School Dist. No. 1 v. Teachers' Retirement Fund

• Court: Oregon Supreme Court
• Writing for the Court: Bean
• Citation: School Dist. No. 1 v. Teachers' Retirement Fund, 163 Or. 103, 95 P.2d 720 (Or. 1939)
• Decision Date: 10 November 1939
• Parties: SCHOOL DISTRICT NO. 1, MULTNOMAH COUNTY <I>v.</I> TEACHERS' RETIREMENT FUND ASSOCIATION

163 Or. 103

95 P.2d 720

SCHOOL DISTRICT NO. 1, MULTNOMAH COUNTY

v. TEACHERS' RETIREMENT FUND ASSOCIATION

Supreme Court of Oregon.

Argued October 13, 1939.

Reargued November 10, 1939.

Reversed November 14, 1939.

Estoppel — Statutes

1. The donee of private right created by statute for public good has no legal power to waive such right.

Contracts — Statutes

2. The requirements of statute enacted for public good may not be nullified by private contract.

Contracts — Statutes

3. Statutory contracts of public with individuals may not be varied by private contract.

Contracts — Teachers' retirement

4. The statute creating disability annuities for retired members of Teachers' Retirement Fund Association was enacted for public good within rule that requirements of statute enacted for public good may not be nullified by private contract.

Contracts — Public funds

5. The public interest is included in statutory contract for payment of disability annuities to retired members of Teachers' Retirement Fund Association by reason of devotion of public funds to statutory purpose.

Constitutional law — Public policy

6. The state's public policy is fixed and indicated by constitution, statutes, and court decisions.

Contracts — Teachers' retirement fund

7. Waivers of claims against Teachers' Retirement Fund Association for disability benefits because of illness or diseases arising from or connected with physical impairments revealed by physical examinations of applicants for teaching positions are void as contrary to statute and inimicable to state's public policy.

Annuities — Public policy

8. A condition against public policy, imposed on annuity by donor or grantor thereof, is not binding on annuitant.

Schools and school districts — Teachers — Physical examination

9. A school district has implied power to determine by physical examination whether applicant for teaching position is afflicted with any communicable disease or incapable of discharging his or

her duties as teacher for purpose of determining whether district will employ applicant.

Schools and school districts — Retirement of teachers

10. Providing for retirement of teachers and payment of disability annuities thereto is proper public function in aid of free education.

  See 24 R.C.L. 612
                  17 C.J.S. Contracts, § 212
                

In Banc.

Appeal from Circuit Court, Multnomah County.

JACOB KANZLER, Judge.

Action by School District No. 1, Multnomah County, against the Teachers' Retirement Fund Association of such district and others for a declaratory judgment establishing the validity of waivers of claims against the association for disability benefits. From a judgment overruling named defendant's demurrer to the complaint, such defendant appeals.

REVERSED.

John D. Galey, of Portland (Beckman & Galey, of Portland, on the brief), for appellant.

Grant T. Anderson, of Portland (Ralph H. King, of Portland, on the brief), for respondent.

BEAN, J.

The defendant, The Teachers' Retirement Fund Association, hereafter referred to as the association, was incorporated in 1912 as an Oregon nonprofit corporation, pursuant to chapter 280, Oregon Laws, 1911, now section 35-2701, Oregon Code 1930, et seq. By virtue of section 35-2706, Oregon Code 1930, as amended in 1929, all teachers employed by the plaintiff, hereafter referred to as the district, after July 1 1929, automatically became members of the defendant association.

By section 35-2707, Oregon Code 1930, the district is bound to pay to the association such sums of money as may be required to enable the association to pay to each member of the association annuities in accordance with said section, which provides in part as follows:

"If said board of directors shall find that said association has a reserve not lower than the usual reserve computed by the American experience table of mortality and 4 per cent interest, the said board of school directors shall pay to said association the 3 per cent of tax money, hereinbefore referred to, as fast as it is received by said school district, and such additional sums of money, if any, as may be required to enable said association to pay to such retired members thereof from the total of said payments so made to it by said school district the following sums, to wit:

* * * * *

(d) To each member under the age of 60 years, who shall become disabled, either as the result of illness or accident, after this act takes effect, to the extent that he or she is, and probably will be, unable thereafter to perform his or her duties as a school teacher, a sum, monthly, equal to the difference between $75 and the amount of the monthly annuity which said member's contributions to said association will purchase on the basis of the full scale of payments established by said association for members of like age; provided, no payments under this subdivision shall be made until after such member has been totally disabled for a period of five months; and provided further, that in the event of the removal of such total disability further payments hereunder shall cease. Annually the board of directors of the district shall make timely determination of the amount of moneys, if any, which is to be paid by the district, in addition to said 3 per cent of the amount of tax received by said school district, and shall provide in the annual budget of the district for and levy a tax for said moneys. All said moneys shall be paid at such time or times as moneys of the district are available therefor, and as may be necessary to enable the association to make the payments to its members herein provided for."

