Wells

Appellants 1 2 brought this action against appellees attacking the J. C. Penney Company Profit-Sharing Retirement Plan (for Management Staff), hereinafter referred to as “Plan” on the ground that such Plan so far as it pertains to the awarding of capital stock of the J. C. Penney Company, hereinafter referred to as “Penney”, is illegal and void and of no effect since it is, in effect a wagering contract, lottery or tontine contract prohibited by the constitution, statutes, laws and public policy of the state of New York. Jurisdiction is based upon diversity of citizenship.

The facts as to the Plan and the participation therein of appellants Wells and Albertsen were agreed upon as set forth in an extensive pretrial order.

Penney is a chain store operation. At the end of 1953 it had some 1634 stores located in all forty-eight states. Previous to the adoption of the Plan Penney had put into operation various stock participation plans, one of which was involved in the case of Hawke v. Commissioner of Internal Revenue, 9 Cir., 109 F.2d 946 . Beginning in 1937 Penney made a study of various pension plans endeavoring to develop one suitable to Penney’s needs. The Plan which we are…