Theisen v. City of Dearborn , 5 Mich. App. 607 ( 1967 )

J. H. Gillis, P. J.

This is a class action brought July 15, 1964, by individuals and the Retired and Pensioned Policemen and Firemen Association of Dearborn, an unincorporated association, against the city of Dearborn. Plaintiffs claimed they were entitled to additional moneys owing to them by reason of certain provisions of the policemen’s and firemen’s retirement system. They sought an accounting and discovery to inspect the financial records of the city to ascertain the moneys owing to them under the pertinent provisions of the charter and ordinances of the defendant city.

Defendant filed a motion for accelerated judgment claiming that a prior case, Morrison v. City of Dearborn (Wayne County No. 299-972) was in res judicata as to the issues raised by the instant litigation. The circuit court for Wayne county granted the motion for accelerated judgment. Plaintiffs’ motion to set aside the judgment was denied. Plaintiffs’ appeal, raising two questions: (1) Is the matter involved res judicataf (2) Do appellants have the right to see the financial records of the defendant city?

The Morrison Case was an action brought by retired policemen and firemen of the city of Dearborn to compel defendant city to pay increased retirement annuities provided by chapter 21 of the Dearborn city charter. The circuit court in accord with an agreement between the parties made certain findings in the case including the formula to be used in ascertaining what the plaintiffs were entitled to receive in the form of increased retirement annuities.¹ Judgment was entered in the Morrison Case in favor of the plaintiffs in the amount of $195,936.19, which sum was arrived at by applying the formula set forth in footnote 1. The judgment covered the amounts to be paid according to the adjusted annual annuities and accrued payments for the period October 1, 1952, through January 31, 1961.

Defendant asserts that the Morrison judgment is res judicata and controlling in this litigation.

The doctrine of res judicata as stated by our Supreme Court is that:

“An existing final judgment or decree rendered upon the merits without fraud or collusion by a tribunal of competent jurisdiction upon a matter within its jurisdiction is conclusive of the rights of the parties, or their privies, in all other actions or suits in the same or any other tribunal of concurrent jurisdiction on the points and matters in issue in the first proceeding.” Lilienthal v. City of Wyandotte (1938), 286 Mich 604, 616.

The judgment of a court of concurrent jurisdiction, directly upon the point, is, as a plea, a bar, or as evidence, conclusive between the same parties, upon the same matter, when directly in question in another court. Johnson Co. v. Wharton (1894), 152 US 252 (14 S Ct 608, 38 L ed 429).

In a class action, one or more persons may be permitted to maintain or defend an action for themselves and various other persons similarly situated and interested. GCR 1963, 208. An exception to the general rule that no person is bound by a judgment except those who are parties or stand in privity with others who are parties exists in the case of persons who are so represented by persons on the record as parties. Hansberry v. Lee (1940), 311 US 32 (61 S Ct 115, 85 L ed 22, 132 ALR 741).

A judgment against the parties representing the general class is operative against those represented. Smith v. Swormstedt (1853), 57 US 288 (14 L ed 942). This is a rule of law founded on convenience and necessity. Masonic Widows’ and Orphans’ Home and Infirmary v. Hieatt Brothers (1923), 197 Ky 301 (247 SW 34); Mathews v. Lightner (1902), 85 Minn 333 (88 NW 992). It is based upon the theory that the persons joined and not joined have a common interest (Brenner v. Title Guarantee & Trust Company [1937], 276 NY 230 [11 NE2d 890, 114 ALR 1010]), that the parties joined may be depended upon to bring forward the entire merits of the controversy as a protection to their own interests (Hale v. Hale [1893], 146 Ill 227 [33 NE 858, 20 LRA 247]) and that the persons hot joined as parties are sufficiently represented by those who are joined (Sam Fox Publishing Co., Inc., v. United States [1961], 366 US 683 [81 S Ct 1309, 6 L ed 2d 604]). A person relying upon a former adjudication must generally show the identity of the cause of action, the subject matter, and the issues. United States v. Parker (1887), 120 US 89 (7 S Ct 454, 30 L ed 601); Murphy Chair Co. v. American Radiator Co. (1912), 172 Mich 14.

