Eastham v. Public Employees Retirement Ass'n Bd.

• Decision Date: 23 August 1976
• Docket Number: No. 10322,10322
• Parties: John P. EASTHAM and Thomas W. Hoover, Plaintiffs-Appellants, v. The PUBLIC EMPLOYEES' RETIREMENT ASSOCIATION BOARD, Orlando Fernandez, Mrs. Betty Fiorina, Robert I. Griego, Jesse S. Kornegay, Frank M. Olmstead, R. F. Apodaca, Dennis D. Luna, Richard E. Aragon, Floyd Avila, James W. Harrison, Leonard T. Valdes, R. C. Morgan, Frank Bateman and Lilburn C. Homan, Defendants-Appellees.
• Court: New Mexico Supreme Court

Page 679

553 P.2d 679

89 N.M. 399

John P. EASTHAM and Thomas W. Hoover, Plaintiffs-Appellants, v. The PUBLIC EMPLOYEES' RETIREMENT ASSOCIATION BOARD, Orlando

Fernandez, Mrs. Betty Fiorina, Robert I. Griego, Jesse S.

Kornegay, Frank M. Olmstead, R. F. Apodaca, Dennis D. Luna,

Richard E. Aragon, Floyd Avila, James W. Harrison, Leonard

T. Valdes, R. C. Morgan, Frank Bateman and Lilburn C. Homan,

Defendants-Appellees.

No. 10322.

Supreme Court of New Mexico.

Aug. 23, 1976.

John P. Eastham, pro se

Stephen L. ReVeal, Albuquerque, for plaintiffs-appellants.

Kegel & McCulloh, Lyle E. Teutsch, Jr., Santa Fe, for defendants-appellees.

OPINION

MONTOYA, Justice.

Plaintiffs, claiming membership in the Public Employees' Retirement Association under the Legislative Retirement Act (§ 5--5--6.1, N.M.S.A., 1953 (Repl.Vol. 2, pt. 1, 1974)), brought an action seeking a judgment in the District Court of Santa Fe County to declare the Legislative Retirement Act unconstitutional. They also sought an injunction forbidding retirement payments to annuitant legislators if the Legislative Retirement Act was declared unconstitutional. Named as defendants in the action were members of the Public Employees' Retirement Association Board (PERA), its executive secretary, and three annuitant legislators, being R. C. Morgan, Frank Bateman and Lilburn C. Homan.

Defendants answered, attacking the plaintiffs' standing to sue, and contending that the suit was an improper class action. They also generally denied other allegations of the complaint. At the trial, defendants asserted that certain indispensable parties were not joined as defendants, and that by reason thereof, the complaint should be dismissed.

The trial court, after hearing testimony, made findings which, insofar as they are pertinent to the disposition of this appeal, are as follows:

'5. The Defendants R. C. Morgan, Frank Bateman and Lilburn Homan are former legislators now retired and receiving annuities as legislative members of the Public Employees Retirement Association.

'6. In addition to the Defendants Morgan, Bateman and Homan, there are thirty-one additional persons who are retired members of the New Mexico Legislature receiving annuities as legislative members of the Public Employees Retirement Association.

'7. There are twenty additional legislative members of the Public Employees Retirement Association who qualify in all respects for retirement, except that they have not reached retirement age.

'8. That all legislative members of the Public Employees Retirement Association who have either retired or who have completed all requirements for retirement, except that all reaching retirement age, are subject to the jurisdiction of this Court.

'9. There has been no notification of the existence of the action given to any of the thirty-one additional individuals who fall within the same class as the Defendants Morgan, Bateman and Homan, or to the twenty individuals who are legislative members of the Public Employees Retirement Association, and have completed all requirements for retirement except that of age.'

Pursuant to the aforementioned findings, the court concluded as follows:

'4. The fifty-one additional persons who are either retired legislators or persons eligible to retire as soon as they reach the required age are not so numerous as to make it impracticable to bring them on before the Court as required by Rule 23 of the Rules of Civil Procedure, and therefore a class action is not authorized.

'5. Due process of law as guaranteed by the Federal and State Constitutions requires a person affected by a class action be given notice thereof, which has not been done in this case, the absence of which notice requires a dismissal of the Complaint.'

On appeal, the plaintiffs contend that the trial court committed error, alleging that plaintiffs have standing to sue in this action and that this was a proper class action.

We first consider the pertinent Rules of Civil Procedure for the District Courts of the State of New Mexico (§§ 21--1--1(1) through 21--1--1(94), N.M.S.A., 1953 (Repl.Vol. 4, and 1975 Supp.)). Rule 19(a), supra, dealing with joinder of a person needed for just adjudication, sets forth facts requiring a person who is subject to service of process to be joined as a party to an action if--

'* * * (1) in his absence complete relief cannot be accorded among those already parties, or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest, or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. * * *'

Subsection (c) of Rule 19, supra, requires the pleader to state, if known to him, the names of those persons as described in Rule 19(a) who are not joined, and the reasons why they are not joined. No reason is given for failure to join other members of the legislative retirement plan.

