Court Opinion

ID: 9529144
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:48:00.213396+00
Date Added: 2024-06-11T13:27:41.653193
License: Public Domain

Hill, J.
(dissenting) — If I understand the argument of the plaintiff aright, it is that the legislature, by subsequent enactment, can modify the original pension contract between him and the city and pension fund board only if he consents thereto. And if a change is favorable to him, by his silence and continuing employment he assents to the modification; if a change is unfavorable to him or subsequent events make it so, his silence and continuing employment have no effect whatsoever, and he can at any time, however remote, assert that he never consented to the change and that it impairs the obligations of his contract. To be more concrete, let us take a look at chapter 24 of the Laws of 1937, p. 62, which made several changes in the police relief and pension fund act as it existed when the plaintiff joined the Seattle police force and, so he claims, entered into a contract with the city.
*704Section 1 of the 1937 act, p. 62 (Rem. Rev. Stat. (Sup.), § 9582), incorporated three amendments in the police pension fund law: (1) It changed the requisite for retirement to service for twenty-five years or more, regardless of the applicant’s age; (2) it added the proviso involved herein, limiting pensions to $125 a month; and (3) it added a second proviso, which in effect eliminated a deduction for the pension fund from any amount over $250 that an officer might receive as monthly salary.
Section 2 of the 1937 act, p. 63 (Rem. Rev. Stat. (Sup.), § 9583), limited pensions given to police officers disabled in service to one hundred twenty-five dollars a month and deleted from § 3 of chapter 18, Laws of 1911, p. 58 (Rem. Rev. Stat., § 9583), the words, “but on the death of such pensioner his heirs or assigns, shall have no claims against or upon such police relief or pension fund.”
Section 3 of the 1937 act, p. 63 (Rem. Rev. Stat. (Sup.), § 9585), increased the amount of the pension payable to the widow or children of a police officer who lost his life by violence while engaged in the performance of his duty, from one third to one half the salary attached to the rank which such officer held at the time of his death (without limiting the amount of the pension).
Section 4 of the 1937 act, p. 64 (Rem. Rev. Stat. (Sup.), § 9586), provided that in the event of the death of a police officer with five years service or more, his widow or children under sixteen or certain other dependents would be entitled to one thousand dollars from the fund, whereas prior to 1937 such a payment was made only when the officer had died from natural causes.
Section 5 of the 1937 act, p. 64 (Rem. Rev. Stat. (Sup.), § 9588), made it possible to continue a pension or allowance to a retired police officer’s dependents or his legally appointed guardian even though, under the terms of that section, the retired officer himself would have no further right to receive the pension or allowance. (Loss of his rights might be occasioned by his conviction of a felony, becoming an habitual drunkard, failing to report for examination as required, or disobeying requirements of the board.) That *705section also eliminated continuing residence within the state as a requisite to eligibility for a pension and removed limitations on the powers of the board as to its requirements which could lead to loss of pension rights.
Thus it will be seen that the 1937 act, while it limited pensions of police officers to one hundred twenty-five dollars a month, liberalized the benefits payable in several particulars. Under the plaintiff’s “Heads, I win; tails, the city loses” concept of modification of his claimed contract, he could and did approve the changes beneficial to him and, after sixteen years of silence (1937 to 1953), can say that he never assented to that portion of § 1 of the 1937 act which limited his pension to one hundred twenty-five dollars a month.
Plaintiff apparently recognized the anomaly of making such a claim after accepting the benefits of another portion of the same section which limited the amount of his salary from which the two per cent deduction for the police relief and pension fund could be made, inasmuch ás on August 4, 1953, shortly before the commencement of this action, he belatedly tendered two per cent of that portion of his salary over two hundred fifty dollars for the period from January 1, 1943, when his salary first exceeded two hundred fifty dollars, to August 9, 1950, when he retired.
