Payne v. Board of Trustees of the Teachers' Insurance & Retirement Fund

The issue in this case is a matter of statutory construction.

On May 31, 1947, plaintiff had completed 26 years of teaching service, of which 18 were in North Dakota, and had paid all assessments to qualify him for a retirement annuity.

Sec 15-3927 of 1943 RC provides in part that any teacher who has complied with the provisions of this Chapter may retire and receive the annuity provided for in Sec 15-3928.

Sec 15-3928 provides in part that each teacher who shall haveretired from service shall be entitled to receive as an annuity a sum equal to 1/50th of his average annual salary for the years of service for which assessments were paid, multiplied by the whole number of years of service as a teacher.

This latter section was amended by Ch 165 of the 1947 SL, effective July 1, 1947, which increased the amount of the annuities.

"Any person who has complied with the provisions of this chapter and who desires to retire from active service in the public schools or state institutions shall apply in writing to the board for the annuities provided in this chapter." Sec. 15-3930 of 1943 RC.

On August 27, 1947, plaintiff expressed his desire to retire and applied in writing for the annuities fixed under Ch 165, supra.

Did plaintiff's retirement become effective, as a matter of law, on May 31, 1947, or on the date when he applied?

Under the foregoing statutes, plaintiff is not entitled to the annuities provided until he has complied with the provisions of the chapter and until he "shall have retired." On the other hand there is no time limitation thereafter as to when he "mayretire." In fact, there is an inducement to continue in service, since years of continued service may increase the annuities.

Retirement is optional with the teacher and is not compulsory upon attaining eligibility or at any time. Teachers do not retire annually at the end of each school year, nor is there any presumption to that effect.

Under this act, such status results only when the individual teacher elects to retire and applies in writing for the benefits; never as a matter of law. Until the teacher has taken the initiative in this respect, the Board can do nothing, because it is not authorized to do so under this law and for the further reason that it would be unable to determine the amount of annuity, since that is dependent upon the term of service which would not terminate until retirement.

The majority hold that the provision for applying in writing for retirement is to notify the Board that applicant has ceased teaching and paying assessments; that it is merely procedural and merely serves notice that applicant has complied with his part of a so-called contract. The fallacy of this theory is that the element of retirement is overlooked.

The teacher must have retired before he is eligible to annuity. He cannot apply for the benefits, before retirement, although otherwise eligible, and continue teaching.

If he has retired and resumes teaching, the payments must be discontinued. Sec 15-3935 of 1943 RC.

After plaintiff attained eligibility for retirement, he had the legal right to determine when to make application. The exercise of that right cannot be defeated because he rendered no teaching service or paid any assessments provided for by the 1947 amendment. This amendment does not require as a condition to retirement, subsequent to July 1, 1947, that any teacher eligible to retire prior to that date, meet any special conditions, nor does the act provide or imply that a teacher's rights in the fund, with respect to the payment of annuities, be fixed at the time he became eligible to retire.

The 1947 amendment does not limit increased annuities to teachers who became eligible to retirement subsequent to July 1, and should not be construed to exclude teachers who actually retired after July 1, 1947, though eligible for retirement before that date. To so assume would read into the act a provision not there.

It seems clear that Payne did not retire until August 27, 1947, at which time his rights in the fund became vested in accordance with the law then in effect.

The retirement act is a public purpose, is an exercise of the state taxing power and is merely in the nature of an added salary allowance to public servants. State ex rel. Haig v. Hauge, 37 N.D. 583,164 N.W. 289, LRA1918A 522.

The law is general in its application. The assessment paid by each teacher does not determine the amount of his annuity. Until the teacher has complied with the law and until he has decided to retire, his rights in the fund are contingent or inchoate, and subject to legislative control or change by the Board. After his election to retire and his application for annuity, such rights become vested. Rights are vested when the right to their enjoyment, present or prospective, have become his property as a present interest. 12 CJ 955 (485); 16 CJS, Constitutional Law § 215.

The provisions of the Retirement Act, including the 1947 Amendment, are not retroactive but prospective.

"No part of this code is retroactive unless it is expressly declared to be so." Sec 1-0210 of 1943 R.C.

"It is presumed that the legislature intends a statute to operate prospectively only unless it clearly manifests a contrary intention." Murray v. Mutschelknaus, et al. 70 N.D. 1, 291 N.W. 118; Petters Co. v. Nelson County, 68 N.D. 471, 281 N.W. 61.

Plaintiff retired August 27, 1947. The law in effect at that time was Ch 165 of the 1947 SL, and since it is not retroactive, the retirement cannot be said effective as of a prior date, as a matter of law. Certainly, plaintiff did or said nothing from which that fact might be implied. He is entitled to the benefits provided under the 1947 Amendment. The judgment of the District Court should be affirmed.