service, are in the nature of compensation for services previously rendered for which full and adequate compensation was not re is free and not compelled, must be governed by moral and honorable obligations, or solicitude for the public welfare. When the State takes from the public treasury a sum of money and gives it to a corporate body for the relief of deserving beneficiaries, it does one of two things: it either bestows a charity, or recognizes and discharges an obligation due from it to the recipients. The former it cannot do except in specified cases. The latter it may always do, for the constitutional provision was not intended and should not be construed to make impossible the performance of an honorable obligation founded upon a public service, invited by the State, adopted as its agency for doing its work, and induced by exemptions and rewards which good faith and justice require should last so long as the occasion demands. We do not apprehend that the wise prohibition of the Constitution is weakened or narrowed by the construction." In a number of States a tax imposed upon foreign fire insurance companies and directed to be applied to the benefit of the members of the fire departments has been held to be unconstitutional on grounds which do not affect the power of the legislature to authorize municipalities to pension its agents and employees. See San Francisco v. Liverpool &c. Ins. Co., 74 Cal. 113; Henderson v. London and L. Ins. Co., 135 Ind. 23; State v. Merchant Ins. Co., 12 La. An. 802; State v. Wheeler, 33 Neb. 563; Philadelphia Assoc. v. Wood, 39 Pa. St. 73. On the other hand, such tax has been held to be within the power of the legislature in Trustees of Exempt Firemen's Fund v. Roome, 93 N. Y. 313, supra; Firemen's Benevolent Asso. v. Lounsbury, 21 Ill. 510; Fire Dept. of Milwaukee v. Helfenstein, 16 Wis. 136. In Matter of Mahon v. Board of Education, 68 N. Y. App. Div. 154 (aff'd 171 N. Y. 263), Laughlin, J., said: "Such pension laws, so called, are now quite common, both in State and federal legislation. These annuities, after the expiration of the period of active service, are not gratuities, but are in the nature of compensation for the services previously rendered for which full and adequate compensation was not received at the time of the rendition of the services. In other words, it is in effect pay withheld to induce longcontinued and faithful service. Such statutes are designed to benefit the public service in two ways: First, by encouraging competent and faithful employees to remain in the service and refrain from embarking in other vocations; and second, by retiring from the public service those who, by devoting their best energies for a long period of years to the performance of duties in a public office or employment have, by reason thereof or of advanced age, be come incapacitated from performing the duties as well as they might be performed by others more youthful or in greater physical or mental vigor. Provision is thus made for the partial support of such teachers when their retirement without such provision was deemed inequitable and but for such provision doubtless would not be enforced. These and other considerations will sustain such legislation from successful attack where the legislature has limited the application of the law to those who are in the public service or employ at the time of its enactment." In Commonwealth v. Walton, 182 Pa. 373, the city councils of Philadelphia appropriated by ordinance the sum of $10,000 for the charter purposes of the Pension Fund Association, a corporation organized to pay pensions to members of the association and to families of deceased members. Its membership was composed of persons belonging to the police force. It was held that the contribution was for a proper municipal purpose; that it was not contrary to any constitutional provision; and that statutory authority to the city "to make, ordain, and establish such and so many laws, ordinances, and regulations as shall be necessary for the welfare and comfort of the city" conferred power on the city council to make the appropriation. Sterrett, C. J., quoted the provision of the Pennsylvania Constitution that "The general assembly shall not authorize any city to obtain or appropriate its money for or loan its credit to any corporation, association, or individual," and said: "It is evident from an examination of the cases on the subject, that no strictly legitimate municipal purpose was in ceived at the time of the rendition of the services. It is in effect pay withheld to induce long-continued and faithful service, and tended to be prohibited. The evident purpose of the prohibition was to confine municipalities to the objects for which they were created and to restrain the legislature from authorizing any perversion of them. By the Act of March 17, 1789, which appears to be still in force, the city councils of Philadelphia 'have full power and authority to make, ordain, and establish such and so many laws, ordinances, and regulations as shall be necessary for the welfare and comfort of the city.' We have no right to assume, nor is there anything from which it may be fairly inferred, that the