Jacobs v. New Jersey State Highway Authority

• Court: New Jersey Supreme Court
• Writing for the Court: FRANCIS
• Citation: Jacobs v. New Jersey State Highway Authority, 255 A.2d 266, 54 N.J. 393 (N.J. 1969)
• Decision Date: 14 July 1969
• Parties: William T. JACOBS, Plaintiff-Appellant, and Board of Trustees, Public Employees Retirement System and Eden S. Ewing, Plaintiffs-Intervenors, v. NEW JERSEY STATE HIGHWAY AUTHORITY, Garden State Parkway, D. Louis Tonti, Executive Director, and Sylvester C. Smith, Chairman, Defendants-Respondents.

Page 393

54 N.J. 393

255 A.2d 266

William T. JACOBS, Plaintiff-Appellant and Board of Trustees, Public Employees Retirement System and Eden S. Ewing, Plaintiffs-Intervenors, v. NEW JERSEY STATE HIGHWAY AUTHORITY, Garden State Parkway, D Louis Tonti, Executive Director, and Sylvester C Smith, Chairman, Defendants-Respondents.

Supreme Court of New Jersey.

Argued March 17, 1969.

Decided July 14, 1969.

Frederick E. Popovitch, Point Pleasant, for plaintiff-appellant William T. Jacobs and for plaintiff-intervenor Eden S. Ewing (Toolan, Romond & Burgess, Perth Amboy, attorneys).

Theodore A. Winard, Deputy Atty. Gen., for plaintiff-intervenor Board of Trustees, Public Employees Retirement System (Arthur J. Sills, Atty. Gen., attorney).

Theodore W. Geiser, Newark, for defendants-respondents (Sonia Napolitano, Newark, on the brief, Pindar, McElroy, Connell & Foley, Newark, attorneys).

The opinion of the court was delivered by

FRANCIS, J.

The issue here is the propriety of the action taken by the New Jersey State Highway Authority in forcing plaintiffs Jacobs and Ewing, two of its employees, to retire, Jacobs at age 66 years and Ewing at 65 1/2 years. This was done pursuant to a department regulation issued on October 30, 1964. On that date all employees were notified that the Authority Commissioners had adopted 'a retirement policy (to become effective January 1, 1965) which provides that all Authority employees shall retire upon attaining age 65.' The regulation authorized the Personnel Committee upon application of a department or Staff Division Head to extend the retirement date of an employee with the approval of the Executive Director of the Authority.

Ewing became an employee of the Authority on August 16, 1954, Jacobs on September 2, 1954. This was 10 years before promulgation of the retirement rule. Ewing reached 65 years of age on April 5, 1967, and following the grant of a six months' extension of employment, he was retired 'in accordance with the policies of the Authority.' Jacobs became 65 years of age on April 15, 1965, but his retirement was delayed for one year 'in order to train a replacement' for him. He applied for an additional extension but it was denied; his forced retirement from service became effective on April 15, 1966 at age 66 years. Upon retirement Ewing and Jacobs, having been contributing members of the Public Employees Retirement System (PERS), N.J.S.A. 43:15A--1 et seq., began to receive pension payments based upon the service credits each had accumulated therein.

After considerable time had elapsed Jacobs instituted this proceeding attacking his compulsory retirement as illegal and seeking an order restoring him to employment. The attack was and is based upon the contention that under PERS, N.J.S.A. 43:15A--47, which he contends is controlling with respect to retirement from public employment, retirement is voluntary between age 60 years and 70 years and only becomes mandatory at age 70 years.

The suit was brought in the Superior Court, Chancery Division, but since it was properly cognizable in the Appellate Division under R.R. 4:88--8, it was transferred there for determination. See R.R. 1:27D(a). We pause to note that the suit was begun long after expiration of the time limit fixed for such actions by R.R. 1:3--1(b) or any extensions thereof under R.R. 1:27B(d). As a result, the Authority moved to dismiss, but in view of the importance of the public question involved, the Appellate Division felt there should be a decision on the merits. Consequently the motion was denied. This Court likewise is of the view that the meritorious issue should be resolved.

The Appellate Division concluded that the Authority was empowered by N.J.S.A. 27:12B--5(q) of its creating act N.J.S.A. 27:12B--1 et seq. governing the appointment of its employees, to adopt the general mandatory retirement policy which was applied to Jacobs. It therefore affirmed the order requiring him to retire. The Attorney General moved to intervene on behalf of the Board of Trustees of the Public Employees Retirement System, and also filed a petition for certification. Both applications were granted. Prior to argument Ewing, whose situation is the same as that of Jacobs, asked leave to intervene. The motion was granted and the matters presented at the same time.

