Abbott v. City of San Diego

• Decision Date: 25 November 1958
• Citation: 165 Cal.App.2d 511,332 P.2d 324
• Court: California Court of Appeals Court of Appeals
• Parties: Gheen R. ABBOTT et al., Plaintiffs, Appellants and Respondents, v. CITY OF SAN DIEGO, a municipal corporation, et al., Defendants, Appellants and Respondents. George AGNEW et al., Plaintiffs, Appellants and Respondents, v. CITY OF SAN DIEGO, a municipal corporation, et al., Defendants, Appellants and Respondents. Angeline ARMSTRONG et al., Plaintiffs, Appellants and Respondents, v. CITY OF SAN DIEGO, a municipal corporation, et al., Defendants, Appellants and Respondents. Civ. 5844-5846.

Page 324

332 P.2d 324

165 Cal.App.2d 511

Gheen R. ABBOTT et al., Plaintiffs, Appellants and Respondents, v. CITY OF SAN DIEGO, a municipal corporation, et al., Defendants, Appellants and Respondents.

George AGNEW et al., Plaintiffs, Appellants and Respondents, v. CITY OF SAN DIEGO, a municipal corporation, et al., Defendants, Appellants and Respondents.

Angeline ARMSTRONG et al., Plaintiffs, Appellants and Respondents, v. CITY OF SAN DIEGO, a municipal corporation, et al., Defendants, Appellants and Respondents.

Civ. 5844-5846.

District Court of Appeal, Fourth District, California.

Nov. 25, 1958.

Rehearing Denied Dec. 23, 1958.

Hearing Denied Jan. 21, 1959.

Kenneth Sperry, Long Beach, for plaintiffs.

J. F. DuPaul, City Attorney, Fletcher & Mack, San Diego, for defendants.

COUGHLIN, Justice pro tem.

These three cases involve actions by retired firemen and policemen, and the widows of deceased retired firemen and policemen, to recover an alleged balance due on pension payments and for declaration of pension rights. In the Abbott case--Gheen R. Abbott et al. v. City of San Diego, et al.--the plaintiffs are retired firemen; in the Agnew case--George Agnew er al. v. City of San Diego et al.--the plaintiffs are retired policemen; and in the Armstrong case--Angeline Armstrong et al. v. City of San Diego et al.--the plaintiffs are personal representatives of deceased firemen and policemen. All of these firemen and policemen had been employed by, and performed substantial services for the city of San Diego during the period of time when applicable laws provided for monthly pension payments on a fluctuating basis; the amounts to be paid depended upon the salary currently paid to active employees of the rank held by the pensioner at the time of his retirement.

In 1923, by Charter amendments (Stats.1923, pp. 1581, 1588, 1593) the city of San Diego adopted a pension plan for retired firemen and policemen; provided for the payment into Pension Funds of 1% of the employees' wages together with other sums from other sources, including a payment from the General Fund of the City of such 'sum each year as may be required for the maintenance of said [Funds]'; directed that a retired employee with 20 years of service should be paid 'a yearly [compensation] equal to one-half the amount attached to the rank held by him for one year or more previous to the time of his retirement'; and made provision for an employee disabled in the line of duty.

In 1931, the City adopted a new Charter which included a pension program providing for the payment of pensions on a fluctuating basis to both retired and disabled employees; it was expressly stated that 'all pensioners shall have their pensions increased or decreased to meet the prevailing scale of salary * * *'; payments from salary into the Pension Funds were increased to 2%; other changes were made but, in the main, the plan adopted in 1923 was continued in force. Stats.1931, pp. 2838, 2917, 2920, 2923, 2926.

In 1941, the Charter was amended by providing that the pension paid to policemen would be in a fixed amount based on the average salary received during the five-year period prior to retirement. Stats.1941, pp. 3429, 3447. In 1947, by Charter amendment, a revised program was adopted; the fixed payment plan was extended to pensions payable to firemen as well as to policemen; a maximum pension of $200 per month was established; and the salary contribution by employees was raised to 8%. Stats.1947, pp. 3578, 3580. In 1955, an enabling amendment to the Charter provided for the transfer of firemen and policemen employed on June 30, 1946 into the City Employees' Retirement System; placed a maximum on their contributions; fixed the time for retirement; prescribed minimum and maximum retirement allowances; and made administrative changes. Stats.1955, p. 4049. This retirement system provided for the payment of compensation on a fixed formula basis. The 1955 amendment expressly provided that it should not be construed so as to affect the vested rights of retired firemen or policemen. All but seven of the plaintiffs retired before the effective date of this amendment, and these seven retired within a matter of a few months thereafter.