constitutional prohibition in question was intended to revoke or curtail any of the powers or authority with which the city councils were theretofore vested by the comprehensive grant above quoted. It is not even suggested that a reasonable appropriation by the councils for the creation or maintenance of a police pension fund is not an appropriation to a strictly municipal use, and 'necessary for the welfare and comfort of the city.' A judiciously administered pension fund is doubtless a potent agency in securing and retaining the services of the most faithful and efficient class of men connected with that arm of the municipal service in which every property owner and resident of the city is most vitally interested. Reasons in support of this proposition need not be stated in detail. They are such as readily suggest themselves to every reflecting mind." The court also said that if the councils were satisfied that the distribution of the fund would be better effected through the agency of the association than by any agency of their own creation, they had a right to so provide. See also Commonwealth v. Barker, 211 Pa. 610. In Massachusetts, the latest dicta of the Supreme Court seem to sustain the view that it is within the power of the legislature to authorize a municipality to grant pensions for long and meritorious services. In Mead v. Acton, 139 Mass. 341, the court held that a statute authorizing a town to pay bounties to soldiers who re-enlisted in a regiment during the Civil War was unconstitutional. Morton, C. J., said, arguendo: "In any view we can take of the statute the payments it contem plates are mere gratuities or gifts to individuals. The principle would be the same if a town should vote a gratuity or a pension to one who had rendered services as an officer or was in any way entitled to its gratitude. This a town has not the power to do, even with the sanction of the legislature. A statute conferring such power is unconstitutional, because it authorizes raising money by taxation for the exclusive benefit of particular individuals, and appropriates money for a private purpose which can only be raised and used for public objects." In Kingman v. Brockton, 153 Mass. 255, the court held that the legislature has no power to authorize a city or town to appropriate money for the erection of a building to be devoted in part to the use of a post of the Grand Ármy of the Republic so long as such post should continue as an organization. Allen, J., said: "If a city or town may be authorized to give such assistance to a body of persons who have been soldiers, or sailors in the war, the same principle would seem to extend so far as to include those who have rendered other great and meritorious services, and thus are entitled to public gratitude, such, for example, as societies of disabled or past firemen or policemen." He expressed the opinion that this could not be done. But in Opinion of the Justices, 175 Mass. 599, the court, in answer to a legislative inquiry, expressed the opinion that the legislature may within the Constitution appropriate money to pay the widow, heirs, or legal representatives of a person who died while holding an office, the salary payable from the treasury of the State or of a municipality for any period of time to which such person would have been entitled if living and continuing to hold office, if it can fairly be thought that the public good will be served by such grant, but not where the only advantage is such as may be incident and collateral to the relief of a private citizen; and it may also authorize a municipality to appropriate money for that purpose where the person died holding a municipal office, assuming that the legislation on the subject will so far specify the object and occasion as to show that the expenditure is for the the public benefit accrues in two ways: first, by encouraging competent and faithful employees to remain in the service and refrain from embarking in other vocations; and, second, by retiring from the public service those who by devoting their best energies for a long period of years to the performance of duties in a public office or employment have, by reason thereof or of advanced age, become incapacitated from performing the duties as well as they might be performed by others more youthful or in greater physical or mental vigor.' But the constitutionality of municipal pension laws is not uniformly conceded, even when the beneficiaries are in public good. In reaching this conclu- the promotion of loyalty and patriotsion the court said that while the power ism, by the payment of money, the to pay gratuities to individuals does erection of statues, or the bestowal of not exist, yet when a public purpose can medals, decorations, or other badges be carried out or helped by spending of honor. public money, the power of the legis lature is not curtailed or destroyed by the fact that the money is paid to private persons, who had no previous claim to it of any kind. It referred to the military pensions granted by the Federal government and pointed out that its powers in that respect were generally recognized and unquestioned. If a man has deserved greatly of the