Court Opinion

ID: 878624
Source: CourtListenerOpinion
Date Created: 2013-06-04 22:47:55.93404+00
Date Added: 2024-06-11T15:37:46.866126
License: Public Domain

IN THE SUPREME COURT OF THE STATE OF MONTANA
                               No. 83-17

IN THE MATTER OF THE WAGE APPEAL
OF MONTANA STATE HIGHWAY PATROL
OFFICERS, MONTANA PUBLIC EMPLOYEES
ASSOCIATION, INC., and JAMES L.
RIDDLE, as a representative member
of a class similarly situated,

BOARD OF PERSONNEL APPEALS, a
division of the Department of
Labor and Industry of the State
of Monta.na, STATE PERSONNEL
DIVISION, a division of the
Department of Administration of
the State of Montana, and the
DEPARTMENT OF JUSTICE, STATE OF
MONTADTA ,
           Respondents.

                     ORDER AMENDING OPINION

PER CURIAM:

     It appearing that language intended to be incorporated
in the opj-nion issued January 26, 1984, was inadvertently
omitted,
     IT IS ORDERED:
     1.    That the second full paragraph on pa.ge 5 of the
opinion of     January   26,   1984 be     amended   to read   in two
paragraphs, as follows:
          In finding No. 9, the court found thet, "The
     MPEA did not re-open negotiations on the subject of
     the 1% longevity pay after the legislature repealed
     the   or ti on of k 31-105, R.C.M.
           L
                                            (1947), which
     provided for it." This findings follows logically
                          .-

     - - other findings - - issue specifically
     from the                  on the         made 2 -the
     Board of Personnel Appeals - -  and is
     suppert 2. -in the record hy - testimony - -
                   -                the            of Tom
     Schneider , Executive Director - -
                                    of MPEA.
         In finding - -
                     No. 11, - court found - -
                              the            that, "The
    gradeand step to which each officer was assigned
    - conversion - - Pay - - based on total
    on             trthe        Plan, was
    salar - - pay plus longevity." The Board of
    Y      i.e. base
    Personnel Appeals had previously found, in its
    findings No. 8, that, h he grade and step to which
    each   individual    Highway   Patrol officer was
    assigned, except five sergeants who were placed at
    step 2 at grade 14, were not affected by the
    inclusion of longevity pay in their base pay for
    conversion purposes to the new pay plan, i.e.
    placement on the pay matrix was determined by base
    pay alone; longevity was not included for placement
    purposes."

     2.   The material above underlined was omitted from the
original opinion.   No other emphasis is intended.
     3.   Copies hereof to counsel of record.
    DONE and DATED this   2 3 4 day   of February, 1984.

                                 ';pLwRJ.wtrqe
                                          Chief ,lustice
                                No. 83-17
                 IN THE SUPREME COURT OF THE STATE OF MONTANA

                                     1984

IN THE MATTER OF THE WAGE APPEAL OF
MONTANA STATE HIGHWAY PATROL OFFICERS,
MONTANA PUBLIC EMPLOYEES ASSOCIATION,
AND JAMES RIDDLE, as a representative
member of a class similarly situated,
                                Petitioners and Appellants,

BOARD OF PERSONNEL APPEALS, a division
of the Department of Labor & Industry
of the State of Montana, STATE PERSOPJNEL
DIVISION, a division of the Department of
Administration of the State of Montana,
and the DEPARTMENT OF JUSTICE, STATE OF
MONTANA,
                                Respondents and Respondents.

APPEAL FROM:      District Court of the First Judicial District,
                  In and for the County of Lewis & Clark,
                  The Honorable Peter G. Meloy, Judge presiding.

COUNSEL OF RECORD:
      For Appellants:
                  Hjort, Lopach & Tippy; Barry Hjort argued,
                  Helena, Montana

      For Respondents:
                  Patricia Schaeffer argued, Asst. Attorney General,
                  Helena, Montana

                                                    . _ _ . - - I _ _ _

                                 Submitted:   October 27, 1983
                                   Decided:   January 26, 1984

Filed:
         ;A!;   0 <5
                       ,ug34

                                 Clerk
Mr. Justice John C.              Sheehy delivered the Opinion of the
Court.

