No. 94-526
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
L. C. GULBRANDSON,
Plaintiff,
v.
CAROLE CAREY, FRED J. FLANDERS, CAROL
LAMBERT, TROY MCGEE, SR., ELEANOR PRATT
and TERRY TIECHROW, individually and in
their official capacities as members of the
Montana Public Employees' Retirement Board,
Defendants.
ORIGINAL PROCEEDING
COUNSEL OF RECORD:
For Plaintiff:
Thomas K. Hopgood; Luxan & Murfitt, Helena,
Montana
Patrick F. Hooks, Attorney at Law, Helena,
Montana (argued)
For Defendants:
Kelly A. Jenkins, Special Assistant Attorney
General, Montana Department of Administration,
Helena, Montana (argued)
Submitted: April 11, 1995
Decided: August 24, 1995
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.
By order dated October 31, 1994, and pursuant to Rule 44,
M.R.App.P., the United States District Court, District of Montana,
certified the following question of law to this Court for
consideration and decision:
Does the benefit increase provided for in Chapter 664,
Laws of 1989, an amendment to § 19-5-502, MCA, which
became effective on July 1, 1991, apply to members of the
Montana Judges' Retirement System who retired after the
date of enactment but prior to the effective date of the
legislation?
We accepted jurisdiction of the certified question by order dated
November 15, 1994, and stated that we would decide the certified
question on the basis of the statement of facts contained in the
federal court's Certification of Question of Law, as well as the
Record described in the Certification. We hold that the referenced
benefit increase does not apply to members of the Montana Judges'
Retirement System who retired after the enactment, but before the
effective date, of the legislation and, therefore, answer the
certified question in the negative.
The facts contained in the Certification, and upon which our
decision is based, are as follows:
L. C. Gulbrandson (Gulbrandson), an Arizona resident, was an
active member of the Montana Public Employees' Retirement System
(PERS) and, subsequent to its creation, Judges' Retirement System
(JRS) from January 4, 1960 through August 31, 1989. For service as
a district court judge and supreme court justice during this
period, Gulbrandson was credited with 29 years and 8 months of
2
service credit in JRS. Since September 1, 1989, Gulbrandson has
been a retired member of JRS.
Carole Carey, Eleanor Pratt, Terry Tiechrow, Troy McGee, Sr.,
Fred Flanders, and Carol Lambert are Montana residents appointed by
the governor to the Public Employees' Retirement Board (Board),
pursuant to § 2-15-1009, MCA. The Board is charged under Montana
law, Title 19, MCA, with the administration of JRS, among other
state administered governmental retirement systems.
During Gulbrandson's period of active membership on the bench
in PERS, from January 4, 1960, through June 30, 1967, he
contributed 5.6% of his salary to PERS. On July 1, 1967, JRS was
formed as a retirement system separate from PERS. All
Gulbrandson's service credit in PERS was transferred to JRS. From
July 1, 1967, through August 31, 1989, Gulbrandson contributed 6%
of his salary to JRS.
During the 51st Montana Legislature which convened in January
1989, Senate Bill 241was introduced by Senator Mazurek and others.
This bill, as introduced, provided for additional state funding to
JRS and provided for an increase in retirement benefits for those
years served by a Judge after the 15th year from 1% to 2% of final
salary for each such year of service.
This bill, as amended, was signed by the Governor of Montana
on May 13, 1989, and enrolled as Chapter 664, Laws of 1989 (Ch.
664). As enacted, Ch. 664 was effective on July 1, 1989, except
for two sections which were to be effective on July 1, 1991. The
more pertinent of these delayed-effect sections, Sec. 3, provided
3
as follows:
Section 19-5-502, MCA, is amended to read:
Upon retirement from service, a member shall receive a
service retirement allowance which shall consist of the
state annuity plus the member's annuity. The member ’ s
annuity shall be the actuarial equivalent of his
aggregate contributions at the time of retirement. The
state annuity shall be in an amount which, when added to
the member's annuity, will provide a total retirement
allowance of 3 l/3% per year of his final salary for the
first 15 years' service and 1.785% per year for each
year's service after 15 years' service.
Sec. 3, Ch. 664 was one of two sections of that legislation
which had a delayed July 1, 1991, effective date. The remainder of
the legislation, including a mechanism for increased state funding
for JRS, was effective July 1, 1989.
Gulbrandson was an active member of JRS at the time of the
legislative enactment and for more than three months beyond
enactment. As an active member during this time, Gulbrandson
continued to contribute 6% of his salary to JRS.
Had he completed his term, Gulbrandson's term of office would
have expired January 6, 1991. Gulbrandson resigned voluntarily on
August 31, 1989.
Beginning September 1, 1989, Gulbrandson began to receive "a
total retirement allowance of 3 l/3% per year of his final salary
for the first 15 years' service and 1% per year for each year's
service thereafter," as provided in § 19-5-502, MCA, on that date.
Gulbrandson has continued to receive a total retirement allowance
based on these percentages.
Between May 13, 1989, and July 1, 1991, there were 6 active
members of JRS with more than 15 years of service. Gulbrandson was
4
the only member with more than 15 years of service who voluntarily
terminated service during that period.
On January 23, 1992, Gulbrandson appeared before the Board
informally seeking Board consideration of the application of Sec.
3, Ch. 664, initially as to all members retired prior to July I,
1991, then as to himself. The Board requested an Attorney
General's Opinion on the issues.
On December 4, 1992, the Attorney General of Montana issued an
opinion to the Board which concluded that Ch. 664 did not increase
the retirement allowance for those JRS members who retired prior to
July 1, 1991, even those who retired after the date of enactment.
