Steinberg v. United States

WHITAKER, Judge

(concurring).

I concur in the result, but since my view of the case is somewhat different from that expressed by the other judges, I submit this concurring opinion.

In the first place I think, notwithstanding the case of Dodge v. Board of Education, 302 U.S. 74 , 58 S.Ct. 98 , 82 L.Ed. 57 , and cases in the Courts of Appeals decided since the Dodge case — -I think, notwithstanding these opinions, a Federal employee who has retired from the service has a vested right in the retired pay to which he was entitled at the time of his retirement.

When an employee enters the Government service he does so relying upon the statute or regulations fixing the current compensation of the office and the amount to which he will be entitled upon retirement. So long as he remains in the Government service, Congress of course has the right to change the compensation to be paid the holder of the office, as well as the retired pay to which he will be entitled upon retirement. The employee takes the office with knowledge, actual or constructive, of the power of Congress to do this. But, after the employee has rendered the services required of him by the Government, and severs his connection with the Government, he then becomes entitled to the retired pay in effect at the time of his retirement.

This, I think, is a vested right, because it is compensation for services already rendered. Retired pay is not a pension; it is not a gratuity; it is a part of the emoluments of the office. Those emoluments are the payment periodically of the employee’s current salary, less deductions for contributions to the retirement fund, etc., and also the retired pay to which the employee is entitled under the law in force at the time of his retirement.

This view is supported by Title 4, section 401, of the Act of July 31, 1956, 70 Stat. 747 , known as the Civil Service Retirement Amendments Act of 1956. It is carried in the United States Code Annotated in section 2254 of Title 5. Subsection (b) of that section reads as follows:

“Consent to deductions.

“(b) Each employee or Member shall be deemed to consent and agree to such deductions from basic salary, and payment less such deductions shall be a full and complete discharge and acquittance of all claims and demands whatsoever for all regular services during the period covered by such payment, except the *595 right to the benefits to which he shall be entitled under this chapter, notwithstanding any law, rule, or regulation affecting the individual’s salary.” [Italics mine.]

Retirement pay is one of the benefits to which an employee is entitled “under this chapter.” The statute means, therefore, that the Government is completely discharged and acquitted of “all claims and demands whatsoever for all regular services during the period covered by such payment,” when it pays the employee his basic salary and the “benefits to which he shall be entitled under this chapter,” which includes retirement pay. The Government is not discharged and acquitted of the employee’s claim and demand against it until it has paid him, not only his basic salary, but also his retired pay.

Substantially this same section has been in force since the Retirement Act of 1920.

The above view is supported by the opinion of the Supreme Court of Pennsylvania in Hickey v. Pittsburgh Pension Board, 378 Pa. 300 , 106 A.2d 233 , 52 A.L.R.2d 430 . Beginning on page 437 of 52 A.L.R.2d there is an extensive annotation on the vested right of an employee to retirement benefits. It will be noted that many States hold that he has such a vested right.

It must be admitted that the decisions of the Federal courts are in the other direction. The earliest case is Pennie v. Reis, 132 U.S. 464 , 10 S.Ct. 149, 151 , 33 L.Ed. 426 . That case would seem to lend some support to the view I have expressed above. I quote the following paragraph from the opinion in that case, calling particular attention to the portions thereof which I have italicized.

“Being a fund raised in that way, it was entirely at the disposal of the government until, by the happening of one of the events stated, — the resignation, dismissal, or death of the officer, — the right to the specific sum promised became vested in the officer or his representative. It requires no argument or citation of authorities to show that in making a disposition of a fund of that character, previous to the happening of one of the events mentioned, the state impaired no absolute right of property in the police officer. The direction of the state that the fund should be one for the benefit of the police officer or his representative, under certain conditions, was subject to change or revocation at any time, at the will of the legislature. There was no contract on the part of the state that its disposition should always continue as originally provided. Until the particular event should happen upon which the money, or a part of it, was to be paid, there was no vested right in the officer to such payment. His interest in the fund was until then a mere expectancy, created by the law, and liable to be revoked or destroyed by the same authority. The law of April 1, 1878, having been repealed before the death of the intestate, his expectancy became impossible of realization. The money which was to pay the amount claimed had been previously transferred and mingled with another fund, and was no longer subject to the provisions of that act. Such being the nature of the intestate’s interest in the fund provided by the law of 1878, there was no right of property in him of which he or his representative has been deprived.” [Italics ours.]