       Certain Montana Highway Patrol officers, through the
Montana Public Employees Association, Inc., appeal from an
order of the District Court, First Judicial District, Lewis
and Clark County, denying them the right to 1 percent yearly
increments on their present salaries.                 The issue came before
the District Court pursuant to a petition for judicial review
of an administrative order issued by the Board of Personnel
Appeals.     We affirm the District Court.
       In 1973, the Legislature passed a bill directing the
Department      of        Administration      to     develop     a     statewide
classification and pay plan.            According to the bill, the new
plan    could    not      result   in   the    decrease     of   any      current
employee's salary.           Ch. 440, S       8, Laws of Montana (1973).
The plan was developed along those guidelines and presented
to     the   1975     Legislatu-re for        its    approval.       By     joint
resolution, the Legislature approved the classification and
pay    plan,    set    forth     the method        for implementation, and
provided that:         "This wage and salary plan is in lieu of any
other plan or system of pay increases for classified state
employees."         House Joint Resolution            37, Laws of Montana
(1975).
       Prior to the adoption of the pl-an, the Montana Highway
Patrol officers received a base salary determined by rank and
an increase of 1 percent per year for each additional year
served.      Section 31-105, R.C.M.        1947.      However, in 1975, with
the    adoption      of    the   plan, the Legislature repealed              the
provision of section 31-105, R.C.M.                 1947, which provided for
the 1 percent longevity increments.                    Therefore, effective
January 4, 1975, Montana Highway Patrol officers are entitled
to recieve a base salary, an annual step increase and, in
place of the annual 1 percent longveity increases for each
year of service, a longevity increase of $10 per month for
each five years of service.
        During the same year in which the new plan was approved,
the     Highway     Patrol officers below           the   rank of     sergeant
organized     for     collective         bargaining    and     through    their
representative, the Montana               Public Employees Association,
Inc.      (MPEA), negotiated a collective bargaining agreement.
The agreement set grade levels for the officers and adopted
in full the provisions of the new classification and pay
plan.
        Almost three years later, in 1978, the petitioners filed
a petition with the Board of Personnel Appeals contending
that the adoption and implementation of the pay plan caused a
reduction in their longevity pay and that the longevity pay
was either a separable part of their salary or a fringe
benefit.     This contention was rejected by both the hearing
examiner and the Board.
        The petitioners then filed a complaint and petition for
judicial     review        in      the   District     Court,    raising    the
constitutional issue of impairment of contract.                  The District
Court remanded the cause of action to the Board and directed
the Board to obtain additional evidence regarding the Highway
Patrol officers' employment contracts with the Department of
Justice     prior     to     the    effective   date      of   the   statewide
classifj-cation and pay plan.
        This was done, and the hearing examiner concluded that
the employment contracts were unconstitutionally impaired by
the adoption of the pay plan and the repeal of section
31-105,    R.C.M.    1947.      The Board of Personnel Appeals adopted
the hearing examiner's findings of fact but declined to adopt
his conclusions of law and recommended order.                     The Board
stated that it would instead prefer that the District Court
make the necessary legal conclusions.
      Upon     judicial    review,    the     District    Court    modified
certain findings of the hearing examiner and concluded that
because the 1 percent longevity increments did not become a
part of the Highway Patrol officers' employment contracts
until those increments were earned, the adoption of the
statwide       classification        ant!     Pay     plan        did    not
unconstitutionally        impair   any      contractual   riaht     to   the
increments.
      The following issues are raised on appeal:
      1.     Whether the District Court abused its discretion by
making findings of fact not based on the record and also by
making findings of fact specifically contrary to the findings
of the Roard of Personnel Appeals.
      2.     Whether the District Court abused its discretion by
determining that certain findings of fact made by the Board
of Personnel Appeals were "clearly erroneous."

