Court Opinion

ID: 9547008
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:40:04.315845+00
Date Added: 2024-06-11T15:17:12.277249
License: Public Domain

PHELPS, Justice
(dissenting).
I regret that I am unable to concur with the majority opinion in this case. I quite agree with the majority that a number of questions have been presented and argued that are without merit. But I am convinced that there are at least two points raised to the unlawful delegation of legislative power that are sound.
First, section 17, subd. c of the Act provides that the board of trustees shall have among others, the following duties: “ * * * adopt all necessary actuarial tables to be used in the operation of the system as prepared by the actuary, and compile such additional data as may be necessary for required actuarial valuations and actuarial studies of the operating experience of the fund.”
If this language is literally construed the board is not authorized to exercise any discretion in the matter of adopting actuarial tables .but must adopt without question, such, necessary tables as may be prepared and recommended by the actuary regardless of their actuarial soundness. I find the cardinal difficulty however to be that this legislation has delegated to the actuary authority to prepare and recommend the promulgation of such tables as he may choose without setting up any standards by which he is to be guided in preparing such tables or upon which their accuracy can be ascertained.
I confess I am not familiar with actuarial tables or with the factors considered in their preparation but my limited experience and observation relating to kindred matters suggest to me that at least, among the things to be considered by an actuary would be the number of employees participating in the Fund,- their ages, their length-of service, their wages, their sex, their classification as to the work they perform and the hazards involved therein, perhaps their state of health, the contributions required of them and the annuities and benefits provided for in the Act. I assume the actuary in preparing such actuarial tables must apply those factors and whatever others are involved to some established recognized formula upon which the table must rest. The same limited experience and observation suggests to me that these retirement measures and other like legislation ' requiring the use of actuarial tables, as well as those used by insurance companies, have been in operation sufficiently long to *448have developed formulas recognized as standard upon and by which computation may be made in the preparation of actuarial tables and when applied the same factual circumstances will always produce the same results.
If I am correct in this observation then the Act under consideration should have required the actuary to use one of these standardized tables in computing the amount to be contributed by the state, leaving to the actuary only the authority to apply the facts and circumstances found to exist in this particular case to that table and make his computations accordingly. The problem would then be reduced to one of mathematics and properly within the delegative power of legislative bodies. If the actuarial table is based upon either of the Experience Mortality Tables and is arrived at by applying the factual situation found to exist with reference to employees affected under the Act, then the same Experience Mortality Table should have been designated as a permanent standard for the preparation of such actuarial tables.
' An examination of different mortality, annuity and interest tables including the American Experience of Mortality, The Actuaries’ Combined Experience Table of Mortality and Dr. Wigglesworth’s Table of Mortality indicate, for example, a considerable variation in the present value of a dollar at the same rate of interest based on the same age and life expectancy. To be more concrete according to the Combined Experience Table of Mortality the present annuity value of a dollar based on interest at 5% at the age of 41 is $13.252. Dr. Wigglesworth’s table of mortality shows the present annuity value of a dollar at the same rate of interest and at the same age to be $12.53. Evidently a varying disparity would arise reg;ardless of the rate of interest. This one factor alone would make considerable difference in computing annuities. It is logical to infer that other results would vary in the application of othei factors to be considered.
By leaving the board of trustees and the actuary free to adopt whatever actuarial tables they deem proper without designating any standards by which they are to be determined, the Act delegates to the actuary and the board the power to make a law whereas the limit of the legislative power is to delegate to them the authority to determine facts or some set of facts upon which the action of the law is intended.to depend. Therefore I cannot escape the conviction that the carte blanche authority given to the actuary and to the board of trustees to adopt actuarial tables without setting up recognized standards for their guidance constitutes an unlawful delegation of legislative power rendering the Act null and void. Duhame v. State Tax Commission, 65 Ariz. 268, 179 P.2d 252, 171 A.L.R. 684; Panama Refining Co. v. Ryan, 293 U. S. 388-448, 55 S.Ct. 241, 79 L.Ed. 446.
