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Kuhlmann v. Bd. of Trustees

OPINION FILED MAY 11, 1982.

HERMAN J. KUHLMANN, PLAINTIFF-APPELLEE AND CROSS-APPELLANT,

v.

BOARD OF TRUSTEES OF THE POLICE PENSION FUND OF MAYWOOD, DEFENDANT-APPELLANT AND CROSS-APPELLEE.



APPEAL from the Circuit Court of Cook County; the Hon. ARTHUR L. DUNNE, Judge, presiding.

PRESIDING JUSTICE STAMOS DELIVERED THE OPINION OF THE COURT:

Plaintiff Herman Kuhlmann, former police chief of Maywood, Illinois, brought this action for declaratory judgment to establish his pension rights under the Illinois Pension Code. Defendant in this suit is the Board of Trustees of the Police Pension Fund of Maywood, Illinois (the Board). The trial court found plaintiff entitled to a pension of 60% of the salary of the police chief for the year prior to October 27, 1980. The Board appeals, contending that plaintiff's pension should be based on his salary for the year prior to May 1968, when plaintiff began receiving a disability pension. Plaintiff cross-appeals, asserting that his pension should be 75% of the police chief's salary for 1980.

Plaintiff joined the Maywood police force on October 15, 1945. He rose through the ranks and was appointed chief of police in March 1967. In May 1968, plaintiff was injured in the line of duty and began receiving a disability pension of $486.71 per month. This pension was granted pursuant to section 3-114 of the Illinois Pension Code, which provided that a policeman who becomes disabled is entitled to a pension of one-half his salary for the year immediately prior to his retirement on disability. Ill. Rev. Stat. 1967, ch. 108 1/2, par. 3-114 (repealed effective October 1, 1973).

Plaintiff attained age 50 on June 28, 1971. He then had the option, per section 3-114, to convert his disability pension to a regular pension. Section 3-114 provided, in part:

"If the disability continues for a period which, when added to his period of active service equals 20 years, the policeman shall, if he is age 50 and if he elects to then retire from the police force, be paid a regular pension in lieu of such disability pension." (Ill. Rev. Stat. 1971, ch. 108 1/2, par. 3-114.)

The "regular pension" referred to in section 3-114 is the retirement pension provided for in section 3-111 of the Pension Code. That section provides, in part:

"Any policeman who has creditable service of 20 years or more and has reached age 50 and who is no longer in the service as a policeman, shall be entitled to a yearly pension equal to 1/2 of the salary attached to the rank he held on such police force for 1 year immediately prior to his retirement * * *." (Ill. Rev. Stat. 1971, ch. 108 1/2, par. 3-111.)

Section 3-111 also provides for incremental increases in the pension rate (pension rates greater than 50% of the base period pay) for policemen who have more than 20 years of creditable service.

Although plaintiff reached age 50 in 1971, he did not elect to convert his disability pension to a retirement pension until October 27, 1980. Plaintiff contends, essentially, that he remained a member of the police force until October 1980, when he elected to retire, and that his pension should be based on the police chief's salary for the year prior to October 27, 1980. Plaintiff also maintains that his pension should be based on 35 years' service (1945 to 1980), a term of service that (under the present version of section 3-111, adopted in 1975) would entitle him to a pension equal to 75% of the base period salary.

The Board contends that plaintiff retired in 1968, not 1980, and that, in any event, section 3-114 should not be interpreted so as to permit a policeman on a disability pension to wait until well past the age of 50 and then claim a retirement pension based on the current salary for the policeman's former rank. The Board points to section 3-116.1 of the Pension Code, which replaced the repealed section 3-114. (See Ill. Rev. Stat. 1979, ch. 108 1/2, par. 3-116.1 (effective October 1, 1973).) The two sections are comparable in that both allow a policeman who reaches the age of 50 while on disability to receive a retirement pension if his years of active service combined with his time on disability pension total 20 years. Section 3-116.1 specifies, however, that the electing policeman's retirement pension will be one-half of his salary on the date of his retirement on disability. (Ill. Rev. Stat. 1979, ch. 108 1/2, par. 3-116.1) The Board argues that in this regard section 3-116.1 merely clarifies the intendment of section 3-114. The Board also argues that the result sought by plaintiff violates article VIII, section 1(a) of the Illinois Constitution, which prohibits the use of public funds for private purposes. See Ill. Const. 1970, art. VIII, sec. 1(a).

For the most part, the trial court accepted plaintiff's position. The court found plaintiff entitled to a pension based on the salary of the chief of police for the year prior to October 27, 1980, and the court stated that the annual pension should be 60% of that base period salary. The trial court arrived at the 60% figure by applying the incremental increase provision of section 3-111 that was in effect in 1971. That provision allowed a 1% increase in pension rate for each year of service over 20 years, with a maximum rate of 60% of the base period pay. (See Ill. Rev. Stat. 1971, ch. 108 1/2, par. 3-111.) In 1975, the incremental increase formula was revised to allow a 2% pension rate increase for each year of service over 20 years, up to 30 years, and a 1% rate increase for each year of service over 30 years, with a maximum rate of 75% of the base period pay. (Ill. Rev. Stat. 1975, ch. 108 1/2, par. 3-111.) In his cross-appeal, plaintiff argues that he should be allowed the incremental increase provision in effect in 1980, the year he elected to "retire."

We find that three appellate court cases control the disposition of the Board's appeal. For the sake of clarity, we will review all three before considering their application to the instant case.

In People ex rel. Anastasia v. Civil Service Com. (1973), 10 Ill. App.3d 583, 295 N.E.2d 127, the plaintiff was a policeman who took a disability pension in 1962 and requested to replace that pension with a retirement pension in 1969, pursuant to section 3-114 of the Pension Code. The trial court found the plaintiff entitled to a retirement pension based on one-half of the 1969 salary attached to his former rank. The appellate court affirmed, finding that a policeman who, per section 3-114, retires while on a disability pension may receive a retirement pension based on the salary for his rank for the year prior to his "regular" retirement. 10 Ill. App.3d 583, 587.

In Peifer v. Board of Trustees (1976), 35 Ill. App.3d 383, 342 N.E.2d 131, this court reaffirmed the Anastasia court's interpretation of section 3-114. The plaintiff in Peifer had, prior to the repeal of section 3-114, requested the pension board to convert his disability pension to a retirement pension. The defendant board waited until section 3-114 had been replaced by section 3-116.1 (effective October 1, 1973), and then offered a retirement pension based on the latter section. This court found that article XIII, section 5 of the Illinois Constitution creates an enforceable contractual right to pension benefits. (35 Ill. App.3d 383, 386, citing Ill. Const. 1970, art. XIII, sec. 5 ("Membership in any pension or retirement system of the State * * * shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired").) We held that the plaintiff was entitled to a retirement pension based on section 3-114 (35 Ill. App.3d 383, ...


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