      3.   Whether the District Court erred in determining that
the Highway Patrol officers have no vested contractual right
to the continuation of the 1 percent increments and that the
legislative repeal of the statute containing the benefit did
not   constitute     an     unconstitutional        impairment      of   the
obligation of contract.
      In regard to the first issue, the petitioners contend
that the District Court exceeded its authority under the
standard of review set forth by the Montana Administrative
Procedure Act, section 2-4-704, MCA.                 Specificall-y, they
contend that the District Court's findings of fact Nos. 3, 6,
9, and 11 are not supported by evidence in the record and
that finding of fact No. 11 is also directly contrary to the
specific     finding      of     fact   made     and     approved       by    the
administrative agency.
     In findings Nos. 3 and 6, the court added references to
the annual step increases provided                for by       the statewide
classification and pay plan.            The petitioners contend that no
mention of these increases was made in the administrative
agency's findings.        However, shortly after filing the initial
petition in this matter, the parties stipulated that the
hearing examiner could take administrative notice of, among
other things, House Joint Resolution 37.                   In House Joint
Resolution    37,    the       Legislature     approved     the     statewide
classification      and    pay    plan,   including      the    annual       step
increases, and set forth the method for implementing the step
increases.
     In finding No. 9, the court found that, "The MPEA did
not re-open negotiations on the subject of the 1% longevity
pay after the legislature repealed the portion of                   §   31-105,
R.C.M.     (1947), which       provided    for    it."      The     Board     of
Personnel Appeals had previously found, in its finding No. 8,
that, "The grade and step to which each individual Highway
Patrol officer was assigned, except five sergeants who were
placed at step 2 at grade 14, were not affected by the
inclusion of longevity pay in their base pay for conversion
purposes to the new pay plan, e . , placement on the pay
matrix was determined by base pay alone; longevity was not
included for placement purposes."
     At a glance, it would appear that the two findings
contradict one another.           However, a review of the testimony
of Cindy Foster, a Department of Justice accountant who was
personally involved in instituting the 1975 pay plan for the
Highway Patrol reveals that the findings are not in conflict.
Foster testified that she calculated the current gross salary
of each officer, using base pay plus their earned 1 percent
increments.     She then determined the appropriate grade level
according to the classification plan and compared the old
sa.lary to step one of the appropriate grade.               If the old
salary was less than or equal to step one, the officer was
placed at step one.       If the old salary exceeded step one, the
officer was placed at the step which most closely matched his
salary without reducing it.           Foster further testified that
five sergeants were placed at grade 14, step 2, because their
total salary exceeded step 1.         In all other cases, placement
at step 1, resulted in increased salaries for the officers.
      In response to further questioning by the petitioners'
counsel, Foster testified that all of the officers, except
the five sergeants, would have been placed at the same level
and grade on the pay matrix had the longe~~ity
                                             portion of
gross salary been excluded from, rather than included in, the
officers'     salary.      Therefore,      the   1    percent    longvity
increments earned to that time were included in the officers'
gross salary when the officers were transferred over to the
new plan, but the officers' placement on the pay matrix was
generally not affected by           the inclusion of the longevity
increments.    This was recognized by the hearing examiner but
was not stated clearly in his finding.               The District Court
merely translated the hearing examiner's finding; it did not
substitute its judgment for that of the agency on the weight
of   the   evidence on     questions of      fact.      Therefore, the
District    Court   was    within    its   authority     under   section
2-4-704, MCA, to make the challenged findings.
     We now turn to the next issue on appeal.             The Dj-strict
Court determined that the hearing examiner's findings of fact
Nos. 6 and 11 were "clearly erroneous" to the extent they
implied that the Highway Patrol officers had a contractual
right   to   the   1 percent    longvity    increments before       such
increments    were   actually   earned     by    the    Highway   Patrol
officers.    Findings Nos. 6 and 11 read as follows:
     "6. Highway Patrol officers employed on January 4,
     1975 and prior thereto relied upon the inducement
     of the offer of a 1% longevity benefit, among other
     things, and accepted the offer by swea.ring an oath
     to faithfully perform the duties required of them.
     They entered into a contract of employment with the
     Department of Justice in accepting the offer of a
     1% longevity benefit and swearing to perform their
     assigned duties.

     "11. The 1% longevity benefit set forth in Section
     31-105, R.C.M. (1947) was a private right created
     by statute, which became a part of the individual
     contracts of employment between the Department of
     Justice and the Highway Patrol officers, who were
     employed prior to the date of the repeal of the
     law, April 21, 1975."

