No. 3--04--0693

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 2005

PRESIDING JUSTICE SLATER delivered the opinion of the court:

Defendant Pekin Police Pension Board (the Board) terminatedthe pension of plaintiff Charles Bassett, a former Pekin policeofficer, after he was convicted of a felony. The Boardauthorized a refund of plaintiff's pension contributions aftersubtracting more than $40,000 that plaintiff had received inbenefits. On administrative review, the circuit court determinedthat plaintiff was entitled to a full refund of hiscontributions. The Board now appeals from the circuit court'sdecision; plaintiff has cross-appealed from the Board's denial ofinterest. We affirm and remand.

Facts

After contributing to the Pekin police pension fund for 29years, plaintiff began receiving pension benefits in December of2002. On August 28, 2003, plaintiff was convicted of the felonyoffense of official misconduct in connection with themisappropriation of funds at the police department. The Boardsubsequently terminated plaintiff's benefits effective October 1,2003. Plaintiff's $94,404.24 in contributions to the pensionfund were refunded to him, reduced by the $40,218.10 in benefitsplaintiff had received. This resulted in a refund totaling$54,186.14. Plaintiff filed a complaint for administrative reviewin the circuit court of Tazwell County alleging that he wasentitled to a full refund of all his contributions to the pensionfund without any offset for the benefits he had received.Plaintiff also asserted that he was entitled to interest on therefunded amount. Relying on Shields v. Judges Retirement System,204 Ill. 2d 488, 791 N.E.2d 516 (2003), the circuit court heldthat plaintiff was entitled to a full refund of his pension fundcontributions, but it denied his request for interest. The Boardnow appeals from the court's ruling and the plaintiff has cross-appealed from the denial of interest. We affirm and remand.Analysis

Standard of Review

In reviewing a decision under the Administrative Review Law(735 ILCS 5/3-101 et seq. (West 2002)), we review the decision ofthe administrative agency rather than that of the circuit court. XL Disposal Corp. v. Zehnder, 304 Ill. App. 3d 202, 709 N.E.2d293 (1999). An agency's findings of facts are held to be primafacie true and correct and will not be disturbed unless they areagainst the manifest weight of the evidence. Abrahamson v.Illinois Department of Professional Regulation, 153 Ill. 2d 76,606 N.E.2d 1111 (1992). However, questions of law, such as theproper interpretation of a statute, are reviewed de novo. Shields, 204 Ill. 2d 488, 791 N.E.2d 516 (2003); see EnviriteCorp. v. Illinois Environmental Protection Agency, 158 Ill. 2d210, 632 N.E.2d 1035 (1994).

The Pension Code

Plaintiff's pension benefits were terminated pursuant tosection 3-147 of the Illinois Pension Code (Pension Code), whichprovides in part:

"§ 3-147. Felony conviction. None of the benefitsprovided in this Article shall be paid to any personwho is convicted of any felony relating to or arisingout of or in connection with his or her service as apolice officer.

This Section shall not impair any contract orvested right acquired prior to July 11, 1955 under anylaw continued in this Article, nor preclude the rightto a refund." (Emphasis added.) 40 ILCS 5/3-147 (West2002).

As the language emphasized above indicates, while a policeofficer convicted of a felony forfeits his right to pensionbenefits, he may receive a refund of his contributions to thepension fund. Section 3-124 of the Pension Code addresses theissue of refunds, but it is limited to situations where a policeofficer is separated from service with less than 20 yearsservice, or where an officer dies with less than 10 yearsservice:

"§ 3-124. Refund. A police officer who isseparated from police service after June 30, 1953 withless than 20 years of service is entitled to a refundupon request of all contributions made by the officerto the police pension fund.

***

If a police officer dies with less than 10 yearsof police service, the officer's contributions to thepolice pension fund shall, upon written request of hisor her surviving spouse, be refunded to the spousewithout interest. If upon the death of a policeofficer, there is no surviving spouse, the excess ofthe officer's contributions to the fund over anypension payments shall be refunded to his or her heirsor estate. Acceptance of this refund shall bar thepolice officer's dependents or estate from any furtherparticipation in the benefits provided under thisArticle." 40 ILCS 5/3-124 (West 2002).

Since there is no specific statutory provision governingrefunds when a police pension is terminated under section 3-147,the Board relied on Phelan v. Village of LaGrange Park PolicePension Fund, 327 Ill. App. 3d 527, 763 N.E.2d 343 (2001). Phelan examined sections 3-124 and 3-147 and held that while theformer section did not apply when a pension was terminated due toa felony conviction, the latter section entitled the felon to arefund. Construing the statutes together led the court toconclude that the refund was limited to the amount that thecontributions exceeded the benefits which had been paid. Otherwise, the Phelan court stated, a pensioner whose benefitswere terminated by a felony conviction would be treated morefavorably than a police officer whose benefits where terminatedby separation or death. See Phelan, 327 Ill. App. 3d at 536, 763N.E.2d at 350.

