Wilson Oil Co. v. Hardy , 49 N.M. 337 ( 1945 )

I cannot agree with the result reached by the prevailing opinion. Without challenging sufficiency of the evidence to sustain the findings or disputing correctness of the conclusion that a bona fide agreement upon fixed number of hours for overtime, between employer and employee (even though the variable nature of hours of employment might suggest the arrangement), cannot be sustained under the Act, if actually the employee puts in more overtime than that agreed upon as a fair estimate for which he is not paid the prescribed rate of pay; nevertheless, the Act does not authorize, nor do the most elemental principles of honesty and fair dealing sanction, its employment to mulct the employer for attorney's fees and liquidated damages, as double pay for the overtime shown on a secret and concealed time record kept over the considerable period here involved and never disclosed to the employer until employment had terminated.

The honesty and good faith of the parties in entering into this arrangement for payment of overtime not only is not questioned by the prevailing opinion, but is conceded. In other words, as the majority concede and the record so abundantly establishes, it was thought to be within the law. However, that the plaintiffs very soon conceived the idea not to abide by it, in the event their overtime exceeded that estimated, is conclusively established by the fact testified to by them, that from the very beginning they began to keep a secret record of their overtime. The purpose seems obvious. If the overtime substantially exceeded that upon which they had agreed as a fair estimate, they could recover not only the rate of pay prescribed by the Act, but double it as liquidated damages plus attorney's fees. On the other hand, if the agreed estimate should exceed actual overtime they would get paid for something they did not earn. Under such circumstances, what did common honesty and fair dealing dictate should be done? Obviously, they called upon the plaintiffs to make known to the defendant that, according to a record being kept by them, the agreed estimate relied upon was being substantially exceeded from payday to payday. Had they so informed the defendant, it could have saved itself double pay for overtime and attorney's fees by paying for the extra overtime as it accrued; or, it could have made an even greater savings by employing extra help at the rate of pay for regular time and thus have greatly reduced overtime, if, indeed, not eliminating it altogether. This is exactly what the defendant's president testified the company would have done had it been so advised.

Even without supporting authority, the mere statement of the case suggests the plaintiffs' estoppel. However, there is pertinent authority for applying estoppel in cases of this very kind. Mortenson v. Western Light Telephone Co., D.C.,42 F. Supp. 319; Carter v. Butler, Ga. App., 31 S.E.2d 210; Gale v. Fruehauf Trailer Co., 158 Kan. 30, 145 P.2d 125; Clevenger v. W.M. Ritter Lumber Co., 294 Ky. 764, 172 S.W.2d 625. Cf. Hanzely v. Hooven Letters, Inc., City Ct., 44 N.Y.S.2d 398.

In Mortenson v. Western Light Telephone Co., supra, the court said [42 F. Supp. 322]:

"While there is no doubt of the sound principle of law that if an employer and employee agree that the wages to be paid were less than those permitted by the Act, it would not be binding as against the employee as the Act is for the general good of society and cannot be defeated by private agreement; yet no court has held, and I do not believe that any court will hold, that an employee can, without permission or knowledge of his employer, make incorrect reports as to his daily services and permit the employer to act as though such reports were honestly made and thereafter take advantage of this situation and claim that the false reports so made can be corrected. All of the elements of an estoppel are present in this case."

In the case at bar, the majority say:

"It would have served no purpose for the employer here to have known that the contract by which it and the workmen had arbitrarily and unalterably limited the hours for which overtime would be paid (but not the hours to be put in by the workmen) actually had not allowed for sufficient time and pay."

The statement that the parties had "arbitrarily and unalterably" limited the hours for which overtime would be paid is unwarranted and impeaches the conceded good faith of the parties in agreeing upon what then seemed to them a fair estimate of overtime, based upon previous experience with an employment whose hours were so fluctuating and variable as to render it almost impossible, as a practical matter, to keep an accurate account of them. Certainly, the record discloses the plaintiffs were unwilling as substantial excess overtime progressively accumulated on their secret records, to test by disclosure whether defendant would treat the estimate as "arbitrarily and unalterably limited" by the agreement or regard it as subject to correction upon a showing that it was in fact based on mistake and error. Good faith is not to be deduced from plaintiffs' conduct in concealing from the employer knowledge of the secret record until the employment had been terminated and all hope of minimizing overtime by the use of extra help or otherwise was gone. On the contrary, such conduct strongly suggests a plan to entrap an employer into double liability for the overtime and attorney's fees embraced in the judgment which the prevailing opinion affirms.

I am unable to believe the Congress ever intended that the Fair Labor Standards Act should be employed as an instrument of entrapment and oppression. The courts consistently have declined to permit the wholesome and salutary statute of frauds, itself to be transformed into an instrument for perpetuating a fraud. The analogy is strong. In my opinion, the judgment should be reversed.

I dissent.

BICKLEY, J., concurs.