The court did not discuss substantial performance. In Division of Labor Law Enforcement v. RyanAero. Co., 106 Cal.App.2d Supp. 833 [236 P.2d 236, 30 A.L.R.2d 347] (cited as an authority in Witkin, supra), where the employee was short five working days of the required one-year period for a vacation, the court, in affirming recovery by the employee, concluded that the clause was ambiguous and did not necessarily purport to declare a condition precedent; that the purpose of the clause was "to accomplish continuous and faithful service and as an inducement to the employee to remain in the employment" (106 Cal.App. 2d Supp. at p. 835); and that it (the court) was bound on appeal on the judgment roll alone to presume that any question of substantial performance was passed on by the trial court and supported by the evidence. In Division of Labor Law Enforcement v. Mayfair Markets, 102 Cal.App.2d Supp. 943 [ 227 P.2d 463], where an employee was terminated after 10 months of the required 12-month period for a vacation, the court affirmed no recovery for the employee because "If there was any question of substantial perfo
In some cases only (1), supra, is present (Div. Labor L. Enf., etc. v. Ryan Aero. Co., 106 Cal.App.2d Supp. 833, 236 P.2d 236, 30 A.L.R.2d 347); in others, both (1) and (2), supra, exist (Division of Labor L. Enf. v. Standard Coil Products Co., 136 Cal.App.2d Supp. 919, 288 P.2d 637); while in Wamsutta Mills, Inc., 34 Lab.Arb. 158, cited by appellant, condition (3) above is found. In this state the courts have adopted the condition precedent (as opposed to the vested right) test where required to do so by the plain language of the contract concerning vacation pay. Division of Labor L. Enf. v. Anaconda Copper Min. Co., 138 Cal.App.2d 92, 97, 291 P.2d 169; Division of Labor L. Enf. v. Standard Coil etc. Co., supra, 136 Cal.App.2d Supp. 923, 288 P.2d 637, 640.
Courts have allowed recovery for vacation pay despite the fact that contract eligibility requirements were not met, if the employee had substantially performed. ( Div.Labor L. Enf. v. Ryan Aero. Co. (1951) 106 Cal.App.2d Supp. 833 [236 P.2d 236, 30 A.L.R.2d 347]; see Division Labor L. Enf. v. Standard Coil etc. Co., supra, 136 Cal.App.2d Supp. at pp. 924-925; Div. of Lab. L. Enf. v. Mayfair Mkts., supra, 102 Cal.App.2d Supp. at pp. 948-949; cf. Division of Labor LawEnforcement v. Transpacific Transportation Co. (1979) 88 Cal.App.3d 823, 830 [ 152 Cal.Rptr. 98].) This court has recognized that the "frustration of purpose" doctrine can also afford relief. "If the purpose of requiring employment on a certain date was to induce employees to remain in the employment, it may reasonably be argued that the purpose of the contingency was frustrated by the closing of the plant and the employees should be excused from performance of the condition precedent."
See Posner v. Grunwald-Marx, Inc. (1961) 56 Cal.2d 169, 177 [ 14 Cal.Rptr. 297, 363 P.2d 313]; McCarroll v. L.A.County etc. Carpenters (1957) 49 Cal.2d 45, 66-67 [ 315 P.2d 322]; Holayter v. Smith (1972) 29 Cal.App.3d 326, 333-334 [ 104 Cal.Rptr. 745]; San Diego etc. Carpenters v. Wood, Wire,etc. Union (1969) 274 Cal.App.2d 683, 689 [ 79 Cal.Rptr. 164]; Div. Labor L. Enf. v. Ryan Aero. Co. (1951) 106 Cal.App.2d Supp. 833 [236 P.2d 236, 30 A.L.R.3d 347]. Civil Code section 1636 declares that "A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful."
Vacation agreements similar to those contained in the union agreement here have increased in use and are a customary provision in collective bargaining agreements at present, to the extent that now practically every union agreement provides for a paid vacation in some form. Although the courts of the country are not all in agreement as to the nature of a paid vacation, yet it is indicated that most of them agree that it constitutes a form of additional earnings and is not to be regarded as a gratuity. "The appellate court in Division of Labor Law Enforcement v. Ryan Aeronautical Co. (1951) 106 Cal.App.2d Supp 833, 236 P.2d 236, 30 ALR2d 347, said: 'Decisions have made clear that a contractual provision for vacation with pay is neither a gratuity nor a gift. It is a supplement to the employment agreement which in effect constitutes an offer of reward or additional wages for constant and continuous service. "And the court in Textile Workers' Union of America v. Paris Fabric Mills, Inc. (1952) 18 N.J. Super. 421, 87 A.2d 458, affd 22 N.J. Super. 381, 92 A.2d 40, said: 'It is beyond dispute that an agreement to pay vacation pay to employees made to them before they performed their services, and based upon length of service and time worked, is not a gratuity but is a form of compensation for services, and when the services are rendered, the right to secure the promised compensation is vested as much as the right to receive wages or other form of compensation.
. . . The parties must be supposed to have made the contract in the belief that its terms would be fulfilled, that the payments stipulated would be made. . . .' (San Diego Construction Co. v. Mannix (1917) 175 Cal. 548, 556.)" (Division of Labor Law Enforcement, Department of Industrial Relations v. Ryan Aeronautical Co. (1951) 106 Cal.App.2d Supp. 833, 835-836.) "In resolving doubts as to whether an event is made a condition of an obligor's duty, and as to the nature of such an event, an interpretation is preferred that will reduce the obligee's risk of forfeiture, unless the event is within the obligee's control or the circumstances indicate that he has assumed the risk."
" (Italics added.) ( Div. Labor L. Enf. v. Ryan Aero. Co. (1951) 106 Cal.App.2d Supp. 833, 836 [236 P.2d 236, 30 A.L.R.2d 347].) (5) Thus in general while the timing of vacations in the private sector is left to the employer, (see in general 30 A.L.R.2d 360), the employer may not arrange his schedule so as to frustrate vacation benefits which have become due and payable, for his own economic benefit.
The law does not support a forfeiture in these circumstances where the employees were terminated through no fault of their own after having substantially performed the services entitling them to a bonus. ( Div. of Labor L. Enf. v. Ryan Aero. Co., 106 Cal.App.2d Supp. 833, 835 [236 P.2d 236, 30 A.L.R.2d 347]; see Posner v. Grunwald-Marx, Inc., 56 Cal.2d 169, 186-187, 189 [ 14 Cal.Rptr. 297, 363 P.2d 313].) Defendant contends that two of plaintiff's assignors voluntarily chose to work for Japan Line even though defendant offered to retain them, and that these two employees should not qualify for recovery.
We cannot, by a process of judicial erosion, wipe out the clearly defined salary differential between two and three years' service with the department. In support of their theory of substantial performance, respondents rely on Division of Labor Law Enforcement v. Ryan Aeronautical Co., 106 Cal.App.2d Supp. 833 [236 P.2d 236, 30 A.L.R.2d 347]. That case, however, is not here applicable.
" There is no doubt or ambiguity about the meaning of these provisions. While it is true that "Courts are disinclined to construe the stipulations of a contract as conditions precedent, unless compelled by the language of the contract plainly expressed" (Division of Labor Law Enforcement v. Ryan Aero. Co. (1951), 106 Cal.App.2d Supp. 833, 835 [30 A.L.R.2d 347]), yet in this case we are so compelled. To be entitled to a vacation in any year an employee must be "in the active employ of the company" on June 1 of that year.