In reversing the Board's order and ruling that plaintiff wasentitled to a full refund of his pension contributions, thecircuit court relied on the supreme court's decision in Shields,204 Ill. 2d 488, 791 N.E.2d 516. Shields addressed the sameissue presented in this case: whether a pensioner whose benefitsare forfeited as a result of a felony conviction is entitled to afull refund of his contributions without deduction for thebenefits he had received prior to the forfeiture. In Shields,however, the pension was from the Judges Retirement System (40ILCS 5/18-101 et seq. (West 2002)) rather than the Police PensionFund (40 ILCS 5/3-101 et seq. (West 2002)). The Board contendsthat this distinction limits the Shields holding to casesinvolving judicial pensions, leaving Phelan as the controllingauthority with regard to police pensions. We disagree.

The Shields court examined two statutory provisions: section 18-163 and section 18-129 of the Pension Code. Section18-163 is the judicial pension forfeiture provision, and it isnearly indistinguishable from its police pension counterpart:

"§ 18-163. Felony conviction. None of thebenefits herein provided shall be paid to any personwho is convicted of any felony relating to or arisingout of or in connection with his or her service as ajudge.

This Section shall not operate to impair anycontract or vested right acquired before July 9, 1955under any law or laws continued in this Article, nor topreclude the right to a refund." (Emphasis added.) 40ILCS 5/18-163 (West 2002).

Indeed, Shields described sections 3-147 and 18-163 as"identical." Shields, 204 Ill. 2d at 494, 791 N.E.2d at 521. The Shields court noted that section 18-163 contained nolimitation on the right to a refund: "In other words, the rightto the refund is unconditional." Shields, 204 Ill. 2d at 497,791 N.E.2d at 521.

The Shields court also considered the various provisionsconcerning refunds contained in section 18-129 of the PensionCode. This section, much like section 3-124, provides forrefunds of contributions under certain conditions, includingdeath or upon ceasing to be a judge. See 40 ILCS 5/18-129(a)-(g)(West 2002). However, because none of the provisions of section18-129 addressed the situation where benefits have been forfeiteddue to a felony conviction, the Shields court ruled that section18-129 had no application to those circumstances. Accordingly,in light of the unconditional nature of the right to a refundgranted by section 18-163, the court concluded that it was notpermissible to reduce that refund by pension benefits which hadalready been received:

"[I]f the Board were permitted to deduct Shield'sbenefits from his total contributions, it would, ineffect, be recouping benefits rightfully paid toShields prior to his conviction. That result would beincompatible with our determination that the right to arefund is unconditional." Shields, 204 Ill. 2d at 497,791 N.E.2d at 521.

Given that the forfeiture provisions governing judicial andpolice pensions are essentially identical, the right to a refundof contributions to the police pension fund granted by section 3-147 is no less unconditional than that granted by section 18-163. In addition, just as the refund provisions of section 18-129 haveno application to the forfeiture of a judicial pension, section3-124 contains no reference to forfeiture of a police pension andis therefore similarly inapplicable. In short, there is simplyno principled distinction between the circumstances presented inShields and those presented here. Accordingly, we find that,pursuant to Shields, plaintiff is entitled to a full refund ofhis contributions to the police pension fund, undiminished by anybenefits he received prior to termination.

Cross-Appeal

Plaintiff has cross-appealed from the Board's denial ofinterest on his refunded contributions. Plaintiff's claims forinterest encompass three distinct time periods. First, plaintiffcontends that interest should be calculated from the time hebegan making contributions to the pension fund until the date ofthe Board's decision which terminated his pension benefits andawarded him a partial refund. We disagree.

The general rule in Illinois is that interest is notrecoverable unless provided for by agreement of the parties or bystatute. Ochoa v. Maloney, 69 Ill. App. 3d 689, 387 N.E.2d 852(1979); see also Department of Transportation v. New CenturyEngineering and Development Corp., 97 Ill. 2d 343, 454 N.E.2d 635(1983). Section 3-147 of the Pension Code does not provide for arefund with interest, and plaintiff cites no statutory authorityfor his claim. Indeed, the only reference to interest in thecontext of a police pension is the provision in section 3-124concerning an officer who dies with less than 10 years service. Under those circumstances, the surviving spouse may receive arefund of the pension contributions without interest. See 40ILCS 5/3-124 (West 2002). We find no error in the refusal by theBoard to award plaintiff prejudgment interest.

Plaintiff next claims that he is entitled to 6% interest onthe unpaid amount of $40,218.10 from the time that the Boardissued its decision on January 12, 2004, until the date of thecircuit court's decision on August 6, 2004. We disagree.

