Opinion ID: 878193
Heading Depth: 1
Heading Rank: 2

Heading: part ii. diminution of salary and impairment of contract

Text: Although our decision on the separation of powers issue is dispositive, we nonetheless proceed to the two additional grounds on which the trial court held the statutes to be unconstitutional  diminution of salary and impairment of salary. The salary forfeiture provisions clearly violate these constitutional provisions. The penalty provisions of both statutes require a one month's forfeiture of pay in the event of a violation. Section 3-2-104, MCA, which applies to supreme court justices, provides in part that the supreme court ... shall order that the state auditor not issue a warrant for payment of services for 1 month, which pay is forfeited by the justice. Section 3-5-212, which applies to district judges, provides in part that the supreme court ... shall order that the state auditor not issue a warrant for payment of services for 1 month, which pay is forfeited by the judge. The trial court held that these statutes constitute both an unconstitutional diminution of salary and an unconstitutional impairment of contract. The state constitutional prohibition against diminution of judicial salaries during terms of office provides that [a]ll justices and judges shall be paid as provided by law, but salaries shall not be diminished during terms of office. Art. VII, § 7(1). The federal constitutional prohibition against impairment of contracts, Art. I, § 10, provides in part: no state shall ... pass any ... law impairing the obligation of contracts ... The state constitutional prohibition against impairment of contracts, Art. II, § 31, provides: [n]o ... law impairing the obligation of contracts ... shall be passed by the legislature. In arguing that the prohibition against reduction of judicial salaries is not violated, defendant in effect argues that the legislature can do indirectly what it is prohibited from doing directly. Defendant concedes that the statute mandates a reduction in salary but argues that if the judiciary imposes the sanctions rather than the legislature, the constitution is not violated. This argument, of course, ignores the fact that the judicially-imposed reductions are mandated by the statutes. And assuming that the legislature can indirectly violate the constitution by imposing the duties on the supreme court to forfeit the salaries of judges who do not comply with the challenged statutes, the defendant next argues that the contract impairment clauses of the United States and Montana Constitutions are not violated because the legislature has reserved to itself the authority to condition payment of salaries on performance of all services required. As applied here, defendant claims that the legislature can withhold judicial salaries if a judge does not reach a decision within the time limits set by the challenged statutes. A constitutional provision prohibiting diminution of salaries during the term of office is designed to remove from lawmakers the temptation to exert control over the other branches by promise of reward in the form of increased compensation or threats of punishment by way of reduced salaries. State ex rel. Jackson v. Porter (1920), 57 Mont. 343, 188 P. 375. In Jackson, we so interpreted the 1889 provision which applied to all elected public officers. The 1889 Constitution also contained a provision applying only to judges. Art. VIII, § 29, expressly prohibited the salaries of judges from being increased or decreased. The provision with respect to all public officials was not carried over to our 1972 Constitution; however, a similar provision applying to judges was, of course, placed in the 1972 Constitution. Art. VII, § 7 of our present Constitution, although now applying only to judicial compensation, still embodies the fundamental policy considerations set forth in Jackson. See also Merialdo, supra, 268 P.2d at 925, where the Nevada Supreme Court so interpeted the judicial article of the Nevada Constitution which prohibits judicial salary reductions during a term of office. This was one ground on which the Nevada court struck down statutes setting deadlines for judicial opinions and requiring affidavits of compliance as a condition of getting paid. We will not, as the defendant urges, sanction an indirect violation of the Constitution by upholding a scheme for reduction of salaries mandated by the legislature but administered by the courts. We must, therefore, conclude that the challenged statutes violate Art. VII, § 7 of our Constitution forbidding a reduction of judicial salaries during a term of office. Assuming, however, that it is permissible to indirectly violate an express mandate of the Constitution, the statutes challenged here nonetheless cannot survive a challenge that they violate the impairment of contract clauses of our State and Federal Constitutions. In Olson v. Cory (1980), 27 Cal.3d 203, 164 Cal. Rptr. 217, 609 P.2d 991, the California Supreme Court interpreted the impairment clauses as it affects the judiciary's right to salary set by statute. The court held that a judge entering office does so partly in consideration of the salary benefits then offered by the state for that office. The court held that if those salary benefits are reduced by the legislature during a judge's term of office or during the unexpired term of a predecessor judge, the judge is nonetheless entitled to the contract for benefits during the remainder of the term. In applying the impairment clause the court stated: Public employment gives rise to certain obligations which are protected by the contract clause of the Constitution. [Citations omitted.] Promised compensation is one such protected right. [Citations omitted.] Once vested, the right to compensation cannot be eliminated without unconstitutionally impairing the contract obligation. [Citations omitted.] When agreement of employment between the state and public employees have been adopted by governing bodies, such agreements are binding and constitutionally protected. 164 Cal. Rptr. at 220-21, 609 P.2d at 994. Although defendant concedes the constitutional protection accorded judicial salaries through the impairment clauses, the argument nonetheless is made that no impairment exists if there is a statutory basis for the legislature to condition payment of salary on performance of all services required. Applied here, defendant argues that the legislature can properly condition payment of judicial salaries based on timely filing of affidavits and timely filing of judicial decisions. Defendant argues that ... such failure on the part of a justice or judge constitutes a non-performance of required services justifying the withholding of the warrant. Clearly, a justice or judge has no contractual right to expect payment of service he has not rendered. In searching for a statutory basis for the legislature to condition payment, defendant cites but does not quote section 2-16-406, MCA, a statute having absolutely no application to this case. This statute, in a most general way, specifies which services rendered by all elected state officials must be considered as falling within the duties for which they are paid their annual salaries. Neither withholding of nor forfeiture of judicial salaries is contemplated by this statute. Section 2-16-406, has been in existence since 1895, although it has been amended several times over the years. It is part of that chapter dealing with salaries of the following elected state officials: the governor, lieutenant governor, chief justice and justices [it does not cover salaries of district court judges], attorney general, state auditor [the defendant here], superintendent of public instruction, public service commissioners, secretary of state, and clerk of the supreme court. The preceding statute (section 2-16-405, MCA) establishes the annual salaries for the elected state officials mentioned here. Section 2-16-406 specifies, in a most general way, the duties that must be performed for the salary received. It provides: (1) The salary of each such officer shall be for all services required of him or which may hereafter devolve upon him by law, including all services rendered ex officio as a member of any board, commission, or committee, but shall not include actual necessary travel, lodging, and subsistence expenses incidental to his official duties. (2) Unless otherwise provided by law, the salaries of officers must be paid out of the general fund in the state treasury monthly on the last day of the month. Defendant's interpretation of this statute renders it subject to the same constitutional objections made concerning the challenged statutes here. We need not belabor the point, however, because this interpretation is so clearly in error. In effect, defendant argues that the legislature can withhold or forfeit the salaries of all state officials covered by the statute. Suffice to say that this interpretation will undoubtedly come as a great shock to those state officials who claim a right to their salaries without a requirement that they file affidavits or perform their duties within a specified time. We have held that the challenged statutes violate Art. VII, § 7(1), which empowers the legislature to set judicial salaries subject to the restriction that such salaries cannot be reduced during a term of office. The legislature cannot directly establish an annual salary by one statute and then indirectly take away any part of that salary by a statute that imposes a forfeiture because an affidavit has not been filed or a decision has not been filed within the time limits set by the challenged statutes. These forfeiture provisions just as clearly violate the impairment of contract clauses of the State and Federal Constitutions.