Banish v. City of Hamtramck

• Decision Date: 18 March 1968
• Docket Number: Docket No. 2658,No. 1,1
• Citation: 9 Mich.App. 381,157 N.W.2d 445
• Parties: Edward BANISH et al., Plaintiffs-Appellees, v. The CITY OF HAMTRAMCK, a municipal corporation et al., Defendants-Appellants
• Court: Court of Appeal of Michigan — District of US

Page 445

157 N.W.2d 445

9 Mich.App. 381

Edward BANISH et al., Plaintiffs-Appellees, v. The CITY OF HAMTRAMCK, a municipal corporation et al Defendants-Appellants.

Docket No. 2658.

Court of Appeals of Michigan, Division No. 1.

March 18, 1968.

Released for Publication April 5, 1968.

Rehearing Denied May 15, 1968.

Charles W. Kotulski, City Atty., Stanley J. Draganski, Edmund E. Torcellini, Asst. City Attys., Hamtramck, for appellants.

Con S. Gryczka and Theodore R. Robbins, Detroit, for appellees.

Before FITZGERALD, P.J., and LEVIN and McGREGOR, JJ.

LEVIN, Judge.

Plaintiffs are retired policemen and firemen and retired members of the police signal and fire alarm systems of the city of Hamtramck. Under the provisions of the city charter, they are entitled to receive a pension at the rate of one-half the pay of the rank in which they served at the time of retirement. The charter provides that in the event of any change at any time after retirement 'in such rate of pay' the pension thereafter will be 'at the rate of one-half (1/2) the pay for said rank so changed.' ¹

The charter provision was adopted in 1938, and from the time of its adoption through the fiscal year preceding 1959--1960 pensioners received their 50% Share of adjustments whenever pay changes were approved for persons on active duty. For the fiscal year 1959--1960 the common council adopted the recommendation of its budget board increasing the pay of its class B employees to correspond to that paid in the city of Detroit, but providing that retirees shall not receive one-half of the increment. Such proviso was expressed as follows:

'that the basic pay of the Class B employees for all intents and purposes shall be the same as was prevailing in the 1958--59 fiscal year and that any Amounts paid over and above such basic pay shall be construed as payments made only while in active service for the city of Hamtramack and Not constituting part of any salary upon which pension payments are to be computed and paid in the future.' (Emphasis added.)

The parties refer to the increment over basic pay, in 1959--1960 and later years paid only to those in active service, as 'in service pay.'

The plaintiffs, and the other members of the class in whose behalf this suit was instituted, are all class B employees.

The separate designation for 'in service pay' set forth for the first time in the 1959--1960 budget also appears in subsequent budgets. In the 1964--1965 budget, 'in service pay' was supplemented by 'hazard risk pay,' a designation continued in the 1965--1966 budget. During these years employees in active service received an annual clothing or uniform allowance, annual holiday pay and annual longevity pay benefits not reflected in the pensions of retired employees.

The retirees made informal efforts to obtain from the city payment of 50% Of these amounts. When such efforts failed a petition demanding payment was filed with the common council on August 24, 1964. The petition was rejected on September 29, 1964.

Plaintiffs' complaint was filed March 1, 1965, and sought a writ of mandamus requiring payment of increased pension benefits. Defendants answered that the charter provision means 'one-half of Regular salary and not any Other pay,' that the common council of the city of Hamtramck might authorize compensation over and above the 'regular salary' payable only to active members of the police and fire departments and signal and alarm systems, and that in service, hazard risk, holiday and longevity pay and clothing and uniform allowances were not part of regular salary.

One of the city officers who was conversant with the matter testified that the action of the common council in adopting the 1959--1960 recommendation of the budget board was a temporary austerity measure due to loss of revenue; the intent was to restore to the retirees full pension benefits; and when the city adopted an income tax ordinance substantial sums were set aside for pension benefit payments once the courts passed on the constitutionality of the income tax ordinance.

There was testimony that the nature of the work of policemen and firemen had not changed, and that the hazard of those positions was not fundamentally different from the hazard faced by the retirees when they served. Deductions were made from the pay of active service employees for city and federal income tax in respect to the portions of their pay designated in service, hazard risk, longevity, and holiday; there was no such deduction in regard to the clothing or uniform allowance.

