Petition — Kerner v. State Employees' Retirement System

MICHA RODAK, JR., CLERK

‘EILED

y

SUPREME COURT OF THE UNITED STATES

May Term, A.D., 1979

No. 78-1349

OTTO KERNER, by Anton Kerner, his representative,

Petitioner,

Vv.

STATE EMPLOYEES’ RETIREMENT SYSTEM OF ILLINOIS,

ET AL.,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

SUPREME COURT OF THE STATE OF ILLINOIS

ROBERT WEINER

1307 South Seventh Street

Post Office Box 2418

Springfield, Iilinols 62706

Attorney for Petitioner

TERRY L. FIELDS

Of Counsel

—-— —

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Statutes and Constitutional Provisions Involved.. 3

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Reasons for Granting Writ ...............e0005 7

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Appendix A

Opinion of Supreme Court of Illinois .......... App. 1

Opinion of Appellate Court, Fourth District

EES EES ee App. 8

Journal Entry of Judgment of the Circuit Court

of Sangamon County, Illinois ............... App. 19

Supplemental Decision of the Hearing Officer. ... App. 25

Decision of the Hearing Officer of the State

Employees’ Retirement System ............ App. 31

TABLE OF CASES

Weems vs. United States, 217 U.S. 349, 30 S. Ct.

544, 54 L. Ed. 793, 799, 801, 803 ................ 11

ewe

IN THE

SUPREME COURT OF THE UNITED STATES

May Term, A.D., 1979

No.

OTTO KERNER, by Anton Kerner, his representative,

Petitioner,

Vv.

STATE EMPLOYEES’ RETIREMENT SYSTEM OF ILLINOIS,

ET AL.,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

SUPREME COURT OF THE STATE OF ILLINOIS

To the Honorable, the Chief Justice and Associate Justices

of the Supreme Court of the United States:

Otto Kerner, by Anton Kerner, his representative, the

petitioner herein, prays that a Writ of Certiorari issue

to review the judgment of the Illinois Supreme Court

entered in the above-entitled cause on September 19, 1978.

OPINIONS BELOW

The opinion of the Illinois Supreme Court is reported

at 72 Ill. 2d 507, 382 N.E. 2d 243, 21 Ill. Dec. 879, and is

printed in Appendix A hereto, infra, page 1. The judg-

ment of the Appellate Court of the Fourth District of

Illinois, is printed in Appendix A hereto, infra, page 3.

Said opinion is reported at 53 Ill. App. 3d 747, 368 N.E. 2d

1118, 11 Ill. Dee. 510. The Journal Entry of Judgment of

the Cireuit Court for the Seventh Judicial Circuit of

Illinois, Sangamon County, is printed in Appendix A

hereto, infra, page 19. The Order of the State Employees’

Retirement System of Illinois is printed in Appendix A

hereto, infra, page 22. The Decision of the Hearing Offi-

cer of the State Employees’ Retirement System of Illinois

is printed in Appendix A hereto, infra, page 25.

JURISDICTION

The judgment of Supreme Court of Illinois (Appendix

A, infra, page 1) was entered on September 19, 1978. A

timely petition for rehearing was denied on December 1,

1978. (Appendix A, infra, page 7). The jurisdiction of

the Supreme Court is invoked under 28 U.S.C. §1257(3).

QUESTIONS PRESENTED

L

Whether §14-199 of the Illinois Pension Code (Ill. Rev.

Stat. 1975, ch. 108%, §14-199) violates the due process

clarse of the XIV Amendment of the Constitution of the

United States.

II.

Whether §14-199 of the Illinois Pension Code (Ill. Rev.

Stat. 1975, ch. 108%, §14-199) violates the United States’

Constitution’s VIII Amendment prohibition of cruel and

unusual punishment.

Ii.

Whether the manner in which the Supreme Court of

—

Illinois reviewed this cause violated the due process clause

of the XIV Amendment of the Constitution of the United

States.

STATUTES AND CONSTITUTIONAL

PROVISIONS INVOLVED

Amendment VIII — Constitution of the United States:

‘Excessive bail shall not be required, nor excessive

fines imposed, nor cruel and unusual punishments in-

flicted.’’

Amendment XIV — Constitution of the United States:

‘‘Section 1. All persons born or naturalized in the

United States, and subject to the jurisdiction thereof,

are citizens of the United States and of the State

wherein they reside. No State shall make or enforce

any law which shall abridge the privileges or im-

munities of citizens of the United States; nor shall

any State deprive any person of life, liberty, or

property, without due process of law; nor deny to

any person within its jurisdiction the equal protection

of the laws.

Section 2....

Section 3....

Section 4....

Section 5... .’’

Ill. Rev. Stat. 1975, ch. 108%, §14-199:

“14-199, §14-199. Felony conviction. None of the

benefits herein provided for shall be paid to any person

who is convicted of any felony relating to or arising

out of or in connection“with his service as an employee.

This section shall not operate to impair any contract

or vested right heretofore acquired under any law or

laws contained in this Article nor to preclude the right

to a refund.

‘‘All future entrants entering service subsequent

to July 9, 1955 shall be deemed to have consented to

4

the provisions of this section as a condition of cover-

age.”

Ill. Rev. Stat. 1975, ch. 108%, §14-102:

**14-102. §14-102. Purpose. The purpose of the sys-

tem is to provide an orderly means whereby aged

or disabled employees may be retired from active

service, without prejudice or hardship, and to enable

the employees to accumulate reserves for themselves

and their dependents for old age, disability, death

and termination of employment, thus effecting economy

and efficiency in the administration of the State Gov-

ernment,’’

STATEMENT OF CASE

On September 28, 1965, Otto Kerner (herein for con-

venience referred to as ‘‘Kerner’’), then Governor of

Illinois, applied for membership in the State Employees’

Retirement System (herein for convenience referred to as

‘‘System’’). Under the option then existing, Kerner paid

into the System $11,048.34, which included 4% compound

interest, and obtained service credits retroactively to the

date of his taking office, viz., January 9, 1961.

On May 19, 1968, Kerner resigned as Governor to be-

come a Judge of the United States Court of Appeals for the

Seventh Circuit, and on May 2, 1969, applied for a retire-

ment allowance. On June 16, 1969, the System granted

the allowance retroactively to January 19, 1969, by paying

$1,534.88, and thereafter monthly allowances of $335.08

each, through June, 1973. At the time of the initial payment

Kerner was notified that his contributions to the System,

excluding interest, totalled $16,815.71. Payments were

stopped commencing with the month of July, 1973; three

additional payments were made at various times there-

after, and Kerner’s total payments from the System are

agreed to be $18,927.82.

Kerner was convicted of one or more felonies under

the United States Code in the United States District Court

for the Northern District of Dlinois, Eastern Division.

These convictions were affirmed on appeal.

On October 3, 1975, Kerner filed a demand with the

System for resumption of payments. A hearing was con-

vened before a hearing officer, who rendered his decision

on April 26, 1976, recommending such resumption. On

May 3 and 5, 1976, the board of trustees of the System

reviewed the hearing officer’s report, held further hearings

and overruled the hearing officer.

6

Kerner died in May, 1976, and his representative filed

an administrative review proceeding in the Circuit Court

of Sangamon County, Illinois, asking in effect that the

finding of the System be reversed and Kerner’s estate

be awarded payments from July, 1973, through May, 1976,

totaling $9,382.24. The Circuit Court reversed the System.

The Appellate Court for the Fourth District of Illinois,

however, reversed the Circuit Court. The Supreme Court

of Illinois granted leave to appeal and affirmed the Ap-

pellate Court.

When the Illinois Supreme Court granted the petition

for leave to review, there was no indication that any of

the seven justices of the Dlinois Supreme Court did not

participate in the decision to grant review. All seven

justices heard oral arguments in the cause. However, when

the written opinion was issued, there was a notation that

three of the justices, including the Chief Justice, had

taken no part in the consideration or decision of the case.

No explanation as to why these justices recused themselves

or at what point in the cause these justices recused them-

selves was offered. Again, when notice that the petition

for rehearing had been denied was issued, there was a

notation that the same three justices had taken no part,

even though petitioner had raised the question in his

petition for rehearing as to whether the procedure em-

ployed by the Illinois Supreme Court violated petitioner’s

right to due process of law, as guaranteed by the XIV

Amendment of the United States Constitution.

Pe

Petitioner has, from the first, asserted that §14-199 of

the Illinois Pension Code (Ill. Rev. Stat. 1975, ch. 10814,

§14-199) violates both the cruel and unusual punishment

prohibition of the VIII Amendment of the Constitution

of the United States and the due process clause of the

7

XIV Amendment of the Constitution of the United States.

The Circuit Court of Sangamon County, Illinois, found:

‘‘that the statute, namely, 414-199, Chap. 108%, Il.

Rev. Stat., 1975, is unconstitutional as to the Plain-

tiff, Otto Kerner, as a violation of his rights under

the United States Constitution .. .’’

The Appellate Court for the Fourth District of Illinois,

held that the VIII Amendment is applicable only to crim-

inal proceedings, not civil proceedings. The Illinois Appel-

late Court also termed petitioner’s claims that the statute

in question violated the due process clause of the XIV

Amendment of the Constitution of the United States as

‘*untenable.’’

And the Illinois Supreme Court, noting that it had re-

viewed petitioner’s claims relating to cruel and unusual

punishment and due process, stated:

‘*We hold that the termination of payments here

violates none of these provisions.’’

REASONS FOR GRANTING REVIEW

I.

Section 14-199 of the Illinois Pension Code (Ill. Rev. Stat.,

1975, Ch. 108%, §14-199) violates the due process clause

of the XIV Amendment of the United States Constitution.

