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CITY OF LOS ANGELES, Petitioner, v. INDUSTRIAL ACCIDENT COMMISSION of the State of California, and Lucille C. Morse, Katherine Morse and Karol Morse, minors, by and through their Guardian ad Litem and trustee, Lucille C. Morse, Respondents.
The problem presented for determination in these proceedings is the propriety of the order for commutation of an award of death benefits made on September 16, 1963, by the commission pursuant to the petition of the applicants, Lucille C. Morse and her minor children.1
On November 9, 1962, the commission made the following order: ‘IT IS ORDERED that the Findings and Award, dated July 11, 1962, be, and the same hereby are affirmed as Decision After Reconsideration.’ Those findings of fact were in part as follows: 1. Thomas O. Morse died on March 11, 1961, as a proximate result of injury on January 17, 1961, arising out of and occurring in the course of his employment as a fire fighter by the City of Los Angeles, a municipal corporation, the employer being permissibly uninsured. 2. The employee left surviving him, wholly dependent, Lucille C. Morse, his wife, and his two minor children, Katherine Morse and Karol Morse, for whom Mrs. Morse was appointed guardian ad litem and trustee. 3. The City of Los Angeles was liable for the amount of compensation or death benefits awarded, ‘in addition to and without credit on account of pension payments which it may be obligated to make.’
The award was in the sum of $21,100, $600 thereof being designated for burial expenses. The amount of $20,500, less specified legal expenses, was ordered to be paid at the rate of $65 per week, beginning March 12, 1961. A petition for a writ of review with respect to the award of the commission was filed in this court by the City of Los Angeles. (Civil No. 26956.) That petition was denied on February 15, 1963, and thereafter the Supreme Court of California denied a petition for hearing filed in that court by the City of Los Angeles.
On April 24, 1963, the Board of Pension Commissioners of the City of Los Angeles notified Mrs. Morse that it had taken action which reduced the amount of the monthly pension payment to her for the month of March, 1963, ‘by the amount of workmen's compensation benefits which had accrued * * * during said month by virtue of the award which was made * * * by the Industrial Accident Commission, and for each month thereafter during which such benefits shall so accrue * * * until the amount of said award is paid * * * in full.’ That action was based upon a ‘report’ of the city attorney which discussed the provisions of section 182 1/2 of the city charter.2 Thereafter the petition for commutation of the award of death benefits was filed by Mrs. Morse on behalf of herself and her children.
In acting upon the petition for commutation the commission made an order which was in part as follows: ‘IT ISTHEREFORE ORDERED that the final 182.384 weekly payments accruing herein on and after September 29, 1963, be, and they are hereby commuted to their present value of $11,266.27, payable forthwith to Van Nuys Savings and Loan Association, as further Ordered below, less the sum of $150.00 * * * as attorneys' fees. IT IS FURTHER ORDERED that the balance of said commutation due and owing applicant be, and it is hereby ordered deposited with the Van Nuys Savings and Loan Association * * * at the courrent dividend rate. Applicant Lucille C. Morse is hereby authorized to withdraw from said account the sum of $287.00 bimonthly, or an aggregate sum of $574.00. IT IS FURTHER ORDERED that applicant Lucille C. Morse make no withdrawals in excess of the above-stated amounts without further Order of this Commission.’