The trial judge found that both hazard risk and in service pay were increases in regular compensation, and that such increases in pay were so labeled to circumvent the charter requirements that retirees receive one-half thereof. He added: 'the same goes for holiday pay and the same goes for uniforms. This is simply giving increases by virtue of different titles.'

On July 14, 1966, a judgment was entered by the trial judge adjudicating this a class action and that the members of the class--plaintiffs and all persons who had retired as policemen, firemen, and members of the police signal and fire alarm systems--were entitled, as part of their retirement pensions, to: 50% 'of all pay increases, including 'in service pay increase' and 'hazard risk pay'; fifty percent (50%) of all uniform allowances; fifty percent (50%) of all paid holidays'; but they 'shall not recover any part of the longevity payments made to those of the same rank or grade on active duty.'

The judgment declared the increase in benefits retroactive to March 1, 1959, and covered benefits through the fiscal year 1965--1966. It also provided that, once computed, individual arrearages shall be set forth in a supplemental judgment and bear interest at 5% Per annum from the date of said supplemental judgment, except that in the case of deceased employees interest shall not run until after appointment of a special or general administrator to whom payment may be made.

The defendants appeal. The plaintiffs cross-appeal, claiming a right to 50% Of longevity pay and interest from the date (August 24, 1964) the petition demanding payment was filed with the city council.

I.

The charter of a city is its fundamental law, and all ordinances in conflict therewith are null and void, upon the principle that a statute which contravenes a constitution must fall. Mayor of City of Dearborn v. Dearborn Retirement Board of Trustees (1946), 315 Mich. 18, 24, 23 N.W.2d 186; Thiesen v. Dearborn City Council (1948), 320 Mich. 446, 31 N.W.2d 806; Brady v. City of Detroit (1958), 353 Mich. 243, 91 N.W.2d 257. ²

The distinction sought to be created between 'regular salary' and 'any other pay' is clearly foreclosed by the charter language, which speaks simply in terms of 'pay.' A fair reading of the charter language requires that the term 'pay,' as used in the clause 'one-half (1/2) the pay for said rank so changed,' be interpreted to mean the regular compensation currently paid to those of the rank held by the retiree at the time of his retirement. The crucial question, then, is what is regular compensation? We have no hesitancy in holding, on the facts of this case, that in service pay and hazard risk pay are regular compensation. Those terms were devised in an attempt to take two bites out of the cherry with the deliberate purpose, and none other, of depriving retirees of the full pension rights which the charter mandates.

The charter provision requiring escalation or reduction of retirement pay expresses a purpose that retirement benefits will, in fact, escalate and reduce as the pay of the rank in which the retiree was serving at the time of retirement changes. The defendants' argument would permit the city to keep the retirees' pay constant--or, indeed, to effect only reductions and no increases--by simply adopting the correct nomenclature and dividing the pay of active service employees into categories plausibly packaged and labeled. We look beyond form to substance.

Holiday pay is defined by ordinance No. 246, approved November 12, 1958, as a 'sum equal to eight (8) times the maximum daily rate of pay,' payable 1/8th on the first pay day after each of 8 designated holidays. We hold that holiday pay is part of regular compensation and, hence, pay.

As to longevity pay, various ordinances provide for it after 11 years of service, of which a minimum of 6 years has been accumulated in the same basic class or rank. While approval of the director of public safety, or the chief of the respective department, of the employee's 'conduct of work performance' is required for longevity pay, the only record evidence is that a substantial number of employees whose years of service qualified them for longevity pay did in fact receive it. The maximum longevity pay increase is earned when one reaches 16 years of service. Since one must serve for 20 years to be eligible for retirement, it appears that a substantial number of the plaintiffs and members of the class would have received longevity pay had the ordinances concerning longevity pay been adopted prior to their retirement.

The longevity pay ordinances provide that longevity pay is not part of

'base pay, nor is it a reward based on mere length of service or seniority. It is incentive pay designed to retain and reward the firemen and police officers for future service who continue to serve meritoriously.'

Is that not a definition of compensation--a consideration paid as an incentive to performance of good and faithful service? The fact that the city finds it necessary or desirable to pay greater compensation to those who have served long and faithfully does not make such payment less than compensation. The amounts so paid are not gratuities.

Whether longevity pay is part of the pay of the rank formerly held by an individual retired employee depends upon his rank, and part of his 'rank' is whether he served 11 years, 6 years in...