No. 94-526

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

L. C. GULBRANDSON,

Plaintiff,

v.

CAROLE CAREY, FRED J. FLANDERS, CAROL

LAMBERT, TROY MCGEE, SR., ELEANOR PRATT

and TERRY TIECHROW, individually and in

their official capacities as members of the

Montana Public Employees' Retirement Board,

Defendants.

ORIGINAL PROCEEDING

COUNSEL OF RECORD:

For Plaintiff:

Thomas K. Hopgood; Luxan & Murfitt, Helena,

Montana

Patrick F. Hooks, Attorney at Law, Helena,

Montana (argued)

For Defendants:

Kelly A. Jenkins, Special Assistant Attorney

General, Montana Department of Administration,

Helena, Montana (argued)

Filed:

Submitted: April 11, 1995

Decided: August 24, 1995
Justice Karla M. Gray delivered the Opinion of the Court.

By order dated October 31, 1994, and pursuant to Rule 44,

M.R.App.P., the United States District Court, District of Montana,

certified the following question of law to this Court for

consideration and decision:

Does the benefit increase provided for in Chapter 664,

Laws of 1989, an amendment to § 19-5-502, MCA, which

became effective on July 1, 1991, apply to members of the

Montana Judges' Retirement System who retired after the

date of enactment but prior to the effective date of the

legislation?

We accepted jurisdiction of the certified question by order dated

November 15, 1994, and stated that we would decide the certified

question on the basis of the statement of facts contained in the

federal court's Certification of Question of Law, as well as the

Record described in the Certification. We hold that the referenced

benefit increase does not apply to members of the Montana Judges'

Retirement System who retired after the enactment, but before the

effective date, of the legislation and, therefore, answer the

certified question in the negative.

The facts contained in the Certification, and upon which our

decision is based, are as follows:

L. C. Gulbrandson (Gulbrandson), an Arizona resident, was an

active member of the Montana Public Employees' Retirement System

(PERS) and, subsequent to its creation, Judges' Retirement System

(JRS) from January 4, 1960 through August 31, 1989. For service as

a district court judge and supreme court justice during this

period, Gulbrandson was credited with 29 years and 8 months of

2
service credit in JRS. Since September 1, 1989, Gulbrandson has

been a retired member of JRS.

Carole Carey, Eleanor Pratt, Terry Tiechrow, Troy McGee, Sr.,

Fred Flanders, and Carol Lambert are Montana residents appointed by

the governor to the Public Employees' Retirement Board (Board),

pursuant to § 2-15-1009, MCA. The Board is charged under Montana

law, Title 19, MCA, with the administration of JRS, among other

state administered governmental retirement systems.

During Gulbrandson's period of active membership on the bench

in PERS, from January 4, 1960, through June 30, 1967, he

contributed 5.6% of his salary to PERS. On July 1, 1967, JRS was

formed as a retirement system separate from PERS. All

Gulbrandson's service credit in PERS was transferred to JRS. From

July 1, 1967, through August 31, 1989, Gulbrandson contributed 6%

of his salary to JRS.

During the 51st Montana Legislature which convened in January

1989, Senate Bill 241was introduced by Senator Mazurek and others.

This bill, as introduced, provided for additional state funding to

JRS and provided for an increase in retirement benefits for those

years served by a Judge after the 15th year from 1% to 2% of final

salary for each such year of service.

This bill, as amended, was signed by the Governor of Montana

on May 13, 1989, and enrolled as Chapter 664, Laws of 1989 (Ch.

664). As enacted, Ch. 664 was effective on July 1, 1989, except

for two sections which were to be effective on July 1, 1991. The

more pertinent of these delayed-effect sections, Sec. 3, provided

3
as follows:

Section 19-5-502, MCA, is amended to read:

Upon retirement from service, a member shall receive a

service retirement allowance which shall consist of the

state annuity plus the member's annuity. The member ’ s

annuity shall be the actuarial equivalent of his

aggregate contributions at the time of retirement. The

state annuity shall be in an amount which, when added to

the member's annuity, will provide a total retirement

allowance of 3 l/3% per year of his final salary for the

first 15 years' service and 1.785% per year for each

year's service after 15 years' service.

Sec. 3, Ch. 664 was one of two sections of that legislation

which had a delayed July 1, 1991, effective date. The remainder of

the legislation, including a mechanism for increased state funding

for JRS, was effective July 1, 1989.

Gulbrandson was an active member of JRS at the time of the

legislative enactment and for more than three months beyond

enactment. As an active member during this time, Gulbrandson

continued to contribute 6% of his salary to JRS.

Had he completed his term, Gulbrandson's term of office would

have expired January 6, 1991. Gulbrandson resigned voluntarily on

August 31, 1989.

Beginning September 1, 1989, Gulbrandson began to receive "a

total retirement allowance of 3 l/3% per year of his final salary

for the first 15 years' service and 1% per year for each year's

service thereafter," as provided in § 19-5-502, MCA, on that date.

Gulbrandson has continued to receive a total retirement allowance

based on these percentages.

Between May 13, 1989, and July 1, 1991, there were 6 active

members of JRS with more than 15 years of service. Gulbrandson was

4
the only member with more than 15 years of service who voluntarily

terminated service during that period.

On January 23, 1992, Gulbrandson appeared before the Board

informally seeking Board consideration of the application of Sec.

3 , Ch. 664, initially as to all members retired prior to July I,

1991, then as to himself. The Board requested an Attorney

General's Opinion on the issues.

On December 4, 1992, the Attorney General of Montana issued an

opinion to the Board which concluded that Ch. 664 did not increase

the retirement allowance for those JRS members who retired prior to

July 1, 1991, even those who retired after the date of enactment.

