Latham v. Haney Seed Co.

807 P.2d 645, 119 Idaho 427, 29 Wage & Hour Cas. (BNA) 1444, 1990 Ida. App. LEXIS 88
CourtIdaho Court of Appeals
DecidedJune 1, 1990
DocketNo. 17512
StatusPublished

This text of 807 P.2d 645 (Latham v. Haney Seed Co.) is published on Counsel Stack Legal Research, covering Idaho Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Latham v. Haney Seed Co., 807 P.2d 645, 119 Idaho 427, 29 Wage & Hour Cas. (BNA) 1444, 1990 Ida. App. LEXIS 88 (Idaho Ct. App. 1990).

Opinion

PER CURIAM.

James Latham appeals from the summary judgment barring his claim to the benefits of two life insurance policies purchased for him by his former employer. The district court dismissed Latham’s suit because the two-year limitation period applicable to collection of wages had passed. I.C. § 45-608. We will address whether the insurance benefits sought by Latham are “wages” as defined by I.C. § 45-609(3) and whether the employment contracts fall under the statute of limitation provision of I.C. § 45-608. For the following reasons, we vacate the judgment and remand the case for further proceedings.

Summary judgment is proper when genuine issues of material fact are absent and the case can be decided as a matter of law. I.R.C.P. 56(c); Moss v. Mid-American Fire and Marine Ins. Co., 103 Idaho 298, 647 P.2d 754 (1982). We exercise free review over the legal question of whether life insurance falls under the “wages” definition of I.C. § 45-609(3). For the purposes of the summary judgment motion, we accept the district court’s statement of the facts to be as follows.

James Latham entered into employment contracts with Haney Seed Company (Haney Seed) in 1971 and in 1973. In each contract Haney Seed agreed to purchase a $50,000 ordinary life insurance policy naming Latham as the insured, “in consideration of the employee’s [Latham] continued employment with employer [Haney Seed].” The policies were to be paid in a number of different ways, depending upon the contingencies involved. Latham has alleged that, according to the contracts, if Haney Seed terminated his employment, he would have the option to continue the policies in force or to receive the cash surrender value. Latham alleges that Haney Seed breached this agreement after discharging him on August 8, 1983.

Latham filed this action to recover damages for the face amount of the two policies. The district court granted Haney Seed’s motion for summary judgment, dismissing Latham’s complaint with prejudice for failure to file within two years of the accrual of the cause of action. Latham appealed. Later, acting on Latham’s motion, the Supreme Court suspended the appeal and remanded the case so the district court could reconsider its decision in light of Whitlock v. Haney Seed Co., 114 Idaho 628, 759 P.2d 919 (Ct.App.1988). The result remained unchanged. Ultimately, Latham’s appeal was assigned to this Court.

Idaho Code § 45-609(3) defines “wages” as “compensation for labor or services rendered by an employee, whether the amount is determined on a time, task, piece or commission basis.” On remand the district court held that the insurance benefits claimed by Latham fell within this definition. We disagree. Whitlock, supra, specifically addresses this issue and holds that life insurance benefits are not synonymous with “wages.” Whitlock states:

We do not believe this language encompasses the cash value of a life insurance policy payable to an employee where, as here, the proceeds of the policy were to be paid to the employee at retirement or to his heirs upon his death. The policy is a fixed benefit of employment status. As such, it is compensatory in a generic sense; but it is not compensation earned in increments as services are performed. In this respect it is unlike wages. It is also unlike compensation paid in direct consideration of services rendered, in amounts over and above an employee’s regular “paychecks.”

114 Idaho at 634-35, 759 P.2d at 925-26. Whitlock involved a suit against Haney Seed for breach of an employment contract virtually identical to the employment contracts entered into between Latham and Haney Seed. Whitlock’s claim was based on a statute allowing treble damages for unpaid “wages.” On appeal, this Court upheld the judgment awarding Whitlock treble damages for vacation pay and reversed the treble damage award for the cash value of the life insurance policy.

