Eaton v. City of Los Angeles

• Decision Date: 14 March 1962
• Citation: 20 Cal.Rptr. 456,201 Cal.App.2d 326
• Court: California Court of Appeals Court of Appeals
• Parties: Henry S. EATON et al., Plaintiffs and Respondents, v. CITY OF LOS ANGELES et al., Defendants and Appellants. Civ. 25382.

Page 456

20 Cal.Rptr. 456

201 Cal.App.2d 326

Henry S. EATON et al., Plaintiffs and Respondents, v. CITY OF LOS ANGELES et al., Defendants and Appellants.

Civ. 25382.

District Court of Appeal, Second District, Division 4, California.

March 14, 1962.

Rehearing Denied March 28, 1962.

Hearing Denied May 16, 1962.

Roger Arnebergh, City Atty., Bourke Jones and John J. Tully, Jr., Asst. City Attys., and Weldon L. Weber, Deputy City Attorney for appellants.

Kenneth Sperry and John L. Kaesman, Long Beach, for respondents.

Bewley, Knoop, Lassleben & Whelan, and Martin E. Whelan, Jr., Whittier, as amicus curiae on behalf of respondents.

BURKE, Presiding Justice.

Plaintiffs in this case are all retired members of the police or fire department who were employed by defendant city subsequent to July 1, 1925, but prior to January 17, 1927. Each of them served regularly as a member of said police or fire department for an aggregate period of more than twenty years, and was granted and is being paid a fixed service retirement pension pursuant to section 181 of the charter of the City of Los Angeles, as amended by St.1927, p. 2023 and St.1947, p. 3679. By their complaint, which was filed May 29, 1959, plaintiffs sought to obtain a declaratory judgment as against the defendant city and its board of pension commissioners respecting their past and future pension rights and to recover past-due pension benefits. Plaintiffs assert that they are and were from the date of their retirement entitled to receive a fluctuating pension in lieu of the fixed pension paid to them. They also requested the entry of a declaratory judgment as to the rights of their widows or other dependents to receive a fluctuating death benefit pension upon their demise. Reference is made to the cases of Henry v. City of Los Angeles, Cal.App., 20 Cal.Rptr. 440, and the other cases consolidated with that case, for details as to the legal background of this litigation.

In its memorandum opinion and order, findings and judgment the trial court, in respect to the issues presented on this appeal:

(1) Rejected plaintiffs' contention that the 1925 change from fluctuating to fixed pensions was invalid and unconstitutional as to plaintiffs since the plaintiffs, employed after July 1, 1925, acquired no 'vested contractual rights' to fluctuating pensions;

(2) Held that plaintiffs, who retired prior to June 16, 1947, have always been entitled, from date of retirement to June 16, 1947, to fixed pensions based upon the pre-1927 formula, to wit, a percentage of the annual salary of the rank held one year prior to date of retirement and, from June 16, 1947, pursuant to the 1947 amendment, they have been entitled to receive fluctuating pensions based upon the current salaries of the average ranks held during the three years immediately preceding date of retirement, and they are entitled to recover, from date of retirement, the differences between such pensions and those which had been paid to them because the pension fund is a trust fund and the time provide in applicable statutes of limitation and charter claim sections did not commence to run until plaintiffs' claims were rejected by the pension board;

(3) Held that plaintiffs who retired subsequent to June 16, 1947, have always been entitled, from date of retirement, to fluctuating pensions based upon the current salaries of the average ranks held during the three years immediately preceding date of retirement, and they are entitled to recover, from date of retirement, the differences between such pensions and those which have been paid to them because the pension fund is a trust fund and the time provided in applicable statutes of limitations and charter claim sections did not commence to run until plaintiffs' claims were rejected by the pension board;

(4) Held that the widows of plaintiffs, if married at least one year prior to date of retirement, shall be entitled to fluctuating pensions based upon the 1947 formula, to wit, the current salaries of the average ranks held during the three years immediately preceding date of retirement, provided that should the pension payable under the pre-1927 formula (salary attached to the rank held one year prior to retirement) be greater than that payable under the 1947 formula, then each widow or other dependent, except the widows or other dependents of the plaintiffs Hales, James and Volkman, shall be entitled to fluctuating pensions computed on said pre-1927 formula;

(5) Held that because of the confidential relationship existing between pensioners and the city defendants are estopped to urge the bar of the statute of limitations and charter claims sections; and

(6) Adopted plaintiffs' running account theory in respect to the bar of section 376 of the city charter, St.1927, p. 2014.

