IN RE: the MARRIAGE OF Judith F. and Titus G. SMITH.

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Court of Appeal, Third District, California.

IN RE: the MARRIAGE OF Judith F. and Titus G. SMITH. Judith F. SMITH, Appellant, v. Titus G. SMITH, Respondent.

Civ. 15225.

Decided: March 15, 1976

Blackmon, Isenberg, Moulds, Blicker, Wasserman, Samuel & Rodda by Phillip L. Isenberg, Sacramento, for appellant. Steven P. Schwafel, Fairfield, for respondent.

This is an appeal in a dissolution proceeding in which the appellant wife claims the court erred by declaring the husband's military retirement benefits to be his separate property.

The appeal is presented to us on the clerk's transcript. It reflects that the respondent was a technical sergeant in the Air Force, having enlisted on December 15, 1954. Appellant and respondent married approximately four years later on September 27, 1958, and separated in March 1970.

Prior to trial, the parties apparently agreed upon all issues framed by the pleadings with the exception of the division of the retirement pay. The trial court adopted a stipulation for division of property, custody of children and payment of support, and in the interlocutory judgment of dissolution declared the military retirement to be respondent's separate property. The court's judgment of dissolution in ruling on the retirement issue stated as follow:

‘The military retired pay of Respondent is found to be his sole and separate property as a result of it not having vested prior to separation of the parties.’

The dissolution proceeding was heard and concluded on November 8, 1974. A judgment was filed and entered March 7, 1975. It was conceded that respondent's retirement benefit vested on January 1, 1975, after 20 years of Air Force service; it had not, of course, vested at the time of separation in 1970, or at the time of trial. It was also conceded by the parties that respondent remained on active military duty after vesting, but was eligible to retire at his election.

This court, in In re Marriage of Martin (1975) 50 Cal.App.3d 581, 123 Cal.Rptr. 634, determined that retirement after vesting (maturing of the retirement benefit) is not a condition precedent to a division of the vested military retirement asset. Where a spouse is eligible for retirement from the military and the only condition to the payment of the benefits is his or her application for them, benefits should be divided as a part of the community property. To do otherwise would mean that one spouse would be deprived of any share in retirement benefits by the decision of the other spouse to delay the retirement until after dissolution proceedings are concluded. (Bensing v. Bensing (1972) 25 Cal.App.3d 889, 893, 102 Cal.Rptr. 255.)

Until the very recent Supreme Court decision in In re Marriage of Brown (1976) 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561, military as well as other retirement benefits were not divisible as community assets so long as they had not vested but were a mere expectancy. (French v. French (1941) 17 Cal.2d 775, 778, 112 P.2d 235.) The Supreme Court in Brown, 15 Cal.2d at page 841, 126 Cal.Rptr. at page 634, 544 P.2d at page 562 expressly held to the contrary stating, ‘[W]e have concluded that French v. French should be overruled and that the subsequent decisions which rely on that precedent should be disapproved. As we shall explain, the French rule cannot stand because nonvested pension rights are not an expectancy but a contingent interest in property; furthermore, the French rule compels an inequitable division of rights acquired through community effort. Pension rights, whether or not vested, represent a property interest; to the extent that such rights derive from employment during coverture, they comprise a community asset subject to division in a dissolution proceeding.’ Continuing, the court stated, at page 846, 126 Cal.Rptr. at page 638, 544 P.2d at page 566, ‘Although as we have pointed out, . . . courts have previously refused to allocate this right in a nonvested pension between the spouses as community property on the ground that such pension is contingent upon continued employment, we reject this theory.’ (Fn. omitted.)

The court, recognizing the many potential difficulties in this new approach to the determination of rights in nonvested pension funds, ordered a limited retroactive application only. At page 851, 126 Cal.Rptr. at page 641, 544 P.2d at page 569, it stated, ‘We conclude that our decision today should not apply retroactively to permit a nonemployee spouse to assert an interest in nonvested pension rights when the property rights of the marriage have already been adjudicated by a decree of dissolution or separation which has become final as to such adjudication, unless the decree expressly reserved jurisdiction to divide such pension rights at a later date (see Civ.Code, § 4800). Our decision will apply retroactively, however, to any case in which the property rights arising from the marriage have not yet been adjudicated, to such rights if such adjudication is still subject to appellate review, or if insuch adjudication the trial court has expressly reserved jurisdiction to divide pension rights.’ (Fn. omitted. Emphasis added.)

