OLSON v. CORY

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Court of Appeal, Second District, Division 3, California.

Lester E. OLSON, Robert L. Bostick, Kenneth Williams, Pat Mullendore, Newell Barrett, Roberta Ralph, Lawrence E. Drumm, Vincent M. Erickson, Maurice J. Hindin, Thomas A. Newell, Benjamin Landis, M. Peter Katsufrakis, Kathleen D. Kurland, Joseph Lodge, William F. Levins, Donald Dungan, and all others similarly situated, Plaintiffs and Appellants, v. Kenneth CORY, et al., Defendants and Respondents.

Civ. 64385.

Decided: February 28, 1983

Stroock & Stroock & Lavan, and William H. Levit, Henry J. Silberberg and Margaret A. Nagle and Gibson, Dunn & Crutcher and Richard Chernick, Los Angeles, for plaintiffs and appellants. Lawrence E. Gercovich and D. Robert Shuman, Sacramento, for State Controller Kenneth Cory. Richard J. Moore, County Counsel, Oakland, Daniel Blackstock, County Counsel, Chico, John B. Clausen, County Counsel, Martinez, Floyd R.B. Viau, County Counsel, Fresno, Raymond W. Schneider, County Counsel, Eureka, James H. Harmon, County Counsel, El Centro, Ralph B. Jordan, Jr., County Counsel and Peter A. Warmerdam, Deputy County Counsel, Bakersfield, Douglas J. Maloney, County Counsel, San Rafael, Russell Koch, County Counsel and Blair H. Checketts, Deputy County Counsel, Merced, Paul DeLay, County Counsel, Salinas, Stephen W. Hackett, County Counsel, Napa, Adrian Kuyper, County Counsel and Richard D. Oviedo, Deputy County Counsel, Santa Ana, James H. Angell, County Counsel, Riverside, Lee B. Elam, County Counsel, Sacramento, Alan K. Marks, County Counsel, San Bernardino, Donald L. Clark, County Counsel, Barstow, and Arlene Prater, Deputy County Counsel, San Diego, Gerald A. Sherwin, County Counsel and Michael McGrew, Deputy County Counsel, Stockton, James B. Lindholm, Jr., County Counsel, San Luis Obispo, Scovil F. Hubbard, Deputy County Counsel, Pismo Beach, Keith C. Sorenson, County Counsel and Lemuel M. Summey, Deputy County Counsel, Redwood City, George P. Kading, County Counsel and Marvin Levine, Deputy County Counsel, Santa Barbara, Selby V.I. Brown, Jr., County Counsel, San Jose, Clair A. Carlson, County Counsel and Jonathan Wittwer, Asst. County Counsel, Santa Cruz, Milton Goldinger, County Counsel, Fairfield, James P. Botz, County Counsel, Santa Rosa, and John Chapin, Deputy County Counsel, Fairfield, Gilbert Boyne, County Counsel, Modesta, Darrell Larsen, County Counsel, Yuba City, Calvin E. Baldwin, County Counsel, Visalia, Dorothy L. Schechter, County Counsel and Mary C. Ward, Deputy County Counsel, Ventura, Charles R. Mack, County Counsel, Woodland, John H. Larson, County Counsel and Halvor S. Melom, Deputy County Counsel, George P. Agnost, City and County Counsel and David E. Goldman, Deputy City Atty., Richard Radosh, Deputy Atty. Gen., Los Angeles, Poland K. Bowns, Staff Counsel, Sacramento, Howard, Prim, Rice, Nemerovski, Canady & Pollak and Ann Brick, San Francisco, for defendants and respondents.

Plaintiffs and appellants appellate justices, superior and municipal court judges and judicial pensioners, representing their respective classes (appellants), appeal from a denial of their motion for an order specifying their right to receive interest as an issue without substantial controversy.   The contend on appeal that they have met all the conditions for awarding interest pursuant to Civil Code section 3287, subdivision (a).

For reasons hereinafter discussed, the judgment is reversed in part and affirmed in part.

