[56 NJSuper Page 557] Plaintiff seeks a declaratory judgment determining its rights and obligations and those of the defendants and, in particular, whether the amount necessary to be contributed to the Teachers' Pension and Annuity
Fund (hereinafter called the "Fund"), a corporation of the State of New Jersey, in order that the defendant Catherine L. Liebman may receive a pension from the Fund, should be contributed by it or by her, and, in either case, what the amount of the contribution shall be. Mrs. Liebman counterclaimed, alleging that she was at all times willing to make contributions to the Fund, but that as a result of the negligence of the plaintiff pension payments were not deducted from her salary, although the statute then and now in effect required that the plaintiff make such deductions from the salaries of its teachers. Mrs. Liebman contends that plaintiff, therefore, should be required to contribute to the Fund such amount as is necessary to enable her to receive the pension to which she would ordinarily be entitled by reason of her service. The Fund and the other defendants insist that Mrs. Liebman is entitled to a pension, provided the proper amount is paid to the Fund, and that the State Board of Education was entirely within its rights in withholding the sum of $11,958.99 from state school moneys payable to plaintiff until such time as the default with respect to Mrs. Liebman's pension is remedied.
The statute creating the "Teachers' Pension and Annuity Fund," at the time Mrs. Liebman became a teacher in the plaintiff's educational system, was R.S. 18:13-24 et seq. This statute has since been repealed and superseded by N.J.S.A. 18:13-112.1 et seq. Admittedly, Mrs. Liebman made no contributions to the Fund, but her claim is that the plaintiff's wrongful acts in failing to withhold from her monthly salary checks the amount required by law deprived her of the benefits which she otherwise would have enjoyed. This being so, she alleges that whatever contribution is presently due the Fund must be paid by plaintiff because it is as a result of its negligence that she is in her present predicament.
The State waived its right to immunity from suit (Taylor v. New Jersey Highway Authority , 22 N.J. 454 (1956); Gruschow v. New Jersey State Highway Department , 56 N.J. Super. 146
(App. Div. 1959)), in order that this matter, which apparently affects numerous individuals throughout the State of New Jersey, could be heard on its merits.
The material facts in this case are not in dispute. Mrs. Liebman, who is now 67 years of age, was first employed in 1910 as a teacher in the public schools of the City of Elizabeth. She taught for a period of over four years and then resigned to be married. She had no intention at that time of ever returning to the teaching profession. She was a member of the then Teachers' Pension Fund and contributions were taken out of her salary. Membership in the fund then, as now, and at all times while she was teaching, was compulsory by law. When she resigned she attempted to withdraw from the fund the amount of her contribution, but because that fund was in precarious financial condition she was told that no money was available. The fund subsequently became actuarially unsound.
A new fund was established by R.S. 18:13-24 et seq. , effective April 10, 1919 (L. 1919, c. 80). This latter statute, with amendments, continued in full force and effect until the passage of L. 1955, c. 37, effective January 1, 1956. The latter statute repealed the 1919 act, but it was provided in N.J.S.A. 18:13-112.5 that, although sections 24 to 110 inclusive of chapter 13 of Title 18 were repealed, "Any benefits and allowances granted under the statutes repealed by this section prior to the effective date of this act shall be continued in the same manner and under the same conditions as originally granted." Both the 1919 and 1955 acts required the employer to deduct from the compensation of each teacher on each and every payroll the amount certified by the board of trustees of the pension fund as being that person's proper contribution. R.S. 18:13-75 and N.J.S.A. 18:13-112.34. The funds so deducted by the employer were formerly required to be transmitted to the State Treasurer, and now to the board of trustees of the Fund. Both statutes provide that in default of so doing the State
Board of Education has the right to withhold school moneys from the district board until the default is made good. R.S. 18:13-94 and N.J.S.A. 18:13-112.34.
Mrs. Liebman resumed teaching in 1925 as a substitute. She returned to full-time teaching on March 1, 1926. The 1919 act was thus applicable to her. As of the latter date, deductions should have been made from her salary. She continued as a teacher in the plaintiff's school system until March 31, 1956. She testified that when she received her first full-time teaching salary check in 1926, she noticed that no deduction had been made for the pension payment. Because of her membership in the prior fund, she knew that a deduction should have been made. She says that she went to the then school principal and called it to his attention, and he told her that he would take it up with the proper authorities. Thereafter, according to her story, he told her that there were others in the Linden schools similarly situated and that she would be taken care of. Nothing further was done about the matter by her, and plaintiff made no deduction from her salary up to the date of her retirement. She says that she thought it was up to the school authorities to take care of it and so, aside from the one discussion with her then school principal sometime in April 1926, she never thereafter up to 1956 discussed the matter with any other official of the school system or the board of education. There is no proof to indicate that her school principal advised her that deductions were not required, nor that he had any authority to in any way bind the plaintiff.
The pension system was integrated with federal Social Security by the provisions of L. 1955, c. 37. When this occurred, Mrs. Liebman said she was told by the assistant superintendent of schools that she would have to retire as of March 31, 1956, in order to secure coverage under both the Fund and Social Security. Acting on this advice, she said that she sent in a letter ...