Castle, Chief Judge, Cummings, Circuit Judge, and Holder, District Judge.
Plaintiff brought this diversity action against the New York Central Railroad Company to recover damages for an alleged breach of contract. Plaintiff began working for defendant on November 11, 1950, as a labor union member, and served defendant pursuant to collective bargaining agreements until 1957, when he was appointed to a non-agreement, managerial position. Thereafter, plaintiff served in non-union positions until his employment was terminated on December 31, 1965. Plaintiff had participated in various merger studies since 1961, and claims that due to uncertainty created by possible mergers, he had been looking for other employment.
On April 5, 1965, while plaintiff was stationed in Chicago, the president of New York Central, A. E. Perlman, sent a letter and "Personnel Policy" statement "to New York Central Non-Agreement Supervisors, Managers and Officers." The letter stated the imminency of New York Central's merger with Pennsylvania Railroad due to the Interstate Commerce Commission trial examiner's approval of the merger, and the company's objective of keeping all managerial personnel. The Personnel Policy stated in pertinent part:
"In keeping with the treatment accorded employees subject to agreements with unions, it will be the policy to avoid adverse effect on all non-agreement personnel. * * *
"Accordingly, these policies will apply to supervisors, managers, other officers, and other employees (except temporary personnel) not subject to agreements with unions. They will apply to all changes affecting these persons that occur as the result of the merger or in anticipation of the merger. Special provision will be made for handling those exceptional situations where inequity or undue personal or family hardship would otherwise result.
"I. SUPERVISORS, MANAGERS, and OFFICERS.
A. No supervisor, manager, or officer who is presently employed by one of the individual companies will be deprived of employment, or have his compensation reduced, or be excluded from fringe benefits as a result of the merger or in anticipation of the merger until he retires, resigns, dies, or is removed for cause. However, the company may offer any such person a position in either a different geographical location, a new field of endeavor, or both.
B. Ability and qualifications, including experience and familiarity with duties, will be the primary considerations in making assignments to positions.
C. Any such supervisor, manager, or officer required to relocate will be entitled to (1) living expenses for himself and family while traveling and securing a new home, (2) moving expenses for household goods, (3) reimbursement for costs and losses in the sale of a home or in cancellation of a lease and (4) a $500 allowance to cover other transfer expense.
D. Any such person under 60 years of age who is unwilling to relocate or take a position in a new field of endeavor will be granted a lump sum severance payment at the rate of position last held and based upon length of service as follows:"
The "Separation Payment" for plaintiff's length of service was twelve months' pay, or $13,020.
On May 27, 1965, plaintiff completed and signed defendant's standard Personal Data Sheet and indicated as ...