PROCEDURAL HISTORY

On August 3, 1977, this class action was commenced on behalf of the named appellants and all justices of the Supreme Court and Courts of Appeal, all judges of the superior and municipal courts and all judicial pensioners under the Judges' Retirement Law.   The original named defendants were Kenneth Cory (Cory), as Controller of the State of California,1 and Mark H. Bloodgood (Bloodgood), as Auditor-Controller of the County of Los Angeles (collectively respondents).

The complaint sought a declaration that the 1976 amendment to Government Code section 68203 was unconstitutional because it reduced the salary of judges by limiting the cost of living increases provided by the former statute.2  It also requested a declaration that Bloodgood was obligated to pay to the judges of the Municipal Court of Los Angeles County all payments due on and after September 1, 1977, pursuant to the formula prescribed under Government Code section 68203 prior to the 1976 amendment, and that Cory was obligated similarly to make payments under the former statute to pensioners and to all judges other than municipal court judges.

The complaint additionally sought damages consisting of all salary and retirement benefits due to be paid from September 1, 1977, to the date of judgment, under the prior law, together with interest.

On February 21, 1978, the superior court issued a declaratory judgment declaring the 1976 amendment unconstitutional and reserving jurisdiction to consider, subsequent to any appeal from the judgment, matters such as certification of the plaintiff class and the awarding of past due salary and interest.   Cory and Bloodgood appealed.

On March 27, 1980, as modified on May 30, 1980, the California Supreme Court decided that the 1976 amendment “insofar as it would limit cost-of-living salary increases as provided by section 68203 before the 1976 amendment, cannot be constitutionally applied to (1) a judge or justice during any term of office, or unexpired term of office of a predecessor, if the judge or justice served some portion thereof (a ‘protected term’) prior to 1 January 1977,[[[[3 ] and (2) a judicial pensioner whose benefits are based on some proportionate amount of the salary of the judge or justice occupying that office.”  (Olson v. Cory (1980) 27 Cal.3d 532, 546, 178 Cal.Rptr. 568, 636 P.2d 532.)

On April 18, 1980, municipal court judges of three other California counties, filed a complaint in intervention on behalf of all present and former municipal court judges against Cory and the auditor-controllers of the counties of California.   They requested a judgment against county auditor-controllers for payment under former Government Code section 68203 of all salaries due from September 1, 1977, to the date of the final judgment in the case, plus interest.

After the California Supreme Court issued Olson v. Cory, plaintiff intervenors and the original-named plaintiffs obtained a temporary restraining order and a subsequent preliminary injunction prohibiting defendants and defendants-by-intervention from making any payments to members of the class in excess of 75 percent of back salaries.   They subsequently filed a notice of motion and motion for an order specifying their right to receive interest as an issue without substantial controversy.

On December 12, 1980, the superior court certified the action as a class action on behalf of all justices and judges of courts of record of California and all judicial pensioners as of December 12, 1980, and shortly thereafter denied the motion regarding the right to receive interest.

Appellants appealed.

DISCUSSION 4

 1. Civil Code section 3287 subdivision (a) permits recovery of interest.

Appellants base their claim for interest on Civil Code section 3287, subdivision (a),5 which provides:  “Every person who is entitled to recover damages certain, or capable of being made certain by calculation, and the right to recover which is vested in him upon a particular day, is entitled also to recover interest thereon from that day, except during such time as the debtor is prevented by law, or by the act of the creditor from paying the debt.   This section is applicable to recovery of damages and interest from any such debtor, including the state or any county, city, city and county, municipal corporation, public district, public agency, or any political subdivision of the state.”

