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Delathouwer v. Kewanee Boiler Corp.

OPINION FILED APRIL 8, 1981.

GEORGE DELATHOUWER, PLAINTIFF-APPELLANT,

v.

KEWANEE BOILER CORPORATION, DEFENDANT-APPELLEE.



APPEAL from the Circuit Court of Henry County; the Hon. DAVID J. MASON, Judge, presiding.

MR. PRESIDING JUSTICE SCOTT DELIVERED THE OPINION OF THE COURT:

This action was commenced in the Circuit Court of Henry County seeking a declaratory judgment. At issue were the plaintiff George DeLathouwer's rights under a collectively bargained retirement and disability pension plan administered by the defendant, Kewanee Boiler Corporation. After an adverse ruling in the circuit court, the plaintiff prosecuted this appeal.

Kewanee Boiler is a 112-year-old business engaged in the manufacture of boiler products at Kewanee, Illinois. In the early part of this century it was incorporated under the laws of the State of Illinois. In 1927 the then Kewanee Boiler Corporation was purchased by American Standard, Inc. American Standard dissolved the Illinois corporation and ran the boiler plant as a division of American Standard until March 2, 1970, when the plant was sold to certain investors who took title in the name of the rechartered Kewanee Boiler Corporation.

The plaintiff was first employed at the boiler plant on November 21, 1945, when the plant was operated by American Standard. Mr. DeLathouwer, who was born in 1919, worked for American Standard for 24 years 3 months, until the time that ownership of the boiler plant changed hands. He continued in the employ of the new owners, Kewanee Boiler, until December 1, 1975, at which time he was certified as totally and permanently disabled and entitled to receive disability benefits from his then current employer, Kewanee Boiler.

At the same time the plaintiff made application to his previous employer, American Standard, for early retirement benefits. At the time of the change in ownership of the boiler plant in 1970, certain of the employees, Mr. DeLathouwer being one such employee, had acquired irrevocably vested pension rights under the plan administered by American Standard. Those benefits became "frozen" on March 2, 1970, as the plaintiff and others ceased their employment with American Standard. The benefits payable under the American Standard pension plan could be paid at a reduced rate basis beginning with an "early retirement" date, or at a full-rate basis beginning with the "normal retirement date" upon reaching age 65. It is agreed that plaintiff's full rate monthly pension benefit as "frozen" on March 2, 1970, is $4.25 times the 24 1/4 years he was employed by American Standard. That equals a full pension of $103.06.

When the plaintiff applied for early retirement benefits under his American Standard pension, he was nine years away from his normal retirement date of November 1, 1984. Since the frozen pension benefits are paid over a longer period of time with the early retirement option, the full benefit is actuarially reduced in amount. As a result of this actuarial reduction, Mr. DeLathouwer became entitled to a monthly pension benefit from American Standard in the sum of $47.41.

The primary issue on this appeal is what effect the American Standard pension has on the plaintiff's right to disability pension under the employment agreement in force at the time he was certified disabled. On December 1, 1975, employees at the boiler plant were represented by Local No. 195 of the International Brotherhood of Boilermakers, Ironship Builders, Blacksmiths, Forgers and Helpers, AFL-CIO. The Local, as representative for the plaintiff, entered into an agreement effective March 1, 1974, which governs the disability pension benefits payable under the instant facts. The pertinent sections of that 52-page printed agreement are set forth below.

"15.01 The following retirement pensions as described in the booklet with the Kewanee Boiler Corporation are outlined as follows:

(f) Disability Benefit. An employee is entitled to a monthly disability income, payable during the continuance of his disability up to age 65 if:

(1) He is certified by the employer as being totally and permanently disabled, and

(2) He has completed ten (10) years continuous service including time with American Standard, Inc.

The amount of monthly benefit income will be equal to the employee's credited benefit without actuarial reduction. If the minimum is applicable the $60.00 monthly offset will not be made until Social Security becomes payable. Minimum monthly benefits will be $100.00. If the employee is still disabled at age 65, the normal retirement annuity is then payable."

As was testified at trial, the "booklet" to which the employment agreement refers is the Pension Plan, Summary Plan Description for Bargaining Employees of Kewanee Boiler Corporation. This summary booklet is distributed to covered employees pursuant to the requirements of the Employee Retirement Income Security Act (29 U.S.C. § 1001 et seq. (1976)). The booklet, like the employment agreement, is not a complete statement of the disability pension plan; the booklet includes this paragraph:

"Your rights and benefits under the Plan outlined in this booklet are subject to the terms of the Plan and to the Group Annuity Contract issued to Kewanee Boiler Corporation by Aetna Life Insurance Company, Hartford, Connecticut. A copy of the Contract and Plan is available in the Plan ...


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