                                             No.    82-220

                    I N THE SUPREME COURT OF THE STATE OF !O J A ; A
                                                           I TT TS

                                                    1982




B O K N ' S G O O D T I f E COfi'IFA'NY
 R N E

                 P e t i t i o n e r and Respondent,

       -vs-
DAVID J . BISHOP,

                 Respondent and A p p e l l a n t .




Appeal from:        The D i s t r i c t C o u r t o f t h e E i g h t e e n t h J u d i c i a l D i s t -
                    r i c t , I n and f o r t h e County o f G a l l a t i n , The Eonor-
                    a b l e W. W, L e s s l e y , J u d g e p r e s i d i n g .


C o u n s e l o f Record:

        For Appellant:

                 Wellcome & F r o s t , Bozeman, Montana

        F o r Respondent:

                 Lyman B. B e n n e t t , 111, Bozeman, Montana
                 P a u l J. Van T r i c h t , Dept. o f L a b o r , H e l e n a ,
                 F4ontana.




                                             Submitted on B r i e f s :           September 9 ,         1932

                                                                 Decided:        December 6 , 1982
Mr. Chief Justice Frank I. Haswell delivered the Opinion of
the Court.
        Plaintiff appealed from a District Court reversal of a
hearing officer's award to plaintiff of wages and a penalty
due from defendant employer.       We vacate the judgment and
reinstate the hearing officer's decision.
        John Bronken   incorporated defendant    corporation    in
March, 1979, with the anticipation of being a wine distri-
butor because the wine initiative had passed, legalizing the
sale of wine in grocery stores as of July 1, 1979.      In early
April, 1979, plaintiff and John Bronken, president of
defendant corporation, met      at the Elks Club in Bozeman,
Montana, to discuss the terms of plaintiff's employment with
defendant.    Plaintiff was to be the head of the wine depart-
ment.     There is a conflict of testimony as to what was
agreed upon at this meeting.         Defendant claims that the
union contract under which some of his other employees were
hired was discussed in relation to plaintiff's hourly wage
only    (plaintiff was paid as a driver-salesman      under    the
contract) and that the rest of the union contract at issue
here was not applicable to plaintiff.      Plaintiff claims that
all aspects of his employment were to be governed by the
entire union agreement.
        Plaintiff requested to be paid weekly as was customary
with the union employees, but plaintiff also expressed dis-
approval of joining the union so money which would have
ordinarily gone to his union pension and hospitalization
benefits was paid      to him directly.     The topics of sick
leave, vacation    pay   and   overtime   compensation were    not
addressed at this meeting.
        Prior to April 16, 1979, plaintiff went to defendant's
offlce to obtain some sweeping compound                 to clean out
plaintiff's apartment and Bronken gave plaintiff a copy of
the union agreement.          No portions of this agreement were
edited or stricken out.
       Although       plaintiff    did    not   actually    appear    at
defendant's place of business to begin working until April
23, 1979, his pay raises indicate that his official hiring

date was April 16, 1979.          His duties were to manage and set
up the wine department for defendant and included promoting
the wines defendant wholesaled to restaurants and managing
the accounts thus set up.
       Dan Rasmussen was hired on a day-to-day basis for
approximately two weeks to assist in setting up the wine
department in its initial stages and, at the end of that
time, was laid off.         During the fall of 1979, Gary Johnson
was hired as a wine deliverer, which included delivering
wine   that plaintiff had         presold.      Johnson also received
instructions from plaintiff on displays to be built and on
keeping    store shelves stocked with wine.              John Bronken
testified that Johnson reported directly to plaintiff and no
one else.
       Plaintiff was discharged on April 14, 1980, and on
June 17, 1980, plaintiff filed a wage claim with the Labor
Standards Division of the Department of Labor and Industry,
alleging that defendant owed him wages including overtime
and payment for holidays, vacations and for working on his
birthday.     On January 19, 1981, a hearing was held before a
hearing     officer    of   the   Labor   Commission.      The   hearing
officer found that the union contract was the best indicator
of   the   employment relationship           between    plaintiff    and
defendant         and     that     it       governed             said   relationship.              'The

h e a r i n g o f f i c e r a l s o found t h a t p l a i n t i f f          was n o t a s u p e r -

v i s o r a n d t h a t d e f e n d a n t owed p l a i n t i f f           $1,404.48       i n wages

which i n c l u d e d o v e r t i m e , v a c a t i o n p a y , and f o u r h o u r s p a y o n

t h e day of       d i s c h a r g e and t h a t d e f e n d a n t owed a p e n a l t y o f

$1,404.48        by v i r t u e o f s e c t i o n 39-3-206,              MCA.