The next case which came before the Supreme Court in which the question was raised was Dodge v. Board of Education, supra. It is not altogether clear from the opinion in this case whether it had application to people who had already retired before the reduction in retirement benefits, or only to those still on the payroll. I concede full power in the legislature to reduce retired benefits to people on the payroll when the Act was passed, but I deny the power of the *596 legislature to reduce retirement benefits to people who have severed their connection with the Government; in other words, to people who have already earned the retired pay in effect at the time of their retirement.

In addition to this, the Supreme Court, in Dodge v. Board of Education, supra [ 302 U.S. 74 , 58 S.Ct. 100 ], was construing, not a Federal statute, but a State statute, which had been construed by the Supreme Court of the State, and the United States Supreme Court said that they gave “great weight to the views of the highest court of the state touching these matters.”

Notwithstanding this, I must concede that this opinion leans in the direction of the doctrine that a retired employee has no vested right in the retired fund to which he was entitled at the time of hia retirement.

The Court of Appeals for the First Circuit, in MacLeod v. Fernandez, 101 F.2d 20 , certiorari denied 308 U.S. 561 , 60 S.Ct. 72 , 84 L.Ed. 471 , expressly held that the retired pay of a retired employee could be reduced by a law passed after the date of his retirement. Rafferty v. United States, 210 F.2d 934 , from the Third Circuit, held that a beneficiary under a retirement statute did not acquire a vested right in the benefits of the retirement statute until after the death of the employee. This particular case does not seem to be very much in point. But MacLeod v. Fernandez, supra, does seem to be directly in point. I do not agree with the decision in that case. If I am correct in saying that the retired pay is not a pension or a gratuity, but is compensation for services already rendered, then I think an employee’s right to this retired pay does become vested at the time of his retirement.

If this view is correct, Congress has taken this vested right without due process of law. I do not think this can be gainsaid and, hence, I do not enlarge upon it.

But, if it be assumed that the foregoing position is wrong, I still think the employee who has been deprived of his retired pay because he had had recourse to the rights guaranteed by the Fifth Amendment has been denied due process of law, for this reason; The Act under consideration discriminates between employees who have not availed themselves of the rights guaranteed by the Fifth Amendment and those who have. This, I think, is an arbitrary and an unreasonable discrimination. I think so because the employee who has had recourse to the Fifth Amendment has violated no law; he has refused to discharge no legal obligation; all that he has done is to avail himself of the rights guaranteed to him by the Bill of Rights.

The Act under consideration would deprive an employee of the right guaranteed to him by the Bill of Rights. A person cannot be deprived of his property rights for any such reason, when others still enjoy those rights. I think the Act which takes away from retired employees rights to which other employees are entitled, merely because he exercises a right guaranteed to him by the Constitution, is an unjust, an arbitrary, and an unreasonable discrimination against him. See Wieman v. Updegraff, 344 U.S. 183 , 73 S.Ct. 215 , 97 L.Ed. 216 ; Slochower v. Board of Education, 350 U.S. 551 , 76 S.Ct. 637 , 100 L.Ed. 692 ; Ullmann v. United States, 350 U.S. 422 , 76 S.Ct. 497 , 100 L.Ed. 511 .

Now, Judge MADDEN in his opinion says that a retired employee is still an employee and can be required by the Government to render it service as a condition of his right to continue to receive retired pay. I do not understand this to be the law, because I think retired pay is paid, not in consideration of services to be rendered after retirement, but in consideration of services already rendered. See Garner v. Board of Public Works of Los Angeles Board, 341 U.S. 716 , 71 S.Ct. 909 , 95 L.Ed. 1317 .

For these reasons I concur in the result reached by Judges LARAMORE and *597 LITTLETON, and by the Chief Judge on somewhat different grounds.