On September 13, 1993, Gulbrandson filed a formal petition

with the Board for redetermination of his retirement allowance.

The Board denied the petition on September 23, 1993.

Members of JRS with more than 15 years of service credit who

retired after July 1, 1991, have received "a total retirement

allowance of 3 l/3% per year of his final salary for the first 15

years ' service and 1.785% per year for each year's service after 15

years' service," as provided in § 19-5-502, MCA, after that date.

Jack L. Green, a JRS member active from May 1, 1963, through

December 31, 1992, with 29 years, 8 months service credit in JRS,

has at all times received a total retirement allowance based on

1.785% of final average salary for all years subsequent to his 15th

year of service.

1 . Is Gulbrandson entitled to the increased retirement

5
benefit provided in Section 3, Chapter 664, Laws of 1989,

amending § 19-5-502, MCA, which was enacted in 1989 and

effective July 1, 1991, under the plain language of the

statute?

Our function in construing and applying statutes is to

effectuate the legislature's intent. United States v. Brooks

(Mont. 1995), 890 P.2d 759, 761, 52 St.Rep. 113, 114. To determine

legislative intent, we first look to the plain meaning of the words

used in the statute. Stansbury v. Lin (1993), 257 Mont. 245, 249,

848 P.2d 509, 511. If the legislature's intent can be determined

by the plain language of the words used, we may not go further and

apply other means of interpretation. Prairie County Co-op v.

Kalfell Ranch, Inc. (Mont. 1994), 887 P.2d 241, 246, 51 St.Rep.

1488, 1491. It is only when the intent cannot be determined from

the language of the statute that we will examine legislative

history. Matter of Kalfell Ranch, Inc., 887 P.2d at 246.

As of its effective date on July 1, 1991, Section 3, Chapter

664 provides an increased retirement benefit to JRS members with

more than 15 years' service "upon retirement from service." The

plain meaning of the statutory language is that a member is

entitled to the increased benefit upon his or her retirement from

service on or after July 1, 1991. Such plain, clear and

unambiguous language expresses the legislature's intent and permits

no further interpretation by this Court. Matter of Kalfell Ranch,

- I Inc. 887 P.2d at 246.

Here, Gulbrandson retired from service nearly two years before

the effective date of Section 3, Chapter 664. He did not retire

6
again on or after July 1, 1991. Based on the plain meaning of the

statute, we conclude that he was not entitled to the increased

retirement benefit contained in § 19-5-502, MCA, as amended by

Chapter 664, upon his retirement prior to July 1, 1991.

Gulbrandson argues that denial of his entitlement to the

increased retirement benefit impermissibly impairs his contract

with the JRS in violation of Article II, section 31, of Montana's

Constitution. Under the three-part test we apply to determine

whether legislation violates the impairment of contracts clause,

the initial inquiry is whether the law has operated as a

substantial impairment of the contract. Matter of Yellowstone

River (1992), 253 Mont. 167, 182-83, 832 P.2d 1210, 1219 (citations

omitted). Thus, in order to address Gulbrandson's argument, we

must determine the parameters of his contract to determine whether

the contract guarantees him the benefit increase contained in

Section 3, Chapter 664. If it does not, then denial of the

increased retirement benefit cannot impair the contract.

At the time of Gulbrandson's retirement prior to the effective

date of Section 3, Chapter 664, JRS members with more than 15

years' service were entitled to 1% per year of current salary for

each year of service after 15 years. See § 19-5-502, MCA (1989).

This clear and undisputed entitlement is our starting point in

determining the terms of Gulbrandson's retirement benefit contract.

Gulbrandson argues that the entirety of Chapter 664 became

operable law as of May 13, 1989, when it was signed by Governor

Stan Stephens. Accordingly, and notwithstanding the delayed

7
effective date of the Section 3 amendment to § 19-5-502, MCA, he

asserts that his entitlement to the increased retirement benefit

contained in Chapter 664 became a vested part of his contract as of

May 13, 1989. He relies, in part, on Leonard v. City of Seattle

(Wash. 1972), 503 P.2d 741. Leonard does not support his position.

In Leonard, the Washington Supreme Court considered whether a

retired police officer's pension could be forfeited under a statute

enacted after the officer's retirement which forfeited pension

rights upon a felony conviction. The court refused to allow the

forfeiture, stating that rights to a public pension "are to be

determined as of the latest enactments applicable to the recipient

in effect prior to actual retirement . . . .I' Leonard, 503 P.2d at

747. Applying the Leonard language here, it is clear that the

latest enactment applicable to Gulbrandson which was in effect

prior to his retirement was § 19-5-502, MCA (19891, because Section

3 , Chapter 664 was not effective until July 1, 1991.

Nor is Gulbrandson's reliance on 73 Am. Jur. 2d Statutes § 360

(1974), well placed. The portion of that discussion on which he

relies centers on whether a bill becomes law on passage by the

legislature or only upon approval by the governor; that is not the

issue presently before us. We note that Gulbrandson does not quote

a later part of the discussion which points out that legislatures

often are authorized to prescribe the time when a statute takes

effect. 73 Am.Jur. 2d Statutes § 360 (1974). That is precisely

what the Montana legislature did here.

The terms of Gulbrandson's retirement benefit contract are

8
determined pursuant to the statutes in effect at the time of his

retirement on August 31, 1989. The amendment to § 19-5-502, MCA,

via Section 3, Chapter 664, was not yet effective on that date.

Therefore, we conclude that Gulbrandson's contract does not include

the increased retirement benefit contained in Section 3, Chapter

664 and, as a result, his contract was not impaired by denying him

entitlement to that increased benefit.