On September 13, 1993, Gulbrandson filed a formal petition
with the Board for redetermination of his retirement allowance.
The Board denied the petition on September 23, 1993.
Members of JRS with more than 15 years of service credit who
retired after July 1, 1991, have received "a total retirement
allowance of 3 l/3% per year of his final salary for the first 15
years ' service and 1.785% per year for each year's service after 15
years' service," as provided in § 19-5-502, MCA, after that date.
Jack L. Green, a JRS member active from May 1, 1963, through
December 31, 1992, with 29 years, 8 months service credit in JRS,
has at all times received a total retirement allowance based on
1.785% of final average salary for all years subsequent to his 15th
year of service.
1. Is Gulbrandson entitled to the increased retirement
5
benefit provided in Section 3, Chapter 664, Laws of 1989,
amending § 19-5-502, MCA, which was enacted in 1989 and
effective July 1, 1991, under the plain language of the
statute?
Our function in construing and applying statutes is to
effectuate the legislature's intent. United States v. Brooks
(Mont. 1995), 890 P.2d 759, 761, 52 St.Rep. 113, 114. To determine
legislative intent, we first look to the plain meaning of the words
used in the statute. Stansbury v. Lin (1993), 257 Mont. 245, 249,
848 P.2d 509, 511. If the legislature's intent can be determined
by the plain language of the words used, we may not go further and
apply other means of interpretation. Prairie County Co-op v.
Kalfell Ranch, Inc. (Mont. 1994), 887 P.2d 241, 246, 51 St.Rep.
1488, 1491. It is only when the intent cannot be determined from
the language of the statute that we will examine legislative
history. Matter of Kalfell Ranch, Inc., 887 P.2d at 246.
As of its effective date on July 1, 1991, Section 3, Chapter
664 provides an increased retirement benefit to JRS members with
more than 15 years' service "upon retirement from service." The
plain meaning of the statutory language is that a member is
entitled to the increased benefit upon his or her retirement from
service on or after July 1, 1991. Such plain, clear and
unambiguous language expresses the legislature's intent and permits
no further interpretation by this Court. Matter of Kalfell Ranch,
- I 887 P.2d at 246.
Inc.
Here, Gulbrandson retired from service nearly two years before
the effective date of Section 3, Chapter 664. He did not retire
6
again on or after July 1, 1991. Based on the plain meaning of the
statute, we conclude that he was not entitled to the increased
retirement benefit contained in § 19-5-502, MCA, as amended by
Chapter 664, upon his retirement prior to July 1, 1991.
Gulbrandson argues that denial of his entitlement to the
increased retirement benefit impermissibly impairs his contract
with the JRS in violation of Article II, section 31, of Montana's
Constitution. Under the three-part test we apply to determine
whether legislation violates the impairment of contracts clause,
the initial inquiry is whether the law has operated as a
substantial impairment of the contract. Matter of Yellowstone
River (1992), 253 Mont. 167, 182-83, 832 P.2d 1210, 1219 (citations
omitted). Thus, in order to address Gulbrandson's argument, we
must determine the parameters of his contract to determine whether
the contract guarantees him the benefit increase contained in
Section 3, Chapter 664. If it does not, then denial of the
increased retirement benefit cannot impair the contract.
At the time of Gulbrandson's retirement prior to the effective
date of Section 3, Chapter 664, JRS members with more than 15
years' service were entitled to 1% per year of current salary for
each year of service after 15 years. See § 19-5-502, MCA (1989).
This clear and undisputed entitlement is our starting point in
determining the terms of Gulbrandson's retirement benefit contract.
Gulbrandson argues that the entirety of Chapter 664 became
operable law as of May 13, 1989, when it was signed by Governor
Stan Stephens. Accordingly, and notwithstanding the delayed
7
effective date of the Section 3 amendment to § 19-5-502, MCA, he
asserts that his entitlement to the increased retirement benefit
contained in Chapter 664 became a vested part of his contract as of
May 13, 1989. He relies, in part, on Leonard v. City of Seattle
(Wash. 1972), 503 P.2d 741. Leonard does not support his position.
In Leonard, the Washington Supreme Court considered whether a
retired police officer's pension could be forfeited under a statute
enacted after the officer's retirement which forfeited pension
rights upon a felony conviction. The court refused to allow the
forfeiture, stating that rights to a public pension "are to be
determined as of the latest enactments applicable to the recipient
in effect prior to actual retirement . . . .I' Leonard, 503 P.2d at
747. Applying the Leonard language here, it is clear that the
latest enactment applicable to Gulbrandson which was in effect
prior to his retirement was § 19-5-502, MCA (19891, because Section
3, Chapter 664 was not effective until July 1, 1991.
Nor is Gulbrandson's reliance on 73 Am. Jur. 2d Statutes § 360
(1974), well placed. The portion of that discussion on which he
relies centers on whether a bill becomes law on passage by the
legislature or only upon approval by the governor; that is not the
issue presently before us. We note that Gulbrandson does not quote
a later part of the discussion which points out that legislatures
often are authorized to prescribe the time when a statute takes
effect. 73 Am.Jur. 2d Statutes § 360 (1974). That is precisely
what the Montana legislature did here.
The terms of Gulbrandson's retirement benefit contract are
8
determined pursuant to the statutes in effect at the time of his
retirement on August 31, 1989. The amendment to § 19-5-502, MCA,
via Section 3, Chapter 664, was not yet effective on that date.
Therefore, we conclude that Gulbrandson's contract does not include
the increased retirement benefit contained in Section 3, Chapter
664 and, as a result, his contract was not impaired by denying him
entitlement to that increased benefit.
