OFFICES AND OFFICERS ‑- STATE ‑- EMPLOYEES' RETIREMENT ‑- NEW PENSION PLAN FOR SURVIVING SPOUSE

OFFICES AND OFFICERS ‑- STATE ‑- EMPLOYEES' RETIREMENT ‑- NEW PENSION PLAN FOR SURVIVING SPOUSE

A statute providing that whenever any person presently receiving a retirement allowance from the state employees' retirement system shall die leaving a surviving spouse, a monthly payment shall be made to the surviving spouse in an amount equal to one‑half the retirement allowance received by the retired person during his life, would be unconstitutional.

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                                                                   March 2, 1961

Honorable Avery Garrett
State Representative
47th District
Legislative Building
Olympia, Washington

                                                                                                                Cite as:  AGO 61-62 No. 17

Dear Sir:

            By letter, previously acknowledged, you have requested an opinion of this office relative to the constitutionality of proposed legislation adding a new section to chapter 41.40 RCW, to read as follows:

            "Notwithstanding any other provision of this chapter, whenever any person presently receiving a retirement allowance shall die leaving a surviving spouse, upon satisfactory proof of such facts made to it, the board shall order and direct that a monthly payment, equal to one‑half the retirement allowance received by the retired person at the time of his death, shall be paid to the surviving spouse during his life:  PROVIDED, That if such spouse marry he shall receive no further pension.  No spouse shall be entitled to any payments on the death of a retired person unless he has been married to such retired person for a period of at least five years prior to the date of death."

            In our opinion, the proposed legislation would be unconstitutional, for the reasons set forth in our analysis.

             [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            At the outset, we note that you have specifically directed our attention to Article II, § 25 (35th Amendment) of the Washington State Constitution, which provides as follows:

            "The legislature shall never grant any extra compensation to any public officer, agent, employee, servant, or contractor, after the services shall have been rendered, or the contract entered into, nor shall the compensation of any public officer be increased or diminished during his term of office.  Nothing in this section shall be deemed to prevent increases in pensions after such pensions shall have been granted."  (Emphasis supplied.)

            In the recent case ofLuders v. Spokane, 157 Wash. Dec. 55 [[57 Wn.2d 162]], 356 P. (2d) 331 (1960), the Washington Court held that under the above underlined portion of this constitutional provision, which was added by constitutional amendment in 1958, the pension of a retired former public officer or employee might be increased after it had been granted, even though such an increase would constitute a grant of extra compensation after the services of the recipient had been rendered.  This decision should be compared with Sonnabend v. Spokane, 53 Wn. (2d) 362, 333 P. (2d) 918 (1958), decided prior to the effective date of the 1958 amendment, wherein the court was compelled to hold such a pension increase to be constitutionally invalid.

            The court's reasoning in the Sonnabend case, supra, was based upon the proposition that the pension of a public officer or employee is not a gratuity, to be given or withheld at will, but rather is deferred compensation for services rendered.  Bakenhus v. Seattle, 48 Wn. (2d) 695, 296 P. (2d) 536 (1956); Aldrich v. State Employees' Retirement System, 49 Wn. (2d) 831, 307 P. (2d) 270 (1957).  Consequently, it followed that unless an exception was to be permitted in the case of pension increases, such a pension increase would constitute an unconstitutional grant of extra compensation after the services for which the compensation was paid had been rendered.

            The 1958 amendment, in effect at the time of the Luders case, supra, but not in effect at the time of theSonnabend case,supra, provided for such an exception.  As we read your letter, requesting an opinion of this office relative to the constitutionality of the above quoted proposed legislation (now known  [[Orig. Op. Page 3]] as House Bill 563, 1961 Legislative Session), your primary concern is with whether this constitutional amendment is broad enough to allow the pension provided by this bill.  However, your question does not limit itself to this specific constitutional provision.

            We have previously alluded to Bakenhus v. Seattle, supra, and Aldrich v. State Employees' Retirement System, supra, as having characterized the pension of a retired former public officer or employee as deferred compensation rather than as a gratuity.  In fact this characterization was born of necessity.  An examination of the specific provisions of our state constitution relating to the expenditure of public funds, as these provisions have been construed by our court, reveals clearly that in this state payments from the public treasury to private individuals may constitutionally be made only as (1) compensation for services rendered, or (2) gratuities for the aid of the economically needy.  The constitutional provisions to be noted are:

            (1) Article VIII, § 5, providing that:

            "The credit of the state shall not, in any manner be given or loaned to, or in aid of, any individual, association, company or corporation."

            (2) Article VIII, § 7, providing that:

            "No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm, or become directly or indirectly the owner of any stock in or bonds of any association, company or corporation."

            (3) Article VII, § 1 (14th Amendment), providing in pertinent part that:

            "The power of taxation shall never be suspended, surrendered or contracted away.  All taxes shall be uniform upon the same class of property within the territorial limits of the authority levying the tax and shall be levied and collected forpublic purposes only. . . ." (Emphasis supplied.)

