Arizona State Retirement Bd. v. Gibson

• Decision Date: 07 February 1966
• Docket Number: CA-CIV,No. 1,1
• Citation: 411 P.2d 47,2 Ariz.App. 609
• Parties: ARIZONA STATE RETIREMENT BOARD, State of Arizona, Appellant, v. Helen GIBSON, Appellee. * 67.
• Court: Arizona Court of Appeals

Page 47

411 P.2d 47

2 Ariz.App. 609

ARIZONA STATE RETIREMENT BOARD, State of Arizona, Appellant, v. Helen GIBSON, Appellee. ^*

No. 1 CA-CIV 67.

Court of Appeals of Arizona.

Feb. 7, 1966.

Rehearing Denied March 14, 1966.

Darrell F. Smith, Atty. Gen., Robert W. Pickrell, former Atty. Gen., by John A. Murphy, Jr., Sp. Asst. Atty. Gen., for appellant.

Scoville & Hofmann, by Leroy W. Hofmann, Phoenix, for appellee.

STEVENS, Chief, judge.

This case relates to the right of the Arizona State Retirement System Board, hereinafter called the Board, to offset against the pension of the widow of a deceased former member of the Arizona Highway Patrol certain disability retirement payments which it is claimed the member illegally received during his lifetime. All references herein are to the Arizona Revised Statutes unless expressly otherwise stated.

Title 38 of the Arizona Revised Statutes bears the caption 'Public Officers and Employees'. Chapter 5 thereof bears the caption 'Social Security and Retirement' and Article 2 of said chapter bears the caption 'State Employees Retirement System'. Prior to the year 1959, Article 2 was composed of Sections 38-741 to 38-764, both inclusive. Section 38-743, subsec. A recognizes the Board as an autonomous body with an official seal, with a capacity to transact business in its official name and among other things 'in that name may sue and be sued.' The Board is authorized to employ individuals and designate certain duties and responsibilities to the employees. One such employee is the Director. The 1959 session laws contain chapter 145 which chapter was approved by the Governor and filed with the Secretary of State on 2 April 1959 although the chapter by its own terms did not cover benefits until 1 July 1959. Section 2 of chapter 145 contains the following introductory recitation:

'Title 38, chapter 5, article 2, Arizona Revised Statutes, is amended by adding sections 38-765 to 38-776 * * *'

The 1960 session laws reflect chapter 42 which chapter was approved by the Governor and filed with the Secretary of State on 22 March 1960, and which became law on 25 June next following. One of the sections which was amended by chapter 42 is section 38-773 which said section was added to the statute law of the State of Arizona with the enactment of chapter 145.

The legislative purpose in adopting chapter 145 is a humanitarian purpose and is well expressed in section 1 of the chapter as follows:

'PURPOSE

It is generally recognized that the official duties of the members of the Arizona highway patrol are of such nature that they require men possessed of considerable physical strength and endurance. Because of the nature of the employment, highway patrol members are frequently compelled to withdraw from the patrol prior to reaching the age for retirement under the state employees' retirement system. Under these circumstances patrol members and their families are not afforded the same protection as other public employees who are in a position to continue their work until becoming eligible for retirement and it is the purpose of this act to make provisions therefor.'

The case which we have for consideration is a case of comparatively simple facts and yet it is difficult to set this matter forth in a short opinion. George C. Gibson was born in 1893. In 1949 he married the plaintiff herein and they remained husband and wife throughout the balance of his natural lifetime, he having died on the 19th day of May 1960. The record reflects extremely poor health in the latter months of his life and that the plaintiff remained at his side. In 1942, Gibson commenced his employment with the Arizona Highway Patrol and pursuant to a later application, he was blanketed in under the Arizona State Employees Retirement System with credit for his service beginning with the year 1942. During the early part of the year 1959, Mr. Gibson became ill and was placed on sick leave. After chapter 145 became effective and on the 3rd day of July of that same year, he filed a petition for disability retirement. The appropriate administrative procedures were completed and he was placed on disability retirement with a pension of $241.09 a month beginning July 1959.

Section 38-773, as the same appears in chapter 145, reads as follows:

'APPLICABILITY OF WORKMEN'S COMPENSATION LAW AND FEDERAL OLD AGE AND SURVIVORS INSURANCE SYSTEM

'This article shall be supplemental and in addition to the benefits payable under the state workmen's compensation law or the federal old age and survivors insurance system, but members and their beneficiaries receiving compensation under those provisions of law shall not receive the benefits provided by this aritcle during the period they receive such compensation.'