2 . Does the denial of the increased retirement benefit
contained in Section 3, Chapter 664, violate
Gulbrandson's constitutional right to the equal
protection of the law?
Gulbrandson argues that the Board's interpretation and
application of Section 3, Chapter 664 creates impermissible
classifications of JRS retirees and singles him out based on his
retirement between the date the governor signed Chapter 664 and the
effective date of Section 3 thereof. His stated equal protection
challenge is to the amended statute as applied by the Board, rather
than to the statute by its terms, and is based on his contention
that he is entitled to the increased retirement benefit pursuant to
§ 19-5-502, MCA, as amended. Because we conclude above that
Gulbrandson is not entitled to the increased retirement benefit
under the plain meaning of the amended statute, we deem his equal
protection argument to,be directed at the provisions of the amended
statute, that is, a facial challenge to the law itself.
Article II, section 4 of the Montana Constitution provides
that "[nlo person shall be denied the equal protection of the
9
laws. ” The purpose of the equal protection clause "is to ensure
that persons who are citizens of this country are not the subject
of arbitrary and discriminate state action." Cottrill v. Cottrill
Sodding Service (1987), 229 Mont. 40, 42, 744 P.2d 895, 897;
quoting Godfrey v. Mont. State Fish & Game Com'n (1981), 193 Mont.
304, 306, 631 P.2d 1265, 1267. We determine whether state action
violates equal protection by applying either a strict, intermediate
or rational basis standard of scrutiny. The determination of which
standard is appropriate depends on the facts and the rights
involved. See Arneson v. State (19931, 262 Mont. 269, 272-73, 864
P.2d 1245, 1247-48; Cottrill, 744 P.2d at 897.
The most stringent standard, strict scrutiny, is imposed when
the action complained of interferes with the exercise of a
fundamental right or discriminates against a suspect class.
Eastman v. Atlantic Richfield Co. (1989), 237 Mont. 332, 337-38,
777 P.2d 862, 865. The intermediate standard is applied in cases
involving rights that are significant, or important, but not
fundamental. Butte Community Union v. Lewis (19861, 219 Mont. 426,
432-34, 712 P.2d 1309, 1312-14. The lowest standard, the "rational
basis" or "reasonable relationship" test, applies in most cases.
To withstand rational basis scrutiny, the law or state action need
be only rationally related to furthering a legitimate state
purpose. Ameson, 864 P.2d at 1248.
With regard to the proper standard of scrutiny for this case,
Gulbrandson makes a passing argument that intermediate scrutiny
applies. He does not, however, distinguish our decision in
10
ArneSXl, where we rejected intermediate scrutiny in favor of the
rational basis standard in the context of an equal protection
challenge to retirement benefit statutes. Ameson, 846 P.Zd at
1248. Consequently, we analyze Gulbrandson's claim under the
rational basis test.
To a certain extent, nearly all legislation sets forth
classifications regarding applicability, benefits and recipients;
the fact that some of these classifications are imperfect does not
necessarily mandate a conclusion that they violate the equal
protection clause. Ameson, 864 P.2d at 1248. Moreover, every
possible presumption must be indulged in favor of the
constitutionality of a challenged statute. Arneson, 864 P.2d at
1248; citing State v. Safeway Stores (1938), 106 Mont. 182, 199, 76
P.2d 81, 84.
Section 19-S-502, MCA, as amended by Section 3, Chapter 664
effective July 1, 1991, created two classes of retired judges, with
those retiring after that date receiving an increased retirement
benefit for years of service in excess of I5 years. The issue
before us is whether a rational relationship exists between the
delayed effective date of Section 3, Chapter 664, which results in
Gulbrandson's lack of entitlement to the increased retirement
benefit, and a legitimate government interest. See Arneson, 846
P.2d at 1248-49.
The factual and legal equal protection issues in this case are
similar to those addressed by the Michigan Supreme Court in Hughes
v. Judges Retirement Bd. (Mich. 1979), 282 N.W.2d 160. In Huches,
11
two retired judges instituted an action for a writ of mandamus
increasing their retirement benefits under a 1974 amendment to the
retirement system; both judges had retired before the effective
date of the amendment. The writ was denied and the judges
appealed. Hushes, 282 N.W.2d at 162-63.
Applying the rational basis test, the Michigan Supreme Court
quoted earlier cases stating that "legislation is not
unconstitutional because . . . it benefits a particular class, so
long as the law operates equally upon those within a particular
class." Hushes, 282 N.W.2d at 167 (citations omitted). The court
first concluded that the legislature did not intend to provide the
increased benefit to judges retiring prior to the effective date of
the retirement system amendment. It then discussed the purpose
of the 1974 amendment at issue, which was to induce judges to
remain in service as judges. Given that purpose and the fact that
no incentive to remain on the bench can be offered to a judge who
has already retired, the "distinction created between judges who
retire prior to the amendment and those who retire after the
amendment is [not] arbitrary, unreasonable, or devoid of rational
basis." Hucrhes 282 N.W.2d at 168. On that basis, the Michigan
court held that the classification created by the amendment was
"rationally related to the object of the legislation in which it is
made." Hucrhes, 282 N.W.2d at 168. The Huches rationale is equally
applicable here.
On its face, as discussed above, the delayed effective date of
the amendment to § 19-5-502, MCA, establishes the legislature's
12
intent to provide the increased retirement benefit to those judges
retiring on or after the July 1, 1991, effective date. The fact
that the amendment created two classifications does not produce an
equal protection violation; to this extent, the delayed-effect
amendment is not unlike most legislation which, by its very nature,
contains or produces classifications regarding benefits,
applicability and the like by virtue of a change in statute at a
particular point in time. See Ameson, 864 P.2d at 1248.
