Court Opinion

ID: 9617638
Source: CourtListenerOpinion
Date Created: 2023-08-22 04:59:04.041123+00
Date Added: 2024-06-11T18:04:14.015526
License: Public Domain

Ott, J.
(dissenting) — I dissent for the following reasons: (1) The majority have concluded that the doctrine of equitable estoppel is not applicable against the state because “When one deals with a statutory board or commission, he is presumed to know the statutory limits of its vested authority.”
I have no quarrel with the rule, but I do not agree with the majority’s application of the rule to the facts of the instant case.
The state employees’ retirement act, Laws of 1947, chapter 274, p. 1168, does not provide what mortality tables are to be used in the operation of this system. This power is vested in the board. The board was acting within its authority when it approached prospective members of the system for *13the purpose of soliciting their membership therein, and represented that the annuity for both sexes would be based upon the 1937 mortality table for male lives. Under the act, whether the same table would be used for determining the annuity for females was a determination solely within the discretion of the board.
The record shows that, at the time the 1937 table for male lives was adopted by the board, the 1937 table for female lives showed that their life expectancy exceeded that of males by five years. With this knowledge, the board nevertheless adopted the 1937 table for male lives and made it applicable to both sexes. The executive seceretary of the retirement board testified that only one table was adopted for the reason that the board desired to make the retirement system more-attractive to prospective members, to simplify the explanation of the annuity benefits, and to make the administration of the system less complicated.
Prospective members of the system were informed of the annuity benefits they would receive, and were entitled to rely upon the board’s representations, since there was no prohibition in the act against the board’s adopting the same mortality table for both sexes.
In State v. Carlyon, 166 Wash. 498, 500, 7 P. (2d) 572 (1932), the state sought a preference over general creditors by reason of certain coupons sold to the state. We said:
“Here, the state, as a creditor, is merely seeking to collect a fund which it manifestly holds in a proprietary capacity. In all such cases, the trend of our decisions has been to hold a public corporation, such as a county, which is a subdivision of the state, to the same principles of common honesty and natural justice as would obtain between private concerns (Franklin County v. Carstens, 68 Wash. 176, 122 Pac. 999), and that the state itself is bound by principles of equitable estoppel, and in its business relations with individuals must not expect more favorable treatment than is fair between men.” (Italics mine.)
Again, in Strand v. State, 16 Wn. (2d) 107, 117, 132 P. (2d) 1011 (1943), we said:
“It has generally been recognized by this court that the *14doctrine of equitable estoppel would apply against the state when acting in its proprietary capacity. [Citing cases.]”
In the instant case, the state was acting in a proprietary capacity when it solicited membership in an annuity plán for which the member paid consideration.
Estoppel will not be asserted to enforce a contract which is contrary to the statute, but the rule is otherwise where, as here, the statute grants the authority under which the board acted when it represented that there would be no differentiation between the sexes.
The majority state that no injustice has been shown, since, although the monthly annuity payments for women will be smaller than those for men, the women will receive them for a longer period of time. Assuming, arguendo, that women state employees have a longer life expectancy than men in the same occupation, it does not follow that any of those who relied upon the representations of the board at the time they joined the system will live longer. The injustice lies in securing membership in the system by misrepresenting the benefits that the member would receive. In reliance thereon, respondents withdrew from their local retirement systems in order to join the state system, which was represented to be more attractive. The principles of “common honesty and natural justice” require that the state be estopped to deny the validity of the board’s act.
(2) The conclusions reached by the majority are contrary to the recent decision of this court in Eisenbacher v. Tacoma, 53 Wn. (2d) 280, 333 P. (2d) 642 (1958), wherein we said:
“. . . An employee who accepts a job to which a pension and relief plan or system is applicable contracts for a pension and relief plan or system substantially in accord with the then existing legislation governing the same; modifications of a pension plan or system cannot be imposed on the employee unless the changes are equitable to the employee ...”
(A) The same benefits were allowed to both sexes in accord with the existing legislation. The legislature had delegated to the board the legislative power to adopt a *15mortality table which would be applicable to all beneficiaries under the act.
(B) The primary rule announced in the Eiseribacher decision is that any modification of a pension program must be equitable to the employee. A modification which admittedly decreases the employee’s existing right to benefits, and grants no compensating benefit, cannot be said to be equitable.
(C) The conclusion of the majority in the instant case permits the pension board to impair the state’s contract with certain women employees, in a manner which the Eiseribacher case held the legislature itself could not do. The act embodies the terms of the contract between the state and its employees, and did not reserve to the state or to its pension board the power to modify the mortality table previously adopted and accepted by employees when they joined the system. In the absence of this express reservation in the original contract (legislative act), the state is without power to change its terms.
(3) The majority conclude that the contractual rights of the respondents, as evidenced by the statute in effect at the time they joined the system, do not include the right to receive annuity benefits based upon the mortality table in effect at that time. I cannot agree.
The act does not indicate that the board’s order adopting subsequent tables is to be retroactive. The majority state that, unless the orders of the board are retroactive, the annuity fund would become actuarially unsound, in view of the rising life expectancy.
Assuming, arguendo, that the fund is actuarially unsound, the agents of the state knew such to be the fact when they induced the respondents to join the system. Whether the fund, in fact, will be actuarially unsound can be determined only when the last person to receive benefits under the system is deceased. In this regard, a reading of the act clearly evidences that the legislature recognized the solemnity of its contractual obligations and intended that any future deficit in the fund be met by appropriation.
*16Further, the 1947 act, and the 1951, 1953, and 1955 amendments thereto, recognized that there were different categories of employees, with different rights, dependent upon the date of their membership in the system. The 1955 statute recognizes six categories of “original members,” and defines “new member” as one who became such after April 1, 1949, except as otherwise provided in the act. RCW 41.40.010. If it were intended that an employee’s contractual rights did not vest until his retirement, the legislature would not have created these special categories whereby certain benefits were preserved for “original members.”
Since there is nothing in the act or the amendments thereto which would indicate a legislative intent that the changed tables were to have a retroactive effect, I am convinced that the respondents, as original members, are entitled to receive annuities computed upon the annuity table in force at the inception of their membership.
In Birnbaum v. New York State Teachers Retirement System, 5 N. Y. (2d) 1, 176 N. Y. S. (2d) 984 (1958), the highest appellate tribunal of the state of -New York, in' a majority opinion written by Chief Judge Conway reviewing a statute strikingly similar to ours, after holding that the adoption of a subsequent mortality table which diminished the annuity benefits of those who had not reached retirement was an impairment of contract and in violation of the constitutional prohibition against such impairment, held, further, that
“. . . it is reasonable to construe the Education Law as authorizing (1) a periodic review by the State Teachers Retirement System of the mortality tables being used to compute annuities, (2) the adoption of new mortality tables, and (3) the use of the new mortality tables in the computation of the annuities of only such persons as enter the system thereafter.”
I concede that the decisions of other jurisdictions are not controlling here. However, the cited New York case is based upon the application of sound judicial principles and interpretation of the sovereign state’s contracts with its servants, which require the sovereign state to deal honestly and *17fairly with those who faithfully serve the people. Such principles of honesty and fairness in government should be the rule and guide in the state of Washington.
For the reasons stated, the judgment should be affirmed.
Foster and Hunter, JJ., concur with Ott, J.
September 1, 1959. Petition for rehearing denied.