The effect of §14-199 of the Illinois Pension Code (TIIl.

Rev. Stat., 1975, Ch. 108%, §14-199) is to deny petitioner

a propertv right. Because petitioner was convicted of a

‘‘felony relating to or arising oui of or in connection with

his service as an employee [of the State of Llinois],’’

petitioner was denied his pension benefits. By definition,

pension rights represent earned deferred compensation for

which the state employee rendered legitimate services.

What is the object sought to be attained by the Illinois

General Assembly in enacting §14-199? Perhaps it is well

first to consider what the purpose of the Illinois State

Legislature was in enacting the ‘‘State Employees’ Retire-

ment System of Ilinois.’’ The purpose underlying creation

of the System is codified in §14-102 of the Illinois Pension

Code (Ill. Rev. Stat., 1975, Ch. 108%, §14-102) :

**14-102. §14-102. Purpose. The-purpose of the sys-

tem is to provide an orderly means whereby aged or

disabled employees may be retired from active service,

without prejudice or hardship, and to enable the em-

ployees to accumulate reserves for themselves and

their dependents for old age, disability, death and

termination of employment, thus effecting economy

and efficiency in the administration of the State Gov-

ernment.’’

How, then, does the legislative purpose underlying the

enactment of the System relate to the legislative purpose

underlying §14-199? According to the Fourth District Ap-

pellate Court of Illinois:

‘*We are of the opinion that the principal purpose

of the statute [Section 14-199] is to penalize work-

related felonies.’’

Although the construction of that sentence is somewhat

awkward (clearly, work-related felonies cannot in and of

themselves be penalized), what the Illinois Appellate Court

was apparently trying to convey is that §14-199 serves

to penalize public employees who are convicted of work-

related felonies. At the same time, the Illinois Appellate

Court criticized the respondent herein for its ‘‘ pious moral-

izing’’ in urging ‘‘that Kerner should not be rewarded

for his bad acts.’’

Every public employee ‘‘who is convicted of any felony

relating to or arising out of or in connection with his

service as an employee’’ is peualized by being denied his

pension benefits. Denial of pension benefits certainly does

not effect ‘‘economy and efficiency in the administration

of the State Government.’’ Denial of pension benefits

clearly works ‘‘prejudice or hardship’’ for those aged or

disabled public employees retired from active service. Pub-

lic employees who are denied pension benefits are without

the accumulated ‘‘reserves for themselves and their de-

pendents for old age, disability, death and termination of

employment.’’ And the denial of pension benefits certainly

cannot be termed ‘‘orderly.’? Everything contained in

§14-199, then, is at odds with the legislative purpose ex-

pressed in §14-102.

Pension rights are earned deferred compensation —

property rights. Pension rights are established when pub-

lic employees render legitimate services to the State over

a period of time. Section 14-199 denies earned deferred

compensation (pension rights) to any public employee con-

victed of a work-related felony — regardless of whether

the act or acts which formed the basis for the felony con-

viction also served to enable the employee to obtain his

pension rights. As such, §14-199 violates the guarantees

of due process of law established in the XIV Amendment

of the Constitution of the United States. In §$14-199,

the legislature has arbitrarily created a classification of

public employees convicted .? work-related felonies who,

because of their convictions, are denied pension rights,

which pension rights constitute earned deferred compensa-

tion for services legitimately rendered. Section 14-199

penalizes any public service employee convicted of a work-

related felony, without regard to whether that individual

obtained his pension rights either wholly or partially

through his own wrongdoing.

The statute does not penalize public service employees

who are convicted of work-related misdemeanors. The stat-

ute does not penalize public service employees who are

not prosecuted for work-related felonies, because the stat-

ute of limitations has run. The statute does not penalize

public-service employees who, though initially charged with

work-related felonies, enter into plea negotiations whereby

a plea of guilty is entered to a charge of a work-related

10

misdemeanor, thereby avoiding the effects of 414-199. Ac-

cordingly, §14-199 is arbitrary in its classification and the

distinction it creates does not have a reasonable basis when

considered in relation to the purposes of the over all

legislation as outlined in §14-102.

The peculiar rule imposed by §14-199 upon public ser-

vice employees convicted of work-related felonies is that

these employees lose their pension rights, even though

taking pension rights away from these individuals is at

odds with every listed legislative purpose found in §14-102

and even though individuals convicted of work-related mis-

demeanors or precluded from prosecution by the statute

of limitations are not denied their pension rights. Further,

the class created by §14-199 is the ‘‘artificial’’ class of

public-service employees convicted of work-related felonies,

without regard to whether these employees obtaind their

pension rights through their wrong-doing and without re-

gard to the fact that these employees performed legitimate

services for the State of Illinois for which their pension

rights represent earned deferred compensation.

Accordingly, petitioner respectfully submits that §14-199

of the Illinois Pension Code violates the due process clause

of the XIV Amendment of the Constitution of the United

States.

il.

Section 14-199 of the Illinois Pension Code violates the

United States’ Constitution’s Vill Amendment prohibition of

cruel and unusual punishment.

Denial of petitioner’s pension rights came as a direct

result of his conviction of a felony or felonies in Federal

Court. The denial of Otto Kerner’s pension rights consti-

tutes punishment. The fact that the punishment comes

about as the result of a civil proceeding instead of a crimi-

nal proceeding does not mean that denial of his pension

rights is not punishment. Otto Kerner was denied his

pension rights in addition to being imprisoned and fined.

11

His pension rights were taken away from him even though

they constituted earned deferred compensation for past

services legitimately rendered to the State of Illinois. His

pension rights were denied him without any inquiry as

to whether those pension rights were obtained fraudulently

or illegally.

As this Court acknowledged in Weems v. United States,

217 U.S. 349, 30 S.Ct. 544, 54 L. Ed. 793, at 799:

‘*What constitutes a cruel and unusual punishment

has not been exactly decided.’’

This Court continued at page 801:

‘‘Time works changes, brings into existence new

conditions and purposes. Therefore a principal, to be

vital, must be capable of wider application than the

mischief which gave it birth. This is peculiarly true

of constitutions.’’

The Constitution:

‘*. . . may acquire meaning as public opinion be-

comes enlightened by a humane justice.’’ (54 L. Ed.

793 at 803)

Fublic opinion enlightened by humane justice dictates

that the denial of pension benefits asa result of conviction

of work-related felony be deemed a violation of the VIII

Amendment’s prohibition of cruel and unusual punishment

when the public service employee, as a result of the felony

conviction, has already been incarcerated and fined; es-

pecially in view of the fact that his pension benefits repre-

sent earned deferred compensation for services legitimately

rendered as a public employee.

The manner in which the Illinois Supreme Court reviewed

this cause violates the due process clause of the XIV Amend-

ment.

Aithough review by the Illinois Supreme Court was with-

in the discretion of the Court in this cause, once the Llli-

12

nois Supreme Court granted petitioner’s petition for leave

to review, petitioner's right to have the review conducted

in accord with the XIV Amendment’s guarantee of due

process attached. When his petition for leave to review was

granted by the Illinois Supreme Court, there was no indi-

cation that any of the justices did not participate in the

decision as to whether or not to review the case.

All of the Illinois Supreme Court Justices were present

and participated in oral argument in this cause. Not until

the written decision was rendered did petitioner learn

that three of the seven justices, including the Chief Justice,

had taken no part in the consideration or decision of this

cease. And, again, when Petitioner received notice that his

petition for rehearing had been denied, the notice con-

tained the statement, ‘‘Chief Justice Ward, Mr. Justice

Clark, and Mr. Justice Moran took no part.’’

Petitioner respectfully contends that the three justices

removing themselves from consideration of the cause

should have communicated such fact to the parties at the

time the petition for leave to appeal was granted.

Fundamental fairness required those Justices to excuse

themselves from oral argument in the cause. Procedural

due process, as guaranteed by the XIV Amendment, dic-

tated that the parties to the cause know the composition

of the Court to which their arguments were directed.

CONCLUSION

For the foregoing reasons this petition for a writ of

certiorari should be granted.

Respectfully submitted,

ROBERT WEINER

1307 South Seventh

Post Office Box 2418

Springfield, Illinols 62706

Attorney for Petitioner

TERRY L. FIELDS

Of Counsel!

February 26, 1979.

APPENDIX 1

OPINION

SUPREME COURT OF ILLINOIS

AT A TERM OF THE SUPREME COURT, begun and

held in Springfield, on Monday, the eleventh day of Septem-

ber in the year of our Lord, one thousand nine hundred and

seventy-eight, within and for the State of Illinois.

BE IT REMEMBERED, that afterwards, to-wit, on the

19th day of September, 1978 the opinion of the Court was

filed in said cause and entered of record in the words and

figures following, to-wit:

Otto Kerner, etc., 7

Appellant,

State Employee’s Retirement System of Appellate Court

Illinois; et al., etc.,

Appellees. |

Docket No. 50239—Agenda 56—May 1978.

ANTON KERNER, Appellant, v. STATE EMPLOYEES’

RETIREMENT SYSTEM OF ILLINOIS et al., Appel-

lees.

MR. JUSTICE UNDERWOOD delivered the opinion

of the court:

The question on this appeal concerns the effect of a

felony conviction upon the pension rights of the late Otto

Kerner, Jr., former Governor of Illinois. The facts, which

are undisputed, are included in the opinion of the ap-

pellate court (53 Ill. App. 3d 747) and will be restated

here only so far as necessary for an understanding of our

opinion.

