Woodward v. Cadillac Overall Supply Co.

240 N.W.2d 710, 396 Mich. 379, 1976 Mich. LEXIS 264

• Court: Michigan Supreme Court
• Decided: April 21, 1976
• Docket: 56015, (Calendar No. 4)
• Status: Published

Opinions

Lindemer, J.

This is a class action by employees and the widow of a deceased employee to recover pension benefits allegedly due pursuant to a plan adopted by Clean-Wear Service Company or Cadillac Overall Supply Co., its parent. All parties’ benefits were 100% vested but trustee National Bank of Detroit terminated pension rights at the direction of the Pension Trust Advisory Committee. The committee acted under the following provision of the retirement plan, entitled "Forfeiture of Benefits”:

"In the event that any participant shall enter the employment of any competitor of any Company without the written approval of such Company, or become associated in any manner with such a competitor in the opinion of the Advisory Committee, whose decision shall be final, before such participant has received the full amount in his segregated account or accounts to which he otherwise would be entitled, such participant shall lose all right to any balance in such account and the interest of such participant in any Trust shall at once cease and terminate and be allocated to other eligible employees covered by such Trust in accordance with the provisions of Section 3 below.”

When this clause was raised as a defense, plaintiffs moved for summary judgment as to liability pursuant to GCR 1963, 117.2(2). The trial court denied the motion but certified the question for interlocutory appeal. The Court of Appeals denied leave but this Court granted leave.

Appellants claim that the clause in question violates MCLA 445.761; MSA 28.61:

"All agreements and contracts by which any person, co-partnership or corporation promises or agrees not to engage in any avocation, employment, pursuit, trade, profession or business, whether reasonable or unreasonable, partial or general, limited or unlimited, are hereby declared to be against public policy and illegal and void.”

Appellees rely on Couch v Difco Lab, Inc, 44 Mich App 44; 205 NW2d 24 (1972). We agree that Couch controls.

The Legislature declared that promises or agreements not to engage in any employment were against public policy, illegal and void. This clause neither extracts nor embodies such a promise. Instead, it denies the right to further participation in the retirement plan if he does engage in such employment, an acknowledgment of his right to do so. While we recognize that employees may be deterred from engaging in competition by such an arrangement, we agree with Judge (now Justice) Levin’s interpretation of the Michigan statute in Couch:

"The Legislature has chosen to bar only agreements which prevent an employee from engaging in other employment. It has not barred any restraint upon seeking other employment. Nor has it, despite public discussion of forfeitures under private sector retirement plans, declared a public policy against enforcement of such clauses.”¹

See also Judge (now Justice) Fitzgerald’s opinion in Tobin v General Motors Corp, 17 Mich App 475; 169 NW2d 644 (1969). If a broader prohibition is to be imposed, it is up to the Legislature, not this Court.

Appellants’ other arguments are not properly presented for our consideration by this motion for summary judgment but depend upon facts which must be developed at trial. See Hubbard v Miller, 27 Mich 15; 15 Am Rep 153 (1873), and Reed v Kaydon Engineering Corp, 38 Mich App 353; 196 NW2d 487 (1972).

The trial court’s denial of summary judgment is affirmed. Remanded for further proceedings.

Coleman and Fitzgerald, JJ., concurred with Lindemer, J. Levin and Ryan, JJ., took no part in the decision of this case.

1 Couch, supra, at 48; 205 NW2d 26 (footnote omitted).