Goldmann, Freund and Conford. The opinion of the court was delivered by Conford, J.A.D.
This is an action by 27 former employees of the defendant to recover severance pay contended to be due them attendant upon the sale of defendant's gas business to another company in June 1952 resulting in the termination of their employment with defendant. Twenty-five of them were granted summary judgment in the Superior Court, Law Division. As to two of the plaintiffs, Voorhees and Lonsdale, somewhat different factual questions were involved and their cases were held for trial after the court denied defendant's motion for summary judgment as to them. Defendant's present appeal is both from the grant of summary judgment in favor of the 25 and the denial of summary judgment for the defendant as to the two.
We confine our attention first to the common cause of the 25 plaintiffs who received judgment in the Law Division. These were all supervisory employees of the defendant, engaged exclusively in the gas phase of its business. Defendant was required by an order of the Securities Exchange Commission to divest itself of its gas properties and operations and it complied by a sale thereof to New Jersey Natural Gas Company by contract dated December 3, 1951 and effective June 2, 1952. Plaintiffs were notified by letter dated
May 29, 1952 that they were no longer employed by defendant. They all obtained employment with the purchasing company.
On July 1, 1949 defendant issued its "General Rules," containing a variety of conditions of employment, compensation and benefits, including the following:
"The Company's plan for severance compensation is set forth in its labor agreements covering classifications of certain employees. This plan likewise applies to employees not covered by those labor agreements. A copy thereof may be obtained from the Personnel Department."
This provision remained in effect to and including June 2, 1952. The rules were compiled and distributed by the defendant to all the employees, including plaintiffs. On June 2, 1952 there was in effect between defendant and a labor union a collective bargaining agreement which provided for severance pay benefits for union employees at the rate of one week's pay for each full year of continuous service with the company payable to those permanently released from employment after at least a full year of service for reasons beyond the control of the employees. It was settled in Adams v. Jersey Central Power & Light Co. , 36 N.J. Super. 53 (L. Div. 1955), affirmed 21 N.J. 8 (1956), that the circumstances under which union employees of the defendant engaged solely in defendant's gas operations were transferred to the New Jersey Natural Gas Company as a consequence of the transaction referred to did not disentitle them to the severance pay benefits specified in the collective bargaining agreement. Defendant does not contend to the contrary as to the 25 plaintiffs presently involved. These persons were not members of the union and they claim solely under the General Rules. Defendant argues that it was not liable to these plaintiffs for the severance pay then specified, within settled principles of contract law; and, in the alternative, that disputed issues of fact precluded the grant of summary judgment in favor of the plaintiffs.
Defendant's first contention is that insofar as the plaintiffs are concerned the publication and distribution of the severance pay rule was a mere gratuitous promise of a bonus by the employer, not supported by consideration to the employer or detriment to the employees and therefore not enforceable. It is stressed that the employees undertook no new obligations nor were required to forego any rights or privileges in return for the company's promise and were free to quit at will.
The fallacy in the foregoing argument is the assumption therein that the company's offer was susceptible of acceptance only by the rendition of a promise or undertaking by the employee in exchange, i.e. , that it contemplated the consummation of a bilateral contract. Its natural construction, however, is the submission of an offer in return for rendition of services in employment by the employee until the occurrence of the condition stipulated -- a unilateral contract. This is the general present-day construction of employment stipulations for severance pay, bonuses or similar incentive plans. Chinn v. China National Aviation Corporation , 138 Cal. App. 2 d 98, 291 P. 2 d 91 (D. Ct. App. 1955); Hunter v. Sparling , 87 Cal. App. 2 d 711, 197 P. 2 d 807 (D. Ct. App. 1948); Bullock v. Sterling Drug , 93 F. Supp. 371 (D.C.E.D. Pa. 1950), affirmed 187 F.2d 145 (3 Cir. 1951); Roberts v. Mays Mills , 184 N.C. 406, 114 S.E. 530, 28 A.L.R. 338 (Sup. Ct. 1922); Hercules Powder Co. v. Brookfield , 189 Va. 531, 53 S.E. 2 d 804 (Sup. Ct. 1949); Cain v. Allen Electric etc. Company , 346 Mich. 568, 78 N.W. 2 d 296 (Sup. Ct. 1956); Schofield v. Zion's Co-op Mercantile Institution , 85 Utah 281, 39 P. 2 d 342, 96 A.L.R. 1083 (Sup. Ct. 1934). Thus, plaintiffs' ...