         On     February        20,        1981,     the         Department        of    Labor     and

Industry        ordered      defendant             to       pay    these     two    sums     to    the

Department t o hold i n t r u s t f o r p l a i n t i f f .                      The D e p a r t m e n t

order      was     appealed           to     the    Eighteenth              Judicial       District

C o u r t , G a l l a t i n County, and t h e Department i n t e r v e n e d .                     The

D i s t r i c t Court reversed t h e hearing o f f i c e r ' s determination

and    found       that    defendant              owed          plaintiff     nothing       because

t h e r e was     no m u t u a l      consent with                regard     t o overtime pay,

h o l i d a y pay o r p a y f o r           t h e day of           discharge.            Motions     to

amend t h e D i s t r i c t C o u r t o r d e r w e r e d e n i e d .            The D e p a r t m e n t

and     plaintiff         appeal           from    the          District     Court        decisions

reversing        the      hearing          officer      I   s   decision     and        denying    the

m o t i o n t o amend.

         W e f r a m e t h e i s s u e s on a p p e a l t h u s :

          (1) Was         the    hearing           officer's            conclusion        that     the

u n i o n a g r e e m e n t g o v e r n e d t h e employment r e l a t i o n s h i p b e t w e e n

plaintiff        and    defendant            c l e a r l y erroneous            i n view     of    the

reliable,        probative         and s u b s t a n t i a l e v i d e n c e on t h e whole

record?

          (2)    Was      the    hearing           officer's            determination             that

p l a i n t i f f was n o t a s u p e r v i s o r c l e a r l y e r r o n e o u s i n v i e w o f

the    reliable,          probative          and        substantial          evidence        on    the

whole r e c o r d ?

         Before addressing t h e s e i s s u e s , we i n i t i a l l y t a k e n o t e
of the scope of judicial review of agency decisions:
           "(2) The court may not substitute its
           judgment for that of the agency as to the
           weight of the evidence on questions of
           fact. The court may affirm the decision
           of the agency or remand the case for fur-
           ther proceedings. The court may reverse
           or modify the decision if substantial
           rights of the appellant have been preju-
           diced because the administrative find-
           ings, inferences, conclusions, or deci-
           sions are:
           "(a) in violation of constitutional or
           statutory provisions;
           "(b) in excess of the statutory authority
           of the agency;
           "(c) made upon unlawful procedure;
           "(d) affected by other error of law;
           "(e)  clearly erroneous in view of the
           reliable, probative, and substantial
           evidence on the whole record;
           "(f) arbitrary or capricious or charac-
           terized by abuse of discretion or clearly
           unwarranted exercise of discretion; or
           "(g) because findings of fact, upon
           issues essential to the decision, were
           not made although requested." Section 2-
           4-704(2), MCA.
     Our   limited   scope of   judicial   review     of   agency
decisions was recently discussed in State ex rel. Montana
Wilderness Association et al. v. Board of Natural Resources
and Conservation et al.    (1982), - Mont     .       ,   648 P.2d
734, 39 St.Rep.   1238.   A court may not reverse the agency
decision unless substantial rights of the appellant have
been prejudiced because the agency determination was clearly
erroneous in light of the reliable, probative and substan-
tial evidence (section 2-4-704(2)(e), MCA).       Also, a review-
ing court may not substitute its judgment for that of the
agency's as to the weight of the evidence on questions of
fact (section 2-4-704(2),     MCA).   In Montana Wilderness
Association,             s u p r a , w e n o t e d t h a t o u r r e v i e w was l i m i t e d t o
d e t e r m i n i n g whether        t h e a d m i n i s t r a t i v e b o d y ' s d e c i s i o n was
s u p p o r t e d by s u b s t a n t i a l e v i d e n c e .

          Regarding t h e f i r s t i s s u e , p l a i n t i f f a r g u e s t h a t t h e r e
are a       number         of    c o r r e l a t i o n s between          the parties'           actual

c o n d u c t and t h e terms o f t h e u n i o n a g r e e m e n t , i n c l u d i n g t h e
facts      that      plaintiff          received          in    cash       the    equivalent         of

union       health         and     pension         benefits,         he     was    paid      on     all
holidays          mentioned           in      the     union         agreement        except        his

b i r t h d a y a n d was p a i d w e e k l y a s were m o s t u n i o n e m p l o y e e s .
P l a i n t i f f f u r t h e r a r g u e s t h a t t h e r e was a n i m p l i e d c o v e n a n t

of    good      faith        and     fair      dealing         in    employment c o n t r a c t s ,
c i t i n g G a t e s v.        L i f e of    Montana I n s u r a n c e Company              (1982),

