Decision Number 180

Ruling of Bishop Nolan B. Harmon Relative to the Authority of the Western North Carolina Conference to Grant Annuities on an Adjusted Basis to Conference Members Related to Approved Institutions That Have Pension Plans

Digest

An Annual Conference has authority to grant annuities on an adjusted basis to Conference members related to institutions that are approved by the Annual Conference for annuity responsibility and having their own pension plans.

Statement of Facts

The following letter was received by the Secretary of the Judicial Council:


"I am enclosing a request for a decision from the Judicial Council which is being forwarded by the Western North Carolina Conference. The enclosure is a copy of the proceedings leading up to and the decision of Bishop Nolan B. Harmon on the matter contained therein. When our 1960 Journal comes from the press this will be found on pages 100-102. Bishop Harmon's decision was rendered June 11, 1960.

Fraternally, /s/ Charles D. White

COPY OF THE ENCLOSURE

EPISCOPAL DECISION: A. G. Lackey of the Board of Pensions presented the following:

"Bishop Harmon and members of the Western North Carolina Conference: The Board of Pensions in answer to Minute Question 15, 'What Methodist Institutions or organizations are approved by the Conference for annuity responsibility?' answered 'Brevard College, Methodist Home, Hugh Chatham Memorial Hospital, North Carolina Advocate, Lake Junaluska Assembly, Children's Home, and Greensboro College, High Point College, Pfeiffer College on an adjusted basis,' the adjusted basis being the difference between the college pension plan and the Conference annuity. The legality of paying the above named schools on an adjusted basis has been questioned. The Annual Conference, Saturday morning, June 11, 1960, directed the Board of Pensions to ask the bishop to rule on the authority of the Conference to grant an annuity on an adjusted basis to Conference members serving institutions that have a pension plan.

A study committee in 1956 recommended to the conference that pensions be granted these men based on 1618, section 9, page 444 of the 1956 Discipline. (On recommendation of the Conference Board of Pensions, the Annual Conference shall determine the Methodist institutions and organizations related to its service in which shall be approved for annuity responsibility of the Conference; provided, however, that such list shall be printed in the Conference Journal under the Disciplinary question 'What Methodist institutions or organizations are approved by the conference for annuity responsibility?')

Paragraph 1618-3a seems to contradict the paragraph referred to (the following years of service on trial or in the effective relation shall not be approved as a basis of annuity claim (a) Years for which a pension, or any other form of compensation or "deferred salary," is received from any source other than the Annual Conference.)

Bishop Harmon then rendered the following decision:

EPISCOPAL DECISION REGARDING THE LEGALITY OF THE WESTERN NORTH CAROLINA CONFERENCE'S ACTION ON ONE PHASE OF ITS PENSION PLAN

Having been asked formally by the Western North Carolina Conference at its session on the morning of June 11, 1960, to rule on a question of possible conflict between " 1618, Section 9 of the 1956 Discipline: and " 1618-3a of the same Discipline, and whether or not the actions and attitudes of the Western North Carolina Conference in this matter (hereafter to be described) as invalid it is my judgment that they are not. For the following reasons:

Paragraph 1618, section 9, is as follows:

On recommendation of the Conference Board of Pensions, the Annual Conference shall determine the Methodist institutions and organizations related to it service in which shall be approved for annuity responsibility of the conference; provided however, that such list shall be printed in the Conference Journal under the Disciplinary question "What Methodist institutions or organizations are approved by the conference for annuity responsibility?"

Pursuant to this, the Board of Pensions of the Western North Carolina Conference in answer to question 15, "What Methodist institutions or organizations are approved by the conference for annuity responsibility?" answered as follows in the 1960 Conference Minutes: "Brevard College, Methodist Home, Hugh Chatham Hospital, "North Carolina Christian Advocate," Lake Junaluska Assembly, Children's Home, and Greensboro College, High Point College, Pfeiffer College on an adjusted basis."

The legality of paying persons related to the above schools on an adjusted basis has been questioned because of " 1618-3a of the same 1956 Discipline which says, "The following years of service on trial or in the effective relation shall not be approved as a basis of annuity claim; (a) years for which a pension or other form of compensation or 'Referred Salary' is received from any other source than the annual conference."

Since there is an apparent contradiction here between these two sections of " 1618 cited, I decide that the controlling authority should be given to 1618 section 9 because:
(1) It is the more definite and specific and spells out exactly the procedure that an annual conference may follow, and that in fact is followed by the Western North Carolina Conference. In this case the specific outranks the general in its application and is the exact course the Western North Carolina Conference follows.

(2) As the annual conference is the basic body in the church, and as " 1619.9 admits that a conference shall determine those organizations which can be related to it for annuity service; and since the Western North Carolina Conference acting under its basic rights and in line with this provision, 1618.9 does each year review and approve for annuity responsibility such organizations as it decides are worthy of the same, it is my judgment and opinion that the course the Western North Carolina Conference is following in this regard is valid in every way; and that whatever weight may be given to " 1618, 3a, this is not sufficient to overturn the right of the Conference to proceed as it is doing.