On or about May 25, 1936, the board of directors of the district duly adopted a rule that required every applicant for a teaching position in the schools of its district to take a medical examination from one or more designated medical examiners as a condition precedent to his or her employment as a teacher, which rule has not been abrogated. The purpose of the rule is claimed by the district to be two-fold: (1) To determine a prospective teacher's physical qualifications to discharge the duties of a teacher, and (2) to determine whether such prospective teacher suffers from some existing physical impairment likely to result in permanent disability at any time. In those instances where such an examination revealed a physical condition which then constituted or might thereafter cause a physical disability, the district required the execution by the applicant of an instrument of waiver, whereby the applicant agreed to "waive any and all claim for disability benefits from the Teachers' Retirement Fund Association for any illness or disease arising from or connected with any impairment" mentioned in connection with the examination.

The association asserts that these waivers are void. The district commenced this declaratory judgment proceeding to establish their validity. The trial court overruled the defendant's demurrer to the complaint, holding that the waivers were valid. The association submits that the waivers in suit are contrary to public policy and therefore void.

The district contends that it is empowered to employ teachers and to make rules and regulations for the government of the district under and by virtue of section 35-1315a, Oregon Code Supplement, 1935; that the power to employ teachers and make rules and regulations for the government of the district conveys implied power to determine by reasonable means an applicant's physical qualifications to discharge the duties of a teacher, since the power to employ cannot be intelligently exercised otherwise; that an applicant may be physically incapable of discharging such duties or he may be the carrier of communicable tuberculosis, or other communicable diseases, in which case the public health is directly concerned; that the power to employ teachers, and to make rules and regulations for the government of the district, conveys implied power to determine an applicant's desirability from the standpoint of the financial obligation the district will assume thereby. Whenever a teacher of the district becomes disabled to the extent that he or she is and probably will be unable thereafter to discharge the duties of his or her employment, the law provides disability benefits for such teacher payable out of funds of the district: § 35-2707, Oregon Code 1930, as amended by Oregon Laws 1939, ch. 287.

1. It is assigned that the court erred in overruling defendant's demurrer to the complaint. The defendant association contends that the waivers in suit are contrary to public policy and therefore void; that a private right given for the public good cannot be waived contemporaneously with its first application to the facts: Motor Contract Co. v. Van Der Volgen, 162 Wash. 449, 298 P. 705, 79 A.L.R. 29, and note p. 33; Federal Nat. Bank v. Koppel, 253 Mass. 157, 148 N.E. 379, 40 A.L.R. 1443; Alcolea v. Smith, 150 La. 482, 90 So. 769, 24 A.L.R. 815; Peugh v. Davis, 96 U.S. 332, 24 L.Ed. 775. An anticipatory waiver of this kind is to be distinguished from an executed waiver: De Boest v. Gambell, 35 Or. 368, 58 P. 72. The donee of a private right created by statute for the public good has not the legal power to waive such right: Bunker v. Coons, 21 Utah 164, 60 P. 549, 81 Am. St. Rep. 686; Glendale v. Coquat, 46 Ariz. 478, 52 P. (2d) 1178, 102 A.L.R. 837; Cato v. Grendel Cotton Mills, 132 S.C. 454, 129 S.E. 203, 41 A.L.R. 439, 441.

2-4. The requirements of a statute enacted for the public good may not be nullified by private contract: Central R. Co. v. Mauser, 241 Pa. 603, 88 Atl. 791, 49 L.R.A. (N.S.) 92. Statutory contracts of the public with individuals may not be varied by private contract: Lukens v. Nye, 156 Cal. 498, 105 P. 593, 36 L.R.A. (N.S.) 244, 249, 20 Am. Cas. 158; Murphy v. Prendergast, 164 N.Y.S. 213, 99 Misc. 326. The statute creating the disability annuity was enacted for the public good within the meaning of the foregoing rule: Zumpfe...