that
was a
or course
employes
plan.
ance and
that
knew of such
None
negative
requirement
of the cases cited
support
City’s
and Tri-Met’s contention there must
be evidence in
record that
there was in fact a
n
employe
promoted
One former non-union
who had been
high management
position
a
payment
testified
he
was aware
pensions
employes.
to retired non-union
There
no
knowledge prior
indication in the record
he
whether
obtained this
becoming
management
part
way
or that he in
relied
proceeding
thereon. At
the time
this
he was not a member of
employes
litigation.
class
non-union
involved in the
*40
n Thompson
Burr,
329,
(1971);
v.
260 Or
419 employe pension plan knew of concerned that the plan. generally applicable Patterson, in law stated supra at 12: “ pension plans’ all consensual includes ‘Private pay-
arrangements age old in for made advance of upon payee’s ments or other benefits conditional attaining payments age. an advanced It excludes e.g., pursuant plan advance, created in it made a gratuitous employer’s promise, made excludes an only pay an or after the time retirement, at employee a life. such more, for Without gratuitous undertakings held not to be have been legally con- enforceable because the absence of something bargained presently sideration, that is, * * *” employer. (Emphasis Pat- terson’s.) require
Most courts of, some manifestation acknowledgment at least a of, existence of such plan by employe. example, Molumby Shap For in v. leigh Company, (Mo hardware SW2d Ct App 1965), discussing non-contributory pension while plan, the court concluded: plans
“For such to become enforceable contracts required the courts have notification and knowl- edge part employee of the benefits on the employment consideration or continuance of * * *” upon plan. reliance Universal-Engel Paper Likewise, Parnas v. Box Company, (Mo 1960), App SW2d Ct the court pension paid found that a on a board of directors’ reso recognition past, lution in service with faithful was gratuity out consideration and was mere since there mutuality required no contract; the court some promissory action or forbearance in order to invoke against estoppel company. Accord, v. Perreault *41 420 (1946); Indian v. Plowman A2d 812
Hall, 94 NH 191, 49 Parsley 1937). (ED Supp 1 Ill See Refining 20 F Co., (Wyo Company, 291 P2d Wyoming 395 Automotive v. Roseburg Dist., Or Harryman Fire 1964). v. Cf., (1966). P2d 51 631, 420 employes payments non-union the the
Since all directors of by of board the of a resolution virtue were employe, by any testimony non-union was no and there upon or relied about he knew that evidence, or other the directors, payments of board such future judge theory adopted trial unilateral contract portion trial support. of the this reverse We without court’s decree. eligible employes to re and non-union
Union take-over date tire at the Companies had ruled that court below eligible employes obligation who were not to those no In McHorse v. of the take-over. retire date at the supra, that court found Electric, Portland General prece- employe all conditions has satisfied where the plan, becoming eligible a vested a he has under dent right court con- at 331. The benefits. 268 Or to the plan pension are tinued benefits under a “* * * having upon employee’s satis- paid eligibility requirements as conditions fied certain *” * * precedent payout. 334. at 268 Or to such Taylor Dep. Bd., Ret. 265 Or Mult. Sher. also, See v. (1973), court where the 510 P2d plan rising rights are under a noted necessary subject completion service. to Vallejo Rico, Porto v. American R. Co. Accord, (1955); supra ALR2d 461 516; Annotation, at Fifth (1963). Inc., 39 Lab Arb 1171 Lines, Avenue Coach that the agree Tri-Met apparently not vest itself does collective bargaining agreement service age require rights necessary before the terms met, that, spite ments are but they argue deferred compensation theory agreement, rata obligation to create should be applied pro benefits. n *42 contend that pension They pay aside a set certain amount theoretically employers the of and that this year by pay each reduced amount way n bargaining agreement Rights employes of under a collective agreement principles of are derived from that and the bilateral Legal Employee apply. Aaron, contracts See Status Benefit Rights (1961). under Private Plans 15 there is no Pension Where generally agreement, such bilateral theories courts ton to one of two support pension rights. vesting increasing theory, adopted by courts, The first an number of give obligations pension plans holds ing upon rise to contractual bind- pension plan employer. an embodies offer employer which the and pay pension enter into a unilateral contract to employe accepts by remaining continuously job on the rendering requisite period. apply- faithful service for the In ing theory great place weight this courts on the fact that employes general plan either in knew terms of the existence of a concerning or had detailed information it and continued their employment upon promise plan. in reliance of a theory theory The second is a variant the contract promised