United States District Court, Northern District of Illinois, E.D
November 14, 1972
JAMES BAAKE ET AL., PLAINTIFFS,
GENERAL AMERICAN TRANSPORTATION CORPORATION, A CORPORATION, DEFENDANT.
The opinion of the court was delivered by: Parsons, District Judge.
MEMORANDUM OPINION AND ORDER
This case is before me today for ruling on cross motions for
summary judgment by plaintiffs and defendant.
The facts of the case have been stipulated to by all parties
concerned and are, therefore, well documented.
The defendant, is a New York corporation, which maintained
a facility in Milwaukee, Wisconsin for the maintenance and
repair of railroad refrigerator cars until July 12, 1968
(hereinafter referred to as the "Milwaukee car repair shop").
Plaintiffs are former employees of the defendant at that shop
and were at all relevant times, members of Local Lodge No.
390, Brotherhood Railway Carmen of the United States and
Canada (hereinafter referred to as the "Union").
Plaintiffs were in a collective bargaining unit represented
by the Union and were covered by a collective bargaining
agreement dated June 13, 1967 between the defendant and the
On September 13, 1966, defendant and the Union entered into
a Pension Agreement which became effective November 1, 1966,
and which provided that it would remain in effect until
midnight, December 31, 1969 and thereafter from year to year
until written notice of termination was given by either party
not more than ninety days, nor less than sixty days prior to
December 31, 1969 or on or before any annual expiration date
During the period November 1, 1966 through July 1, 1968
plaintiffs retired under the said Pension Agreement and began
to receive monthly pensions. The benefits under the Pension
Agreement were provided by contributions made by the Company
to a trust fund held by the First National Bank of Chicago.
The amount of the contributions was determined by an actuarial
On April 29, 1968 defendant notified the Union that it was
considering curtailment of work at its Milwaukee car repair
shop and on June 7, 1968 its decision to do so was announced.
Defendant and the Union entered into negotiations concerning
the effect of curtailment of operations at the Milwaukee car
repair shop and held meetings pursuant to that end in May,
June, July, October and November of 1968. When the defendant
and the Union were unable to reach agreement on the subject of
pensions the dispute was referred to counsel for the defendant
and the Union.
The Union's position was that pensions should be paid to
employees who retired under the Pension Agreement for their
lifetime. The defendant's position was that it ought to be
required only to pay pensions from the trust until amounts
contributed by defendant during the term of the Pension
Agreement were exhausted.
On October 8, 1969 representatives of the defendant notified
the Union that defendant elected to terminate the Pension
Agreement as of December 31, 1969. On December 19, 1969 the
defendant and the Union entered into a written "Termination
Agreement" dated December 19, 1969. Plaintiffs were notified
on July 28, 1970 that amounts available in the trust fund
would be sufficient to provide monthly pensions only for a
portion of 1970. Plaintiffs received pensions in full for all
months up to and including August of 1970 and partial pensions
for the month of September of 1970. Since the latter date
plaintiffs have not received any further pension benefits.
Plaintiffs then brought an action under Section 301 et seq. of
the Labor Management Relations Act of 1947, as amended,
29 U.S.C. § 185 et seq., claiming that the defendant had breached
its Pension Agreement with the Union and asking for specific
performance of that Agreement. Thereafter, the cross motions
for summary judgment that are before the Court on this date
Plaintiffs allege two grounds for their right to summary
judgment. The first ground is that "The unambiguous terms of
the Pension Agreement, specifically vest in them an absolute
right to a lifetime pension once all the conditions have been
fulfilled." The second ground is that "The doctrine of
equitable estoppel prohibits the defendant from now denying
that plaintiffs are entitled to full pension."
Despite the compassion that I feel for the plaintiffs'
plight I find I must hold for the defendant for the reasons
It is obvious beyond any need for explanation that a
contract must be construed so as to give effect to all of its
provisions. Thus, all portions of the Pension Agreement must
be read in the light of all other provisions of that Agreement
and the Termination Agreement. It would be well at this time
elucidate those provisions of the Agreements that I have
considered in reaching my decision.
