State ex rel. O'Donald v. City of Jacksonville Beach

• Decision Date: 12 June 1962
• Docket Number: No. D-267,D-267
• Parties: STATE of Florida, on the relation of Fay O'DONALD, Appellant, v. CITY OF JACKSONVILLE BEACH, a municipal corporation, et al., Appellees.
• Court: Florida District Court of Appeals

Page 349

142 So.2d 349

STATE of Florida, on the relation of Fay O'DONALD, Appellant, v. CITY OF JACKSONVILLE BEACH, a municipal corporation, et al., Appellees.

No. D-267.

District Court of Appeal of Florida, First District.

June 12, 1962.

Rehearing Denied July 5, 1962.

Harry B. Fozzard, Jacksonville, for appellant.

Stephen Stratford, Jacksonville, for appellees

WIGGINTON, Judge.

This appeal is from a final judgment entered in a mandamus action instituted by appellant for the purpose of securing the benefits to which she claims to be entitled as the widow of a deceased employee of appellee. The judgment appealed quashed the alternative writ theretofore issued and dismissed the petition. There is no dispute as to the controlling facts in the case, the question involved being only one of law.

Appellant is the widow of Fleming O'Donald, who was an employee of the City of Jacksonville Beach when Chapter 19914, Laws of Florida, Sp.Acts of 1939, was enacted. This Act created an employee's pension plan for the City of Jacksonville Beach, mandatorily required all employees to become members of the plan established thereby, and to contribute a percentage of their salaries to the fund from which benefits would be paid. This Act was amended by Chapter 23371, Sp.Acts of 1945. Fleming O'Donald continued in the employment of appellee until his retirement for disability on September 1, 1950. Under the pension act as amended, O'Donald was entitled to receive a monthly pension for the remainder of his life in the sum of $137.36. At that time the Act further provided that upon his death there would be paid to his widow a monthly pension in a sum equivalent to 75% of the amount to which O'Donald had received during his retirement. In pursuance of its obligations under the terms and provisions of the pension act appellee paid to O'Donald the amount provided by the law then in effect. Subsequent to O'Donald's retirement, and prior to his death, the Legislature amended the pre-existing pension law by enactment of Chapter 27643, Sp.Laws of 1951. The purpose of the 1951 Act was to create a comprehensive retirement system for the employees and officers of the City of Jacksonville Beach. The assets belonging to the old pension fund were transferred to the new system, and it was provided that pensions and other benefits which were allowed and payable under the old pension act would become obligations of the new system and payable from the pension reserve fund created thereby within certain limitations provided in the Act. The new law specifically provided that pensions allowed and payable to retired employees of the City prior to the effective date of the new act should be continued without adjustment throughout the lifetime of such employee. The Act further provided, however, that no contingent benefits shall accrue to the widow or children of such retired employee upon the latter's death unless such retired employee elected in writing to accept a reduced retirement benfit during the remainder of his life, and a reduced benefit to his widow and dependents in the event of his death.

O'Donald made no election in writing as provided in the new retirement act of 1951, but continued to receive and accept from the City the same monthly pension benefits previously paid to him as provided by the law which was in effect at the time of his retirement. O'Donald died on December 19, 1960, and his widow, the appellant herein, made demand upon the City to pay her the pension benefits provided under the law which was in effect at the time of her deceased husband's retirement. This demand was refused on the sole ground that her rights, if any, to retirement benefits were those provided in the new retirement act adopted in 1951, and since her deceased husband failed to comply with the terms thereof by electing in writing to accept a reduced retirement benefit during the remainder of his life, and a reduced benefit to his widow after his death, the widow's contingent benefits provided under the original pension law were terminated and she is now entitled to nothing.

