Jensen v. Pritchard

• Citation: 120 Ind.App. 439,90 N.E.2d 518
• Decision Date: 27 February 1950
• Docket Number: No. 17967,17967
• Parties: JENSEN et al. v. PRITCHARD.
• Court: Court of Appeals of Indiana

Page 518

90 N.E.2d 518

120 Ind.App. 439

JENSEN et al. v. PRITCHARD.

No. 17967.

Appellate Court of Indiana, in Banc.

Feb. 27, 1950.

J. Emmett McManamon, Atty. Gen., Frank E. Coughlin, Deputy Atty. Gen., Harold V. Whitelock, Deputy Atty. Gen., for appellants.

Bell & Bell, Indianapolis, for appellee.

CRUMPACKER, Judge.

The appellee Edwin H. Pritchard, for himself and all others similarly situated, filed complaint in the Marion Circuit Court wherein he alleges that he and those he represents are members of the Field Examiners' Retirement Fund which was created and set up agreeable to the provisions of Chapter 107 of the Acts of 1941, Burns' Stat., § 60-241 et sequi, and that they retired as active field examiners in the service of the Department of Inspection and Supervision prior to 1947. That since their retirement they have been receiving benefits under the provisions of said act appropriate to their ages and years of service. That in 1947 the legislature amended the Act of 1941, supra, in such manner that greater contributions are required of field examiners and upon their retirement they are paid increased benefits. Acts of 1947, ch. 149, Burns' Stat. § 60-245 et sequi, (Supp.). The complaint further alleges that the appellee and those he represents are entitled to the increased benefits provided by the act as amended in 1947 upon proper application therefor. That he made such application and tendered to the fund the full amount of all contributions required by said act as amended and demanded that he be paid the increased benefits provided thereby. That the trustees in charge of said fund, the appellants herein, refused to accept his contribution and denied that he and those like him are entitled to additional benefits. The complaint asks that 'Chapter 107 of the Acts of 1941, as amended by Chapter 149 of the Acts of 1947, be interpreted for the purpose of declaring the rights, status, and legal relations of the plaintiff and all other persons similarly situated' in respect to said fund. The appellants' answer admits all of the allegations of this complaint except that charging that the appellee is entitled to benefits under the 1947 amendment. This left but a single issue in the case. Are members of the Field Examiners' Retirement Fund who retired prior to 1947 within the purview of the act as amended and therefore entitled to the additional benefits it affords? This being a question of law the case was tried on the pleadings and no evidence was introduced. The question was resolved by the court in favor of the appellee and this appeal followed.

The appellants' position may be summarized as follows: (1) The benefits provided by the act in question constitute pensions payable out of public funds. (2) As the public purpose served by an act offering prospective pensions out of public funds to state employees ceases to exist upon the retirement of such employees, there is grave doubt as to the constitutionality of an act that increases a pension after retirement because it involves the use of public money for purely private purposes. (3) A statute should be construed to avoid constitutional objection and therefore the Act of 1941, supra, as amended in 1947, should be held inapplicable to the appellee who had already retired when the amendment increasing pensions was enacted.

On the other hand the appellee contends that said act as amended creates an annuity rather than a pension. That where a statute provides for acceptance or rejection of a retirement plan it amounts to an offer of an annuity contract to all those within the class to whom the offer is made and upon acceptance becomes a binding contract. That he and all others similarly situated are within the class to whom the offer was made. That he accepted it and has tendered performance of all obligations the offer imposed upon him and is entitled to the benefits the amended act provides.

As to the distinction between pensions and annuities both the appellants and the appellee refer us to the case of Raines v. Board of Trustees of Illinois State Teachers' Pension and Retirement Fund, 1937, 365 Ill. 610, 7 N.E.2d 489, 490, and both lean heavily thereon in support of their respective contentions. We agree that such distinction and its importance are ably pointed out in that case and therefore we quote from the court's opinion as follows:

'The whole difficulty in this case arises from a failure to distinguish between a pension fund and an annuity fund derived in part from voluntary contributions made under a statutory option to contribute or refrain from contributing. A 'pension' is in the nature of a bounty springing from the appreciation and graciousness of the sovereign, and may be given, withheld, distributed, or recalled at its pleasure. People [ex rel.] v. Retirement Board, 326 Ill. 579, 158 N.E. 220, 54 A.L.R. 940; Porter v. Loehr, 332 Ill. 353, 163 N.E. 689; Pecoy v. City of Chicago, 265 Ill. 78, 106 N.E. 435. For this reason it is held that a pensioner has no vested right in a pension fund. It has also been held that the character of a pension fund is not changed by compulsory contributions by way of exactions from the salaries or wages of public officers and employees. It is said that such payments into the fund are not in fact payments by the officer or employee, and the employment is accepted with knowledge that certain amounts will be deducted each month and placed in the pension fund; that the money is not first segregated from the public fund so as to become private property and then turned over to the pension fund, but is set aside or transferred from one public fund to another, and remains public money over which the person from whose salary it is deducted has no control, and in which he has no right. Pecoy v. City of Chicago, supra; Hughes v. Traeger, 264 Ill. 612, 106 N.E. 431; Pennie v. Reis, 132 U.S. 464, 10 S.Ct. 149, 33 L.Ed. 426; State [ex rel. Risch] v. Board of Trustees of Policemen's Pension Fund, 121 Wis. 44, 98 N.W. 954.

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'There is a wide difference between voluntary contributions to a fund under a statutory elective right and being compelled to suffer deductions without any such right. In the later case the officer or employee has no voice in determining whether or not he will suffer such exactions. They are imposed by the statute and deducted even if against his will. In the other case it is wholly a matter of choice with him. He may elect to come within the terms of the act and receive its benefits, or he may forego that privilege at his option, with no other effect than to deprive him of participating in the fund. If he does not elect to contribute, he receives and retains the full amount of his salary or wages. If he elects to contribute, the amounts are deducted by his direction. The effect is the same as if his full salary were paid to him and after it became his private means he in turn contributed to the retirement fund. In such case there is neither reason nor authority to hold that the fund remains public money in which he has no right or interest.'

The Illinois court's final conclusion was that the statute under...