Whether or not respondent's retirement benefit had vested on the date of separation is thus not an issue. Our decision is limited to a determination of the extent of the community interest in the retirement asset held by the respondent. Civil Code section 5118, adopted in 1971 and effective in March 1972, provides, ‘The earnings and accumulations of a spouse and the minor children living with, or in the custody of, the spouse, while living separate and apart from the other spouse, are the separate property of the spouse.’ Section 5118 mandates that the date of separation is determinative of the extent of the community interest in the retirement asset. It requires that all earnings and accumulations of the spouses following the date of separation be their separate property; therefore, any accumulation of additional interest in the retirement fund after March 1972 (effective date of section 5118) must remain the separate property of respondent. On that date (the date of separation of the parties antedated the effective date of section 5118), respondent's military retirement benefit was a divisible community asset, and its value must be determined according to the dictates of the Civil Code.

Between marriage and separation, 138 months elapsed. As noted, however, Civil Code section 5118 did not become operative until March 1972, 24 months following the date of separation. The fractional community interest in the retirement benefits must therefore be determined on the basis of 162 months of marital contribution in 240 months1 of retirement interest.

Respondent's retirement benefit vested prior to the date of the interlocutory decree (he had completed 240 months of active duty January 1, 1975), requiring that a present division and payment of a proportionate share be made to appellant (In re Marriage of Martin, supra, 50 Cal.App.3d 581, 123 Cal.Rptr. 634), notwithstanding the fact that respondent remains on active military duty.

The community interest in the retirement asset is determined to be 67.5 percent. Appellant's share is 33.75 percent.2 She is therefore entitled to a monthly payment (commencing on the effective date of this decision)3 equal to 33.75 percent of the amount of retirement to which respondent would have been entitled had he retired on the twentieth anniversary of his active service.

The judgment is reversed with directions to the trial court to enter judgment dividing the retirement asset in accord with our decision. Each of the parties shall bear his or her own costs on appeal.

FOOTNOTES

1.  Twenty years' service or 240 months are required as a prerequisite to receipt of the basic minimum retirement benefit payment.

2.  The division of the community asset, unless otherwise stipulated to by the parties, is made according to the provisions of Civil Code section 4800, subdivision (a) which reads as follows:‘(a) Except upon the written agreement of the parties, or on oral stipulation of the parties in open court, the court shall, either in its interlocutory judgment of dissolution of the marriage, in its judgment decreeing the legal separation of the parties, or at a later time if it expressly reserves jurisdiction to make such a property division, divide the community property and the quasi-community property of the parties, including any such property from which a homestead has been selected, equally.’

3.  The effect of In re Marriage of Brown (1976) 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561 is to overrule French v. French (1941) 17 Cal.2d 775, In re Marriage of Brown (1972) 27 Cal.App.3d 188, 103 Cal.Rptr. 510; In re Marriage of Peterson (1974) 41 Cal.App.3d 642, 115 Cal.Rptr. 184; In re Marriage of Fithian (1974) 10 Cal.3d 592, 111 Cal.Rptr. 369, 517 P.2d 449, 112 P.2d 235; and other cases in harmony therewith. Those cases sustained the decision of the trial court; since Brown directs limited retroactive application, we deem it appropriate to commence payment to the appellant nonretroactively. Had respondent's military retirement not vested, we would have ordered, consonant with the thrust of In re Marriage of Brown, supra, 27 Cal.App.3d 188, 103 Cal.Rptr. 510, that payments to appellant be deferred until the retirement benefit had vested; and had respondent's service terminated for any reason prior to vesting, no payments would have been required to be made to appellant. (In re Marriage of Martin (1975) 50 Cal.App.3d 581, 123 Cal.Rptr. 634.)

EVANS, Associate Justice.

REGAN, Acting P. J., and JANES, J., concur.

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