In 1965, during his service as Governor, Otto Kerner

applied for and was accepted into membership in the State

Employees’ Retirement System (hereinafter System) and

APPENDIX 2

by paying some $11,000 secured credit for his prior

gubernatorial service. Following his 1968 resignation as

Governor to accept appointment as a Federal judge, he

applied for and was granted retirement benefits and sub-

sequently received monthly pension checks. He was there-

after convicted of several felonies under the United States

Code (see United States v. Isaacs (7th Cir. 1974), 493

F.2d 1124, cert. denied (1974), 417 U.S. 976, 41 L. Ed.

2d 1146, 94 S. Ct. 3183), which were related to his ser-

vice as Governor. His monthly pension allowances were

terminated by the System because of those convictions,

resulting in a demand by him for resumption of pension

payments and for all arrearages and benefits. The System,

claiming that the convictions caused a loss of all rights in

the pension plan except the right to a refund of the

lump-sum payment and monthly contributions, filed a

counterclaim seeking repayment of the difference between

the total benefits paid and the amounts contributed by him.

A hearing officer appointed by the secretary of the

System recommended resumption of the pension payments

and payment of all arrearages and benefits. The board

of trustees of the System, however, rejected the hearing

officer’s recommendation and voted to refuse any further

payments. Further, the board remanded the cause to the

hearing officer for a determination concerning the System’s

counterclaim. Following Otto Kerner’s death, his repre-

sentative filed an administrative review proceeding in the

circuit court of Sangamon County (Ill. Rev. Stat. 1975,

ch. 108%, par. 14-200; ch. 110, par. 264 et seq.) attacking

the board’s termination of the monthly pension payments.

The circuit court reversed the board and ordered payment

of all arrearages and benefits accruing prior to Otto

Kerner’s death. The Appellate Court for the Fourth Dis-

trict, however, reversed the circuit court (53 Ill. App. 3d

APPENDIX 3

747), effectively affirming the decision of the board of

trustees. We granted leave to appeal. We note that the

System’s counterclaim for repayment of the amceunt paid

to Otto Kerner in excess of his contributions is not in-

cluded in this appeal.

The primary question presented is the construction of

section 14-199 of the Illinois Pension Code:

‘‘None of the benefits herein provided for shall be

paid to any person who is convicted of any felony

relating to or arising out of or in connection with

his service as an employee.

This section shall not operate to impair any contract

or vested right heretofore acquired under any law or

laws continued in this Article nor to preclude the right

to a refund.

All future entrants entering service subsequent to

July 9, 1955 shall be deemed to have consented to the

provisions of this section as a condition of cover-

age.’’ (Ill. Rev. Stat. 1975, ch. 10844, par. 14-199.)

In construing this statute, as with any statute, our ob-

jective is to ascertain and give effect to the legislative

intent as determined from the necessity or reason for the

enactment and the meaning of the words employed. Jn re

Roberts Park Fire Protection District (1975), 61 Ill. 2d

429, 437-38.

Plaintiff first contends that the phrase ‘‘convicted of

any felony’’ refers only to convictions of crimes which are

felonies under Illinois law, and that since the convictions

were actually violations of Federal law, not Illinois law,

they are not within the statutory description of ‘‘any

felony.’’ We disagree. When faced with an analogous ques-

tion in the context of a Federal statute, the United States

Supreme Court chose a broad interpretation of the word

‘Cany’?:

‘‘Nor can we hold that the Act bars use of commit-

APPENDIX 4

tee testimony in United States courts but not in state

courts. The Act forbids use of such evidence ‘in any

criminal proceeding *** in any court’. Language could

be no plainer. Even if there could be legislative history

sufficiently strong to make ‘any court’ mean United

States courts only, there is no such history. The few

scraps of legislative history pointed out tend to indi-

cate that Congress was well aware that an ordinary

person would read the phrase ‘in any court’ to in-

clude state courts. To construe this phrase as having

any other meaning would make the Act a trap for the

unwary.’’ (Adams v. Maryland (1954), 347 U.S. 179,

181-82, 98 L. Ed. 608, 612, 74 S. Ct. 442, 445.)

There is similar authority from this court that, absent

contextual implications to the contrary, a broad interpre-

tation of the word ‘‘any”’’ is to be favored. E.g., Patteson

v. City of Peoria (1944), 386 Ill. 460, 464-65; People ex rel.

Ocean Accident & Guarantee Corp. v. VanCleave (1900),

187 Ill. 125, 134-35. 7

In our judgment the legislature’s choice of the word

‘fany’’ evinces an intent to include all felonies, State or

Federal, so long as the offense was a ‘‘felony relating to or

arising out of or in connection with’’ service as a State

employee. ‘‘The language of the [Illinois Pension] Code is

clear and there is no need for this court to construe it so as

to give it any meaning other than the one which is clearly

stated. It is the duty of the court to enforce the law as

enacted according to its plain and unmistakable provi-

sions.’’ (Peterson v. Board of Trustees (1973), 54 Ill. 2d

260, 264.) This literal interpretation accords with the

obvious purpose of the statute, to discourage official mal-

feasance by denying the public servant convicted of un-

faithfulness to his trust the retirement benefits to which

he otherwise would have been entitled. This construction

accords, too, with the related purpose of implementing the

public’s right to conscientious service from those in govern-

en —

APPENDIX 5

mental positions. In view of this legislative goal it seems

to us plainly immaterial whether the felony involved is

defined by the laws of this State, a sister State, or the

Federal government as long as it arose from, was con-

nected with, or related to the State service; that it was

so related here is undisputed. We believe the offenses of

which Otto Kerner was convicted are clearly felonies within

the ambit of section 14-199.

Plaintiff also contends that because Otto Kerner’s rights

were vested, at least by the time preceding his convictions

when he began receiving monthly payments, they were

‘theretofore acquired’’ within the meaning of the second

paragraph of section 14-199 and thus could not be impaired

by this statute. Our reading of the statute, however,

indicates the phrase ‘‘heretofore acquired’’ means acquired

prior to the enactment of the felony provision and does

not refer to the date of vesting or contracting in the case

of each individual member. This second paragraph protects

the right of employees whose pension rights had vested

before the 1955 enactment of this provision. It is not

applicable to Otto Kerner, whose pension rights vested

long after the section’s effective date. The flaw in plaintiff’s

reading of the statute was emphasized by the appellate

court when it noted that under plaintiff’s theory, an em-

ployee need only retire prior to his conviction of a felony

in order to render the entire statute meaningless. (53

Ili. App. 3d 747, 751.) Certainly such easy circumvention

of the law’s purpose cannot have been intended.

We believe section 14-199 is clearly applicable here and

by its terms operated to deny Otto Kerner the retirement

benefits to which he would have been entitled, absent the

convictions, under the Illinois Pension Code. Plaintiff

urges, however, that this conclusion renders the statute

APPENDIX 6

unconstitutional under article XIII, section 5, of the Illi-

nois Constitution of 1970, which provides:

‘‘Membership in any pension or retirement system

of the State, any unit of local government or school

district, or any agency or instrumentality thereof, shall

be an enforceable contractual relationship, the bene-

fits of which shall not be diminished or impaired.”’

The difficulty with plaintiff’s position is that the very

section of the Constitution upon which he relies provides

that membership in the retirement system is ‘‘an enforce-

able contractual relationship.’’ Section 14-199 was, of

course, in effect years before Otto Kerner became a mem-

ber of the retirement system, and it became, by its terms,

a condition of the contractual relationship to which he

consented by applying for membership. As the commentary

accompanying the Constitution states: ‘‘Of course, the

‘contractual relationship’ is governed by the actual terms

of the contract or pension.’’ (Ill. Ann. Stat., 1970 Const.,

art. XITI, sec. 5, Constitutional Commentary, at 302 (Smith-

Hurd 1971).) Plaintiff does not explain how enforcement

of this condition, to which the parties agreed and which

has existed throughout the duration of the contract, can

become an unconstitutional impairment of the benefits of

that contract. (See In re Roberts Park Fire Protection

District (1975), 61 Ill. 2d 429, 441.) Membership in the

System was sought with knowledge of this condition, and

it clearly cannot be said to impair or diminish the benefits

within the meaning of the constitutional provision.

We have also reviewed plaintiff’s claims relating to

corruption of blood and forfeiture of estate (Ill. Const.

1970, art. I, sec. 11), cruel and unusual punishment (U.S.

Const., amend. VIII), and due process (Ill. Const. 1970,

art. I, sec. 2; U.S. Const., amends. V, XIV). We hold that

a eg per ne

APPENDIX 7

the termination of payments here violates none of these

provisions.

Accordingly, the judgment of the appellate court sus-

taining the Board’s denial of pension benefits is affirmed.

Judgment Affirmed

WARD, C.J., and CLARK and MORAN, JJ., took no

part in the consideration or decision of this case.

December 1, 1978

The Supreme Court today denied the petition for rehear-

ing in the above entitled cause. Chief Justice Ward, Mr.

Justice Clark and Mr. Justice Moran took no part.

Very truly yours,

/s/ Clell L. Wood

Clerk of the Supreme Court

STATE OF ILLINOIS

APPELLATE COURT

AT AN APPELLATE COURT, for the Fourth Judicial

District of the State of Illinois, sitting at Springfield:

PRESENT

HONORABLE FREDERICK 8. GREEN Presiding Judge

HONORABLE ALBERT G. WEBBER III Judge

HONORABLE JOHN T. REARDON Judge

Attest: ROBERT L. CONN, Clerk.

BE IT REMEMBERED, that to-wit: On the 21st day of

October A.D. 1977, there was filed in the office of the Clerk

APPENDIX 8

of the Court an opinion of said Court, in words and figures

following:

STATE OF ILLINOIS

APPELLATE COURT

FOURTH DISTRICT

General No. 14306 Agenda No. 77-496

OTTO KERNER, by ANTON KERNER, his )

representative,

Plaintiff-Appellee,

Vv.