     The     petitioners   contend   that       there   was   reliable,
probati~re and substantial evidence in the record to su.pport
the hearing exami.nerlsd.etermination that the Highway Patrol
officers had an employment contract with their employer and
that the contract included a term or condition providing for
the 1 percent longevity increments.
     The standard of judicial review of an agency's findings
is set forth in section 2-4-704(2) (e), MCA:
    "(2) Th.e court may not substitute its judgment for
    that of the agency as to the weight of the evidence
    on questions of the agency or remand the case for
    further proceedings.    The court may reverse or
    modify the decision if substantial rights of the
    appellant have     been  prejudiced   because   the
    administrative findings, inferences, conclusions,
    or decisions are:
      "(el clearly erroneous in view of the reliable,
      probative, and substantial evidence on the whole
      record. "

      We have determined. that a findinq is "clearly erroneous"
when, although there is evidence to support it, a review of
the   record   leaves the court with            the definite and             firm
conviction that a mistake has been committed.                   Thornton v.
Commissioner of the Department of Labor and Industry (Mont.
1980), 621 P.2d 1062, 1065, 37 St.Rep. 2026, 2028; Brurud v.
Judge Moving and Storage Company, Inc. (1977), 172 Mont. 249,
563 P.2d     558.     Here the District Court was left with a
definite     and    firm    conviction   that    a     mistake    had       been
committed.
      In Standard Chemical Manufacturing Company v. Employment
Security Division fMont. 1980), 605 P.2d 610, 613, 37 St.Rep.
105, 108, this Court stated:           "Where factual determinations
are wa.rranted by the record - - -
                             and have a reasonable basis -
                                                         in

- they are to be accepted."
law,                                     (Emphasis added).           Although
findings Nos. 6 and 11 are substantially factual, they are
not   entirely      so.       The    findings     also       contain        Legal
conclusions.       It was these legal conclusions, implicit in the
hearing     examiner's      findings, that      were    modified       by    the
District Court.       Therefore, the determination of whether the
District Court erred          in modifying the hearing examiner's
findings depends on whether the Highway officers had, as a
matter of la.w,an implied contractual right to the 1 percent
longevity increments before those increments were earned by
the individual Highway Patrol officers.
      The    answer    to    this   question    is     the    crux     of    the
petitioners' last issue and indeed, the crux of the whole
appeal.     The petitioners contend that as a matter of law, the
Highway      Patrol     officers       have       a    vested       right   to    the

continuation of the 1 percent longevity increments and that
the legislative repeal of that portion of section 31-105,
R.C.M.    1947, providing            for    the       increments violated         the
constitutional          protection         against          the     impairment    of
contracts.
      The petitioners contend that the 1 percent longevity
increments became         an    implied       term or         condition of       each
Highway      Patrol     officer's      empl-oyment contract             after    the
statutory     provision        was    adopted         and    went    into    effect.
However, when the Legislature enacts a statute fixing certain
terms and conditions of public employment, such as salaries
and compensation, it js presumed that the statute does not
                      .
create contractual rights, but is intended merely to declare
a   policy    to   be    pursued      until       the       Legislature     declares
otherwise.       Dodge v. Board of Education (1947), 302 U.S. 74,
58 S.Ct. 98, 82 L.Ed. 57; Anderson v. City of Northlake (N.D.
Ill. 1980), 500 F.Supp. 863.               If contractual rights are to be
created by       statute, the language of the statute and the
circumstances must manifest a legislative intent to create
private rights of a contractual nature enforceable against
the State.         Cook v. City of Binghamton                     (N.Y. 1979), 398
N.E.2d    525.     Here, the provision creating the 1 percent
increments provided:           "These salaries shall be increased one
percent    (1 percent) per year for each individual year of
service."     Neither the circumstances nor the language of the
statute suggest that a contractual obliqation was intended to
be created.
     Thid is not to say that the Highway Patrol officers were
without any rights under the statute.                       The statute conferred
upon the Highway Patrol officers a right to receive the 1
percent increments from the time the statutory provisions
were   adopted and went into effect until the Legislature
repealed the stztute in 1975.       However, that right was not
absolute.
       In Williams v. Board of Education (N.J. Super. 1980),
422 A.2d    461, the Superior Court considered the nature of
salary increments.      There, Williams, a tenured high school
principal was transferred by the local school board to the
position of elementary school principal.        She challenged the
action of the school board        as a violation of the tenure
statutes    which    prohibited     reduction                 upon
transfer.    Will-iams did not allege that her total salary was
reduced; she alleged that her future salary expectation was
reduced because the formula used to determine the annual
salary increments for e1ementa.r~school principals was lower
than   for high     school principals.   The court found that
Williams had no vested right to future sa.lary increases.
Quoting from Greenway v. Camden Board of         ducati ion (1942),
129 N.J.L. 461, 29 A.2d 890, the court stated:
       "Increments, as used here, are the periodic,
       consecutive additions or increases which do not
       become a part of the sal-ary of a teacher until they
       accrue under the rule making such provision; and,
       until the accrual, the modification or repeal cf
       the rule so providing does not constitute a
       reduction of the current salary."
       422 A.2d at 464.