It is appellant's contention that the pension benefits provided for a widow under the law which was in effect at the time of her husband's retirement constituted a vested right of contract which could not be impaired by the subsequently enacted retirement law adopted in 1951. It is appellee's position that the widow acquired no vested rights of contract under the original pension law; that such law was validly amended in 1951 by enactment of the statute creating a new retirement system, and that the terms and provisions of the new law were binding on appellant and her deceased husband. Appellee takes the secondary position that even though a contingent beneficiary, such as appellant in this case, might be entitled to pension or retirement benefits under statutes such as those now considered, such rights do not come into being or become vested until the death of her husband, and that her right to benefits must then be determined in accordance with the law in effect at that time. Appellee reasons that since the new retirement act of 1951 was in effect at the time of O'Donald's death, appellant's rights, if any, must be determined in accordance with the provisions of that law and not the law as it existed prior to that time.

For the purpose of this opinion we point out that the question here presented arises under employees' pension or retirement plans created by acts of the legislature. The rules of law pronounced herein apply only to pension or retirement plans so created, and shall not necessarily be interpreted as applicable to pension or retirement plans adopted and placed into effect by business or industry.

The controlling question presented for our decision is whether under the facts of this case appellant widow acquired a vested right of contract to pension benefits provided by the law in effect at the time of her husband's retirement, and if so, whether the amendatory act of 1951 impairs the obligations of that contract.

The Constitutions of both the United States and the State of Florida provide that no state shall pass any law impairing the obligation of contracts. ¹

In the early case of Anders v. Nicholson our Supreme Court held: "It is also settled that constitutional provisions against impairing the obligations of a contract do not apply to obligations imposed by the law without the assent of the party bound, even though by a legal fiction they may be enforced in an action in form ex contractu. In other words, the classes of contracts protected are voluntary--that is, based on the assent of the parties, expressly or impliedly given. That class of obligations, aptly styled 'quasi contracts,' is not embraced within the constitutional guaranty against the passage of a law violating the obligation of a contract." A quasi contract was defined by the court to be "A class of obligations which are imposed or created by law without regard to the assent of the party bound on the ground that they are dictated by reason and justice, and which are allowed to be enforced by an action ex contractu. They rest solely on the legal fiction and are not contract obligations at all in the true sense, for there is no agreement." ²

Whether a given pension or retirement plan created by an act of the legislature confers upon employees participating therein a vested right of contract depends upon whether participation is voluntary upon the election of the employee, or whether participation is mandatorily required of all persons included within the plan regardless of their desire to become members thereof.

Under the decisional law of this state, it has been established that benefits provided by a pension or retirement plan created by an act of the legislature in which all employees to be benefitted thereby are mandatorily required to participate therein may be subsequently modified by amendatory legislation which would be binding on all employees who are in the active service of the employer at the time such amendment is adopted, provided the amendment does not reduce the benefits to such an unreasonable extent as to justify the inference that deprivation and not reasonable regulation was the legislative object in view. In the Holton case ³ an employee of the City of Tampa retired under a pension law which mandatorily required all employees to become members of the plan and contribute a percentage of their salary to the fund from which pensions were paid. After Holton's retirement the original law was amended in such manner as to materially reduce the pension payments theretofore received by him as a retired employee. Under the peculiar wording of the pension act the employee, upon retirement, was not an ex-member of the Tampa Fire Department but was considered a retired fireman still retained in the service as a member of the Fire Department. It was upon the theory that even though retired, the employee was still in the active service of the City that our Supreme Court held the employee did not possess a vested right of contract to be paid the amount of pension specified in the original law, but like all other active members of the Fire Department then in the service of the City, he was bound by the amendatory act which reduced pension benefits to a sum less than he was originally paid.

To like effect is the decision of the Supreme Court in the Voorhees case ⁴ which involved the question of whether a mandatory pension plan created by an act of the legislature, and applicable to certain designated employees of the City of Miami, conferred a vested right of contract in the employees covered by the plan which could not be impaired by subsequent legislation. Implicit in the court's decision is the holding that since the pension plan in question was mandatory in character, it conferred no vested rights of contract in the employees covered thereby. In its decision the court quoted from its...