Moreover, there is no dispute that the classification created
by the amendment "operates equally upon those within the particular
class." See Hushes, 282 N.W.2d at 167. All judges who retired
prior to July 1, 1991, receive the retirement benefits to which
they were statutorily entitled at the time of their retirement;
those who retired after July 1, 1991, also receive the retirement
benefits to which they were statutorily entitled at the time of
their retirement, including the increased benefit provided as of
that date via Section 3, Chapter 664.
In addition, as was the case in Hushes, one of the purposes of
Section 3, Chapter 664, even before the effective date was delayed,
was to provide an incentive to judges to remain in service by
increasing their retirement benefit for years of service in excess
of 15 years; indeed, the delayed effective date can be viewed as an
additional inducement in that judges with significant numbers of
years of service might be encouraged to remain in service not
merely until the July 1, 1991, effective date, but for some time
thereafter. There is no question but that the purpose of the
13
amendment, including the delayed effective date, is a legitimate
governmental interest. Given the stated purpose, and the fact that
the incentive to remain on the bench cannot be successful with
regard to judges retiring prior to its effective date, we cannot
say that the distinction between judges retiring prior to, and
after, the effective date of the amendment is in any way arbitrary,
unreasonable or devoid of rational basis. See Hushes, 282 N.W.2d
at 167-68.
Gulbrandson advances an argument that the distinction at
issue relates not to when a judge retires, but to equality of
retirement benefits among judges with similar years of service. He
compares his own situation to that of retired district court judge
Jack Green, who retired December 31, 1992. At the time of their
respective retirements, each was credited with 29 years and 8
months of service. With regard to the amount of retirement benefit
received for years of service in excess of 15 years, Judge Green
received 1.785% per year, while Gulbrandson received 1% per year.
The fatal flaw in this comparison relates to our discussion
regarding the plain meaning of § 19-5-502, MCA, as amended; namely,
that the amount of retirement benefit to which a member of the JRS
is entitled is calculated pursuant to the statutes in effect at the
time of the retirement. When Gulbrandson retired, § 19-5-502, MCA
(1989), entitled him to 1% of current salary per year for each year
of service exceeding 15 years. Judge Green, on the other hand,
retired well after the effective date of the amendment to § 19-5-
502, MCA, and, therefore, was entitled to the increased retirement
14
benefit which became effective on July 1, 1991. While this
difference in benefit entitlement between retiring judges with
identical periods of service may be less than perfect, such
imperfection does not mandate a conclusion that it violates
Gulbrandson's right to equal protection of the laws. See Ameson,
864 P.2d at 1248. In addition, relative to our discussion of the
purpose of the amendment, that purpose was furthered by Judge
Green's remaining in service after its effective date; it could not
have been furthered by Gulbrandson, who retired prior to
eligibility for the increased retirement benefit.
We conclude that § 19-5-502, MCA, as amended by Section 3,
Chapter 664, is not unreasonable or arbitrary. We further conclude
that it is rationally related to a legitimate governmental interest
in providing an incentive for judges remaining in service for
longer periods of time.
We hold that the retirement benefit increase provided in
Section 3, Chapter 664, Laws of 1989, an amendment to § 19-5-502,
MCA, which became effective on July 1, 1991, does not apply to
members of the Montana Judges' Retirement System who retired after
the enactment date, but prior to the effective date, of the
legislation. Therefore, we answer the certified question in the
negative.
15
We corlcur.
Chief Justice
16
Chief Justice J. A. Turnage respectfully dissents.
The majority opinion correctly states that this Court's
function is to determine the legislature's intent in the passage of
a statute. The majority then goes on to say that based on the
plain language of the statute Retired Justice L. C. Gulbrandson is
not entitled to the benefits of § 19-5-502, MCA, as amended by
Chapter 664 of the 1989 Montana Session Laws.
Resorting to this method of judicial analysis ignores a long
history of § 19-S-502, MCA, and Chapter 664 of the Session Laws of
1989. This Court's resorting to the "plain language" analysis
affords an easy solution to the issue before this Court, neat,
plausible and wrong.
To arrive at a just and correct solution of the issue before
this Court it is absolutely necessary to fully understand the
history and political maneuvering that underlies the 1989 amendment
to § 19-5-502, MCA. Failure to do so can only result in a denial
of justice and fairness in this case.
For several years, the Montana Judges' Retirement System had
been the focus of certain actuarial consultants and personnel of
the Montana Public Employees' Retirement System who consistently
proclaimed that the Judges' Retirement System was under-funded. I
respectfully submit that the following factual information set
forth herein clearly establishes that for more than ten years last
past and presently, the System is not under-funded. The following
information obtained from the records of the Public Employees'
Retirement Board are most interesting and factually important.
STATE OF MONTANA
JUDGES’ RETIREMENT SYSTEM
ADDITIONS TO NET ASSETS AVAILABLE FOR BENEFITS
FISCAL ANNUAL NET ASSETS
m REVENUE% EXPENSES ADDITIONS AVAILABLE
06/30/85 1,486,109 420,788 1,065,321 6,614,467
06/30/X6 1,606,206 451,163 1,155,043 7,769,510
06/30/87 1,678,660 442,168 1,236,492 9,006,002
06/30/88 1,653,856 453,033 1,200,823 10,206,825
06/30/89 1,829,743 465,282 1,364,461 11,571,286
06/30/90 1,984,lOO 613,484 1,370,616 12,941,902
06/30/91 2,065,536 580,088 1,485,448 14,427,350
06/30/92 2,169,853 667,957 1,501,896 15,929,246
06/30/93 2,409,254 802,217 1,607,037 17,536,284
06/30/94 2,5.52,411 749,612 1,802,739 19,339,023
It is important to note that actuarial consultants have
indulged certain assumptions that are not supported by logic or the
facts or the actuary has failed to take into consideration certain
other relevant and Very important facts concerning judges'
retirement. For example:
(1) Assumption that the rates of salary increase for judges
are based upon an assumed compounded growth rate of 6.5 percent per
annum. If such were the case, Montana judges certainly would not
be the lowest paid judges in the nation. If the actuary was
correct, Montana district judges commencing January 1, 1995, would
be receiving a salary of $98,309 annually, or $35,131 more than
they are actually receiving.
