Chamber of Commerce of Eastern Union County v. Leone

• Decision Date: 12 April 1976
• Citation: 141 N.J.Super. 114,357 A.2d 311
• Parties: CHAMBER OF COMMERCE OF EASTERN UNION COUNTY, a nonprofit corporation of the State of New Jersey, et al., Plaintiffs, v. Richard LEONE, Treasurer of the State of New Jersey et al., Defendants.
• Court: New Jersey Superior Court

Page 114

141 N.J.Super. 114

357 A.2d 311

CHAMBER OF COMMERCE OF EASTERN UNION COUNTY, a nonprofit corporation of the State of New Jersey, et al., Plaintiffs, v. Richard LEONE, Treasurer of the State of New Jersey et al. Defendants.

Superior Court of New Jersey Chancery Division.

April 12, 1976.

John M. Boyle and William A. Cambria, Elizabeth, for plaintiffs (Sauer, Boyle, Dwyer & Canellis, Elizabeth, attorneys).

Theodore A. Winard, Asst. Atty. Gen., for defendants Leone, Byrne and Carragher (William F. Hyland, Atty. Gen., attorney).

David J. Goldberg, Trenton, for defendants General Assembly and Speaker of the General Assembly (Warren, Goldberg & Berman, Trenton, attorneys).

John P. Nulty, Newark, for defendants Frank J. Dodd and New Jersey Senate (DeCotiis, Nulty & Hayden, Newark, attorneys).

ACKERMAN, J.S.C.

This matter is before the court on cross-motions for summary judgment. The motions arise out of an action challenging the constitutionality of the Legislative Pension Act of 1972, N.J.S.A. 43:15A--135 through 43:15A--140, and the constitutional validity of a law appropriating monies to provide legislators with district home offices, L.1974, cc. 58 and 83. Plaintiffs are individual and corporate entities who contend that the laws at issue are violative of the New Jersey Constitution and who, as taxpayers of the State of New Jersey, seek to restrain expenditures pursuant to these laws. Defendants are the Governor of the State of New Jersey, the Treasurer of New Jersey, New Jersey's then Acting Secretary of State, the New Jersey State Senate and its President and the New Jersey General Assembly and its Speaker. The Senate and the General Assembly, as well as the President of the Senate and the Speaker of the General Assembly, have filed a cross-claim against the State Treasurer to compel him to permit the purchase of credit for prior legislative service in accordance with the provisions of the Legislative Pension Act.

The principal act at issue herein, the Legislative Pension Act, was approved on November 3, 1972, L.1972, c. 167, now codified as N.J.S.A. 43:15A--135 through 43:15A--140, inclusive. Insofar as pertinent to the instant action, the act's provisions may be summarized as follows:

N.J.S.A. 43:15A--135 states that all members of the Legislature shall become members of the Public Employees Retirement Systems.

N.J.S.A. 43:15A--136 provides that each legislator shall contribute 5% Of his legislative salary to separate account in the annuity savings fund.

N.J.S.A. 43:15A--137 allows a legislator to purchase credits for prior legislative service at the rate of 5% Of his legislative salary for each year for which credit may be claimed.

N.J.S.A. 43:15A--138 requires that no benefits under the Legislative Pensions Act can be paid until the legislator has completed all public employment covered by the Public Employees Retirement System. At that time, if a legislator has reached age 60, he is entitled to receive an annuity arrived at by the contributions made by him during his term of service and an additional pension so as to bring total payment equal to 3% Of the amount earned by the legislator in his final year in the Legislature, multiplied by the number of years of service.

N.J.S.A. 43:15A--139 allows a legislator with at least eight years service who otherwise qualifies to select among various options as to the method of receipt of pension benefits.

N.J.S.A. 43:15A--140 deals with the return of contributions to a legislator and the right to elect benefits if the legislator qualifies for benefits under more than one section of the Public Employees' Retirement System.

Finally, by its own provisions 'the act (was to) take effect immediately.'

Plaintiffs contend that this act violates N.J.Const. (1947), Art. IV, § IV, par. 7, which provides, in pertinent part:

Members of the Senate and General Assembly shall receive annually, during the term for which they shall have been elected and while they shall hold their office, such compensation as shall, from time to time, be fixed by law and no other allowance or emolument, directly or indirectly, for any purpose whatever. * * * (hereinafter cited as paragraph 7)

In brief, plaintiffs assert that the act violates the above constitutional provision in 'eight separate and distinct ways':

1. Under the act, compensation is not received annually but is paid in various installments both during the term of service and after the criteria for retirement mandated by the act are satisfied.

