Abbott v. City of Los Angeles

• Citation: 326 P.2d 484,50 Cal.2d 438
• Court: United States State Supreme Court (California)
• Decision Date: 06 June 1958
• Parties: Ruth ABBOTT et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents. Eva A. ADAMS et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents. Margaret ABNEY, as Special Administratrix of the Estate of Glen M. Abney, Deceased, et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, a municipal corporation, et al. Defendants and Respondents. Fred H. BEHRNS et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents. Elizabeth M. MASON et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents. L. A. 24354-L. A. 24538.

Page 484

326 P.2d 484

50 Cal.2d 438

Ruth ABBOTT et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents.

Eva A. ADAMS et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents.

Margaret ABNEY, as Special Administratrix of the Estate of Glen M. Abney, Deceased, et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, a municipal corporation, et al. Defendants and Respondents.

Fred H. BEHRNS et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents.

Elizabeth M. MASON et al., Plaintiffs and Appellants, v. CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents.

L. A. 24354-L. A. 24538.

Supreme Court of California, In Bank.

June 6, 1958.

Rehearing Denied July 2, 1958.

Kenneth Sperry, Long Beach, for appellants.

Ball, Hunt & Hart and Joseph A. Ball, Long Beach, as amici curiae on behalf of appellants.

Roger Arnebergh, City Atty., Bourke Jones and John J. Tully, Jr., Asst. City Attys, Weldon L. Weber and John F. Feldmeier, Deputy City Attys., Los Angeles, for respondents.

SCHAUER, Justice.

In these five cases, consolidated for trial, plaintiffs appeal from adverse judgments in their actions seeking to enforce pension payments upon a fluctuating basis (i. e., based upon salaries currently being paid from time to time) rather than in fixed amounts determined at the time the pension is granted. Defendants are the City of Los Angeles and its Board of Pension Commissioners. We have concluded that charter amendments by which fixed payment pensions were substituted for fluctuating may not properly be applied to plaintiffs, and that the judgments should be reversed.

The 673 plaintiffs in the Abney and the 30 plaintiffs in the Behrns cases were appointed as members of the fire or the police department of defendant city prior to July 1, 1925, and retired therefrom subsequent to that date upon pensions which have been paid in fixed amounts. In the Abbott, Adams and Mason cases the 79 plaintiffs are widows who were granted fixed-payment pensions upon the deaths of their respective husbands who had been employed in the fire or police department prior to, and died after, January 17, 1927. (In the Abbott case the husbands of the 17 plaintiffs, with one exception, had retired prior to January 17, 1827.) In each of the five actions the first count of the complaint is for a declaratory judgment to the effect that each of such plaintiffs is entitled to a fluctuating pension upon the ground that certain city charter amendments of July 1, 1925, and January 17, 1927, substituting fixed pensions for previously provided fluctuating pensions, are as to them unconstitutional and invalid; the second count seeks a money judgment for the difference, commencing three years prior to the date each plaintiff filed a claim therefor with defendants, between the amount of the fixed pension paid and the amount of the fluctuating pension to which plaintiffs claim to be entitled. It appears that in addition to the present plaintiffs (some 782 in number), another 2,000 persons occupy a similar legal relationship to defendant city.

Following findings of the court more fully discussed hereinafter, judgments were entered declaring that the pertinent charter amendments constituted reasonable and valid changes in the pension system with respect to plaintiffs and that the only pensions to which plaintiffs are entitled are the substituted fixed amount ones the city has been paying; that the rights and duties of the respective parties have ripened into a 'rule of property' which should not now be disturbed; and that plaintiffs are barred by laches and the statute of limitations. These appeals followed.

For more than 20 years prior to July, 1925, pertinent statutes, ordinances, and provisions of the city charter of Los Angeles, provided a fluctuating retirement pension after 20 or more years of service for members of the police and fire departments of 50 per cent of the salary that might be fixed from time to time, even after a member's retirement, for the position held one year prior to retirement. (Effective in January, 1923, a further 1 2/3 per cent of such salary was added for each year of service in excess of 20 years and less than 30 years.) A like fluctuating pension was also provided in case of service-connected disability. If a member died as a result of such disability or after retirement, a fluctuating pension was payable to his widow, children or dependent partents; this pension amounted to one half the salary fixed from time to time for the position held by the member at the time of his death or one year prior to the date of retirement. (See e. g., Charter of 1889, art. XI 1/2, §§ 2, 3, 4, as amended; Stats.1923, p. 1412-1414.)