STATE EMPLOYEES’ RETIREMENT SYS-

TEM OF ILLINOIS; ELLIOTT EPSTEIN,

Director of Finance of the State of Illinois

and Trustee and Acting Chairman of the

Board of Trustees of the State Employees’

Retirement System of Illinois; GEORGE Appeal from

antennae cy of the State of f Circuit Court

linois an rustee o e Board of Trustees gam

of the State Employees’ Retirement System San on County

of Illinois; CLASCENNA HINTON HAR- 299-76

VEY, Trustee of the Board of Trustees of

the State Employees’ Retirement System

of Illinois; MICHAEL L. MORY, Secretary

of the Board of Trustees of the State Em-

ployees’ Retirement System of Illinois; and

ALAN J. DIXON, Treasurer of the State of

Illinois and Treasurer of the State Em-

ployees’ Retirement System of Mlinois,

Defendants-Appellants. J

MR. JUSTICE WEBBER delivered the opinion of the

court:

This appeal involves the state pension rights of the

late Otto Kerner, one-time governor of Illinois.

The essential facts are not in serious dispute. On Sep-

tember 28, 1965, Otto Kerner (herein for convenience re-

ferred to as ‘‘Kerner’’), then Governor of Illinois, applied

for membership in the State Employees’ Retirement Sys-

tem (herein ‘‘System’’). Under an option then existing,

Kerner paid into the System $11,048.34, which included

4% compound interest, and obtained service credits retro-

actively to the date of his taking office, viz., January 9,

1961,

APPENDIX 9

On May 19, 1968, Kerner resigned as Governor to be-

come a Judge of the United States Court of Appeals for

the Seventh Circuit, and on May 2, 1969, applied for a re-

tirement allowance. On /une 16, 1969, the System granted

the allowance retroactively to January 19, 1969, by paying

$1,534.88, and thereafter monthly allowances of $335.08

each, through June 1973. At the time of the initial payment

Kerner was notified that his contributions to the Sys-

tem, excluding interest, totalled $16,815.71. Payments were

stopped commencing with the month of July 1973; three

additional payments were made at various times thereafter,

and Kerner’s total payments from the System are agreed

to be $18,927.82.

Kerner was convicted of one or more felonies under the

United States Code in the United States District Court

for the Northern District of Illinois, Eastern Division.

These convictions were affirmed on appeal. They related

to Kerner’s service as an employee of the State of Illinois.

On October 3, 1975, Kerner filed a demand with the

System for resumption of payments. A hearing was con-

vened before a hearing officer, who rendered his decision

on April 26, 1976, recommending such resumption. On May

3 and 5, 1976, the board of trustees of the System reviewed

the hearing officer’s report, held further hearings and

overruled the hearing officer. ;

Kerner died in May 1976, and his representative filed

an administrative review proceeding in the circuit court

of Sangamon County, asking in effect that the finding

of the System be reversed and Kerner’s estate be awarded

payments from July 1973, through May 1976, totaling

$9,382.24. The circuit court reversed the System and this

appeal ensued.

Fundamental ard central to the solution of the problem

APPENDIX 10

presented is the construction of section 14-199 of the Illi-

nois Pension Code (Ill. Rev. Stat. 1975, ch. 108%, par.

14-199). Equally fundamental is the effect, if any, upon

section 14-199 of article XIII, section 5, of the Illinois

Constitution of 1970.

The statutory section in question, section 14-199, reads

as follows:

‘*None of the benefits herein provided for shall be

paid to any person who is convicted of any felony

relating to or arising out of or in connection with

his service as an employee.

This section shall not operate to impair any contract

or vested right heretofore acquired under any law

or laws continued in this Article nor to preclude the

right to a refund.

All future entrants entering service subsequent to

July 9, 1955 shall be deemed to have consented to the

provisions of this section as a condition of coverage.”’

Ill. Rev. Stat. 1975, ch. 1081, par. 14-199.

This provision first appeared in 1955 as paragraph 216.2

of chapter 127, Ill. Rev. Stat., and became effective July 9,

1955. In 1963 the legislature codified various pension plans

into what is now chapter 10814, Ill. Rev. Stat., and the sec-

tion was incorporated therein without change except to add

to it the words, ‘‘subsequent to July 9, 1955.’’

Before proceeding further, we must lay to rest one

matter raised in the briefs. Kerner’s brief spends a con-

siderable amount of time and space arguing the proposi-

tion that a pension is a contractual right, not a bounty. This

is conceded by the System. Some early cases, decided when

pension plans were much less common than today, contain

language which at least look in the direction of bounty

or grace-and-favor, alterable at the will of the sovereign.

More recent authority has totally rejected such thinking

and pensions are now acknowledged to be contractual in

APPENDIX 11

nature. (See Peterson v. Board of Trustees of Firemen’s

Pension Fund (1973), 54 Ill. 2d 260, 296 N.E. 2d 721.)

Kerner’s pension was a contract right and became vested

in 1969 when the System granted him an allowance. The

actual date of vesting is of little importance since the

statute in question was in force at all times since 1955.

In construing the statute the trial court held that until

retirement an employee’s rights were inchoate, but upon

actual retirement such rights became vested. The court

read the words ‘‘heretofore acquired’’ in paragraph 2 of

section 14-199 of the Pension Code as relating to the date

of retirement. Such a construction totally ignores the im-

pact of paragraph 3.

A reading of the statute as passed in 1955 and a further

reading of it as amended in 1963 demonstrate clearly that

the legislature intended a change in the pension contract

for those retiring after July 9, 1955. Paragraph 2 is, in

effect, a saving clause and acknowledges that the legislature

could not constitutionally impair a previously acquired con-

tract right. ‘‘Heretofore’’ in the 1955 act could only refer

by logic and grammar to a time prior to July 9, 1955;

all ‘‘future entrants”’ (i.e., those after July 9, 1955) are

deemed to have consented to the felony divestiture pro-

vision as part of the pension contract. The amendment of

1963 further underscores the importance of the date.

The legislative intent is clear: Rights acquired prior

to July 9, 1955, could not be divested or impaired and no

effort was made to do so; rights acquired after July 9,

1955, could be divested, since the felony conviction con-

dition became part of the pension contract. It is a prime

example of a condition subsequent, a familiar feature of

contract law.

To pursue the theory of the trial court to its logical

APPENDIX 12

conclusion, all an employee need do is to conceal his

criminal activity until after retirement and thus render

the entire statute meaningless.

In Peterson v. Board of Trustess of Firemen’s Pension

Fund, 54 Ill. 2d 260, 264-65, 296 N.E.2d 721, , the court

said: ,

“‘The language of the Code is clear and there is

no need for this court to construe it so as to give

it eny meaning other than the one which is clearly

stated. It is the duty of the court to enforce the law

as enacted according to its plain and unmistakable

provisions, [Citation.] The legislature could have pro-

vided pensions for fire fighters or other full-time

appointed employees of the fire department who are

no longer capable of performing the duties of their

positions because of physical incapacity. It did not

do so. We cannot now alter the plain language of the

statute and through judicial construction incorporate

such a provision in the Code. [Citation.]’’

The doctrine applies with force to the case at bar. The

statute is plain and clear: Those acquiring pension rights

prior to July 9, 1955, may not have them divested by

conviction of a felony; those acquiring pension rights

after July 9, 1955, forfeit such rights upon such convic-

tion. Any other interpretation tortures the statute and

contorts it into an unrecognizable melange. The trial court

was in error in its construction.

Since we have decided that the trial court misconstrued

the statute, we must next consider the meaning of ‘‘any

felony.’’ The trial court found that the felonies of which

Kerner was convicted were within the ambit of the statute.

The System asserts that since no cross-appeal was taken

from this finding, the matter is not properly before this

court. Village of Arlington Heights v. National Bank of

Austin (1st Dist. Gen. No. 76-762 (1977) ), Ill. App. 3d ‘

a!

APPENDIX 13

N.E.2d , holds that a specific negative finding be-

low against an appellee is not before an appellate court

unless cross-appealed. However, in view of our finding

that the trial court erred in construing ‘‘heretofore ac-

quired,’’ we must examine the other proposition because,

should we also find error in construing ‘‘any felony,’’ and

find that the felonies involved here are not within the am-

bit of the statute, the decision of the trial court could be

upheld, although not its reasoning.

Since this appears to be a case of first impression, we

have no direct precedents to aid us. Kerner lays emphasis

on an unpublished opinion of the Attorney General of

Illinois to the Director of the Department of Registration

and Education under date of February 15, 1966. The sub-

sequent history of that opinion is detailed in Bruni v.

Dept. of Registration and Education (1974), 59 Ill. 2d

6, 319 N.E.2d 37, cert. denied, 421 U.S. 914. The Attorney

General narrowly construed the meaning of ‘‘conviction

of a felony’’ in the Medical Practice Act. The legislature

responded at its next session by broadening the meaning.

The supreme court held that where a court (or the Attor-

ney General by analogy) construes the terms of a statute

and the legislature thereafter defines those terms, the de-

cision is presumptively not in accordance with the intent

of the legislature.

We are not so presumptuous as to.say what the legis-

lature might do in the event we should narrowly construe

‘‘any felony’’ in the case at bar, but the career of the

General’s opinion of February 15, 1966, is at least prima

facie evidence that such an opinion would be destined for

short tenure.

