Does the 1981 dual-compensation rule in G.S. 135-72 cut off Uniform Judicial Retirement System benefits for North Carolina judges who had already retired and started serving as federal judges before the statute's October 9, 1981 effective date?

Plain-English summary

On October 9, 1981, the General Assembly ratified Chapter 978 of the 1981 Session Laws. Section 7 of that bill added a new G.S. 135-72 to the Uniform Judicial Retirement System (UJRS) statutes. The new section was a dual-compensation provision aimed at North Carolina judges who also drew federal-judicial salaries or federal-judicial retirement allowances. Two operative subsections did the work.

Subsection (a) said current UJRS members "who are appointed to serve as a justice, judge or magistrate in the United States Courts" would not be eligible for UJRS benefits while actively serving federally.

Subsection (b) said that if "a retired former member be appointed" to a federal judicial position or be receiving a federal-judicial retirement allowance, his UJRS allowance would be reduced so the total of his UJRS allowance plus his federal salary or federal-retirement allowance did not exceed the salary for the last office he held in the General Court of Justice of North Carolina. The reduction was capped: under no circumstances would the UJRS retirement allowance fall below the annuity value of his accumulated contributions.

The Director of the Retirement and Health Benefits Division asked the AG whether this new statute applied to two specific North Carolina judges who had retired from the UJRS and started serving as federal judges before the statute's October 9, 1981 effective date:

• Hon. Sam J. Ervin, III, who had been appointed Circuit Judge with the United States Court of Appeals for the Fourth Circuit and retired from the UJRS effective July 1, 1980.
• Hon. Richard C. Erwin, who had been appointed to the United States District Court for the Middle District of North Carolina and retired from his position as Judge of the North Carolina Court of Appeals effective January 1, 1981.

Both had been federally appointed and had begun receiving UJRS benefits well before October 9, 1981.

The AG said G.S. 135-72 did not reach them. The reasoning was straightforward.

Literal language. Both subsections (a) and (b) used the future-oriented phrase "who are appointed" / "be appointed." A person already appointed before the statute's effective date does not fit the phrase "who is appointed" or "should be appointed" once the statute exists. The literal language reached only future appointments.

Prospective-statute presumption. "Ordinarily, a statute will be given prospective effect only, and will not be construed to have retroactive effect unless such intent is clearly expressed or arises by necessary implication from its terms" (citing 12 Strong's North Carolina Index 3d, Statutes, § 8). The 1981 amendment contained no clear expression of retroactive intent.

Retroactivity definition. Under Gardner v. Gardner, 300 N.C. 715 (1980), a statute is retroactive "when its operative effect is to alter the legal consequences of conduct or transactions completed prior to its enactment." Reducing benefits for judges who had already retired and already begun federal service would alter the legal consequences of completed actions: their UJRS retirement and their federal appointment. That would be a retroactive application, and absent clear legislative intent to make G.S. 135-72 retroactive, the statute could not be applied that way.

The settled-rights point reinforced the answer. The retirees and the Retirement System had already established their benefit relationship. Reducing a retiree's allowance based on conduct that the legislature had not yet flagged as benefit-reducing would unsettle vested expectations.

So Judges Ervin and Erwin (and any similarly situated retirees) continued to receive their full UJRS benefits. The dual-compensation rule applied only to future appointments.

Currency note

This opinion was issued in 1981. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

The Uniform Judicial Retirement System has been amended many times since 1981. The dual-compensation provisions in G.S. 135-72 have likely been adjusted. The grandfathering result here was driven by the specific text of the 1981 enactment and the prospective-statute presumption, both of which remain doctrinally robust, but specific retirement questions require checking the current statutes and current Retirement System practices.

Common questions

Q: Could the legislature have made G.S. 135-72 retroactive?
A: Probably, with clear language, but it might have raised constitutional issues about impairing vested contract rights of retirees. The 1981 enactment contained no clear retroactive language, so the AG never reached the constitutional question.

