Driggs v. Utah Teachers Retirement Board

Decision Date01 November 1943
Docket Number6598
CourtUtah Supreme Court
PartiesDRIGGS v. UTAH TEACHERS RETIREMENT BOARD et al

Original proceeding by Frank M. Driggs against Utah State Teachers Retirement Board and others for a writ of mandate to compel the defendant Board to restore plaintiff's monthly retirement allowance to the amount which was fixed under the act creating the state teachers' retirement system as it existed at time of plaintiff's retirement.

Alternative writ made permanent.

Derrah B. Van Dyke and Samuel C. Powell, both of Ogden, for plaintiff.

Grover A. Giles, Atty. Gen., and C. N. Ottosen, Asst. Atty. Gen for defendants.

CROCKETT District Judge. LARSON, McDONOUGH, and WADE, JJ., WOLFE Chief Justice, concurring. MOFFAT, J., having disqualified himself, did not participate.

OPINION

CROCKETT, District Judge.

The plaintiff, Frank M. Driggs, was retired under the Utah Teachers' Retirement System in November of 1940, and his "retirement allowance" or "pension" was fixed and allowed by the defendant, Utah State Teachers' Retirement Board, in the sum of $ 143.58 per month for the remainder of his life. The 1941 legislature amended the law so that as it has been interpreted and applied by the defendant Board, the sum he receives per month was reduced to $ 98.19 per month. The question is squarely presented here: Is this an unconstitutional invasion of his vested contract rights?

This is an original proceeding wherein the plaintiff seeks a writ of mandate to compel the defendant Board to restore his monthly retirement allowance to the amount which was fixed under the law as it existed at the time of his retirement. The defendants have filed a general demurrer to the petition, and rely upon it. The parties have filed a stipulation as to certain facts, in addition to those stated in the petition, and the matter is submitted upon that basis.

The plaintiff served as a teacher in the public schools of Utah continuously for almost fifty years; during the last forty years he was Superintendent of the School for the Deaf and Blind at Ogden. His important contribution to the State of Utah and its educational system by his long record of outstanding service is conceded by all, but is, of course, not in any way determinative of his legal rights.

On June 3, 1937, he filled out the Teachers' Retirement System blank at the request of the defendant Board, and in accordance with the existing law. The law specifically provided that: "All teachers shall be deemed to consent to become members." He became a member of the Utah State Teachers' Retirement System on July 1, 1937; thereafter, a regular sum was deducted from his salary each month and paid into the System, making a total of $ 643.75 paid in at the time of his retirement. On November 20, 1940, he became 70 years of age, and, under the law, was compelled to retire. On November 21, 1940, he was retired by the Board, and was required to fill out a printed application form, and to make a choice of several options for the payment of his retirement allowance. He selected what is known as "Option No. 1," under which it was determined he should receive a monthly retirement allowance in the sum of $ 143.58 for the remainder of his life. This total sum was made up of what was designated under the law as three separate funds, as follows:

No. 1. An "annuity" based upon the contributions by the member;

No. 2. A "pension" purchased by the contributions of the State, based upon the contributions by the member; and

No. 3. An additional "pension" purchased by the contributions of the State calculated upon a formula based upon the years of service and the salary of the member at retirement.

However, as stated in the stipulation of the parties, the three together form the "component parts of one monthly retirement allowance."

The Act creating the Utah State Teachers' Retirement System was Chapter 62, Session Laws of 1935; it was repealed, and the present teachers' retirement act was enacted by Chapter 85, Session Laws of 1937. Amendments were adopted by Chapter 80, Session Laws of Utah, 1939, and Chapter 60, Session Laws of Utah, 1941. The latter amendment changed the law under which petitioner's retirement allowance had been fixed, reducing the amount to be paid from the above mentioned funds No. 2 and No. 3, so that no retirement allowance would exceed the maximum of $ 100 per month. The fund No. 1, which is the repayment to the plaintiff of his own accumulated contributions on an actuarial basis, was left undisturbed. This 1941 Act, as it has been interpreted and applied by the defendants, reduced the plaintiff's payments so that he would receive a total of $ 98.19 per month, which amount he has been receiving under protest since June, 1941.