We are of the opinion that the principal purpose of the

statute is to penalize work-related felonies. The structure

of government has become so complex in recent times and

APPENDIX 14

the functions of state, Federal and local governments so

intertwined and enmeshed as to make the Cretan labyrinth

look like an interstate highway. The proliferation of Fed-

eral laws, offenses and punishments is a matter of common

knowledge and is so extensive that the hoary aphorism

of ‘‘the Federal case’’ has lost its meaning. The plain

meaning of the statute relates to felonies ‘‘relating to

or arising out of or in connection with’’ service, not as

against any particular sovereign. It does not strain

credulity to envision that, given the nature of the Federal

intrusion into state affairs, most of the felonies likely

to arise under the statute will be Federal in nature.

We are further persuaded that ‘‘any felony’’ as used

in the statute includes Federal offenses by the specific

holding in Bruni wherein a Federal felony which was only

a misdemeanor under state law was held to be a felony

under the Medical Practice Act.

The trial court was correct in holding that Kerner’s

offenses were felonies under section 14-199 of the Pension

Code.

We turn next to the principal constitutional question

raised in this appeal. After making its interpretation of

the statute as detailed above, the trial court then further

found that if its interpretation were in error, then the

statute was unconstitutional as to Kerner in that it ‘‘di-

vests or diminishes or impairs a vested interest.’’ While

the order of the trial court refers to both the Constitu-

tion of the United States and the Constitution of the State

of Illinois, we believe that the main emphasis was on the

Illinois Constitution of 1970 which provides in article

XIII, section 5:

‘‘Membership in any pension or retirement system

of the State, or any unit of local government or school

district, or any agency or instrumentality thereof,

———?

i—_

APPENDIX 15

shall be an enforceable contractual relationship, the

benefits of which shall not be diminished or impaired.’’

This section is new, the 1870 Constitution having con-

tained no similar provision. Furthermore, the section was

offered from the floor in the Constitutional Convention

and hence we do not have the benefit of reports from

which to glean the intent of the framers. However, the

record of proceedings of the Convention sheds some light

on the matter.

The delegates were concerned that there should be ade-

quate funding of state and local pension systems (IV

Record of Proceedings Sixth Illinois Constitutional Con-

vention, 2926-27, July 21, 1970). In connection with that

debate, delegate Kinney, a co-sponsor of the provision

stated :

‘*Mrs. Kinney: Thank you, Mr. Green and I did

discuss the term ‘vesting’ with Mr. Kanter, the coun-

sel to the Committee on Style and Drafting, and we

thought that it would be quite fair if a person under-

took employment under a statute that provided for

a contingency for lowering the benefits at some future

time, that this was, indeed, the contract that he had

accepted. All we are seeking to do'is to guarantee

that people will have the right that were in force at

the time they entered into the agreement to become

an employee, and as Mr. Green has said, if the benefits

are $100 a month in 1971, they should be not less than

$100 a month in 1990.’’ (IV Record of Proceedings

Sixth Illinois Constitutional Convention, 2931-32.)

It is thus apparent that the framers recognized circum-

stances under which a pension might be reduced, and by

extension of reasoning, divested altogether.

The hearing officer cited Ballard v. Board of Trustees

(1974), Ind. App. , 313 N.E.2d 351, and as basis

for his decision, and while not citing it specifically, the

APPENDIX 16

trial court’s decision appears to adopt its rationale. By

way of supplemental authority filed by the System we

are informed that the Indiana Supreme Court has over-

ruled its appellate court in the Ballard case. (Ballard v.

Board of Trustees (1975), 263 Ind. 79, 324 N.E.2d 813,

appeal dismissed, 423 U.S. 806.) The Indiana court, while

seeming to hold the pension as a gratuity, held that even

if a contractual theory were adopted, nevertheless such

pension was subject to statutory reservations and could

be divested. The appellate court decision in Ballard is

inapposite.

Kerner also relies on Leonard v. City of Seattle (1972),

81 Wash. 2d 479, 503 P.2d 741. Apart from the fact that

the Washington statute is distinguishable from the Illinois,

the facts reveal that the felony was committed some four

years after retirement. The Washington court held that

the felony did not occur in the course of the employee’s

duties and hence the pension could not be terminated.

Leonard is likewise unpersuasive here.

Article XIII, section 5, is largely derived from the New

York Constitution of 1940 and the Illinois Supreme Court

has looked to the decisions of that state in construing

the provision in question here. (Peters v. City of Spring-

field (1974), 57 Ill. 2d 142, 311 N.E.2d 107.) We may

therefore look to New York for guidance.

In Holz v. Kowal (1967), 27 App. Div. 2d 128, 276 N.Y.S.

2d 398, a situation analogous to the case at bar arose.

The New York pension law had for a long time prohibited

a pensioner from taking certain types of public employ-

ment and still continue to draw his allowance. One such

pensioner sued and claimed that such prohibition was un-

constitutional under the section similar to Illinois’ article

XIII, section 5. The court heid that the prohibition ante-

dated the constitutional provision and continued thereafter,

APPENDIX 17

and hence was not affected by the adoption of the 1940

Constitution.

The instant case is strikingly similar. When Kerner en-

tered the System, the felony provision was in existence as

part of the pension contract. The adoption of the 1970

Constitution could not impair any obligations nor remove

any disabilities existing in that contract.

We hold that the adoption of article XIII, section 5,

of the Constitution of 1970 neither abrogated nor modified

section 14-199 of the Lllinois Pension Code.

Kerner also makes several claims under the Constitu-

tion of the United States which we shall consider briefly.

First, that the denial of pension rights is cruel and un-

usual punishment under amendment VIII. This right has

been everywhere held to apply to criminal, not civil pro-

ceedings. (See Robbins v. Police Pension Fund (S.D.N.Y.

1973), 321 F. Supp. 93.) It has no relevancy here. Sec-

ond, that the denial was an ex post facto law in violation

of article I, sections 9 and 10 of the United States Con-

stitution and article I, section 16, of the Illinois Consti-

tution of 1970. The claim has no merit since the statute had

been in existence nearly six years before Kerner’s em-

ployment commenced in 1961. Third, Kerner claims lack

of due process but cites no authority for the proposition.

The claim is untenable. Procedurally he was granted ade-

quate hearing and review. Substantively it is uncontested

that he was entitled to a refund of all contributions over

what he had paid in. Fourth, claim is made under article

I, section 11, of the Illinois Constitution of 1970, concern-

ing corruption of blood or forfeiture of estate. It is like-

wise groundless; no estate was forfeited, only a right to

continued pension benefits by reason of his actions. The

corruption cases turn generally on the question of whether

the individual enlarges his own estate or profits from his

APPENDIX 18

own wrong. Neither is present here. The System urges

that Kerner should not be rewarded for his bad acts.

This is in the nature of some pious moralizing and has

no persuasiveness in view of the specific language of sec-

tion 14-199.

The additional constitutional claims are without founda-

tion.

Finally, Kerner claims that the action of the System was

ultra vires. The contention appears to ground itself on

an allegation that the board of trustees had no chairman

and held no meetings between May 1973, and June 1974.

Under the authority of Arlington Heights v. National

Bank of Austin (ist Dist. Gen. No. 76-762 (1977)), Il.

App. 3d ‘ N.E.2d , we consider the matter

waived. In any event, Kerner never requested a hearing

or a final decision until the filing of his claim for reinstate-

ment in 1975. The final decision was made by a duly con-

stituted board after a full hearing. Kerner fails to demon-

strate in what manner he was prejudiced by the procedures

employed by the board.

The briefs discuss the question of interest on the claim.

In view of the disposition which we make of the case, the

question becomes moot.

The decision of the circuit court of Sangamon County

is reversed.

Reversed.

GREEN, P.J., and REARDON, J., concur.

ee

APPENDIX 19

IN THE CIRCUIT COURT FOR THE

SEVENTH JUDICIAL CIRCUIT OF ILLINOIS

SANGAMON COUNTY, SPRINGFIELD, ILLINOIS

OTTO KERNER, by ANTON KERNER, his }

representative,

Plaintiff,

Vv.

STATE EMPLOYEES’ RETIREMENT SYS-

TEM OF ILLINOIS; ELLIOTT EPSTEIN,

Director of Finance of the State of Illinois

and Trustee and Acting Chairman of the

Board of Trustees of the State Employees’

Retirement System of Illinois; GEORGE

LINDBERG, Comptroller of the State of Administrative Review

Illinois and Trustee of the Board of Trustees -— No. 299-76

of the State Employees’ Retirement System :

of Illinois; CLASCENNA HINTON HAR-

VEY, Trustee of the Board of Trustees of

the State Employees’ Retirement System

of Illinois; MICHAEL L. MORY, Secretary

of the Board of Trustees of the State Dm-

ployees’ Retirement System of Illinois; and

ALAN J. DIXON, Treasurer of the State of

Illinois and Treasurer of the State Em-

ployees’ Retirement System of Illinois, |

Defendants.

ORDER

Now the matter of the above-entitled cause on Admin-

istrative Review before this Court having eome on to be

heard and the Court having examined the pleadings, re-

port of proceedings, the arguments of counsel and the briefs

heretofore submitted by counsel for the respective parties

directed to the within Administrative Review, the Court

makes the following findings:

1. That this Court has jurisdiction of the parties hereto

and the subject matter hereof.

2. That the within entitled cause is concerned with the

effect of a conviction of a crime on pension benefits under

the State Employees’ Retirement System of Illinois.

APPENDIX 20

3. That the conviction of the former Governor of the

State of Illinois, Otto Kerner, occurred after his retirement

and during the period that he was receiving his pension

under the State Employees’ Retirement System of Illinois.

4. That the offenses of which the former Governor of

the State of Illinois, Otto Kerner, was convicted are felonies

within the meaning of §14-199 of Chap. 108%, Ill. Rev.

Stats. 1975.

5. That the Court further finds that the issue involved

is the meaning or interpretation of §14-199 of Chap. 10814,

Ill. Rev. Stats. 1975.

