William YONGMAN and International Brotherhood of Electrical Workers, Local No. 1245, Plaintiffs and Appellants, v. NEVADA IRRIGATION DISTRICT, Melvin A. Brown, Ross C. McBurney, C. Bruce McDonald Vernon D. Vineyard, and Warren S. Wilson, Directors, Defendants and Respondents.
Plaintiffs appeal from judgment entered after order sustaining demurrer to first amended complaint1 without leave to amend.
Does the complaint state a cause of action in that defendant district is bound, either by express oral contract or implied contract, to provide its employees with annual merit increases in wages?
This is on action brought by plaintiffs for the benefit of plaintiffs Youngman, International Brotherhood of Electrical Workers Local 1245, which includes employees of the district, and all employees of the district.
The pertinent allegations of the complaint follow. Defendant Nevada Irrigation District (hereinafter ‘District’) is a public agency organized under the provisions of the California Water Code (§ 20500 et seq.) operating in Nevada and Placer Counties. The individually named defendants are its board of directors.
Plaintiff Youngman was employed by the District in April 1963 in the job classification of Utility Foreman, Grade III. At that time the District had in effect a salary schedule providing for five steps within each job classification, each step having a higher wage rate. At was time of Youngman's employment, it was District's announced practice to review once each year on or about April I each employee's work performance on a merit basis, and advance employees on a merit basis go the next higher step on the salary schedule so that after five years a satisfactory employee could expect to reach the top salary step of his job classification.
In April 1964, District reviewed, among that of other employees, Youngman's work performance, found it satisfactory and advanced him to step two of his classification and raised his salary accordingly.
In April 1965, District decided to, and arbitrarily and capriciously did, discontinue its practice of annual merit review, and neither Youngman nor any other employee, then or thereafter, was considered for merit review for step increases.
The complaint seeks a declaratory judgment that Youngman and other employees were entitled to merit step increases in 1965 and and an order compelling District to take the necessary ministerial steps to effectuate the declaratory judgment.
The first cause of action alleges that the salary schedule, written personnel policies, conduct and past practice of the District gave rise to an implied obligation for it to continue granting annual merit step increases.
The second cause of action alleges, in addition to the matters alleged in the first cause of action, that Local 1245, in negotiating with the District concerning 1965 wage rates, and Youngman in continuing in, employment, relied upon representations by defendants, express and implied, that general wage increases effective January 1, 1965, would not not not in any way affect merit increases, in accordance with established District policy; that District is estopped on the basis of its salary schedules, written personnel policies, conduct and past practice, to refuse considering and granting annual merit step increases.
The third cause of action contains allegations to maintain a class action for other employees who similarly to Youngman, were denied merit step reviews.
The fourth cause of action is hereinafter described.
The fifth cause of action alleges that District is estopped, on the basis of the oral promises alleged in the first and fourth causes of action, to refuse considering and granting annual merit step increases.
The court sustained, without leave to amend., defendant's demurrer to the complaint on the ground of failure to state a cause of action. It then entered judgment for defendants on that order.
A. EXPRESS CONTRACT.
The fourth cause of action alleges in pertinent part, that Harold Gleason, District's superintendent, had full authority to act on behalf of District in hiring employees and to enter into contacts with respect thereto, and that, acting within the course and scope of his authority, he expressly represented and promised when when he hired Youngman that it was the established practice to annually consider and grant merit step increases and that Youngman would be considered for and granted such increases in April of each year, By reason of the District's practice, conduce, salary schedules and per personnel policies, there continues to exist between District and Youngman an express oral agreement whereby District is obligated to annually review and advance Youngman one step within his classification in accordance with reasonable merit criteria and to pay the salary specified in the salary schedule.
So far as the claim of an alleged express oral contact based upon the alleged promise of the superintendent is concerned, the complaint does not state a cause of action. There is no showing of the superintendent's authority to make such a contract. The allegation that he had full authority to enter into such contract is merely a conclusion, not based upon any facts alleged. Moreover, section 21185 of the Water Code leaves the hiring and fixing of salaries of employees at the sole discretion of the District's board of directors. Section 22225 provides: ‘Each district has the power generally to perform all acts necessary to carry out fully the provisions of his division.’ Section 22230 provides ‘a district may make and perform any necessary contracts to carry out the purposes of the district.’ Section 22232 provides: ‘A district may employ * * * employees as may be deemed necessary * * *.’
It is not alleged the board expressly agreed to make annual merit reviews. Section 21185 provides in part: ‘The board shall: * * * (a) Employ * * * employees as required. (b) Prescribe their duties and fix their salaries.’