The New Jersey State Highway Authority was created by N.J.S.A. 27:12B--1 et seq. Section 5(q) thereof confers power on it

'To appoint such additional officers * * * and employ such consulting engineers, attorneys, accountants, construction and financial experts, superintendents, managers and other employees and agents as the Authority deems advisable and as may be necessary in its judgment; to fix their compensation; and to promote and discharge such officers, employees, and agents; all without regard to the provisions of Title 11 of the Revised Statutes.'

Thus the Authority was given broad power to hire, promote and discharge employees free of the restraints imposed by the Civil Service Act, Title 11, N.J.S.A. Accordingly its employees cannot acquire tenure, and are ordinarily subject to discharge without the benefit of charges, hearing thereon and establishment of good cause.

It may be noted that although the statute speaks of hiring, promotion and discharge, no mention of 'retirement' appears in any of its various sections. Retirement from employment has a connotation different from discharge. The former ordinarily signifies voluntary withdrawal, the latter compulsory dismissal. See Brown v. Little, Brown & Co., 269 Mass. 102, 168 N.E. 521, 66 A.L.R. 1284 (1929); People ex rel. Tims v. Bingham, 166 N.Y.S. 28 (Sup.Ct.Spec.Term 1906). The statute neither contains provision for the establishment of an individual pension fund for Authority employees, nor any reference whatever to pension benefits for them. Since the absence of a pension plan for public employees in these modern times would be most unusual, we must look beyond the particular statute in determining whether an applicable legislative provision for pension benefits exists. Such a provision is found in the comprehensive Public Employees' Retirement System, particularly N.J.S.A. 43:15A--7.

This Act established a pension system for State employees. Section 7(c) as it appeared in 1954 required all persons accepting employment in the classified service of the State to enroll therein as a condition of employment. L.1954, c. 84, § 7, p. 479. ¹ In 1955 employees of the New Jersey Highway Authority were expressly included in the public retirement system. L.1955, c. 261, § 19, p. 977; N.J.S.A. 43:15A--73. ² Subsection (a) of Section 73 provided:

'Upon such enrollment, the said employees shall be subject to the Same contribution and benefit provisions of the retirement system as State employees.' (Emphasis added).

As soon as this Act became effective the Authority required its employees to become members of the system. Jacobs and Ewing acceded to the mandate and enrolled.

Under PERS retirement for age is regulated by N.J.S.A. 43:15A--47, which says:

'Retirement from service shall be as follows:

a. A member who shall have reached 60 years of age may retire from service by filing with the board of trustees a written statement, duly attested, stating at which time subsequent to the execution and filing thereof he desires to be retired. The board of trustees shall retire him at the time specified or at such other time within 30 days after the date so specified as the board finds advisable. b. A member who shall have reached 70 years of age shall be retired by the board for service forthwith, or at such time within 90 days thereafter as it deems advisable, except that an employee reaching 70 years of age may be continued in service from time to time upon written notice to the board of trustees by the head of the department where the employee is employed.' N.J.S.A. 43:15A--47.

Thus a member may retire voluntarily between ages 60 and 70 years, but on reaching 70 years he 'shall be retired forthwith' by the board of trustees of the system, subject to the exception which is not material here. And he must be given the retirement allowance specified by N.J.S.A. 43:15A--48.

The general administration and responsibility for the proper operation of PERS and for making effective the provisions of the Act are vested in the board of trustees. N.J.S.A. 43:15A--17. The board is required to appoint an actuary to be its technical advisor on matters regarding the operation of the fund created by the provision of the Act. N.J.S.A. 43:15A--18. The actuary's duty (among others) is to make an actuarial investigation into the mortality, service and compensation or salary experience of the members of the pension system as well as its assets and liabilities. On the basis of such study the board of trustees must adopt for the retirement system such mortality, service and other tables as are deemed necessary, certify the rates of deduction from compensation computed to be necessary to pay the annuities authorized by the Act, and certify the rates of contribution, expressed as a proportion of the compensation of members, which shall be made by the State to the contingent reserve fund. N.J.S.A. 43:15 A--19.

Thus it appears that the pension benefits provided under PERS are funded by joint contributions of the employees covered and their employers. The employees contribute at a percentage rate of their compensation which remains fixed during their active service. The remainder of the cost of the benefits is met by employer contributions determined and certified by the system's actuary. The employers' contribution as calculated by the actuary is expressed as a proportion of the compensation paid to all employees, which if paid monthly during the entire prospective service of the employees will be sufficient to provide for the pension reserves required at the time of discontinuance of active service. See N.J.S.A....