Defendants contend on appeal the trial court erred in the following respects:

(1) In holding the trust fund theory applicable to the fire and police pension fund of the City of Los Angeles so as to suspend application of statutes of limitation and charter claims sections to claims for increased pensions;

(2) In holding the 1947 amendment to the city charter (Stats.1947, pp. 3679-3687) created fluctuating pensions to which all plaintiffs, whether retired prior thereto or not, and their widows, are entitled, and in so determining in the face of the fact that this was not an issue in the case;

(3) In holding the formula for computing fixed pensions adopted in 1927, to wit, average monthly rate of salary received during the three years immediately preceding retirement, is invalid and unconstitutional in respect to members (and their dependents) whose employment began prior to January 17, 1927, and such plaintiffs are entitled to have their pensions calculated on the pre-1927 formula, to wit, annual salary of the rank or position held one year prior to retirement;

(4) In holding widows of plaintiff members who commenced their employment prior to January 17, 1927, are entitled to have their fluctuating pensions calculated upon either the pre-1927 or 1947 formula, whichever results in the greater pension;

(5) In holding defendants are estopped to assert the bar of the statute of limitations and charter claims sections;

(6) In holding the running account theory applicable to claims for increased pensions so as to prevent the running of the time provided in the claims section of the city charter (§ 376); and

(7) In entering judgment solely against the board of pension commissioners (not the City of Los Angeles, a party hereto) and in limiting payment of said judgment solely out of the reserve presently existing in the fire and police pension fund.

Plaintiffs contended in the trial court the relationship between the pension board and retired pensioners is that 'of a trustee under an express trust' and therefore 'the statute of limitations is not a bar in this case until there has been an express repudiation by the Pension Board of its obligations to adjust these accounts, and that that repudiation did not occur until they rejected the claims of these plaintiffs in the cases at bar, which, of course, occurred just a month or two before the action was filed.' In its memorandum opinion and order the trial court based its approval of plaintiffs' trust fund theory upon the provisions of the city charter and sections 2221 and 2222 of the Civil Code which pertain to the creation of voluntary trusts.

The trial court, in commenting upon Abbott v. City of Los Angeles, 50 Cal.2d 438, 326 P.2d 484, herein termed the 'Abbott case,' pointed out that in that case the trust fund theory was not raised nor was evidence introduced to support it, whereas in the instant case it was raised. Defendants assert the relationship of pensioner and city is not that of the ordinary trustor, trustee and beneficiary provided for in sections 2221 and 2222 of the Civil Code. They assert the true relationship is that of employer-employee; the obligation of the city to pay a pension is a contractual obligation imposed by law, as pointed out in the Abbott case; and as to any unpaid pensions the relationship of the city to the pensioner is that of a debtor to a creditor.

Nearly all contracts embrace a certain degree of trust relationship, as does every agency, but it does not follow that each creates a trust. (Grotefend v. May, 33 Cal.App. 321, 165 P. 27.) Moneys in the pension fund may be dispersed only by clear authority of law. (McNichols v. Police Protection Ass'n of Denver, 121 Colo. 45, 215 P.2d 303.) Members of a pension board have only such powers as are conferred by statute, charter and ordinance.

The sections of the Civil Code pertaining to voluntary trusts are applicable solely to private trusts (Estate of Sutro, 155 Cal. 727, 733, 102 P. 920; Estate of Hinckley, 58 Cal. 457, 483), whereas the Los Angeles city charter sections which govern the payment of pensions are statutes having a special application to the matter of pensions.

It is a general rule of construction that a statute having special application controls a general one. (Chilson v. Jerome, 102 Cal.App. 635, 283 P. 862.)

In Nicols v. Board of Police Pension Fund Com'rs, 1 Cal.App. 494, 82 P. 557, the plaintiff raised the trust fund theory in an attempt to secure pension benefits which would otherwise be barred by the statute of limitations. She asserted that the pension fund is held by the commissioners under an express trust in favor of those for whom it was created and consequently the statute of limitations did not run against her until a repudiation of the trust on the part of defendants. In its decision the court pointed out the money which was retained by the treasurer from the employee's pay as a member of the police department and paid into the pension fund was not a contribution to the fund by the employee but was money of the employing government agency retained in its possession for the creation of the pension fund, and as was held...