2. The annual pension payments upon retirement which are provided by the act are not paid during the term for which the individual legislator has been elected.

3. The act requires that the pension be paid only upon retirement from all public service. This is directly contrary to the requirement in the Constitution that the compensation be paid while the office is held.

4. The act provides for a pension payment to be added to the contributory annuity. Thus, the act specifically provides for additional payments to legislators after retirement.

5. The pension benefits provided by the act make it impossible to have the compensation for legislative service 'fixed by law.' As a result, the total compensation payable to a legislator for a year of service is dependent upon the total years of service and the life span of individual members.

6. The compensation for legislators cannot be fixed, and will not be uniform for each member, because, under the act, the compensation payable for one year of service is dependent upon the variable factors of total years of service and the life span of individual members.

7. The Legislative Pensions Act provides for a 'retirement allowance.' This directly contrary to the mandate of the Constitution that 'no other allowance or emolument' be paid.

8. The act provides a direct additional allowance to legislators, for retirement purposes, which is specifically proscribed by the Constitution.

Plaintiffs further contend that, even if the act is constitutional under paragraph 7, it is unconstitutional under N.J.Const. (1947), Art. IV, § IV, par 8, which provides:

The compensation of members of the Senate and General Assembly shall be fixed at the first session of the Legislature held after this Constitution takes effect, and may be increased or decreased by law from time to time thereafter, but no increase or decrease shall be effective until the legislative year following the next general election for members of the General Assembly. (hereinafter cited as paragraph 8)

That is, plaintiffs assert that this paragraph has been violated because, pursuant thereto, the effective date must be January 8, 1974--not November 3, 1972--and also because the provision for retroactive purchase of prior service credit is in direct contravention to the prospective mandates of this paragraph. Finally, plaintiffs contend that the act cannot be saved by changing the effective date thereof and/or by deleting the provision for retroactive purchase because, pursuant to the scheme of the entire act, this provision is not severable therefrom.

Plaintiffs further assert that defendants herein have violated the two constitutional paragraphs cited above by the approval, during 1974, of L.1974, c. 58, and L.1974, c. 83. In brief, these acts appropriated an allowance to each legislator, not to exceed $5,000, for the legislator's home district office, including furnishings, equipment and other expenses related thereto. To plaintiffs these acts constitute an improper 'allowance or emolument' to legislators under paragraph 7. Finally, defendants assert that, even if otherwise proper, the allowances provided in the acts violated paragraph 8 because they were made effective immediately.

Defendants have made various responses to plaintiffs' constitutional arguments. On October 16, 1974 the Attorney General of New Jersey issued Formal Opinion No. 12 in which he reviewed the Legislative Pension Act, including the history relating thereto, and concluded that the act was partially unconstitutional under paragraph 8 because of its effective date and because of the provision for retroactive purchase of credit for service. However, the opinion concluded that the effective date could be changed to January 8, 1974; that the unconstitutional provision could be deleted, and that, so modified, the act would be constitutional under both paragraphs 7 and 8. The act is presently being administered in accordance with that opinion.

As to the constitutionality of the acts providing appropriations for district home offices, the Attorney General on September 5, 1974 issued Opinion No. 6 in which he concluded that, in all respects, these acts were consistent with the New Jersey Constitution.

Defendants Leone, Byrne and Carragher have adopted the positions articulated in the opinions of the Attorney General. That is, these defendants agree with plaintiffs that the Legislative Pension Act does violate paragraph 8, but disagree with plaintiffs as to whether the violative provisions of the act can be changed or deleted so as to render the act, as modified, constitutional. In short, these defendants contend that the act can be so modified and, as such, this act, as well as the act relating to district home offices, is fully consistent with paragraphs 7 and 8.

The legislative defendants disagree with plaintiffs, and hence agree with Attorney General Opinion No. 12 with respect to the constitutionality of the Legislative Pension Act under paragraph 7. These defendants also agree with Attorney General Opinion No. 6 on the constitutionality of the act relating to home district offices. However, whereas the Attorney General upheld the Legislative Pension Act by viewing pensions as a permissible form of deferred compensation under paragraph 7, these other defendants contend that this constitutional provision was not intended to--and did not, in fact--deal in any way with pensions. As such, these...