Kerner v. State Employee's Retirement System

368 N.E.2d 1118, 53 Ill. App. 3d 747, 11 Ill. Dec. 510, 1977 Ill. App. LEXIS 3521
CourtAppellate Court of Illinois
DecidedOctober 21, 1977
Docket14306
StatusPublished
Cited by14 cases

This text of 368 N.E.2d 1118 (Kerner v. State Employee's Retirement System) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kerner v. State Employee's Retirement System, 368 N.E.2d 1118, 53 Ill. App. 3d 747, 11 Ill. Dec. 510, 1977 Ill. App. LEXIS 3521 (Ill. Ct. App. 1977).

Opinion

Mr. JUSTICE WEBBER

delivered the opinion of the court:

This appeal involves the State pension rights of the late Otto Kerner, one-time governor of Illinois.

The essential facts are not in serious dispute. On September 28, 1965, Otto Kerner (herein for convenience referred to as “Kerner”), then Governor of Illinois, applied for membership in the State Employees’ Retirement System (herein “System”). Under an option then existing, Kerner paid into the System *11,048.34, which included 4$ compound interest, and obtained service credits retroactively to the date of his taking office, viz., January 9, 1961.

On May 19, 1968, Kerner resigned as Governor to become a judge of the United States Court of Appeals for the Seventh Circuit, and on May 2, 1969, applied for a retirement allowance. On June 16,1969, the System granted the allowance retroactively to January 19, 1969, by paying *1,534.88, and thereafter monthly allowances of *335.08 each, through June 1973. At the time of the initial payment Kerner was notified that his contributions to the System, excluding interest, totalled *16,815.71. Payments were stopped commencing with the month of July 1973; three additional payments were made at various times thereafter, and Kemer’s total payments from the System are agreed to be *18,927.82.

Kerner was convicted of one or more felonies under the United States Code in the United States District Court for the Northern District of Illinois, Eastern Division. These convictions were affirmed on appeal. They related to Kemer’s service as an employee of the State of Illinois.

On October 3, 1975, Kemer filed a demand with the System for resumption of payments. A hearing was convened before a hearing officer, who rendered his decision on April 26,1976, recommending such resumption. On May 3 and 5, 1976, the board of trustees of the System reviewed the hearing officer’s report, held further hearings and overruled the hearing officer.

Kerner died in May 1976, and his representative filed an administrative review proceeding in the circuit court of Sangamon County, asking in effect that the finding of the System be reversed and Kemer’s estate be awarded payments from July 1973, through May 1976, totalling *9,382.24. The circuit court reversed the System and this appeal ensued.

Fundamental and central to the solution of the problem presented is the construction of section 14—199 of the Illinois Pension Code (Ill. Rev. Stat. 1975, ch. 108½, par. 14—199). Equally fundamental is the effect, if any, upon section 14—199 of article XIII, section 5, of the Illinois Constitution of 1970.

The statutory section in question, section 14—199, reads as follows:

“None of the benefits herein provided for shall be paid to any person who is convicted of any felony relating to or arising out of or in connection with his service as an employee.
This section shall not operate to impair any contract or vested right heretofore acquired under any law or laws continued in this Article nor to preclude the right to a refund.
All future entrants entering service subsequent to July 9, 1955 shall be deemed to have consented to the provisions of this section as a condition of coverage.” Ill. Rev. Stat. 1975, ch. 108½, par. 14—199.

This provision first appeared in 1955 as paragraph 216.2 of chapter 127, Ill. Rev. Stat., and became effective July 9, 1955. In 1963 the legislature codified various pension plans into what is now chapter 108½, Ill. Rev. Stat., and the section was incorporated therein without change except to add to it the words, “subsequent to July 9, 1955.”

Before proceeding further, we must lay to rest one matter raised in the briefs. Kerner’s brief spends a considerable amount of time and space arguing the proposition that a pension is a contractual right, not a bounty. This is conceded by the System. Some early cases, decided when pension plans were much less common than today, contain language which at least look in the direction of bounty or grace-and-favor, alterable at the will of the sovereign. More recent authority has totally rejected such thinking and pensions are now acknowledged to be contractual in nature. (See Peterson v. Board of Trustees (1973), 54 Ill. 2d 260, 296 N.E.2d 721.) Kerner’s pension was a contract right and became vested in 1969 when the System granted him an allowance. The actual date of vesting is of little importance since the statute in question was in force at all times since 1955.

In construing the statute the trial court held that until retirement an employee s rights were inchoate, but upon actual retirement such rights became vested. The court read the words “heretofore acquired” in paragraph 2 of section 14—=199 of the Pension Code as relating to the date of retirement. Such a construction totally ignores the impact of paragraph 3.

A reading of the statute as passed in 1955 and a further reading of it as amended in 1963 demonstrate clearly that the legislature intended a change in the pension contract for those retiring after July 9, 1955. Paragraph 2 is, in effect, a saving clause and acknowledges that the legislature could not constitutionally impair a previously acquired contract right. “Heretofore” in the 1955 act could only refer by logic and grammar to a time prior to July 9, 1955; all “future entrants” (i.e., those after July 9, 1955) are deemed to have consented to the felony divestiture provision as part of the pension contract. The amendment of 1963 further underscores the importance of the date.

The legislative intent is clear: Rights acquired prior to July 9, 1955, could not be divested or impaired and no effort was made to do so; rights acquired after July 9,1955, could be divested, since the felony conviction condition became part of the pension contract. It is a prime example of a condition subsequent, a familiar feature of contract law.

To pursue the theory of the trial court to its logical conclusion, all an employee need do is to conceal his criminal activity until after retirement and thus render the entire statute meaningless.

In Peterson v. Board of Trustees, 54 Ill. 2d 260, 264-65, 296 N.E.2d 721, the court said:

“The language of the Code is clear and there is no need for this court to construe it so as to give it any meaning other than the one which is clearly stated. It is the duty of the court to enforce the law as enacted according to its plain and unmistakable provisions. [Citation.] The legislature could have provided pensions for fire fighters or other full-time appointed employees of the fire department who are no longer capable of performing the duties of their positions because of physical incapacity. It did not do so. We cannot now alter the plain language of the statute and through judicial construction incorporate such a provision in the Code. [Citation.]”

The doctrine applies with force to the case at bar.

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Cite This Page — Counsel Stack

Bluebook (online)
368 N.E.2d 1118, 53 Ill. App. 3d 747, 11 Ill. Dec. 510, 1977 Ill. App. LEXIS 3521, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kerner-v-state-employees-retirement-system-illappct-1977.