The firemen in these cases were in the employ of the city prior to 1947 and the policemen prior to 1941; the firemen and policemen retired, respectively, after 1947 and 1941; in most instances they retired after 20 years of service; all of them attained retirement status in accord with governing laws and regulations; and all of them have been paid pensions monthly of a fixed formula basis.

On varying dates in April and May, 1956, in compliance with a Charter provision, the plaintiffs filed with the City claims for the difference between the pension payments made under the fixed formula and the payments which would have been made under the fluctuating formula; the Charter provides that a claim for money due from the City shall be presented within ninety days after the last item thereof has accrued; the difference between the payments under the two formulae was substantial; the amounts claimed were limited to payments due within the three-year period immediately prior to filing; the claims were filed with the auditor and controller of the City and the Board of Administration of the City's Retirement System; payment was denied.

Thereafter, the plaintiffs brought these actions. The trial court determined that they were entitled to receive pension payments under the fluctuating formula and awarded judgment accordingly, but limited recovery to those monthly payments accruing during the ninety-day period prior to the filing of said claims and since said time, but refused to allow interest from the date of accrual as requested by plaintiffs.

All parties appealed from the judgment; the defendant from those portions in favor of the plaintiffs; and the plaintiffs from those portions in favor of the defendants.

The defendants contend the trial court erred in holding the Charter amendments of 1941 and 1947 were not applicable to a determination of the amount of plaintiffs' pension payments; in applying the fluctuating rather than the fixed formula to such determination; and in finding against their defenses that these actions are barred by laches and the statute of limitations.

The plaintiffs contend that the trial court erred in refusing recovery of monthly payments accruing at a time more than ninety days prior to the filing of their claims with the City; in refusing to allow interest from date of accrual on unpaid pension benefits accruing since September 7, 1955, being the date when section 3287 of the Civil Code was amended; and in failing to more clearly define the future pension rights of a widow of any plaintiff-pensioner in the event of his death.

The pension provisions of a city charter are an indispensable part of the contract of employment between a city and its employees, creating a right to pension benefits as an integral part of compensation payable under such contract, which vests upon acceptance of employment. Kern v. City of Long Beach, 29 Cal.2d 848, 852, 179 P.2d 799; French v. French, 17 Cal.2d 775, 777, 112 P.2d 235, 134 A.L.R. 366; Dryden v. Board of Pension Com'rs, 6 Cal.2d 575, 579, 59 P.2d 104. 'This right arises before the happening of the contingency which makes the pension payable, and it cannot be constitutionally abolished by subsequent changes in the law.' Wallace v. City of Fresno, 42 Cal.2d 180, 183, 265 P.2d 884, 886. However, 'vested contractual pension rights may be modified prior to retirement for the purpose of keeping a pension system flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system,' providing such modifications are reasonable. Allen v. City of Long Beach, 45 Cal.2d 128, 131, 287 P.2d 765, 767. '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.' Allen v. City of Long Beach, 45 Cal.2d 128, 131, 287 P.2d 765, 767. '* * * it is advantage or disadvantage to the particular employees whose own contractual pension rights, already earned, are involved which are the criteria by which modifications to pension plans must be measured' (Abbott v. City of Los Angeles, 50 Cal.2d 438, 326 P.2d 484, 489), and 'the substitution of a fixed for a fluctuating pension is not permissible unless accompanied by commensurate benefits.' Abbot v. City of Los Angeles, 50 Cal.2d 438, 326 P.2d 484, 493.

The firemen and policemen in the cases at bar had earned vested rights to retirement benefits under Charter provisions, providing for pensions based on a fluctuating formula, which were in force from 1923 until amended in 1941 and 1947. Abbott v. City of Los Angeles, 50 Cal.2d 438, 326 P.2d 484; Allen v. City of Long Beach, 45 Cal.2d 128, 287 P.2d 765; Chapin v. City Commission, 149 Cal.App.2d 40, 307 P.2d 657; Glaeser v. City of Berkeley, 148 Cal.App.2d 614, 307 P.2d 61; Cochran v. City of Long Beach, 139 Cal.App.2d 282, 293 P.2d 839.

In support of their contention that the 1941 and 1947 amendments were reasonable and, therefore, control a determination of the pension amounts payable in these cases, the defendants offer the statutory history showing a continual expansion of benefits under the City's pension plan from 1911 to date.

Prior to 1941, these favorable changes included an increase in benefits in case of death or disability, and for widows and dependent children; lowering of age requirements; enlarging participation in administration of the Funds; and relaxing the provisions respecting residence and grounds for discharge.

The benefits conferred under a pension system by changes which are made from time to time prior...