FRENCH v. FRENCH (1940)

This is an action for divorce. The parties were married on September 17, 1923. The defendant reenlisted in the United States Navy in May, 1925, and continued in active service therein until July 10, 1939, when, upon his application, he was transferred from active service to the Fleet Naval Reserve.

This action was begun on June 29, 1939, and the interlocutory decree was entered on November 21, 1939. In addition to awarding the plaintiff for her support a monthly payment for three years and declaring that certain real property was held by the parties as joint tenants, the interlocutory decree declared that various items of personal property were community property and divided them between the parties. Among other things the “Reserve Pay, Pension or Retired Pay” to be thereafter received by the defendant “from the United States Government for services in the United States Navy * at present reserve pay * for the period of fourteen (14) years hereafter” and the “then increased” pay to be received by the defendant after the expiration of fourteen years was adjudicated to be community property and as such was divided between the parties, one-half to each, “upon payment by the United States Government to said defendant”.

The defendant has appealed from that portion of the judgment which adjudicated that his pay for service in the Fleet Reserve and his possible future retired pay, in the event of his retirement after fourteen years' service in the Fleet Reserve, were community property and which awarded one-half thereof to the plaintiff.

The main question presented is whether, where the property rights of the parties are being settled in an interlocutory decree of divorce, the pay subsequently received by a member of the Fleet Reserve is and may be treated as community property and awarded to the wife as such. The respondent relies upon Crossan v. Crossan, 35 Cal.App.2d 39, 94 P.2d 609; and Dryden v. Board of Pension Com'rs, 6 Cal.2d 575, 59 P.2d 104. In the first of these cases, the defendant had an interest in the State Employees' Retirement Fund, which interest had been acquired through deductions from his earnings during marriage and, aside from other benefits, he was entitled to withdraw his portion of the fund at any time his employment was discontinued. The trial court, having found that this interest was of a certain value, awarded it to the defendant and awarded to the plaintiff an equivalent amount of other community property. It was held that the interest in the fund was a valuable right which had been purchased with community funds, and that it was proper, under these circumstances, to treat this interest as community property. In the Dryden case the question of community property was not involved, although it was held, under certain provisions of the Los Angeles city charter requiring members of the police department to pay 4 per cent of each salary check received into a pension fund, that the pension provided for was not a gratuity but was an integral portion of the contract of employment, and that the right to receive such a pension became vested when the employment began. While the principles of these cases are applicable where vested rights have accrued which have been acquired by payments from community funds, we have a somewhat different situation before us in the instant case.

The original naval reserve force was established by the act of August 29, 1916, 39 Stats. at Large, chap. 417, p. 587. It was largely amended by the Act of Congress of February 28, 1925, U.S.C.A., title 34, sec. 751 et seq., and by the Naval Reserve Act of 1938, U.S.C.A., title 34, sec. 852 et seq. In the former statutes, the compensation of members of the Naval Reserve was frequently referred to as “retainer pay.” In discussing such pay, although in connection with a different problem, the court in Sawyer v. United States, 2 Cir., 10 F.2d 416, 421, said: “Retainer pay is the compensation paid to enlisted men retained in the service, but not rendering active service, although liable, to be called into active service by the President, and when so called they no longer receive ‘retainer pay,’ but ‘pay.’ The act of 1916 enacts that ‘men enrolled in the Fleet Naval Reserve shall be “paid” at the rate of * per annum, such pay to be considered as “retainer pay” for the obligation on the part of such members to serve in the Navy in time of war or national emergency.’ ”

In Crawford v. United States, D.C., 291 F. 801, it was held that retainer pay was not to be regarded as pay for services which had been rendered, but as an allowance for holding oneself in readiness to render service if called on.

In the Naval Reserve Act of 1938, the expression “retainer pay” has been dropped and the act throughout refers to the compensation of members of the Fleet Reserve as “pay”. U.S.C.A., title 34, sec. 853 et seq. It appears from the language of the statute that one of the purposes thereof is to build up a body of trained and qualified officers and men who shall be available if needed; that a member of this reserve assumes an obligation to serve in the Navy in time of war or during a national emergency; that he may be required to perform not more than two months' active duty in each four-year period and shall submit to a physical examination at least once during each four-year period; that he subjects himself to the laws and regulations provided for the Navy; that he may be ordered to active duty at certain times, in which event his pay as a member of the Fleet Reserve would cease; that he is subject to certain training duty, during which his reserve pay would also cease; that he is subject to discharge for a good reason; that his pay may be withheld if he fails to perform any of the duties imposed upon him by law; and that it is mandatory upon him to comply with all of the obligations he has assumed in order to be entitled to continue to receive his pay.