private pension plan holds that the benefits under are compensation. theory deferred is This derived from the fact that negotiations many wage negotiations. pensions specific points labor include in employer’s promise Consideration for the is daily employe. legal found in the work of the While the effects compensation of the unilateral contract and deferred theories of private pensions similar, they are the time when become enforce- theory able is Under different. the unilateral contract the em- ploye’s pension rights do not become enforceable until he has required age reached the the deferred and service set forth in the offer. Under compensation theory successfully he can assert his claim as soon as he has earned the amount contributed or set benefit, even, cases, aside for his in some where a bilateral con- tract has been formed. general For a approaches, Aaron, discussion of the various see supra; Note, Rights Pension Worker, Plans and The The Retired (1970); Reappraisal Note, 70 Colum L Rev 909 A the Private System, (1972). Pension L 57 Cornell Rev which, they have compensation represents in deferred they support of this contention In interest. a vested Supp 338 Seagrave Corporation, F277 cite Lucas v. 1967), the basis of (D on court, wherein the Minn employes of the compensation, found that the deferred eligible yet a resti- company had to retire not who were given tutionary remedy quantum for labor meruit of such compensation value the actual less than at plan. on the service, in reliance adopt Washington deferred which courts, theory situa compensation contract in non-bilateral in Lucas. from court different view take a tions, Mfg., Grays Jacoby example, & Harbor Chair For v. (1970), the court P2d 666 911, 920-21, 77 Wash2d concluded: plan may to declare a
“It seem unfair deny employee compensation is an who and then be compensation. But the of this fault fruits at compensation terms limited extent of this company [between and the in- of the contract surance many an held that cases have carrier], and *43 employee fall does not fault who who is not at but may requirements not recover contractual within the * * pension benefits. (1955). ALR2d 461 also, See 42 Annotation, com- the deferred Thus under seems that even it pensation theory, the em- held that courts have some ploye rights plan until he has satisfied has no under age requirements. and service question, for however, this need reach
We not Oregon definitively adopted deferred com has not pensation theory any Both Mc under circumstances. Taylor supra, and Electric, Horse v. Portland General suggest supra, Dep. that the Bd., Ret. v. Mult. Sher.
433 leaning Supreme con the unilateral Court is toward bargaining theory there collective tract where is no bargaining agreement agreement. Where a collective given it that has no indication exist, does the court provisions specific eligibility will not follow the employes agreement. themet that who have not Those rights age requirements in no vested and service have pro Companies pension not liable and are rata a pensions. n payment for the of these argument impossibility Commercial frustration pension that contend since plan only was non-funded and funds available pay it when the box, came out of the fare Companies’ and Tri-Met box the took over fare ability payments im was to make rendered possible. argument This is without merit. # *
“* impossibility [T]he doctrines of un- of risks of frustration involve the allocation expected of performance occurrences which make orig- duties burdensome than contractual more * * * inally contemplated. If the occurrence reasonably normally take foreseeable, courts position promisor the risk that the has assumed *” * * impossibility frustration. Calamari 1970). (hornbook § series Perillo, 316, Contracts 198 (1932), § 849, II Contracts Restatement, See adopted Savage 147, 249 Or Sons’, in v. Peter Kiewit (1968). H. also, P2d 437 P2d See (1958), Drayage in Service, Lab Arb 436 Krementz n employes not are covered non-union various bargaining agreement nin the theories discussed so collective vesting. regard pro apply supra, However, rata their situation with theory compensation adoption oí deferred even the a no them this case there to cover in since would suffice accepted testimony plan, of pension, knew of these workers exchange pay future or otherwise for a reduction *44 payment pensions. Companies’ upon relied employer’s inability pay which the financial was no payments defense to the claim union’s for back ad- mittedly pensions pay. due for and vacation repeatedly emphasized
In the case at bar, Companies in their brief, believed that the fran- subject chise was to termination at moment. This uncertainty present during every collective bar- gaining employes Companies session with the and the ample opportunity provision had agreement to write a into the obligations persons
that the to retired would only period extend for the term the contract or operation. Companies The statements made clearly support they in their brief the conclusion that assumed the risk that the franchise would be termina- ted.