*449The contributions of the state, counties, cities, towns and school districts are likewise ascertained by the actuary and determined by the board of trustees by the use of whatever actuarial table or tables the actuary chooses to recommend to the board. When such amount is fixed by the board of trustees it becomes mandatory upon the state, county or municipality to levy a tax to meet the obligation regardless of the condition of its budget.
There is no limitation in the Act upon the amount of taxes required to be levied by counties and participating municipalities. Under the present law counties and municipalities of Arizona may not increase their taxes to exceed 10% above the amount levied the preceding year. If this Act is held to be constitutional it repeals by implication the law prohibiting the increase of taxes levied by counties and cities in excess of 10% above the amount levied the previous year. The amount necessary to meet the requirements of the Act may in itself be far in excess of the 10% differential fixed by the provisions of Chapter 73, Article 4, A.C.A.1939. It amounts to a levying of a tax without according to the taxpayer an opportunity to be heard and which denies to him due process of law. For that reason the Act must fall. State Tax Commission v. Shattuck, 44 Ariz. 379, 38 P.2d 631.
The Indiana Act after which the Retirement Act was evidently largely patterned provides in section 22 thereof as follows:
It is further provided that a municipality, as herein defined, (the same as ours) electing to become a participant in the fund, is hereby authorized and empowered to increase its annual tax levy, above the limitation now or hereafter imposed by law, to meet the cost of participation in the fund herein created. This increase shall be limited to a rate on each dollar of taxable property assessed for taxation in such municipality which will produce an amount not in excess of fifteen (IS) per cent of the annual average of total salaries of the employees of said municipality or participating unit * * Burns’ Ann.St. § 60-1622.
An inclusion of this provision in the Arizona Act would have cured the latter defect pointed out.
Let us next examine section 22 of our Act providing that:
“Any municipality may elect, by ordinance or resolution adopted by the governing body as defined herein to become a participant in the fund established by this act.
“A copy of any such ordinance or resolution, duly certified, electing to join the fund and to make the required contributions thereto under the provisions of this act, shall be filed with the board of trustees of the Public Employees’ Retirement Fund of Arizona. Such ordinance or resolution shall designate by departmental, divisional, occupational or other definable classification, the employees who are to become *450members of the fund. Membership in the fund of any municipality or any group of employees thereof shall be subject to the acceptance and approval of the board of trustees of the Public Employees’ Retirement Fund of Arizona. * * * ”
It is my view that the portion of the section just quoted is clearly an unlawful delegation of legislative authority. I am thoroughly familiar with the rule that boards of supervisors and municipal council occupy a position different from that of the ordinary administrative board. It is held by all of the authorities that boards of supervisors and city council have power to enact ordinances when that power has been expressly or by necessary implication granted to them by the legislature. Associated Dairy Products Co. v. Page, 68 Ariz. 393, 206 P.2d 1041. No such right, however, is enjoyed by purely administrative boards such as the board of trustees created by the provisions of this Act and boards of trustees of school districts. I do not think there is any doubt that the legislature or the people could lawfully delegate to boards of supervisors and to the legislative bodies of cities and towns the authority to pass an ordinance or resolution electing to participate in the Retirement Fund created by this Act but when the Act went further and authorized these governing ■bodies to designate which department, division, occupation or other definable classification may become members of the Fund to the exclusion of others without setting up some standard by which such designations were to be made, as by common consent of the members of the department or by a majority thereof, such provision constituted an unlawful! delegation of power to them. It delegated to these bodies the power to classify employees of counties and cities. The power to make such classifications when reasonable, resides in the legislative body alone and cannot be delegated.
Neither the legislature nor the people, however, could pass a retirement act, for example, covering all state employees and extend it only to the employees in the assessor’s or recorder’s office of the various counties. This is true for the simple reason that the selection of the employees of either or both of these departments to the exclusion of others would constitute an unlawful classification of employees to whom the bounty under the provisions of the Act may be available.