In the opinion accompanying its order the commission stated in part as follows: ‘The principal issue [in the proceedings pursuant to the prior application for death benefits] was whether or not the defendant City of Los Angeles was entitled to claim credit for pension beneits against the City's liability under the death benefits section of the Workmen's Compensation Law. In resolving said issue, we concluded that ‘* * * since the decedent was required to contribute to the pension, any credit allowed on account of the pension payments against the City's obligation to pay workmen's compensation would constitute a contribution from the earnings of the employee to cover the cost of his compensation, in violation of Section 3751 of the Labor Code.’ * * * After our Findings and Award became final, the City of Los Angeles paid applicant $6,055.00 in accrued benefits to March 30, 1963, representing a period of 107 weeks at $65.00 a week. As to this accrued part of the workmen's compensation award, the City took no credit in regard to any pension liability * * *. Thereafter, the City commenced to deduct from the monthly pension due and owing applicant the amount of the workmen's compensation benefits awarded for the same period * * *. The net result was that the applicant's monthly income from pension and compensation benefits has become exactly the same as it had been prior to the original proceedings. Applicant, by petitioning for commutation, seeks a lump sum payment of the whole remaining balance of her workmen's compensation award, so that it will all be accrued and deprive the City of its basis for the monthly offset of pension liability. The City contends that a proper basis for commutation has not been established and that the applicant would not gain anything by a commutation, in that the City would continue to reduce the pension on the same actuarial basis * * *. We agree with the defendant that the Commission has no jurisdiction to determine the amount of the pension. We do, however, have a vital concern and, indeed, an implied statutory obligation to see to it that our awards are enforced. * * * Ignoring mere form and giving weight to substance, it becomes obvious that our award is not being complied with as to monthly compensation payments. * * * The City is doing indirectly that which it was prohibited from doing directly. * * * Although, as stated above, we have no jurisdiction over the pension, we deem it advisable, in order to fully protect Mrs. Morse's rights, to put her in substantially the same financial position as she would have been had the City given full effect to our award. We will, therefore, order commutation of the balance of the award * * * with authority to Mrs. Morse to withdraw therefrom [the designated savings and loan association] bimonthly the sum of $287.00, or an aggregate sum of $574.00 * * *. This represents approximately the amount of workmen's compensation Mrs. Morse is entitled to, plus the amount of pension which has been reduced. If the defendant City reinstates her full pension rights or is ordered to do so by a court of competent jurisdiction, then the amount of withdrawal will be limited to $65.00 a week, which is the compensation indemnity rate. * * *'
The basic problem is whether the commission exceeded its statutory authority in making the order for commutation. When the commission made its order, section 5100 of the Labor Code was as follows: ‘At the time of making its award, or at any time thereafter, the commission, on its own motion either with or without notice, or upon application of either party with due notice to the other, may commute the compensation payable under this division to a lump sum and order it to be paid forthwith or at some future time if any of the following conditions appear: (a) That such commutation is necessary for the protection of the person entitled thereto, or for the best interest of either party. (b) That commutation will avoid undue expense or hardship to either party. (c) That the employer has sold or otherwise disposed of thew greater part of his assets or is about to do so. (d) That the employer is not a resident of this State.'3
As has been noted, in the proceedings which preceded the commission's award of July 11, 1962, the city contended that it was entitled to credit for sums paid as pension benefits. But the commission, as it had jurisdiction to do (Healy v. Industrial Acc. Com., 41 Cal.2d 118, 121–122, 258 P.2d 1),4 determined that the amount otherwise due under the workmen's compensation law could not be so reduced. Thereafter the city, in complaince with the commission's award, made the payments when due but achieved a monetary result consonant with its previous contention by reducing in amount the monthly payments of pension benefits.
Inherent in the commission's order for commutation is a determination that the city's action with respect to the reduction of the amount of the monthly payments of pension benefits was invalid. The question here presented is not whether the city's action was, as a matter of law, unjustified, but rather whether the commission was empowered to make a determination of that matter in the course of the exercise of its statutory authority to order commutation. The present problem is not that which was earlier before the commission. Rather, it is one of whether the widow and children are, by virtue of the city's interpretation and application of section 182 1/2 of its charter, being deprived of pension benefits to which they are entitled. It is obvious that the action taken by the commission, even if funds of the city are placed in the hands of a depositary as ordered, could not effectually prevent the city from continuing to follow its interpretation of its charter in deetermining what monthly payments of pension benefits should be made. A final and effective resolution of the question, as distinguished from a determination of the specific amounts due and payable under the commission's award, can only be made by a court having jurisdiction to directly adjudge in a plenary manner the current controversy between Mrs. Morse and her children and the City of Los Angeles. (Cf. Lyons v. Hoover, 41 Cal.2d 145, 258 P.2d 4; Stafford v. Los Angeles etc. Retirement Board, 42 Cal.2d 795, 270 P.2d 12; O'Brien v. City of San Jose, 180 Cal.App.2d 609, 4 Cal.Rptr. 744; Vero v. Sacramento City E. R. System, 41 Cal.App.2d 482, 107 P.2d 82; Foster v. Pension Board, 23 Cal.App.2d 550, 73 P.2d 631.)