Q: What about a judge who retired before October 9, 1981, but took federal judicial appointment after that date?
A: That fact pattern was not directly before the AG. By the literal text of subsection (b) ("should a retired former member be appointed"), the post-effective-date federal appointment would seem to trigger the reduction. The AG's discussion focused on retirees who had already been federally appointed before the effective date.

Q: Is the UJRS the only NC retirement system this affected?
A: The opinion specifically addressed UJRS. Other state retirement systems (the Teachers' and State Employees' Retirement System, the Legislative Retirement System, the Local Governmental Employees' Retirement System) have their own dual-compensation provisions that should be analyzed under their own statutes.

Q: What if a retired judge later became eligible for additional federal benefits not anticipated at the time of state retirement?
A: Outside the scope of the opinion. The AG's analysis was anchored to whether G.S. 135-72 could apply retroactively to people whose state retirement and federal appointment had already occurred when the statute took effect.

Background and statutory framework

The statutory text of G.S. 135-72 was the anchor:

• G.S. 135-72(a). "Members who are appointed to serve as a justice, judge or magistrate in the United States Courts shall not be eligible for benefits under this Article while actively serving as a justice, judge or magistrate in the United States Courts."
• G.S. 135-72(b). "Should a retired former member be appointed to serve as justice, judge or magistrate in the United States Courts or be in receipt of a retirement allowance from service as a justice, judge or magistrate in the United States Courts, his retirement allowance provided under the provisions of this Article shall be reduced so that the sum of his retirement allowance and the salary or retirement allowance from service as a justice, judge or magistrate in the United States Courts does not exceed the salary for the office last held by the retired member in the General Court of Justice of North Carolina. Provided, however, that under no circumstances will the retired member's retirement allowance be reduced below the amount of his annuity resulting from his accumulated contributions."

The two phrases that did the prospective work were "who are appointed" and "be appointed." Both phrasings looked forward from the date the statute took effect. The AG read them literally and resisted any inference that the legislature meant to reach already-completed appointments.

The interpretive default was the long-standing prospective-statute presumption articulated in Strong's North Carolina Index 3d, Statutes, § 8 (1978). The retroactivity test in Gardner v. Gardner, 300 N.C. 715 (1980), provided the operational definition: a statute is retroactive when it alters the legal consequences of conduct or transactions completed before enactment.

The factual setup is notable for its specificity. Sam J. Ervin, III, was the son of Senator Sam J. Ervin, Jr., and had been appointed to the Fourth Circuit in 1980. Richard C. Erwin had been appointed to the Middle District of North Carolina shortly thereafter. Both had retired from the UJRS to take their federal positions before G.S. 135-72 existed. The AG's grandfathering result let both continue to draw their full UJRS retirement allowance.

Citations

• N.C.G.S. § 135-72 (Coordination of benefits with federal judicial service)
• N.C.G.S. § 135-72(a) (current member dual-service rule)
• N.C.G.S. § 135-72(b) (retired former member offset rule)
• Chapter 978, 1981 Session Laws (enacting G.S. 135-72)
• Gardner v. Gardner, 300 N.C. 715, 718, 268 S.E.2d 468 (1980) (retroactivity defined as altering legal consequences of completed transactions)
• 12 Strong's North Carolina Index 3d, Statutes, § 8 (1978) (prospective-statute presumption)

Source

• Landing page: https://ncdoj.gov/opinions/retirement-judges-receipt-of-benefits-while-serving-as-federal-judge/

Original opinion text

Requested By: E. T. Barnes, Director
Retirement and Health Benefits Division
Department of State Treasurer

Question:
Does G.S. § 135-72, which denys retirement benefits to members or retired former members of the Uniform Judicial Retirement System of North Carolina who are appointed to serve as a justice, judge or magistrate in the United States Courts, apply to judges retired from the Uniform Judicial Retirement System and serving as judges in the United States Courts prior to the October 9, 1981, effective date of G.S. § 135-72?

Conclusion:
No.

