Opinion
10-15-1957
Kenneth Sperry, Long Beach, for appellants. Roger Arnebergh, City Atty., Bourke Jones, John J. Tully, Tr., Asst. City Attys., Weldon L. Weber, John F. Feldmeier, Deputy City Attys., Los Angeles, for respondents.
Ruth ABBOTT et al., Plaintiffs and Appellants,
v.
CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents.
Eva A. ADAMS et al., Plaintiffs and Appellants,
v.
CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents.
Glen M. ABNEY et al., Plaintiffs and Appellants,
v.
CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents.
Fred H. BEHRNS et al., Plaintiffs and Appellants,
v.
CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents.
Elizabeth M. MASON et al., Plaintiffs and Appellants,
v.
CITY OF LOS ANGELES, a municipal corporation, et al., Defendants and Respondents.*
Oct. 15, 1957.
Rehearing Denied Nov. 6, 1957.
Hearing Granted Dec. 12, 1957.
Kenneth Sperry, Long Beach, for appellants.
Roger Arnebergh, City Atty., Bourke Jones, John J. Tully, Tr., Asst. City Attys., Weldon L. Weber, John F. Feldmeier, Deputy City Attys., Los Angeles, for respondents.
SHINN, Presiding Justice.
Plaintiffs appeal from adverse judgments in five actions against the City of Los Angeles. The actions were consolidated for trial. There were findings and judgment in each case and the appeals are presented on a single record and set of briefs.
In the Abney and Behrns cases the plaintiffs, who are retired policemen and firemen, seek to establish pension rights as they existed prior to 1925. St.1925, p. 1085. A new charter was adopted in that year. It made changes in the pension rights of policemen and firemen as they had existed in 1923 and prior thereto. For convenience we will refer to the changes brought about by the new charter as amendments of the former charter, inasmuch as they effected alterations in pension rights, Further enactments in 1927, St.1927, p. 2008, and 1947, St.1947, p. 3677, effected changes in pension rights of widows of retired members. The plaintiffs in the Abbott, Mason and Adams cases are widows whose rights were affected. Pensions have been paid by the city to plaintiff members in the Abney and Behrns cases under the 1925 charter, and to plaintiff widows in the Abbott, Mason and Adams cases, in accordance with the charter of 1925 as amended. The plaintiff widows in these three cases contend that the 1927 alterations in their pension rights are invalid. A general statement of the several modifications of pension rights will serve as a background for our discussion of the several appeals.
From 1923 to 1925 the City Charter of Los Angeles provided a retirement pension after twenty or more years of service for members of the Police and Fire Departments of 50 per cent of the salary that might to fixed from time to time, even after a member's retirement, for the position held one year previous to retirement, plus an additional 1 2/3 per cent of such salary for each year of service in excess of twenty years and less than thirty years. A like fluctuating pension was also provided for members who might become physically or mentally incapacitated in the discharge of duties, or whose retirement was thereby made necessary. In case of the death of a member as a result of such injuries or sickness or after retirement, a pension was payable to his widow, child or children or dependent parents, and this pension amounted to one-half the salary fixed from time to time for the position held by the member at the time of his death or one year prior to the date of retirement. Sections 2, 3 and 4 of Article XI 1/2 of the Charter of 1889, as amended; Statutes 1926, p. 1408. Section 4 provided for widows' pensions.
Article XVII of the Charter of 1925 (Statutes 1925, p. 1085) substituted for sections 2, 3 and 4 above referred to, sections 181, 182 and 183. Section 183 provided for widows' pensions. For present purposes it will be sufficient to say that these three new sections were substantially the same as those for which they were substituted. Standing alone they would have continued in force the rights to pensions corresponding to increases or decreases in salaries for positions formerly held by pensioners. However, a section was added, numbered 184, reading as follows: 'That all pensions granted in accordance with the provisions of Sections 181, and 182 hereof shall remain in force and effect for the period granted, and any increase of decrease of salaries of active members of the Fire and Police Departments shall not in anywise affect the amount of the pensions paid to retired members of such departments, nor shall the amount of such pensions be changed for any other reason.'