In the instant case, the court found that there are thirty-one additional persons who are retired from the legislature and are receiving annuities as legislative members of the PERA. In addition, the court found twenty additional members who qualify for retirement, except that they have not reached the eligible age. The court further found that, except for the three former legislators named as defendants, none of the others received any notice of the instant action. These persons have an initial and vested interest in the retirement plan and are indispensable parties to insure a just adjudication of the issues herein involved. In State v. Scarborough, 78 N.M. 132, 134, 429 P.2d 330, 332 (1967), we said:

'It was settled in this jurisdiction as early as 1924 that all persons whose interests will necessarily be affected by any judgment or order in a particular case are necessary and indispensable parties, and that the court cannot proceed to a judgment without such party. American Trust & Sav. Bank of Albuquerque v. Scobee, 29 N.M. 436, 453, 224 P. 788. That position has been consistently followed by this court. Burguete v. Del Curto, 49 N.M. 292, 163 P.2d 257; State ex rel. Del Curto v. District Court, 51 N.M. 297, 183 P.2d 607; Sullivan v. Albuquerque Nat'l Trust & Sav. Bank, 51 N.M. 456, 188 P.2d 169; Keirsey v Hirsch, 58 N.M. 18, 265 P.2d 346, 43 A.L.R.2d 929; Swayze v. Bartlett, 58 N.M. 504, 273 P.2d 367; State ex rel. Skinner v. District Court, 60 N.M. 255, 291 P.2d 301; Sellman v. Haddock, 62 N.M. 391, 310 P.2d 1045; State ex rel. Reynolds v. W. S. Ranch Co., 69 N.M. 169, 364 P.2d 1036; State Game Comm'n v. Tackett, 71 N.M. 400, 379 P.2d 54; Rule of Civil Procedure 19 (§ 21--1--19, N.M.S.A. 1953).'

It is of further interest to note that none of the above findings were attached and therefore are the undisputed facts before this court. We find the following language in C. de Baca v. Baca, 73 N.M. 387, 394, 388 P.2d 392, 397 (1964):

'In American Trust & Savings Bank of Albuquerque v. Scobee, 29 N.M. 436, 453, 224 P. 788, 790, we stated:

"There is a general rule that all persons, whose interests will necessarily be affected by any decree is (in) a given case, are necessary and indispensable parties, and the court will not proceed to a decree without them. Where such necessary parties cannot for any reason be brought before the court, there is nothing to be done except to dismiss the bill, for the suit is inherently defective. * * *'

Other decisions to like effect are State Game Commission v. Tackett, 71 N.M. 400, 379 P.2d 54; Sellman v. Haddock, 62 N.M. 391, 310 P.2d 1045; Keirsey v. Hirsch, 58 N.M. 18, 265 P.2d 346, 43 A.L.R.2d 929; Hugh K. Gale Post No. 2182 v. Norris, 53 N.M. 58, 201 P.2d 777; Page v. Town of Gallup, 26 N.M. 239, 191 P. 460.'

The plaintiffs also claim error in the trial court's decision to dismiss the action because of the failure of the plaintiffs to give notice to the persons affected by a class action. The plaintiffs' complaint is framed joining the three annuitant legislators as representatives of the class of legislative annuitants pursuant to Rule 23(a), supra, which is pertinent here and deals with three types of class actions. It makes a requirement common to all three, that the persons constituting the class must be so numerous as to make it impracticable to bring them all before the court, in which case such numbers of them, one or more as will fairly insure the adequate representation of all, may, on behalf of all, sue or be sued.

The three types of class suits covered by Rule 23(a), supra, have become popularly known as 'true,' 'hybrid' and 'spurious.' Thus, an action that is brought to enforce a right which is 'joint, or common, or secondary in the sense that the owner of a primary right refuses to enforce that right and a member of the class thereby becomes entitled to enforce it(,)' is known as a 'true' class action. The second class refers to those actions where the right to be enforced is several but 'the object of the action is the adjudication of claims which do or may affect specific property involved in the action(,)' and the label of 'hybrid' is applied. The other action involves suits to enforce a several right where there is 'a common question of law or fact affecting the several rights and a common relief is sought(,)' and is known as a 'spurious' action.

Plaintiffs say that the class action involved is a 'spurious' action. The labeling of the type of action is unimportant here and the pigeonholing of suits into one class or another has baffled both courts and legal writers. The trial court made no determination as to the type of class action, but found that no notification of the existing action had been given to the thirty-one individuals in the same category, or the twenty other legislators who had completed all requirements for retirement...