In article XVII of the Charter of 1925 (Stats.1925, p. 1085), sections 181, 182, and 183 were substituted for sections 2, 3, and 4 of the Charter of 1889 above referred to, and section 184 was added. (For convenience, changes effected by the Charter of 1925 will be termed charter amendments.) So far as here material, sections 181, 182, and 183 were substantially the same as those they replaced. However, the new section 184 provided that 'any increase or decrease of salaries of active members of the Fire and Police Departments shall not in anywise affect the amount of the pensions paid to retired members of such departments, nor shall the amount of such pensions be changed for any other reason.' In other words, pensions thereafter granted to retired members would be upon a fixed rather than a fluctuating basis. Widows' pension rights were unaffected by section 184, and continued upon a fluctuating basis until January, 1927, when, by amendment, the section was in terms made applicable to the pensions of widows and other members of families. (Stats.1927, pp. 2023-2024.) Widows' pensions granted thereafter have been paid upon a fixed basis. Also by 1927 amendment, the basis of the fixed retirement and widows' pensions became average salary received by the members over the three-year period immediately preceding retirement, rather than being related to the preceding one-year period only.

Defendant city has been and is presently paying pensions upon a fluctuating basis to all police and fire department members whose pensions matured prior to the 1925 amendment and to all widows upon whose pensions payment became due prior to the 1927 amendment. Members' pensions becoming due for initial payments subsequent to the 1925 amendment, and widows' pensions maturing for payments after the amendment of 1927 (even though the husband had retired previously), have been honored upon a fixed rather than a fluctuating basis. Meantime salaries attached to the positions involved have been increased from time to time, and plaintiffs claim the right to proportionately increased pension payments.

Validity of the Amendments as Applied to These Plaintiffs

Plaintiffs first contend that under the principles enunciated by this court in Allen v. City of Long Beach (1955), 45 Cal.2d 128, 287 P.2d 765, the trial court erred in determining that as to them the change from a fluctuating to a fixed pension was reasonable and therefore constitutional and valid. In that case defendant city attempted by charter amendment to substitute a fixed for the proviously provided fluctuating pension, and it was held that as to employes whose employment had commenced while the fluctuating pension provisions were a part of the charter the alteration was unreasonable and invalid. We there declared that (at page 131 of 45 Cal.2d at page 767 of 287 P.2d) 'An employee's vested contractual pension rights may be modified prior to retirement for the purpose of keeping a pension system flexible to permit adjustiments in accord with changing conditions and at the same time maintain the integrity of the system. (Citations.) Such modifications must be reasonable, and it is for the courts to determine upon the facts of each case what constitutes a permissible change. To be sustained as reasonable, alterations of employees' pension rights must bear some material relation to the theory of a pension system and its successful operation, and changes in a pension plan which result in disadvantage to employees should be accompanied by comparable new advantages. (Citations.) In the present case it appears that section 187.2 (the amendment) substantially decreases plaintiffs' pension rights without offering any commensurate advantages, and there is no evidence or claim that the changes enacted bear any material relation to the integrity or successful operation of the pension system established by section 187 of the charter * * *.

'* * * (At page 132 of 45 Cal.2d, at page 767 of 287 P.2d) Payment of a fixed (pension) amount freezes the benefit at a figure which is based on salary scales preceding retirement, thus the longer an employee is retired on a fixed pension the more likely it is that the amount of his pension will not accurately reflect existing economic conditions, whereas a retired employee receiving a fluctuating pension based on the salaries that active employees are currently receiving can maintain a fairly constant standard of living despite changes in our economy. We are at present in an era of rising salaries and high cost of living. * * * This court pointed out in Casserly v. City of Oakland (1936), 6 Cal.2d 64, 69, 56 P.2d 237, that a 'pension measured by the pay of officers of similar rank inures to the benefit of pensioners, when the value of money is low and the pay increased.' (Cf. Terry v. City of Berkeley (1953), 41 Cal.2d 698, 703, 263 P.2d 833, involving applicability of a similar charter amendment to persons already retired, where it was stated that the change from a fluctuating to a fixed pension was detrimental to pensioners.) It is, of...