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McCarthy v. Board of Trustees of Public Employees'' Retirement System of New Jersey

Decided: December 8, 1964.

AUSTIN L. MCCARTHY, APPELLANT,
v.
BOARD OF TRUSTEES OF THE PUBLIC EMPLOYEES' RETIREMENT SYSTEM OF NEW JERSEY, RESPONDENT



Gaulkin, Foley and Collester. The opinion of the court was delivered by Gaulkin, S.j.a.d.

Gaulkin

The Board of Trustees of the Public Employees' Retirement System (hereafter Board) refused to pay to Austin L. McCarthy (hereafter Austin) death benefits which Austin claims are payable to him by virtue of the death of his brother Frank V. McCarthy (hereafter Frank), and Austin appeals.

The facts are stipulated. Frank was employed by Highland Park for over 30 years, and in 1955 he was superintendent of streets. In January of that year he became a member of the Public Employees' Retirement System under the provisions of L. 1954, c. 84 (hereafter chapter 84). In his application for membership Frank named Austin as beneficiary and, in the event Austin did not survive him, Eleanor R. Sabino. Under section 41(c) of said chapter 84 his membership entitled his beneficiary to

"(1) His accumulated deductions at the time of death, together with regular interest; and (2) An amount equal to 1 1/2 times the compensation received by [him] in the last year of creditable service."

It is agreed that (2) was "noncontributory" -- i.e., section 24 of said chapter 84 provided that this benefit was to be paid out of a "contingent reserve fund" made up entirely of money contributed by the State. Section 57 of said chapter 84 permitted

a member to buy additional "contributory" death benefits, but Frank did not elect to buy any. Section 28 provided that such additional contributory death benefits were to be paid to the beneficiaries of members who elected to buy them out of a "members' death benefit fund" made up of the contributions of such members.

Thereafter L. 1955, c. 214 (hereafter chapter 214) was passed. Section 1 of said act provided that the Board "is hereby authorized * * * to purchase * * * a policy or policies of group life insurance to provide for the benefits specified in section 41 * * * and 57 of chapter 84 of the laws of 1954." Section 4 of chapter 214 provided that the premiums for the coverage of the noncontributory death benefits were to be "paid from the contingent reserve fund established by section 24 of chapter 84 of the laws of 1954," while the premiums for the "optional contributory death benefits * * * shall be paid from the members' death benefit fund established by section 28 of chapter 84 * * *."

Section 5 of said chapter 214 provided that "each member selecting the additional death benefit coverage shall agree to the deduction of a percentage of his compensation" to pay for it. Section 6 provided that the group policies must contain the conversion privileges "prescribed by the law" relating to group life insurance. (See N.J.S.A. 17:34-31. No such benefits were obtainable under chapter 84.) Sections 7 and 8 of chapter 214 provided, as far as is here pertinent:

"7. Benefits under such group policy or policies shall be paid by the company to such person, if living, as the member shall have nominated by written designation duly executed and filed with the insurance company through the board of trustees, otherwise to the executors or administrators of the member's estate; except that if the board of trustees accepts from the member during his lifetime a request directing that the retirement system rather than the insurance company make payment of any death benefit in equal annual installments over a period of years or as a life annuity and such request is effective upon his death, or if the board of trustees accepts from a beneficiary to whom payment would otherwise be made by the insurance company in one sum a similar request for payment by the retirement system in equal annual installments over a period of years

or as a life annuity, the insurance company shall make payment of the death benefit to which such request for payment pertains in one sum directly to the retirement system, and the retirement system shall thereupon make payment to the beneficiary in the manner directed by the member or the beneficiary as the case may be, and except, further, that if a member dies in active service as a result of accident and claim is made and allowed under section 49 of chapter 84 of the laws of 1954, the death benefit payable under the policy in such case, exclusive of any additional death benefit provided by section 57 of said chapter, shall, in lieu of being paid as aforesaid be paid to the retirement system to be credited to the contingent reserve fund established by section 24 of chapter 84 of the laws of 1954 and paid therefrom in accordance with said section 24. A member may file with the insurance company through the board of trustees and alter from time to time during his lifetime, as desired, a duly attested written nomination of his payee for the death benefit.

8. * * * Any arrangement for payment under the group policy to a beneficiary * * * shall be in lieu of that provided by sections 41 * * * and ...


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