2 . Does the denial of the increased retirement benefit

contained in Section 3, Chapter 664, violate

Gulbrandson's constitutional right to the equal

protection of the law?

Gulbrandson argues that the Board's interpretation and

application of Section 3, Chapter 664 creates impermissible

classifications of JRS retirees and singles him out based on his

retirement between the date the governor signed Chapter 664 and the

effective date of Section 3 thereof. His stated equal protection

challenge is to the amended statute as applied by the Board, rather

than to the statute by its terms, and is based on his contention

that he is entitled to the increased retirement benefit pursuant to

§ 19-5-502, MCA, as amended. Because we conclude above that

Gulbrandson is not entitled to the increased retirement benefit

under the plain meaning of the amended statute, we deem his equal

protection argument to,be directed at the provisions of the amended

statute, that is, a facial challenge to the law itself.

Article II, section 4 of the Montana Constitution provides

that "[nlo person shall be denied the equal protection of the

9
laws. ” The purpose of the equal protection clause "is to ensure

that persons who are citizens of this country are not the subject

of arbitrary and discriminate state action." Cottrill v. Cottrill

Sodding Service (1987), 229 Mont. 40, 42, 744 P.2d 895, 897;

quoting Godfrey v. Mont. State Fish & Game Com'n (1981), 193 Mont.

304, 306, 631 P.2d 1265, 1267. We determine whether state action

violates equal protection by applying either a strict, intermediate

or rational basis standard of scrutiny. The determination of which

standard is appropriate depends on the facts and the rights

involved. See Arneson v. State (19931, 262 Mont. 269, 272-73, 864

P.2d 1245, 1247-48; Cottrill, 744 P.2d at 897.

The most stringent standard, strict scrutiny, is imposed when

the action complained of interferes with the exercise of a

fundamental right or discriminates against a suspect class.

Eastman v. Atlantic Richfield Co. (1989), 237 Mont. 332, 337-38,

777 P.2d 862, 865. The intermediate standard is applied in cases

involving rights that are significant, or important, but not

fundamental. Butte Community Union v. Lewis (19861, 219 Mont. 426,

432-34, 712 P.2d 1309, 1312-14. The lowest standard, the "rational

basis" or "reasonable relationship" test, applies in most cases.

To withstand rational basis scrutiny, the law or state action need

be only rationally related to furthering a legitimate state

purpose. Ameson, 864 P.2d at 1248.

With regard to the proper standard of scrutiny for this case,

Gulbrandson makes a passing argument that intermediate scrutiny

applies. He does not, however, distinguish our decision in

10
ArneSXl, where we rejected intermediate scrutiny in favor of the

rational basis standard in the context of an equal protection

challenge to retirement benefit statutes. Ameson, 846 P.Zd at

1248. Consequently, we analyze Gulbrandson's claim under the

rational basis test.

To a certain extent, nearly all legislation sets forth

classifications regarding applicability, benefits and recipients;

the fact that some of these classifications are imperfect does not

necessarily mandate a conclusion that they violate the equal

protection clause. Ameson, 864 P.2d at 1248. Moreover, every

possible presumption must be indulged in favor of the

constitutionality of a challenged statute. Arneson, 864 P.2d at

1248; citing State v. Safeway Stores (1938), 106 Mont. 182, 199, 76

P.2d 81, 84.

Section 19-S-502, MCA, as amended by Section 3, Chapter 664

effective July 1, 1991, created two classes of retired judges, with

those retiring after that date receiving an increased retirement

benefit for years of service in excess of I5 years. The issue

before us is whether a rational relationship exists between the

delayed effective date of Section 3, Chapter 664, which results in

Gulbrandson's lack of entitlement to the increased retirement

benefit, and a legitimate government interest. See Arneson, 846

P.2d at 1248-49.

The factual and legal equal protection issues in this case are

similar to those addressed by the Michigan Supreme Court in Hughes

v. Judges Retirement Bd. (Mich. 1979), 282 N.W.2d 160. In Huches,

11
two retired judges instituted an action for a writ of mandamus

increasing their retirement benefits under a 1974 amendment to the

retirement system; both judges had retired before the effective

date of the amendment. The writ was denied and the judges

appealed. Hushes, 282 N.W.2d at 162-63.

Applying the rational basis test, the Michigan Supreme Court

quoted earlier cases stating that "legislation is not

unconstitutional because . . . it benefits a particular class, so

long as the law operates equally upon those within a particular

class." Hushes, 282 N.W.2d at 167 (citations omitted). The court

first concluded that the legislature did not intend to provide the

increased benefit to judges retiring prior to the effective date of

the retirement system amendment. It then discussed the purpose

of the 1974 amendment at issue, which was to induce judges to

remain in service as judges. Given that purpose and the fact that

no incentive to remain on the bench can be offered to a judge who

has already retired, the "distinction created between judges who

retire prior to the amendment and those who retire after the

amendment is [not] arbitrary, unreasonable, or devoid of rational

basis." Hucrhes 282 N.W.2d at 168. On that basis, the Michigan

court held that the classification created by the amendment was

"rationally related to the object of the legislation in which it is

made." Hucrhes, 282 N.W.2d at 168. The Huches rationale is equally

applicable here.

On its face, as discussed above, the delayed effective date of

the amendment to § 19-5-502, MCA, establishes the legislature's

12
intent to provide the increased retirement benefit to those judges

retiring on or after the July 1, 1991, effective date. The fact

that the amendment created two classifications does not produce an

equal protection violation; to this extent, the delayed-effect

amendment is not unlike most legislation which, by its very nature,

contains or produces classifications regarding benefits,

applicability and the like by virtue of a change in statute at a

particular point in time. See Ameson, 864 P.2d at 1248.

