Christensen v. Mpls. Mun. Emp. Retire. Bd.

• Citation: 331 NW 2d 740
• Decision Date: 18 March 1983
• Docket Number: No. C7-82-601.,C7-82-601.
• Parties: Larry Jens CHRISTENSEN, Appellant, v. MINNEAPOLIS MUNICIPAL EMPLOYEES RETIREMENT BOARD, et al., defendants and third-party plaintiffs, Respondents, v. STATE of Minnesota, third-party defendant, Respondent.
• Court: Minnesota Supreme Court

331 N.W.2d 740 (1983)

Larry Jens CHRISTENSEN, Appellant, v. MINNEAPOLIS MUNICIPAL EMPLOYEES RETIREMENT BOARD, et al., defendants and third-party plaintiffs, Respondents, v. STATE of Minnesota, third-party defendant, Respondent.

No. C7-82-601.

Supreme Court of Minnesota.

March 18, 1983.

Popham, Haik, Schnobrich, Kaufman & Doty and Bruce D. Willis, Minneapolis, for appellant.

Fredrikson, Byron, Colborn, Bisbee & Hansen and Frederick E. Finch, Minneapolis, for Minneapolis Mun. Employees Retirement Bd., et al.

Hubert H. Humphrey, III, Atty. Gen., and Douglas C. Blomgren, Sp. Asst. Atty. Gen., St. Paul, for State of Minn.

Peterson, Engberg & Peterson, Jay Y. Benanav and Roger A. Peterson, Minneapolis, for Minneapolis Police Relief Assn., et al.

Sigal & Miller and Samuel I. Sigal, Minneapolis, for Central Labor Union Council of Minneapolis and Hennepin County.

Heard, considered and decided by the court en banc.

SIMONETT, Justice.

This appeal raises the question of whether a retired public employee's pension may be discontinued by an act of the legislature changing the eligibility requirements. The trial court, believing itself bound by earlier decisions of this court characterizing a government pension as a gratuity, held that the legislature was not prohibited by the constitution from imposing, as to employees already retired, an age requirement of 60 years before benefits could be paid where previously there had been no age requirement. We conclude that the gratuity approach no longer accurately portrays the public employees' retirement system and that the amendment of the retirement age as to employees already retired is an unconstitutional impairment of contract; and we reverse.

On January 2, 1974, at the age of 38, plaintiff-appellant Larry Jens Christensen resigned from city service, service which began in 1951. From 1951 through 1964 he worked part time for the city as an election helper. He was then elected to the Minneapolis City Council for a term commencing July 1, 1965, and served in that capacity until January 2, 1974. In 1966, on his own application, he became a contributing member of the Minneapolis Municipal Employees Retirement Fund (MMERF), and, upon leaving public service on January 2, 1974, he became entitled to pension benefits, having served the requisite 10 years. 1969 Minn. Laws, ch. 914, § 3.

Effective January 2, 1974, Christensen began receiving his monthly pension of $355.19 a month, which was later raised in January 1978 to $369.40 a month. When he left city service in 1974 Christensen elected to receive a lower than possible monthly payment to himself so that a monthly payment could later be made to a surviving spouse. In April 1980, the retirement board suspended further monthly pension benefits to Christensen until he attained the age of 60 because of the enactment of 1980 Minn. Laws, ch. 342, § 22, codified at Minn.Stat. § 422A.156 (1982), which imposed the new minimum age requirement for entitlement to benefits. Christensen is now 48 years old and must, therefore, wait 12 years or so before again becoming eligible to receive pension benefits. At that time his benefits will be $622.69 a month.

The trial court found that Christensen knew, while in public service, that he would be entitled under the law to pension benefits after he had worked for the city for 10 years without regard to his age, and that Christensen had considered this fact in making his decision to run for election and reelection to city office. At the time of trial, Christensen was working as a part-time janitor and groundskeeper.

The trial court found that there are eight other formerly elected, now retired Minneapolis city officials besides Christensen who had chosen to become contributing members of the pension plan and whose retirement benefits were discontinued upon the enactment of section 422A.156. These former officials ranged in age from 32 to 52 years when they began receiving monthly retirement payments and had served as elective city officials from 2 to 14 years.