Tri-Met-union contract contend that when Tri-Met en bargaining agreement tered into its first collective fully incorporated pro with the union, which all the prior bargaining agreement visions collective between Rose and the Tri-Met union, became pension liable thereunder for all benefits. bargaining agree-
The effect of the collective ment between Tri- Tri-Met the union was to make retiring employes Met liable for benefits of all agreement eligible prior under and not to retire to the date of the take-over. As above concluded, obligation (except secondary obligation there was no pointed out) part as hereinafter on the of Tri-Met to pay employes already those union who had retired or eligible entering were to retire- and the mere into the agreement bargaining incorporating collective the lan- guage bargaining agreement prior of a collective with
425 obligation City from shift the Rose cannot serve to City to Tri-Met. Rose by
Contribution Tri- Companies that The contend pensions liability for the Met must contribute to their eligible-to-retire workers. union due the retired and § 1: As defined in Am Contributions 6, 18 Jur2d principle is one of contribution “The or doctrine equality bearing burden. Contri- in a common by payment each made a bution has been defined as person, having by any persons, or of several liability, in the loss his share common interest or necessarily paid money one suffered or in the of the right parties The of the others. behalf * * # variously described contribution has also been equity the several as an when one of which arises discharges parties debt liable on a common (Footnotes obligation all.” omit- for the benefit of ted.) McReary, P2d also, 41,
See
v.
Or
Mansfield
(1972).
654,
For the doctrine contribution to by persons hav debt there must be a common however, liability only liability. City’s ing The common liability secondary guarantor, its and, thus, that of a Companies’. n In the ab is not common with that of the liability, of con such doctrine sence of common applicability. tribution has no monthly Amount benefits the dis fixed decree, trial in its court, The monthly liability puted disability retirement and being paid 1969. as of November amounts n See obligation (Primary infra, pp 428-30 discussion Tri-Met). City and monthly level of benefit contend employe at in effect
each former exceed that cannot and, event, time of retirement, his actual he became cannot exceed the in effect when amount eligible to retire. employes last work- were covered
ing agreement City and union ef- between Rose paid fective November The retirement benefits 1,1968. agreement under that are ones that control. should agreement Paragraph em- 12 of all those Under ployes would who retired before November per when receive month until November 1, $60 *46 pay per then the to month and would be increased $63 per May increased All those 1, to month on 1969. $66 retiring receive on after November 1965 would 1, or per time month until November at which $65 May the 1, 1969, benefit would increase to until $68.25 paid whereupon amount would increase to the $71.50 per employes retiring on or Novem- month. All after per receive retirement ber 1968 would month $150 pay. This and we was the trial court’s determination affirm it. by Companies raised
The other contentions the appeal in their are merit and need not be without discussed here. by
Cross-appeal
City
the
and Tri-Met
liability
the
Acceleration City trial
The
Tri-Met contend that the
City
Landport
by
requiring
court erred
not
Rose
requirement upon receipt
pension
fund the
to
system.
urge
They
monies from the take-over of the
that the amount due be accelerated. Acceleration
a
remedy
anticipatory
an
used where there has been
re-
possibility
pudiation
future
of a
breach.
breach or a
past
Companies in
There has
no breach
been
suspect
in the future.
and no reason to
breach
obligations up
to the
allmet
their
agreement,
time
at which
time
the take-over
obligations
agreed
pending the out-
to undertake these
actively
Companies have
suit. While the
come
this
liability,
continuing
is no reason
there
contested their
obligation.
suspect they will meet such
and Tri-Met
cited
All
the cases
anticipatory
breach situations.
involve breach or
analogous
presented in this
the one
more
situation to
appears
Co.,
in Rishmiller v. Prudential Ins.
case
(1934),
company
Minn
wherein
348,
“* * * [I]n no such ab- there was this case unqualified repudiation solute contract regard required put rule in as is into effect the * * * might plain- anticipatory Nor breach. monthly present future tiff indemnity value of recover breach. what to call normal he chooses *47 * * * merely pay obligation Defendant’s was long money as certain dates certain sums of on disability. plaintiff a Such lived or suffered right give plaintiff to the situation does present payments. He must await value of future * * * money pay mere refusal the due dates. ‘A upon especially refusal based terms when due, although good mis- faith contract and justified takenly re- is not a it, believed to be * * [Citations pudiation *.’ contract omitted.]” 192 Minn at 353.