Moreover, there is no dispute that the classification created

by the amendment "operates equally upon those within the particular

class." See Hushes, 282 N.W.2d at 167. All judges who retired

prior to July 1, 1991, receive the retirement benefits to which

they were statutorily entitled at the time of their retirement;

those who retired after July 1, 1991, also receive the retirement

benefits to which they were statutorily entitled at the time of

their retirement, including the increased benefit provided as of

that date via Section 3, Chapter 664.

In addition, as was the case in Hushes, one of the purposes of

Section 3, Chapter 664, even before the effective date was delayed,

was to provide an incentive to judges to remain in service by

increasing their retirement benefit for years of service in excess

of 15 years; indeed, the delayed effective date can be viewed as an

additional inducement in that judges with significant numbers of

years of service might be encouraged to remain in service not

merely until the July 1, 1991, effective date, but for some time

thereafter. There is no question but that the purpose of the

13
amendment, including the delayed effective date, is a legitimate

governmental interest. Given the stated purpose, and the fact that

the incentive to remain on the bench cannot be successful with

regard to judges retiring prior to its effective date, we cannot

say that the distinction between judges retiring prior to, and

after, the effective date of the amendment is in any way arbitrary,

unreasonable or devoid of rational basis. See Hushes, 282 N.W.2d

at 167-68.

Gulbrandson advances an argument that the distinction at

issue relates not to when a judge retires, but to equality of

retirement benefits among judges with similar years of service. He

compares his own situation to that of retired district court judge

Jack Green, who retired December 31, 1992. At the time of their

respective retirements, each was credited with 29 years and 8

months of service. With regard to the amount of retirement benefit

received for years of service in excess of 15 years, Judge Green

received 1.785% per year, while Gulbrandson received 1% per year.

The fatal flaw in this comparison relates to our discussion

regarding the plain meaning of § 19-5-502, MCA, as amended; namely,

that the amount of retirement benefit to which a member of the JRS

is entitled is calculated pursuant to the statutes in effect at the

time of the retirement. When Gulbrandson retired, § 19-5-502, MCA

(1989), entitled him to 1% of current salary per year for each year

of service exceeding 15 years. Judge Green, on the other hand,

retired well after the effective date of the amendment to § 19-5-

502, MCA, and, therefore, was entitled to the increased retirement

14
benefit which became effective on July 1, 1991. While this

difference in benefit entitlement between retiring judges with

identical periods of service may be less than perfect, such

imperfection does not mandate a conclusion that it violates

Gulbrandson's right to equal protection of the laws. See Ameson,

864 P.2d at 1248. In addition, relative to our discussion of the

purpose of the amendment, that purpose was furthered by Judge

Green's remaining in service after its effective date; it could not

have been furthered by Gulbrandson, who retired prior to

eligibility for the increased retirement benefit.

We conclude that § 19-5-502, MCA, as amended by Section 3,

Chapter 664, is not unreasonable or arbitrary. We further conclude

that it is rationally related to a legitimate governmental interest

in providing an incentive for judges remaining in service for

longer periods of time.

We hold that the retirement benefit increase provided in

Section 3, Chapter 664, Laws of 1989, an amendment to § 19-5-502,

MCA, which became effective on July 1, 1991, does not apply to

members of the Montana Judges' Retirement System who retired after

the enactment date, but prior to the effective date, of the

legislation. Therefore, we answer the certified question in the

negative.

1 5
We corlcur.

Chief Justice

16
Chief Justice J. A. Turnage respectfully dissents.

The majority opinion correctly states that this Court's

function is to determine the legislature's intent in the passage of

a statute. The majority then goes on to say that based on the

plain language of the statute Retired Justice L. C. Gulbrandson is

not entitled to the benefits of § 19-5-502, MCA, as amended by

Chapter 664 of the 1989 Montana Session Laws.

Resorting to this method of judicial analysis ignores a long

history of § 19-S-502, MCA, and Chapter 664 of the Session Laws of

1989. This Court's resorting to the "plain language" analysis

affords an easy solution to the issue before this Court, neat,

plausible and wrong.

To arrive at a just and correct solution of the issue before

this Court it is absolutely necessary to fully understand the

history and political maneuvering that underlies the 1989 amendment

to § 19-5-502, MCA. Failure to do so can only result in a denial

of justice and fairness in this case.

For several years, the Montana Judges' Retirement System had

been the focus of certain actuarial consultants and personnel of

the Montana Public Employees' Retirement System who consistently

proclaimed that the Judges' Retirement System was under-funded. I

respectfully submit that the following factual information set

forth herein clearly establishes that for more than ten years last

past and presently, the System is not under-funded. The following

information obtained from the records of the Public Employees'

Retirement Board are most interesting and factually important.
STATE OF MONTANA

JUDGES’ RETIREMENT SYSTEM

FISCAL

m REVENUE% EXPENSES

ANNUAL

ADDITIONS

NET ASSETS

AVAILABLE

06/30/85 1,486,109 420,788 1,065,321 6,614,467

06/30/X6 1,606,206 451,163 1,155,043 7,769,510

06/30/87 1,678,660 442,168 1,236,492 9,006,002

06/30/88 1,653,856 453,033 1,200,823 10,206,825

06/30/89 1,829,743 465,282 1,364,461 11,571,286

06/30/90 1,984,lOO 613,484 1,370,616 12,941,902

06/30/91 2,065,536 580,088 1,485,448 14,427,350

06/30/92 2,169,853 667,957 1,501,896 15,929,246

06/30/93 2,409,254 802,217 1,607,037 17,536,284

06/30/94 2,5.52,411 749,612 1,802,739 19,339,023

ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS

It is important to note that actuarial consultants have

indulged certain assumptions that are not supported by logic or the

facts or the actuary has failed to take into consideration certain

other relevant and Very important facts concerning judges'

retirement. For example:

(1) Assumption that the rates of salary increase for judges

are based upon an assumed compounded growth rate of 6.5 percent per

annum. If such were the case, Montana judges certainly would not

be the lowest paid judges in the nation. If the actuary was

correct, Montana district judges commencing January 1, 1995, would

be receiving a salary of $98,309 annually, or $35,131 more than

they are actually receiving.