(2) Another actuarial assumption is that the obligation of the
pension reserves must be adjusted to present value which, of
course, assumes that every judge will retire tomorrow and there
18
never will be any further contributions made to the system from all
of the present revenue sources and that all of the present value
obligations would have to be paid out on the same date. This
assumption, although with due respect may be a standard actuarial
approach, simply defies logic for the reason that it cannot and
will not ever occur.
(3) A relevant fact that should be considered by the actuary
in making assumptions is the fact that judges are not entitled to
draw normal retirement until they have reached the age of sixty-
five years. This requirement does not apply to any other public
employee system in the State of Montana. The result of such
requirement is, of course, that judges, when they do commence to
draw retirement, are at a relatively advanced age and based on the
mortality tables cannot expect to draw their retirement for any
extended number of years. A review of the retirement board records
relating to deceased judges will most certainly bear out this fact
of life.
(4) It does not appear that the actuary has taken into account
that many of the present judges are entering the system at a much
earlier age and contributions will be made by them and the employer
for an extended period of time that statistically did not take
place in years past. These judges, of course, will also be
required to wait before receiving any benefit from the system under
normal retirement until they have reached the age of sixty-five
years.
19
From the foregoing revenues and expenses from June 30, 1985,
to June 30, 1994, it is readily apparent that revenues have been
exceeding expenses by over three times annually and that the annual
additions to and growth of the fund assets are exceeding well over
$l,OOO,OOO in each of those ten years. The net assets of the
Judges' Retirement System will, of course, continue to grow at the
experienced rate or in excess thereof. With prudent investment of
the funds, this system will be in a position to loan money to the
United States of America to bail out its Social Security System in
a few more years.
What does this history of the System's revenues and expenses
have to do with the issue in this case? Everything.
This inquiry leads us to the history of what is now § 19-5-
502, MCA, as amended by Chapter 664 of the Montana Sessions Laws of
1989. Prior to the 1987 session of the Montana legislature, it was
apparent that there was an unfairness in the Judges' Retirement
System. What is now § 19-5-502, MCA, from the inception of the
System, penalized judges who had served fifteen years by reducing
their retirement benefits to 1 percent credit for each year of
service after fifteen years. This reduction was far below the
annual service credit for the first fifteen years of service and
was nearly twice lower than the annual service credit of public
employees in the state. In an attempt to bring some equity into
this situation, there was introduced Senate Bill 365 in the 1987
session which would have raised the 1 percent annual credit after
fifteen years to 2 percent. Senate Bill 365 was heard in the
20
Senate and House Committees. During the hearings, it was evident
that personnel of the Public Employees' Retirement System succeeded
in alarming the committee members that the Judges' Retirement
System was in great jeopardy and under-funded. Please note, for
each of the fiscal years ending June 30, 1986, and June 30, 1987,
the net assets of the funds had increased by well over $l,OOO,OOO
for each of those years. The net result was that the House of
Representatives failed to approve the Bill and the Bill died,
notwithstanding the fact that the Bill carried with it a funding
mechanism to increase contributions to the Judges' Retirement
System over and above any anticipated additional expenses by virtue
of the increased service credit.
It was apparent during the 1987 legislative hearings that
certain members of the legislature were of a mind that any
legislation that benefited judges was not going to meet with their
approval. Unfortunately, this carried over into the 1989 session.
During the 1989 session, Senate Bill 241 was introduced and is
now Chapter 664 of the 1989 Montana Session Laws. It amended § 19-
5-502, MCA, into its present form.
Senate Bill 241 contained a funding provision which more than
exceeded any cost to the system by raising the service retirement
credit from 1 percent to 2 percent. In spite of the written
testimony of the Public Employees' Retirement Division Administra-
tor that the Board did not oppose Senate Bill 241 and that it did
provide a method of funding that more than off-set any of its
costs, the Division persisted in claiming that the Judges'
21
Retirement System was under-funded in spite of the fact that for
the fiscal year June 30, 1988, the additions to the retirement
aSSets increased by well over $l,OOO,OOO and on June 30, 1989, the
assets increased by $1,364,461.
The House Committee on State Administration held hearings on
the Bill and again, in spite of the system not opposing the Bill,
a representative of the Public Employees' Retirement Division went
into great length in again raising fears of under-funding of the
judges' retirement system. It was apparent that the usual
opponents to any legislation that would benefit the judiciary was
again arguing that the Judges' Retirement System was under-funded
and the Committee initially refused to approve the Bill on a tie
vote and the Bill was tabled. Thereafter, political maneuvering
obviously took place and the Bill was taken off of the table,
amended and passed with the increased annual service credit benefit
reduced from 2 percent to 1.785 percent, the same as other public
employees of the State of Montana were receiving. The most
significant amendment to Senate Bill 241, and which clearly
evidences political maneuvering that would make Machiavelli blush,
is found in what then appeared as section 5 of the Bill, and which
section does not appear in our Montana Code Annotated, reads as
follows:
Section 5. Review of actuarial valuation. The public
employees retirement board shall provide to the 52nd
legislature, by January 10, 1991, a copy of the most
current actuarial valuation of the judges' retirement
system. The legislature shall review the actuarial
soundness of the judges' retirement system, and the 52nd
legislature may eliminate or modify the effect of [this
act].