Actually, to be consistent, the plaintiff should not have made such a tender but should have sued the city for the difference between the two per cent deducted from his salary from June 12, 1929 (the effective date of chapter 101, Laws of. 1929, p. 199; Rem. Rev. Stat., § 9581), to the date of his retirement, and the 1.5 per cent deduction authorized at the time he joined the police department in 1925 (chapter 54, Laws of 1923, p. 177; Rem. Comp. Stat. (Sup.), § 9581). Either plaintiff had forgotten this provision of his claimed contract or he concluded that his acquiescence in the two per cent deduction for more than twenty years constituted consent to that modification of his contract.
It should also be noted that there have been several changes since 1925 relative to the city’s payments into the *706police relief and pension fund, changes which'no doubt were necessary to keep the fund solvent. In 1925, the contract, if it was a contract, provided that the city of Seattle should transfer to the fund specified portions of its revenues received from certain taxes, sales, licenses, fines, and forfeitures. Chapter 54, Laws of 1923, p. 177; Rem. Comp. Stat. (Sup.), § 9581. By chapter 101, Laws of 1929, p. 199 (Rem. Rev. Stat., § 9581), the proportionate share of the pension fund from those sources was increased (and the members’ contributions were increased from 1.5 per cent to two per cent of their salaries). And chapter 30, Laws of 1933, p. 180 (Rem. Rev. Stat. (Sup.), § 9581), directed the transfer into the fund each year from license fees, fines, and forfeitures (without the previous limitations) an amount which, together with the amounts deducted from salaries, would meet the financial requirements of the fund. This last would seem to amount to a practical guarantee of the solvency of the pension fund (which is, more accurately, a retirement pay, disability, and death benefit fund).
To all of these changes in his 1925 contract the plaintiff, we assume, has assented, because they represent only additional burdens upon the city.
The general rule as to the contractual rights of contributing members in a government-supported pension system is as stated in Lickert v. Omaha (1944), 144 Neb. 75, 84, 12 N. W. (2d) 644:
“The existence of legislation making-pension and retirement provisions for members of a police department and the acceptance or retention of employment as a member of a police department does not establish a contract, between the member and the city, that such members will thereafter be granted the retirement and pension benefits provided in such legislation.
“The right of the legislative body to amend the pension law is not affected by the fact that a given sum was required by law to be deducted and was deducted each month from the police officer’s pay by the disbursing officer and paid into a pension fund; such a provision in legal effect says that the officer shall receive each month the net amount payable to him.
*707“Until the particular event happens upon which the pension is to be paid there is no vested right in the police officer to such payments.
“The legislative change amending the pension provisions, previous to the happening of one or more of the conditions mentioned in the act, impairs no absolute right of property in the police officer.”
However, in cases where participation in the pension plan is voluntary on the part of the employee, such payments have been held to constitute sufficient consideration to make the pension plan contractual. In re Sanborn (1930), 159 Wash. 112, 292 Pac. 259; Raines v. Board of Trustees of Illinois State Teachers’ Pension & Retirement Fund (1937), 365 Ill. 610, 7 N. E. (2d) 489; Keegan v. Board of Trustees of Illinois Municipal Retirement Fund (1952), 412 Ill. 430, 107 N. E. (2d) 702.
There would also seem to be a basis for a very convincing argument for regarding the pension plan as contractual in those cases, such as the present, where the amount paid by the employee, even though compulsory, is not returnable to him if his employment is terminated, by death or otherwise, prior to his eligibility for retirement. The distinction between the refundable payment and the nonrefundable payment is that the employee making the former has, until his right to a pension accrues, an opportunity to evaluate the payments made against the pension provided, and to make his choice between a refund and a pension, while the employee making nonrefundable payments has no such choice. It could well be argued that the pension in the latter case is presently contractual because a nonrefundable payment is as much a consideration as the first payment on an annuity contract, and, whether the plan be called a pension plan or an annuity contract, the person paying is entitled to benefits on the terms of the plan existing at the time of the first payment, or upon any modification thereof agreed to by the parties. The fact that the payments may be smaller than those required by insurance companies under experience and mortality tables to mature policies for similar amounts should not detract from the contractual relation in *708such a case, the wisdom of the rates not being within the province of the courts but a matter for the legislature. Acquiescence in any proposed modification as indicated by legislative changes would probably have to be assumed unless prompt notice was given of a refusal to agree to any proposed change.
