Board of Trustees of Public Employees' Retirement Fund v. Hill

• Decision Date: 04 January 1985
• Docket Number: No. 684,684
• Citation: 472 N.E.2d 204
• Parties: BOARD OF TRUSTEES OF THE PUBLIC EMPLOYEES' RETIREMENT FUND, Appellant, v. Nat U. HILL and Lester G. Baker, Appellees. S 212.
• Court: Indiana Supreme Court

Page 204

472 N.E.2d 204

BOARD OF TRUSTEES OF THE PUBLIC EMPLOYEES' RETIREMENT FUND, Appellant, v. Nat U. HILL and Lester G. Baker, Appellees.

No. 684 S 212.

Supreme Court of Indiana.

Jan. 4, 1985.

Linley E. Pearson, Atty. Gen., Arthur Thaddeus Perry, Deputy Atty. Gen., Indianapolis, for appellant.

Virgil L. Beeler, Marc W. Sciscoe, Baker & Daniels, Jerry P. Belknap, Barnes & Thornburg, Evan E. Steger, Ice, Miller, Donadio & Ryan, Indianapolis, for appellees.

DeBRULER, Justice.

This was a civil action by the appellees, Judges Hill and Baker, to obtain declaratory relief. The defendant below was the Board of Trustees of the Public Employees' Retirement Fund in its capacity as administrator of the Indiana Judges' Retirement Fund, created by statute. Ind. Code Sec. 33-13-8-1. The action challenged 1982 and 1983 amendments to Ind. Code Sec. 33-13-8-10 which redefined salary in its role as a factor in the calculation of judges' retirement benefits. The action was submitted to the trial court for determination upon the complaint, the answer, a stipulation of fact, and briefs. A judgment for the plaintiffs was rendered in which the court declared that the redefinition was legally ineffective and also unconstitutional under Article I, Section 24 of the Indiana Constitution and Article I, Section 10, Clause 1 of the United States Constitution. The Board then satisfied the predicates for appeal. Exclusive jurisdiction of the appeal is in this, the Indiana Supreme Court, pursuant to Appellate Rule 4(A)(8).

The present justices holding office on this Court are participants in the judges' retirement system and consequently have interests and expectations in the subject matter of this appeal which are identical to those of appellees. The parties are undoubtedly aware of this but do not question our jurisdiction or authority to decide this appeal. Even so, it is appropriate to raise the matter ourselves. Ind. Code Sec. 33-2.1-8-3.

A justice of the Supreme Court of Indiana may not sit in a particular appeal when the justice or a member of the justice's family has an economic interest in its outcome. Ind. Code Sec. 33-2.1-8-2. A justice should disqualify himself in a proceeding whenever his impartiality might reasonably be questioned. Code of Judicial Conduct, Canon 3. However, in the cause at hand, self-recusal by each justice would result in there being no court at all to exercise the judicial power vested in this Court by the constitution. Ind. Code Sec. 33-2.1-2-1. The common law which also binds this Court, and our common law tradition, have long regarded the absence of an appropriate forum in which to resolve a legitimate case to be intolerable, and consequently require judges having an interest in a case to hear the case in spite of the interest they may have if there is no other proper forum in which the case can be heard. United States v. Will, (1980) 449 U.S. 200, 101 S.Ct. 471, 66 L.Ed.2d 392. This is the "rule of necessity" and according to it justices presently on this Court are duty bound to hear this appeal because there is no other appropriate forum to do so.

Appellees by their action challenged the Acts 1982, P.L. 191, Secs. 3 and 4 and Acts of 1983, P.L. 299, Secs. 4 and 5, which amended the retirement benefit provisions of the judges' retirement statute, Ind. Code Sec. 33-13-8-1 et seq. Specifically, they amended Ind. Code Sec. 33-13-8-10 and added Ind. Code Sec. 33-13-8-10.1. Their legal effect was to redefine salary as a factor in determining the annual retirement benefit of judges who accepted retirement prior to September 30, 1982, as that salary being paid as of September 30, 1982, for the office which the judge held when leaving the bench. They also redefined salary as such factor for those who retired after September 30, 1982, as that salary being paid to the judge when leaving the bench. The amendments left other factors contained in certain tables unaffected. Prior to the challenged amendments, and since the inception of the judges' retirement system in 1953, salary as such factor was that salary being paid from time to time for the office which the judge held when leaving the bench. Under that definition, the retirement benefits were flexible, and increased for participants and retirees as salaries increased. Under the redefinition of the challenged amendments, retirement benefits did not continue after retirement to track increases in salaries but were capped.

