Ballard v. Board of Trustees of Police Pension Fund of City of Evansville

• Decision Date: 25 June 1974
• Docket Number: No. 1-873A139,1-873A139
• Citation: 313 N.E.2d 351
• Parties: Wilbert Lee BALLARD, Plaintiff-Appellant, v. BOARD OF TRUSTEES OF the POLICE PENSION FUND OF the CITY OF EVANSVILLE, Indiana, Defendant-Appellee.
• Court: Indiana Appellate Court

Page 351

313 N.E.2d 351

Wilbert Lee BALLARD, Plaintiff-Appellant, v. BOARD OF TRUSTEES OF the POLICE PENSION FUND OF the CITY OF EVANSVILLE, Indiana, Defendant-Appellee.

No. 1-873A139.

Court of Appeals of Indiana, First District.

June 25, 1974.

Rehearing Denied Aug. 9, 1974.

Opinion Superseded 324 N.E.2d 813.

John D. Clouse, Evansville, for plaintiff-appellant.

John C. Cox, Evansville, for defendant-appellee.

LYBROOK, Judge.

Plaintiff-appellant Ballard brought an action for restoration of his policeman's pension which had been terminated by defendant-appellee Board due to his conviction of a felony. From a judgment in favor of the appellee, Ballard appeals.

Ballard challenges the constitutionality of the termination of his benefits pursuant to IC 1971, 19-1-24-5, Ind.Ann.Stat. § 48-6405 (Burns 1963), which provides:

"Whenever any person who shall have received any benefit from such fund shall be convicted of a felony or shall become an habitual drunkard or shall fail to report himself for duty or for examination, or otherwise shall fail to comply with any legal requirements imposed by the board of trustees of the police pension fund, said board may upon notice to any such person discontinue or reduce in its discretion any payments that might otherwise accrue thereafter: Provided, however, That nothing contained in this act [§§ 48-6401-48-6406] shall be construed to entitle said board to recall into service any member who has previously been retired from active service on account of having served twenty years or more; nor shall anything in this act be construed to entitle a retired member to a pension after he shall have been convicted of a felony, or shall have become an habitual drunkard. [Acts 1925, ch. 51, § 5, p. 167.]"

The issue was presented to the court upon the following stipulation of fact by the parties:

"Come now the parties by counsel and stipulate and agree that the following facts are true and that this stipulation may be used upon the trial of this cause, both parties, however, reserving the right to introduce other evidence, said stipulation being as follows, to-wit:

1. The plaintiff, Wilbert Lee Ballard, was, prior to his retirement as set out hereinafter, a member of the Police Department of the City of Evansville, Indiana.

2. That the defendant, Board of Trustees of the Police Pension Fund of the City of Evansville, Indiana, is the legal entity charged with the ownership, trusteeship, and maintenance of the Police Pension Fund of the Police Department of the City of Evansville, Indiana.

3. That the plaintiff, Wilbert Lee Ballard, was permanently injured in an on-duty accident when serving with the Evansville Police Department, and, thereafter, in November of 1967, was retired from said department on a disability pension, administered by the Board of Trustees of the Pension Fund of the City of Evansville, Indiana.

4. That, thereafter, the said Wilbert Lee Ballard regularly drew said pension until the same was terminated and cancelled as set out hereinafter.

5. That on the 14th day of August, 1970 the said Wilbert Lee Ballard was convicted of second degree murder in the Superior Court for Pima County. Tuscon, Arizona. That second degree murder is, and was at said time, a felony according to the laws of the State of Arizona.

6. That, thereafter, on August 16, 1970, the defendant Board of Trustees discontinued paying to the said Wilbert Lee Ballard his pension benefits solely because of said conviction.

7. That at the time said pension was discontinued and cancelled, the said Wilbert Lee Ballard was drawing the sum of $322.50 per month in pension benefits from the defendant, and said pension was payable [sic] at said rate per month until the year of 1971 when it would have been increased to the sum of $343.64 per month, at which rate it was payable until the year of 1972 at which time it would have been increased to the sum of $353.74 per month."

I.

Resolution of the issues presented in this cause necessitates an examination of the nature of the rights, if any, which an officer acquires through participation in the Police Pension Fund. ¹

The fund is derived from several sources, including contributions by police officers during the course of their employment. It is the character of these contributions by the members of the force which is of controlling significance for purposes of this appeal, since courts have traditionally drawn a distinction between voluntary and involuntary plans.