This provision authorizes prejudgment interest in actions based upon a general underlying monetary obligation, including the statutory obligations of a governmental entity.  (Tripp v. Swoap (1976) 17 Cal.3d 671, 681, 131 Cal.Rptr. 789, 552 P.2d 749, disapproved on other ground Frink v. Prod (1982) 31 Cal.3d 166, 180, 181 Cal.Rptr. 893, 643 P.2d 476;  Mass v. Board of Education (1964) 61 Cal.2d 612, 625–626, 39 Cal.Rptr. 739, 394 P.2d 579.)   Our Supreme Court also has determined that actions against governmental bodies to recover retroactive salary increases and improperly withheld pension benefits are actions for damages within the meaning of the statute.  (Tripp v. Swoap, supra, 17 Cal.3d at p. 682 fn. 12, 131 Cal.Rptr. 789, 552 P.2d 749;  Sanders v. City of Los Angeles (1970) 3 Cal.3d 252, 262–263, 90 Cal.Rptr. 169, 475 P.2d 201;  Benson v. City of Los Angeles (1963) 60 Cal.2d 355, 365–366, 33 Cal.Rptr. 257, 384 P.2d 649.)

 To recover interest against the counties and the state, appellants must initially satisfy three conditions flowing from the statute as outlined in Tripp v. Swoap, supra, 17 Cal.3d at p. 682, 131 Cal.Rptr. 789, 552 P.2d 749:  “(1) There must be an underlying monetary obligation;  (2) the recovery must be certain or capable of being made certain by calculation;  and (3) the right to recovery must vest on a particular day.”

 The instant case satisfies these three requirements.   As to the first, the state and the counties have a statutory obligation to pay the salaries of all judges of courts of record within the state, and these salary payments include periodic cost of living increases.  (Gov.Code, §§ 68200–68206.5, 71220.)   An action to recover improperly withheld increases is therefore an action on an underlying monetary obligation.  (See Tripp v. Swoap, supra, at p. 682 fn. 12, 131 Cal.Rptr. 789, 552 P.2d 749;  Sanders v. City of Los Angeles, supra, 3 Cal.3d at pp. 262–263, 90 Cal.Rptr. 169, 475 P.2d 201.)

Second, the amount of recovery due each justice, judge or pensioner within the appellant class is “certain or capable of being made certain by calculation.”   Civil Code section 3287, subdivision (a) permits each person entitled to recover damages also to receive interest.   Thus, while there was uncertainty as to the total number of individuals entitled to recover until our Supreme Court determined the validity of the contested amendment to Government Code section 68203, the amount of retroactive increase for each qualifying individual was simply that amount the individual would have received under the former statute's formula for each year within the relevant “protected term.”  (Olson v. Cory, supra, 27 Cal.3d at p. 546, 178 Cal.Rptr. 568, 636 P.2d 532.)

 Respondents contend that the damages were not certain or capable of being made certain because the total amount that they had to pay to the class was not fixed until Olson v. Cory determined the extent of the amendment's invalidity.   The uncertainty that existed, however, was a legal uncertainty as to respondents' liability and not a factual uncertainty as to the extent of damages.

 While Civil Code section 3287, subdivision (a) does not authorize prejudgment interest as a matter of law where the amount of damages depends upon factual findings based on conflicting evidence, it does authorize interest where the facts are not in dispute and the court merely determines liability.  (Esgro Central, Inc. v. General Ins. Co. (1971) 20 Cal.App.3d 1054, 1062–1063, 98 Cal.Rptr. 153;  McConnell v. Pacific Mutual Life Ins. Co. (1962) 205 Cal.App.2d 469, 478–480, 24 Cal.Rptr. 5.)

In the present case, the dispute among the parties did not involve a factual issue with conflicting evidence on the extent of damages, but rather concerned a legal question as to whether respondents should increase appellants' salaries and pension benefits under Government Code section 68203 as amended in 1976 or as it existed before the amendment.   Thus, anyone knowing the law and the undisputed facts could have computed the amounts due.  (Cf. McConnell v. Pacific Mutual Life Ins. Co., supra, at p. 480, 24 Cal.Rptr. 5.)

 Finally, appellants' right to recover vested on the dates on which they would have received yearly increases under Government Code section 68203 as it existed before the 1976 amendment.  “The Civil Code requires vesting ․ only in order to fix with sufficient certainty the time when the obligation accrues so that interest should not be awarded on an amount before it is due.”  (Mass v. Board of Education, supra, 61 Cal.2d at p. 625, 39 Cal.Rptr. 739, 394 P.2d 579.)   The increases became vested on the dates they accrued under the former statute beginning on September 1, 1977, and on each September 1 thereafter during the individual appellant's protected term.