6. It is the further finding of this Court that until an

employee has earned his retirement pay or until the time

arrives when he retires, his retirement is an inchoate right.

7. It is the further finding of this Court that when con-

ditions are satisfied at the time of retirement, pay under

the retirement plan has become a vested right of which

the person entitled to a pension cannot be deprived for the

reason that it has ripened or matured into a full contrac-

tual obligation.

8. For the reasons stated herein it is the finding of the

Court that the findings of the State Employees’ Retire-

ment System of Illinois in their Order previously entered

on May 5, 1976, disqualifying Otto Kerner by reason of

the provisions of the Ill. Rev. Stats. 1975, Chap. 108%,

§14-199 should be reversed.

9. It is the further finding of the Court that if this

Court’s interpretation of said statutory provision is found

to be in error then it is the further finding of this Court

that the statute, namely, §14-199, Chap. 108%, Ill. Rev.

Stats. 1975, is unconstitutional as to the Plaintiff, Otto

Kerner, as a violation of his rights under the United States

APPENDIX 21

Constitution and the Constitution of the State of Illinois

in that the Decision and Order of the State Employees’

Retirement System of Illinois on May 5, 1976, divests or

diminishes or impairs a vested interest.

For the foregoing findings and reasons set out herein IT

IS HEREBY ORDERED, ADJUDGED AND DECREED

that the Decision and Order of the State Employees’ Re-

tirement System of Illinois entered on May 5, 1976, ter-

minating the pension of Otto Kerner and denying Otto Ker-

ner of any further pension benefits BE AND IS HEREBY

reversed and remanded to the State Employees’ Retire-

ment System of Illinois with instructions to pay over to

the Estate of Otto Kerner the sum of all arrearages and

that he be accorded all benefits and emoluments due him

under the State Employees’ Retirement System of Illinois

in conformance with this Order.

The memorandum opinion of Hon. Paul C. Verticchio,

dated 12/1/76 is incorporated herein and attached hereto.

ENTERED this 27th day of December, 1976.

/s/ Harvey Beam

Judge of the Circuit Court

I hereby certify the document to which this certificate is

attached is a true and complete copy of the original on file

and of record in my office.

Date: December 27, 1976, /s/ Edward W. Ryan, Clerk of

the Circuit Court in the State of Illinois and County of

Sangamon.

APPENDIX 22

CIRCUIT COURT, SEVENTH JUDICIAL CIRCUIT

ILLINOIS

December 1, 1976

Robert Weiner, Esquire

Attorney at Law

1227 South Seventh Street

Springfield, IL 62703

M. Brooks Byus, Esquire

Assistant Attorney General

500 South Second Street

Springfield, IL 62706

RE: OTTO KERNER, ete.

vs.

STATE EMPLOYEES’ RETIREMENT SYSTEM

OF ILLINOIS, et al.

No. 299-76 Administrative Review

Gentlemen:

The Court has examined the pleadings, the Report of

Proceedings, the arguments of counsel and the briefs di-

rected to the Administrative Review of the above-captioned

case.

It is agreed that this case is concerned with the effect

of a conviction of a crime on pension benefits under the

State Employees’ Retirement System. The facts are not

in controversy. It is unrebutted that the conviction of the

former Governor of the State of Illinois, Otto Kerner,

occurred after his retirement and during the period that

he was receiving a pension under the State Employees’

Retirement System.

The Plaintiff in their brief directs some argument to

the issue that the felonies involved herein are not within

the scope of Chapter 10814, paragraph, 14-199.

ed tence eee ta Ce

APPENDIX 23

It is the finding of the Court that the said offenses are

felonies within the said statute. The pertinent statutory

provision reads as follows:

‘*Felony conviction. None of the benefits herein

provided for shall be paid to any person who is con-

victed of any felony relating to or arising out of or

in connection with his service as an employee.

This section shall not operate to impair any contract

or vested right heretofore acquired under any law or

laws continued in this Article nor to preclude the right

to a refund.

All future entrants entering service subsequent to

July 9, 1955 shall be deemed to have consented to the

provisions of this section as a condition of coverage.’

It is further the finding of this Court that the issue in-

volved is the meaning or interpretation of Illinois Revised

Statutes 1975, Chapter 108%, paragraph 14-199.

It is the finding of this Court that until an employee has

earne] his retirement pay or until the time arrives when

he retires, his retirement pay is an inchoate right.

It is further the order of the Court that when conditions

are satisfied at the time of retirement, pay under the retire-

ment plan has become a vested right of which the person

entitled to a pension cannot be deprived. It has ripened

or matured into a full contractual obligation.

Pursuant to the above findings, the findings of the State

Kmployees’ Retirement System in an order herein entered

disqualifying Otto Kerner under the provisions of the Illi-

nois Revised Statutes 1975, Chapter 108%, paragraph 14-

199, are reversed.

It is further the finding of the Court that if the above

interpretation of the trial court is in error, then the said

statute is unconstitutional as to the Plaintiff, Otto Kerner,

APPENDIX 24

as a violation of the United States Constitution and the

Constitution of the State of [Illinois in that it divests or

diminishes or impairs a vested interest.

Counsel for the Plaintiff is directed to prepare an order

pursuant to the above findings and present the said order

to the Honorable Judge Harvey Beam as Presiding Judge

of Sangamon County in the absence of this Judge due to

retirement.

The Court has on this date entered the following docket

order:

‘*Cause called for further hearing. Findings of the

State Employees’ Retirement System reversed for rea-

sons set out in Court’s opinion of December 1, 1976.

Cause continued for presenting of written order to

the Honorable Harvey Beam, Presiding Judge of San-

gamon County.”’

Sincerely yours,

/s/ Paul C. Verticchio

Circuit Judge

PCV*df

ce: The Honorable Harvey Beam

Presiding Judge of Sangamon County

Room 411 County Building te.

Springfield, IL 62701

Court file

APPENDIX 25

BEFORE THE

STATE EMPLOYEES’ RETIREMENT SYSTEM

OF ILLINOIS

IN THE MATTER OF OTTO KERNER,

Petitioner. No. 1

SUPPLEMENTAL

DECISION OF HEARING OFFICER,

MANUEL J. ROBBINS

NATURE OF ADDITIONAL PROCEEDINGS

The undersigned Hearing Officer has heretofore con-

ducted hearings on the petition filed by Otto Kerner de-

manding the resumption of his pension payments and for

payment of pension arrearages and benefits thereunder

and the answer and demand for refund filed by the Retire-

ment System.

On April 23, 1976 the undersigned rendered a decision

that Otto Kerner under his contractual relationship with

the State Employees’ Retirement System of the State of

Illinois and under the provisions of Article 14, Chap.

108% of the Illinois Revised Statutes acquired a vested

enforceable interest in his pension which cannot be termi-

nated, forfeited, diminished or impaired. The Hearing

Officer recommended that Otto Kerner’s application for

service retirement allowance had been accepted by the Re-

tirement System which he was a member in good standing,

that his vesting was complete and that he was entitled to

receive resumption of his pension payments and payment

of all arrearages, benefits and emoluments.

On May 5, 1976 at a meeting of the Board of Trustees of

the State Employees’ Retirement System of the State of

Illinois a unanimous decision of the Trustees was made

denying the request of Otte Kerner for the resumption of

APPENDIX 26

his pension payments and for the payment of any pension

arrearages and benefits thereunder.

By motion approved on May 5, 1976, at said meeting of

the Board of Trustees it was requested that Manuel J.

Robbins, Hearing Officer, review the record and make a

recommendation as to whether or not the Board of Trus-

tees of the State Employees’ Retirement System of the

State of Illinois has the power and obligation to seek re-

payment of such service retirement allowance payments

made to Otto Kerner in excess of his contributions made

to the System. In arriving at his Supplemental Decision

the Hearing Officer was instructed not to utilize his own

prior decision as a foundation for his supplemental deci-

sion. Instead the Hearing Officer was requested to use as

a foundation and as a sole consideration for his supple-

mental decision the ruling of the Board of Trustees of the

State Employees’ Retirement System of the State of Ili-

nois made on May 5, 1976 denying the petition of Otto

Kerner to reinstate his service retirement allowance pay-

ments, and to use said Board of Trustee’s decision as the

sole basis for his supplemental decision.

A copy of the letter of May 18, 1976 of Michael L. Mory,

Executive Secretary containing said instructions is attached

hereto as Exhibit A.

» FINDINGS AND CONCLUSIONS

Section 14-199 of Chap. 108% of the Illinois Revised

Statutes states as follows:

‘*Felony Convictions. None of the benefits uerein

provided for shall be paid to any person who is con-

victed of any felony relating to or arising out of or

in connection with his service as an employee.’’

‘‘'Mhis section shall not operate to impair any con-

tract or vested right heretofore acquired under any

APPENDIX 27

law or laws continued in this Article nor to preclude

the right to a refund.’’

‘*All future entrants entering service subsequent to

July 9, 1955 shall be deemed to have consented to the

provisions of this section as a condition of coverage.’’

The Board of Trustees of the State Employees’ Retire-

ment System of [Illinois has decided that Otto Kerner did

not have an enforceable vested interest in his pension and

that therefor his pension can be terminated. Said decision

further ordered that his pension payments be permanently

terminated and that Otto Kerner be denied any further pen-

sion benefits. Since the Board of Trustees has so inter-

preted Section 14-199 of Chap. 108% of the Illinois Re-

vised Statutes then it follows as a matter of course that

the language of the first paragraph of Section 14-199 shall

apply.