Participation in the pension plan with which we are concerned is clearly involuntary. Every member of the police force is liable to the payment of assessments into the fund and is conclusively deemed to have agreed that enforced contributions may be deducted from his salary. IC 1971, 19-1-24-2, Ind.Ann.Stat. § 48-6402 (Burns 1973 Cum.Supp.).

According to the great weight of authority and the law of this State, involuntary plans are mere gratuities involving no agreement of the parties. The pension has been characterized as a bounty springing from the appreciation and graciousness of the sovereign. Accordingly, it may be given, withheld, distributed or recalled at the sovereign's pleasure. While the contributions made by the employee are commonly designated as compensation, he neither receives nor controls them. Since the individual cannot prevent appropriation of his contributions to the fund, he lacks the power of disposition which accompanies ownership of property. Since he completely lacks control over or right to the monies appropriated, it has been theorized that the payments into the fund are not in fact personal contributions. Herein lies the distinguishing factor between voluntary and involuntary contribution systems. Under a voluntary plan the employee theoretically receives the money then turns it back to the fund. In effect, the money becomes private means and is then contributed. Conversely, under an involuntary plan it is considered that the monies are never actually segregated from public funds. The end result is that no vested rights are acquired in the fund by the employee under an involuntary plan. Kern v. State ex rel. Bess (1937), 212 Ind. 611, 10 N.E.2d 915, citing Pennie v. Reis (1889), 132 U.S. 464, 10 S.Ct. 149, 33 L.Ed. 426; Jensen v. Pritchard (1950), 120 Ind.App. 439, 90 N.E.2d 518, citing Raines v. Board of Trustees Pen . Fund (1937), 365 Ill. 610, 7 N.E.2d 489.

In Klamm v. State ex rel. Carlson (1955), 235 Ind. 289, 126 N.E.2d 487, our Supreme Court reiterated the concepts that pensions under an enforced or compulsory contribution plan are gratuities, involving no agreement of the parties and creating no vested rights. However, the court went on to say:

"Where the statutory conditions for retirement existing when the application is made have been met, and the award of the pension has been made, or as of right should have been made, the pensioner's interest becomes vested and takes on the attributes of a contract, which, in the absence of statutory reservations, may not legally be diminished or otherwise adversely affected by subsequent legislation. Pennie v. Reis, 1889, 132 U.S. 464, 10 S.Ct. 149, 33 L.Ed. 426, supra; Freyermuth v. State ex rel. Pinter, 1939, 215 Ind. 693, 21 N.E.2d 707; Roddy v. Valentine, 1935, 268 N.Y. 228, 197 N.E. 260, supra; Klench v. Board of Pension Fund Com'rs., 1926, 79 Cal.App. 171, 249 P. 46; State ex rel., v. Trustees, 1948, 149 Ohio St. 477, 79 N.E.2d 316; Id., 150 Ohio St. 377, 82 N.E.2d 743."

Upon the above authority Ballard argues that upon retirement he acquired a vested contractual right to the payment of his pension. Appellee, on the other hand, insists that the pensioner's right is merely statutory, rather than contractual in nature.

The language employed being somewhat less than definite, we have examined the cases cited by the Klamm court as authority for the above statement. State ex rel. v. Trustees, supra, involved constructions by the Ohio Supreme Court of certain legislative amendments to the state pension plans for firemen and policemen. The statutes generally provided that the granting of a pension to an eligible beneficiary would operate to vest a right in that person to receive such pension at the rate fixed at the time of the granting for so long as he remains a beneficiary.

In considering the nature of the right acquired by the pensioner, the court reasoned:

"Doubtless the considerations outlined just above were responsible, in a measure at least, for the enactment of the 'vested right' statutes, and the effect of those statutes is to make the engagement of public authorities to pay a pension, upon conditions fulfilled, a contractual obligation founded upon a valid consideration, giving to the pensioner a vested right in his pension which cannot afterwards be impaired or revoked.

The cases of Retirement Board of Allegheny County v. McGovern et al. Com'rs, 316 Pa. 161, 169, 174 A. 400, 404 and David v. Veitscher Magnesitwerke Actien Gesellschaft, 348 Pa. 335, 346, ...