The power of the legislature to classify groups who may or may not participate in the benefits of an act of legislation is too well settled to require citation-of authority to sustain it but it is equally well settled that such classification must be reasonable. It " 'must • embrace all and exclude none whose conditions and wants render such legislation equally necessary or appropriate to them as a class.’ ” Hunt v. Mohave County, 18 Ariz. 480, 162 P. 600, 602. “The classification * * * must rest upon some ground of difference having a fair and substantial relation to the object of the *451legislation, so that all persons similarly circumstanced shall be treated alike.” Colgate v. Harvey, 296 U.S. 404, 56 S.Ct. 252, 256, 80 L.Ed. 299. To designate the employees of the assessor’s office as beneficiaries and deny it to the employees of the recorder’s office or the treasurer’s office is an unreasonable classification and would be wholly void for that reason. Certainly if the department of government or the people in whom the power of legislation resides may not thus arbitrarily classify employees who are to participate in the Fund it cannot delegate such authority to any one else. I therefore hold that the attempt to do so in the above provisions of the Act is unconstitutional and void.
I think there cannot be the slightest doubt that to delegate to the board of trustees the power to arbitrarily reject the employees of any municipality or of any department thereof after their election to participate in the Fund according to the provisions of the Act constitutes an unlawful delegation of legislative authority to such board and is therefore wholly void. This is too patent to require citation of authority. It will be observed that in this provision as in the others above mentioned there is lacking any semblance of a standard by which the act of the board of trustees may be measured. It grants to the board the attributes of despotism. True the board may never exercise its power. It is not what the board may or may not do in that respect with which we are concerned. It is what it has the power to do that is important. Hernandez v. Frohmiller, 68 Ariz. 242, 204 P.2d 854.
Extraordinary conditions do not create or enlarge constitutional power. The fact that it may have been more difficult to set up standards for the guidance of the actuary, the trustees of the Fund and the governing bodies of municipalities, as defined in the Act, cannot justify its omission. Brown v. Illinois Bankers Life Assur. Co., 144 Kan. 670, 63 P.2d 165. A standard cannot be set up which is so indefinite as to confer unlimited power. State ex rel. Donaldson v. Hines, 163 Kan. 300, 182 P.2d 865; Federal Radio Commission v. Nelson Brothers Bond & Mortgage Co., 289 U.S. 266, 53 S.Ct. 627, 77 L.Ed. 1166.
It is a well-recognized rule of statutory construction that if a severable portion of a statute is declared to be unconstitutional it does not affect the validity of the other portions of the statute. There is an exception to this rule, however, which is equally as well established as the rule itself to the effect that if the invalid portion was a consideration and an inducement to the enactment of the whole act and it may be presumed that the law would not have been enacted had the invalid portion been omitted, then the whole act must fall. Alabam’s Freight Co. v. Hunt, 29 Ariz. 419, 242 P. 658.
I believe it to be an indisputable fact that the success of an initiative measure at the *452polls depends upon the efforts of those who are to benefit directly or indirectly by it and without such support it has little chance of carrying. The court will take judicial notice of the number of votes cast for and against the Act under consideration throughout the state. After a study of those returns I am of the view that the majority it received in counties where state employees were comparatively few in number raises a strong presumption that the measure received the support of the county and municipal employees in that area and would not have carried at the polls had the invalid portion thereof relating to counties, municipalities and school districts been omitted. I am further of the view that its inclusion in the Act was a most potent consideration and inducement to its passage. I therefore am constrained to hold that the whole Act is void for the reason last above stated.
A cardinal rule of statutory construction is that the court must determine, if possible, the legislative intent and that such intent must be found in the language of the statute aided by canons and rules of construction. Barlow v. Jones, 37 Ariz. 396, 294 P. 1106. An act passed by the legislature is presumed to have been carefully studied by the members before voting for or against its passage. This is true because it is presumed that a public official will discharge the duties of his office to the best of his ability as required by his oath of office. If he complies with that oath he thoroughly familiarizes himself with all legislation introduced for passage and any law for which he votes should therefore represent his legislative intent, since intent can only be made manifest through the use of appropriate language designed to express such intent.