•Analyzing the facts of the case before this Court in light of the above, we find:

The cause of action in Morrison was to determine the amount of benefits to which retired policemen and firemen in the city of Dearborn are entitled.

The cause of action in the instant case is to'determine the amount of benefits to which retired policemen in the city of Dearborn are entitled. The' subject matter is identical. The issues have not changed. The parties were and are before this Court attempting to ascertain the amount of moneys owing to them under the pertinent provisions of the charter and ordinances of defendant city.

It is now the plaintiffs’ claim that they are entitled to have longevity pay included in the computation of the formula which is used in arriving at annuity retirement benefits.

The formula in question is found in chapter 21, § 21.8, of the Dearborn city charter. In this formula longevity is not mentioned as such, but, according to the affidavit presented by the city controller, longevity was utilized in computing the average annual wage. It is also important to note that the trial court’s opinion stated that longevity pay was included in the computations and formula. The formula was arrived at by the parties and adopted by the court and included in the formal judgment.

While it is true that if an incorrect formula was used, the decision of the court could he appealed; it cannot now be collaterally attacked. Corbitt v. Timmerman (1893), 95 Mich 581 (35 Am St Rep 586); Swartz v. Laurencelle (1963), 371 Mich 153. An appeal from the Morrison decision would have been the proper procedure to contest the validity of the formula. Forbes v. Ziegenhardt (1950), 328 Mich 187.

A possible factor to be considered would be whether the formula used by the defendant impairs or diminishes the rights of retired policemen in light of Const 1963, art 9, § 24. Under the facts as presented and the formula used in the earlier decision, no rights appear to be impaired or diminished. For these reasons, the decision of Judge Bowles is conclusive and a bar to later suits. Drouillard v. Labadie (1929), 248 Mich 503.

It appears then that while the formula to he used was arrived at by agreement of the parties involved, the trial judge in his opinion applied the formula to be used to the provisions of the city charter. Thus, the formula to be used was not derived from the agreement of the parties alone and entered into the record as an administrative act by the court. In the latter case, we would have the classic illustration of a consent judgment which is primarily the act of the parties to the litigation. Union v. Ewing (1963), 372 Mich 181; Ortiz v. Travelers Insurance Company (1966), 2 Mich App 548.

In the Morrison Case, the interpretation of this section as advocated by the parties was considered. (See trial court’s opinion in the Morrison decision.) A suggestion that the changed compensation rate be divided by 5 was rejected by the trial court. This further indicates that the formula was not a mere stipulation by the parties but rights or facts judicially tried and determined by a court of competent jurisdiction. Skinner v. Argentine Township Board (1927), 238 Mich 533. In the last cited case, the doctrine of res judicata has been held applicable when an opportunity for such trial has been given.

A judgment entered by the court upon a hearing or upon consideration of the case is a judgment of the court. The fact that the parties might have added their consent does not convert it into a judgment by consent.

The formula ultimately used to determine individual annuity benefits was arrived at after lengthy consideration and deliberation by the trial court with the consent of the parties. The claims presented to this Court by the appellants, individually and as class representatives, having been previously decided upon the merits without fraud or collusion, are barred under the doctrine of res judicata,

Plaintiffs also contend they have the right to inspect the financial records of the defendant in order to “measure their claim according to the language set forth in the charter.” Defendant conténds that plaintiffs were afforded the opportunity to inspect the records and in fact did inspect the financial records.. This issue was not raised in the trial court and will not he heard here for the first time. Gorby v. Yeomans (1966), 4 Mich App 339. Further, there is no showing that plaintiffs were denied access to the city’s financial records. On the contrary, defendant makes the point that the figures used by the plaintiffs could only have been obtained from the city records.