Section 2-1303 of the Code of Civil Procedure (Code)provides that when judgment is entered upon any award, report orverdict, interest shall be earned from the time the award is madeat the rate of 9%, or at the rate of 6% when the judgment debtoris a governmental entity. The debtor may stay the accrual ofinterest by tendering payment of the judgment. 735 ILCS 5/2-1303(West 2004). In Owens v. Stokoe, 170 Ill. App. 3d 179, 524N.E.2d 755 (1988), this court applied section 2-1303 in a casewhere the judgment was increased on appeal. The plaintiff inOwens was awarded $40,000 in damages but that amount was reducedto $10,000 based on the jury's determination that plaintiff was75% contributorily negligent. On appeal, the contributorynegligence finding was reversed and a judgment of $40,000 wasentered for plaintiff. On remand, the trial court ruled that theplaintiff was entitled to interest on the entire $40,000 from thetime of the original jury verdict. We reversed that ruling,finding that the defendant did not have a reasonable opportunityto prevent the accrual of interest because he could not have beenexpected to foresee the reversal of the $10,000 judgment. Furthermore, it would have been inequitable to expect thedefendant to tender $40,000 when an enforceable judgment existedonly for $10,000. This court also noted that in cases where anappellate court increases an award granted in a trial court,"interest on the increased portion of the award is available onlyafter the appellate court or the trial court on remand entersjudgment." Owens, 170 Ill. App. 3d at 181, 524 N.E.2d at 756;see also Rosenbaum v. Rosenbaum, 94 Ill. App. 3d 352, 418 N.E.2d939 (1981).

Based on Owens, we find that plaintiff is not entitled tointerest on the increased amount of contributions refunded tohim. The Board should not have been expected to foresee that itsdecision would be reversed by the circuit court, nor would it beequitable to require it to tender an amount greater than itbelieved was proper. Accordingly, section 2-1303 of the Codedoes not apply.

In its brief, the Board contends that plaintiff is notentitled to interest on the disputed amount from the time of itsdecision until the circuit court's ruling. The Board thenasserts, however, that if interest is due, section 2 of theInterest Act (815 ILCS 205/2 (West 2004)) is the applicablestatutory provision. We disagree.

Section 2 provides in part:

"§ 2. Creditors shall be allowed to receive atthe rate of five (5) per centum per annum for allmoneys after they become due on any bond, bill,promissory note, or other instrument of writing; ***." (Emphasis added.) 815 ILCS 205/2 (West 2004).

In Fenton v. Board of Trustees, 203 Ill. App. 3d 714, 561N.E.2d 105 (1990), the court held that section 2 applied to ajudgment against a police pension board which had denied adisability pension to the plaintiff. The Fenton court based itsdecision on the fact that the term "other instrument of writing"had been applied to construction contracts, insurance policies,real estate listing contracts and leases, which were "no morelike bonds, bills or promissory notes than is the pensionagreement, in that they are all writings creating anindebtedness." Fenton, 203 Ill. App. 3d at 723, 561 N.E.2d at111. Therefore, since the terms and conditions of the pensionfund were written in the Illinois Pension Code, the Fenton courtheld that the pension agreement was an "other instrument ofwriting" and section 2 applied. Fenton was subsequently followedin Barber v. Board of Trustees, 256 Ill. App. 3d 814, 630 N.E.2d446 (1993) (police disability pension); Martino v. Police PensionBoard, 331 Ill. App. 3d 975, 772 N.E.2d 289 (2002) (policedisability pension); and Barry v. Retirement Board of theFiremen's Annuity and Benefit Fund, 357 Ill. App. 3d 749,828N.E.2d 1238 (2005) (firemens' widows' death benefit annuity).

We disagree with the conclusion of Fenton and its progenythat the pension code qualifies as an "other instrument ofwriting" under section 2 of the Interest Act for two reasons. First, as the Fenton court recognized, under the principle ofejusdem generis, the phrase "other instrument of writing" shouldbe construed to refer only to writings similar to the "bond[s],bill[s], or promissory note[s]" listed in the statute. 815 ILCS205/2 (West 2004); see Fenton, 203 Ill. App. 3d at 714, 561N.E.2d 110. In our opinion, the provisions of the pension codehave little in common with bonds, bills, promissory notes, orother instruments of indebtedness.

Second, Fenton's analysis is contrary to the rule thatinterest statutes are to be strictly construed; nothing will beread into them by intendment or implication. In re Walker, 131Ill. 2d 300, 546 N.E.2d 520 (1989); Spina v. Toyota Motor CreditCorp., 301 Ill. App. 3d 364, 703 N.E.2d 484 (1998). Accordingly,we decline to adopt Fenton's expansive interpretation of section2, and we find that it does not apply to plaintiff's judgment.

Finally, plaintiff maintains that he is entitled to 6%interest under section 2-1303 of the Code on the circuit court'sjudgment of $40,218.10 from the August 6, 2004, date it wasrendered until the date of payment. The Board concedes thisissue. We remand for calculation of this amount.

For the reason stated above, the judgment of the circuitcourt reversing the Board's decision and granting plaintiff afull refund of his pension contributions is affirmed. The denialof prejudgment interest is also affirmed. This cause is remandedfor the calculation of post-judgment interest pursuant to section2-1303 of the Code.

Affirmed and remanded.

O'BRIEN, J., concurs.

JUSTICE LYTTON specially concurring:

_________________________________________________________________

Although I concur with the majority opinion, I find the entirediscussion of the Interest Act superfluous. It is unnecessary tothe opinion because we have determined that the plaintiff was owedno interest on the increased amount of contributions refunded tohim. Thus, I do not join in the dicta that needlessly challengesan entire line of Illinois cases.