(2) Another actuarial assumption is that the obligation of the

pension reserves must be adjusted to present value which, of

course, assumes that every judge will retire tomorrow and there

18
never will be any further contributions made to the system from all

of the present revenue sources and that all of the present value

obligations would have to be paid out on the same date. This

assumption, although with due respect may be a standard actuarial

approach, simply defies logic for the reason that it cannot and

will not ever occur.

(3) A relevant fact that should be considered by the actuary

in making assumptions is the fact that judges are not entitled to

draw normal retirement until they have reached the age of sixtyfive years. This requirement does not apply to any other public

employee system in the State of Montana. The result of such

requirement is, of course, that judges, when they do commence to

draw retirement, are at a relatively advanced age and based on the

mortality tables cannot expect to draw their retirement for any

extended number of years. A review of the retirement board records

relating to deceased judges will most certainly bear out this fact

of life.

(4) It does not appear that the actuary has taken into account

that many of the present judges are entering the system at a much

earlier age and contributions will be made by them and the employer

for an extended period of time that statistically did not take

place in years past. These judges, of course, will also be

required to wait before receiving any benefit from the system under

normal retirement until they have reached the age of sixty-five

years.

19
From the foregoing revenues and expenses from June 30, 1985,

to June 30, 1994, it is readily apparent that revenues have been

exceeding expenses by over three times annually and that the annual

additions to and growth of the fund assets are exceeding well over

$l,OOO,OOO in each of those ten years. The net assets of the

Judges' Retirement System will, of course, continue to grow at the

experienced rate or in excess thereof. With prudent investment of

the funds, this system will be in a position to loan money to the

United States of America to bail out its Social Security System in

a few more years.

What does this history of the System's revenues and expenses

have to do with the issue in this case? Everything.

This inquiry leads us to the history of what is now § 19-5-

502, MCA, as amended by Chapter 664 of the Montana Sessions Laws of

1989. Prior to the 1987 session of the Montana legislature, it was

apparent that there was an unfairness in the Judges' Retirement

System. What is now § 19-5-502, MCA, from the inception of the

System, penalized judges who had served fifteen years by reducing

their retirement benefits to 1 percent credit for each year of

service after fifteen years. This reduction was far below the

annual service credit for the first fifteen years of service and

was nearly twice lower than the annual service credit of public

employees in the state. In an attempt to bring some equity into

this situation, there was introduced Senate Bill 365 in the 1987

session which would have raised the 1 percent annual credit after

fifteen years to 2 percent. Senate Bill 365 was heard in the

20
Senate and House Committees. During the hearings, it was evident

that personnel of the Public Employees' Retirement System succeeded

in alarming the committee members that the Judges' Retirement

System was in great jeopardy and under-funded. Please note, for

each of the fiscal years ending June 30, 1986, and June 30, 1987,

the net assets of the funds had increased by well over $l,OOO,OOO

for each of those years. The net result was that the House of

Representatives failed to approve the Bill and the Bill died,

notwithstanding the fact that the Bill carried with it a funding

mechanism to increase contributions to the Judges' Retirement

System over and above any anticipated additional expenses by virtue

of the increased service credit.

It was apparent during the 1987 legislative hearings that

certain members of the legislature were of a mind that any

legislation that benefited judges was not going to meet with their

approval. Unfortunately, this carried over into the 1989 session.

During the 1989 session, Senate Bill 241 was introduced and is

now Chapter 664 of the 1989 Montana Session Laws. It amended § 19-

5-502, MCA, into its present form.

Senate Bill 241 contained a funding provision which more than

exceeded any cost to the system by raising the service retirement

credit from 1 percent to 2 percent. In spite of the written

testimony of the Public Employees' Retirement Division Administrator that the Board did not oppose Senate Bill 241 and that it did

provide a method of funding that more than off-set any of its

costs, the Division persisted in claiming that the Judges'

21
Retirement System was under-funded in spite of the fact that for

the fiscal year June 30, 1988, the additions to the retirement

aSSets increased by well over $l,OOO,OOO and on June 30, 1989, the

assets increased by $1,364,461.

The House Committee on State Administration held hearings on

the Bill and again, in spite of the system not opposing the Bill,

a representative of the Public Employees' Retirement Division went

into great length in again raising fears of under-funding of the

judges' retirement system. It was apparent that the usual

opponents to any legislation that would benefit the judiciary was

again arguing that the Judges' Retirement System was under-funded

and the Committee initially refused to approve the Bill on a tie

vote and the Bill was tabled. Thereafter, political maneuvering

obviously took place and the Bill was taken off of the table,

amended and passed with the increased annual service credit benefit

reduced from 2 percent to 1.785 percent, the same as other public

employees of the State of Montana were receiving. The most

significant amendment to Senate Bill 241, and which clearly

evidences political maneuvering that would make Machiavelli blush,

is found in what then appeared as section 5 of the Bill, and which

section does not appear in our Montana Code Annotated, reads as

follows:

Section 5. Review of actuarial valuation. The public

employees retirement board shall provide to the 52nd

legislature, by January 10, 1991, a copy of the most

current actuarial valuation of the judges' retirement

system. The legislature shall review the actuarial

soundness of the judges' retirement system, and the 52nd

legislature may eliminate or modify the effect of [this

act].