On October 9, 1981, the General Assembly ratified Chapter 978 of the 1981 Session Laws. Section 7 of that bill enacted G.S. § 135-72 as a new section in Article 4 of Chapter 135 governing the Uniform Judicial Retirement System of North Carolina. That section reads in its entirety as follows:

"§ 135-72. Coordination of benefits. —(a) Members who are appointed to serve as a justice, judge or magistrate in the United States Courts shall not be eligible for benefits under this Article while actively serving as a justice, judge or magistrate in the United States Courts.

(b) Should a retired former member be appointed to serve as justice, judge or magistrate in the United States Courts or be in receipt of a retirement allowance from service as a justice, judge or magistrate in the United States Courts, his retirement allowance provided under the provisions of this Article shall be reduced so that the sum of his retirement allowance and the salary or retirement allowance from service as a justice, judge or magistrate in the United States Courts does not exceed the salary for the office last held by the retired member in the General Court of Justice of North Carolina. Provided, however, that under no circumstances will the retired member's retirement allowance be reduced below the amount of his annuity resulting from his accumulated contributions."

The question asked is whether G.S. § 135-72 should be applied to two former North Carolina judges retired from the Uniform Judicial Retirement System of North Carolina and currently serving as judges of the United States Courts. The Honorable Sam J. Ervin, III, was appointed as a Circuit Judge with the United States Court of Appeals for the Fourth Circuit, where he is now serving, and retired effective July 1, 1980, from the Uniform Judicial Retirement System. The Honorable Richard C. Erwin was appointed to a position as Judge with the United States District Court for the Middle District of North Carolina and retired from his position as Judge of the North Carolina Court of Appeals effective January 1, 1981. Both these individuals thus had retired from their positions as judges with the North Carolina judicial system and from the Uniform Judicial Retirement System and consequently were in receipt of benefits from the Uniform Judicial Retirement System well before the effective date of G.S. § 135-72.

The language of G.S. § 135-72(a) applies to Uniform Judicial Retirement System members "who are appointed" as federal judges.

Those persons are not eligible for benefits under the Uniform Judicial Retirement System as long as they are actively serving as federal justices, judges or magistrates. Construing the language literally, this language would not apply to a judge already in receipt of benefits from the Uniform Judicial Retirement System and serving as a federal judge since such judges could not be viewed as "members who are appointed" while G.S. § 135-72 was in effect. They had been appointed prior to that date. Similarly, G.S. § 135-72(b) Uniform Judicial Retirement System "should a retired former member be appointed to serve as a justice, judge or magistrate in the United States courts. . . ." Again, a judge already retired from the Uniform Judicial Retirement System and serving as a judge of the United States District Court or the United States Court of Appeals does not fall within the language of one who would "be appointed" during the effective period of G.S. § 135-72 since he would have already been appointed prior to any statute reducing his benefits upon such appointment. Thus, the literal language of both G.S. § 135-72(a) and G.S. § 135-72(b) does not apply to persons who had already been retired from the Uniform the Uniform Judicial Retirement System and begun serving as a justice, judge or magistrate in the United States courts prior to the effective date of G.S. § 135-72.

"Ordinarily, a statute will be given prospective effect only, and will not be construed to have retroactive effect unless such intent is clearly expressed or arises by necessary implication from its terms" 12 Strong's North Carolina Index 3d, Statutes, § 8 (1978). "The application of a statute is deemed 'retroactive' or 'restrospective' when its operative effect is to alter the legal consequences of conduct or transactions completed prior to its enactment." Gardner v. Gardner, 300 N.C. 715, 718, 268 S.E.2d 468 (1980). To apply G.S. § 135-72 to judges who had already retired and were receiving benefits from the Uniform Judicial Retirement System while also actively serving as judges in the United States courts prior to enactment would be to alter the settled rights and obligations of the Retirement System and the retirees. Consequently, G.S. § 135-72 should not be applied to retirees of the Uniform Judicial Retirement System serving as judges in the United States court at the time that G.S. § 135-72 went into effect.

Rufus L. Edmisten
Attorney General

Norma S. Harrell
Assistant Attorney General