Since widows' pensions were provided for by section 183, it is not questioned that section 184 did not affect those pensions; therefore, widows' pension rights remained as they had been prior to the adoption of the 1925 charter, namely, on a fluctuating basis, whereas pensions granted to members upon retirement for services or for disability were fixed, respectively, at the amount of salary attached to the position one year prior to date of retirement, or the date of retirement, and were not to be increased or decreased by any subsequent change in salaries for active members. However, in 1927, by amendment, section 184 was made applicable to the pensions of widows and other members of families. At the same time the retirement and widows' pensions were fixed on the basis of the average salary received by the members over a three-year period instead of the salary attached to the position held one year immediately preceding the date of retirement or at that date. Section 183 was again amended in 1947 in numerous particulars. These are not germane to the basic changes in widows' pensions effected by the 1927 amendment, and need not be considered.
The five actions were brought by pensioners in 1955, after demands were rejected by the city. In the Abney case the plaintiffs, 673 in number, and in the Behrns case, 30 in number, are retired members of one department or the other, who were in the department prior to 1925 and who retired after the 1925 amendment. For the purposes of our decision the plaintiffs in the two cases will be considered as a single class. All these plaintiffs performed substantial services prior to 1925 and substantially all of them retired prior to the 1947 amendment. They have been receiving fixed pensions at the rates at which they were granted in accordance with the 1925 amendment. Thereafter the salaries attached to the positions they formerly held have been increased from time to time and these plaintiffs seek to establish a right to have their pensions increased proportionately. They contend that the change from a fluctuating to a fixed pension was, as to them, invalid.
In the Adams and Mason cases, with a single exception, the plaintiffs are widows whose husbands were employed prior to 1927, and who rendered substantial services prior to 1927, but who retired after the amendment of 1927 and died while on retirement; they have been receiving widows pensions in fixed amounts at the rates at which they were granted in accordance with the 1927 amendment.
The seventeen plaintiffs in the Abbott case, with one exception, are widows of former members who retired and were granted pensions prior to 1927. All but four of the husbands retired prior to 1925. They were paid on the fluctuating scale while they lived, but since their demise, after 1927, their widows have been paid at the fixed rate, as provided by the 1927 amendment. The plaintiffs in these three cases seek to have established a right to receive the greater pensions that would be due them had the basis not been changed. In all the cases the amounts claimed are greatly in excess of the amounts that have been received.
The first cause of action of each complaint is for a judgment declaring the right of the plaintiffs to receive pensions upon the former fluctuating basis. A second cause of action is for a money judgment for the difference between the pensions the plaintiffs have received during the immediately preceding three years and the amounts that would have accrued on the fluctuating basis.
Upon the facts that were established by stipulation the members who were granted pensions for services prior to 1925 had a vested contractual right to receive pensions as a part of their agreed compensation, and it was a right within the protection of the contract and due process clauses of the State and Federal constitutions. Kern v. City of Long Beach, 29 Cal.2d 848, 179 P.2d 799; Allen v. City of Long Beach, 45 Cal.2d 128, 287 P.2d 765.
Basically the claims of all the plaintiffs are founded upon the doctrine announced in the Allen case that while pension rights may be modified prior to retirement, within reason, the changes must bear some material relation to the theory of a pension system and its successful operation, and they may not validly create disadvantages to the employee unless the same are accompanied by comparable new advantages.
It is not contended by the city that the modifications in question did not create disadvantages to the employees; it is contended that they were accompanied or, as relevant complements, followed by the granting of substantial and sufficient new advantages.
The court found that the changes accomplished by the 1925, 1927 and 1947 amendments bore a reasonable relation to the theory of the pension system and its successful operation, and were either accompanied by or preceded by comparable or greater than comparable new advantages or benefits. The judgment sustained the modifications as fair, reasonable and, therefore, valid.
The court also found that all plaintiffs are barred by laches from asserting their claims and that their pleaded causes of action are barred by the three-year statute of limitations.
