Appeal from Order of Commonwealth Court at 2843 C.D. 1983, entered February 22, 1985, affirming the Order of the Board of Claims at Docket No. 565, dated September 16, 1983. 88 Pa. Commw. Ct. 1,
Nix, C.j., and Larsen, Flaherty, McDermott, Hutchinson, Zappala and Papadakos, JJ. Nix, C.j., and Larsen and Hutchinson, JJ., file a concurring opinion.
Appellant, Dr. Albert A. Watrel, served as the president of Slippery Rock State College until his dismissal by Governor Shapp on June 11, 1976. When Dr. Watrel alleged that he had been illegally discharged, a Settlement Agreement and Mutual Release was negotiated between Dr. Watrel and the Commonwealth, Department of Education (hereafter "DOE"). Under the terms of the Agreement, Dr. Watrel relinquished all claims against DOE arising from his dismissal. In exchange, DOE agreed, inter alia, to grant Dr. Watrel one year sabbatical leave at half pay, waiving his duty to return to the state college system for one year of service following his sabbatical leave; pay liquidated damages in the amount of $19,968; and pay full fringe benefits through June 30, 1977. In addition, the parties agreed as follows:
ALBERT A. WATREL agrees to make every effort to obtain employment elsewhere, and if such efforts are successful, the Commonwealth agrees to accept contributions for retirement purposes through the state college Page 64} system to permit ALBERT A. WATREL to become vested in the State Employees Retirement System. In the event no other suitable employment is obtained by ALBERT A. WATREL, the Commonwealth agrees to permit appropriate employment to ALBERT A. WATREL within the state college system for a period of one year or such lesser period of time as is necessary for him to become vested in the State Employees Retirement System.
[Emphasis ours]. Prior to his dismissal, Dr. Watrel had contributed to the State Employees' Retirement System for eight years. When read in conjunction with the provision for sabbatical leave, it becomes obvious that the quoted provisions were designed to assure Dr. Watrel's contributions throughout the ten years required for vesting in the State Employees' Retirement System.
In accordance with his agreement to obtain employment elsewhere, Dr. Watrel secured employment as president at Dickinson State College in Dickinson, North Dakota. He duly tendered his tenth year contribution to DOE for forwarding to the State Employees' Retirement Board (hereafter "SERB"); however, SERB refused to accept the payment as not in accordance with the State Employees' Retirement Code, Act of March 1, 1974, P.L. 125, No. 31, as amended, 71 Pa.C.S.A. 5101 et seq. (Supp. 1986) (hereafter "Code").*fn1 Thereafter, Dr. Watrel brought an action against DOE for breach of the Settlement Agreement and Mutual Release. He claimed damages in the amount of $105,333.41 -- the value of his account if he had been vested with ten years credited service.
The Board of Claims denied recovery.*fn2 In doing so, the Board determined that there had in fact been no breach, reasoning that DOE had not expressly undertaken to guarantee
Dr. Watrel's vesting in the State Employees' Retirement Fund and that all parties to the Agreement knew that DOE's power to act was limited to acceptance, transmittal and recommendation of Dr. Watrel's retirement contribution. The Board rejected Dr. Watrel's argument that the Commonwealth's agreement to accept contributions "to permit [him] to become vested in the State Employees Retirement System" operated as a guarantee on the grounds of intervening illegality. On appeal, Commonwealth Court determined that the Board had incorrectly applied the doctrine of intervening illegality. Nevertheless, Commonwealth Court, 88 Pa. Commw. 1, 488 A.2d 378, affirmed the Board's decision, reasoning that the Agreement to permit vesting could not be effectively performed without violating a statute and was therefore "'illegal, unenforceable, and void ab initio,' Gramby v. Cobb, 282 Pa. Super. 183, 188, 422 A.2d 889, 892 (1980)." Because there has been no breach by DOE and Dr. Watrel's plight is entirely of his own making, i.e., he bargained himself out of the retirement system, we affirm.*fn3
As quoted, supra, the parties agreed that Dr. Watrel would make every effort to obtain employment elsewhere, and, in return, DOE would accept his tenth year contribution to permit his vesting in the State Employees' Retirement System. The parties' performance under this provision has generated the instant controversy because this provision is self-defeating. In accordance with this provision, Dr. Watrel sought and accepted a position of employment in North Dakota. The problem is that the Code only provides for extension of retirement credit to "active member[s]," and when he was employed in North Dakota, Dr. Watrel was not an "active member."
At the time Dr. Watrel tendered his tenth year contribution, "active members" included State employees*fn4 who
were contributing to the fund and members on leave without pay*fn5 for whom authorized contributions were made to
the fund, Act of March 1, 1974, P.L. 125, No. 31, since amended, 71 Pa.C.S.A. § 5102.*fn6 While he was employed in North Dakota, Dr. Watrel was neither. Thus, under the Code, he was not entitled to make contributions to the Fund, and the SERB, which is charged with administering the Fund according to the Code, 71 Pa.C.S.A. § 5901, properly rejected his tender.
As quoted supra, DOE agreed "to accept contributions . . . to permit [Dr. Watrel] to become vested in the State Employees' Retirement System." The language is clear and unambiguous: DOE agreed to accept Dr. Watrel's contribution. When DOE forwarded the contribution to the SERB, it fully discharged its duty under this clause. As administration of the State Employees' Retirement Fund is solely the responsibility of the SERB, DOE was without power to effect the vesting of Dr. Watrel's pension. We will not presume that DOE agreed to perform an act which it did not have the statutory authority to perform. Any assumption by Dr. Watrel that DOE promised to do more than accept his contribution and forward it to SERB is unwarranted, as one who deals with a state official is bound to know the limitations of that official's authority. Luzerne Twp. v. Fayette County, 330 Pa. 247, 199 A. 327 (1938); Rustrum Realty, Inc. v. Dept. of Property and Supplies, 35 Pa. Commw.Ct. 62, 384 A.2d 1043 (1978).
It could seem that Dr. Watrel got the short end of it, as it were, but the Agreement was the culmination of lengthy, sophisticated and counseled negotiations, and was freely entered into by both parties. Moreover, the provisions governing administration of the State Employees' Retirement Fund are fully set forth in the Code. Thus, Dr. Watrel must be charged with the knowledge that, when he ceased to be an "active member," he no longer was entitled
to retirement credit under the Code, and acceptance of his contribution was not assured. Ignorantia juris quod quisque tenetur scire, neminem excusat. As Dr. Watrel's predicament is entirely the result of an Agreement which he negotiated and freely entered into, he must accept the consequences.
The main thrust of Dr. Watrel's plea for relief is that the result in this case is inequitable. Careful consideration convinces ...