Payne v. Board of Trustees of the Teachers' Ins. & Retirement Fund

• Decision Date: 18 December 1948
• Docket Number: 7095.
• Citation: 35 N.W.2d 553,76 N.D. 278
• Court: North Dakota Supreme Court

35 N.W.2d 553

76 N.D. 278

PAYNE v. BOARD OF TRUSTEES OF THE TEACHERS' INS. & RETIREMENT FUND et al.

No. 7095.

Supreme Court of North Dakota

December 18, 1948

Rehearing Denied Jan. 28, 1949.

Syllabus by the Court.

1. Payments made to retired teachers pursuant to the Teachers' Insurance and Retirement Act, Chapter 15-39 N.D.R.C.1943, and 1947 Supplement are not donations but are in the nature of added compensation for long and faithful service in the public interest. State ex rel. Haig v. Hauge 37 N.D. 583, 164 N.W. 289, L.R.A.1918A, 522.

2. In the construction of a statute the courts give weight to the practical and contemporaneous construction placed upon it by the officers charged with its administration.

3. A teacher who has attained the age, made the payments, and completed the service as required by the law is entitled to an annuity measured by the terms of the law in force when his teaching service terminated.

4. The making of an application for an annuity is not a part of a service for which the annuity is a reward. It is but a demand for the payment of the annuity upon the administrators of the law. It may be made at any time at or after the completion of the teaching service.

5. The right to the annuity begins as of the date the teacher ceases to teach irrespective of when the application therefor is made.

6. The record in the case is examined and it is held for reasons stated in the opinion that the plaintiff became eligible for an annuity and completed his teaching service on May 31, 1947, and the amount thereof is measured by the terms of the law in effect on that day.

MILLER Dist. J., dissenting.

Nels G. Johnson, Atty. Gen. and P. O. Sathre and C. E. Brace, Asst. Attys. Gen., of Bismarck, for defendants and appellants.

W. H. Stutsmen, of Mandan, for plaintiff and respondent.

George F. Shafer, of Bismarck, amicus curiae.

GRIMSON District Judge.

The plaintiff brings this action to determine and enforce his rights under the act providing for the teachers' insurance and retirement fund.

The law providing for such a fund was passed by the 1913 session of the legislature, Chap. 251, now, as amended, Chap. 15-39, NDRC 1943 and 1947 Supplement. It became effective July 1, 1913. It provides for such fund, its control and administration by a board of trustees.

All teachers of the public schools had the option of joining the fund and all who became teachers after January 1, 1914, were conclusively deemed members of the fund. The teachers and some officers of the state educational institutions were later added to the membership.

The fund was made up by assessments from teachers' salaries for twenty-five years, starting with one percent. for the first eight years and two percent. for the next seventeen years. These assessments were increased by Chapter 259, S.L.1941, Sec. 15-3923, NDRC 1943, and again by Chapter 166, S.L.1947, Sec. 15-3914, 1947 Supp. NDRC 1943 and were by that section permitted to continue beyond the twenty-five years.

In addition to the funds derived from the assessments the law provided a contribution from the county tuition fund of a sum equal to ten cents for each child of school age in each county. This was increased to twenty cents per child, Chap. 259, S.L.1941, and, finally, the legislature provided that the school boards should also contribute from the teachers' salary fund of the district an amount equal to the teachers' assessments, Chap. 167, 1947 S.L., Sec. 15-3917, 1947 Supp. NDRC 1943.

The act then provided that any teacher after twenty-five years of service, of which eighteen years, including the last five, must be in the schools of the State who had paid his assessment for twenty-five years and met the requirements of the law was entitled to retire and receive an annuity of a sum equal to 1/50th of his or her average annual salary for the last five years of service multiplied by the whole number of years of service as teacher. This was later changed to a sum equal to the 1/50th of his average salary for the years of service multiplied by the whole number of years of service as a teacher, Chap. 259, S.L.1941, Sec. 15-3928, NDRC 1943 and, finally to two percent. of the total earnings as salary for the years of teaching service for which assessments were paid, Chap. 165, S.L.1947, Sec. 15-3928, 1947 Supp. NDRC 1943. Teachers who have retired may resume teaching but during such time the annuity shall cease to be again resumed on subsequent retirement 'at the same amount and under the same conditions,' Chap. 165, S.L.1947, Subsection 4, 15-3928, 1947 Supp. NDRC 1943. This 1947 amendment raised the minimum of the annuity from $350.00 to $600.00 and the maximum from $750.00 to $1200.00, Chap. 165, 1947 S.L., Sec. 15-3928, 1947 Supp. NDRC 1943. Provision is also made in the law for an annuity to a teacher disabled after fifteen years of service, Sec. 15-3927, NDRC 1943 and for the withdrawals and refunds to teachers ceasing to teach before they are eligible for retirement, Chap. 168, S.L.1947, Sec. 15-3940, 1947 Supp. NDRC 1943. The law provides for a reduction of annuities by the Board of Trustees whenever the condition of the fund makes that necessary, Sec. 15-3931, NDRC 1943. The retirement age first was fifty years, later increased to fifty-five years, Chap. 165, S.L.1947 Supp. Sec. 15-3928, NDRC 1943. When a person desires to retire from active service he 'shall apply in writing to the board for the annuities provided.' Sec. 15-3930, NDRC 1943.