22
The obvious purpose of the legislators who were not particu-
larly supportive of the judiciary in offering this amendment
certainly cannot be attributed to a factual fear of under-funding
of the Judges' Retirement System in view of the fact that the
System had been growing with excess revenues over expenses at well
over $l,OOO,OOO per year for several years prior to the 1989
legislative session. It is apparent that the opponents of the Bill
included this amendment for the purpose of having the Bill before
them again in the 1991 legislative session when they could
effectively repeal the 1989 increased service credit benefit. 1n
any event, certain of the opponents to this Bill did not return to
the 1991 legislative session and there was no effort to repeal the
increased service benefits.
The foregoing basic facts are all set forth in the appendix to
plaintiff's brief and are a part of the record in this case. Such
facts support the observations of the undersigned.
With the foregoing in mind, it is obvious that the legislative
intent behind what is now Chapter 664 of the Montana Session Laws
of 1989 cannot be determined by simply looking at the bare wording
of Senate Bill 241.
In this Court's search for justice, it would be unwise to
dispose of this case based on a plain language doctrine.
There is a further point that gives rise to the necessity of
interpreting the legislative intent in this manner. If, as claimed
by the majority, that section 3 of Chapter 664 is only to be
effective on July 1, 1991, this raises a substantial question as to
23
whether or not any portion of section 3 of the Act, which is the
entirety of 5 19-5-502, MCA, likewise is not to be effective until
July 1, 1991. If such be the case, for a two-year period from July
1, 1989, to July 1, 1991, no member of the Judges' Retirement
System could receive any credit for those two years of service.
Such "plain language" approach technically could lead to an absurd
result that the majority would likely disavow.
It should be noted that major portions of Senate Bill 241
became effective July 1, 1989, particularly those portions that
provided additional monies to the Judges' Retirement System.
If the legislature clearly intended that no judge retiring
prior to July 1, 1991, would be entitled to any of the .785 percent
service credit retirement, they simply could have stated in the
amendment to 5 19-5-502, MCA, the following: "No judge retiring
prior to July 1, 1991, shall be entitled to the increased service
credit of .785 percent per year for each year of service after
fifteen years." If such was their intent, they could have easily
made that additional statement, thereby avoiding the underlying
litigation and the necessity for this Court to interpret legisla-
tive intent.
It must also be noted that Retired Justice Gulbrandson is not
seeking the increased service credit benefit from the effective
date of the act, July 1, 1989, but only from the July 1, 1991, when
the increased service credit became effective. Retired Justice
Gulbrandson is the only retired person that could possibly be or
has been affected by the July 1, 1991, effective date of the
24
increased service credit. He is the only member of the Judges'
Retirement System with more than fifteen years service credit that
retired between July 1, 1989, and July 1, 1991. He is entitled,
prospectively, to the benefit of the act increasing the service
credit effective July 1, 1991. Denying him the benefit of Senate
Bill 241 for an increased service credit commencing July 1, 1991,
which is what Retired Justice Gulbrandson is requesting, does not
involve a retroactive request for benefits--only a prospective
right to those benefits subsequent to July 1, 1991.
Denial of the prospective benefits subsequent to July 1, 1991,
violates Retired Justice Gulbrandson's rights secured under the
Contracts Clause, Article I, Section 10, Clause 1, of the United
States Constitution. On September 10, 1989, when Retired Justice
Gulbrandson concluded his judicial career, Senate Bill 241 had been
law since it was approved by the Governor on May 12, 1989. The
basic effective date of the act had been law since July 1, 1989.
Therefore, Retired Justice Gulbrandson had a constitutionally-
protected contract right to rely upon the benefits that are due him
under the act before he retired.
Retired Justice Gulbrandson has also been denied equal
protection of the law as guaranteed under the Fourteenth Amendment
to the United States Constitution, which classifies him in such a
manner as to make the classification arbitrary and capricious.
Even under the reduced rational basis test of equal protection, the
State cannot demonstrate any legitimate rational purpose in denying
25
the prospective benefits based upon the clear record of the assets
of the Judges' Retirement System.
Of the nearly one hundred past and present members of the
Judges' Retirement System, Retired Justice Gulbrandson is the only
person that could possibly be affected by 13 19-5-502, MCA. NO
other person retired between the approval date of the act, May 12,
1989, and July 1, 1991. The denial of benefits to Retired Justice
Gulbrandson simply cannot set any precedent, affect any other
person and like circumstances simply will never again reoccur.
Retired Justice Gulbrandson served the people of Montana with
dedication, diligence and ability for twenty-three years as
District Judge of the Seventh Judicial District and for six years
and eight months as a Justice of the Montana Supreme Court--a total
of twenty-nine years and eight months of judicial service.
During Justice Gulbrandson's service as a District Judge in
the Seventh Judicial District from January 4, 1960, to January 2,
1983, he was the only judge serving the District that comprised the
Counties of Richland, Dawson, McCone and Wibaux. During much of
that time this judicial district was experiencing a judicial
explosion because of an oil development boom that prevailed during
nearly all of that period of time. It is ironic that after all of
those years L. C. Gulbrandson provided judicial service to the
Seventh Judicial District as the lone district judge thereof, the
legislature in 1984, the year that Retired Justice Gulbrandson
assumed his seat on the Montana Supreme Court, increased the number
26
of judges in the Seventh Judicial District by adding an additional
judge.
