Caravaggio v. Retirement Bd. of Teachers' Retirement System of City of New York

• Decision Date: 26 March 1975
• Citation: 368 N.Y.S.2d 475,36 N.Y.2d 348,329 N.E.2d 165
• Parties: , 329 N.E.2d 165 Rose CARAVAGGIO, Respondent, v. RETIREMENT BOARD OF the TEACHERS' RETIREMENT SYSTEM OF the CITY OF NEW YORK, Defendant. RETIREMENT BOARD OF the TEACHERS' RETIREMENT SYSTEM OF the CITY OF NEW YORK, Defendant and Interpleading Plaintiff, v. Helen CARAVAGGIO, Interpleaded Defendant-Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 475

368 N.Y.S.2d 475

36 N.Y.2d 348, 329 N.E.2d 165

Rose CARAVAGGIO, Respondent, v. RETIREMENT BOARD OF the TEACHERS' RETIREMENT SYSTEM OF the

CITY OF NEW YORK, Defendant.

RETIREMENT BOARD OF the TEACHERS' RETIREMENT SYSTEM OF the

CITY OF NEW YORK, Defendant and Interpleading Plaintiff, v. Helen CARAVAGGIO, Interpleaded Defendant-Appellant.

Court of Appeals of New York.

March 26, 1975.

Arthur Karger, Samuel W. Sherman, New York City, and Irving A. Cook, Brooklyn, for interpleaded defendant-appellant.

Samuel M. Sprafkin and Mandel M. Einhorn, New York City, for respondent.

BREITEL, Chief Judge.

This appeal involves two conflicting claims to a fund held by the Retirement Board of the New York City Teachers' Retirement System. The fund consists of benefits payable on death of the late Daniel P. Caravaggio, a former member of the Retirement System, who had died shortly after retirement.

Plaintiff Rose Caravaggio was decedent's first wife. She claims the fund as an allegedly irrevocably designated beneficiary under a separation agreement made with decedent prior to their divorce. Interpleaded defendant Helen Caravaggio was decedent's second wife, who lived with him until his death. She claims the amount of the benefits due as the last beneficiary designated by her husband. Defendant and interpleading plaintiff Retirement Board holds the fund as a disinterested stakeholder.

Supreme Court gave summary judgment to the first wife, Rose, and directed payment of the fund to her. The Appellate Division affirmed, without opinion.

The issue is whether a member of the New York City Teachers' Retirement System may effectively agree, in a separation agreement, to designate irrevocably a beneficiary of benefits payable on death.

There should be a reversal. A member of the Teachers' Retirement System may not effectively agree, in a separation agreement, or otherwise, to designate irrevocably a beneficiary of benefits payable on death. Such an agreement, while perhaps a contractual promise enforceable against the general assets of the deceased member's estate, will not operate to defeat the claim of a later validly-designated beneficiary to the specific fund.

Decedent, Daniel P. Caravaggio, was for many years a teacher in the New York City school system, and was a contributor-member of the Teachers' Retirement System. Decedent and Rose were married on September 5, 1931. On January 9, 1957, decedent named his wife Rose as beneficiary of all benefits payable by the Retirement System in the event of his death prior to retirement. Also, on the same day, decedent made a selection of retirement benefits under Option I of section B20--46.0 of the New York City Administrative Code, and designated Rose as beneficiary of all benefits under this option payable upon his death after retirement.

After some 38 years of marriage, the couple separated, and entered into a separation agreement dated March 28, 1969. In the separation agreement, decedent purported to make irrevocable the 1957 designation of Rose as beneficiary of benefits payable in the event of his death prior to retirement. Decedent also agreed that, upon his retirement, he would designate the 'wife' as beneficiary of all benefits payable upon his death after retirement. The obvious purpose of these provisions in the agreement was to create a vested right in Rose to receive the benefits and to make irrevocable in 1957 designation of beneficiary for Option I benefits. The agreement provided that the designation would be binding upon decedent whether or not the parties were divorced, or either remarried. A copy of the agreement was delivered to the Retirement Board and receipt was acknowledged by it, but the board noted that it did not bear 'any responsibility for the fulfillment of any part of the agreement.'

On or about April 19, 1969, Rose obtained a judgment of divorce against her husband in Juarez, Mexico. The separation agreement was incorporated into the Mexican judgment. Rose remarried in June, 1969, and decedent too was remaried, on July 10, 1969, to his surviving widow, Helen.

On April 2, 1971, decedent filed with the Retirement Board a new designation of beneficiary naming second wife Helen as the primary beneficiary of all benefits payable in the event of his death either before or after retirement and named his children from his first marriage as contingent beneficiaries. The designation stated that it superseded all previously-filed designations of beneficiary. On March 23, 1972, decedent filed a new selection of benefits under Option II of section B20--46.0 of the Administrative Code, and designated Helen as the sole beneficiary to receive the benefits upon his retirement under Option II. This designation was unchanged at the time of decedent's death.

Together with the new selection of benefits made on March 23, 1972, decedent filed an application for retirement, to be effective May 1, 1972. Three days after his retirement, on May 3, 1972, decedent died. In accordance with the 'death gamble' provisions of the statute, paragraph b of subdivision 2 and subdivision 4 of section B20--41.0 of the Administrative Code, decedent was deemed to have elected to retire under Option I. Payment of the benefits has been suspended pending the outcome of this litigation.

