Case Title: Snow v. Abernathy

Citation: 331 So. 2d 626

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1976-04-30T00:00:00Z

Document:
331 So. 2d 626 (1976)
Elizabeth S. SNOW
v.
Martha Gayle ABERNATHY et al.
Martha Gayle ABERNATHY et al.
v.
Elizabeth S. SNOW.
SC 1186, SC 1186-X.

Supreme Court of Alabama.
April 30, 1976.
*627 Zeanah, Donald, Lee & Williams, Tuscaloosa, for appellant and cross-appellee.
McCoy Davidson, Tuscaloosa, for appellees and cross-appellants.
EMBRY, Justice.
Elizabeth S. Snow appeals from judgment that declared Code of Ala., Tit. 55, § 460(6)(c), as applied to the facts of this case, in part unconstitutional and in another part constitutional.
Martha Gayle Abernathy, Judy Tucker and Michael David Snow, cross-appeal complaining of that part of the judgment favorable to Elizabeth S. Snow.
The Code section, subject of the declaration in the judgment from which this appeal and cross-appeal are taken, is one of the provisions of the Employees' Retirement Systems Act. The Retirement Systems govern retirement benefits of certain employees of the State of Alabama and certain employees of participating counties, cities, towns and public or quasi public organizations. The Systems were first established by Act No. 515, Regular Session of the Legislature of Alabama of 1945. An amendment, pertinent to this case, was enacted in 1967.
Abernathy, Tucker and Snow filed an action against Elizabeth S. Snow, David G. Bronner and J. Ben Swindle. Abernathy, Tucker and Snow are the children and heirs at law of Henry O. Snow, Jr., deceased. Abernathy and her husband are executors of his Last Will and Testament. Elizabeth S. Snow is his widow. Bronner is Secretary-Treasurer of the Retirement Systems of Alabama. Swindle is Retirement Executive of the Systems. Their complaint was amended. The amended complaint sought a declaratory judgment and injunctive relief: to declare the Retirement Systems Act unconstitutional if applied to provide for return of contributions of Henry O. Snow, Jr., deceased, to the surviving spouse rather than the beneficiary (his estate) designated by him prior to the 1967 Amendment to the Act, and to enjoin payment by Bronner and Swindle of any monies held by the Retirement Systems payable by virtue of Snow's membership therein, pending final determination by the trial court of those entitled to such monies.
*628 After evidentiary hearings, without a jury, the judgment entered by the trial court provided in part:
Henry Snow was employed by the City of Tuscaloosa on August 1, 1943. The Employees' Retirement Systems were established by legislative act some two (2) years subsequent to his employment. Henry Snow elected to become a member of the Retirement Systems in 1947, by executing a written instrument. By that same document he designated his first wife, Martha Gayle Snow, beneficiary as permitted by Act No. 515, Regular Session of the Alabama Legislature of 1945. In pertinent part that Act provided:
Henry Snow divorced his first wife, Martha Gayle, in 1965, and changed his beneficiary from her to his estate. On August 28, 1966, Snow married the appellant, Elizabeth *629 S. Snow who became his widow upon his death during January 1974. By 1967 Amendment to Retirement Systems Act (Code of Ala., Tit. 55, § 460(6)(c)), Act No. 515, Acts of Alabama, 1945, Regular Session, was changed as it pertained to return of contributions. Also, the 1967 Amendment designated the surviving spouse as beneficiary to whom contributions would be returned and added a surviving spouse benefit.
It provided in part:
After Henry Snow died, his widow, Elizabeth Snow, filed for return of her deceased husband's contributions with accumulated interest (as provided for under the 1967 Amendment) and also filed for the surviving spouse benefit that was created by that Amendment.
The issues presented for review are:
(a) Did decedent acquire vested contractual rights, including a right to designate his beneficiary, when he became a member of the Retirement Systems in 1947?
(b) If the decedent acquired vested contractual rights, is Code of Ala., Tit. 55, § 460 (the 1967 Amendment to the Retirement Systems Act), in its application to this case, an unconstitutional impairment of those rights?
(c) Is the widow, Elizabeth Snow, entitled to the death benefit of $5,000, as provided in Code of Ala., Tit. 55, § 460(6)(c), regardless of that statute's constitutionality, or lack of it, as it was here applied?