However, a determination of whether the plaintiff did or did not have a contract is not necessary in the present case, as the decision would be the same under either the general rule or the suggested exception thereto, because the plaintiff assented to the modifications, which precludes the recovery he seeks.
Obviously, the parties to an executory contract can modify it by mutual agreement. Tingley v. Fairhaven Land Co. (1894), 9 Wash. 34, 36 Pac. 1098; Shell Oil Co. v. Wright (1932), 167 Wash. 197, 202, 9 P. (2d) 106; Robinson v. Shell Oil Co. (1933), 172 Wash. 611, 618, 21 P. (2d) 246. If a pension plan for public employees is contractual in character, a legislative change can be made therein without impairment of the existing contracts only if the other parties thereto agree to the change as a modification of the contract.
If a contractual relationship existed, the enactment of 11 of chapter 24, Laws of 1937, p. 62, served as notice of the intention of the .city to limit pension payments from the police relief and pension fund in the manner indicated as to all who thereafter contracted with the city for a pension, and to modify the existing pension contracts to conform thereto in so far as it had the power to do so within constitutional limitations.
If the existence of a contract in the present case is assumed, although not determined, the question is: Did the plaintiff acquiesce in or agree to the changes in his pension contract proposed by the legislation enacted in 1937?
I believe that he did. It has already been pointéd out that chapter 24, Laws of 1937, p. 62, while it placed a limit on the amount of the pension that would be paid a police officer upon retirement, liberalized, other provisions of the policemen’s relief and pension act, including a. provision in § 1 that limited the two per cent deductions to two hundred *709fifty dollars of the salary received. Deductions from plaintiff’s salary were limited to two per cent of two hundred fifty dollars after his salary was increased to more than that amount January 1, 1943. When he accepted benefits under the 1937 act, he acquiesced in all the modifications that that act made in his contract unless he in some way made known the specific modifications to which he did not assent.
Another basis for a determination that the plaintiff acquiesced in the 1937 act is that he accepted salary increases subsequent to that enactment above the salary scale in force at the time the act became effective. When wages and pension benefits of public employees are inextricably combined, as they are under chapter 39 of the Laws of 1909 as amended [cf. RCW 41.20], any salary increase which could affect the amount of the pension to be paid on retirement must be regarded as conditioned upon the acquiescence by the employee benefited thereby in any pension limitations in effect at the date of the increase. A city might well be willing to increase a police captain’s salary from two hundred fifty dollars to three hundred seventy dollars a month for the relatively short period that he serves as captain if his pension would not be affected thereby, but be entirely unwilling to increase his salary in that amount if it would entail an additional sixty dollars a month in his pension, which could continue for many years after his retirement.
If a pre-existing contract is assumed, the acceptance by the plaintiff of an increase in salary above two hundred fifty dollars, the salary schedule for a police captain in the Seattle police department in 1937, when the pension limitation amendment was enacted, constituted acquiescence by him in the changes made in his pension contract by that amendment, as did his acceptance of the benefit of the limitation of his payments into the pension fund to two per cent of two hundred fifty dollars a month.
I find no merit in plaintiff’s contention, based upon § 6 of chapter 24, Laws of 1937, p. 65 (Rem. Rev. Stat. (Sup.), § 9592-1), that the amendments contained in that chapter *710were not intended to apply to him and the other police officers similarly situated.
Under either the general rule or the suggested exception, the result would be the same. I would reverse the judgment and direct the entry of a judgment of dismissal.
Hamley, C. J., concurs with Hill, J.