There is a variety of laws establishing and maintaining similar funds for public employees in the different states. Consequently, there is a variety of authorities on the interpretation thereof, based partly on different wordings of the laws and partly on the difference in judicial concepts as to the nature of these retirement funds. Some courts hold these retirement funds to be in the nature of a pension or a gratuity which may be abolished at any time and apply to them the principles of law governing pensions. Dodge v. Board of Education, 364 Ill. 547, 5 N.E.2d 84, 85; Id. 302 U.S. 74, 58 S.Ct. 98, 82 L.Ed. 57; Pennie v. Reis, 132 U.S. 464, 10 S.Ct. 149, 33 L.Ed. 426. Others hold the relation between the teacher and the fund to be contractual in nature and apply to it, as far as possible, the principles of law governing contracts. State ex rel. O'Neil v. Blied, 188 Wis. 442, 206 N.W. 213. See also annotations in 54 A.L.R. 943, 112 A.L.R. 1009, 118 A.L.R. 992, 137 A.L.R. 249. It is impossible to reconcile all these decisions. We think the latter class of cases better reasoned and more sound.

In the case of Talbott v. Independent School District, 230 Iowa 949, 962, 299 N.W. 556, 563, the Iowa court, after reviewing many decisions says:

'The conclusion to be deduced from all of these decisions holding that allowances paid to public employees from retirement funds, in part maintained by them, is that such allowances are not pure pensions, gratuities, or bounties, but are given in consideration of services which were not fully recompensed when rendered. And also that any contribution by the state, or any subdivision of it, by way of taxation or other public money, to such retirement or disability funds, is not a donation for a private purpose, but is a proper outlay for a public purpose, which purpose is to bring about a better and more efficient service in these various departments by improving their personnel and morale, through the retention of faithful and experienced employees.'

See also: In re Sanborn, 159 Wash. 112, 292 P. 259; Mattson v. Flynn et al., 216 Minn. 354, 13 N.W.2d 11; Ball v. Board of Trustees of Teachers' Retirement Fund, 71 N.J.L. 64, 58 A. 111.

As to teachers' pensions the decisions of the courts are more uniform and favorable to the theory that the payments are not donations but in the nature of added compensation for long and faithful service in the public interest.

'It is a matter of common knowledge that statutory provision has been made in many, if not in all, states for pensions or retirement funds for public school teachers. The statutes vary materially in many respects, but it seems, as has been said, that they have as their common basis not charity or benevolence, but compensation for faithful, long continued, valuable, public service. On this theory, a law providing for the payment of pensions to teachers out of the general school fund, or providing for a tax to raise such fund, is constitutional. Such an expenditure of funds is for a school purpose, and is not prohibited by a constitutional prohibition of appropriations for charitable or benevolent purposes to any person, since they are founded on service rendered to the commonwealth. 40 Am.Jur. 973.

This court has sustained the Teachers' Insurance and Retirement Act as constitutional. In State ex rel. Haig v. Hauge, 37 N.D. 583, 591, 164 N.W. 289, 291; L.R.A.1918A, 522, 525, this court said:

'Surely the providing of a permanent teachers' insurance fund, which shall give dignity to the profession, encourage persons to enter into it, and provide for old age, is a 'provision for the establishment and maintenance of a system of public schools.'

'A tax levied for this purpose is not a donation to any person, nor is it forbidden by section 185 of Article 12 of the Constitution * * *.

'It is merely in the nature of an added salary allowance to public servants. * * * they (the people) may certainly also be taxed in order to provide a fund which shall increase the efficiency of the teachers themselves and aid and encourage them to devote their lives to a profession which, though essential to our civilization, has been but poorly encouraged, and has too often been looked upon merely as a stepping stone to other employments.'

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