 2. The “special fund” rule precludes recovery by appellants judicial pensioners from the Judges' Retirement Fund.

Respondent PERS argues that appellant judicial pensioners may not recover interest under Civil Code section 3287, subdivision (a) because the Judges' Retirement Fund is a special fund and therefore not within the reach of the statute.

The Judges' Retirement Fund is authorized and created by Government Code section 75100 as a special fund consisting of “all cash, securities, or other assets paid into it in accordance with this article,” and as the source of “all retirement allowances payable by law to judges.”

Two appellate court decisions have explicitly rejected a plaintiff judicial pensioner's claim for interest on back retirement payments on the basis that Civil Code section 3287, subdivision (a) does not embrace recovery of interest against a special fund.   In Jorgensen v. Cranston (1962) 211 Cal.App.2d 292, 27 Cal.Rptr. 297, disapproved on other grounds Mass v. Board of Education, supra, 61 Cal.2d at page 627, 39 Cal.Rptr. 739, 394 P.2d 579, and in Willens v. Cory (1975) 53 Cal.App.3d 104, 125 Cal.Rptr. 670, the plaintiffs initially were denied pension benefits and later obtained a favorable ruling and an award of back payments in mandamus actions but could not recover interest.  “[The Judges' Retirement Fund] is a fund held in trust and over which the Controller is the trustee.   Whenever a claim is made against the fund it was not only the right of the Controller, it was his obligation, to make sure that the claimant is a party entitled and whenever any doubt reasonably exists to obtain an adjudication to settle the controversy․  Restatement Second of Trusts, section 207, vol. 1, p. 470․  [¶]  This being the general rule, we cannot therefore attribute to the Legislature ․ Civil Code, section 3287 an intent to include, within its scope, claims against public retirement funds reasonably challenged by the State Controller.”  (Willens v. Cory, supra, 53 Cal.App.3d at p. 106, 125 Cal.Rptr. 670;  Jorgensen v. Cranston, supra, 211 Cal.App.2d at pp. 301–302, 27 Cal.Rptr. 297.)

Our Supreme Court has recognized this principle in Benson v. City of Los Angeles (1963) 60 Cal.2d 355, 33 Cal.Rptr. 257, 384 P.2d 649 and Mass v. Board of Education, supra, 61 Cal.2d 612, 39 Cal.Rptr. 739, 394 P.2d 579.   In Benson, the court affirmed the trial court's award of interest on accrued pension benefits withheld by the City of Los Angeles pending the award of the pension to plaintiff.   The court distinguished Jorgensen on the basis that it was an action in mandate and that the plaintiff sought interest or payments from a special fund.   The Benson court stated “the judges' retirement fund is a special trust fund and as such may not fall within the meaning of section 3287 [citing Jorgensen ], whereas it is well established that liability for pensions such as the instant one is not limited to any particular fund, but rather is a general obligation imposed by law upon the city.”  (Benson v. City of Los Angeles, supra, 60 Cal.2d at p. 365, 33 Cal.Rptr. 257, 384 P.2d 649.)

In Mass, the court permitted recovery of interest in a mandamus action because the fund source was general rather than special.   The court held that a wrongfully suspended teacher was entitled to full salary payments from the date of suspension and to interest from the dates these payments were due stating, “although some decisions suggest that interest cannot be recovered in a mandamus action [citing, inter alia, Jorgensen ], we hold that the present action in mandamus may support a judgment for interest since it involves recovery upon a general underlying monetary obligation.”  (Mass v. Board of Education, supra, 61 Cal.2d at pp. 625–626, 39 Cal.Rptr. 739, 394 P.2d 579;  emphasis added.)

