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Swan v. Board of Trustees of Teachers'' Pension and Annuity Fund

Decided: November 2, 1964.

MIRIAM M. SWAN, APPELLANT,
v.
THE BOARD OF TRUSTEES OF THE TEACHERS' PENSION AND ANNUITY FUND, ETC., RESPONDENT



Conford, Kilkenny and Lewis. The opinion of the court was delivered by Kilkenny, J.A.D.

Kilkenny

May the board of trustees of the Teachers' Pension and Annuity Fund of the State of New Jersey (hereinafter "Pension Fund"), in granting a public school teacher an accident disability retirement allowance pursuant to N.J.S.A. 18:13-112.41, deduct therefrom the amount of a workmen's compensation award for permanent disability paid by the local board of education for the same disabling accident, when the board of education has been reimbursed for that payment out of a settlement obtained by the teacher from a third-party tortfeasor and the board of education has released the teacher from further claims? The Pension Fund made such a deduction in the instant case, claiming that it had a right to do so under N.J.S.A. 34:15-43. The teacher, Miriam M. Swan, appeals from that determination, pursuant to R.R. 4:88-8.

The matter has been submitted on an agreed statement in lieu of record. R.R. 1:6-2; R.R. 2:6. The facts, hereinafter noted, are not in dispute.

On April 15, 1959 Mrs. Swan was employed as a teacher by the Newark Board of Education. On that day, she became partially permanently disabled as the result of personal injuries sustained in and from an accident arising out of and in the course of her employment. She fell while descending a darkened stairway in a tenement house to which she had

gone to visit a pupil therein and to give him instruction. This was part of her teaching assignment.

On August 28, 1959 Mrs. Swan filed an application with the Pension Fund for accident disability retirement benefits, as provided by N.J.S.A. 18:13-112.41, requesting that the benefits become effective October 1, 1959. Her application was based upon the accident and injuries sustained by her on April 15, 1959. As of the date of her application she was 64 years old and beyond the statutory age limit of 60 years to qualify for an ordinary disability retirement allowance.

On December 8, 1959 the Pension Fund tentatively denied Mrs. Swan's application for accident disability retirement benefits and, instead, retired her under a service retirement allowance pursuant to N.J.S.A. 18:13-112.41 and 18:13-112.46. It was then stipulated by the parties that the appealable determination with respect to her retirement under the accident disability retirement allowance provision would be held in abeyance subject to the outcome of a contemplated workmen's compensation proceeding.

On February 7, 1963 Mrs. Swan was awarded the sum of $3,850 for her permanent disability by the Division of Workmen's Compensation by reason of the accident of April 15, 1959, besides other incidental benefits for temporary disability, medical payments, legal fees and the like, making her gross award in excess of $5,000. The board of education of Newark paid the award.

On or about March 20, 1963 a third-party action instituted by Mrs. Swan for her injuries in the accident of April 15, 1959 was settled for $5,000. The board of education accepted $2,604.35 in full satisfaction of its right of subrogation against that third-party recovery and released Mrs. Swan from all further claims with reference thereto. The board figured that its subrogation right extended to the full $5,000, because the gross amount of the workmen's compensation award paid by it had exceeded that sum. It recognized its obligation under N.J.S.A. 34:15-40 to pay $1,666.66 in legal fees, 33-1/3% of the $5,000 recovered, plus $95.65 for disbursements

by the attorneys in the third-party suit, a total of $1,762.31. This would have left a net balance recoverable by the local board of $3,237.69. Because of some disputed items, the board compromised its claim by accepting $2,604.35 ($2,500 plus the difference between the $200 maximum allowable for expenses and the actual expenses of $95.65 reported by Mrs. Swan's attorneys). On these figures, the board of education closed out any rights it had to reimbursement from Mrs. Swan. Thus, the sum of $2,604.35 was paid to the Newark Board of Education in full settlement and release of all obligations by reason of its having paid the workmen's compensation award in Mrs. Swan's favor.

On May 9, 1963 the Pension Fund rescinded its original action in regard to Mrs. Swan's claim for accident disability retirement benefits and granted her such a retirement allowance retroactively to October 1, 1959, the effective date requested in her original application. It calculated that for the 45 months between October 1, 1959 and June 30, 1963, Mrs. Swan should have received $500.88 monthly, or a total of $22,539.60, as against the monthly pension of $351.53 actually received, amounting to a total of $15,818.85, thus entitling her to an additional $6,720.75. But it then deducted from the balance of $6,720.75 the workmen's compensation award of $3,850 for permanent disability, and thus fixed as the net sum due and payable to Mrs. Swan $2,870.75. On June 26, 1963 the Pension Fund ...


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