Appellee Hill was judge of the Monroe Circuit Court for twenty-four years, and a participant in the judges' retirement system, leaving the bench on December 31, 1980. Since March, 1982, he has been receiving a retirement annuity. The annuity is presently based upon the salary provided for the Monroe Circuit Court on September 30, 1982, as provided by the challenged amendments. He is currently receiving a monthly benefit which is $213.62 less than the amount he would be receiving under the statute before the challenged amendments.

Appellee Baker is the present judge of the Dearborn and Ohio Circuit Court, and has so served since January 1, 1949. He is a participant in the judges' retirement system and is entitled under the challenged amendments to receive a retirement benefit based upon the salary provided for the judicial office he holds when leaving the bench. Before the challenged amendments he had the right to receive increases in those annuity benefits by reason of increases to the salary for that office made after leaving the bench. The court in agreement with appellees found that a contractual right had arisen in them as a result of their participation in the system to receive retirement benefits based upon the changing salary levels for the offices which they had served, as provided under Ind. Code Sec. 33-13-8-10 prior to the challenged amendments.

The trial court declared that the challenged amendments were unlawful and impaired the contractual rights of participants in the system in violation of the state and federal constitutions. The trial court determined that participation in the judges' retirement system is based upon holding office, choosing to be in the system, and making contribution to the system.

The Indiana judges' retirement system was initiated in 1953, by Chapter 157, Acts of 1953. Participation is based on choice, and once commenced continues until a judge becomes an annuitant, dies or accepts a refund. Modifications have occurred through the years, but the essential requirements for participation have remained and are: holding judicial office, choosing to be in the system, and making money contributions from salary payments. Section 10 of Chapter 157, Acts of 1953, offered the following benefit to participants:

"The amount of the annual retirement benefits to which any participant is entitled shall be fifty per centum. Provided, however, That in no event shall the annual retirement annuity exceed the sum of four thousand dollars per year."

By 1977 amendments, Section 10 provided benefits to participants as follows:

"The amount of the annual retirement benefit to which a participant...is entitled equals the product of (i) the annual salary being paid for the office which the participant held at the time of his separation from service, multiplied by (ii) the percentage prescribed in the following table: ..."

The Board agrees that this 1977 formula provided, as had previous ones, that the annual benefit payable would be based upon the salary being paid from time to time for the particular judicial office that had been held. Salary was thus a flexible factor and as salary increased so also did benefits. The 1977 amendments also established a table for calculation of benefits wherein the rate as a percentage of current salary increased from 24% to 60% as the participant's years of service increased from 8 to 22 years. The legislative judgment was, roughly speaking, that a retired judge deserves an annual pension benefit amounting to about half of the salary of an active judge. Through this tie-in with current salaries, the retirement benefit would reflect current economic conditions and more nearly satisfy current needs of the retired judges.

The challenged 1982 and 1983 amendments left the table described above intact, but altered salary as a factor in the calculation. For judges like Appellee Hill, salary was frozen at the September 30, 1982 level, and for judges like Appellee Baker it was frozen as of the date he leaves the bench. For both, the tie-in between retirement benefits and current salaries was discarded. The question in this case is whether that tie-in, once extended can lawfully be withdrawn. The trial court held that it could not be.

The Board first asserts that the relief granted by the trial court was excessive, in that the judgment did not leave the amendments intact and applicable to new judges who may have assumed their judicial offices after the challenged amendments were effective, or to those judges who had less than the minimum number of years service required for earning the annuity when the amendments became effective. The principle relied upon is that a court in constitutional litigation may give a limiting construction to a statute to keep it within constitutional bounds. Board of Commissioners of Howard...