The court distinguished most of the contrary cases, including Jorgensen, “on the narrow ground that they involved mandamus actions against a trustee of a special fund.”  (Id., at p. 625 fn. 8, 39 Cal.Rptr. 739, 394 P.2d 579;  emphasis added.)   Pursuing this distinction, the court stated that “[t]he contractual obligation for payment of salary in the present case, as in Benson, [v. City of Los Angeles, supra ], is a general obligation and thus does not fall within the ‘special fund’ rule.”  (Id., at p. 626, 39 Cal.Rptr. 739, 394 P.2d 579.)

Appellants contend that Jorgensen and Willens do not apply here because in those cases respondent trustee of the Judges' Retirement Fund was seeking a judicial determination of whether the plaintiffs were entitled to pension benefits at all, while in the present case there is no dispute regarding appellants' status as pensioners.

Appellants' argument overlooks the factual situations underlying Benson and Mass, both of which involved judicial determinations of status and awarded interest under Civil Code section 3287, subdivision (a) because the actions concerned general monetary obligations rather than special funds.   Thus, in Benson, the widow and the former wife of a city employee each claimed entitlement to the employee's pension after his death.   The trial court determined that the widow was the proper recipient and granted her request for interest on the back payments.   Similarly, in Mass the plaintiff was a teacher who sued for and obtained reinstatement of his teaching status, past salary payments and interest.

 We therefore are not persuaded that determination of status was the critical factor prohibiting recovery of interest in Jorgensen and Willens.   Rather, we understand these four cases—Jorgensen, Willens, Benson and Mass —to stand for the principle that plaintiffs are not permitted an award of interest when the claim is against a special fund such as the Judges' Retirement Fund.

Appellants pensioners next contend that if the rule set forth in Jorgensen and Willens applies and they cannot recover interest under Civil Code section 3287, subdivision (a), they are entitled to interest in accordance with the principle articulated in Restatement Second of Trusts, section 207, comment c as follows:  “If [the trustee's] failure to pay was due to a reasonable doubt as to his duty to make payment, he is not liable, during the period while the question of his duty is being litigated, for any interest except such as he has actually received or should have received during that period.”

 The Jorgensen court cited this passage as a “general rule” supporting the conclusion that plaintiff pensioner could not receive interest under Civil Code section 3287, subdivision (a).  (Jorgensen v. Cranston, supra, 211 Cal.App.2d at p. 302, 27 Cal.Rptr. 297.)   The Willens court, however, stated that “[e]ven if the citation to the Restatement of Trusts in Jorgensen (see 211 Cal.App.2d at p. 302, 27 Cal.Rptr. 297) supports plaintiff's position, the Jorgensen rule is valid, independent of any nonjudicial authority on which it purported to rely.”  (Willens v. Cory, supra, 53 Cal.App.3d at p. 107, 125 Cal.Rptr. 670;  emphasis added.)

We do not believe that Jorgensen and Willens provide adequate authority for appellants' claim of recovery.   Appellants judicial pensioners have not cited, and we have not found, any California cases in which plaintiffs in appellants' position have recovered prejudgment interest under this principle.

 Moreover, in the absence of a statutory exception, such as that provided by Civil Code section 3287, subdivision (a), governmental entities traditionally have been immune from liability for prejudgment interest.  (Sanders v. City of Los Angeles, supra, 3 Cal.3d at p. 262, 90 Cal.Rptr. 169, 475 P.2d 201;  Tripp v. Swoap, supra, 17 Cal.3d at pp. 683–684, 131 Cal.Rptr. 789, 552 P.2d 749.)   We therefore decline to extend the law as appellants judicial pensioners request.

 3. The “prevented by law” exception is not available to respondents Cory and the county-auditors.

 Respondents Cory and the county-auditors argue that because they were required to comply with the 1976 Amendment to Government Code section 68203 until our Supreme Court determined its validity in Olson v. Cory, they were “prevented by law ․ from paying the debt” within the meaning of Civil Code section 3287, subdivision (a).   They contend that therefore they are exempted from paying any prejudgment interest on the retroactive increases.