             [[Orig. Op. Page 4]]

            InBakenhus v. Seattle, supra, the court, in characterizing a pension granted to a public employee as deferred compensation, observed that if it were to hold otherwise,

            ". . . we would be bound to hold further that such [pension] statutes are contrary to the provisions of . . . Art. VIII, § 7, of the Washington constitution and are therefore void."

            InGruen v. State Tax Commission, 35 Wn. (2d) 1, 211 P. (2d) 651 (1949), the court upheld a bonus to be paid to veterans of World War II against an attack based upon Article VIII, § 5, supra, stating:

            ". . . The funds raised by the sale of bonds are not to be given away.  They are to be paid for services rendered."  (p. 30)

            In cases where the legislature has purported to authorize payments from the public treasury to or on behalf of private individuals who have renderedno services, our court has refused to sustain the legislation unless predicated upon economic need on the part of the recipient.  Thus, inMorgan v. Department of Social Security, 14 Wn. (2d) 156, 127 P. (2d) 686 (1942), the court upheld so much of the senior citizens grant act (chapter 1, Laws of 1941) as provided for the payment of pensions to senior citizens "without resources or income."  However, inState v. Guaranty Trust Co., 20 Wn. (2d) 588, 148 P. (2d) 323 (1944) the court held another portion of the same act, providing for the payment of a one hundred dollar funeral expense allowance, to be unconstitutional insofar as it might apply to those who died leaving sufficient property to defray funeral expenses.  In thus concluding, the court observed, pertinently, as follows:

            ". . . Our constitution, as we construe it, forbids the use of public funds to aid any person unless he is in need, . . ." (p. 593)

            Thus, it may be seen that the instant proposed legislation, House Bill 563,supra, hangs very pointedly on the horns of a constitutional dilemma.

            Beyond doubt the pension to be paid thereunder would have to be paid from public funds.  In this connection the bill contains no provision altering present law (RCW 41.40.330 and 41.40.361) relative to employee and employer contributions to the retirement system, which contributions are geared, essentially, only to meet  [[Orig. Op. Page 5]] existing retirement allowance requirements on an actuarial basis.  Consequently, legislative appropriation of public funds would be necessary to finance the additional pension payments which are proposed.

            However, because the bill contains no requirement that the surviving spouse, to whom the pension is to be paid be in economic need of same, it cannot be sustained as a constitutionally proper gratuity.  State v. Guaranty Trust Co., supra; Morgan v. Department of Social Security, supra.

            Therefore, if the bill is to be sustained, it must rest upon the proposition that the pension to be paid to the qualified surviving spouse is to be paid as deferred compensation for the services previously rendered by the decedent former public officer or employee.  But if thus characterized and treated, the pension would, we believe, be contrary to Article II, § 25 (35th amendment), supra.  Because the bill relates to present rather than future retirees, payment of the pension, as deferred compensation, would constitute a grant of extra compensation, not in the permissible form of an increase in a previously granted pension, but as anew, additional, andseparate pension to be paid to the qualified surviving spouse of a present retiree over and above such retirement allowance as is payable to the retiree himself.  Under the bill, the state employees' retirement board would not be directed to pay an increased retirement allowance to the retiree.  Instead, it would be directed to pay to the surviving spouse "a monthly payment [for life or until remarriage], equal to one‑half the retirement allowance received by the retired person at the time of his death, . . ."

            Consequently, by way of summary, it is our opinion that (1) treated as a gratuity the pension here proposed would be unconstitutional because not necessarily related to the economic need of the recipient, and (2) treated as deferred compensation, the pension would be unconstitutional because (being payable only to the surviving spouse of a present retiree) it would constitute a grant of extra compensation outside the scope and field of permissible legislative activity as provided by Amendment 35, supra.

            In thus concluding, we are not unmindful that the courts of certain other jurisdictions have taken a somewhat more liberal view than has our own court with regard to the scope of constitutionally proper gratuities to private individuals.  SeePeople ex rel. McDavid v. Barrett, 370 Ill. 478, 19 N.E. (2d) 356 (1939), wherein the Supreme Court of Illinois upheld the payment of a pension to  [[Orig. Op. Page 6]] certain widows of deceased former state judges.  Interestingly enough, the Illinois court rejected an argument that such a pension would constitute a grant of extra compensation to the former judges themselves, emphasizing that the payments were to be made not to "public officers, agents, servants or contractors" but to a person not coming within one of these classes.  The court then proceeded to uphold payment of the pension even without any indication of need on the part of the recipient, on the rather vague ground that,

            ". . . the appropriations in controversy are of a public nature enhancing the general welfare and are therefore valid."  (p. 360)

            The requirement of economic need, clearly adopted in State v. Guaranty Trust Co., supra, would seem to preclude the expectability of a similar decision by our own court.

            Finally, in closing we should take care to note that nothing we have said herein is intended to reflect upon the constitutionality or unconstitutionality of legislation providing for pension for the surviving spouse of a future retiree from public service.

            We trust the foregoing will be of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

PHILIP H. AUSTIN
Assistant Attorney General