Judgment affirmed. Costs to appellee.

McGregor, J., concurred with J. H. Gums, P. J.

1 The following is an excerpt from the trial court’s opinion:

“So far as computation, the first consideration is the ascertainment of a retiree’s ‘average final compensation.’

“Chapter 21, at section 21.8, gives the formula. It is there provided that ‘average final compensation’ means:

“ ‘The average annual salary or wages paid to a member by the city for service rendered as a policeman or fireman during his last five years of service preceding retirement; or if he has less than five years of service, then the average annual salary or wages paid to him by the city during his total years of service.’

“This necessarily is an individual computation for each of the plaintiffs here.

“The next computation is the ascertainment of what a retiree is entitled to immediately upon his retirement, Section 21,28 prgYides the formula, specifying that:

“i* * * a jnem'ber shall receive a service retirement annuity equal to one-fiftieth of his average final compensation multiplied by his total years of creditable service * * *’

“This language, however, is qualified hy these words:

«i* * * ipke serviee retirement annuity of a member or beneficiary shall not esxeeed one-half his average final compensation, or seven-tenths of the annual rate of pay received by a patrolman first-elass, or a fireman first-class, whichever amount is the lesser.’ “The second computation, too, is an individual one for each of the claimants, and it is qualified by the language setting an outer limit or ceiling upon the annuity.

“Finally, the third computation involves the disputed fluctuation of benefits. The formula is found at section 21.37. This language means that when a rate of compensation is changed for any rank, grade, or position, for those still in active serviee, the annuities received by retirees or beneficiaries are also changed. The formula is:

<! i-x- * * the annuity, or other benefit, payable to a beneficiary, shall be adjusted to an amount based upon the changed rate of compensation for the corresponding rank, grade, or position.’

“This means that the annuity is changed in relation to the amount of change in the rate of compensation for the corresponding rank, grade, or position. The pivotal language, it is believed, is ‘on which the annuity, or other benefit, payable to a beneficiary, is based.’ This term is defined in seetion 21.28 heretofore noted. The annuity payable to a beneficiary under section 21.28 is based upon a certain rank, grade, or position. So far as the annuity is concerned, that is, that whieh is enjoyed first upon retirement, it is derived not from ascertaining the last rank, grade, or position of the retiree hut rather by the use of the formula found at seetion 21.28. The average final compensation is a figure arrived at by ascertaining what the average salary or wages paid to the member during his last five years of service before retirement or if he has less than five years then the average annual salary or wages paid to him during his total years of service. The figure arrived at by this process, that is, the average final compensation will determine then the rank, grade, or position of the retiree when he first draws an annuity and that is the rank, grade, or position whieh is thereafter used in the computation of increases under seetion 21.37.

“This, too, must he an individual determination. Whenever the rank, grade, or position is changed under section 21.37, then the retiree or beneficiary is entitled to an adjustment of the annuity in an amount based upon the amount of change in the compensation for that rank, grade, or position in whieh the retiree was first found in the computation of his average final compensation. I find no authority for dividing this figure by five as urged upon the court by defendants. However, there is one important proviso; reading the pertinent provisions together in such a way as to harmonize all, specifically reading seetion 21.37 with section 21.28, it is held that the annuity, as increased or decreased under seetion 21.37, shall at no time exceed one-half the rate of compensation for the rank, grade, or position of one still in active service, or seven-tenths of the rate of compensation for the rank, grade, or position of one still in active service, whichever amount is the lesser [sie?J. Any other theory or any other interpretation would lead to an absurd result, for annuities to be enjoyed by retirees or beneficiaries would increase disproportionately to the compensation of those still in aetive service. In result then, the ceiling or proviso continues to operate as an outer limit upon annuities. It is noted that when the revised policemen’s and firemen’s retirement system found at chapter 23 was adopted at section 23.18 (a) thereof, an outer limit was also placed upon a ■service retirement annuity.”