No provision in section 5100 of the Labor Code, as hereinabove set forth, empowered the commission to make the order which is presently under review. That section does not enlarge the commission's jurisdiction so as to enable it to take action for the purpose of attempting to regulate the city's conduct, or to mollify the effect thereof, with respect to monthly payments of pension benefits and thus to accomplish indirectly what the commission has no jurisdiction to do directly.
We do not pass upon the rights of Mrs. Morse and her children with respect to pension benefits or upon the construction, applicability, or validity of any section of the city charter. But we do decide that in making the order for commutation the commission exceeded its statutory power.
The order for commutation of September 16, 1963, is annulled.
1. In its answer to the first petition for writ of review (Civil No. 27815), the commission asserted that the petition showed ‘upon its face that petitioner did not have a cause of action, accrued at the time of filing its Petition herein for Writ of Review,’ because the commission had not then acted upon the petition for reconsideration of the challenged order. On October 28, 1963, the commission denied the petition for reconsideration. The City of Los Angeles thereafter filed a new petition for writ of review in this court. (Civil No. 27913.)
2. Section 182 1/2 of the charter of the City of Los Angeles is as follows: ‘If at any time any member of the Fire or of the Police Department or the widow, child or children, or dependent parent or parents of any such member, or any other person hereafter entitled under the provisions of this Article to pension benefits, shall be granted, because of the sickness, injury or death of such member, any compensation or award, under any general law providing for compensation or indemnity in case of the sickness, injury or death arising out of the performance of duty of such member, then and in that event any payments made pursuant to the provisions of this Article to such member or to such widow, child or children, dependent parent or parents or other person shall be construed to be and shall be payments of such compensation or award under such general law and any payments made under the provisions of this Article shall be first applied to payment of such compensation or award and any balance of such payments made pursuant to the provisions of this Article shall be deemed to be pension payments; and it is hereby provided that the pension provided for in this Article for such member or such widow, child or children, dependent parent or parents, or such other person in case of any such award under such general law, shall be reduced in amount to the difference between the amount of pension provided for in this Article and the total amount of such compensation or award granted and paid under such general law until the total amount awarded under such general law shall have been fully paid. ‘After payment of the total amount of such compensation or award granted under such general law the payments herein provided for shall continue as pension benefits subject to the provisions of this Article.’ (Stats.1927, pp. 2022–2023.)
3. The Legislature amended the section in 1963, the change becoming effective on September 20, 1963. (Stats.1963, ch. 2123, § 1.) Thereby the authority of the commission to act on its own motion without notice was eliminated. In addition, subdivision (b) was amended so as to be as follows: ‘(b) That commutation will avoid inequity and will not cause undue expense or hardship to either party.’
4. In the Healy case the Supreme Court stated (41 Cal.2d at pages 121–122, 258 P.2d at page 3): ‘The city is an employer within the meaning of the workmen's compensation act Lab.Code, § 3300, and the commission, before allowing the city credit for pension payments, should have determined whether Healy would thereby be compelled to contribute to the cost of his compensation. Lab.Code, §§ 5300, 5301. The commission declined to make any inquiry into this matter on the theory that it was precluded from doing so by section 182 1/2 of the city charter, which provides that if an employee who is entitled to a pension because of injury is granted workmen's compensation under general law, then his pension shall be construed as such compensation and shall be applied in payment of the award. If, however, there is any conflict between charter provisions and the compensation sections of the Labor Code, the latter must prevail. Under power expressly granted to it by the Constitution, the Legislature has established a complete system of workmen's compensation which obviously is a subject of state-wide concern, and it is well settled that in such matters the general law is paramount. See Eastlick v. City of Los Angeles, 29 Cal.2d 661, 665–666, 668, 177 P.2d 558, 170 A.L.R. 225. Accordingly, the validity of the credit given the city depends upon whether Healy contributed to the pension for which the credit was allowed and whether as a result of the credit he was required, directly or indirectly, to pay part of the cost of his compensation in violation of section 3751.’
SHINN, P. J., and FILES, J., concur.
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Docket No: Civ. 27815, 27913.
Decided: June 12, 1964
Court: District Court of Appeal, Second District, Division 3, California.
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