Renshaw v. U.S. Pipe & Foundry Co., A--93

• Decision Date: 31 July 1959
• Docket Number: No. A--93,A--93
• Citation: 30 N.J. 458,153 A.2d 673
• Parties: John RENSHAW, Plaintiff-Appellant, v. UNITED STATES PIPE AND FOUNDRY COMPANY, a New Jersey corporation, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 458

30 N.J. 458

153 A.2d 673

John RENSHAW, Plaintiff-Appellant, v. UNITED STATES PIPE AND FOUNDRY COMPANY, a New Jersey corporation, Defendant-Respondent.

No. A--93.

Supreme Court of New Jersey.

Argued March 3, 1959.

Reargued May 4, 1959.

Decided July 31, 1959.

Henry J. Bender, Jr. Moorestown, argued the cause for plaintiff-appellant.

George H. Bohlinger, Jr., Trenton, argued the cause for defendant-respondent (Minton, Dinsmore & Bohlinger, Trenton, attorneys, George H. Bohlinger, Jr., of counsel).

The opinion of the court was delivered by

HALL, J.

This appeal involves a claim by plaintiff, a retired employee of defendant, that a provision of the latter's private pension plan reducing the amount of the pension payable to the extent of any benefits under the Workmen's Compensation Law received by the pensioner after retirement is invalid as against public policy. The case was tried in the Burlington County Court, Law Division, without a jury on a stipulation of facts. Defendant had judgment there and plaintiff appealed to the Appellate Division. We certified the case on our own motion while it was pending in that tribunal. R.R. 1:10--1(a).

On March 1, 1955 plaintiff, who had then been employed by defendant at its Burlington plant for about 19 years, injured his left at work in a compensable accident. Thereafter he filed a claim petition for benefits under the Workmen's Compensation Act. On April 1, 1955 he was retired from employment pursuant to the company's pension plan, having attained the age of 65. The accident had no connection with his retirement.

The pension plan derived from a collective bargaining labor agreement between defendant and the United Steelworkers of America, the exclusive bargaining agent of defendant's production and maintenance employees who were associated as a local unit of the union. The plan was originally agreed to March 1, 1950. It was revised as set forth in a formal agreement executed by the local union and defendant effective March 1, 1955, to expire concurrently with the basic labor agreement between the company and the union. We are concerned on this appeal with certain provisions of this latter instrument. We are given to understand that it was, at its effective date, standard throughout the steel industry.

The contract provided that any employee retiring on or after the effective date with at least 15 years of continuous service and having attained the age of 65 should be entitled to receive a pension. It also provided for a pension for disability for any employee with the same period of continuous service who had not reached the age of 65 but who had become 'through some unavoidable cause permanently incapacitated.' Retirement was made compulsory in any event at age 65.

Specified in the agreement was a formula on which the amount of the pension was to be determined in each case. Generally speaking, it was to be on a monthly basis computed on a percentage of the average monthly earnings of the employee over a designated period before retirement. It was non-contributory as far as the employee was concerned, all moneys being provided by the company. The latter was required to arrange for funding of all matured pensions on a sound actuarial basis, by establishment of a trust fund or insurance or both, in order to secure the payment of pensions during the remainder of the life of retiring employees. The plan was to be administered solely by the employer, and it was specifically prescribed that no employee prior to eligibility for benefits would have any right or interest in or to any portion of any funds paid into any trust or annuity that might be established to pay pensions.

It was further provided that the amount of an individual pension payable according to the formula was subject to reduction or adjustment under certain conditions, which fell into three categories:

1. The amount of the pension for any period was to be reduced by the amount of any other pension, annuity or similar payment to which the pensioner was entitled, whether applied for or not, from any public source (with the exception of pensions granted for military service or payments under the state law pursuant to Title I of the Social Security Act, 42 U.S.C.A. § 301 et seq.), or from any other source to which the company had contributed. If the pensioner had also contributed to the fund out of which an 'other source' pension was payable, the reduction was to be decreased based on the ratio his contributions bore thereto. It was also specified that the reduction by reason of primary old age insurance benefits provided by Title II of the Social Security Act, 42 U.S.C.A. § 401 et seq., should be limited to $85 per month.

