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Anderson v. Seaton

MAY 15, 1957.

ARVID E. ANDERSON AND WILLIAM H. LACEY, APPELLANTS,

v.

GEORGE LELAND SEATON, GORDON ALLER, D.L. BROWN, A.F. STEPHENSON AND J.N. STANBERY, INDIVIDUALLY AND AS TRUSTEES OF THE ILLINOIS BELL TELEPHONE COMPANY, APPELLEES.



Appeal from the Circuit Court of Cook county; the Hon. CHARLES S. DOUGHERTY, Judge, presiding. Affirmed.

PRESIDING JUSTICE FEINBERG DELIVERED THE OPINION OF THE COURT.

Plaintiffs appeal from a decree dismissing their complaint for want of equity.

Plaintiff Anderson became a retired employee of defendant Illinois Bell Telephone Company on April 30, 1948, and plaintiff Lacey likewise became a retired employee on September 30, 1949. They seek by their complaint, on behalf of themselves and all other employees similarly situated, a construction of the pension plan of the Illinois Bell Telephone Company; that their rights under said pension plan be determined and the duties of the individual defendants as trustees of the pension fund, who are referred to as the "Employees' Benefit Committee," be defined, and they be instructed as to their duties; that said defendants be required to restore to plaintiffs and all other persons in like situation the full amount of their pension payments as vested; and that said defendants and trustees be required to restore to each pensioner the amounts by which his payments have been diminished by deduction made by defendants for Social Security benefits received by said pensioners.

The pension plan in question, with its comprehensive provisions, was thoroughly analyzed by the District Court for the Northern District of Illinois in Hurd v. Illinois Bell Telephone Co., 136 F. Supp. 125, affirmed 234 F.2d 942. In the interest of brevity we refer to the opinion of the District Court, which makes detailed reference to the various provisions of the plan. We shall only refer to such provisions of the plan which have a material bearing on the questions involved upon this appeal.

The cause was heard upon a stipulation of facts. From this stipulation it appears that the pension plan was originally adopted January 1, 1913. It provided for a committee of five, appointed by the Board of Directors of the Bell Telephone Company (for convenience hereinafter referred to as "Bell"), and designated as the "Employees' Benefit Committee," charged with the administration of the plan. The powers of the committee were defined by the plan. The individual defendants presently compose the committee, the membership of which from time to time had changed since the plan was adopted.

From May, 1914, to January 1, 1940, Section 8 (27) of the plan provided as follows:

"In case any benefit or pension shall be payable under the laws now in force or hereafter enacted of any State or Country to any employee of the Company or his beneficiaries under such laws, the excess only, if any, of the amount prescribed in these Regulations above the amount of such benefit or pension prescribed by law shall be the benefit or pension payable under these Regulations, . . . ."

It was stipulated that the purpose of the above quoted provision was to avoid duplication of payments under Bell's pension plan and those to be made under the laws of any state or country. Section 8 (27) remained in effect until amended on January 1, 1940, which amendment appears in the record as Section 8(28) of the plan. The effect of this amendment was to liberalize the rights of pensioners. Instead of a total deduction for benefits received by pensioners under any Social Security, old age pension or like regulations, as provided under Section 8(27), the amendment provided for a deduction of only one-half of such benefits received by pensioners. To that extent pensioners were benefited by the amendment referred to.

Section 8(28) contained the further provision:

"This Paragraph 28 shall be effective only while the Act entitled `Social Security Act Amendments of 1939' shall remain in effect unchanged."

Section 8(28) was again amended, effective November 16, 1949. The effective date was after plaintiffs were retired as employees and were qualified as pensioners. It is this amendment which is the subject of complaint by plaintiffs.

In 1950 Congress amended the Social Security Act, effective September 1, 1950, which increased the Social Security benefit and increased the tax contribution to be made by the employer and employee. However, the increased tax rate was divided equally between the employer and employee. This new enactment by Congress automatically terminated the amendment of January 1, 1940, to the Bell pension plan, because of the provision: "This Paragraph 28 shall be effective only while the Act entitled `Social Security Act Amendments of 1939' shall remain in effect unchanged." Thus, without the amendment of November 16, 1949, the status of plaintiffs would have reverted back to the original provision of the plan embodied in Section 8 (27) which provided for a total deduction of the benefits received instead of one-half.

It is obvious that it was for the protection of plaintiffs the amendment of November 16, 1949, was adopted, and we do not see how plaintiffs can complain. Hurd v. Illinois Bell Telephone Co., 136 F. Supp. 125, at p. 144. It was there further pointed out by the District Court that an employee who accepts a pension offer, by working for the prescribed period of time, "must be held to have accepted the offer subject to its express conditions," and that "if one of those conditions is that upon the happening of certain contingencies the pension will be modified or reduced after retirement, it is a valid and binding provision." In affirming, the Court of Appeals, 234 F.2d, at p. 946, said:

"Such an employee receives only a right to receive a monthly pension, not in a specified amount, but in an amount computed in accord with the ...


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