Symington v. City of Albany

• Decision Date: 27 May 1971
• Docket Number: S.F. 22751
• Citation: 485 P.2d 270,5 Cal.3d 23,95 Cal.Rptr. 206
• Court: California Supreme Court
• Parties: , 485 P.2d 270 Kenneth I. SYMINGTON, Plaintiff and Respondent, v. CITY OF ALBANY et al., Defendants and Appellants.

Page 206

95 Cal.Rptr. 206

5 Cal.3d 23, 485 P.2d 270

Kenneth I. SYMINGTON, Plaintiff and Respondent, v. CITY OF ALBANY et al., Defendants and Appellants.

S.F. 22751.

Supreme Court of California,

In Bank.

May 27, 1971.

Lawrence D. Saler, City Atty., for defendants and appellants.

R. Arthur Bellman, Berkeley, for plaintiff and respondent.

Ghitterman, Spielman & Steele and Allan S. Ghitterman, Ventura, as amici curiae on behalf of plaintiff and respondent.

TOBRINER, Justice.

In this case we are called upon to consider whether the trial court properly followed our decision in City of Los Angeles v. Industrial Accident Commission (Fraide) (1965) 63 Cal.2d 242, 253, 46 Cal.Rptr. 97, 404 P.2d 801, and Labor Code, section 3751 in holding that the City of Albany may reduce the pension it pays to retired policemen and firemen who also receive workmen's compensation benefits by an amount proportional to the city's contribution to its pension fund. Labor Code, section 3751 provides that 'No employer shall exact or receive from any employee any contribution, or make or take any deduction from the earnings of any employee, either directly or indirectly, to cover the whole or any part of the cost of compensation under this division * * *.' ¹ In City of Los Angeles v. Industrial Acc. Comm., (Fraide) (1965) 63 Cal.2d 242, 253, 46 Cal.Rptr. 97, 404 P.2d 801, we held that to avoid the violation of section 3751's proscription of employee contributions and to prevent double recovery by the employee the city should receive only a partial credit against workmen's compensation liability by reason of its disability pension payments, and that such credit should be commensurate with the city's contribution to the pension fund.

Plaintiff, a retired fireman, throughout his more than 20 years of service, contributed 6 percent of his earnings to a pension fund to provide for his retirement; the city matched his contributions. The city now seeks to reduce plaintiff's pension by the entire amount of the workmen's compensation benefits otherwise due to him. Thereby the city, in substance, would deprive him of the benefit of his many years of contributions to the pension system and compel him, in violation of Labor Code, section 3751, to pay indirectly for his own workmen's compensation benefits. If, however, plaintiff were to receive both the entire amount of his workmen's compensation benefits and the full city pension, he would derive from the single disability a greater recovery than authorized by section 3751 and the pension plan. We shall explain how the trial court properly followed our Fraide decision and Labor Code, section 3751 to avoid these untoward results and to balance the equities of this case.

1. The facts

Plaintiff commenced his employment with the City of Albany as a fireman in July 1942. On January 29, 1963, he sustained an injury arising in the course of his employment as a fireman. As a consequence of this injury plaintiff became permanently disabled. During his more than 20 years of service, plaintiff contributed 6 percent of his salary to a city pension fund, and the city paid an equal amount. ² Because of the pension rights that had accrued during his employment, the Albany Board of Police and Fire Pension Fund Commissioners (hereinafter pension board) granted plaintiff a service connected pension in the sum of $363.50 per month, effective August 1, 1963.

On February 13, 1964, the Workmen's Compensation Appeals Board (formerly Industrial Accident Commission) awarded plaintiff permanent disability compensation of $52.50 per week beginning August 8, 1963, and continuing for 324 weeks. Thereafter, plaintiff would be entitled to receive $25.44 per week for the remainder of his life. ³ Upon plaintiff's receipt of his workmen's compensation benefits, the pension board undertook to reduce his pension ($363.50 per month) by the entire amount of his workmen's compensation benefits ($210.00 per month). Hence, commencing with June 1964 the city proposed to pay plaintiff a pension of only $153.50 per month. Since he received $210.00 per month from the city's workmen's compensation carrier he would thereafter obtain a total payment each month of $363.50.

Plaintiff then filed an action in the Alameda County Superior Court for declaratory relief to determine the legality of the pension board's deduction. He contended that by reducing his pension to the extent of the entire amount of his workmen's compensation benefits the city had violated Labor Code, section 3751 in the manner found unlawful in City of Los Angeles v. Industrial Acc. Com. (Fraide), supra, 63 Cal.2d 242, 46 Cal.Rptr. 97, and City of Los Angeles v. Industrial Acc. Comm. (Morse) (1965) 63 Cal.2d 263, 46 Cal.Rptr. 110, 404 P.2d 814. The trial court rendered judgment for plaintiff and ruled that the City of Albany should receive only a partial credit against its pension liability and that credit should bear the same ratio to the plaintiff's workmen's compensation payments as the city's contribution to plaintiff's pension bears to the total pension contributions.