Commonwealth by civil services the public advantage of recognizing his merit may stand on ground as strong as that for rewarding a general. It is impossible to foresee the possibilities of genius or distinguished worth and settle in advance the tariff at which its action shall be paid. With reference to its opinions in Mead v. Acton, 139 Mass. 341, and Kingman v. Brockton, 153 Mass. 255, it said that some of the language used therein might need qualification. In Opinion of the Justices, 186 Mass. 603, the court adhered to its views that legislation attempting to give bounties to the veterans of the Civil War who served without bounties was unconstitutional, but declared that it expressed no opinion on the subject of pensions to soldiers, as the statute did not purport to grant pensions or rewards for meritorious services, or money for the relief of present necessities. In Opinion of the Justices, 190 Mass. 611, it declared that a statute attempting to equalize bounties paid to soldiers of the Civil War, would be unconstitutional as authorizing for a private purpose, but that the legislature might, by statute, reward distinguished public services, with a view to In Ontario, the councils of cities and towns may pass by-laws to aid by annual money grant or otherwise superannuation and benefit funds for the benefit of members of the police force and fire brigades, and of their families, and also to aid by annual money grant or otherwise the establishment and maintenance of official benefit funds for employees of the corporation (other than employees of the police force and fire brigades) and their families. Biggar's Municipal Manual (Canada, 1900), p. 800. Any municipal council may also grant to any municipal officer, who has served at least twenty years and who has become incapable through old age of further service, a sum not exceeding his aggregate salary or other remuneration for the last three years of his service, as a gratuity upon his removal or resignation. 55 Vict. ch. 42, $280 (see Biggar's Municipal Manual, Canada, 1900, p. 323). Without legislation there is no power in a municipal corporation to grant a gratuity of this nature. The decision of the council as to a gratuity when made under the circumstances within the limits prescribed by the statute is not reviewable by any Court. Reg. v. Sandwich, 5 Q. B. 895, s. c. 10 Q. B. 563. There is a distinction between a gratuity and an annuity. See Gibson v. East India Co., 5 Bing. N. C. 262; Clarke v. Imperial Gas Co., 4 B. & Ad. 315; Innes v. East India Co., 17 C. B. 351; Marchant v. Lee Conservancy, L. R. 8 Exch. 290. 1 Matter of Mahon v. Board of Education, 68 N. Y. App. Div. 154; aff'd 171 N. Y. 263. the service of the municipalities at the time when the statute granting the pension is enacted, or when the right to a pension accrues thereunder. Some authorities hold that, even under such circumstances, a grant of a pension is a mere gratuity for the benefit of the individual and is a diversion of public funds to the private use of an individual.' In State v. Ziegenhein, 144 Mo. and appropriating thereto a tax upon 283, the Supreme Court of Missouri foreign insurance companies is unconheld that a statute providing that per- stitutional upon a number of grounds, sons serving as policemen of St. Louis viz.: (1) as in conflict with the provifor twenty years may be retired from sion of the Constitution relating to the active service on half pay for the re- title of acts; (2) as not imposing a unimainder of their lives is unconstitu- form and equal rate of taxation and as tional as a grant of public money in applying to a portion of a class only; aid of or to individuals in violation of (3) as being the means of levying muthe express terms of the Constitution. nicipal taxes upon a fraction of a class Williams, J., who delivered the opinion and bestowing the taxes so levied upon of the court, said: "The act, however, a small fraction of the citizens. Henis in all essential features simply a derson v. London & L. Ins. Co., 135 'pension law,' and is properly so called. Ind. 23. It cannot be treated merely as providing compensation for services rendered before retirement and as part of the salary therefor. A salary payable from time to time during active service is received by each police officer, and the amount is fixed according to rank. The man who serves twenty years is entitled to no less during that period than he whose tenure is shorter. The policeman who remains on the force for twenty years less five days, and the one who retains his office for the full term, are paid during active service precisely the same sum, if they are of like rank. This must be deemed proper compensation for the time actually devoted to the public service. Nothing is withheld from the person who may serve twenty years, to be paid to him after he may be placed upon the 'retired list,' and after such retirement he is no longer subject to police duty and cannot be earning a salary. Acts, 1895, p. 235, par. 3. If he has been paid the same as other officers of shorter terms, for the time devoted to public duties, anything in addition thereto can only be regarded as a mere gratuity. The argument of the