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October 16, 1950


The opinion of the court was delivered by: CLARY

In this action David Bullock has claimed of Sterling Durg, Inc. severance pay allegedly due him as an employee of the defendant. It was tried to the Court without a jury. I shall relate the facts as I have found them in narrative form.


 Plaintiff, David Bullock, became an employee of Dr. D. Jayne and Son in the year 1919. Whether Dr. D. Jayne and Son was a partnership or a proprietorship trading under a fictitious name does not appear, In 1931 and in order to carry on the business during the settlement of the Jayne estate, the business was incorporated under the name of Dr. D. Jayne and Son, Inc. This corporation continued in existence and operated the business up to at least the 13th of January, 1947. It was dissolved by proper legal action in April of 1947.

 During the Fall of 1946, defendant Sterling negotiated for the purchase of all of the outstanding stock of the Jayne corporation. Plaintiff herein was head bookkeeper and auditor as well as a Director, Vice-President and Treasurer of the Jayne corporation. During the Fall of 1946, Mr. Hill, President of Sterling, together with the company attorney and Mr. Mulhearn, the Treasurer of the company, visited the Jayne offices in Philadelphia to discuss the stock purchase, particularly with Mr. McIntyre, the President of Jayne, and the majority stockholder. Plaintiff herein, David Bullock, and his wife owned approximately 10% of the outstanding capital stock. As part of the negotiations, plaintiff herein made direct inquiry as to what his status as a Jayne employee would be in the event Sterling acquired 100% stock ownership of Jayne. He was informed that no immediate changes were contemplated but that when any changes were made, all Jayne employees would become Sterling employees and entitled to the same seniority rights as if they had worked for Sterling the length of time they had worked for Jayne. At least one employee of Sterling was then installed in the Philadelphia office of the Jayne corporation to check the financial records and data which was under the supervision of the plaintiff herein, as head bookkeeper and auditor. The review of the records having been completed to the satisfaction of Sterling, the sale was successfully consummated. On the 13th of January of 1947 a meeting was held of the Officers and Directors of the Jayne corporation at which all tendered their resignations as part of the change of ownership and management. Thereafter, on the 17th day of January, certificates of Sterling corporation were issued to the stockholders of the Jayne corporation in exchange for their Jayne stock through the Philadelphia National Bank. Plaintiff herein and his wife exchanged their 10% holdings for Sterling stock having a value of $ 49,500. Thereafter and until February 17, 1947, plaintiff herein continued his duties as head bookkeeper and auditor. Mr. McIntyre was retained by Sterling as general manager of the Jayne operation. On the 17th day of February, 1947, plaintiff was taken ill with a heart condition and his condition was so serious that for several months thereafter he was confined to his bed. He was paid his regular salary, $ 600 per month, by checks of the Jayne corporation through March. Thereafter and through the month of September, 1947, he was paid his regular salary by checks of Sterling Drug, Inc., Jayne branch. It is well to note at this point that deductions were made in each instance for Income Withholding tax, Social Security and Old Age Benefits and the Philadelphia Wage Tax. On or about April 1, 1947, as before mentioned by appropriate legal action the Jayne corporation was formally dissolved and its legal existence terminated.

 Early in May of 1947, Mr. McIntyre, then general manager of the Jayne branch of Sterling corporation, called upon the plaintiff at a time when he was still confined to bed. Plaintiff herein raised the question as to his status as an employee and he was informed by Mr. McIntyre that Sterling would pay him as long as it cared to and if it didn't have a job for him and he wasn't able to go to work, he would be paid off and given severance pay according to a schedule prepared by Sterling for employees leaving its service without fault on the part of the employee. Such a schedule was in existence for all Sterling employees and the then current schedule was one which had been set up on June 20, 1946, a copy of which had been transmitted to the Jayne corporation early in 1947, but whether before or after the actual stock transfer does not clearly appear from the record. This statement of McIntyre had the effect of reassuring the plaintiff to the extent that he did not attempt to get up and return to work against the advice of his doctor who wanted him to rest and effect a complete recovery. He did not return to work before September 30, 1947. The testimony indicates that his illness was extremely serious and that he could not have resumed his employment even up to the date of trial.

 The Jayne branch of Sterling Drug was continued in existence until September 30th of 1947 when, by order of the company, it was closed down and all then employees of Jayne were discharged. At that time plaintiff was informed that his services were no longer required. All employees with the exception of the plaintiff were given severance pay in accordance with the aforementioned severance pay schedule. Plaintiff made demand for severance pay which was refused and this suit was instituted to recover it. The pertinent provisions of the severance pay schedule are as follows:

 'Less than one year's employment . . . Two weeks salary

 One to five years employment . . . One month's salary

 Five to ten years employment . . . Two months salary

 Ten to fifteen years employment . . . Three months salary

 Fifteen to twenty years employment . . . Four months salary

 Twenty to twenty-five years employment . . . Five months salary

 Over twenty-five years employment . . . Six months salary'

 In the letter which embodied the severance pay schedule, the defendant stated that it (the severance pay schedule) 'does apply in cases, for example, where an office or a plant is being closed, or where a consolidation of departments had eliminated the job, or where the employee is no longer able, through no fault of his own, to render satisfactory service.' This schedule embraced the seniority ...

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