Board of Trustees of Emp. Retirement System of City of Montgomery v. Talley, 3 Div. 456

• Decision Date: 04 February 1971
• Docket Number: 3 Div. 456
• Citation: 244 So.2d 791,286 Ala. 661
• Parties: BOARD OF TRUSTEES OF EMPLOYEES' RETIREMENT SYSTEM OF the CITY OF MONTGOMERY, Alabama v. Dorothy Carr TALLEY.
• Court: Alabama Supreme Court

Page 791

244 So.2d 791

286 Ala. 661

BOARD OF TRUSTEES OF EMPLOYEES' RETIREMENT SYSTEM OF the CITY OF MONTGOMERY, Alabama v. Dorothy Carr TALLEY.

3 Div. 456.

Supreme Court of Alabama.

Feb. 4, 1971.

Rehearing Denied March 4, 1971.

Walter J. Knabe, Montgomery, for appellant.

Calvin M. Whitesell, Montgomery, for appellee.

McCALL, Justice.

The appellee filed her bill of complaint, in equity, in the circuit court under Tit. 7, § 156, et seq., Code of Alabama, 1940, as amended, being the Alabama version of the Uniform Declaratory Judgment Act, against the Board of Trustees of the Employees' Retirement System of the City of Montgomery for a declaration of rights, status, and other legal relations, under a municipal ordinance, adopted by the Board of Commissioners of the City of Montgomery, Alabama, establishing the Employees' Retirement System for that city. The municipality adopted the ordinance pursuant to the provisions of Act No. 486, Acts of Alabama, 1961, p. 550, authorizing cities within its classification to enact ordinances to establish and maintain a general system of pensions and retirements. Under the ordinance, the Retirement System is placed under the management of a Board of Trustees of the System which consists of seven members. No respondents, other than the Board of Trustees, are named in the bill. The City of Montgomery is not made a party to the bill.

The complainant, who is the widow of John C. Talley, alleges herself to be a person, interested under this ordinance, whose rights, status, or other legal relations are affected thereunder, because she is the beneficiary designated by her deceased husband, a member of the Retirement System, to receive the retirement allowance at his death, provided in one of the option plans found in Section 6, Subsection 17 of the ordinance. The pertinent portion of this option plan provides that should be retired employee die within thirty days after retirement, his optional election shall not be effective and he shall be considered to be a member in service at the time of his death, and the only benefit payable on his account shall be the return of his contributions, reduced by any retirement allowance payments received by him prior to his death.

Prior to his death on February 25, 1967, John C. Talley applied, on December 29, 1966, for DisabilityRetirement under the ordinance, requesting that his retirement become effective on February 1, 1967, and stating that he had been totally and permanently disabled since August 23, 1966, and that he was born on September 28, 1917. He elected to receive his retirement allowance under one of the option plans which he had read, and he designated his wife Dorothy Carr Talley, the appellee, who was born on January 10, 1922, as the beneficiary to receive the benefits at his death. The Board denied the appellee's application for retirement allowance on the ground that Mr. Talley had died within thirty days after his retirement, insisting that his nominee, the appellee, was entitled under the ordinance only to a return of the contributions, made to the system by her late husband.

In her amended bill, as last amended, the appellee, Mrs. Talley, attacks the constitutionality of the ordinance and avers that the system was not adopted in the best interests of the employees and is arbitrary, and discriminatory in that it provides windfalls to those responsible for its creation and a roulette system for those it was supposed to be enacted for and she prays that the court declare the ordinance null, void and unconstitutional, or, in the alternative, award her monthly benefits for life.

The chancellor decreed, as being void and unconstitutional, the portion of the ordinance which provides that if a member should die within thirty days after retirement or within thirty days after the date of filing his optional election, whichever is later, his optional election shall not be effective and he shall be considered to be a member in service at the time of his death, with the only benefit payable being the return of the contributions made by him, reduced by any retirement allowance payments which he received prior to death. The court made no finding or statement as to why it decreed the ordinance unconstitutional.

There is an actual justiciable controversy existing between the parties to this suit, but it appears from reading the transcript of the record on appeal that the City of Montgomery is not made a party to the suit, notwithstanding the fact that the validity of a municipal ordinance is involved. Thus a question arises as to whether or not the trial court had jurisdiction to proceed to a determination of the case on the merits in the absence of the municipality being a party. This question was not raised by the trial court or the parties.