Case law construing the “prevented by law” exception to Civil Code section 3287, subdivision (a) is scanty.   In Benson one of the issues in the underlying action was the constitutionality of an amendment to the city charter.   Under the amendment, the plaintiff was ineligible to receive her deceased husband's pension.   After the plaintiff filed her claim, the court in other proceedings determined that the amendment was invalid as to a widow of a pensioner who was a member of the retirement system prior to the modification.  (Benson v. City of Los Angeles, supra, 60 Cal.2d at p. 358, 33 Cal.Rptr. 257, 384 P.2d 649.)   Under this holding, the plaintiff in Benson was entitled to the accrued pension benefits.

Defendant City of Los Angeles therein contended that it was not liable for interest on the past due benefits because the city was prevented by law from paying the plaintiff's claim until there had been a final determination in the other proceedings that the amendment was invalid in part.

The Benson court rejected the city's argument and stated that “[t]he uncertainty which existed as to the constitutionality of the charter provision was an uncertainty as to law—not fact.   Ignorance of the law will normally not serve as a defense to an action, including an action for interest.  (See Perkins v. Benguet Consol. Mine Co., 55 Cal.App.2d 720, 769 [132 P.2d 70] ․)   It should further be noted that this court's opinion in 1958 in Abbott v. City of Los Angeles, supra, 50 Cal.2d 438 [326 P.2d 484] raised a substantial doubt as to the validity of the charter amendment in applications such as the instant one.”  (Benson v. City of Los Angeles, supra, 60 Cal.2d at p. 366, 33 Cal.Rptr. 257, 384 P.2d 649;  emphasis added.)

In Perkins v. Benguet Cons. Min. Co. (1942) 55 Cal.App.2d 720, 132 P.2d 70, the case cited in Benson, a debtor claimed exemption under a Philippine court decree which a New York court later declared void and in fraud of plaintiff creditor's rights.   The court in Perkins declared that the rule “prevented by law” exemption “has no application to adjudications that are void.”  (Id., at p. 769, 132 P.2d 70.)

In a recent case, Sonoma County Organization of Public Employees v. County of Sonoma (1979) 23 Cal.3d 296, 152 Cal.Rptr. 903, 591 P.2d 1, however, the Supreme Court denied an award of interest against county governments which had complied with a state statute that levied severe fiscal sanctions against local governments that failed to comply.   The statute, inter alia, prohibited the distribution of state surplus or loan funds to local public agencies that granted salary or wage increases that exceeded the increases provided for state employees.

The Sonoma court issued writs of mandate directing local entities to pay certain wage increases pursuant to employment agreements that predated the statutes, but denied interest on the wages withheld.  “Prejudgment interest is not allowed if the debtor ‘is prevented by law ․ from paying the debt.’  (Civ.Code, § 3287.)   As the local entity respondents make abundantly clear, the practical effect of [the contested statutes] was to prevent them from paying the increases called for in the contracts, for failure to comply with the condition we now hold to be invalid would have required them to renounce state surplus funds, resulting in serious financial hardship.”  (Sonoma County Organization of Public Employees v. County of Sonoma, supra, at p. 321, 152 Cal.Rptr. 903, 591 P.2d 1;  footnote omitted.)

We believe that Benson controls here.   As in Benson, the governmental entity responsible for the invalid enactment is now claiming that it was prevented by its own law from paying the monies owed.   Respondent Cory contends that he did not have the authority to disregard the 1976 amendment to Government Code section 68203 and that he may draw warrants on the treasury only when “authorized by law.”  (Gov.Code, § 12440.)

We note initially that Olson v. Cory, supra, 27 Cal.3d at p. 546, 178 Cal.Rptr. 568, 636 P.2d 532 declared the 1976 amendment constitutionally could not be applied to any justice or judge serving in a “protected” term of office, or to a pensioner whose benefits are based on some proportionate amount of the salary of the justice or judge occupying that office.   As to those justices, judges, and pensioners, therefore, Government Code section 68203 as it existed prior to the 1976 amendment remained in effect.

The state cannot relieve itself of liability by claiming that it was bound to follow its own laws when those laws were invalid.   Permitting Cory to shield the state from responsibility for state legislative action would be blatantly unfair to parties in appellants' position who have suffered predictable loss as a result of that legislative action.

