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No. 88-242
I P J THE SUPREME COURT OF THE STATE OF MONTANA

1988

ASHLAND OIL, INC., d/b/a SUPERAMERICA, Petitioner and Appellant, -vsDEPARTMENT OF LABOR AND INDUSTRY AND J,ABOR APPEALS BOARD, Agencies of the State of Montana, and CHARLES HYATT, Respondents and Respondents.

APPEAL FROM:

District Court of the First Judicial District, In and for the County of Lewis & Clark, The Honorable Thomas Honzel, J~tdgepresiding.

COUNSEL OF RECORD: For Appellant: Francis X. Clinch; Jardine, Stephenson, Rlewett and Weaver, Great Falls, Montana. For Respondent :
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Ann Smoyer; Smoyer, Vaznelis & Berry, Helena, Montana Karl Nagel, Dept. of Labor G Industry, Felena, Montana

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Submitted on Briefs:

Sept. 9, 1988

Decided: December 5, 1988

Clerk

Mr. Justice 11. C. Gulbrandson delj-vered the Opinion of the Court. (Ashland) appeals a Appellant Ashland Oil, Inc. decision from the First Judicial District, Lewis and Clark County, awarding unemployment benefits to the respondent on the basis that the respondent's actions did not constitute misconduct within the meaning of the law. We reverse. Charles Hyatt was employed by Ashland as an assistant manager at its SuperAmerica store in Helena, Montana, from March 1, 1986 to February 12, 1987. One of Hyatt's duties as assistant manager included the recording of non-sufficient fund checks (NSF) returned by banks. On two separate occasions in or around June of 1986, Hyatt notified the store manager when other employees had checks returned. In August of 1986, Hyatt ordered some sporting goods equipment for his personal use through one of the store's suppliers. This was an accepted practice, and employees who took advantage of the practice were expected to pay for the merchandise when it arrived. However, Hyatt did not have sufficient funds to pay for the equipment he ordered, so the amount was billed to the store. This amount went unpaid until an internal audit in December, 1986 revealed the fact Hyatt still had not paid for the goods. The store required Hyatt to pay for the goods and gave him a written warning. In November of 1986, Hyatt's bank began returning his personal checks because of insufficient funds in his account. Between November 13, 1986 and. the end of December, 1986, Hyatt issued four checks to Ashland. These NSF checks were written to pay for gas and merchandise and to obtain cash. Hyatt recorded the amounts of these checks on the NSF ledger he maintained for his employer. However, the ledger did not list the name of the person issuing the check. Hyatt was

notified by both his bank and Check-Rite, Ashland's check collection agent, of these returned checks. These checks amounting to $220 were finally paid in late December, 1986. From December 28, 1986 to February 5, 1987, Hyatt wrote seven more NSF checks to his employer, amounting to a total of approximately $119. Both the bank and Check-Rite again notified Hyatt of each returned NSF check. Check-Rite set up a payment schedule to help Hyatt repay the amounts, but he failed to meet this schedule. Each Friday he promised to come in the next week and pay the amount owing. Finally on February 12, 1987, Check-Rite notified Hyatt's supervisors of their problem with him. When Hyatt came in to pick up his check that day, he was confronted with the information. He informed his supervisors that he was on his way to pay for the checks. When he returned from Check-Rite, he met with his supervisors. At the conclusion of that meeting, Hyatt's employment was terminated. Hyatt filed for unemployment benefits, but his employer objected to the payment of said benefits. Following a hearing on April 6, 1987, the Appeals Referee found Hyatt's conduct did not constitute misconduct within the meaning of the law and awarded benefits. The Board of Labor Appeals and the District Court both affirmed the findings. Ashland raises the following issues for our review: 1. Did the District Court err in determining whether Hyatt committed misconduct on the basis of his employer's conduct? 2. Did the District Court err in holding that Hyatt's issuance of NSF checks to his employer did not constitute misconduct, even though his conduct violated a Montana criminal statute?

3.

Did the District Court err in holding that Hyatt's

admitted violation of the policy of his employer did not. constitute misconduct? 4. Did the District Court err in holding that Hyatt did not breach his fiduciary duty by issuing NSF checks to his employer? Section 39-51-102, MCA, contains the declaration of state public policy with regard to unemployment benefits. In subsection (3) of the statute, the legislature provides that. unemployment benefits are "[tlo be used for the benefit of persons unemployed through no fault of their own. " Section 39-51-102(3), MCA. The code further provides employees m : ' a, be disqualified for unemployment benefits when their discharge is individual's due work to "misconduct connected with the or affecting the individual's Misconduct is

employment. . " Section 39-51-2303(1), MCA. defined in

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Montana Law