Teacher Retirement System v. Duckworth

• Decision Date: 03 April 1953
• Docket Number: No. 15444,15444
• Citation: 153 Tex. 141,260 S.W.2d 632
• Parties: TEACHER RETIREMENT SYSTEM et al. v. DUCKWORTH.
• Court: Texas Court of Appeals

Page 632

260 S.W.2d 632

153 Tex. 141

TEACHER RETIREMENT SYSTEM et al. v. DUCKWORTH.

No. 15444.

Court of Civil Appeals of Texas, Fort Worth.

April 3. 1953.

On the Merits June 26, 1953.

Rehearing Denied Sept. 18, 1953.

John Ben Shepperd, Atty. Gen., of Texas, and Billy E. Lee, Asst. Atty. Gen., for appellants.

H. C. Ray, of Fort Worth, for appellee.

PER CURIAM.

The appellee, Elva Duckworth, individually and as independent executrix of the estate of W. W. Lackey, deceased, recovered judgment against the Teacher Retirement System of Texas and the State Board of Trustees of said System in their official capacity.

The appellants appealed and appellee has filed a motion to dismiss said appeal, on the ground that appellants filed no appeal bond.

It is our opinion that the Teacher Retirement System of Texas is, under Art. 3, § 48a of the Vernon's Ann.St.Constitution, and Art. 2922-1, R.C.S., Vernon's Ann.Civ.St. creating and governing said System, a State Department or State Board and the State Board of Trustees is the head of a State Department. Therefore, Rule 354, T.R.C.P., is not applicable and the appellants were entitled to appeal under the provisions of Articles 2276, 2072, and 279a, R.C.S.

The motion to dismiss is overruled.

On the Merits.

BOYD, Justice.

W. W. Lackey, a retired school teacher, elected to receive his retirement allowance under Art. 2922-1, § 5, subd. 7, R.C.S., Vernon's Ann.Civ.St., known as the Teacher Retirement Act, which provides that any member may '* * * elect to receive his membership annuity in an annuity payable throughout life, * * *.' He died June 28, 1952, and the last annuity payment made to him was for the month of May.

In this suit appellee Elva Duckworth, for herself as sole beneficiary under the will of W. W. Lackey and as independent executrix of his estate, seeks to recover from the Teacher Retirement System and the State Board of Trustees benefits which she contends accrued under the Act for the first twenty-eight days of June. The cause was submitted to the trial court upon an agreed stipulation of facts, and judgment was for appellee. The Teacher Retirement System and the Board appeal.

Section 1, subd. 18, of said article provides that 'membership annuity' shall mean payments for life actuarially determined and derived from reserve funds contributed by a member and an equal amount of reserve funds contributed by the State, and that all membership annuities shall be payable in equal monthly installments. It is provided in section 6, subd. 7, that 'Subject to the limitations of this Act, the State Board of Trustees shall, from time to time, establish rules and regulations for eligibility of membership and for the administration of the funds created by this Act and for the transaction of its business.' The Board adopted a regulation to the effect that the last monthly payment shall be due on the last day of the month next preceding the month in which the beneficiary dies.

Appellants' position is that under the common law doctrine, which they contend prevails in Texas, such annuities are not apportionable in respect of time; and that in any event the above mentioned regulation is a bar to any recovery by appellee. The point appears not to have been decided by any court in this State.

Art. 1, R.C.S., Vernon's Ann.Civ.St., provides: 'The common law of England, so far as it is not inconsistent with the Constitution and laws of this State, shall together with such Constitution and laws, be the rule of decision, and shall continue in force until altered or repealed by the Legislature.'

There seems to be no question but that under the common law of England annuities were generally not apportioned in respect of time. It therefore resulted from the general rule that if the annuitant died before the date of payment his representative could not recover the proportionate part of the annuity for the current year. Henry v. Henderson, 81 Miss. 743, 33 So. 960, 63 L.R.A. 616; Kearney v. Cruikshank, 117 N.Y. 95, 22 N.E. 580; Vander Horst v. Kittredge, 229 App.Div. 126, 241 N.Y.S. 302; Frazer v. First Nat. Bank of Mobile, 235 Ala. 252, 178 So. 441, 126 A.L.R. 1; 2 Perry on Trusts and Trustees, p. 953; 3 C.J.S., Annuities, § 6, page 1383; In re Jenkins' Estate, 199 Wis. 131, 225 N.W. 733; Nehls v. Sauer, 119 Iowa 440, 93 N.W. 346. The reason underlying the rigid common-law rule seems to be that it proceeded upon the interpretation of contracts and because annuities are not like interest which accrues from day to day, but like dividends which do not accrue at all but are declared at the pleasure of the board of managers. They were considered as fixed sums payable on stated days, and until those days arrived there was nothing rendered and nothing due. The annuity was held to be not apportionable since from its nature and character it was not accruing from day to day. Henry v. Henderson, supra.

It will be seen, however, that some well-defined exceptions have been engrafted on the common law rule. Apportionment has been allowed where the annuity was given by a parent to an infant child, or by a husband to a wife living apart from him. Brownstein v. New York Life Ins. Co., 158 Md. 51, 148 A. 273, 274. In that case it was said: "* * * the inequity and arbitrariness of the general rule has been so generally conceded that modern legislation and judicial decisions have steadily tended to narrow the rule and enlarge the exceptions * * *; so that it may be safely stated that the trend of judicial opinion is now in favor of applying the principle of apportionment to any case where the annuity is made for the purpose of maintenance and support." 3 C.J., p. 217, note 57, quotes from Gheen v. Osborn, 17 Serg. & R. 171, 173, as follows: 'It has been settled in this country, that an annuity for the support of daughters is apportioned, and is to be paid up to the death of the daughter, or to the period when the annuity is to cease. So also, an annuity to a wife for her separate maintenance has been apportioned, and decreed, that the fraction occurring between the last day of payment and her death, is to be paid.' See also Seattle-First Nat. Bank v. Brott, 15 Wash.2d 177, 130 P.2d 363. It has been held that interest on money loans was apportionable. Wilson's Appeal, 56 Am.Rep. 214.

In Kieran v. Hunter College Retirement Board, 255 App.Div. 378, 7 N.Y.S.2d 612, 613, the question presented to the court was whether payment should be made for the fractional part of the month in which the beneficiary, a teacher, died. The New York teacher's retirement statute is similar to ours. It provided that payments should be made in equal monthly installments, and the beneficiary had exercised his option to accept his retirement benefits in a retirement allowance throughout life. The court said: 'The defendants urge, first, that an apportionment is prohibited by Section G41-49.0 of the Administrative Code. This section provides that a retirement allowance 'shall be paid in equal monthly installments, * * *.' We find nothing in this section of the code which prohibits the apportionment of the unpaid part of a pension. The fixing of a date for regular payments is obviously done for administrative convenience. * * *'

There is another exception to the common-law rule against apportionment of annuities with stronger reasons for its support. That is where the annuity is paid from a fund which has been largely or partly contributed by the beneficiary. That is so under the teacher retirement system in Texas. '* * * A retirement pension is in the nature of pay withheld to induce continued faithful service. * * * Under the Retirement System the nature of the pension takes the cause out of the normal common law annuity rule. Death is no obstacle to the collection of an unpaid balance of a decedent's compensation for work already performed. * * *' Kieran v. Hunter College Retirement Board, supra. In 78 C.J.S., Schools and School Districts, § 231, sub, h, page 1183, we find the following in the text: 'Ap...