As heretofore stated, this section was amended in the year 1960 by the adoption of chapter 42, the 1959 language being retained and the section being enlarged by adding the following:

'* * * except in the event the employee's primary benefit under those provisions of law is less than the benefits provided by this article, then the state highway patrol retirement system shall pay the deficiency as determined by the state retirement system board.'

In Gibson's application for disability retirement he answered a form questionnaire and gave the following answers to the following questions:

'Have you submitted an application for benefits under the Federal Old Age and Survivors Insurance System. No

'Are you now drawing such ompensation? No'

This document was 'acknowledged' before a notary public. Thereafter eleven (11) warrants were drawn on the State Treasurer each being payable to George C. Gibson, each being the sum of $241.09. On all except two there is a typed restrictive endorsement reading in substance,

'I the undersigned payee, affirm that I am not now drawing a Federal Old Age and Survivors' Insurance System benefit and that I do not have an application now pending.'

The warrant for the month of May 1960, being the month of the death of Mr. Gibson, has the above restriction and was endorsed by Mrs. Gibson in her capacity as executrix. The warrants for the months of December 1959, and February 1960, carry the restriction and what appear to be the signatures of both Mr. And Mrs. Gibson. From her testimony it is probably safe to assume that his name was signed by her.

Upon Mr. Gibson's death, the plaintiff, his widow, applied for her statutory widow's pension. The Board made an informal investigation and concluded that Mr. Gibson had been drawing Social Security on and before the 3 July 1959, application for the disability retirement pension and throughout the period of the receipt of his disability retirement pension. The Board determined that Mr. and Mrs. Gibson had illegally received $2,651.99 and declined to make any payments to the plaintiff until the monthly increment of her pension should equal that sum. Section 38-743, subsec. C states in part that:

'The board * * * may hold hearings for the purpose of determining any question involving any right, benefit or obligation of an employee under this article * * *.'

Pursuant to this section, the plaintiff made application to the Board for a hearing in relation to her pension rights. A then member of the Board, who is also a member of the Bar, was designated to conduct the hearing; he will be referred to herein as the Hearing Officer. There was some delay in arriving at a date which was mutually agreeable to the Hearing Officer and to plaintiff's counsel as it is nor always easy to coordinate the time of busy lawyers. Pending the hearing, the plaintiff qualified as executrix in the matter of the probate of her husband's estate, and the Board filed creditor's claim against the estate of Mr. Gibson. The claim was supported by a letter which stated that the Retirement System did not know until June 1960 that Social Security Benefits were being paid to Mr. and Mrs. Gibson. The letter stated in part:

'The Certificate of Social Security Insurance Award now available to us notes such income payments began in July of 1958, were subsequently increased in January of 1959, and were paid and received during the months of July 1959 through May 1960.'

(Nowhere in the file which was certified to the Superior Court is there any document which supports this statement.) The letter stated that improper payments totaling $2,651.99 was paid and set forth certain deductions which had been made by the fund arriving at the figure set forth in the claim.

The claim was rejected and a letter of advice to that effect was sent to the Board. No suit was filed in relation to the rejected claim within the three months following the rejection of the claim as required by Section 14-579 and the rejection of the claim became final insofar as the estate of Mr. Gibson was concerned.

The hearing was held on the 8th day of September 1961, and at that time is the first indication of any friction or feeling of animosity in relation to the plaintiff's claim. Whether this was shared by all members of the Board we do not know but it appears to have been shared by the Hearing Officer and later by the attorney for the Board. At the inception of the hearing and in relation to the fact that plaintiff had been granted a hearing by the Board, the Hearing Officer stated that:

'She has been granted this right as a matter of grace by the Board.'

This Court does not so interpret Section 38-743, subsec. C above quoted.

During the hearing plaintiff's counsel suggested that certain matters might be the subject of stipulation. The Special Assistant Attorney General who was present at the hearing representing the Board, did not participate in these discussions, the discussions being between the Hearing Officer and the attorney for the plaintiff. The Hearing Officer advised that he was not in a position to bind the Board. This Court does not impute any bad motive, but observes that it would be much better in the conduct of...