Feher's Estate v. Board of Trustees, Public Emp. Retirement System

• Decision Date: 12 July 1961
• Docket Number: No. A--166,A--166
• Citation: 68 N.J.Super. 391,172 A.2d 445
• Parties: ESTATE of Frank R. FEHER, Plaintiff-Appellant, v. BOARD OF TRUSTEES, PUBLIC EMPLOYEES RETIREMENT SYSTEM, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 391

68 N.J.Super. 391

172 A.2d 445

ESTATE of Frank R. FEHER, Plaintiff-Appellant, v. BOARD OF TRUSTEES, PUBLIC EMPLOYEES RETIREMENT SYSTEM Defendant-Respondent.

No. A--166.

Superior Court of New Jersey, Appellate Division.

Argued June 19, 1961.

Decided July 12, 1961.

Joel M. Mangel, Passaic, for appellant (Gardner & Williams, Passaic, attorneys; Joel M. Mangel and Victor C. Otley, Jr., Passaic, on the brief).

Elias Abelson, Trenton, for respondent (David D. Furman, Atty. Gen., Lee A. Holley, Deputy Atty. Gen., of counsel).

Before Judges CONFORD, FREUND and KILKENNY.

The opinion of the court was delivered by

KILKENNY, J.A.D.

Pursuant to R.R. 4:88--8, the estate of Frank R. Feher appeals from a final decision of the Board of Trustees of the Public Employees Retirement System of New Jersey (hereinafter 'Retirement System'). The Board denied the estate's application for a refund of Feher's personal contributions, as a Passaic policeman, to the Passaic Police Pension Fund, and later to the Consolidated Police and Firemen's Pension Fund (hereinafter 'Consolidated').

On July 16, 1935 Feher became a member of the police department of the City of Passaic. As such he contributed 4% Or 5% Of his salary to the local police pension fund, and later to its successor, Consolidated, pursuant to R.S. 43:16--1 et seq., (P.L.1920 c. 160) N.J.S.A Feher continued in active employment as a Passaic Policeman until December 1, 1951, when he was granted a leave of absence to take a position with the New Jersey Turnpike Authority. This leave of absence continued until December 31, 1956. Feher was employed by the Turnpike Authority as Safety Supervisor from December 1, 1951 until his death on February 10, 1959.

The record does not disclose Feher's salary through the years as a Passaic policeman or the total amount of his personal contributions to the Passaic and Consolidated police pension funds. We estimate those contributions as approximately $2,500. The Retirement System says that a liberal estimate would place the sum 'in the neighborhood of $2000.' The attorney for the estate stated at oral argument that he did not know the amount of these contributions, but that the recovery sought is limited to the amount thereof.

On November 5, 1956 Feher applied, as a non-veteran employee, for membership in the Retirement System. In doing so, he sought prior service credit in the System from July 16, 1935 to January 1, 1956 on the basis of his actual service as a Passaic policeman and his continued leave of absence from the Passaic Police Department. Feher was granted 21 years, 6 1/2 months prior service credit with the System, under R.S. 43:2--1 and 2, N.J.S.A. For his continued employment with the Turnpike Authority from January 1, 1956 to the date of the application, Feher was allowed to purchase, by payment of back contributions, this additional service credit. He continued his membership in the Retirement System, making the appropriate contributions in the form of deductions from his salary until the date of his death.

Upon Feher's death, his widow qualified as beneficiary for death benefits pursuant to N.J.S.A. 43:15A--41(c). Accordingly, she was paid $10,327.50 in free insurance benefits, an amount equal to one and one-half times his salary at death. Feher had also availed himself of the inexpensive contributory insurance plan, so that his widow received the further sum of $5,163.75 as additional death benefits. Feher's personal contributions to the Retirement System, in the form of deductions from his salary as a Turnpike employee amounted to $904.73. This amount of $904.73 credited to Feher's individual account in the State's annuity savings fund, plus $6.15 interest thereon, for a total of $910.88 was also paid to Feher's widow, pursuant to N.J.S.A. 43:15--41(c).

Under N.J.S.A. 43:15A--41(c), if a member of the Retirement System dies while a member, his designated beneficiary or the representative of his estate is entitled to be paid '(1) His accumulated deductions at the time of death together with regular interest; * * *.' Such accumulated deductions are defined in N.J.S.A. 43:15A--6(a) as the 'sum of all the amounts, deducted from the compensation of the member or contributed by him, standing to the credit of his individual account in the annuity savings fund.' In Feher's case, the amount standing to his credit in his individual account in the Retirement System was the aforesaid total sum of $910.88 and this was paid. However, Feher's estate contends that it is also entitled to a return of the pension deductions from Feher's salary as a Passaic policeman and received by the Passaic Police Pension Fund, and later by Consolidated.

Such personal contributions to the police pension funds were not subject to withdrawal upon the resignation or death of the contributor. Compulsory deductions from the salaries of policemen and firemen for support of their pension funds under P.L.1920, c. 160 created no contractual or vested equity. Salley v. Firemen's & Policemen's Fund Commission, 124 N.J.L. 79, 11 A.2d 244 (Sup.Ct.1940). This 1920 law made no provision for a return of such compulsory deductions. Clay v. Police and Fire Pension Fund Commission of City of Camden, 121 N.J.L. 19, 1 A.2d 334 (Sup.Ct.1938). Assembly Bill No. 539 of 1959, which would have allowed members of Consolidated to withdraw accumulated deductions was vetoed by the Governor on January 12, 1960 in a message noting: 'this fund had become so hopelessly insolvent that from 1944 no new members have been allowed to join it.'

When Feher was allowed to transfer his prior service credit as a policeman to obtain the benefits thereof as a new member of the Retirement System, the System's actuary determined that $6,202 was the reserve amount necessary to be placed in the System to keep it actuarially sound. Consolidated agreed to transfer that sum to the Retirement System, as an intra-agency arrangement. The Retirement System and Consolidated are State agencies. Consolidated thereby diminished its potential liability to Feher and his wife, and the Retirement System absorbed a new account with a pre-existing service credit liability of 21 years, 6 1/2 months.

The sum of $6,202 transferred by Consolidated to the Retirement System did not represent any money which Feher was entitled to withdraw from Consolidated. Feher's personal contributions to the police pension funds had not amounted to half of that $6,202. That amount was simply a figure arrived at by actuarial experts to resolve a financial problem affecting the two State agencies. As...