relator would establish the proposition that it is a mere matter of legislative discretion to give a salary after retirement to all officers of the State and its municipalities, provided they shall be elected or appointed after the passage of an act to that effect." In Indiana, it has been held that a statute creating a firemen's pension fund In Ohio, the Supreme Court has said that the subject matter of an act pensioning firemen - seemed to be of a general nature and therefore must have uniform operation throughout the State under the Constitution of that State, but as the question was not raised in the case it was not decided. Karb v. State, 54 Ohio St. 383, 391. In State v. Kurtz, 21 Ohio Cir. Ct. 261, a statute to create a pension fund and for the pensioning of teachers in school districts of cities of the second grade of the first class, was held to be unconstitutional for this reason. In State v. Hibbard, 22 Ohio Cir. Ct. 252 (aff'd without opinion, 65 Ohio St. 574), an act for pensioning of school teachers in school districts in cities of the third grade of the first class, being a law relating to public schools, was held to be a law of a general nature. It was also held that, as it only applied to one city, it violated the constitutional provision that laws of a general nature shall have a uniform operation throughout the State. The court also was of the opinion that the statute, in providing that a percentage of salaries paid to teachers should be deducted therefrom, and applied to create a school teachers' pension fund, violated the constitutional provision providing for uniform taxation of property, and also the provision of the bill of rights in that it took private property from one citizen for the benefit of another without his consent and against his will. But to be valid under constitutional requirements, the pensions must be conferred upon persons who at the time of receiving the right to them are officers or employees of the municipality. They cannot be conferred upon persons who had, previously to the grant, retired from the service of the city. A pension to such persons is an appropriation of public funds for the benefit of individuals, and a gift or gratuity.1 § 431. Pensions; Legislative Control over Right. The fund from which municipal pensions are paid is usually created by setting aside certain sources of public income, and frequently provision is made that a stated sum per month shall be retained or deducted from the compensation of each of the officers in the department who may become entitled to a pension. Although the sum so deducted from the officer's compensation is called a part of the officer's compensation in the statute, yet the officer never receives it or controls it, and he cannot prevent its appropriation to the fund in question. He has no power of disposition over it such as always accompanies ownership of property. A statute providing for such a deduction in legal effect says that the officer shall receive as compensation each month the net amount payable to him, and that in addition thereto the State or municipality will create a fund by appropriating the amount retained each month for that purpose, Matter of Mahon v. Board of Education, 171 N. Y. 263, aff'g 68 N. Y. App. Div. 154; People v. Partridge, 172 N. Y. 305, rev'g 74 N. Y. App. Div. 620. In Matter of Mahon v. Board of Education, 171 N. Y. 263, aff'g 68 N. Y. App. Div. 154, it was held that the grant of pensions to persons who had prior to the enactment of the statute ceased to be the officers, agents, or employees of a city, violated prohibitions of the Constitution against giving any money or property to or in aid of any individual and against granting any extra compensation to any public officer, servant, agent, or contractor, Cullen, J., said, "Extra compensation is compensation over and above that fixed by contract or by law when the services were rendered. No one would assert that as between private individuals there arises any equitable or moral obligation to pay for services more than the stipulated compensation, where no services have been rendered additional to those contemplated by the contract. There was no moral obligation on the city of New York to establish a pension system in favor of teachers. Most of the servants of the State and most of the teachers in public schools enjoy no right to be pensioned for services. The question of establishing a system of pensions is one of policy, not of obligation. The legislature might well think that in a large city where teaching is adopted as a calling to be pursued for years, and often for life, it would be wise to provide a system of pensions as an inducement both to service at low wages and also to good conduct in service. But these considerations have no application to the case of officers or employees who are not in service at the time the pension system is established or in force. As to such persons the grant of a pension is a mere gratuity.' The payment of salary to an officer who has been removed from office, is not the payment of any debt or legal expense of the city, nor is it for any corporate purpose and is ultra vires. State v. Williams, 6 S. Dak. 119. |