Chisnell v. Chisnell

• Decision Date: 18 April 1978
• Docket Number: Docket No. 77-2096
• Citation: 267 N.W.2d 155,82 Mich.App. 699
• Parties: Beatrice M. CHISNELL, Plaintiff-Appellee, v. Robert Lloyd CHISNELL, Defendant-Appellant.
• Court: Court of Appeal of Michigan — District of US

Page 155

267 N.W.2d 155

82 Mich.App. 699

Beatrice M. CHISNELL, Plaintiff-Appellee, v. Robert Lloyd CHISNELL, Defendant-Appellant.

Docket No. 77-2096.

Court of Appeals of Michigan.

April 18, 1978.

Released for Publication July 10, 1978.

Daner, Freeman, McKenzie & Matthews by Gary E. Gendernalik, Mt. Clemens, for defendant-appellant.

Thomas J. McCallum, Fraser, for plaintiff-appellee.

Before J. H. GILLIS, P. J., and BASHARA and RILEY, JJ.

RILEY, Judge.

This case involves an issue of first impression in Michigan; i. e., the treatment of military retirement pay in a divorce proceeding. The issue focuses on the question of whether the trial court erred in awarding plaintiff a one-half interest in defendant's net retirement benefits as part of a property settlement where no provision was made for alimony.

Defendant entered the United States Army in 1949 but he left the military in 1953. He re-enlisted in 1955, just prior to his marriage to plaintiff, and retired in 1972 as Chief Warrant Officer, fourth class.

No children were born of this marriage. The parties owned two lots and accumulated personal property, including several cars, a boat, a camper and a car trailer, some of which were encumbered by loans. In 1975, the plaintiff filed her complaint for divorce.

Following a bench trial, the court awarded plaintiff a divorce providing that neither party receive alimony and that all of the marital property be sold, with the proceeds going first to settle the liens on the property and the remainder to be divided equally between the parties.

The court found that defendant, by virtue of his years of military service, was receiving military retirement pay of $9600 per year. After deducting 20 per cent of this amount for taxes, the court awarded plaintiff, as part of the property settlement, one-half of the net amount, or $320 per month. The payments were ordered to continue until the death of either party.

Defendant contends on appeal that military retirement pay is not a marital asset subject to division in a divorce action property settlement. He argues that the retirement pay is analogous to wages, which can only be considered as a factor in granting alimony. Since no alimony was awarded here, defendant argues, plaintiff has no interest in the net retirement pay.

Although no Michigan case has precisely decided this issue, the parties have referred us to several cases from other jurisdictions where the question has been reached with conflicting results. Our analysis of these decisions leads us to the conclusion that, although the question is subject to considerable debate with defensible arguments on both sides of the issue, the trial court below correctly held that the retirement pay was an asset of the marriage subject to a property division.

It appears to be the uniform holding of the community property states that military retirement pay is community property, subject to division upon divorce. ¹ The most comprehensive such opinion is that of the California Supreme Court in In re Marriage of Fithian, 10 Cal.3d 592, 111 Cal.Rptr. 369, 517 P.2d 449 (1974).

The Fithian Court stated that under their community property law, retirement benefits which are earned by one spouse as an element of compensation earned for work done during the course of the marriage are divisible upon dissolution of the marriage. Thus, the threshold issue was whether military retirement pay was intended as deferred compensation for the person's service prior to retirement, or payment for the limited status of the person after retirement. ² The Fithian Court held:

"(M)ilitary retirement pay must be realistically viewed as compensation for past, not present, services. Congress' purpose in creating the retirement pay system was to enhance the morale of the serviceman and to encourage him to remain in the military, and not to compensate him for his limited responsibility to the government after his retirement. Indeed, the amount of retirement pay a serviceman receives bears no relation to any continuing duties after retirement, but is calculated solely on the basis of the number of years served on active duty and the rank attained prior to retirement. (10 U.S.C. § 6323(e).) Moreover, should the serviceman actually be recalled to active duty, he is not only additionally compensated according to the active duty pay scale, but his rate of retirement pay is also increased thereafter. (10 U.S.C. § 1402.) The conclusion is inescapable that retirement pay is awarded in return for services previously rendered and therefore is divisible as community property to the extent the serviceman was married while on active duty." 10 Cal.3d at 604, 111 Cal.Rptr. at 376-377, 517 P.2d at 456-457.