41 California Jurisprudence 2d, Public Officers, section 150, at page 38, provides: ‘One who deals with a public officer stands charged presumptively with full knowledge of that officer's powers and is bound at his peril to ascertain the extent of his power to bind the government of which he is an officer. The fact that an officer assumes to make a contract and thus bind the government does not create the presumption that possesses the power that he attempts to exercise. Not may an officer by his conduct, give rise to an implied contract.’
The courts have uniformly held that where the remuneration is to at the entire discretion of the employer, no action for raises is maintainable.
In the case of Emerson v. Board of Trustees, 23 Cal.Ann.2d 432, P. 436, 73 P.2d 935, P. 937, it is stated:
‘* * * a court is without jurisdiction to decide what salary is salary is reasonable and fix the same same. The fact that a certain salary was paid for the previous year does not necessarily show that it is the reasonable and proper salary for the ensuing year. A discretion rests upon the board of trustees which can neither be arbitrarily exercised nor assumed by a court.’
In Chambers v. Davis, 131 Cal.App. 500, at page 508, 22 P.2d, at page 30, the court said: ‘There can be no doubt the board possesses a reasonable discretion in determining the amount of compensation to be paid to teachers under their jurisdiction. Except for a clear abuse of this discretion the amount of salary which is allowed by the board may be interfered with by a court.’
The step schedule adopted in 1964 by the board nowhere promises annual step advancements nor is there any statement of how an employee mat advance from one step to another. The steps are not tied into years of service. The matter of steps and wages is entirely in the discretion of the board, which could rate a new employee at a step other than step one, although in practice this was never done. It seems conceded that no merit step increases were made without formal approval of the board.
B. IMPLIED CONTRACT.
Plaintiffs contend that the practice of the board in annually considering merit step advances raises an implied contract to continue them. The salary schedule adopted by the board, which sets forth the salary for each of the five steps in the various job classifications, nowhere states or even implies that there will be an annual review of the steps or salary. Moreover, Youngman was employed for no particular term. As said in section 3001 of the Labor Code: ‘A servant is presumed to have been hired for such length of time as the parties adopt for the estimation of wages. A hiring at a yearly rate is presumed to be for one year; a hiring at a daily rate, for one day * * *.’ Section 3002, Labor Cede, provides: ‘In the absence of any agreement or custom as to the term of service, the time of payment, or the rate or value of wages, a servant is presumed to be hired by the month, at a monthly rate of reasonable wages, to be paid when the service is performed.’
‘Servant’ is synonymous with ‘employee.’ (See White v. City of Alameda, 124 Cal. 95, 98, 56 P. 795.) In the case the trustees of the City of Alameda employed White by a resolution as driver of a street wagon at a salary a salary of $60 per month. The court held that White's employment was only on a month-to-month basis.
The fact that District's rules of employment did not provide for employment other than on a month-to-month basis is one indication that its employment schedules in nowise implied that there necessarily was to be an annual adjustment of pay.
While it is true that where, as here, the board is given the general power to contract with reference to the subject matter of salaries of employees, and there is no statutory restriction the mode or manner of so contracting, there may be circumstances which would create an implied contract between the board and an employee (see Nash v. City of Los Angeles (1926) 78 Cal.App. 516, 521, 248 P. 689). No such circumstances exist here. As before stated, no authority is shown to be in the superintendent to contract for annual merit raises, and the only official action of the board was the adoption of a pay schedule for each step in each classification, which in no way indicates that there is to be an annual review of the steps mentioned in the schedule.
Neither District nor Youngman, nor the other employees, are under civil service. There is no contract between District and its employees other than a month-to-month employment. There is no contract between the union and District is not subject to the provisions of the National Labor Relations Act.
While estoppel may be implied against a public body under certain circumstances (see 4 Witkin, Summary of Cal.Law (7th ed. 1960), Equity, § 96, p. 2873), there can be no estoppel against such body based upon representations made by an employee of that body which he had no authority to make. As hereinbefore shown, the exclusive right to fix salaries is in the board. While rules and regulations of the board no doubt are, in effect, a part of the employees' employment contract (see American Federation of Teachers v. Oakland Unified Sch. Dist. (1967) 251 A.C.A. 91, 97, 59 Cal.Rptr. 85), in none of its regulations did the board promise annual review of steps or salaries. Its payroll schedules merely provided certain pay for employees who came within certain steps. Whether to advance an employee from one step to another is a matter entirely within the discretion of the board.