It seems clear that the pay which a member of the Fleet Reserve may thus receive after the dissolution of his marriage, is something quite different from a vested interest which was acquired during the marriage and which was paid for with community funds. Compensation for service in the Fleet Reserve is provided in the form of “pay” for services to be performed while a member thereof. If it can be said that the right to membership or a position in the Fleet Reserve was acquired through service in the Navy during the marriage, it cannot be said that the compensation for such future service was earned during the time of the marriage. In a real sense, the pay here in question is compensation on a part-time basis for services currently performed, including the keeping of oneself on call for active duty at any time. This compensation is not something fixed and certain which existed when the appellant went into the Fleet Reserve or when the divorce was granted. The right to a place in this service is not a property interest which could be presently valued, and whether such service will continue and whether or not any such compensation will be paid depends upon many uncertainties. The only existing right is to keep the position upon certain conditions, and if the requirements are complied with, and to receive compensation in the future for services to be thereafter and continuously rendered. The right to such pay is not vested and is subject to cancellation in a number of contingencies, with a resulting complete loss of any further compensation. The mere right to future employment does not make the subsequent earnings community property, the right thereto was not purchased with community funds, and the future services are to be paid for entirely with federal funds. In our opinion, the pay here in question is, under the federal statutes, compensation for future and continuing services as a member of the Fleet Reserve and not compensation for past services rendered before becoming a member of such Reserve.

It may be further observed that the Fleet Reserve is maintained by the federal government as a part of the system of national defense. Aside from other considerations, the effectiveness of that branch of our defense system should not be undermined and its efficiency impaired by destroying, in large measure, the compensation which makes the system possible, through a strained construction of local community property laws.

The respondent raises three additional questions. It is first urged that in so far as that portion of the decree which is appealed from relates to the “retired” pay which the appellant may eventually receive, the judgment may be sustained. The appellant will not be entitled to such retired pay until and unless he completes a service of fourteen additional years in the Fleet Naval Reserve and complies with all of the requirements of such service. Assuming that such pay, when and if it is eventually received by him, will then be pay for past services the right thereto did not vest and the same was not earned or acquired during this marriage. His right to receive any such pay is still contingent upon many things and it cannot now be known whether or not he will ever receive such pay. If and when he does receive such pay it will come to him as a result of both his active service in the Navy and of his service hereafter with the Fleet Reserve. It would seem to follow that there was no vested right or interest in this regard which existed at the time the judgment was entered which was community property or which could be thus divided at that time.

It is next argued that even if the future earnings of the appellant as a member of the Fleet Reserve are not community property the portion of the decree awarding one-half of such earnings to the respondent may be sustained “as an allowance for support under Civil Code, section 139”. This portion of the decree was not an allowance for the support of the respondent. It purported to be a part of a division of existing community property between the parties and the court made other allowance for the support of the respondent for a limited time. It may be assumed that the court, in its discretion, could have made a different division of the community property which the parties actually possessed and that it could have made a different and other provision for the support of the respondent, but this was not done. The respondent has not appealed from the portions of the decree which cover such matters, and she is bound thereby. Kane v. Eastman, 110 Cal.App. 753, 295 P. 63. The portion of the decree here in question is one purporting to divide community property which was at the time owned by the parties, and the order appealed from cannot be sustained on the ground that an amount of an equivalent value might have been awarded to the respondent in another way or for another purpose.

Finally, it is contended that the money which may actually be received by the appellant as pay for services in the Fleet Reserve during the period between the entry of the interlocutory decree and the entry of the final judgment is, in fact, the community property of the parties, and that the portion of the judgment appealed from should be sustained to that extent. We think this contention must be sustained. The interlocutory decree purported to adjudicate the community property rights of the parties and the matter of support for the respondent. In doing this it treated the appellant's earnings from a particular source, his service in the Fleet Reserve, as community property. This the court had a right to do in so far as it affected these earnings up to the time of final judgment. London G. & A. Co. v. Industrial Acc. Comm., 181 Cal. 460, 184 P. 864, 867. In the case just cited, in speaking of an interlocutory decree which had not covered the matter of community property, the court said that this decree had no effect “upon the statutes declaring the status of the property acquired by him during the marriage, because, until the final judgment, the marriage status continues”. If this be true, it must also be true that the earnings of a party to a divorce between the entry of an interlocutory decree and the entry of a final judgment are community property when such earnings have been so treated and adjudicated to be such in the interlocutory decree. Leavitt v. Leavitt, 134 Cal.App. 145, 24 P.2d 910.

The portion of the judgment appealed from is affirmed to the extent and in so far as it affects the “Reserve Pay” to be received by the appellant during the period between the date of the interlocutory decree and the entry of a final judgment. In so far as the portion of the judgment appealed from affects the reserve or retired pay to be received by the appellant after the entry of final judgment it is reversed. The appellant to recover costs on appeal.

BARNARD, Presiding Justice.

I concur: GRIFFIN, J.