Allen v. City of Long Beach

• Decision Date: 23 September 1955
• Citation: 45 Cal.2d 128,287 P.2d 765
• Court: California Supreme Court
• Parties: Manning T. ALLEN et al., Plaintiffs and Appellants, v. CITY OF LONG BEACH et al., Defendants and Appellants. Elwin L. ALGER et al., Plaintiffs and Appellants, v. CITY OF LONG BEACH et al., Defendants and Appellants. L. A. 22894, 22895.

Page 765

287 P.2d 765

45 Cal.2d 128

Manning T. ALLEN et al., Plaintiffs and Appellants, v. CITY OF LONG BEACH et al., Defendants and Appellants.

Elwin L. ALGER et al., Plaintiffs and Appellants, v. CITY OF LONG BEACH et al., Defendants and Appellants.

L. A. 22894, 22895.

Supreme Court of California, In Bank.

Sept. 23, 1955.

Rehearing Denied Oct. 19, 1955.

Albert D. White, Nowland M. Reid, Long Beach, for plaintiffs and appellants Allen and others.

Kenneth Sperry, Long Beach, for plaintiffs and appellants Alger and others.

Wahlfred Jacobson, City Atty., and Clifford E. Hayes, Deputy City Atty., Long Beach, for defendants and appellants.

GIBSON, Chief Justice.

On March 29, 1945, the City of Long Beach undertook to withdraw substantially all pension rights granted by section 187 of its charter to employees of the police and fire departments, and we held that the action of the city was invalid as to persons employed before that date. Kern v. City of Long Beach, 29 Cal.2d 848, 179 P.2d 799. Those who thereafter entered the police and fire departments were offered no pension benefits until 1950 when the city entered into a contract with the state, pursuant to section 20450 et seq. of the Government Code, for the purpose of making such persons members of the state employees' retirement system. In 1951 section 187.2 of the charter was enacted altering the pension rights of policemen and firemen employed prior to March 29, 1945.

Plaintiffs are members of the police and fire departments, and their employment commenced before March 29, 1945. They brought these actions in declaratory relief seeking a determination of their rights under the charter as amended, and the actions were consolidated for trial. Judgment was rendered upholding two changes in plaintiffs' pension rights and invalidating a third, and all parties have appealed from the judgment.

The 1951 changes in pension rights involved here are:

(1) The amount of each employee's contribution to the city retirement system was raised from 2 per cent of his salary to 10 per cent;

(2) The method of computing the pension benefits payable to employees retiring after 25 years of service was altered to provide for payment of a fixed rather than a fluctuating amount; and

(3) Employees absent by reason of military service were required, upon reinstatement to city employment, to pay into the retirement fund an amount equal to that which would have been deducted from their salaries had they not been absent. Prior to enactment of section 187.2 no such contributions were required from any employee returning from leave of absence granted for military or other purposes.

The trial court upheld the provisions raising the amount of the employees' contributions to the pension system and changing the method of computing pension benefits, and it invalidated the requirement that an employee returning from military service make a contribution to the retirement fund covering the period of his absence.

An employee's 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. Wallace v. City of Fresno, 42 Cal.2d 180, 184, 265 P.2d 884; Packer v. Board of Retirement, 35 Cal.2d 212, 214, 217 P.2d 660; Kern v. City of Long Beach, 29 Cal.2d 848, 854-855, 179 P.2d 799. 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. Wallace v. City of Fresno, 42 Cal.2d 180, 185, 265 P.2d 884; see Packer v. Board of Retirement, 35 Cal.2d 212, 214, 218-219, 217 P.2d 660. In the present case it appears that section 187.2 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.

The provision raising the rate of an employee's contribution to the city pension fund from 2 per cent of his salary to 10 per cent obviously constitutes a substantial increase in the cost of pension protection to the employee without any corresponding increase in the amount of the benefit payments he will be entitled to receive upon his retirement.

The method of computing benefits was revised, under section 187.2, by substituting a fixed pension for the fluctuating pension previously provided for, and the sum to be paid as a pension is based on one-half the average monthly salary earned by the employee during the five years preceding his retirement or death. Prior to enactment of this section a retired employee was to receive a benefit equal to one-half the salary currently attached to the position which he had held one year prior to his retirement, and...