We deem it unnecessary, and therefore inadvisable, to express our views with respect to the reasonableness and validity of the changes in the system wrought by the amendments for the reason that there is, in our opinion, no escape from the conclusion that whatever rights the members of the departments and their widows may have had to successfully assail the changes that were made in the system have been lost through inaction and the acceptance of pensions as granted by the city in accordance with the city charter as it existed at the several times each member and each widow was granted a pension. For this reason we would have to affirm the judgments in any event.
We shall discuss the doctrine of laches in the light of the familiar rule that a finding of an ultimate fact implies that the court determined the evidentiary facts and drew the inferences which logically tended to establish the ultimate fact found. Our views of the factual situation will be only those which, presumably, were entertained by the trial court.
The first element of laches is unreasonable delay with knowledge, actual or imputed, of facts which would reasonably require the taking of action for the establishment or protection of the supposed right.
In the Abney and Behrns cases it was to be presumed that the plaintiffs knew of the several charter amendments at the times of their adoption. Want of knowledge is not pleaded or asserted. They continued in the service of the city without remonstrance and they retired, applied for and were granted pensions in fixed and inflexible amounts. They had a right at the times when the several changes in the law were made to seek an adjudication in their favor of the rights that are now asserted. When the first payments became due they had a right to sue for the amounts that would have been payable had the charter not been amended.
It is true of all the cases that the plaintiffs allege they did not know that the several charter amendments were invalid as to them, or that they have had at all times a right to a fluctuating pension, until shortly before they brought suit, when they sought legal advice and were informed that they had such a right. It is not alleged that they had previously doubted the validity of the charter amendments, or had made any inquiry respecting the same and they allege no excuse for their inaction except their want of knowledge of the claimed invalidity or inapplicability of the amendments.
Much of our discussion of laches will have application to the cases of the widows, as well as those of the members in the Abney and Behrns cases. The provisions for widows' pensions were but a part of the pension rights of the members who had retired or who might retire while those provisions were in effect. They were not rights which vested in the widows until pensions became payable to them. Packer v. Board of Retirement, 35 Cal.2d 212, 217 P.2d 660.
The purported modification of the members' rights from a fluctuating to a fixed basis in 1925 necessitated no action upon the part of those who were already upon retirement for the reason that the city conceded at all times that the modification was inoperative as to them.
The 1927 amendment which purported to apply the modification to widows' inchoate pension rights was also a present modification of the rights of the members. As we shall presently see, no question was ever raised by the members as to the validity of this modification or as to its application to all widows whose pension rights had not vested, although the city has at all times stood upon the modification as applicable to those widows.
For thirty years the plaintiffs in the Abney and Behrns cases have received their fixed pensions without protest. We do not doubt that this is an unreasonably long time to wait for the assertion of a claim that could have been asserted at any time within that period, when it is known that the claim would be resisted, and the one against whom it is attempted to be asserted has had no reason to believe that it ever would be asserted. On its face such a claim is stale, and in order to avoid the consequences of having slept upon his rights it is incumbent upon the claimant, especially in a case where prejudice to his adversary would presumably result, to plead and prove reasonable excuse for his neglect. Burkle v. Levy, 70 Cal. 250, 11 P. 643; Barfield v. Price, 40 Cal. 535; Pratt v. Pratt, 43 Cal.App. 261, 184 P. 956; Gillons v. Shell Co. of California, 9 Cir., 86 F.2d 600; Curtin v. Dorman, 293 N.Y. 505, 58 N.E.2d 515. Assertion of ignorance of one's rights at one time and knowledge at another time will not operate to toll the statute of limitations. Phelps v. Grady, 168 Cal. 73, 78, 141 P. 926; Yasunaga v. Stockburger, 43 Cal.App.2d 396, 401, 111 P.2d 34; Easton v. Geller, 116 Cal.App. 577, 580, 3 P.2d 74; Leahey v. Dept. of Water and Power, 76 Cal.App.2d 281, 286-287, 173 P.2d 69; Watson v. Santa Carmelita, etc., Co., 58 Cal.App.2d 709, 716, 137 P.2d 757. This is the general rule, and while it is applied most often in statute of limitations case, it would seem to be particularly necessary to show a good excuse for apparent neglect when suing upon a stale claim. 30 C.J.S. Equity § 128, pp. 555-556. As stated in Alexander v. Phillips Petroleum Co., 10 Cir., 130 F.2d 593, 606: 'Laches will not be imputed to one who has been justifiably ignorant of the facts creating his right or cause of action, and who, therefore, has failed to assert it. But where the facts were known to the plaintiff, ignorance of the law applicable thereto and the consequent ignorance of his legal rights, will not ordinarily excuse delay in asserting the claim.' See, also, Jones v. Perkins, 6 Cir., 76 F. 82; Le Gout v. Le Vieux, 338 Ill. 46, 169 N.E. 809. However, the applicability of the defense of laches will be determined from the essential facts developed, which it is clear furnish no excuse for the long delay.