We also point out that an Attorney General's opinion issued May 25, 1977, reached the same conclusions as Olson v. Cory regarding the invalidity of the 1976 amendment as applied to “justices and judges elected, appointed or re-elected to their present terms prior to January 1, 1977, during the remainder of said terms․”  (60 Ops.Cal.Atty.Gen. 153, 162 (1977).) 6  Thus, as in Benson, respondents had notice of the 1976 amendment's doubtful validity before the original named plaintiffs commenced the underlying action in this case.

 4. Since the counties were carrying out mere ministerial duties in paying the salaries of appellants, the “prevented by law” exception likewise is unavailable to them.

 Respondent county-auditors contend that they should not be held liable in the same fashion as Cory because the counties were not responsible for enacting the law and were powerless to change it.   Indeed, under the California Constitution and the Government Code, the state Legislature has sole responsibility for prescribing the compensation of the judges and justices of courts of record within the state.  (Cal. Const., art. VI, § 19;  Gov.Code, §§ 68200–68202, 72000.)   The counties are required to pay those salaries to municipal court judges and a certain amount of the prescribed salaries of superior court judges.  (Gov.Code, §§ 71220, 68206.)   In paying the judges' salaries, therefore, the county-auditors are performing a ministerial duty for the state as officers of a legal subdivision of the state rather than acting within one of the counties' authorized areas of independent legislative power.  (See Cal. Const. art. XI, § 1;  Gov.Code, § 23003;  Younger v. Board of Supervisors (1979) 93 Cal.App.3d 864, 870, 155 Cal.Rptr. 921.)   We discern no reason why the legal subdivisions of the state carrying out a state ministerial duty should not bear the same liability as the state.  (See Payne v. Baehr (1908) 153 Cal. 441, 444, 95 P. 895.)

We distinguish Sonoma as involving a legal situation quite dissimilar from that presented here.   In Sonoma the contested statutes invalidly impaired contracts between local governmental agencies and their employees, an area in which the California Constitution has granted chartered cities and counties independent authority.  (Cal. Const., art. XI, § 4 subds. (c), (f) and (g) and § 5 subd. (b);  Sonoma County Organization of Public Employees v. County of Sonoma, supra, 23 Cal.3d at pp. 314–318, 152 Cal.Rptr. 903, 591 P.2d 1.)   Further, the court emphasized that the counties would have faced severe financial hardship if they failed to comply as they would have lost access to state surplus funds.

In the present case, the 1976 amendment affected the counties as legal subdivisions of the state only, and the county-auditors in following the statute performed a ministerial duty as officers of subdivisions of the state.   The counties thus were not affected in an area of traditional independence nor did they face extraordinary financial sanctions as an incentive to comply with the law.7

 a. A valid court order operated to prevent certain payments by respondents and therefore they are not liable for the interest thereon.

 With respect to the preliminary injunction, however, we agree that respondents Cory and the county-auditors were “prevented by law” from making full payments owed under Government Code section 68203 as it existed prior to the 1976 amendments.   After the Supreme Court issued Olson v. Cory, appellants obtained a temporary restraining order and preliminary injunction prohibiting Cory and the county-auditors from making any payments in excess of 75 percent of back salaries owed as a result of Olson v. Cory during the pendency of the remaining action or until further order of the court.   Respondents were thus proscribed by a valid court order obtained at the request of appellants from paying 25 percent of the amounts owed.   We conclude that respondents are not liable for interest on the amounts ordered withheld during the time the orders are in effect.

 5. The issue as to the existence of an appropriation from which interest can be paid is premature.

While conceding that the main issue in this appeal is appellants' entitlement to an award as opposed to whether any such award can be collected, respondent Cory nonetheless invites this court to deal with the appropriation issue.

Respondent Cory contends that since there is no appropriation for payment of interest, there is no legal basis for issuance of “any order or other process compelling the State Controller to pay such interest.”