The court reasoned that the city and plaintiff equally contributed to the pension fund, and thus the city's contributions bore a ratio of one-half to the sum of all contributions to the fund. The trial court then applied the ratio of one-half to the amount of the workmen's compensation benefits ($210.00 per month) and concluded that the city could reduce the pension only by an amount equal to half the workmen's compensation benefits ($105.00). Hence, the city would pay plaintiff a pension of $258.50 per month; the workmen's compensation carrier would pay $210.00 per month; and he would receive a total of $468.50 each month.

2. Labor Code, section 3751, Fraide, and Morse forbid the city from reducing the pension payments by the entire amount of the workmen's compensation benefits

In Fraide we dealt with a fund established by the Los Angeles City Charter to provide pensions for city firemen and policemen, financed in part by these city employees, who contributed 6 percent of their salaries, and in part by city taxes. The city charter authorized a Board of Pension Commissioners to administer the pension fund and provided that if any policeman or fireman were awarded workmen's compensation benefits, any disability pension from the fund would 'be construed to be and shall be payments of such compensation.' The city paid its pensions and discharged its workmen's compensation liability from the same monies because the city served as its own workmen's compensation carrier. When the Industrial Accident Commission refused to allow the city any credit against its workmen's compensation liability for disability pension payments from the pension fund, the city sought review.

In a unanimous opinion, we held that to avoid transgressing section 3751's prohibition against employee contributions, the city should receive only a partial credit against its workmen's compensation liability for disability pension payments. Rejecting the city's contention that its charter provision entitled it to a full credit against its workmen's compensation liability, we noted that in Healy v. Industrial Acc. Comm. (1953) 41 Cal.2d 118, 122, 258 P.2d 1, we had held that the compensation provisions of the Labor Code prevail when in conflict with city charter provisions. (City & County of San Francisco v. Workmen's Comp. App. Bd. (1970) 2 Cal.3d 1001, 1010, 88 Cal.Rptr. 371, 472 P.2d 459; Pearson v. County of Los Angeles (1957) 49 Cal.2d 523, 535, 319 P.2d 624; Wilson v. Beville (1957) 47 Cal.2d 852, 859, 306 P.2d 789; Ferris v. Industrial Acc. Comm. (1965) 237 Cal.App.2d 427, 434, 46 Cal.Rptr. 913 (hg. den.).) ⁴ This court pointed out, 'If we uphold the city's system of employee deductions which can be used for disability pensions and permit the city a complete credit against its workmen's compensation liability, we encourage employers to set up hybrid funds composed of employee contributions and other funds for the purpose of discharging compensation liability, even though the employer cannot show that employee contributions are not used for payment of benefits. Such a system would violate the legislative mandate as interpreted by Healy and offer a stratagem for the purpose of undermining the system of workmen's compensation long established in this state.' (City of Los Angeles v. Industrial Acc. Comm. (Fraide), su pra 63 Cal.2d 242, 252--253, 46 Cal.Rptr. 97, 103, 404 P.2d 801, 807.)

In a companion case of City of Los Angeles v. Industrial Acc. Comm. (Morse), supra, 63 Cal.2d 263, 264--265 and footnote 1, 46 Cal.Rptr. 110, 111, 404 P.2d 814, 815, we indicated expressly that the Fraide principle would limit the city's right to reduce the pension of a fireman's widow by the amount of workmen's compensation death benefits: 'If the city is lawfully entitled to reduce its workmen's compensation liability to Mrs. Morse we see no reason why it may not, as an alternative, reduce its pension liability. In either case, of course, the reduction may not exceed an amount determined by the method of computation outlined in Fraide.'

In the present case the City of Albany urges this court to distinguish Fraide and Morse on six grounds, none of which we find valid:

First: The city contends that the evidence does not show that any funds paid for workmen's compensation came from the earnings of an employee in violation of Labor Code, section 3751. Yet the Morse case expressly holds Fraide applicable whether a city charter provision reduces pension payments to account for workmen's compensation or seeks to deduct from workmen's compensation those amounts that it has disbursed as pension payments. Cavoretto v. City of Richmond (1969) 270 Cal.App.2d 726, 729, 76 Cal.Rptr. 94, expressly relied upon Morse in concluding that a municipality may not evade Fraide by reducing city pension payments instead of workmen's compensation liability.

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