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Skulski v. Nolan

Decided: July 17, 1975.

ANTHONY SKULSKI, THEODORE PROCTOR, MICHAEL J. PRESTIA, FRANK J. MOORE, EDWARD T. BADGER, EDNA M. O'NEILL, RAFFAELA MIGLIOCCIO, MICHAEL BONELLI, JAMES DEFELIPPO, FLORENCE KISLER, AND ALMA E. BURKE, PLAINTIFFS-APPELLANTS,
v.
JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. HELEN WISNIEWSKI, JOHN H. FITZHENRY, JAMES P. CLARK, ADRIAN BRIED, JOSEPH CAPPUCCIO, ELIZABETH DWYER, MARGUERITE CLEMONS, THOMAS J. NATALE, JOHN REIDY, EDWIN M. REILLY, ELIZABETH SHARP, FRANK ESPOSITO, ELIZABETH CIRILLO, THEODORE WRONSKI, ANNA J. ANDREWS, PLAINTIFFS-APPELLANTS, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. JOSEPH GALANO, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. FRANK STEARNS, NICHOLAS FIORE, WILLIAM WHITE, IRVING BARKAN, AND VINCENT L. BODSON, PLAINTIFFS-APPELLANTS, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. DENNIS J. MURRAY, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. GEORGE L. HILLIARD, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. WILLIAM FLAHERTY, NICHOLAS GRABLER AND JOHN FENNELLY, PLAINTIFFS-APPELLANTS, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. FRANCIS L. BOYLE, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. VERONICA TUOHY, ANTHONY MARCHIANO, LAWRENCE KELLY, AND SOLOMON KAMINSKY, PLAINTIFFS-APPELLANTS, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. ROBERT BRADLEY, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. FRANCES CLOUD, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. WILLIAM MACPHAIL AND JOHN GROCHOWSKI, PLAINTIFFS-APPELLANTS, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. MICHAEL G. CARRIG, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. ANDREW GROGAN, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. MARY KAPP, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. MARGARET RYAN, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. FLOYD SMITH, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. JOHN E. ANNITTO, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. MORRIS CHESLER, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. GERTRUDE CRONIN, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. JOSEPH DELONG, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. SAM DINARDO, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT. WILLIAM STEINMETZ, PLAINTIFF-APPELLANT, V. JOSEPH M. NOLAN, RECEIVER OF THE HUDSON COUNTY EMPLOYEES' PENSION COMMISSION, DEFENDANT-RESPONDENT



For affirmance, as modified, of five judgments and reversal and remandment of remaining judgments -- Chief Justice Hughes, Justices Mountain, Sullivan, Pashman and Clifford and Judge Conford. Opposed -- None. The opinion of the Court was delivered by Pashman, J.

Pashman

[68 NJ Page 189] This is a series of consolidated cases consisting of 23 appeals involving 57 individuals whose previously granted disability pensions were discontinued by a court-appointed receiver for the Hudson County Pension Commission. The trial court reinstated most of the pensions but the Appellate Division reversed in all but one

case which is not included in these appeals. We granted the pensioners' petitions for certification, 67 N.J. 72-76 (1975), to establish guidelines governing the termination of disability pensions, and to consider the applicability of our decision in Ruvoldt v. Nolan, 63 N.J. 171 (1973) to the present dispute. We have concluded that the Appellate Division must be reversed and the appeals remanded to the trial court for disposition in accordance with the principles we set forth today.

The pension disputes which are the subject of the present appeals had their genesis in a 1971 grand jury investigation of the operation of the Hudson County Pension Commission. The investigation ultimately led to the indictment and conviction of the five members of the Commission for criminal activity in connection with their official duties. See State v. Deegan, 126 N.J. Super. 475, 480 (App. Div. 1974), certif. den. 65 N.J. 283, 284 (1974).*fn1 Prior to the trial, however, the Attorney General instituted a civil action in the Superior Court, Chancery Division, seeking, among other things, the appointment of a receiver on the grounds of alleged mismanagement and fraud on the part of the Commission. See Ruvoldt v. Nolan, 63 N.J. 171, 173 (1973). By order dated March 1, 1972, the Chancery Division appointed defendant as receiver, vested with all the functions, powers and duties of the commission.

Although he continued pensions granted for age and service, the receiver suspended payment of disability pensions. Notices of suspension were distributed to all affected pensioners together with forms requesting medical and other pertinent information. After reviewing the material submitted, the receiver continued in effect the suspensions of over 200. Prior to formal termination, however, hearings

were held by court-appointed hearing examiners. The receiver made an independent review of the findings of the examiners before ultimately terminating approximately 205 disability pensions. Those who desired reconsideration were also afforded a rehearing before a hearing examiner and further review by the receiver.

The pensioners sought review in the Superior Court, Chancery Division, to determine the validity of the pension terminations. Based upon the record compiled by the receiver and additional testimony presented in support of the claims of various pensioners, the trial court rendered judgment against five of the pensioners,*fn2 expressly relying on the decision in Ruvoldt, but reversed the receiver in all the other cases, thus reinstating the pensions. The court also denied the receiver's counterclaim for return of pension funds in all cases.