It is well established that this defense involves not only unreasonable delay on the part of the claimants but also a showing of detriment suffered by the one who would assert that defense.
The plaintiffs contend that the city pleaded or proved no facts showing any detriment suffered by the city and that the court made no express finding that detriment had been suffered. The answers of the city pleaded laches as a defense in general terms, and in the absence of a demurrer for uncertainty, the pleadings were sufficient to admit of proof of the defense. Sukeforth v. Lord, 87 Cal. 399, 25 P. 497. The finding that the defense of laches was established by the evidence was likewise sufficient. Throughout the trial the question of laches was urged by the city and was considered to be in issue. Criticism of the answers and the finding comes too late. 21 Cal.Jur. 273-4; 3 Cal.Jur.2d 620-21.
It appearing that the delay was excessive the question respecting the defense of laches was whether the city had suffered detriment through the inaction of the pensioners and the belief, on the part of the city, induced by such inaction, that the pensioners were satisfied with the pensions they were receiving, and had no intention of ever questioning the validity of the charter amendments or demanding greater pensions.
The general pension system for city employees has been greatly broadened, advantages and benefits have been added periodically and the burdens upon the taxpayers have been multiplied. By initiative ordinance which became effective July 1, 1926, minimum salaries were fixed for firemen and policemen, which the city council could not lower, and at the same time salaries were increased, which automatically increased the pension rights of active members and their families, as prospective pensioners, as well as the benefits of members who had retired before 1925 and their families. Numerous other increases in the salaries of policemen and firemen have been granted from time to time. Evidence was introduced by the city, and it was otherwise shown, that there had been some ninety-four changes in the city's general pension system which, it is claimed, added benefits, as against ten which were detrimental, with five changes which were not clearly either beneficial or detrimental. Not a few of these related to the pensions of policemen and firemen. Without analysis of these many changes it is sufficient to say that the city has felt free in the past, and would feel free in the furture, to broaden its pension system and grant more liberal benefits in the belief that it would not thereby increase its obligations to those pensioners of the classes of the plaintiffs. There was evidence that the amount paid in pensions for the year 1924-25, $240,986, was increased to $5,916,881 in 1954-55; the tax burden for pensions increased from $2,813,781.64 in 1945-46 to $4,434,163.44 in 1954-55; the average number of persons receiving pensions from the city increased from 244 during 1925-26 to 3,457 in 1954-55 and, despite this increase in number, the amount of the average monthly pension increased from $109.69 in 1925-26 to $144.57 in 1954-55; the difference between the amounts plaintiffs are receiving and the amounts they claim would amount to more than $1,100,000 per year. Computations were in evidence which purported to show that if the basis of increase sought by plaintiffs was extended to all 2,700 pensioners whose pensions would be affected, the increase would total almost $4,000,000 a year.
Plaintiffs contend that enlargement and liberalization of the city's pension system should be taken into account only insofar as benefits were conferred upon themselves and pensioners having the same rights, but this argument relates to the matter of benefits measured against detriments, which we are not considering. It is beside the question of detriment suffered by the city.