Given over my signature in open conference on June 11 and made part of the annual conference record.

Nolan B. Harmon Bishop presiding 

Jurisdiction

This appeal is properly before the Judicial Council under the provision of Paragraph 43, Article II, Section 2 of the Constitution.

Analysis and Rationale

The question presented by this appeal is in regard to the legality of the Western North Carolina Annual Conference supplementing the pension program of institutions which it has approved for annuity responsibility, to the extent that Conference members related to these institutions may be eligible to receive annuities equivalent to the approved annuity rate of the Annual Conference.

Paragraph 1616 of the 1960 Discipline states: "The Annual Conference shallbe the sole judge of the admissibility and validity of annuity claims and shall be fully competent to determine all payments, disallowances and deductions thereunder, subject to the specific regulations relating thereto contained in the Discipline."

With reference to the pension claim of ministers who serve under appointment to Methodist institutions the Discipline states as follows:

Par. 1618 (Section 9) "On recommendation of the Conference Board of Pensions, the Annual Conference shall determine the Methodist institutions and organizations related to it service in which shall be approved for annuity responsibility of the Conference. . . ."

The amount of the apportionments to be paid by the institution are determined by the Annual Conference:

Paragraph 1623 (Section 7a) "An Annual Conference which accepts annuity responsibility in any conference year for service rendered by a member thereof under special appointment to an institution, organization or agency ... may make an apportionment to such institution ... served for such amount as the conference may determine; provided, however, that such apportionment shall not exceed an amount equivalent to twelve times the annuity rate which has been adopted for that conference year."

The foregoing paragraphs of the Discipline clearly define it as being within the power of the Annual Conference to administer its pension program subject to the provisions of the Discipline. There is nothing in the Discipline which denies the Annual Conference the right to adjust apportionments to institutions approved for annuity responsibility or to establish schedules of annuity payment to supplement the pension plan of such institutions with annuity grants from the Annual Conference.

Paragraph 634 "The Annual Conference may make rules to govern its own procedure; provided that no Annual Conference shall make any rule contrary to the Constitution or to the powers granted it by the General Conference."

The legal authority of an Annual Conference to set up a program granting annuities on an adjusted basis as defined by the Western North Carolina Conference in this case is not prohibited by the provisions of the Discipline.

It is our view that Paragraph 1618 is not a prohibition or limitation upon the power of the Annual Conference. This section contains a series of definitions on which the individual claimant is entitled to have his services computed for pension purposes.

Nothing contained in Paragraph 1618 places any limitation on the Annual Conference in the exercise of its power and discretion to wholly or partially assist the institution, organization or agency for which it accepts responsibility, to establish a uniform pension fund in keeping with the standards established for the Annual Conference. The Board or agency responsible for administrating a partial pension plan would be required to take into consideration the definitions contained in Paragraph 1618 in determining the individual claimant's rights and benefits.

The Judicial Council construes Paragraph 1627 of the 1960 Discipline to be a safeguard in such cases and interprets it as the rule which is to be applied in situations where some other form of compensation may cause an annuitant's claim to be questioned. Furthermore Paragraph 1627 is strictly in harmony with the spirit of the pension legislation already quoted in that it gives to the Annual Conference the right to determine each case on its merits.

Paragraph 1627 ". . . the annuity claim of any conference claimant may be disallowed, in whole or in part, by three-fourths vote of the ministers of the Annual Conference, present and voting, for any of the following causes:

(a) Receipt of a pension or other periodical income from an individual church, or from other sources, which may be presumed to cover and adequately compensate for certain years of service included in the claim." (Emphases added.)

It is our conclusion that an Annual Conference may, therefore, approve institutions for annuity responsibility on an adjusted basis and compute its annuity payments on the basis of its appraisal of the adequacy or inadequacy of the pension rate of the institution involved.

Decision

It is the decision of the Judicial Council that an Annual Conference, through its pension system, may legally pay annuities on an adjusted basis to Conference members related to institutions that are approved by the conference for annuity responsibility and having their own pension plans. Accordingly the ruling of Bishop Nolan B. Harmon is hereby affirmed.

Concur In Part and Dissent In Part

 

Dissenting Opinion

1 regret that I must respectfully dissent from the decision of my colleagues in this case. Since it involves some of the basic regulations in accordance with which the pension program of the Church operates, I am impelled to indicate the reasons for my dissent.

The ruling of Bishop Harmon that annuities may be granted by an Annual Conference on a partial or adjusted basis is founded on two assumptions, both of which I respectfully hold are incorrect.

