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decided: March 18, 1971.


Appeal from decree of Court of Common Pleas, Trial Division, of Philadelphia, June T., 1968, No. 1454, in case of Fred H. Garner v. Girard Trust Bank and Charles Ellis, Thomas A. Moffa and George M. Wilson.


Franklin Poul, with him Judith R. Cohn, and Wolf, Block, Schorr & Solis-Cohen, for appellants.

Irving Marks, for appellee.

Bell, C. J., Jones, Cohen, O'Brien and Pomeroy, JJ. Opinion by Mr. Justice O'Brien. Mr. Justice Cohen took no part in the decision of this case. Mr. Justice Eagen and Mr. Justice Roberts took no part in the consideration or decision of this case.

Author: O'brien

[ 442 Pa. Page 167]

Appellee, Fred H. Garner, was an employee of the Binswanger Corporation, which had created a profitsharing pension trust for its employees. Each employee, including appellee, was given a brochure containing information and conditions of the plan. Under the terms of the trust, a member's interest became vested after two years of membership. However, any former member forfeited the unpaid vested interest if he entered "into competition with the Company, as determined by the Committee [appointed by the Board of Directors to administer the trust] in its sole discretion, within two years after his separation from employment and prior to reaching age 65." (§ 5.3) The individual appellants are the members of the committee administering

[ 442 Pa. Page 168]

    the trust. To insure that this non-competition provision is enforced, there is another provision that if a member terminates his employment before he is sixty-five, "no payment shall be made until two years after termination of employment unless the Committee shall determine, in its sole discretion, that there is no substantial risk of such employees engaging in competition with the Company during such two year period." (§ 6.1)

Appellee was in the employ of Binswanger, a real estate firm, from May, 1954 to August, 1965. While in the employ of Binswanger, appellee was in charge of the office-leasing department in which capacity his duties were lease agreement renewals, relocation of tenants, spacing and tenant problems. Upon leaving Binswanger, appellee was sent a formal notice informing him of the state of his account in the trust and reminding him of the provisions of the plan, including the non-competition provision. Nevertheless, on November 1, 1965, appellee became employed by Richard B. Herman Company, a real estate firm engaged in the rental and management of office buildings in center-city Philadelphia. Since that time, he has managed three buildings for Herman, performing the same general services which he had previously performed for Binswanger. It is admitted that Herman Company is in competition with Binswanger.

On September 11, 1967, appellee wrote to the individual appellants demanding his vested interest of $13,365.82. The appellants met on September 19 and 20, 1967, and determined that appellee's interest in the trust had been forfeited because of his competitive activities. After appellee was notified by the company's lawyer, he brought suit in equity seeking a court order requiring the appellants to certify to the Girard Trust Bank, trustee of the plan, that he was entitled to $13,365.82

[ 442 Pa. Page 169]

    as his vested interest under the plan. The chancellor filed his adjudication and decree nisi in favor of the appellee, and after dismissal of their exceptions by the court en banc and entry of a final decree, the appellants brought this appeal.

The law is clear with regard to profit-sharing and pension plans. Even when the employee does not contribute to the plan, when he renders service to an employer who has such a plan in effect, he has a contractual right to enforce the plan according to its terms. Even though by the terms of the plan the committee had "sole and exclusive power and authority to interpret and construe the provisions of the Plan and to decide any disputes which may arise regarding the rights of employees thereunder" (§ 10.4), and the committee had "sole" discretion to determine a forfeiture under the non-competition provision (§ 5.3), the committee's decisions are subject to judicial review to insure that they are exercised "in good faith and within the bounds of reasonable judgment." Shore v. Bell Tel. Co. of Pa., 389 Pa. 445, 133 A.2d 157 (1957), Forrish v. Kennedy, 377 Pa. 370, 105 A.2d 67 (1954). ...

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