The pensioning of civil employees is designed primarily to attain suitable standards of service at a relatively low wage cost by insuring against privation for the employee and his family when his years of productivity have ended. Indeed, the benefits secured by membership in a public retirement system have been accorded constitutional protection in this State in recognition of their importance to the success of the civil service system (N.Y.Const., art. V, § 7; see Matter of Ayman v. Teachers' Retirement Bd., 9 N.Y.2d 119, 125, 211 N.Y.S.2d 198, 201, 172 N.E.2d 571, 573; Kleinfeldt v. New York City Employees' Retirement System, 36 N.Y.2d 95, 365 N.Y.S.2d 500, 324 N.E.2d 865).

The public policy underlying the pensioning of civil employees is reflected in the statutory scheme of the Teachers' Retirement System, as well as those of the other major State and city retirement systems. A member of the Teachers' Retirement System has a statutory right to change his designation of beneficiary at any time, either before or after retirement, by the filing of a new designation or designations prior to his death (Administrative Code of City of New York, § B20--46.0, subd. a; see Moyer v. Dunseith, 180 Misc. 1004, 1006, 46 N.Y.S.2d 360, 361--362, affd. 266 App.Div. 1008, 45 N.Y.S.2d 126; cf., e.g., Retirement and Social Security Law, Consol.Laws, c. 51--A, § 51, subd. d; § 60, subd. c; § 90, subd. c., par. 3, cl. (a); Lade v. Levitt, 33 A.D.2d 956, 957, 306 N.Y.S.2d 704, 706, app. dsmd. 27 N.Y.2d 532, 312 N.Y.S.2d 1001, 261 N.E.2d 111; Gartman v. New York State Employees Retirement System, Sup., 152 N.Y.S.2d 849, 852 (N.Y. State Employees' Retirement System); Retirement and Social Security Law, § 351, subd. d; § 360, subd. c; § 390, subd. c, par. 3, cl. (a) (N.Y. State Policemen's and Firemen's Retirement System)). Such a designation of beneficiary has always been considered revocable (Torok v. Teachers' Retirement Bd., NYLJ, Nov. 15, 1939, p. 1634, col. 6, affd. 262 App.Div. 999, 30 N.Y.S.2d 819, affd. 288 N.Y. 636, 637, 42 N.E.2d 738; cf. Fleming v. New York City Employees Retirement System, NYLJ, Dec. 19, 1962, p. p. col. 7; Flanagan v. O'Dwyer, 197 Misc. 5, 9, 94 N.Y.S.2d 162, 165; Matter of McCoy v. City of New York, NYLJ, May 15, 1941, p. 2182, col. 7 (N.Y. City Employees' Retirement System)). A member cannot in any manner be prohibited during his lifetime from designating anyone as beneficiary (see Moyer v. Dunseith, 180 Misc. 1004, 1006--1007, 46 N.Y.S.2d 360, 361--363, affd. 266 App.Div. 1008, 45 N.Y.S.2d 126, Supra).

The rights of a member to receive benefits under the Teachers' Retirement System are exempt from State and municipal tax, levy and sale, garnishment, attachment, and any other process whatsoever, and are unassignable, except as specifically otherwise provided (Administrative Code, § B20--48.0; see Lapolla v. Retirement Bd., Sup., 140 N.Y.S.2d 449, 452; Hecht v. Whalen, 174 Misc. 146, 147, 18 N.Y.S.2d 488, 489; Matter of Distefano, 167 Misc. 678, 379, 5 N.Y.S.2d 87, 88--89, affd. 255 App.Div. 957, 8 N.Y.S.2d 669; cf. Retirement and Social Security Law, § 110; Crowley v. New York State Employees' Retirement System, 58 Misc.2d 788, 789--790, 296 N.Y.S.2d 616, 617--619; 1940 Opns.Atty.Gen. 356 (N.Y. State Employees' Retirement System); Retirement and Social Security Law, § 410, subd. 3 (N.Y State Policemen's and Firemen's Retirement System); Education Law, Consol.Law c. 16, § 524 (N.Y. State Teachers' Retirement System); Administrative Code, §§ B3--50.0 (N.Y. City Employees' Retirement System), B18--52.0 (N.Y. City Policemen's Retirement System), B19--7.94 (N.Y. City Firemen's Retirement System); see, generally, 22 N.Y.Jur., Exemptions, § 31; 44 N.Y.Jur., Pensions and Retirement Systems, §§ 43, 132, 188). The exemption and antiassignment provisions evince a legislative intent to protect the member and his family from the results of his own improvidence or misfortune, and to relieve the retirement systems from the vast amount of administrative work attendant on the processing of attachments, assignments, and the like (see Crowley v. New York State Employees' Retirement System, 58 Misc.2d 788, 790, 296 N.Y.S.2d 616, 618--619, Supra; Lapolla v. Retirement Bd., 140 N.Y.S.2d 449, 452, Supra; Hecht v. Whalen, 174 Misc. 146, 148, 18 N.Y.S.2d 488, 490, Supra; Matter of Distefano, 167 Misc. 678, 679--680, 5 N.Y.S.2d 87, 88--90, affd. 255 App.Div. 957, 8 N.Y.S.2d 669, Supra).

Given the historical purposes of a public retirement system, the strong provision against assignment of rights during the member's lifetime, and the ambulatory nature of the power to designate beneficiaries after death,...