Enough has been said to demonstrate that in the thirty years since the fluctuating basis of pensions was discarded in favor of the fixed basis the city has assumed enormous new pension obligations, to the advantage and benefit of innumerable employees of the city. It would be a tedious and pointless task to enumerate all the many changes in general pension rights that have contributed to the end result. The progress has been consistently toward expansion and liberalization. It is, of course, impossible to know, except by deduction, whether or to what extent, this action by the city and the voters has been influenced by reliance upon the approximate amount of the city's obligation upon the basis of fixed pensions for all those in the classes of the plaintiffs. Who can say that all or a significant part of these changes would have come to pass had it been known that every increase in the salary of policemen or firemen would be an increase in the pension of every member who served the city in the same position before 1925, as in the Abney and Behrns cases, and of the widows who assail the charter amendments. And who can say that the many new obligations undertaken by the city would not result in great detriment and prejudice to it if, in addition to the city's known existing obligations, it should be irrevocably held to all the consequences of the restoration of the fluctuating basis for pensions of all those of the classes of the plaintiffs.
There was a direct relation between placing pensions on a fixed basis and the development of the general pension system. It is reasonable to assume that the city realized in 1925, and thereafter, when changes were made in the pension system for city employees, that there would be necessity for periodic expansion and liberalization of the system, as well as increases in the compensation of city employees, and that this was a primary reason for discarding the fluctuating basis. There are few subjects in the field of industry that have engaged more attention in the past thirty years than the matter of retirement and retirement compensation. The trend has been consistently toward expansion and liberalization in public as well as private systems; otherwise public employment would have become unappealing to competent and dependable personnel.
It was a reasonable conclusion that the pensioners were chargeable with knowledge of the growth of the general pension system. It may be that the members of the Police and Fire Departments who remained in the service after 1925 did not realize that salary increases and other benefits would be granted which would have given additional advantages under the old system but would give none under the new. It is quite probable that they did not realize in the beginning that the new system would operate to their detriment. And yet, as previously mentioned, in the year following the change of 1925, salaries of policemen and firemen were increased and this, alone, was sufficient to inform the members of the departments that the change of the pension base was detrimental to them because their fixed pensions would not be affected by the increases of salaries. They remained silent then and also throughout the periodic increases in firemen's and policemen's salaries.
As previously mentioned, the elements of laches are unexcused delay in the assertion of a right for an unreasonable time and detriment to the adverse party reasonably attributable to the delay and inaction. We believe that the existence of both conditions was conclusively established. We have seen that the position of the city has been irrevocably altered. Vast changes have been made in its pension system. Heavy new contract obligations have been incurred in favor of city employees. It must be presumed that the trial court drew the inference that the changes in the position of the city have been influenced by the apparent satisfaction of the pensioners with their pension rights as established by the 1925 charter and its amendments. It is a logical inference, and one which the plaintiffs did not and could not overcome by proof. It is a closed chapter. Responsibility for this condition must rest upon the pensioners. It cannot rest upon the city, which is without fault. The court did not err in sustaining the defense of laches as to the first causes of action and, as we shall see, as to the second cause of action.
The complaint in each case contained a second cause of action for a money judgment for the difference between the amounts received by the plaintiffs during the immediately preceding three years and the amounts they would have received had the charter not been amended. It is contended by the plaintiffs in each case that they have stated a cause of action at law and that in such an action the defense of laches is not available to the city. We cannot agree that the action is, in any aspect, at law, or that the defense of laches can be avoided.
Each second cause of action realleges, by reference, those allegations of the first cause of action that form the basis of the demand for declaratory relief, namely, in the Abney and Behrns cases the existence of pension rights as they existed prior to the amendment of 1925, and in the Adams, Mason and Abbott cases, the rights that existed up to the 1927 and 1947 amendments. The only difference between the first and the second causes of action is the addition of a demand for a money judgment in the latter. The facts that have led to the controversy are the same in each cause of action. The nature of the action is the same as it would have been if the allegations of the amounts claimed for the immediately preceding three years had been incorporated in the first cause of action and a demand had been made for judgment for those amounts, in addition to a declaration of rights. It was necessary for plaintiffs to establish the invalidity of the charter amendments in order to obtain relief. Their contracts with the city are for pensions in fixed amounts. Plaintiffs have been paid in full under their existing contracts and have no cause of action based upon them. The essence of their contentions is that the court should annul those contracts as in violation of previously existing vested rights and restore those rights. An adjudication of this issue would involve a determination, under the rules we have previously stated, as to the fairness and reasonableness of the changes that were made and this would inevitably lead to an inquiry into the consequences of the inaction of the pensioners over the years, consisting, as we have seen, of repeated increases of the city's salary and pension obligations. The issues and the proof would be the same whether plaintiffs sought merely a declaration of present and future rights or a recovery of money in the amounts claimed to have accrued during the immediately preceding three years, or both. A judgment for the sums claimed would be just as clearly and effectually an adjudication of present and future rights as would a judgment which merely stated them in any other form.