‘‘None of the benefits herein provided for shall be

paid to any person who is convicted of any felony relat-

ing to or arising out of or in connection with his ser-

vice as an employee .. .’’ (emphasis added)

Therefore, since the Statute is construed as prohibiting

the payment to any person in this category and the Board

of Trustees of the State Employee’s Retirement System

of the State of Illinois has already terminated Otto Kerner’s

pension benefits it has the power and obligation to seek

repayment of such service retirement arrearage payments

made to Otto Kerner in excess of his contribution made

to the State Employees’ Retirement System of the State

of Illinois.

Respectfully submitted,

/s/ Manuel J. Robbins

Hearing Officer

APPENDIX 28

EXHIBIT A

STATE EMPLOYEES’ RETIREMENT SYSTEM

OF ILLINOIS

1201 South Fifth Street, Springfield 62706 217/782-7008

May 18, 1976

Mr. Manuel J. Robbins

Robbins, Coe, Rubinstein & Shafran, Ltd.

Attorneys at Law

Brunswick Building, 33rd Floor

69 West Washington Street

Chicago, Illinois 60602

Re: Otto Kerner Hearing

Dear Mr. Robbins:

In accordance with a motion approved at the May 5,

1976 meeting of the Board of Trustees, I am hereby re-

questing that you review the record and make a recommen-

dation as to whether or not the Board of Trustees has the

power and obligation to seek repayment of such Service

Retirement Allowance payments vouchered to Otto Kerner

in excess of his contributions made to the System. In mak-

ing this recommendation you should take into considera-

tion the decision of the Board as rendered during the

May 5, 1976 meeting denying the petitioner’s request to

reinstate Service Retirement Allowance payments.

I am, by copy of this letter, advising counsel for the

petitioner that should he wish to introduce additional evi-

dence relating to the question of repayment of Service

Retirement Allowance payments in excess of Mr. Kerner’s

contributions that he submit such evidence or argument

directly to you as Hearing Officer. Since we are now antici-

pating another meeting of the Board of Trustees by the

APPENDIX 29

middle of June, I would hope that you could render this

recommendation within the next tw. to three weeks. To

expidite matters, I would suggest that you mail the recom-

mendation directly to each trustee.

Should you have any questions regarding the scope of

this further review, please let me know.

Very truly yours,

/s/ Michael L. Mory

Executive Secretary

MLM:beb

ec: Mr. Robert Weiner

BEFORE THE STATE EMPLOYEES’

RETIREMENT SYSTEM OF ILLINOIS

IN THE MATTER OF OTTO KERNER,

Petitioner. 3.

AFFIDAVIT OF MAILING

TO: Mr. Elliott Epstein, Acting Chairman

Director of Finance of the State of Illinois,

Trustee, State Employees? Retirement System of I]l.

160 North LaSalle Street, Chicago, Illinois 60601.

Mr. George Lindberg

Comptroller of the State of Illinois,

Trustee, State Employees’ Retirement System of IIl.

(Attention: Dan McCarthy),

Capitol Building, Springfield, Illinois 62706.

Ms. Clascenna Hinton Harvey,

Trustee, State Employees’ Retirement System of Ill.

2100 Cherry Road, Springfield, Illinois 62706.

Mr. Michael L. Mory, Secretary,

State Employee’s Retirement System of Illinois

1201 S. 5th Street, Springfield, Illinois 62706.

1

APPENDIX 30

Mr. Alan J. Dixon, Treasurer of the State of Illinois,

Trustee, State Employees’ Retirement System of Il.

Capitol Building, Springfield, Illinois 62706.

Mr. Nolan B. Jones,

Director, Department of Personnel,

Capitol Building, Springfield, Illinois 62706.

Jacqueline K. Nejmanowski, Attorney,

State Employees’ Retirement System of Illinois,

1201 S. 5th Street, Springfield, Illinois 62705.

Robert Weiner, Esq., Attorney,

1227 8. 7th Street, P.O. Box 399, Springfield, Tl. 62705.

MANUEL J. ROBBINS certifies that on this 7th day of

June, 1976, a copy of the attached Supplemental Decision

of Hearing Officer was served upon each of the above named

individuals at the addresses above shown by dropping the

same in the United States Mails at Chicago, Illinois, with

proper postage affixed thereto.

/s/ Manuel J. Robbins

APPENDIX 31

BEFORE THE

STATE EMPLOYEES’ RETIREMENT SYSTEM

OF ILLINOIS

IN THE MATTER OF OTTO KERNER,

Petitioner. No.1

DECISION OF HEARING OFFICER,

MANUEL J. ROBBINS

NATURE OF PROCEEDINGS

This matter comes on to be heard before the State Em-

ployees’ Retirement System of Illinois (‘‘Retirement Sys-

tem’’) on a petition filed by Otto Kerner (‘‘Kerner’’),

demanding the resumption of his pension payments and

for the payment of any pension arrearages and benefits

thereunder.

The Retirement System has answered the petition, indi-

cating it had rightfully withheld said payments because

Kerner had been convicted of a felony and, under the

provisions of Section 14-199, Chapter 108% of the Illinois

Revised Statutes, said payments should be withheld because

Kerner had been convicted of one or more felonies. The

Retirement System also claims that it is entitled to repay-

ment from Kerner of the sum of $2,112.11, representing

the difference between the total amount of benefits received

by Kerner and the amount of Kerner’s accumulated con-

tributions in the retirement system.

The purpose of the hearing is to recommend to the Re-

tirement System a final administrative decision under the

appropriate provisions of Article 14, Chapter 108% of the

Illinois Revised Statutes covering Pensions for the State

Employees’ Retirement System of Illinois.

APPENDIX 32

A hearing was conducted by the undersigned, MANUEL

J. ROBBINS (‘‘Robbins’’), in Springfield, Illinois, on Feb-

ruary 2nd and 3rd, 1976. A full transcript of the hearing has

been prepared and is attached to and made part of the rec-

ord. Petitioner, Kerner, has introduced Exhibits 1 through

25. The Retirement System has introduced Exhibits 1

through 10. All of the exhibits have been made part of the

record, as indicated in the transcript.

STATEMENT OF FACTS

On September 28, 1965, Kerner, then Governor of the

State of Illinois, applied for membership in the Retirement

System under the provisions of Article 14, Chapter 1084,

of the Illinois Revised Statutes, as amended. Kerner vol-

untarily entered the Retirement System by paying therein,

including 4% interest, the sum of $11,048.34. By exercis-

ing his option to membership in the system, Kerner ob-

tained service credits back to his original date of employ-

ment, or date of taking office: January 9, 1961.

On May 19, 1968, Kerner resigned from his position

as an employee of the State of Illinois.

On May 2, 1969, Kerner applied to the Retirement Sys-

tem for a service retirement allowance and requested that

it commence as of January 14, 1969.

On June 16, 1969, the Retirement System notified Kerner

that his application for a service retirement allowance had

been approved by the Claims Committee and authorized

for payment in accordance with the law governing the

system. Kerner was assigned membership record number

112934, and a voucher in the amount of $1,534.88, in pay-

ment of his allowance for the period of January 14, 1969

through May 31, 1969, was forwarded to him. He was

advised by the Retirement System that his service retire-

APPENDIX 33

ment allowance amounted to $4,020.96 per year, or $335.08

per month, and was to continue through life. The same

notice informed Kerner that, for the purpose of determin-

ing his income tax liability, his contributions to the retire-

ment system, excluding interest, totalled $16,815.71. There-

after, for the months of June, 1969 through June, 1973,

Kerner received monthly pension payments in the sum of

$335.08 each, amounting to a total of $16,418.92. Kerner

also received the sums of $324.42 for the months of Sep-

tember, 1973 and May, 1974, and $325.18 for the month

of August, 1974, totaling $974.02. At the time of the hear-

ing on February 2, 1976, Kerner had received gross pen-

sion payments amounting to $18,927.82. For the period

commencing July 1, 1973, up to the time of the hearing on

February 2, 1976, Kerner had failed to receive 28 pension

payments for the total sum of $9,382.24.

Kerner has been convicted of one or more felonies in

case number 71 CR 1086, U.S.A. vs. OTTO KERNER, JR.,

in the United States District Court for the Northern Dis-

trict of Illinois, Eastern Division, which convictions have

been affirmed by the higher courts. The felony convictions,

alleging violations of various sections of the United States

Code, related to or arose out of or were in connection with

Kerner’s service as an employee of the State of Illinois.

ISSUES

I. Does Otto Kerner have a contractual relationship

with the State Employees’ Retirement System of Illinois

which would give him a vested interest in his accumulated

contributions to the System?

II. Is Otto Kerner’s pension a bounty or reward, or

deferred compensation arising out of an enforceable con-

tract right which has given him a vested interest in his

pension?

APPENDIX 34

III. Does the language of Section 14-199, Chapter 108%

of the Illinois Revised Statutes, ‘‘convicted of any felony,’’

include a conviction under the United States Statutes, or

does it only refer to conviction of a felony under the laws

of the State of Illinois?

IV. Is the Retirement System legally authorized to

withhold pension payments and terminate Kerner’s pen-

sion under the provisions of Section 14-199, Chapter 108%

of the Illinois Revised Statutes, by reason of his felony

conviction?

V. If Kerner has a vested right to the pension, can it

be terminated legally under the provisions of Section 14-199,

Chapter 108% of the Illinois Revised Statutes, and the

Illinois and United States Constitutions?

FINDINGS AND CONCLUSIONS

This is a case of first impression in the State of Illinois.

The Retirement System alleges that an administrative

agency and its hearing officer do not have the authority or

jurisdiction to hear or rule upon any judicial or consti-

tutional questions relating to the applicability of the stat-

utes to the matter of Otto Kerner.

