Opinion
No. 79-1193
Decided May 21, 1980.
Annuity — Contracts — Vested rights — Attempted renunciation by creditor — Ineffective, when.
Whether considered a rescission, release, discharge, renunciation, waiver, gift, or otherwise, and whether or not supported by consideration, an attempted renunciation by the creditor of vested rights under an annuity contract is ineffective to divest the creditor of such vested rights where the debtor refuses to accept or agree to such attempted renunciation.
APPEAL from the Court of Appeals for Wood County.
Edith W. Andrews, appellant, was employed by the University of Cincinnati from 1967 through 1973, prior to which she had been a member of the State Teachers Retirement System for 22 years. During her employment with the University of Cincinnati, Andrews was not entitled to contribute to the State Teachers Retirement System, but instead came under a private pension plan, consisting of individual annuity contracts with appellees Teachers Insurance and Annuity Association of America (TIAA) and College Retirement Equities Fund (CREF), with a portion of the premiums being contributed by the university, and a portion being paid by Andrews, through a salary reduction plan, which made the premiums not currently taxable as income to Andrews under the Internal Revenue Code.
Subsequent to 1973, Andrews became employed with the Bowling Green State University and again eligible to contribute to the State Teachers Retirement System. Thereafter, the University of Cincinnati became a state university, and R.C. 3307.32 was enacted, permitting a member of the State Teachers Retirement System to purchase credit for prior teaching service in a public or private college or university, except for service "that is used in the calculation of any retirement benefit currently being paid or payable in the future to such member under any other retirement program, except social security."
In 1977, Andrews made application to the State Teachers Retirement System to purchase credit for the six years of service with the University of Cincinnati, but was advised that she could not do so unless she divested herself of any interest she might have under the annuity contracts with appellees TIAA and CREF. On October 10, 1977, Andrews sent a letter to TIAA stating with respect to both the TIAA contract and the CREF certificate that:
"This letter is to advise you that I hereby, for myself, my heirs, administrators and assigns, renounce any and all interest that I may have at the present time, or in the future, in and to the above described Pension Plans. If I have any other monies or plans with the Teachers' Insurance Annuity Association of America, or the College Retirement Equities Fund, I hereby renounce on behalf of myself, my heirs, administrators and assigns, any and all interest I may have presently or in the future to the same. I am completely divesting myself of any interest, of any payments from said funds presently or in the future. Under no conditions whatsoever, will I accept any payments from these funds."
On the same day, Andrews sent her check in the amount of $5,900.85 to the State Teachers Retirement System in an effort to purchase service credit for her six years of service with the University of Cincinnati. The State Teachers Retirement System subsequently sent back the check and refused to allow Andrews to purchase the requested service credit because TIAA and CREF had rejected Andrews' renunciation of her annuity contracts.
Thereafter, Andrews commenced this action in the Court of Common Pleas of Wood County seeking declaratory relief and a mandatory injunction, inter alia, to allow her to purchase service credit with the State Teachers Retirement System for her six years of service with the University of Cincinnati. That court denied Andrews the requested relief finding that she had not divested herself of her interest in the annuity contracts. The Court of Appeals affirmed the judgment of the trial court.
The cause is before this court pursuant to allowance of a motion to certify the record.
Messrs. Coe Coe and Mr. Larry M. Coe, for appellant.
Mr. William J. Brown, attorney general, and Mr. Ronald J. Corn, for appellee State Teachers Retirement System Board.
Messrs. Porter, Wright, Morris Arthur, Mr. Earl F. Morris and Mr. Albert L. Clovis for appellees Teachers Insurance and Annuity Association of America and College Retirement Equities Fund.
The parties agree that Andrews is not entitled to purchase service credit with the State Teachers Retirement System, pursuant to R.C. 3307.32, unless she has effectively divested herself of any and all rights under the annuity contracts with TIAA and CREF.
Andrews contends that her unequivocal October 10, 1977, letter to TIAA effectively divests her of any rights under the annuity contracts, and that such letter constitutes either a release, discharge, waiver, renunciation, or gift, of any rights which she may have had under such contracts, and that if consideration be necessary, it is supplied by the benefit she will receive from being entitled to purchase service credit in the State Teachers Retirement System.