2. If the pensioner was or should become entitled to or be paid 'any discharge, liquidation or dismissal or severance allowance or payment of similar kind' under any plan of the company, or as to which it had contributed, or by reason of any statute, the total amount so paid or payable was to be deducted from the amount of any pension under the agreement, with similar adjustment for any employee contribution thereto.

3. The permitted deduction directly involved and attacked in this case, reading as follows:

'Any amount paid to or on behalf of any Employee or Pensioner on account of injury or occupational disease causing disability in the nature of a permanent disability for which the Company is liable, whether pursuant to Workmen's Compensation or occupational disease laws, or arising otherwise from the statutory or common law, (except fixed statutory payments for the loss of any bodily member) and any such payments on account of employment by an employer other than the Company, and any disability payment in the nature of a pension under any federal or state law, shall be deducted from or charged against the amount of any pension payable under this Agreement, provided, however, there shall not be deducted from any pension benefits payable prior to age sixty-five (65) because of eligibility arising under Paragraph (b), of Section II (pension for disability prior to age 65) any payments which shall be received by the Pensioner under Workmen's Compensation or Occupational Disease laws for any disability in the nature of a permanent disability.'

Defendant paid plaintiff his full monthly pension computed according to the basic formula in the agreement from his retirement on April 1, 1955 until November 30, 1955. On September 30 of that year a determination, award and rule for judgment on plaintiff's claim was entered in the Division of Workmen's Compensation by which he was awarded temporary and permanent disability compensation and other benefits as a result of the compensable accident. The judgment provided that the employer should be given credit thereon for all payments made to plaintiff under its pension plan from April 1, 1955. Presumably this direction was made pursuant to the plan provision just quoted. After November 30 defendant ceased to pay plaintiff any pension. The compensation award was fully paid, the last payment thereon being received about June 19, 1956. Defendant took the position that, pursuant to the plan, it was not required to resume payment of the pension until January 1, 1961 by which date the total of monthly pension, computed from April 1, 1955, would equal the disability compensation awarded and payable after the latter date. It is conceded that such is the correct result if the plan provision is valid and effective.

After the last compensation payment was received, plaintiff instituted the present action in which he demanded by way of money damages the amount of the pension for each month since defendant had stopped making payment thereof and sought a declaratory judgment that the quoted provision of the pension agreement was unenforceable as violative of the public policy of the State and that he was entitled to receive his full monthly pension from the date of his retirement for the rest of his life without deduction or charge by reason of the compensation award. Defendant's answer asserted the validity of the pension plan provision in question and its binding effect on plaintiff. It also set up the separate defenses of Res adjudicata and estoppel (which require no discussion in the view we take of the case). The trial court held that the plan provision was valid and entered judgment for defendant.

Plaintiff's contention is that, considering the nature, intent and incidents of workmen's compensation, the provision in the retirement plan for reduction of pension by the amount of compensation benefits is contrary to the basic purposes of the compensation act and the character of an award thereunder. It is said this is particularly so because it in effect permits the employer to recoup the amount paid the employee for compensation contrary to the only method allowed therefor by the statute.

Workmen's compensation indeed serves a social purpose recognized by the Legislature and so unquestionably is deeply involved in public policy. While in the United States it is not outright public social insurance, 'the ultimate function it performs as one unit in a developing over-all system of insurance-type protection against wage loss is the same as if it were true social insurance.' 2 Larson, The Law of Workmen's Compensation (1952), § 96.10, p. 483. Other units in the developing system are legislatively provided benefits for non-occupational disability, unemployment compensation, retirement and disability pensions for public employees, and old age insurance and assistance under the social security system, as well as severance or dismissal pay and pension and insurance benefits provided by employers unilaterally or by collective agreement. (We do not speak, of course, of insurance benefits or other protection privately arranged and paid for by the employee with which an employer has no connection.) Our courts have commented that the social...