Campbell v. Judges' Retirement Board

143 N.W.2d 755, 378 Mich. 169, 1966 Mich. LEXIS 72
CourtMichigan Supreme Court
DecidedJuly 19, 1966
DocketCalendar 8, Docket 51,134
StatusPublished
Cited by58 cases

This text of 143 N.W.2d 755 (Campbell v. Judges' Retirement Board) is published on Counsel Stack Legal Research, covering Michigan Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Campbell v. Judges' Retirement Board, 143 N.W.2d 755, 378 Mich. 169, 1966 Mich. LEXIS 72 (Mich. 1966).

Opinions

Dethmers, J.

Plaintiffs had been judges and members of the Michigan judges’ retirement system. All of them retired from their judicial offices before January 1, 1960. They brought these original man[177]*177damus proceedings in this Court on September 29, 1964, to compel defendant board to increase the pension payments to them from the $6,250 per annum they were receiving to $7,500, commencing from September 6, 1963, the effective date of PA 1963, No 172, which raised the salaries of circuit judges from $12,500 to $15,000 annually.

PA 1951, No 198 (CLS 1961, § 38.801 et seq. [Stat Aun 1962 Rev § 27.125(1) et seg.]), created the retirement system for those Supreme Court Justices, circuit judges, recorders judges, and superior court judges who, as the act provided, should elect to become members of the system.

Section 11 of that retirement act provides that members of the system shall be the judges who agree to become members. A written agreement is required on a form to be provided by defendant board. Thus, membership is not compulsory but voluntary on the part of the judges.

Each of the plaintiffs voluntarily executed the necessary form of agreement to become a member and thereafter, through salary deductions by the State, made voluntary contributions to the system in the amounts provided for by the act. By reference, the provisions of the act were made a part of the agreement.

As of January 1, 1960, each plaintiff, having retired, was receiving an annuity of $6,250, being one-half of the amount of the $12,500 salary then currently being paid to circuit judges. This was in accord with the requirement of section 14 of the retirement act as amended by PA 1956, No 224 which called for pension payments in amounts equal to one-half of the salary currently being paid to [178]*178circuit judges, This 1956 amendment as to amounts of pension payments has been referred to as the escalator clause, because it tied the amount of the pension to the increases which might from time to time be granted in salaries to circuit judges.

In 1961, by PA No 169, the act was again amended, to eliminate the escalator clause. It provided for pension payments in the amount of one-half of the salary being paid by the State to the judge at the time of his retirement.

By PA 1963, No 172, the annual salary to be paid by the State to circuit judges was increased from $12,500 to $15,000. Thereupon defendant board was confronted with the question of whether plaintiffs’ rights to an annual pension were to be considered increased in amount by the 1963 salary increase for circuit judges in accord with the escalator clause of the 1956 amendment or barred therefrom by the 1961 amendment eliminating the escalator clause from the retirement act. Acting on the advice of the attorney general, defendant board declined to pay plaintiffs the increase. Hence, this suit.

Plaintiffs’ contention is that they acquired a vested interest in the rights conferred by the retirement act, including the 1956 amendment creating rights under the escalator clause. This would apply not only to those retiring during the time the escalator clause stood unrepealed as a part of the statute (1956-1961) but also to those to whom, by the act’s own terms, it was expressly made applicable, namely, those who had theretofore retired. These rights, so plaintiffs say, cannot be abrogated by giving retroactive effect to the subsequent 1961 amendment eliminating the escalator clause after plaintiffs already had retired and started receiving benefits in accord with the act.

[179]*179Defendant submits that no vested or contractual rights are involved; that, therefore, elimination of-the escalator clause was properly within the powers of the legislature; and that, accordingly, plaintiffs’ rights to benefits are entirely dependent on section 14 as it now stands, namely, as amended in 1961. For this proposition, defendant urges as authority Brown v. City of Highland Park, 320 Mich 108; Wyrzykowski v. Budds, 324 Mich 731; Attorney General v. Connolly, 193 Mich 499; Attorney General v. Chisholm, 245 Mich 285; Thiesen v. Dearborn City Council, 320 Mich 446. In those cases membership of public employees in the retirement system was a condition of employment, compulsory, and deduction from their pay was mandatory, the deductions being placed in a public fund for financing retirement benefits. This Court held that these were not contributions by the employees of their own money but an-appropriation of what had at all times been public-money, that the employees had not voluntarily entered into an agreement, that, therefore, a contract, for retirement benefits had not been made or consummated between the public employing unit of government and the employees, and so, no question of impairment of contracts could be deemed to be. presented by a diminishing of benefits under the pen-, sion plan. Such decisions relating to retirement plans involving compulsory membership and mandatory contributions to the fund of what was deemed to be public money only, although deducted from salaries, have no application to the instant ease in which membership and contributions to the fund by the judges are voluntary and a written agreement is entered into between the judges who elect so to do and the judges’ retirement board acting for the State. Here a contract is created by such mutual action on the part of the two contracting parties, with the judges’ own money, earned as part of their [180]*180salaries, being by their consent and at their direction taken therefrom and placed in the retirement fund as the judges’ voluntary contribution thereto and as a consideration for the State’s agreement to pay a pension to them. In Johnson v. Douglas, 281 Mich 247, 256, this Court said:

“The essential elements of a contract are parties competent to contract, a proper subject matter, a legal consideration, mutuality of agreement, and mutuality of obligation.”

Here the judge voluntarily agrees to enter the system and pay the contributions, he does pay, and the State agrees to pay certain retirement benefits. There is, then, legal consideration, mutuality of agreement, and mutuality of obligation. A contract is made. Accordingly, a problem of impairment of contract is involved here, as contrasted with the above cited Michigan cases relied on by defendant.

Michigan Constitution of 1908, art 2, § 9, followed by Michigan Constitution of 1963, art 1, § 10, and article 1, § 10, of the United States Constitution, prohibit the impairment by State law of the obligation of a contract. Vested rights acquired under contract may not be destroyed bjr subsequent State legislation or even by an amendment of the State Constitution. See City of Lansing v. Michigan Power Co., 183 Mich 400; Ramey v. Michigan Public Service Commission, 296 Mich 449; Village of Constantine v. Michigan Gas & Electric Co., 296 Mich 719; Michigan Public Service Company v. City of Cheboygan, 324 Mich 309.

In this case plaintiffs, who had been judges and contributing members of the judges’ retirement system, elected to and did retire under the governing act. Under that act and particularly section 12 thereof, they, thereupon, ceased to be members of the system. When they so retired and ceased to be [181]

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Bluebook (online)
143 N.W.2d 755, 378 Mich. 169, 1966 Mich. LEXIS 72, Counsel Stack Legal Research, https://law.counselstack.com/opinion/campbell-v-judges-retirement-board-mich-1966.