It is the plaintiff's contention that he is entitled to the full $ 143.58 per month as fixed and allowed to him upon his retirement. On the other hand, it is the contention of the defendants that the funds numbered 2 and 3 are "pension funds" as denominated by the statute and that as such they are subject to change by the Legislature. They emphasize this by pointing out that the 1941 amendment specifically avoided any reduction in Fund No. 1 and reduced in amount only funds numbered 2 and 3.

The terminology used is not the controlling factor; calling fowl fish doesn't make it so, and the statute does not change the character of the fund by calling it a pension. It could have been called "adjusted compensation," "gift," "gratuity," or any other appellation, without changing the essential nature of the rights existing between the parties. We should disregard the terminology, and examine into the nature, purpose, and all of the facts and circumstances concerning this allowance to determine whether or not the plaintiff had a vested contractual right in his whole retirement allowance so that the right could not to be taken from him. Schofield v. Zion's C. M. I., 85 Utah 281, 39 P.2d 342, 96 A. L. R. 1083.

In summary we have the following facts in this case: 1. A pension or retirement allowance system was set up by the statute. 2. There was a continuance in employment in reliance thereon. 3. Plaintiff joined the system and contributed to the fund. 4. These continued over the required period until the retirement age. 5. Plaintiff retired. 6. He applied for the retirement allowance. And, 7, the application was allowed and the amount was determined and payments to the teacher were made. After all of the above conditions had been met, the amendment to the law was enacted which the defendants have interpreted to reduce his allowance.

It is undoubted that where the pension is a mere gratuitous allowance, springing from the generosity and appreciation of the grantor for a past service, the pensioner has no vested right and the pension is terminable at the will of the grantor; Walton v. Cotton, 19 HOW 355, 15 L.Ed. 658; Pennie v. Reis, 132 U.S. 464, 10 S.Ct. 149, 33 L.Ed. 426, affirming 80 Cal. 266, 22 P. 176, and also cases from numerous jurisdictions collected in the notes in 54 A. L. R. 943; 98 A. L. R. 505; 112 A. L. R. 1009; 137 A. L. R. 249.

This court in the case of Schofield and Tingey v. Zion's C. M. I., supra [85 Utah 281, 39 P.2d 343, 96 A. L. R. 1083] speaking through Mr. Justice Larson, who was then a District Judge, distinguished between pensions in the traditional sense, and a pension which is offered as an inducement for future service. In that case, even though the pension arrangement contained the language,

"The Board * * * reserves the right * * * to change the basis of pension allowances by increasing or reducing the same,"

our court held that after the necessary years had been served, the retirement age reached and the pension fixed and allowed, that the pensioners right was vested. It was indicated that in making the employees aware of the proposed pension, the employer held out to its employees that any one of them who served should be entitled to the pension; that this constituted an offer which the employee could fully accept by fulfilling all of the requisite conditions; so that thereafter his pension could not be reduced in amount. There is no question that under the principles laid down in the above case, the plaintiff herein would have been entitled to his full pension for the rest of his life if his rights had existed as against a private individual or corporation. In that case, our court referred to several cases involving public pensions and made no distinction between them and those where pensions were claimed against private individuals.

Our problem then is whether or not the fact that the grantor of the pension is the state would require a different rule. We are entirely aware that courts are much more reluctant to find vested, enforceable pension rights as against the sovereign than against private persons or entities. The problem is not without difficulty; there is a conflict of law upon it.

In the note on vested rights in Pensions, 54 A. L. R. 943, it is stated:

"The unquestioned rule is that a pension granted by the public authority is not a contractual obligation, but a gratuitous allowance, in the continuance of which the pensioner has no vested right, and that a pension is accordingly terminable at the will of the grantor."

At page 945, it adds:

"By the great weight of authority the fact that a person has made compulsory contribution does not give him a vested right in the pension," listing cases from numerous jurisdictions of the United States in support of this rule.

This note is supplemented and the same rule reiterated in notes at 98 A. L. R. 505, 112 A. L. R. 1009, and 137 A. L. R. 249, supported by citation of many later cases.

The defendants cite and rely on...

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