         ,
- Mont. - 638 P.2d                           1 0 6 3 , 39 S t . R e p .    1 6 , and t h a t s i n c e
d e f e n d a n t c r e a t e d t h e a m b i g u i t y i n t h e employment c o n t r a c t ,

t h e a m b i g u i t y s h o u l d be r e s o l v e d a g a i n s t d e f e n d a n t .
          Appellant Department contends t h a t t h e D i s t r i c t Court
e r r e d i n a p p l y i n g t h e law of e x p r e s s c o n t r a c t s t o t h e f a c t s
and t h a t t h e h e a r i n g o f f i c e r c o r r e c t l y a p p l i e d t h e l a w o f

implied contracts.                  The D e p a r t m e n t t h e n r e a s o n s t h a t c o n d u c t
of t h e d e f e n d a n t r e q u i r e d a f i n d i n g t h a t t h e union c o n t r a c t
was a n i m p l i e d p a r t o f t h e employment b e t w e e n p l a i n t i f f a n d
defendant.
          D e f e n d a n t c o n c e d e s t h a t t h e p o r t i o n s o f t h e u n i o n con-

t r a c t r e l a t i n g t o wages,           reimbursement f o r t r a v e l expenses
a n d h e a l t h and p e n s i o n b e n e f i t s w e r e i n c o r p o r a t e d i n t o t h e
employment a g r e e m e n t ,          b u t a r g u e s t h a t t h e r e was no m u t u a l
c o n s e n t w i t h r e g a r d t o o v e r t i m e , h o l i d a y p a y and p a y o n d a y
of d i s c h a r g e .     Defendant f u r t h e r a r g u e s t h a t t h e r e must have
been a       s p e c i f i c i d e n t i f i c a t i o n of     t h e terms of             the   union
agreement to be incorporated into the employment agreement
between plaintiff and defendant before adoption by reference
may be had and, since there was no discussion of those terms
at the meeting at the Elks Club, they may not be incorpor-
ated.
        There was substantial evidence here to support the
hearing officer's findings.            We affirm them.   Matter of Shaw
(19tiO), - Mont   .          ,   615 P.2d 910, 37 St.Rep.       1480.    It
is clear from the record that plaintiff's employment con-
tract paralleled the union contract in numerous ways includ-
ing paid holidays, health and pension benefits, weekly pay-
checks and travel expense reimbursement.             It is also uncon-
troverted that defendant furnished plaintiff with a copy of
the union agreement with no portions deleted or marked out.
The hearing officer could reasonably conclude, as he did,
that the union contract could also be looked to for the
contested portions of plaintiff's pay, i.e., overtime, vaca-
tion pay, payment on the day of discharge, and holiday pay.
        The focus of the second issue involves the hearing
ofricer's   rejection of         defendant's     claim   that   plaintiff
acted in a supervisory capacity and was thus exempt from
overtime pay consideration.            Plaintiff argues that even if
the union agreement is not incorporated into the employment
agreement, it is clear that plaintiff is still entitled to
the   overtime wages     awarded       because   plaintiff was     not   a
supervisor or bona fide executive under                  section 39-3-
406(l)(j), MCA.       To be a bona fide executive requires that
the individual customarily and regularly supervise at least
two fulltime employees or the equivalent.            Rosebud County v.
Roan (198l), - Mont      .         ,   627 P.2d 1222, 38 St.Rep. 639.
See also, Garsjo v. Department of Labor and Industry (1977),
172 Mont. 182, 562 P.2d 473.
      Defendant employer points to the fact that Gary
Johnson basically worked for plaintiff and that plaintiff
was also responsible for the supervision of Dan Rasmussen
who was hired for approximately two weeks to help set up the
wine displays.
      There was substantial credible evidence to support the
hearing officer's determination.    Shaw, supra.      The record
wholly fails to show that plaintiff customarily and regu-
larly supervised at least two fulltime employees.       At best,
plaintiff regularly exercised authority over one employee
(Johnson) in certain aspects of Johnson's job (Johnson would
deliver wine that plaintiff had presold).     Plaintiff did not
customarily and regularly supervise Rasmussen.
      Accordingly, the District Court decision is vacated,
and the hearing officer's determination is reinstated.



                               b-dna$&-iidg.
                                   Chief         ce
                                           J U S ~



We concur:
     7           fl