[429]*429We have found no other cases from Idaho or other jurisdictions that have treated life insurance benefits as “wages.” See Southwest Architectural Prod. v. Smith, 4 Va.App. 474, 358 S.E.2d 745 (1987) (employer-paid fringe benefits, including insurance, retirement and profit sharing plans, are not part of the wage contract); In re Erie Lackawanna Ry. Co., 548 F.2d 621 (6th Cir.1977) (group life insurance coverage as administrative expense).

Haney Seed cites Johnson v. Allied Stores Corp., 106 Idaho 363, 679 P.2d 640 (1984) and Thomas v. Ballou-Latimer Drug Co., 92 Idaho 337, 442 P.2d 747 (1968) for the proposition that bargained for employment benefits fall under I.C. § 45-608. Johnson allowed severance pay and Thomas allowed an employee bonus based on the employer’s net profit to be applicable under the statute. However, bonuses and severance pay are unlike life insurance benefits because insurance is more like a gratuity. Cf. Owens v. Press Publishing Co., 20 N.J. 537, 120 A.2d 442 (1956) (severance pay is not a mere gratuity). Accordingly, we hold, pursuant to Whitlock, supra, the cash value of life insurance benefits does not fall under the definition of “wages” as set forth in I.C. § 45-609(3).

Next, Haney Seed argues that even if the life insurance policies are not “wages,” the two-year statute of limitation provided in I.C. § 45-608 still applies. This statute provides in part as follows:

Any person shall have the right to collect salary, wages, overtime compensation, penalties and liquidated damages provided by any law or pursuant to a contract of employment, but any action thereon shall be commenced in a court of competent jurisdiction within two (2) years after the cause of action shall have accrued____

Haney Seed contends that this is a special statute of limitation governing all claims — such as Latham’s — which arise from a “contract of employment.” Accordingly, Haney Seed argues, even though benefits of a life insurance policy have been held not to be “wages,” the term “liquidated damages” in this statute can and should be construed to include such benefits. On the other hand, Latham argues that because life insurance benefits are not specifically enumerated in I.C. § 45-608, the general statute of limitation, I.C. § 5-216, allowing an action on a written contract within five years, applies instead. Both arguments center around the effect of yet another statute, I.C. § 5-201:

Civil actions can only be commenced within the periods prescribed in this chapter after the cause of action shall have accrued, except when, in special cases, a different limitation is prescribed by statute.

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Related

Thomas v. Ballou-Latimer Drug Co.
442 P.2d 747 (Idaho Supreme Court, 1968)
Moss v. Mid-American Fire & Marine Insurance
647 P.2d 754 (Idaho Supreme Court, 1982)
Mix v. Gem Investors, Inc.
647 P.2d 811 (Idaho Court of Appeals, 1982)
James v. Buck
727 P.2d 1136 (Idaho Supreme Court, 1986)
Thiel v. TAURUS DRILLING LTD. 1980-II
710 P.2d 33 (Montana Supreme Court, 1985)
Whitlock v. Haney Seed Co.
759 P.2d 919 (Idaho Court of Appeals, 1988)
Southwest Architectural Products, Inc. v. Smith
358 S.E.2d 745 (Court of Appeals of Virginia, 1987)
Johnson v. Allied Stores Corp.
679 P.2d 640 (Idaho Supreme Court, 1984)
Safeco Insurance Co. of America v. Honeywell, Inc.
639 P.2d 996 (Alaska Supreme Court, 1981)
Owens v. Press Publishing Co.
120 A.2d 442 (Supreme Court of New Jersey, 1956)

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Bluebook (online)
807 P.2d 645, 119 Idaho 427, 29 Wage & Hour Cas. (BNA) 1444, 1990 Ida. App. LEXIS 88, Counsel Stack Legal Research, https://law.counselstack.com/opinion/latham-v-haney-seed-co-idahoctapp-1990.