It is conceded, as it must be, that plaintiffs' cause of action for a declaration of rights is of equitable cognizance. So it would have been had plaintiffs sought by their first cause of action a money judgment, as well as a declaration of rights. A judgment for money would have followed a favorable declaration of rights. The omission from the second causes of action of the allegations that a controversy exists as to plaintiffs' rights, as found in the first causes of action, and the omission from these causes of action of a prayer for a money judgment does not change the character of the action from one in equity to one at law. It could as well have been contended that the action was at law if a money judgment, as well as declaratory relief, had been sought in the first causes of action. Such a contention, of course, would have been untenable.
Plaintiffs argue that no controversy with the city existed until they made known the demands which they presently assert, and that the statute of limitations for an action for declaratory relief was only set in motion when they made their demands. We cannot agree. There was never a question as to the position of the city from the times of the several amendments of the charter, nor any doubt in the minds of the members of the departments that the city would consider itself bound by those amendments. A controversy does not consist merely of words, of demands on the one hand and refusal on the other hand to accede to the demands. Long delay in making a demand which it is known will be refused does not establish the non-existence of conplicting claims. The pensioners knew when the charter was amended that pensions would not be granted except as authorized by the charter, and they knew when pensions were granted to them that it would be futile to demand more than the amounts of the fixed pensions. The pensioners knew that their only recourse would be through court action, and this knowledge was sufficient to require them to recognize the existence of a dispute with the city. It is not a new dispute except that it has been made vocal. A conflict as to rights and obligations has existed by reason of the facts, that is to say, the claimed curtailment of the rights of the pensioners and the impossibility on the part of the city of restoring former rights under the existing charter.
Since the plaintiffs could not recover a money judgment without first establishing their right to the equitable relief they seek, the trial court correctly concluded that their second causes of action were barred by laches.
The plaintiffs in the Abbott case whose husbands were on retirement before the 1927 amendment contend that that amendment was not intended to be applicable to them. We see no reason for distinguishing between this contention and the claims we have already discussed with respect to the validity of the 1927 amendment. Not only did the husbands of these plaintiffs fail to question the modification of their pension rights through the change in the vasis of included widows' pensions, but each of the widows applied for, received and was granted and has accepted a pension as modified. As early as 1929 the city commenced to pay pensions to those widows on a fixed basis. The average length of time during which the plaintiffs in the Abbott case received the modified pensions without objection was some seventeen years. No material facts were concealed, and it was not shown that any of the plaintiffs was unaware of the fact that the city was applying the 1927 modification to all pensioners of their class. No doubt the trial court concluded that they had knowledge of facts sufficient to require them to take court action for the purpose of having the modification declared inapplicable as to them. For the reasons previously stated, it is too late to assert the claim that they are not bound by the modification.
The briefs contain able discussions of the applicability of the Statute of Limitations and other legal doctrines upon which it is unnecessary to express opinion. Other contentions urged by the city in support of the judgment become superfluous, in view of our decision upon the defense of laches. And with respect to the arguments of plaintiffs upon other points, there is, as we said in the beginning, no escape from the conclusion that whatever rights adverse to the city may have existed in the beginning have been lost through long delay and inaction.
The judgment in each case is affirmed.
PARKER WOOD and VALLEE, JJ., concur. --------------- * Opinion vacated 326 P.2d 484.