In reaching his decision, the trial judge rejected the receiver's contention that the principles set forth in Ruvoldt "were for Ruvoldt only," and thus inapplicable to the instant cases. Relying on Ruvoldt, the trial court concluded that in those cases in which reinstatement was warranted, "the combination of lapse of time, together with the findings of non-involvement in any wrongdoing, the reliance of plaintiff upon the pension grant, and the accompanying irrevocable change of position" precluded the termination of the pensions.*fn3 In several of the cases, the court emphasized that an important factor in his finding of unreasonable delay in reopening the pension awards was the intervening death of the Commission's Medical Examiner:

Until November 28, 1966, Dr. Vincent P. Butler, the Medical Director for the Hudson County Pension Commission, conducted all medical examinations in disability cases and rendered opinions to the Pension Commission concerning the eligibility of applicants for pensions. As of that date, by reason of illness, his assistant took over. Dr. Butler made no examinations after November 28, 1966. On March 5, 1967 Dr. Butler died. He was not, therefore, available to testify at the hearing before the Receiver or at the Court hearing. This constituted a distinct disadvantage to the plaintiff in that Dr. Butler was not available to support his medical opinions. That disadvantage will be overcome by establishing November 28, 1966 as a line of demarcation between what I regard as reasonable and what I regard as unreasonable in this case. There is a lapse of about six years between that date and the date of most of the revocations of the pension awards by the Receiver.

In the five cases in which the receiver's termination of pensions was sustained, the pension had been awarded less than six years prior to suspension by the receiver.*fn4 Finding that the "totality of the circumstances" did not preclude an examination of the validity of the pension grants, the court concluded that there was insufficient evidence of disability or work connection, or both to justify the pension awards. Finding the pension grants illegal, the trial court upheld the termination of said pensions in those five cases. The receiver and the five pensioners whose terminations were affirmed appealed the judgments of the trial court.

On May 8, 1974, in an unreported opinion, the Appellate Division considered the single issue of the retroactivity of L. 1973, c. 345 which substantially amended the pension statutes applicable to Hudson County.*fn5 In concluding that the amendments should be given prospective effect only and were inapplicable in all of the cases under review, the court

emphasized that the act "reveals neither words nor meaningful suggestion that the Legislature intended that the new statutory approach to pensioners' rights have retrospective application."

On June 14, 1974 the Appellate Division considered 55 consolidated pension appeals in a second unreported opinion. Before examining the merits of the individual appeals the court discussed the general principles governing its review. In the court's view, when the receiver's reconsideration of a pension grant discloses that the award is "arrantly illegal," he has the duty to terminate the pension without regard to other considerations. Where the receiver's review of an award reveals that the propriety of a pension grant is "reasonably debatable," however, he must consider the surrounding circumstances to determine whether other compelling considerations exist which in justice and fairness operate as a bar to his authority to terminate apparently illegal pension grants. Applying these principles to the individual appeals, the Appellate Division reversed the trial court's reinstatement of pensions in 49 cases. Five cases were remanded to the Chancery Division for further fact finding, and in one case the Division affirmed the reinstatement of plaintiff's pension. With respect to the five pensions which the trial court found to have been illegally granted, the court in separate opinions, affirmed substantially for the reasons expressed below. We granted the pensioners' petitions for certification on January 14, 1975. 67 N.J. 72-76 (1975).

I

Although two of the pensioners in the cases before us were awarded benefits pursuant to N.J.S.A. 43:10-3,*fn6 most of the pensions were granted in accordance with N.J.S.A.

43:10-4.*fn7 The time interval between the initial pension grants and termination by the receiver ranged from two to 27 years. It is this lapse of time which raises some of the most troublesome questions in these appeals.

At the outset it is appropriate to observe that the trial court was correct in rejecting the receiver's argument that our decision in Ruvoldt was "for Ruvoldt only." In Ruvoldt, an assistant prosecutor had been awarded a disability pension by the same Commission which granted the benefits in the instant appeals. The receiver terminated the pension but the trial court reversed. We affirmed the judgment of the trial court without reaching the merits of Ruvoldt's entitlement

to the pension based upon our conclusion that the issue was "reasonably debatable" and that "[i]t would be essentially unjust to undo the pension grant so many years later after such circumstances of reliance and irremediable change of position as here manifested." Ruvoldt, supra, 63 N.J. at 185. While we were careful to note that in deciding Ruvoldt we did not wish to be understood to express any views on the pension cases then pending before the trial court, see Ruvoldt, supra, 63 N.J. at 174, our approach in Ruvoldt provides a useful starting point for evaluation of the present termination appeals.

Our analysis in Ruvoldt proceeded from the premise that in our State, absent legislative restriction, administrative agencies have the inherent authority to reopen and modify previous orders. Ruvoldt, supra, 63 N.J. at 183; Handlon v. Belleville, 4 N.J. 99, 106-107 (1950); Central Home Trust Co. v. Gough, 5 N.J. Super. 295, 301 (App. Div. 1949) (alternate holding). See also New Jersey Bell Telephone Co. v. Bd. of Public Utility Comm'rs, 12 N.J. 568, 578-79 (1953); McFeely v. Bd. of Pension Comm'rs, 1 N.J. 212, 217-18 (1948). In Handlon, supra, however, we specifically qualified the general principle by adding that:

Barring statutory regulation the power [of reconsideration] may be invoked by administrative agencies to serve the ends of essential justice and the policy of the law. But there must be reasonable diligence. [4 N.J. at 106-07 (insert added)]*fn8

The limitation of reasonable diligence in reopening prior administrative determinations has been recognized in cases decided since Handlon, supra, ...


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