Salter v. Freight Sales Co.

357 N.W.2d 38, 1984 Iowa App. LEXIS 1697
CourtCourt of Appeals of Iowa
DecidedSeptember 6, 1984
Docket83-1067
StatusPublished
Cited by10 cases

This text of 357 N.W.2d 38 (Salter v. Freight Sales Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Iowa primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Salter v. Freight Sales Co., 357 N.W.2d 38, 1984 Iowa App. LEXIS 1697 (iowactapp 1984).

Opinions

HAYDEN, Judge.

Defendants appeal from a judgment for plaintiff for wages withheld, liquidated damages, and attorney fees in this action brought under Iowa Code chapter 91A (1981).

Plaintiff was employed as the manager of one of defendant Freight Sales Company’s furniture stores. Defendant Van Ars-del is the president and majority shareholder of the company. Plaintiff was paid on a commission basis, receiving a nine percent commission on sales he made and a three percent commission on sales made by his subordinates.

On January 11, 1981, the furniture store was burglarized. A bank bag containing $5,061.31 was taken from plaintiff’s locked desk drawer. Plaintiff testified that since he was unable to make a night bank deposit he would ordinarily have taken the money home, but that he did not do so on that occasion because he was not going directly home from work. Beginning on February 1, 1981, defendants reduced plaintiff’s commission rate by one percent. In August or September of the same year the commission rate was restored to the original nine percent. The total amount of compensation plaintiff lost was $5,166.54.

Plaintiff left defendants’ employ several months after his commission rate had been returned to normal. He subsequently filed this action under the Iowa Wage Payment Collection Law for the amount withheld from his salary. The district court found in favor of plaintiff, awarding $5,166.54 for withheld wages, $5,166.54 liquidated damages, and attorney fees of $1,293.75.

On appeal defendants assert: (1) the trial court erred in applying chapter 91A to a situation where an employee’s compensation rate was modified; (2) plaintiff waived his right to complain of the wage reduction by continuing to work for defendants; (3) the trial court should have granted defendants’ motion to reopen the trial for the purpose of offering an exhibit which had been inadvertently omitted at trial; (4) the trial court erred in not allowing defendants to assert a counterclaim; and (5) judgment [41]*41should not have been entered against Van Arsdel individually for actions taken as a corporate officer. Plaintiff has requested attorney fees on appeal.

Our review of this action at law is on assigned error. Iowa R.App.P. 4. The trial court’s findings of fact have the effect of a special verdict and are binding upon us if supported by substantial evidence. Iowa R.App.P. 14(f)(1). The record is reviewed in the light most favorable to the judgment; ambiguities are construed to uphold rather than defeat the judgment. Moody v. Bogue, 310 N.W.2d 655, 658 (Iowa Ct. App.1981).

1. Applicability of Iowa Code Chapter 91A. Iowa Code section 91A.5 provides in part:

2. The following shall not be deducted from an employee’s wages:
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c. Losses due to breakage, lost or stolen property, unless such tools and equipment are specifically assigned to and their receipt acknowledged in writing by the employee from whom the deduction is made, damage to property, default of customer credit, or nonpayment for goods or services rendered so long as such losses are not attributable to the employee’s willful or intentional disregard of the employer’s interests.

“Wages” is defined in section 91A.2(4) as “compensation owed by an employer.” Defendants argue that plaintiff was an employee at will whose employment contract could be modified at any time. They assert that the reduction of plaintiff’s commission was a valid modification of his contract which he chose to accept by continuing in defendants’ employ. Therefore, there was no deduction of compensation owed to plaintiff; all of the compensation to which plaintiff was entitled pursuant to the terms of the modified contract was paid to him.

There is authority to support the proposition that an employment contract terminable at will is subject to modification by either party, and that an employee's decision to continue to work, knowing the new terms, results in the employee’s acceptance of the modification as a matter of law. Janda v. Iowa Industrial Hydraulics, Inc., 326 N.W.2d 339, 341 (Iowa 1982); Moody v. Bogue, 310 N.W.2d 655, 660-61 (Iowa Ct.App.1981). However, the facts of this case show that there was in fact no good faith modification of the employment contract. The asserted “modification” reducing plaintiff’s commission and the later “modification” restoring the original commission was clearly an attempt to circumvent the plain language of the statute.

Defendants argue that their actions were not prompted by the burglary. They claim the reduction in plaintiff’s compensation was due to a reduction in his duties and the necessity of hiring a bookkeeper at plaintiff’s store. At trial the evidence showed that bookkeepers were hired and were paid approximately $3,000. There is substantial support, however, for the trial court’s finding that the reduction of plaintiff’s salary was directly related to the burglary. Most revealing of defendants’ intentions is plaintiff’s exhibit 2, a printed ledger sheet prepared by defendants’ secretary and sent to plaintiff to show the weekly deductions from his wages. Exhibit 2 begins “cash short—$5,061.31.” On the second page of the exhibit the final figure in parenthesis is $105.23, the exact amount by which the deductions exceeded the amount of money stolen from the store.

We in no way imply that employers and employees cannot modify the terms of employment contracts. But when the alleged modification is so obviously an attempt to do what is prohibited by statute, we will disregard the name given to the transaction and look at its substance. Defendants’ actions in this case were nothing more than an attempt to deduct the burglary loss from plaintiff’s wages in contravention of Iowa Code section 91A.5(2)(c).

There is substantial evidence to support the trial court’s findings that there was no evidence of any written authorization from plaintiff for the deduction, see Iowa Code section 91A.5(l)(b), and that [42]*42there was no evidence of plaintiffs willful or intentional disregard of defendants’ interests. See Iowa Code section 91A.5(2)(c).

Therefore, we agree with the trial court’s conclusion that chapter 91A of the Code is applicable to this case.

II. Waiver and Estoppel. Defendants assert that plaintiff assented to the deductions from his wages by continuing his employment. They argue that he either waived the right to later complain about the deductions or is estopped from doing so. We do not agree with this contention.

In Davenport Osteopathic Hospital Association v. Hospital Service, Inc., 261 Iowa 247, 254-55, 154 N.W.2d 153, 158 (1967), the supreme court held that a hospital which elected to stand by a contract and seek recovery for its breach did not assent to modification of the contract and was not estopped to challenge its breach by failing to terminate the contract and continuing to accept payments under the formula in the proposed modification.

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Salter v. Freight Sales Co.
357 N.W.2d 38 (Court of Appeals of Iowa, 1984)

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Bluebook (online)
357 N.W.2d 38, 1984 Iowa App. LEXIS 1697, Counsel Stack Legal Research, https://law.counselstack.com/opinion/salter-v-freight-sales-co-iowactapp-1984.