The Court in Fithian did not feel that this result was affected by the fact that the officer had not contributed, either directly or in the form of a payroll deduction, to the fund out of which the retirement pay is disbursed. The Court found the question of contribution irrelevant to the ultimate characterization of the benefits.

"Although the retirement fund was noncontributory, husband's rights to the benefits vested during marriage and constituted an integral part of his compensation for service in the military." 10 Cal.3d at 596, 111 Cal.Rptr. at 371, 517 P.2d at 451.

Community property states are not the only jurisdictions to rule that military retirement pay is an asset of the marriage divisible upon divorce. In Kruger v. Kruger, 139 N.J.Super. 413, 354 A.2d 340 (1976), the Superior Court of New Jersey, Appellate Division, held that the trial court had correctly distributed a share of the husband's retirement pay to the wife as a portion of the property division. No alimony was awarded.

The Kruger Court first considered the practical and financial aspects of terming such pay as an asset of the marriage rather than income to the husband. ³ The Court then cited from a number of community property cases, including Fithian, supra, which held the pay to be a marital asset. The Kruger Court held:

"We therefore conclude that both the retired pay and disability benefits which defendant husband has become irrevocably entitled to receive for the balance of his life constitute assets subject to equitable distribution to the extent that his entitlement thereto is based upon military service rendered during the existence of the marriage." 139 N.J.Super. at 420, 354 A.2d at 344.

We recognize that the result reached by the Courts in Fithian, supra, and Kruger, supra, is by no means universal. Several jurisdictions have held military retirement pay to be an equivalent to wages, thereby constituting income to the retired spouse that is unavailable for distribution in a property settlement. In United States v. Williams, Md.App., 370 A.2d 1134 (1977), the Maryland Court of Appeals, after having the question certified to them by the United States District Court, held that for the purposes of Maryland divorce law military retirement pay constitutes wages subject to garnishment for payment of an arrearage in alimony. A similar result was reached in Watson v. Watson, 424 F.Supp. 866 (E.D.N.C.1976), although the state's garnishment law altered the disposition of the case.

In In re Marriage of Ellis, 36 Colo.App. 234, 538 P.2d 1347 (1975), affirmed, Colo., 552 P.2d 506 (1976), the Colorado Court held that military retirement pay is not marital property since "(a)t no time has it any cash surrender, loan, redemption, or lump sum value". 36 Colo.App. at 236, 538 P.2d at 1349.

Although, as we have stated, no Michigan case has ruled specifically on this issue, the contrasting points of view in the previously cited cases were discussed by this Court in Hutchins v. Hutchins, 71 Mich.App. 361, 248 N.W.2d 272 (1976). In Hutchins, the issue was the treatment of the husband's pension from the Michigan State Police. The Court noted that the pension question was one of first impression, so it turned to a consideration of analagous areas of law and to decisions of other states:

"In our research in community and noncommunity property states, we find the courts holding that state pensions, private pensions, profit-sharing trust and military pensions could be properly distributed as property under a decree of divorce." (Emphasis added.) 71 Mich.App. at 365, 248 N.W.2d at 274.

After discussing several of the cases concerning military retirement pay, and cases dealing with other forms of pensions, the Hutchins Court concluded:

"Returning to the Michigan public safety department pension, Accident and Disability Fund leads us, as do other jurisdictions with similar statutes, to the conclusion that it also treats the accumulated deductions in the husband's account in a manner which makes them marital property. Here, the plaintiff-husband's interest was...