Issues (a) and (b) outlined above have been previously answered by this court in the case of Smith v. City of Dothan, 279 Ala. 571, 188 So. 2d 532, for all practical purposes.
In Smith v. City of Dothan, supra, an employee exercised his right voluntarily to become a member of a retirement system provided for the employees of the City of Dothan under a legislative act and pay 5% of his salary as contributions toward retirement benefits. Later the legislature limited the deduction of 5% to the first $4,800 of salary and by doing so reduced monthly pension amounts payable under the plan after retirement. When the employee retired he claimed that he was entitled to benefits based upon 5% of his full salary throughout his entire contributing period of work, contending that the legislature had no right to reduce the benefits. He offered to pay the difference in the contributions that he had paid and what he would have paid under the original plan. The court ruled with the employee, holding that under a voluntary retirement program the constitutional prohibitions prohibiting *630 the passage of a law that impairs the obligation of a contract controlled and, therefore, the later legislative act which reduced his pension benefits was not controlling. In reaching this decision, this court said:
It is voluntary participation at the election of the employee that precipitates vesting of contractual rights of that employee in the pension or retirement plan. In this case Snow made the voluntary election by executing a written instrument expressly assenting to membership in the Retirement System. This is not to say that such is the only method of expressing assent.
Though management (or the legislature) may reserve the right to revise or amend the plan, vested rights of the employee may not be impaired and will be safeguarded. Weesner v. Electric Power Board of Chattanooga, 48 Tenn.App. 178, 344 S.W.2d 766 (1961).
A basic determining factor to a resolution of the question of whether Snow acquired vested contractual rights in the statutory retirement plan here under consideration is contribution or noncontribution to the fund. Snow contributed, therefore weight is added to the soundly reasoned conclusion that the relationship between him and the system was contractual in nature. His rights vested thereby and cannot be abrogated by legislation although legislation to improve the system is constitutionally permissible. State ex rel. O'Donald v. City of Jacksonville Beach, supra; Bardens v. Board of Trustees of Judges Retirement System, 22 Ill. 2d 56, 174 N.E.2d 168; Clarke v. Ireland, 122 Mont. 191, 199 P.2d 965; Ball v. Board of Trustees of Teachers' Retirement Fund, 71 N.J.L. 64, 58 A. 111.
Snow's contractually vested right was to receive all benefits "contracted" for and included the power to designate his beneficiary. That right was provided by Act No. 515, Acts of Ala., 1945; the basis of the contractual agreement at the time of Snow's election to participate. By electing, expressly or by assent, to participate in such plan employees acquire vested rights of contract to the benefits provided therein upon acceptance of the plan. Those rights may not be impaired by subsequent legislation.
While the Constitution and law protects those rights vested in Snow, a fortiori, the law limits his rights of contract to those for which he bargained. Snow acquired no contractual rights to the added surviving spouse benefit provided by the 1967 Amendmenta statutory gratuity. Snow did, and could have done, nothing to vest in himself the right to designate who should receive a gratuitous surviving spouse benefit granted by the legislature subsequent to when his vested rights were defined in 1945 upon passage of the original Retirement Systems Act. The surviving spouse benefit, it will be recalled, was not created until 1967. Therefore while Code of Ala., Tit. 55, § 460(6)(c), is unconstitutional as applied to abrogate Snow's right to designate the beneficiary of return of contributions and interest thereon, it did not retroactively grant a concomitant designation of recipient of the $5,000 surviving spouse benefit.
The trial court correctly applied the law to the facts to find Elizabeth Snow, the widow, should receive the $5,000 death benefit; the estate of Henry Snow to receive all contributions and accumulated interest thereon; therefore, the judgment is due to be affirmed.
AFFIRMED.
HEFLIN, C.J., and MERRILL, BLOODWORTH, MADDOX, FAULKNER, JONES, ALMON and SHORES, JJ., concur.