 Appellants maintain that the issue should not be addressed in this opinion because it was not raised in the trial court (see 6 Witkin, Cal.Procedure (2d ed. 1971) Appeal, § 218, pp. 4208–4209), where in the first instance, it should be considered and decided in the event appellants prevail on the entitlement point.

We agree that the issue is premature and therefore decline to discuss it further.

DISPOSITION

The trial court's order denying appellants' motion for an order specifying their right to receive interest as an issue without substantial controversy is reversed as to respondents Cory and the county auditors and is affirmed as to respondent PERS.   The matter is remanded to the trial court for further proceedings.

FOOTNOTES

1.   Respondent Public Employees' Retirement System (PERS) was named as a defendant by stipulation, pursuant to an order filed on October 8, 1980.   PERS became a proper party to the action under Code of Civil Procedure section 385, subdivision (a) because it succeeded Cory as administrator of the Judges' Retirement Fund, effective July 1, 1979.  (Gov.Code, § 75005.)

2.   Former Government Code section 68203, as last amended in 1969, provided:  “ ‘[O]n September 1 of each year ․ the salary of each justice and judge named in Sections 68200 to 68202, inclusive, shall be increased by that amount which is produced by multiplying the then current salary of each justice or judge by the percentage by which the figure representing the California consumer price index as compiled and reported by the California Department of Industrial Relations has increased in the previous calendar year.’ ”  (Added by Stats.1964, 1st Ex.Sess., c. 144, p. 158, § 4, amended by Stats.1969, c. 1507, p. 3086, § 1.)The 1976 amendment, effective January 1, 1977, froze salary increases for 10 months and placed a ceiling of 5 percent on all subsequent increases:  “On July 1, 1978, and on July 1 of each year thereafter the salary of each justice and judge named in Sections 68200 to 68202, inclusive, shall be increased by that amount which is produced by multiplying the then current salary of each justice or judge by the percentage by which the figure representing the California consumer price index as compiled and reported by the California Department of Industrial Relations has increased in the previous calendar year, but not to exceed five percent (5%).”  (Stats.1976, c. 1183, p. 5287, § 4.)

3.   The date on which the 1976 amendment became effective.

4.   Under the rule of necessity, this court may hear and adjudicate this appeal even though some of the justices may be financially interested in the outcome.   In this matter we follow the reasoning of our Supreme Court in its earlier decision in this case, Olson v. Cory, supra, 27 Cal.3d at page 537, 178 Cal.Rptr. 568, 636 P.2d 532:  “The rule of necessity provides that a judge is not disqualified from adjudicating a cause because of personal financial interest if there is no other judge or court available to hear and resolve the cause.  (See Atkins v. United States (1977) 556 F.2d 1028, 214 Ct.Cl. 186.)   It is immediately apparent that all California judges have at least an involuntary financial interest in this case.   To disqualify one would disqualify all, depriving them, and their surviving spouses of opportunity to litigate their case.   This court as now constituted is qualified to hear and determine the issues before us.”

5.   We note that because the sole issue below and on appeal involves the applicability of a statute to uncontradicted facts, the question is one of law.   We are therefore not bound by the trial court's conclusion in our determination of the question.  (Southern California Edison Co. v. State Bd. of Equalization (1972) 7 Cal.3d 652, 659 fn. 8, 102 Cal.Rptr. 766, 498 P.2d 1014;  6 Witkin, Cal.Procedure (2d ed. 1971) § 210, pp. 4200–4201.)

6.   This Attorney General opinion was requested by respondent Cory.

7.   The county-auditors named as defendants in intervention additionally contend that because they were not parties to the original action, they should not be liable for prejudgment interest.   The original action resulting in Olson v. Cory, however, presented questions of law only rather than contested issues of fact.   As a result, we can see no prejudice to defendants-in-intervention, who also undoubtedly had actual notice of the pending action and of the Attorney General's opinion issued prior to the suit (60 Ops.Cal.Atty.Gen. 153, supra ), which questioned the validity of the contested 1976 amendment.

 KLEIN, Presiding Justice.

LUI and DANIELSON, JJ., concur.