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Taft v. Board of Trustees

OPINION FILED MAY 31, 1985.

WILLIAM M. TAFT, PLAINTIFF-APPELLEE,

v.

BOARD OF TRUSTEES OF THE POLICE PENSION FUND OF THE VILLAGE OF WINTHROP HARBOR ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Lake County; the Hon. William D. Block, Judge, presiding.

JUSTICE UNVERZAGT DELIVERED THE OPINION OF THE COURT:

The plaintiff, William M. Taft, a sergeant of the defendant, village of Winthrop Harbor police department, brought suit against the board of trustees of the Police Pension Fund and the village of Winthrop Harbor, in the circuit court of Lake County, seeking administrative review of the disability line of duty pension awarded to him. While granting him a pension, the defendant police pension board ruled the monthly benefits payable under the pension were to be reduced by the amount of any benefits payable to the plaintiff under the Workers' Compensation Act (Ill. Rev. Stat. 1981, ch. 48, par. 138.1 et seq.) *fn1, except for payments specifically excluded under section 3-151 of the Illinois Pension Code (Ill. Rev. Stat. 1981, ch. 108 1/2, par. 3-151).

The circuit court of Lake County reversed the decision of the police pension board in part, ruling that plaintiff had a right to a full pension without a reduction.

The defendants appeal and raise two issues: (1) what effect did the revocation of section 1(b)(1) of the Workmen's Compensation Act (Ill. Rev. Stat. 1971, ch. 48, par. 138.1(b)(2)), as of January 1, 1974, have upon the plaintiff's pension rights in light of the prohibition against "double-dipping" reenacted in section 3-151 of the Illinois Pension Code (Ill. Rev. Stat. 1981, ch. 108 1/2, par. 3-151), effective October 1, 1977; and (2) what effect do sections 7-109(2)(b) and 7-210(d) of the Illinois Pension Code (Ill. Rev. Stat. 1981, ch. 108 1/2, pars. 7-109(2)(b) and 7-210(b)), which provide for transfer of persons from the Illinois Municipal Retirement Fund into a police pension fund and the termination of rights in IMRF, have upon the plaintiff's transfer from IMRF to the police pension fund as of May 1, 1981.

The question raised in this appeal is what are the disability pension benefits to which plaintiff is entitled following injuries incurred on August 28, 1981, which physically disabled him. Resolution of this issue requires a determination of what were his pension rights under the Illinois Municipal Retirement Fund (IMRF) (Ill. Rev. Stat. 1981, ch. 108 1/2, par. 7-101 to par. 7-222) when his rights to benefits became vested on the effective date of the 1970 Illinois Constitution, July 1, 1971, pursuant to section 5 of article XIII of that constitution (Ill. Const. 1970, art. XIII, sec. 5), whether these benefits increased by legislative enactments subsequent to their initial vesting, and whether the pension benefits payable out of the police pension fund established under section 3-101 to section 3-151 of the Illinois Pension Code (Ill. Rev. Stat. 1981, ch. 108 1/2, pars. 3-101 to 3-151) (Policemen's Pension Fund), to which his contributions to the IMRF were transferred by operation of law in May 1981, constitute a diminishment or impairment of his vested pension rights in contravention of section 5 of article XIII of the 1970 Illinois Constitution.

This issue arises as a result of plaintiff's receipt of a workers' compensation award for the injuries which resulted in his physical disability. Defendant, board of trustees of the Police Pension Fund, determined that section 3-151 of the Illinois Pension Code mandated that his pension benefits be reduced by the amount he received under the Workers' Compensation Act. Plaintiff contends that since a provision similar to section 3-151 did not exist with respect to IMRF participants when his pension rights vested, application of section 3-151 to reduce his pension payments diminishes and impairs his vested rights. The board maintains, however, that at the time plaintiff's pension rights became vested on July 1, 1971, section 1 of the Workmen's Compensation Act (Ill. Rev. Stat. 1969, ch. 48, par. 138.1(b)(1)) provided that pension benefits to which a "government" employee is entitled must be reduced by the amount of his award under the Workers' Compensation Act. This provision, however, was deleted by Public Act 78-1141, effective October 1, 1974. Although a provision requiring the same reduction was added to the IMRF provisions and the Policemen's Pension Fund provision, it did not become effective until October 1, 1977. The board also contends that the IMRF provisions which transferred plaintiff's contributions from the IMRF to the policemen's pension fund and declared that the transfer terminated a participant's rights under the IMRF were contractual terms binding upon plaintiff.

The facts which raise this issue are not complicated and are not disputed. Plaintiff became a full-time member of the village of Winthrop Harbor police department in August 1968. At that time, the village's population was less than 5,000 inhabitants, and plaintiff became a member of the IMRF. While the provisions creating the IMRF did not require the reduction of pension benefits where an employee also received an award under the Workmen's Compensation Act, section 1 of the Workmen's Compensation Act provided that an employee

"who is * * * or shall be entitled to receive a pension or benefit for or on account of disability or death arising out of or in the course of his employment from a pension or benefit fund to which the State or any county, town, township, incorporated village, school district, body politic, underwriters' fire patrol or municipal corporation therein is a contributor, in whole or in part, shall be entitled to receive only such part of such pension or benefit as is in excess of the amount of compensation recovered and received by such employee * * * under this Act." Ill. Rev. Stat. 1969, ch. 48, par. 138.1(b)(1).

On July 1, 1971, the 1970 Illinois Constitution became effective. Section 5 of article XIII of the constitution 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 benefits of which shall not be diminished or impaired." Ill. Const. 1970, art. XIII, sec. 5.

The above-cited provision of the Workmen's Compensation Act was repealed by Public Act 78-1141, effective October 1, 1974. Effective October 1, 1977, provisions requiring the similar reduction of pension benefit payments were added to the IMRF provisions (Ill. Rev. Stat. 1981, ch. 108 1/2, par. 7-222) and the Policemen's Pension Fund provisions (Ill. Rev. Stat. 1981, ch. 108 1/2, par. 3-151).

The population of the village increased and exceeded 5,000 by the 1980 census. Consequently, a police pension fund for full-time policemen was established in May 1981 pursuant to section 3-101 of the Illinois Pension Code (Ill. Rev. Stat. 1981, ch. 108 1/2, par. 3-101). According to section 7-109(2)(b) of the Code, plaintiff was excluded from participation in the IMRF upon the establishment of the policemen's pension fund. (Ill. Rev. Stat. 1981, ch. 108 1/2, par. 7-109(2)(b).) His contributions to the IMRF were transferred to that fund pursuant to section 7-210, which further provided that "[s]uch transfer shall terminate any further rights of such employees under this fund." Ill. Rev. Stat. 1981, ch. 108 1/2, par. 7-210(d).

Plaintiff applied for disability line of duty pension benefits arising from injuries sustained August 28, 1981, which the board granted in the sum of $1,211.22 per month, 65% of the salary of $1,863.41 per month attached to his rank and years of service as of the date of his suspension of duty. However, the board then applied section 3-151 of the Illinois Pension Code and reduced his pension benefits by the amount he received under the Workers' Compensation Act until such time as he no longer received payments under the Workers' Compensation Act.

Plaintiff timely filed a complaint for administrative review in the circuit court of Lake County. In its judgment, the circuit court determined that plaintiff's monthly benefits could not be reduced by section 3-151 under the 1970 Illinois Constitution. The court found that although sections 7-109(2)(b) and 7-210(d) contemplated the transferring of contributions from the IMRF to another pension fund, with such ...


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