While an administrative agency does not have the right

to exercise inherent judicial powers, or judicial functions

solely within the realm of the judiciary, it has a duty to

take cognizance of the rights created by contract, and has

the obligation to interpret contractual rights and obliga-

tions between an individual and the State of Illinois cre-

ated by the applicable statutes it has the duty to Administer.

A statute cannot be administered or interpreted in a

vacuum, but must be construed according to the available

guidelines and reasonable interpretations provided by the

Pe ee ee

APPENDIX 35

language of the various portions of the statute, the avail-

able case law which has already interpreted the various

legal principles involving pensions, as well as the guidelines

of the Illinois and United States Constitutions. See Giger

v. Board of Fire and Police Commissioners, 23 Ill. App. 2d

433, 435, wherein it is stated by the court:

‘‘A hearing before an administrative agency on

charges filed against an individual should not be a

partisan hearing with the agency on one side arrayed

against the individual on the other, but instead it

should be an investigation instituted for the purpose

of ascertaining and making findings of fact, and a fair

consideration should be given to the individual’s ob-

jections and his opportunity to be heard should not

be limited in scope.’’

A number of Illinois decisions have made it clear that a

government employees’ retirement system which provided

for optional contributions from employees, changed that

retirement system from a bounty or gratuity for meritori-

ous service to a deferred compensation arising out of a

contractual relationship which ultimately results in vesting

of said rights and becoming a property right, a pension right

that cannot be forfeited.

See:

People ex rel. Judges Retirement System of Ilimois v.

Warren Wright, State Treasurer, as Treasurer of

Judges Retirement System of Iliimois, (1942), 379 Tl.

328, 337;

Douglas C. Ridgeley v. Board of Trustees of State In-

stitutions Teachers’ Pension and Retirement Fund,

(1939), 371 Ill. 409;

S. E. Raines v. Board of Trustees of the Illinois State

Teachers’ Pension and Retirement Fund, (1937), 365

Ill. 610, 614;

Peters v. City of Springfield, (Rehearing denied May

31, 1974), 57 Ill. 2d 142, 311 N.E.2d 107,

APPENDIX 36

In the opinion of the undersigned hearing officer, there

are two kinds of vesting under the contract rights of Ker-

ner in the Retirement System, as provided by Article 14,

Chapter 10814, of the Illinois Revised Statutes:

First, there is the immediate vesting in the accumulated

contributions paid to the Retirement System by Kerner

and the deductions from his salary voluntarily agreed to

by Kerner as a state employee, and as authorized and pre-

seribed by the appropriate paragraphs of Article 14 of

Chapter 10814 of the Illinois Revised Statutes.

Second, there is the ultimate vesting in retirement bene-

fits which arises in the following set of circumstances: Ker-

ner, an employee of the Retirement System and covered

by the pension system, under his contract rights, became

eligible for retirement and applied for pension retirement

benefits under the provisions of and in compliance with

Article 14, Chapter 10814 of the Illinois Revised Statutes.

On May 2, 1969, Kerner, then a member in good standing

of the Retirement System, made an application for service

retirement allowance to the Board of Trustees of the Re-

tirement System. Under the powers vested in the Claims

Committee of the Retirement System, the application of

Kerner for a service retirement allowance was approved

and authorized for payment in accordance with the law

governing the system. A membership record number:

112934, was assigned, and a valid and binding agreement

was made on behalf of the Retirement System to pay Ker-

ner monthly service retirement allowance payments through

life. At that moment, the provisions of Section 14-193 went

into effect:

‘¢ Authorizations. Members shall, by virtue of the

payment of the contributions required to be paid to

this system, receive a vested interest in the accuwmu-

lated contributions in the system, and, in consideration

APPENDIX 37

of such vested interest, each member is deemed to have

agreed to and authorized the deductions from salary

of all contributions payable to this system.

Payment of salary as prescribed by law or as con-

tracted by a department, less the amounts of contribu-

tions provided in this Article, shall, together with such

special vested rights, be a full and complete discharge

of all claims of payments for service rendered by a

member to the State during the period covered by

any such payment.’’ (emphasis added)

The statute does not say a vested right in ‘‘his’’ accumu-

lated contributions to the system, as the State has quoted,

but indicates a vested right in ‘‘the’’ accumulated contri-

butions of the system. This vested right of Kerner’s, is a

binding obligation on the Retirement System and cannot

be forfeited, diminished or terminated.

Article 13, Section 5, of the Illinois Constitution, 1970,

Pension and Retirement Rights, states that:

‘‘Membership in any pension or retirement system

of the State, any unit of local government or school

district, or any agency or instrumentality thereof, shall

be an enforceable contractual relationship, the bene-

fits of which shall not be diminished or impaired.’’

The Retirement System has cited as the reason for ter-

mination of pension payments and benefits, the felony con-

viction of Kerner. Section 14-199 of Chapter 1084 of the

Illinois Revised Statutes states as follows:

‘‘Felony Conviction. None of the benefits herein

provided for shall be paid to any person who is con-

victed of any felony relating to or arising out of or

in connection with his services as an employee.

This section shall not operate to impair any contract

or vested right heretofore acquired under any law or

laws continued in this Article nor to preclude the right

to a refund.’’

APPENDIX 38

It is the opinion of the hearing officer that the language of

paragraph 1 of Section 14-199, namely, ‘‘none of the benefits

provided for shall be paid to any person convicted of any

felony relating to or arising out of or in connection with

his service as an employee,’’ includes a conviction under

the federal statutes as well as the statutes of the State of

Illinois.

It is the opinion of the hearing officer that the second

paragraph of Section 14-199 limits the applicability of the

first paragraph, restricting payment of benefits where the

effect of the first paragraph would be to ‘‘impair any con-

tract or vested right heretofore acquired under any law

or laws continued in this Article.’’

It is the further opinion of the hearing officer that the

language of the second paragraph of Section 14-199 takes

into account and mentions two sets of events which would

arise from the two types of vesting:

(A) Where the termination under paragraph 1 of Sec-

tion 14-199 occurs before the employee-member has retired,

prior to his application for service retirement being ac-

cepted or approved by the Retirement System.

Under these conditions, the vesting is solely in the em-

ployee’s own accumulated contributions to the System. The

employee-member then only as a vested right to a refund

of his accumulated contributions to the Retirement System

and would not have a vested right to a retirement allow-

ance.

(B) Where an employee has met all of his obligations

as an employee-member and, while a member in good

standing, has applied for a service retirement allowance

and his application for service retirement allowance has

been accepted by the Retirement System.

— eee

APPENDIX 39

Under these circumstances, the first portion of paragraph

2 of Section 14-199 prohibits impairment of contract rights

or vested rights ‘‘heretofore acquired’’. The employee-

member has then acquired a vested interest.

When this occurs, the vesting is complete, and the mem-

ber has a vested interest in the ‘‘aceumulated contributions

in the system’’ as described by Section 14-193 of Chapter

108% of the Illinois Revised Statutes. He has a vested

retirement allowance arising out of a contractual rela-

tionship. This benefit cannot be forfeited, terminated, di-

minished or impaired.

See: Leonard v. Seattle, (1972), 503 P.2d 741, where

the court stated, at page 746:

‘‘We accept the city’s contention to the extent that

the retirement pension is contractual in nature; but

that does not mean that once vested the right to the

pension does not constitute a part of the recipient’s

estate. That the retirement pension arises out of a

contract of employment does not deprive it of the

characteristics of property, but rather imparts to it

that very characteristic by removing it from the status

of a gratuity, mere expectancy, or simply a promise

enforceable ultimately by no more than a judgment

for damages.

As this court said in Bakenhus, at page 698, 296

P.2d at page 538:

In this state, a pension granted to a public em-

ployee is not a gratuity but is deferred compensa-

tion for services rendered. The contractual nature

of the obligation to pay a pension when the em-

ployee has fulfilled all of the prescribed condi-

tions was recognized in Luellen v. Aberdeen, 1944,

20 Wash. 2d 594, 148 P.2d 849...”’

Also see Ballard v. Board of Trustees of Police Pen.

Fund of the City of Evansville, Indiana (Rehearing denied

APPENDIX 40

August 9, 1974), 313 N.E.2d 351, where the court stated,

at page 355:

‘*... As fully ripened, plaintiff’s pension constituted

property — the present right to payment of his de-

ferred compensation. When his rights to the pension

fully vested, he acquired enforceable rights to funds

under the control of the trustees according to his con-

tract, and these rights thus finally vested constituted

property not to be divested or defeated by means or

for other reasons or on different grounds than those

upon which any other kind of property could be alien-

ated or defeated.’’

It is, therefore, the decision of this hearing officer that

Otto Kerner became an employee-member of the Retire-

ment System on September 28, 1965, at which time he be-

came an employee-member in good standing. While in good

standing, on May 2, 1969, Kerner applied to the Retire-

ment System for a retirement service allowance. On June

16, 1969, a notification was forwarded to Kerner, duly au-

thorized by the Retirement System, accepting Kerner’s

application for service retirement allowance, approved by

the Claims Committee, and authorized for payment in ac-

cordance with the laws of Illinois involving the Retire-

- ment System. At that time, Kerner, under his contractual

relationship with the Retirement System, and under the

provisions of Article 14, Chapter 108% of the Illinois

Revised Statutes, acquired an enforceable vested interest

APPENDIX 41

in his pension, which cannot be terminated. Therefore,

Otto Kerner is entitled to receive:

(a) resumption of his pension payments;

(b) payment of all pension arrearages, benefits, and emol-

uments.

Respectfully submitted,

/s8/ Manuel J. Robbins

Hearing Officer

Manuel J. Robbins

69 West Washington Street

Chicago, Illinois 60602

312-782-9000