Article IV, Section 4.2 of the Pension Agreement Company
"The Company agrees to contribute to the
Pension Fund from time to time during the term of
this Pension Agreement amounts which shall be
sufficient in the aggregate (based upon estimates
prepared from time to time by an actuary selected
by the Company or life insurance company selected
by the Company) to provide the benefits set forth
in this Pension Agreement."
Article IV, Section 4.3 Limitation on Liability provides:
"Upon the establishment of a Pension Fund, all
benefits provided by this Pension Agreement shall
be paid solely out of that Pension Fund and
neither the Company nor any agent or
representative of the Company, by reason of this
Pension Agreement, or any other reason, shall be
liable, in any manner, for any such benefits."
By the above provisions the defendant's obligation is
limited to those amounts paid into the Pension Fund.
Defendant contributed to the fund beginning with the
effective date of the Pension Agreement and ending with its
termination on December 31, 1969. Defendant correctly contends
that its contributions were to be based upon estimates made by
an actuary of amounts necessary to provide for benefits set
forth in the Plan and that the amounts so contributed were
insufficient not because the estimates were faulty but because
the Pension Agreement terminated within a few years after its
adoption when defendant closed the Milwaukee car repair shop.
The Termination Agreement of December 19, 1969 provides in
Paragraph 4 Pension:
"It is understood and agreed that the `Pension
Agreement' should be terminated in accordance
with the provisions of Article VIII of said
Agreement on December 31, 1969 and that the
assets of the fund shall be allocated as of that
date in the manner and order of precedence set
forth in Article VII of the Agreement."
Article VII explicitly limits the right of the pensioners as
"In the event of termination of the pension
program embodied in this Pension Agreement, the
rights of all covered Employees and Pensioners to
benefits shall thereupon become vested to the
extent of the assets then remaining in the
Pension Fund, which shall, after providing for
the expenses of the pension program and of the
Pension Fund, be allocated for the purpose of
paying benefits * * * * *."
The order of preference follows beginning with providing for
the benefit of pensioners.
Therefore, the parties to the Pension Agreement agreed in
the Termination Agreement that the Pension Fund would be
distributed as the Pension Agreement provided.
It is evident that the provisions of Article VII of the
Pension Agreement read in conjunction with the Termination
Agreement lead to the conclusion that the parties to the
Pension Agreement realized that upon termination of the
Pension Agreement all assets in the Fund would be distributed
to the pensioners only to the extent that they were available
in the Fund.
Article VIII of the Pension Agreement Termination Section 8.1
"This Pension Agreement shall be effective as
of November 1, 1966 and shall remain in full
force and effect until midnight December 31, 1969
and thereafter shall remain in full force and
effect from year to year unless written notice of
termination of this Pension Agreement is given by
either party to the other not more than 90 nor
less than 60 days prior to December
31, 1969 or on or before any annual expiration
Such written termination was given by defendant on October
8, 1969 to become effective as of December 31, 1969.
Plaintiffs contend that Article III, Section 3.1 Period of
Payment delineates the period of payment.
"The first monthly benefit check shall be
payable for the months specified in Article II
for commencement of pensions. The last benefit
check shall be payable for the month in which the
Pensioner dies or resumes employment with the
Plaintiffs' contention would be correct if this provision
could be read in limbo unencumbered by the other quoted
provisions of both the Pension Agreement and the Termination
Agreement. That, of course, is an impossibility. When all of
the provisions are read as a whole the conclusion that must be
drawn is that the intentions of the parties to the Agreement
have been effected.
The above findings lead to the conclusion that the doctrine
of promissory estoppel may not be invoked. The Pension
Agreement was performed according to its terms.
The plaintiffs have alleged that "they have changed their
position to their irrevocable detriment in reliance upon the
prior acts and declarations of the defendant." Yet, there is
no evidence that plaintiffs' continued employment for the
defendant was induced by the promise of a pension or that
their continued employment was detrimental to them.
Defendant properly contends that plaintiffs "cannot object
that something which they had was taken away."
The Pension Agreement as it existed when read in light of
the entire contract was fully performed and came to an end by
its own terms.
Unfortunately those terms did not cover the pensioners for
their lifetime but rather for their lifetime as long as their
lifetime existed and was completed within the lifetime of the
It is, therefore, adjudged, ordered and decreed that summary
judgment be entered in favor of the defendant.
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