22
The obvious purpose of the legislators who were not particularly supportive of the judiciary in offering this amendment

certainly cannot be attributed to a factual fear of under-funding

of the Judges' Retirement System in view of the fact that the

System had been growing with excess revenues over expenses at well

over $l,OOO,OOO per year for several years prior to the 1989

legislative session. It is apparent that the opponents of the Bill

included this amendment for the purpose of having the Bill before

them again in the 1991 legislative session when they could

effectively repeal the 1989 increased service credit benefit. 1n

any event, certain of the opponents to this Bill did not return to

the 1991 legislative session and there was no effort to repeal the

increased service benefits.

The foregoing basic facts are all set forth in the appendix to

plaintiff's brief and are a part of the record in this case. Such

facts support the observations of the undersigned.

With the foregoing in mind, it is obvious that the legislative

intent behind what is now Chapter 664 of the Montana Session Laws

of 1989 cannot be determined by simply looking at the bare wording

of Senate Bill 241.

In this Court's search for justice, it would be unwise to

dispose of this case based on a plain language doctrine.

There is a further point that gives rise to the necessity of

interpreting the legislative intent in this manner. If, as claimed

by the majority, that section 3 of Chapter 664 is only to be

effective on July 1, 1991, this raises a substantial question as to

23
whether or not any portion of section 3 of the Act, which is the

entirety of 5 19-5-502, MCA, likewise is not to be effective until

July 1, 1991. If such be the case, for a two-year period from July

1, 1989, to July 1, 1991, no member of the Judges' Retirement

System could receive any credit for those two years of service.

Such "plain language" approach technically could lead to an absurd

result that the majority would likely disavow.

It should be noted that major portions of Senate Bill 241

became effective July 1, 1989, particularly those portions that

provided additional monies to the Judges' Retirement System.

If the legislature clearly intended that no judge retiring

prior to July 1, 1991, would be entitled to any of the .785 percent

service credit retirement, they simply could have stated in the

amendment to 5 19-5-502, MCA, the following: "No judge retiring

prior to July 1, 1991, shall be entitled to the increased service

credit of .785 percent per year for each year of service after

fifteen years." If such was their intent, they could have easily

made that additional statement, thereby avoiding the underlying

litigation and the necessity for this Court to interpret legislative intent.

It must also be noted that Retired Justice Gulbrandson is not

seeking the increased service credit benefit from the effective

date of the act, July 1, 1989, but only from the July 1, 1991, when

the increased service credit became effective. Retired Justice

Gulbrandson is the only retired person that could possibly be or

has been affected by the July 1, 1991, effective date of the

24
increased service credit. He is the only member of the Judges'

Retirement System with more than fifteen years service credit that

retired between July 1, 1989, and July 1, 1991. He is entitled,

prospectively, to the benefit of the act increasing the service

credit effective July 1, 1991. Denying him the benefit of Senate

Bill 241 for an increased service credit commencing July 1, 1991,

which is what Retired Justice Gulbrandson is requesting, does not

involve a retroactive request for benefits--only a prospective

right to those benefits subsequent to July 1, 1991.

Denial of the prospective benefits subsequent to July 1, 1991,

violates Retired Justice Gulbrandson's rights secured under the

Contracts Clause, Article I, Section 10, Clause 1, of the United

States Constitution. On September 10, 1989, when Retired Justice

Gulbrandson concluded his judicial career, Senate Bill 241 had been

law since it was approved by the Governor on May 12, 1989. The

basic effective date of the act had been law since July 1, 1989.

Therefore, Retired Justice Gulbrandson had a constitutionallyprotected contract right to rely upon the benefits that are due him

under the act before he retired.

Retired Justice Gulbrandson has also been denied equal

protection of the law as guaranteed under the Fourteenth Amendment

to the United States Constitution, which classifies him in such a

manner as to make the classification arbitrary and capricious.

Even under the reduced rational basis test of equal protection, the

State cannot demonstrate any legitimate rational purpose in denying

25
the prospective benefits based upon the clear record of the assets

of the Judges' Retirement System.

Of the nearly one hundred past and present members of the

Judges' Retirement System, Retired Justice Gulbrandson is the only

person that could possibly be affected by 13 19-5-502, MCA. NO

other person retired between the approval date of the act, May 12,

1989, and July 1, 1991. The denial of benefits to Retired Justice

Gulbrandson simply cannot set any precedent, affect any other

person and like circumstances simply will never again reoccur.

Retired Justice Gulbrandson served the people of Montana with

dedication, diligence and ability for twenty-three years as

District Judge of the Seventh Judicial District and for six years

and eight months as a Justice of the Montana Supreme Court--a total

of twenty-nine years and eight months of judicial service.

During Justice Gulbrandson's service as a District Judge in

the Seventh Judicial District from January 4, 1960, to January 2,

1983, he was the only judge serving the District that comprised the

Counties of Richland, Dawson, McCone and Wibaux. During much of

that time this judicial district was experiencing a judicial

explosion because of an oil development boom that prevailed during

nearly all of that period of time. It is ironic that after all of

those years L. C. Gulbrandson provided judicial service to the

Seventh Judicial District as the lone district judge thereof, the

legislature in 1984, the year that Retired Justice Gulbrandson

assumed his seat on the Montana Supreme Court, increased the number

26
of judges in the Seventh Judicial District by adding an additional

judge.

