Wallace v. City of Fresno

• Decision Date: 29 January 1954
• Citation: 42 Cal.2d 180,265 P.2d 884
• Parties: WALLACE et al. v. CITY OF FRESNO et al. S. F. 18884.
• Court: California Supreme Court

Page 884

265 P.2d 884

42 Cal.2d 180

WALLACE et al. v. CITY OF FRESNO et al.

S. F. 18884.

Supreme Court of California, In Bank.

Jan. 29, 1954.

Lawrence W. Young, Fresno, for appellants.

C. M. Ozias, City Atty., Fresno, for respondents.

GIBSON, Chief Justice.

R. T. Wallace was a member of the police department of the city of Fresno from 1921 until July 30, 1949, when he retired at the age of 55 with the rank of chief of police. He was paid a pension of $150 a month until June 1952, when the pension board of the city, upon being informed that he had recently been convicted of preparing a fraudulent federal income tax return, a felony, ordered that the pension be discontinued as to him but that it be paid to his wife during his imprisonment and then terminated forever. Wallace and his wife brought this proceeding in mandamus to compel the city to pay a pension to him during his life and upon his death to his wife for her life. The judgment denied relief as to Wallace but directed the pension board to modify its order by either denying Mrs. Wallace a pension or granting her a pension for life. The Wallaces have appealed from the judgment.

When Wallace entered the police department the city charter authorized the establishment by ordinance of a pension system for members of the police and fire departments who are disabled or become superannuated in the service of the city. In 1923 an ordinance was enacted which provided that after 25 years' service any member who reached the age of 50 years should be entitled to retirement on a pension and that no removal of a member from the department after 25 years' service should operate to deprive him of pension benefits except when ordered for habitual drunkenness, notorious insubordination, or conviction of a felony or crime involving moral turpitude. ¹ It was further provided that if a member retired on a pension and died leaving a widow, the pension should be payable to her during her lifetime or until she should remarry.

Substantially the same provisions were contained in a new ordinance, enacted in 1927, which added a section reading: 'Whenever any person who shall receive any pension from the pension fund as provided herein, * * * shall be convicted of a felony or crime involving moral turpitude, become dissipated or become nonresident of this state except by permission of the board, then said board may, after notice to the pensioner, order that the pension allowance of said person shall immediately cease and terminate; and the pension board in its discretion may order the pension or allowance to be paid to the dependents of said pensioner * * *.' The 1927 ordinance also increased the retirement age to 55 years and specified that if there was a subsequent change in salary for the rank held by a retired member the pension should be calculated upon the basis of the salary as changed but should not exceed the sum of $150 per month. It was further provided that in case of a great public emergency any retired person might be assigned to perform duties by the chief of his department. An amendment adopted in May 1938 required that each member of the fire and police departments, commencing on July 15, 1938, pay into the pension fund four percent (later increased to four and one-half percent) of each month's salary. In 1946 a new ordinance was enacted which superseded the 1927 ordinance but contained provisions practically identical with those set forth above.

A public employee who serves under pension provisions similar to those contained in the 1923 ordinance acquires a vested contractual right to a substantial pension. This right arises before the happening of the contingency which makes the pension payable, and it cannot be constitutionally abolished by subsequent changes in the law. ² Kern v. City of Long Beach, 29 Cal.2d 848, 852 et seq., 179 P.2d 799. In discussing the nature of an employee's rights we recognized in the Kern case that a public pension system is subject to the implied qualification that the governing body may make reasonable modifications and changes before the pension becomes payable and that until that time the employee does not have a right to any fixed or definite benefits but only to a substantial or reasonable pension. 29 Cal.2d at page 855, 179 P.2d 799. To the same effect see Packer v. Board of Retirement, 35 Cal.2d 212, 214, 218-219, 217 P.2d 660. It is, of course, true that when a city originally sets up its pension system it has a rather wide latitude in prescribing the terms and conditions for retirement, and it may adopt restrictions that would be considered unreasonable impairments of the contract if subsequently imposed upon employees who have served under the pension plan. As we have seen, however, the felony conviction provision was not part of the original pension ordinance.

The 1927 and 1946 ordinances, by their terms, clearly purport to apply to a person in Wallace's position, and we must, therefore, determine whether the changes made come within the bounds of a reasonable modification or whether their effect is to impair his vested contractual rights. A number of decisions applying the principles announced in the Kern case have upheld, as reasonable, amendments which were enacted after the employees involved had earned some pension rights but before their pensions became payable. Packer v. Board of Retirement, 35 Cal.2d 212, 218-219, 217 P.2d 660; Allstot v. City of Long Beach, 104 Cal.App.2d 441, 443-444, 231 P.2d 498; Allen v. City of Long Beach, 101 Cal.App.2d 15, 17-21, 224 P.2d 792; Palaske v. City of Long Beach, 93 Cal.App.2d 120, 130 et seq., 208 P.2d 764; Brooks v. Pension Board of City of Alameda, 30 Cal.App.2d 118, 123, 85 P.2d 956 (decided prior to Kern case). In the Packer case the modification eliminated a benefit for an employee's widow but made other changes which were advantageous to the employee. The Allstot, Allen and Palaske cases involved an amendment depriving an employee of the right to earn an increase in the amount of his pension payments by remaining in employment after reaching the retirement age. In the Brooks case the amount of the...