428 Company
Accord,
Trust
Insurance
v.
Benefit
Life
(Tex
App 1972);
Baker,
The facts of this case do not a breach, seeking company bnt rather indicate that the judicial obligations determination of its under the making (until payments contract while when due City take-over). acceleration circumstances, Under proper. n would not be
Primary obligation City and Tri-Met parties controversy on both sides of this apparently interpret the trial court’s order to mean City primarily that the and are Tri-Met liable with City Landport payment pensions Rose and for the employes to those union and non-union who are retired eligible City argues primary to retire. The that such liability improper City and that the and Tri-Met only secondarily Companies argue are while the liable, City primarily that since the and Tri-Met are liable they payment obliga must contribute of these pertinent parts, tions. In its the decree in the retire ment case states: jointly severally
“10. Tri-Met and are pension disability payments liable for to those * * * employees Landport former of Rose who have retired or are were disabled or who eligible for retirement as of November monthly amounts not less than the amounts such n ORS provides employer 659.320 if an has entered into a agreement bargaining providing pay collective benefit punishable by ments, imprison it shall be unlawful and fine and employer wilfully ment for such or with intent to defraud fail to payments. make such *48 paid being paid
employees be or entitled to were 1969. as of November right City Landport of have no and “11. Eose City pension City Tri-Met or as to from contribution payments Landport made Eose made or to be employees.” their former together Taking portion with the decree this of the appears opinion the case, it written the retirement City Tri-Met and the trial court did not intend that payments. primarily The reference be liable for these only liability, opinion, joint refers and several in our City liability inter It does the and Tri-Met se. liability City and in re not reflect the of the Tri-Met City. Landport opinion lation to and Eose judge clearly City trial indicates that Eose and Land- port primarily responsible payment for the of these are rejection retirement benefits. the-court’s Also, feel contribution indicates that it did not that City co-obligors City with Eose Tri-Met were Landport. in it seems clear that court Eather, City guarantors tended that Tri-Met and the be payment pension were benefits to those who eligible retired or to retire as of the date of the take City Landport This over. conclusion renders Eose primarily City secondarily liable and the and Tri-Met benefits. n pension liable for these In conclusion we affirm the decree in the fran- except portion denying chise case that of the decree Companies’ claim In interest, which we reverse. n We note that Oregon statutory pro constitutional and supra way require obligation visions discussed the visions for the continuation of the assumption no that the primary, only they pro and Tri-Met be but make existing pension plans. secondary liability by and Tri-Met would requirements. required by fulfill these Urban This is also all that is Transit Act of Mass 1964. por- except we affirm the decree case employes, allowing pension to non-union tion benefits which is reversed. *49 part part; in
Affirmed in modified and reversed entry with of a new decree consistent remanded for party. opinion. this to neither Costs dissenting part. concurring part, in in FORT, J., opinion was that there of the court concludes finding support and con- insufficient evidence to obligation respecting clusion of the trial court employes. companies pay pensions to non-union to major part the failure on This is based conclusion testify employe he knew of a that non-union to company plan pay pensions relied on it. While testimony agree claim, aided their would have I such finding supported me the trial court’s it seems to testimony only by in n also set forth but every employe by who further fact that non-union age employe while still an reached retirement by pension if he directors, awarded a the board length I standards. think met the of service otherwise inference for the trial court it was a reasonable fully employes were that the non-union conclude both every directors, the board of aware of such action they continuing employment, came to their and that long-continued practice rely upon well before practice This uniform termination of the franchise. years. This seems me to be had continued for employes, particularly the union as true where throughout period majority points work- were out, payment provided ing which for the under a contract pensions companies its members to those of qualified thereunder. who
Accordingly, in the case, I conclude affirmed the decree of the trial court should he employes. In all both the union and the non-union respects, opinion of the other I in the court. concur