Tit. 7, § 166, Code of Alabama, 1940, provides as follows:

'All persons shall be made parties who have or claim any interest which would be affected by the declaration, and no declaration shall prejudice the rights of persons not parties to the proceeding. In any proceeding which involves the validity of a municipal ordinance or franchise, such municipality shall be made a party, and shall be entitled to be heard, and if the statute, ordinance, or franchise is alleged to be unconstitutional, the attorney-general of the state shall also be served with a copy of the proceeding and be entitled to be heard.'

Under the provisions in the first sentence of this statute, it is not fatal to a suit for a declaratory judgment, to omit an interested person as a party, if such person is found to be one whose presence is not necessary to a determination of the controversy between the parties who are before the court, because this is contemplated by § 166, supra, which states in part '* * * no declaration shall prejudice the rights of persons not parties to the proceeding. * * *.' Trammell v. Glens Falls Indemnity Co., 259 Ala. 430, 66 So.2d 537; Trustees of Howard College v. McNabb, 268 Ala. 635, 108 So.2d 835; McCall v. Nettles, 251 Ala. 349, 353, 37 So.2d 635.

Further, where a person, not made a party to the declaratory judgment proceeding, is found to be a necessary party, and the bill shows on its face an absence of such a party, without whose presence the controversy cannot be determined, the court must require such interested person to be made a party, and if not, the bill is subject to a demurrer assigning that ground. Brantley v. Brantley, 258 Ala. 367, 63 So.2d 29.

The word 'shall,' in that portion of § 11 (our § 166, supra) of the Uniform Declaratory Judgments Act has been construed to mean 'may,' because the rights of absent parties having an interest in the controversy are saved from prejudice by the provision in this portion of § 166, supra, which states that '* * * no declaration shall prejudice the rights of persons not parties to the proceeding. * * *.' State ex rel. City of Indianapolis v. Brennan, 231 Ind. 492, 109 N.E.2d 409; Annotation: 71 A.L.R.2d 723, 730; 22 Am.Jur.2d, § 80, p. 944, note 18; 26 C.J.S. Declaratory Judgments § 122, p. 282; and Trammell v. Glens Falls Indemnity Co., supra, holds that this portion of the statute controverts the need for making all interested persons parties, if the parties present represent the merits of the conflict.

There is no such qualification of 'shall,' in the second and last sentence of this statute, § 166, supra. The plain language of this provision in the statute, dictates that 'shall's' logical meaning is 'must,' for otherwise the statutory requirement to make the municipality a party would be without purpose and meaningless. So, where the validity of a municipal ordinance is involved in a declaratory judgment proceeding, the municipality is to be made a party, because the statute expressly requires that this be done. This second sentence of the statute also provides that the municipality shall be entitled to be heard. The municipality is not afforded an opportunity to be heard until or without first being made a party.

The Board of Trustees of the Employees' Retirement System of the City of Montgomery does not constitute the City of Montgomery, the governmental body which adopted the ordinance. Making the Board of Trustees a party is not the same as making the municipality a party. It is clear that they are separate and distinct bodies. City of Danville v. Wilson, Ky., 395 S.W.2d 583, 585. The Board of Trustees, a subdivision or agency of the municipality, is charged with the general administration and the responsibility for the proper operation of the System, and for making effective the provisions of the ordinance. The municipality is charged with appropriating the amount of money necessary to pay the normal and accrued liability contributions to the Pension Accumulation Account for each ensuing year, and the amount of the appropriation required to cover the expense necessary to conduct the administration and operation of the System. The rates of contribution by the municipality to the Pension Accumulation Account are required by the ordinance to be fixed on the basis of the liabilities of the System as shown by actuarial valuation and the municipality's contribution is required by the ordinance to be sufficient to provide for the payment of any pension or other benefit payable on an employee's account not provided by his own contributions. The trial court's final decree, by declaring void and unconstitutional the thirty day waiting period after retirement or after the election of an option plan, whichever is later, understandably increases the risk of loss and the consequent liability of the municipality to pay the retirement allowance to survivors of employees during their lives, and logically, to meet this increase in amount of liabilities, the City of Montgomery must increase its contributions to raise the money. There may be other instances in which the interest of the municipality under the ordinance is involved, but,...