If the courts are realistic can they presume that the voters, who support an initiative measure have studied it or even read it? To so presume amounts to the creation of a legal fiction upon which to base a finding of legislative intent; a legal fiction I believe to be completely refuted by the facts. I recognize that the Constitution reserves to the people of the state the right to initiate and pass legislation of this kind and it may be that, upon the ground of public policy, it is entitled to be shielded by the same protective armor of legal presumptions that surround an act of the legislature. Public policy, however, is the only theory in my opinion upon which such presumption could possibly rest. I say this for the reason that it is common knowledge that voters, for the most part, have no knowledge whatever of the contents of initiative measures, therefore the language used therein cannot be said to express their legislative intent. Under such circumstances it is very doubtful in my mind if public policy should be allowed to prevail in establishing a legislative intent in initiative measures when the facts all contradict that presumption.
*453I have devoted approximately three weeks to the study of this Act and do not now presume to know in detail what it means. Many of the terms used are technical, portions are vague and incapable of understanding. I haven’t the slightest idea of how to compute annuity benefits provided for under section 8 of the Act, nor can I comprehend how contributions of the state for death and disability benefits and for expenses of administration can be based upon the “experience of the Fund” until there is an “experience of the Fund.” Without such “experience of the Fund” there exists nothing upon which the legislature can ascertain what the amount of the appropriation for this purpose should be, and incidentally it will necessarily amount to a considerable sum. Initiative legislation is at best a dangerous, and may prove to be, a most expensive experiment. If the illustration of the practical operation of the Act outlined in the majority opinion is correct, let us see where it leads us: The suppositious employee there has been employed since 1922 drawing $2,700 salary for the first ten years; $3,300 the second 10 years, and $3,600 from 1942 to the date of his retirement, December 31, 1950. He is then 65 years of age and has paid into the Fund $270. Let us assume, without any attempt at accuracy, that the present value of $18,585 is three-fourths of its value approximately 10 years hence or $14,000. This certainly is far less than its actual present value would be under actuarial computation. The state of Arizona on that basis would contribute $52 to the Fund for every $1 contributed by the employee. That amount would have to be contributed forthwith for investment at a 2%% rate of interest in order to keep the Fund solvent. If the ratio of contributions by the state and by employees approximate this figure in its application to all employees,, it brings into vision a red light indicating danger ahead.
However I use the illustration to point out how improbable and impossible it would be for a voter to understand its contents or its effect and how absurd it would be to presume the same legislative intent in an act passed by a vote of the people as that to which an act of the legislature is entitled. As pointed out in the majority opinion courts may not concern themselves with the wisdom of any legislation whether passed by the legislature or by the people. Their province is to interpret the law as they find it.
There is yet another outstanding omission in the Act which standing alone would not be serious. But with the unparalleled power attempted to be delegated to the actuary and to the board of trustees without standards by which, and limitations within which, they must function it becomes vitally important. No provision appears in the Act for an appeal to the courts for the redress of wrongs which may be committed by either the actuary or the board of trustees in the course of administration of the *454Fund. I realize that ordinarily such omission does not prevent resort to the courts by way of mandamus, prohibition or certiorari where discretion has been abused or jurisdiction exceeded by agencies given the power to administer or to participate in the administration of the Act. I point out however that in the Act under consideration no standards or guide posts have been erected within the limits of which they are required to act. Neither discretion nor jurisdiction are circumscribed by the terms of the Act. Therefore if such litigation should arise the court would be without compass or lighthouse to direct its course. If the Act itself sets up no boundaries within which the administration of the Act must be restricted then the court has nothing to take hold of by which it can say that the Act is or is not being properly administered. It has nothing by which it. can say that discretion is being abused or that jurisdiction is being exceeded. No one would undertake to assert that the court sui juris may set up such standards by which it can say there has been an abuse of discretion, or jurisdiction exceeded where by the provisions of the Act no limitation upon the power of the board of trustees or the actuary has been fixed.
There can be no doubt but that a just, intelligible and constitutional retirement act for public employees in this state would redound to the benefit of both the state and its employees and that such a law is urgently needed. But it is my considered judgment that the Act under consideration meets neither of these requirements.
For the reasons set forth in this opinion I hold the Act to be unconstitutional and that the judgment of the lower court should be reversed.