Christensen commenced this action for declaratory and injunctive relief against the defendant-respondents, Minneapolis Municipal Employees Retirement Board and John C. Chenoweth, its executive secretary. These defendants, in turn, brought in the State of Minnesota as a third-party defendant.¹ Plaintiff Christensen contended that the new statute, section 422A.156, was unconstitutional, at least as to him, in that it deprived him of property (his pension benefits) without due process of law, or, alternatively, it impaired his contract of employment with the City of Minneapolis, the performance of which he had completed, in violation of the state and federal constitutions. The case was bifurcated for trial, proceeding to trial first on stipulated facts as to the constitutional issues. The trial court found that plaintiff Christensen's rights in the retirement fund were not vested except as to pension payments already received and that plaintiff's constitutional rights were not violated by application of section 422A.156. The trial court dismissed plaintiff's action and this appeal follows.

We have three issues before us: (1) Did the 1978 and 1980 amendments to chapter 422A setting age 60 as the age for receipt of pension benefits for retired elective officials change the pension eligibility requirements? (2) If so, does the retired elective official have a right to future retirement benefits which is unaffected by the change in the eligibility requirements? and (3) If such a right exists, is it entitled to constitutional protection?

I.

The preliminary issue is whether the 1978 and 1980 amendments of section 422A.156 changed the requirements for pension eligibility from what they had been before. If, as the state contends, the city's pension plan, even before 1978, required elected city officials to attain age 60 before receiving their monthly benefits, then the amendments in 1978 and 1980 did not change the law but merely stated what the law had always been. If this is true, then the amendments have no retroactive effect and we do not reach the constitutional issues. The trial court rejected the state's argument, as do we.

At this point we should describe the pertinent pension eligibility requirements and their legislative history. Chapter 422A describes the retirement program for employees of the City of Minneapolis. Under section 422A.09, city employees are divided into two classes, the contributing class and the exempt class. Among those in the exempt class are persons holding elective office. Elected officials, however, since 1937, can choose to become members of the contributing class and be covered under the pension plan. From 1937 until 1978, elected officials apparently were considered eligible for a retirement allowance if they applied to the retirement board for pension benefits based on the number of years in service without regard to age upon retirement. This practice differed from nonelected city employees who, under the law, could not receive retirement benefits until they reached age 60.

In 1978 the legislature amended Minn. Stat. § 422A.09, subd. 3(2), to make elected city officials subject to the same minimum age requirement for eligibility as had always been the case for nonelected employees. See 1978 Minn.Laws, ch. 562, § 11. This 1978 change imposing an age requirement of 60 years for elected city officers was expressly given only prospective application; i.e., only elected officials first holding office after the effective date of the act were subject to the minimum age requirement. Id., § 35.

However, in 1980 the legislature enacted 1980 Minn.Laws, ch. 342, § 22, which added section 422A.156. This new section gave retroactive effect to the 1978 amendment to section 422A.09, subd. 3(2), and reads as follows:

From and after February 8, 1980, nothing contained in section 422A.09, subdivision 3, clause (2) shall be construed as allowing payment of a retirement allowance or other retirement benefits other than a disability allowance pursuant to section 422A.18 if otherwise eligible to any former, present or future elective officer of the city of Minneapolis who has not attained the age of at least 60 years unless the elective officer has received credit for at least 30 years of services and retires pursuant to section 422A.15, subdivision 1.

The state argues that the revisions of the municipal employees pension statutes from 1937 to the present indicate a strong trend towards equalizing the pension benefits eligibility requirements for elected city officials and other municipal employees. The state concludes from this trend that the provisions relating to "employees" and "members of the contributing class" which have long imposed a minimum age requirement were also intended to apply to "elective city officers." The flaw in the state's argument is its failure to consider the definitions set forth in section 422A.01, subds. 3 and 11, defining "retirement allowance" and "employee" and section 422A.09, subds. 1 and 3, defining the "exempt class." Taken together, these provisions make clear that although the eligibility requirements for members of the contributing class and for elected city officers have become increasingly similar, these two categories have always been and remain separate and distinct within the framework of chapter 422A. It is clear from the statutory scheme that the mere fact that an elected city officer opts to become a contributing member does not mean he or she becomes subject to all provisions of chapter 422A governing "employees" and "members of the contributing class."

When elected city officials were first permitted to join the pension plan in 1937 (1937 Minn.Laws, ch. 171, § 1), the service requirement was 20 years with no minimum retirement age stated. In 1963 the service requirement was reduced to 15 years (1963 Minn.Laws, ch. 374, § 1), and in 1969 it was further reduced to 10...