       This follows from the general rule tha-t an employee's
right to compensation vests or accrues on1.y after he or she
.-

has performed the required services for that pay period.
Mississippi ex rel. Robertson v. Miller (1928), 276 U.S. 174,
48 S.Ct. 266, 72 L.Ed 517; Fisk v. Jefferson (1.885), 116 U.S.

10 Mont. 426, 25 P. 1026.         Therefore, the government may
alter the salary of a public employee prospectively, prior to
the vesting of the salary right.             Personnel Division v . St.
Clair (Or. App. 19721, 498 P.2d 809; Grant v. Nellius (Del.
1977), 377 A. 2d 354.
       Here, the Highway Patrol officers' right to receive the
1 percent increment accrued annually and vested after each
year of service by the individual Highway Patrol officers.
As such, the statute providing for the 1 percent increments
could be modified or repealed as to the unearned increments.
       This    case     is    distinguishable    from    Local   No.     8,

International Association of Fire Fighters v. City of Great
Falls (1977), 174 Mont. 53, 568 P.2d 541.             There, this Court
held that all firemen who served in Great Fal-1s during the
effective period        of    an   ordinance had     vested   contractual
rights to the benefits of the ordinance.                   The city had
adopted an ordinance in 1956 granting firemen and policemen
who had served the city a full period of 20 years an increase
of pay "to induce a longer tenure of service by the same."
The    provisions     of     the   ordinance were    incorporated   in   a
negotiated labor agreement between the city and the firemen's
union.     At all times the state statutes prescribed minimum
wage     scales   for   firemen, and provided         1 percent annual
increases for longevity.           However, the City of Great Falls at
all times paid wages in excess of the statutory minimums to
its firemen, including the longevity increases.
       In 1975, the City of Great Falls, through its city
commission, repealed the 1956 ordinance.                This Court found
that the repeal of the city ordinance unconstitutionally
impaired the City's contract with the firemen because (1) the
original      ordinance created       an   implied   contract,   (2) the
vested rights of those who could claim under the implied
contract were violated, ( 3 ) the provisions of the ordinance
had been incorporated into the union contracts for nearly 19
years, and      (4)   all firemen who served while the original
ordinance was in effect had a vested right to the promised
increases if they would continue employment after 20 years.
     The distinguishing factors in this case, as compared to
those in Local No. 8, are           (1) the Highway Patrol officers
received their increments each year, and these increments
were incorporated into the 1975 state pay plan, ( 2 ) no other
contract, by union or otherwise, with the Highway Patrol
officers is violated, and (3) the object of the original 1
percent statute was not a contractual inducement to become
effective after 20 years of service.              Therefore, the repeal
of the statute in this case providing for yearly increments
to the Highway Patrol officers did not trample any legal or
equitable principles.
     The petitioners do not contend that the Highway Patrol
officers were not afforded the benefit of the 1 percent
increments for the years served before the conversion to the
new pay plan, nor do they contend that the Highway Patrol
officers' salaries were decreased by conversion to the new
pay plan.       In fact, the petitioners acknowledge that the
Highway   Patrol      officers'    total      salary   was   increased   by
conversion to the new pay plan.
     We   can    find    from     this   no   impairment     of   a   vested
contractual right.      The District Court is affirmed.
We Concur:

 %&&&.!a
      Chief Jdstice