There is ample precedent that pension statutes should be

liberally construed in favor of the persons intended to be

benefited thereby and examined in their entirety to determine the

legislative intent. Such laws must be construed equitably in the

interest of the state and the employee and applied so as not to

achieve an unreasonable result. 67 C.J.S. Officers § 243.

The Public Employees' Retirement Board was arbitrary and wrong

in denying Retired Justice L. C. Gulbrandson, prospectively, the

service credit benefits after July 1, 1991.

The certified question cannot be simply answered by a "plain

language" analysis. To do so, would result in a denial of justice.

I would answer the certified question of the United States

District Court by stating that the benefit increase provided for in

Chapter 664, Laws of 1989, an amendment to § 19-5-502, MCA,

provides its benefit prospectively to Retired Justice L. C.

Gulbrandson from July 1, 1991.

Answering the certified question in this manner is a fair,

just and correct interpretation of legislative intent.

As judges, we should make no judgments where there is no

fairness or compassion.

I wish to also note that the legislature subsequently amended

fi 19-5-502, MCA, by Section 103 of Chapter 265, Laws of 1993. This

amendment, effective July 1, 1993, obviously repealed Section 3 of

27
Chapter 664, Laws of 1989, by rewriting § 19-5-502, MCA. It now

reads:

Service retirement benefit. Upon retirement from

service, a member must receive a service retirement

benefit equal to 3 l/3% per year of the member's current

salary for the first 15 years of credited service and

1.785% per year for each year of credited service after

15 years.

In so amending § 19-5-502, MCA, the legislature obviously has

repealed the version that was enacted as Chapter 664, Laws of 1989.

Therefore, the effective dates contained in Chapter 664, Laws of

1989, relating to 5 19-5-502, MCA, no longer apply

The statute, as enacted in Chapter 265 Laws of 1993, by the

plain language thereof, states that a member (retired district

judge or justice) is entitled to a service retirement benefit of

1.785% per year for each year of credited service after fifteen

years.

This includes Retired Justice Gulbrandson and other retired

members of the system.

Even though I believe him to be entitled to the increased

service credit from July 1, 1991, in all events, Retired Justice

L. C. Gulbrandson would be entitled to this benefit from July 1,

1993.

Justice Fred J. Weber joins in

J/f- ,, f ’ ,’

Chief Justice
Justice Fred J. Weber dissents as follows:

I respect the careful analysis in the opinion which concluded

that a judicial member is entitled to the increased benefits only

if he or she retired on or after July 1, 1991. I do disagree with

the fundamentals upon which the analysis is made. I join in the

dissent of Chief Justice J.A. Turnage.

I conclude it is essential to carefully analyze the Act

itself. Chapter 664 contained the following words: "Be it enacted

by the Legislature of the State of Montana." This met the enacting

requirements of § 5-4-101, MCA. Chapter 664 was approved by the

Governor on May 12, 1989. This met the requirements of § 5-4-302,

MCA, with regard to approval by the Governor. The result is that

the entire Chapter 664 became law on May 12, 1989

The title to Chapter 664 stated:

AN ACT GENERALLY REVISING THE JUDGES' RETIREMENT SYSTEM;

REALLOCATING THE DISTRIBUTION OF DISTRICT COURT FEES TO

MAINTAIN THE ACTUARIAL SOUNDNESS OF THE SYSTEM;

INCREASING THE PERCENTAGE OF SALARY USED TO CALCULATE A

MEMBER'S SERVICE RETIREMENT ALLOWANCE AFTER 15 YEARS OF

SERVICE IN THE SYSTEM; AMENDING SECTIONS 19-5-404, 19-5-

502, AND 25-l-201, MCA; AND PROVIDING EFFECTIVE DATES.

(Emphasis added.)

In summary the title shows that the Act generally revised the

Judges' Retirement System, reallocated district court fees to

maintain actuarial soundness, increased percentage of salary for

member's service retirement allowance after 15 years, amended code

sections with regard to fees and finally provided effective dates.

The title indicates that the intent of the legislature was to

increase the percentage used to calculate a judge's retirement

after 15 years service.

29
I will next consider the seven sections which make up Chapter

664. Section 1, amended § 19-S-404, MCA, to provide that the

portion of the fee for filing a dissolution of marriage and a

motion for substitution of a judge shall be transmitted by the

clerk of district court to the State. I do point out that 5 19-5-

404, MCA, includes provisions for the transmission of other fees,

none of which were amended. Note that Section 1 became effective

July 1, 1989 - I so that the described fees were transmitted to the

State commencing on that date.

Section 2, provided that the same 5 19-5-404, MCA, was amended

to provide that the State was required to first deposit in the

retirement fund an amount equal to 34.71% of the salaries paid to

district court judges and supreme court justices--prior to this

amendment, the amount was equal to 31% of such salaries. Note that

this requirement for the increased payment by the State to the fund

was effective July 1, 1991.

Section 3, contained the amendment that upon retirement from

service the State annuity plus the member's annuity will provide a

total retirement allowance of 3 l/3% per year of a judge's final

salary for the first 15 years' service and 1.785% per year for each

year's service after 15 vears. Prior to its amendment, the amount

after 15 years was 1%. This Section 3 is stated to become

effective July 1, 1991, and is the primary section at issue in this

case.

Section 4, provides for amendments in § 25-l-201, MCA, which

provides that of the fee for filing a petition for dissolution of

marriage, $35 must be remitted to the State to be deposited as

30
provided in 5 19-5-404, MCA; and further provides that the fee for

filing a motion for substitution of judge must be remitted to the

State to be deposited as provided in 5 19-5-404, MCA. Again note

that this Section 4 took effect on July 1, -I1989 so those fees were

remitted to the State following that date.