Moreover, the complaint completely fails to state any cause of action based upon estoppel. As stated in Ruinello v. Murray (1951) 36 Cal.2d 687, 689, 227 P.2d 251, 253: ‘There can be no estoppel unless plaintiff will suffer unconscionable injury or defendant will be unjustly enriched if the contract is not enforced.’ No facts to show the existence of either of these elements are alleged.
It should be remembered that a governmental body such as the board of directors of an irrigation district has the power, the its discretion, to reduce salaries. (Emerson v. Board of Trustees, supra, 23 Cal.App.2d at p. 434, 73 P.2d 935.) We have been cited to no authority holding that such a district is required to maintain salaries at the level existing at the time of employment or at any particular time.
Actually, the plaintiff's salary has not been restricted to that at the time of his employment. According to the complaint, he received a step increase in 1964 and was given a raise in 1965.2
‘The rule is uniform that boards of directors of irrigation districts have only such powers as are expressly granted or necessarily included in the exercise of the powers granted’ (Bottoms v. Madera Irr. Dist. (1925) 74 Cal.App. 681, 702, 242 P. 100, 108.) We have been cited to no grant of power to an irrigation district board of directors which would authorize them to contract, either expressly or impliedly, for permanent employment of its employees or annual increases in wages. However, assuming such power to exist, the complaint fails to show that the board of directors in any way entered into any such contact.
Applicable to the contention that the courts should interfere with the discretion of the board of directors of this irrigation district on the matter of salaries of its employees, is the following from Monahan v. Dept. of Water & Power (1941) 48 Cal.App.2d 746, 120 P.2d 730, where the court in an action, as here, for declaratory relief, refused to interfere with the refusal of the commissioners to rank journeymen linemen with trouble men and pay them the same wages.
‘* * * For the court to accord relief here would not only be to put governmental executives in a straitjacket, but would involve an altogether too complacent an attribute of superiority in the court in the handing of administrative details which have not been entrusted to them but to the executives on the job.’ (P. 753, 120 P.2d p. 734.)
No issue is raised by the parties as to whether Local 1245 is a proper party to this proceeding, thus that matter is not before us.
Section 3502, Government Code, provides for membership by public employee in ‘the activities of employee organizations of their own choosing for the purpose of representation on all matters of employer-employee relations.’ Section 3503 provides: ‘Employee organizations shall have the right to represent their members in their employment relations with public agencies.’ Section 3505 provides: ‘The governing body of a public agency, or such boards, commissions, administrative officers * * * shall meet and confer with representatives of employee organizations upon request, and shall consider as fully as it deems reasonable such presentations as are made by the employee organization on behalf of its members prior to arriving at a determination of policy or course of action.’ (Emphasis supplied.) Section 3505 requires the meeting and conference with the union only upon its request. There is no allegation that Local 1245 ever requested a meeting with the board concerning the elimination in 1965 of review for merit step increases.3
The allegations concerning the claimed promise made to the union that the general wage increases given employees in 1965 would not affect merit step increases are equivocal. There is no direct allegation of such promise being made. It appears only by way or recital. The allegations read: ‘Plaintiff IBEW, in negotiating with the District with respect to 1965 wage rates and conditions of employment, and plaintiff Youngman * * * acted in reliance upon representations by defendants express and implied, that general wage increases effective January 1, 1965, would not preclude or in any way affect merit step increases * * *.’ (Emphasis supplied.)
As we have hereinbefore pointed out, the District cannot be bound by any implied promise. The allegation as to an express promise states no facts to support it. Such a promise could only be made legally by formal action of the board. It is not alleged that any such action was taken. Although plaintiffs' counsel was asked at oral argument if any such action actually was taken, the court was not advised that there was any record of ant such action, and counsel for District stated that there was none. The statutes concerning the powers of boards of directors of irrigation districts make no provision for contracts made informally.
It would appear that in this action the union is attempting to do indirectly what it may not do directly—bind the District to a collective bargaining agreement or a modified type agreement.
1. (Hereinafter ‘complaint.’)
2. Defendants' answer states that the raise referred to in the complaint was ‘a raise of some 8% to 5% in the salary of each employee * * *.’
3. Apparently there was a later meeting between the board the union concerning such increases for the year 1966, for it was stated argument that the merit step schedule had been restored as to wages for 1966 and subsequently.
BRAY, Associate Justice (Assigned).
FRIEDMAN, Acting P. J., and REGAN, J., concur. Hearing granted; TOBRINER, J., not participating.