There is ample precedent that pension statutes should be
liberally construed in favor of the persons intended to be
benefited thereby and examined in their entirety to determine the
legislative intent. Such laws must be construed equitably in the
interest of the state and the employee and applied so as not to
achieve an unreasonable result. 67 C.J.S. Officers § 243.
The Public Employees' Retirement Board was arbitrary and wrong
in denying Retired Justice L. C. Gulbrandson, prospectively, the
service credit benefits after July 1, 1991.
The certified question cannot be simply answered by a "plain
language" analysis. To do so, would result in a denial of justice.
I would answer the certified question of the United States
District Court by stating that the benefit increase provided for in
Chapter 664, Laws of 1989, an amendment to § 19-5-502, MCA,
provides its benefit prospectively to Retired Justice L. C.
Gulbrandson from July 1, 1991.
Answering the certified question in this manner is a fair,
just and correct interpretation of legislative intent.
As judges, we should make no judgments where there is no
fairness or compassion.
I wish to also note that the legislature subsequently amended
fi 19-5-502, MCA, by Section 103 of Chapter 265, Laws of 1993. This
amendment, effective July 1, 1993, obviously repealed Section 3 of
27
Chapter 664, Laws of 1989, by rewriting § 19-5-502, MCA. It now
reads:
Service retirement benefit. Upon retirement from
service, a member must receive a service retirement
benefit equal to 3 l/3% per year of the member's current
salary for the first 15 years of credited service and
1.785% per year for each year of credited service after
15 years.
In so amending § 19-5-502, MCA, the legislature obviously has
repealed the version that was enacted as Chapter 664, Laws of 1989.
Therefore, the effective dates contained in Chapter 664, Laws of
1989, relating to 5 19-5-502, MCA, no longer apply
The statute, as enacted in Chapter 265 Laws of 1993, by the
plain language thereof, states that a member (retired district
judge or justice) is entitled to a service retirement benefit of
1.785% per year for each year of credited service after fifteen
years.
This includes Retired Justice Gulbrandson and other retired
members of the system.
Even though I believe him to be entitled to the increased
service credit from July 1, 1991, in all events, Retired Justice
L. C. Gulbrandson would be entitled to this benefit from July 1,
1993.
,, f’
J/f- ,’
Chief Justice
Justice Fred J. Weber joins in
Justice Fred J. Weber dissents as follows:
I respect the careful analysis in the opinion which concluded
that a judicial member is entitled to the increased benefits only
if he or she retired on or after July 1, 1991. I do disagree with
the fundamentals upon which the analysis is made. I join in the
dissent of Chief Justice J.A. Turnage.
I conclude it is essential to carefully analyze the Act
itself. Chapter 664 contained the following words: "Be it enacted
by the Legislature of the State of Montana." This met the enacting
requirements of § 5-4-101, MCA. Chapter 664 was approved by the
Governor on May 12, 1989. This met the requirements of § 5-4-302,
MCA, with regard to approval by the Governor. The result is that
the entire Chapter 664 became law on May 12, 1989
The title to Chapter 664 stated:
AN ACT GENERALLY REVISING THE JUDGES' RETIREMENT SYSTEM;
REALLOCATING THE DISTRIBUTION OF DISTRICT COURT FEES TO
MAINTAIN THE ACTUARIAL SOUNDNESS OF THE SYSTEM;
INCREASING THE PERCENTAGE OF SALARY USED TO CALCULATE A
MEMBER'S SERVICE RETIREMENT ALLOWANCE AFTER 15 YEARS OF
SERVICE IN THE SYSTEM; AMENDING SECTIONS 19-5-404, 19-5-
502, AND 25-l-201, MCA; AND PROVIDING EFFECTIVE DATES.
(Emphasis added.)
In summary the title shows that the Act generally revised the
Judges' Retirement System, reallocated district court fees to
maintain actuarial soundness, increased percentage of salary for
member's service retirement allowance after 15 years, amended code
sections with regard to fees and finally provided effective dates.
The title indicates that the intent of the legislature was to
increase the percentage used to calculate a judge's retirement
after 15 years service.
29
I will next consider the seven sections which make up Chapter
664. Section 1, amended § 19-S-404, MCA, to provide that the
portion of the fee for filing a dissolution of marriage and a
motion for substitution of a judge shall be transmitted by the
clerk of district court to the State. I do point out that 5 19-5-
404, MCA, includes provisions for the transmission of other fees,
none of which were amended. Note that Section 1 became effective
July 1, -
1989I so that the described fees were transmitted to the
State commencing on that date.
Section 2, provided that the same 5 19-5-404, MCA, was amended
to provide that the State was required to first deposit in the
retirement fund an amount equal to 34.71% of the salaries paid to
district court judges and supreme court justices--prior to this
amendment, the amount was equal to 31% of such salaries. Note that
this requirement for the increased payment by the State to the fund
was effective July 1, 1991.
Section 3, contained the amendment that upon retirement from
service the State annuity plus the member's annuity will provide a
total retirement allowance of 3 l/3% per year of a judge's final
salary for the first 15 years' service and 1.785% per year for each
year's service after 15 vears. Prior to its amendment, the amount
after 15 years was 1%. This Section 3 is stated to become
effective July 1, 1991, and is the primary section at issue in this
case.
Section 4, provides for amendments in § 25-l-201, MCA, which
provides that of the fee for filing a petition for dissolution of
marriage, $35 must be remitted to the State to be deposited as
30
provided in 5 19-5-404, MCA; and further provides that the fee for
filing a motion for substitution of judge must be remitted to the
State to be deposited as provided in 5 19-5-404, MCA. Again note
that this Section 4 took effect on July 1, -I so those fees were
1989
remitted to the State following that date.