Section 5, provides as follows:

Review of actuarial valuation. The public employees

retirement board shall provide to the 52nd legislature,

by January 10, 1991, a copy of the most current actuarial

valuation of the judges' retirement system. The

legislature shall review the actuarial soundness of the

judges' retirement system, and the 52nd legislature may

eliminate or modify the effect of [this act].

Section 5 also became effective July 1, 1989. I emphasize that the

52nd Legislature in 1991 did QQ& eliminate or modify the effect of

Chapter 664

Section 6, pertains to rule-making authority which is not

pertinent here.

Section 7, provided:

Effective dates. (1) Except as provided in

subsection (2), [this act] is effective July 1, 1989.

(2) [Sections 2 and 31 are effective July 1, 1991.

In substance this provides that the Act is effective July 1, 1989,

with the exception of Sections 2 and 3 which are effective July 1,

-.1991

The opinion concludes that as of the effective date of July 1,

- I 1991 Section 3 of the Act provides an increased retirement benefit

to judges with more than 15 years' service "upon retirement from

service. I' The opinion then concludes that the plain meaning of the

statutory language is that a member is entitled to the increased

benefits upon retirement from service on or after July 1, 1991.

3 1
The opinion concludes that the foregoing is the plain, clear and

unambiguous language expressed by the legislature as to its intent

and permits no further interpretation. I do not agree with that

analysis.

When Chapter 664 is considered in its entirety, it explains

the reason for the different effective dates. In its reallocation

of district court fees to maintain actuarial soundness, Section 5

provided that the Retirement Board should provide to the

legislature a current actuarial valuation of the retirement system

and specifically required that the legislature review the actuarial

soundness and granted to the 1991 Legislature the right to

eliminate or modify the effect of this Act. Note that the

additional fees were collected for retirement fund purposes

commencing July 1, 1989, so that such fund payments were made for

two years. I note here that the figures contained in Chief Justice

Turnage's dissent show that the June 30, 1988 figures, which would

have been available to the 1989 Legislature, demonstrated net

assets available of $10,206,825. The 1991 Legislature would have

had available the June 30, 1990 figures, which showed net assets

available of $12,941,902, an increase of over $2,700,000 in two

years. On its face this suggests the actuarial soundness of the

fund and demonstrates a reason for the 1991 Legislature not

eliminating or modifying the effect of Chapter 664.

The opinion concludes that the plain meaning of the statutory

language is that a judge is entitled to increased benefits only if

he retired from service on or after July 1, 1991. 1n substance,

that seems to be a conclusion that Section 3 of the Act had

32
absolutely no effect until July I, 1991. I cannot agree with such

a conclusion. Section 3, with its provision of 1.785% per year for

each year's service after 15 years, was enacted and in effect from

and after May 12, 1989. I conclude that the entire Chapter 664 as

enacted and approved by May 12, 1989, was in effect from and after

that date and has not been either amended or eliminated.

The opinion then reaches the following conclusion with which

I emphatically disagree:

The terms of Gulbrandson's retirement benefit

contract are determined pursuant to the statutes in

effect at the time of his retirement on August 31, 1989.

The amendment to 5 19-s-502, MCA, via Section 3, Chapter

664, was not yet effective on that date. Therefore, we

conclude that Gulbrandson's contract does not include the

increased retirement benefit contained in Section 3,

Chapter 664 and, as a result, his contract was not

impaired by denying him entitlement to that increased

benefit.

I agree with the opinion in its statement that the terms of

Gulbrandson's retirement benefit contract are determined pursuant

to the statutes in effect at the time of his retirement on August

31, 1989--the critical question becomes whether or not Chapter 664,

which had been enacted in its entirety and approved by May 12,

1989, could be considered as being in effect in its entirety. In

substancec the conclusion of the opinion is that the including of

Section 3 of Chapter 664, had absolutely no effect until July 1,

1991. I do not agree with that analysis. Chapter 664 rebuts the

opinion's conclusion as it places in effect two charges in the form

of fees which are to be paid to the State and remitted by the State

into the Retirement Fund for ultimate payment to the judges.

In applying a contract law theory to the contract between

Gulbrandson and the State upon his retirement on August 31, 1989,

33
I conclude that the entire Chapter 664 as enacted and approved by

May 12, 1989, became a part of that contract. He had the right to

rely upon this contact and to the benefits thereof when he retired

August 31, 1989. Gulbrandson of course became subject to the

express terms of Section 3, which provided that the additional

.785% would not be payable prior to July 1, 1991.

I would therefore answer the certified question of the United

States District Court by concluding that the benefit increase

provided in Chapter 664 provides its benefit to Gulbrandson from

and after July 1, 1991.

34
Justice William E. Hunt, Sr., dissenting.

I dissent.

Even a casual reading of the majority and dissenting opinions

filed in this case reveals that there is little left to be said by

way of analysis of the law or its application to the facts of this

case, and this dissent will not add to those arguments. I have

only to say that this Court can and should, in fairness, law, and

equity, recognize the contract that existed between the State and

Retired Justice Gulbrandson who performed his part of the agreement

in full by paying his share of the premium into the retirement fund

and serving as judge and justice in the Montana judicial system for

nearly 30 years. I do not see how we can do otherwise.

35
August 24, 1995

CERTIFICATE OF SERVICE

I hereby certify that the following certified order was sent by United States mail,

following named:

prepaid, to the

ED SMITH

CLERK OF THE SUPREME COURT

STATE OF MONTANA