Peterson v. California Shipbuilding Corp.

WILSON, J.

This action involves the construction of the terms of an employees’ profit sharing trust created by respondent California Shipbuilding Corporation, known as Calship Employees’ Benefit Fund. Appellant seeks to enforce his claim to benefits which he asserted under the declaration of trust and which were denied by respondents, the corporation and the trustees of the fund. Their demurrer to the amended complaint was sustained with leave to amend. Appellant refused to amend further. A judgment of dismissal followed, from which this appeal was taken.

Bespondent corporation established a trust under date of November 30, 1942, for the benefit of its executive, administrative or professional employees who were paid on a fixed salary basis and not an hourly rate with overtime and who were exempt from the coverage of the Federal Fair Labor Standards Act of 1938. (29 U.S.C.A. §§ 201-219.) The general provisions of the trust agreement material to this action are as follows:

1. Every employee not entitled to compensation for overtime would become a qualified participant in the fund upon completion of six months’ service.

2. An annual contribution to the fund would be made by the trustor on or before November 30th, of each year. This would amount to either 5 per cent of the net profits realized for the fiscal year ending each such November 30th, or 15 per cent of the basic compensation otherwise paid during such year to all members of the benefit fund, but not more than the latter. No contributions were made by the employees.

3. At the end of each payroll year the money paid into the trust would be apportioned to the account of each member

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employee on a percentage ratio established by dividing the base pay of the employee by the aggregate total base pay of all employees for the payroll year.

4. Payments from the fund to the members were to be made as follows: (a) Upon death while a member all amounts credited to the member’s account would be paid to his personal representative, (b) Upon becoming incapacitated for six consecutive months the entire account could be withdrawn, (c) Upon induction into the armed services of the United States the entire account could be withdrawn, (d) If a member ceased to be an employee less than one year after becoming a member of the fund he received 25 per cent of all amounts credited to his account at the time of the termination of his employment, (e) If a member ceased to be an employee more than one but less than three years after becoming a member of the fund he received 50 per cent, (f) If a member ceased to be an employee more than three but less than five years after becoming a member of the fund he received 75 per cent, (g) An employee who quit after five years’ employment was entitled to receive his entire account, (h) Member employees whose employment was terminated because of cessation or substantial curtailment of shipbuilding operatiofis would receive their entire accounts.