IN RE: the MARRIAGE OF Mary Lee and Harry Lloyd MILHAN.

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Court of Appeal, Second District, Division 3, California.

IN RE: the MARRIAGE OF Mary Lee and Harry Lloyd MILHAN. Mary Lee MILHAN, Appellant, v. Harry Lloyd MILHAN, Respondent.

Civ. 40803.

Decided: February 28, 1974

Jack A. Otero, Santa Barbara, for appellant. Price, Postel & Parma and Gary R. Ricks, Santa Barbara, for respondent.

Mary Lee Milhan, the former wife of Harry Lloyd Milhan, appeals from that portion of a judgment in a proceeding to dissolve their marriage that determined that the $2,293 cash surrender value of Milhan's Navy Mutual Aid Association life insurance policy, the $2,190 cash surrender value of his National Service life insurance policy and his United States Navy retired pay of approximately $600 per month were all his separate property.1

Wife contends that these three items should have been classified as quasi-community and community property and, therefore, divided equally between the parties pursuant to Civil Code section 4800, subdivision (a). We agree for the reasons hereinafter stated.

Husband and wife were married on June 8, 1944, upon husband's graduation from the U. S. Naval Academy. Husband is a retired commander in the United States Navy who, on his retirement on November 1, 1965, became a California resident and started working for General Motors Corporation in Santa Barbara. His retired pay is non-transferable and he is subject to recall to active duty at any time. His NSLI policy is administered by the Veterans' Administration. His Navy Mutual Aid Policy is administered by a board of Navy officers. Both policies apparently were purchased during marriage and the premiums thereon were presumably paid by husband from his pay and salary during marriage until the final dissolution thereof on February 17, 1970.

Federal military retired pay of a spouse domiciled in California is quasi-community property when it has been earned by that spouse elsewhere during marriage. (See Civ.Code, §§ 4803, subd. (a), 687, 5107–5110; In re Marriage of Fithian, 10 Cal.3d 592, 596, 604, 111 Cal.Rptr. 369, 517 P.2d 449; Phillipson v. Board of Administration, 3 Cal.3d 32, 40, 89 Cal.Rptr. 61, 473 P.2d 765.) Husband should therefore have been directed in the judgment under review to pay one-half of his retired pay to wife as he receives it.

The cash surrender values of the Navy Mutual Aid Association and National Service insurance policies on the life of husband are quasi-community and community property of the parties and therefore should have been divided equally between them. These values were accumulated through the payment of premiums from husband's earnings during marriage and the net return on the investment of those earnings. As just indicated, the earnings of husband were quasi-community and community property and the net return on the investment of those earnings was likewise quasi-community and community property. (See Boyd v. Oser, 23 Cal.2d 613, 621, 145 P.2d 312.) These policies were quasi-community and community property. (See Tyre v. Aetna Life Ins. Co., 54 Cal.2d 399, 402, 6 Cal.Rptr. 13, 353 P.2d 725.) This being so, their cash surrender values possessed the same character.

The portion of the judgment challenged on appeal is reversed for modification of the judgment so that it will conform in all respects with the views expressed in this opinion.


1.  Notwithstanding the fact that this is no longer their status, for convenience the parties will be referred to as wife and husband.

COBEY, Acting Presiding Justice.

ALLPORT and LORING,* JJ., concur.