Section 5, provides as follows:
Review of actuarial valuation. The public employees
retirement board shall provide to the 52nd legislature,
by January 10, 1991, a copy of the most current actuarial
valuation of the judges' retirement system. The
legislature shall review the actuarial soundness of the
judges' retirement system, and the 52nd legislature may
eliminate or modify the effect of [this act].
Section 5 also became effective July 1, 1989. I emphasize that the
52nd Legislature in 1991 did QQ& eliminate or modify the effect of
Chapter 664
Section 6, pertains to rule-making authority which is not
pertinent here.
Section 7, provided:
Effective dates. (1) Except as provided in
subsection (2), [this act] is effective July 1, 1989.
(2) [Sections 2 and 31 are effective July 1, 1991.
In substance this provides that the Act is effective July 1, 1989,
with the exception of Sections 2 and 3 which are effective July 1,
1991
-.
The opinion concludes that as of the effective date of July 1,
- I Section 3 of the Act provides an increased retirement benefit
1991
to judges with more than 15 years' service "upon retirement from
service. I' The opinion then concludes that the plain meaning of the
statutory language is that a member is entitled to the increased
benefits upon retirement from service on or after July 1, 1991.
31
The opinion concludes that the foregoing is the plain, clear and
unambiguous language expressed by the legislature as to its intent
and permits no further interpretation. I do not agree with that
analysis.
When Chapter 664 is considered in its entirety, it explains
the reason for the different effective dates. In its reallocation
of district court fees to maintain actuarial soundness, Section 5
provided that the Retirement Board should provide to the
legislature a current actuarial valuation of the retirement system
and specifically required that the legislature review the actuarial
soundness and granted to the 1991 Legislature the right to
eliminate or modify the effect of this Act. Note that the
additional fees were collected for retirement fund purposes
commencing July 1, 1989, so that such fund payments were made for
two years. I note here that the figures contained in Chief Justice
Turnage's dissent show that the June 30, 1988 figures, which would
have been available to the 1989 Legislature, demonstrated net
assets available of $10,206,825. The 1991 Legislature would have
had available the June 30, 1990 figures, which showed net assets
available of $12,941,902, an increase of over $2,700,000 in two
years. On its face this suggests the actuarial soundness of the
fund and demonstrates a reason for the 1991 Legislature not
eliminating or modifying the effect of Chapter 664.
The opinion concludes that the plain meaning of the statutory
language is that a judge is entitled to increased benefits only if
he retired from service on or after July 1, 1991. 1n substance,
that seems to be a conclusion that Section 3 of the Act had
32
absolutely no effect until July I, 1991. I cannot agree with such
a conclusion. Section 3, with its provision of 1.785% per year for
each year's service after 15 years, was enacted and in effect from
and after May 12, 1989. I conclude that the entire Chapter 664 as
enacted and approved by May 12, 1989, was in effect from and after
that date and has not been either amended or eliminated.
The opinion then reaches the following conclusion with which
I emphatically disagree:
The terms of Gulbrandson's retirement benefit
contract are determined pursuant to the statutes in
effect at the time of his retirement on August 31, 1989.
The amendment to 5 19-s-502, MCA, via Section 3, Chapter
664, was not yet effective on that date. Therefore, we
conclude that Gulbrandson's contract does not include the
increased retirement benefit contained in Section 3,
Chapter 664 and, as a result, his contract was not
impaired by denying him entitlement to that increased
benefit.
I agree with the opinion in its statement that the terms of
Gulbrandson's retirement benefit contract are determined pursuant
to the statutes in effect at the time of his retirement on August
31, 1989--the critical question becomes whether or not Chapter 664,
which had been enacted in its entirety and approved by May 12,
1989, could be considered as being in effect in its entirety. In
substancec the conclusion of the opinion is that the including of
Section 3 of Chapter 664, had absolutely no effect until July 1,
1991. I do not agree with that analysis. Chapter 664 rebuts the
opinion's conclusion as it places in effect two charges in the form
of fees which are to be paid to the State and remitted by the State
into the Retirement Fund for ultimate payment to the judges.
In applying a contract law theory to the contract between
Gulbrandson and the State upon his retirement on August 31, 1989,
33
I conclude that the entire Chapter 664 as enacted and approved by
May 12, 1989, became a part of that contract. He had the right to
rely upon this contact and to the benefits thereof when he retired
August 31, 1989. Gulbrandson of course became subject to the
express terms of Section 3, which provided that the additional
.785% would not be payable prior to July 1, 1991.
I would therefore answer the certified question of the United
States District Court by concluding that the benefit increase
provided in Chapter 664 provides its benefit to Gulbrandson from
and after July 1, 1991.
34
Justice William E. Hunt, Sr., dissenting.
I dissent.
Even a casual reading of the majority and dissenting opinions
filed in this case reveals that there is little left to be said by
way of analysis of the law or its application to the facts of this
case, and this dissent will not add to those arguments. I have
only to say that this Court can and should, in fairness, law, and
equity, recognize the contract that existed between the State and
Retired Justice Gulbrandson who performed his part of the agreement
in full by paying his share of the premium into the retirement fund
and serving as judge and justice in the Montana judicial system for
nearly 30 years. I do not see how we can do otherwise.
35
August 24, 1995
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA
Gulbrandson v. Carey
Court: Montana Supreme Court
Date filed: 1995-08-24
Citations: 901 P.2d 573, 272 Mont. 494, 52 State Rptr. 843
Copy Citations