The first assumption is that Paragraphs 1618 (9) and 1618 (3a) of the 1956 Discipline are in conflict. Paragraph 1618 (9) provides that an Annual Conference may accept annuity responsibility for certain of its members who are employed by Methodist institutions related to the Annual Conference and printed in the Annual Conference Journal. Paragraph 1623 (7a) provides that the Annual Conference may make an apportionment on the institution, whose employee is accepted by the Annual Conference for annuity responsibility, in any amount determined by the Annual Conference not to exceed 12 times the annuity rate of the Conference for a particular year. When this provision is taken advantage of, the person, for whom annuity responsibility is accepted by the Annual Conference, will receive for each year of approved service the full annuity rate of the Conference. He will then be listed in the Annual Conference Journal "with annuity claim upon this Annual Conference" as provided for in Paragraph 1618 (4) of the 1960 Discipline. This provision is not compulsory, however, so that a member of an Annual Conference serving such an institution may accept the pension provided by the institution he is serving, in which case he would be listed in the Annual Conference Journal "without annuity claim upon this Annual Conference" as provided for service either from the Annual Conference or from the institution he is serving and be listed accordingly in the official journal of the Annual Conference.

Paragraph 1618 (3) reads in part:

"The following years of service on trial or in the effective relation shall not be approved as a basis of annuity claim: (a) "Years for which a pension or other form of compensation or 'deferred salary' is received from any source other than the Annual Conference." (Emphasis added.)

This clearly and specifically prevents a member of an Annual Conference from receiving an annuity from the Annual Conference if he is receiving a pension for the same year of service from any other source.

There is no conflict between these two Paragraphs, 1618 (9) and 1618 (3a). The former provides that a member of an Annual Conference may receive a pension from either the Annual Conference or from the institution he is serving, and it must be indicated in the Annual Conference Journal whether or not he is to receive it from the Annual Conference. There is no provision in Paragraph 1618 (4) for a listing which would indicate that he receives a partial or adjusted pension from the Annual Conference. The latter provides that he cannot receive a pension from both for the same year of service. There is no mention anywhere in the Discipline of a partial rate or adjusted rate for a year of approved service. On the contrary, Paragraph 1619 defines the annuity claim of a retired minister as "an amount equivalent to the total of his years of approved service multiplied by the annuity rate. . . ." This positive regulation defining the method of calculating the pension of a member of an Annual Conference, nullifies the argument in the majority decision that because the Discipline does not prohibit an adjusted pension, it is therefore legal.

The second assumption in Bishop Harmon's ruling that Paragraph 1618 (9) is "more definite and specific and spells out exactly the procedure that an Annual Conference may follow" and therefore should have precedence over 1618 (3a) is equally incorrect. A careful reading of both paragraphs will indicate that both of them are "definite and specific" and that each "spells out exactly the procedure an Annual Conference may follow" with respect to the aspect of the regulations treated by each. Each, therefore, is equally authoritative, valid and binding upon an Annual Conference.

In the majority decision, attention is called to the powers of an Annual Conference and Paragraph 1616 of the 1960 Discipline is cited indicating its powers especially with respect to pension matters. The Paragraph reads as follows:

"The Annual Conference shall be the sole judge of the admissibility and validity of annuity claims and shall be fully competent to determine all payments, disallowances, and deductions thereunder, subject to the specific regulations relating thereto contained in the Discipline."

The most important part of this Paragraph in connection with the matter under consideration is the last clause, ". . . subject to the specific regulations relating thereto contained in the Discipline." (Emphasis added.)

The 1960 Discipline has 22 pages of specific regulations, called the Pension Code, which set forth in great detail the regulations governing the operation of the pension program of the Church. Included in these specific regulations are Paragraphs 1618 (3a) prohibiting a member of an Annual Conference from receiving two pensions for the same year of service, and Paragraph 1619 defining precisely what is the annuity claim of a retired minister. These specific regulations enacted by the General Conference and contained in the Discipline restrict the powers of an Annual Conference in the administration of the pension program to the degree that Annual Conference regulations must conform to them and that no regulations can be adopted by an Annual Conference which are contrary thereto. In the light of this, it is difficult to understand the statement contained in the majority decision, "It is our view that Paragraph 1618 is not a prohibition or limitation upon the power of the Annual Conference. This section contains a series of definitions on which the individual claimant is entitled to have his service computed for pension purposes." (Emphasis added.)

Paragraph 1627 is quoted in the majority decision as supporting the principle involved in a partial or adjusted annuity. It is to be noted that this Paragraph has to do solely with the disallowance and not with the establishment of a claim. It specifies that disallowance cannot be made by a general rule of the Annual Conference. Each case must be heard and adjudicated separately. Action to disallow a claim must be by a three-fourths vote of the Annual Conference, after the claimant has been notified by registered mail three months in advance, with specifications of the cause or causes under which the case will be cited, and after he has had opportunity for a hearing. Furthermore, the Conference Board of Pensions must bring to the Conference in writing a full statement of the case and a record of its vote for or against the recommendation. It is obvious that this is not the regular method by which a claim is established and can hardly be considered as supporting the principle upon which a partial or adjusted annuity can be granted.

For the above reasons, I respectfully dissent from the majority decision which affirms the ruling of Bishop Nolan A. Harmon made in the Western North Carolina Conference on June 11, 1960.

Lester A. Welliver