Appellees TIAA and CREF, on the other hand, contend that rescission and cancellation of the annuity contracts or renunciation or waiver by Andrews of her rights thereunder requires consideration, which is not present in this case.
Andrews has fully performed her obligations under the annuity contracts, and has a vested right to receive pension payments in accordance with the terms and conditions thereof. There is no further obligation on her part, but there are obligations upon TIAA and CREF to make payments in the future to Andrews upon the terms and conditions set forth in the contracts. Each of the contracts contains the identical paragraph 14 stating: "Any assignment or pledge of this certificate or of any benefit hereunder will be void and of no effect."
Under the annuity contracts, there is a duty on the part of TIAA and CREF to make certain payments to Andrews, with no future reciprocal duty on her part. Under such circumstances, consideration would be required in order for there to be a rescission, release, or discharge of the obligation of TIAA and CREF to Andrews. See Speroff v. First-Central Trust Co. (1948), 149 Ohio St. 415. If there be no consideration for her "agreement," Andrews would not be precluded from enforcing her rights under the annuity contracts in the future unless her action be considered a waiver or a gift. Andrews' contention that there is consideration is somewhat tenuous at best.
A waiver partakes of some of the nature of estoppel and may be enforced by the person having a duty to perform, who has changed his position as a result of the waiver. White Co. v. Canton Transportation (1936), 131 Ohio St. 190. A waiver, however, is not enforceable by the person making the waiver as a renunciation over the objection of the "beneficiary" of the waiver.
Similarly, one may make a gift, as donor, only if the gift be accepted by the donee. See Hamor v. Moore's Admrs. (1858), 8 Ohio St. 239, 242; Phipps v. Hope (1866), 16 Ohio St. 586, 594; Pressman v. Merrill, Lynch (1960), 113 Ohio App. 70, 72; McCoy v. Gosser (1917), 8 Ohio App. 145, 148; 26 Ohio Jurisprudence 2d 147, 158, Gifts, Sections 7 and 16. Clearly, one does not have to accept an unwanted gift which another attempts to make to him.
Ordinarily, acceptance of a gift is presumed as stated in Harvey v. Gardner (1885), 41 Ohio St. 642, at 649:
"* * * In general, any gift by deed, will, or otherwise, is supposed prima facie, unless the contrary appears, to be beneficial to the donee. Consequently the law presumes, until there is proof to the contrary, that every gift, whether in trust or not, is accepted by the person to whom it is expressed to be given."
In this case there is proof to the contrary. To the extent, if any, that Andrews' actions constitute a gift, the record is clear that it was rejected by TIAA and CREF.
The same is true if the attempted action by Andrews is considered as a rescission, release, discharge, renunciation, or waiver. Whether or not supported by consideration, Andrews' attempted action is not complete and effective, unless and until accepted or agreed to by TIAA and CREF. Here, they have neither agreed to nor accepted Andrews' attempted relinquishment of her rights under the annuity contracts, rendering her unilateral action ineffective.
TIAA and CREF have refused to accept or recognize Andrews' attempted renunciation of her rights under the annuity contracts because of the possible effect it might have upon its contracts with other annuitants, including the possible jeopardizing of the favorable tax status which the annuity contracts receive under the Internal Revenue Code. Whether or not acceptance of the attempted renunciation by Andrews would have the effect that TIAA or CREF fear is not before us, but the possibility of such adverse effect upon other annuity contracts makes it reasonable for them to refuse to accept Andrews' attempted renunciation of her rights under the annuity contracts, whether or not supported by consideration.
Whether viewed as a rescission, release, discharge, renunciation, waiver, gift, or otherwise, and whether or not supported by consideration, Andrews' attempted renunciation by her October 10, 1977, letter is ineffective so long as it is not accepted, or agreed to, by TIAA and CREF.
Accordingly, the judgment of the Court of Appeals is affirmed.
Judgment affirmed.
CELEBREZZE, C.J., W. BROWN, KERNS, SWEENEY, LOCHER and HOLMES, JJ., concur.
WHITESIDE, J., of the Tenth Appellate District, sitting for HERBERT, J.
KERNS, J., of the Second Appellate District, sitting for P. BROWN, J.