Conner v. Conner

• Decision Date: 31 October 1983
• Parties: Robert E. CONNER, Jr., Respondent, v. Elaine CONNER, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 482

468 N.Y.S.2d 482

97 A.D.2d 88

Robert E. CONNER, Jr., Respondent, v. Elaine CONNER, Appellant.

Supreme Court, Appellate Division,

Second Department.

Oct. 31, 1983.

Arnold B. Firestone, Hauppauge, for appellant.

Smith, Panish & Shapiro, New York City (Harry Shapiro, New York City, of counsel), for respondent.

Before TITONE, J.P., and GULOTTA, O'CONNOR, BRACKEN and BROWN, JJ.

O'CONNOR, Justice.

Defendant wife appeals from an order denying her an expert's fee to determine the value of the education of plaintiff husband, who was awarded a master's degree in business administration by Harvard University. It is her argument that the academic degree is a "marital asset", indeed, virtually the parties' only asset, and that it has "economic potential" susceptible of calculation and proof by an expert. Her proposed retainer agreement with the expert, annexed to her motion, speaks of determining plaintiff husband's net income and net worth, "including the value of his Masters of Business Administration degree", and of "[a]ssist[ing] in the structuring of the divorce settlement to achieve maximum tax benefits" for defendant wife.

Plaintiff husband and the nisi prius court, relying on the Fourth Department's recent decision in Lesman v. Lesman, 88 A.D.2d 153, 452 N.Y.S.2d 935, app. dsmd. 57 N.Y.2d 956, concluded that no fee should be awarded for such an evaluation because, first, a degree or license is not property subject to equitable distribution in a judgment dissolving a marriage, and second, defendant wife had made no contribution to his earning the degree sufficient to warrant restitution.

I agree with the Fourth Department's conclusion that an academic degree is not property susceptible of distribution pursuant to part B of section 236 of the Domestic Relations Law. I conclude, however, that the jural nature of an academic degree is essentially irrelevant to the operation of the new law in allocating the economic incidents of the divorce judgment between property settlement and alimony (now maintenance), apart from significant considerations such as taxation and creditors' rights. I further conclude that Special Term misconstrued the nature of spousal contributions recognized under the new law. I therefore analyze these issues at some length because the value report and tax advice which defendant wife receives at the plaintiff husband's expense will only be useful if formulated under premises compatible with the new law.

THE FACTS

The parties were married in West Germany in 1971. Plaintiff husband had just been discharged from the United States Army with the rank of captain, and defendant wife was working as a full-time teacher. Defendant wife, who holds a master's degree in education, was unemployed for a few months upon their return to the United States, but she eventually commenced part-time employment in the education field. From November, 1973 to June, 1974 she resumed full-time employment as a teacher During this same period, plaintiff husband pursued a bachelor's degree in the University of California at Santa Barbara from 1971 to 1973, while working at part-time school year jobs and full-time summer positions. Two years of study from September, 1973 to June, 1975 earned him a master's degree in public administration from Harvard University, and two more years, from September 1975 to June 1977, were spent in obtaining the master's degree in business administration in issue here.

and from November, 1974 to June, 1975 she worked as a substitute teacher. After their second child was born in August, 1975, she no longer engaged in any remunerative employment.

Defendant wife points out that during four of the six years following their marriage, plaintiff husband was a full-time student, working only sporadically while she worked as a teacher and cared for their son until the birth of their second child, when she was "required" to remain at home and care for the family. Plaintiff husband points out that during the entire time he was enrolled in the Harvard business administration program, he was the sole financial support of their household, working full time the summer of 1976 and part-time thereafter as a consultant. Thereafter he worked for several firms as an investment adviser.

At the time of defendant wife's application for an expert's fee, plaintiff husband was earning in excess of $55,000 yearly. Defendant wife, who had not attempted to obtain employment since September, 1979, admitted in a prior affidavit that she was capable of earning $17,000 yearly as a teacher.

The parties own no real property or other assets of substantial value apart from a 1971 and a 1977 automobile, $2,000 in a checking account and $3,000 in a savings account. Hence defendant wife claims that plaintiff husband's business degree represents "virtually the sole marital asset". Plaintiff husband argues that his business degree was "a cumulative product of my hard work over many years", and objected to its analysis as property susceptible to division in the nature of an interest in his future earnings.

Defendant wife moved, with the proposed retainer agreement annexed, for an order directing plaintiff husband to pay directly to her expert the sum of $750, inter alia, to evaluate: (1) the marital property of the parties; (2) the education of the plaintiff husband, including his business degree; (3) the economic loss to defendant wife in sacrificing her career as a school teacher in order to become a homemaker and mother; (4) the present respective financial positions of the parties; and (5) the future financial circumstances of the parties.

Ruling that the education of the plaintiff husband, including his business degree, was not an asset susceptible to distribution as marital property, Special Term granted the application only to the extent of awarding an expert's fee of $500 (1) to "evaluate all other marital property acquired by the parties during the marriage," and (2) "to place a value on her homemaker services, if any". The court reasoned:

"The Legislature has now provided for Equitable Distribution of 'property'. It has not provided for equitable distribution of future earnings, and the courts, as noted in Lesman, supra, should not do so either by distorting the concept of property or by applying our own notions of equity * * * In fixing the amount of maintenance, and in distributing the marital property, the courts must consider the contributions made by a wife to the husband's 'career or career potential * * * Here, it appears that the wife did not contribute monetary support during the period of time that it took for the husband to attain the professional degree which enabled him to be where he is today financially. The wife, however, may have made contributions in the role of a homemaker and mother which enabled her husband to attain his degree and employment" (emphasis supplied).

DISCUSSION: ACADEMIC DEGREE AS MARITAL PROPERTY

The Fourth Department in Lesman v. Lesman, 88 A.D.2d 153, 452 N.Y.S.2d 935 "By classifying an education or degree as property, the courts, in reality, treat as property the future enhanced earning capacity that may result from the education. Enhanced earning capacity is not property. It is not vested; it is only an uncertain expectancy, for it is dependent upon the future success and efforts of the degree holder".

supra, ruled that a medical degree and a license to practice medicine earned during marriage were not marital property within the meaning of the Equitable Distribution Law. Upon a review of decisions on the issue in other jurisdictions, the court noted that the majority had held that such items are not property subject to distribution upon divorce, and recapitulated the various approaches taken by different courts in analyzing the issue. The court concluded (Lesman v. Lesman, supra, p. 157, 452 N.Y.S.2d 935):

Defendant wife attacks this analysis as inequitable on the ground that a spouse should be compensated for the contributions made during the marriage to the education of the other spouse. These contributions, she argues, were made with the reasonable expectation that they would inure to the benefit of both parties to the marriage in the future. To prohibit this result, then, would deny such spouse the benefits of the marital partnership.

Defendant wife points out that the distinction made in Lesman v. Lesman (supra) between property and future services has been sharply criticized as an unnecessary and confusing exploration into "the semantical bog of defining 'property' " (Foster-Freed, Virtue Is Not the Only Reward for Spousal Contributions, N.Y.L.J., January 17, 1983, p. 1, col. 1). Foster and Freed note that New York's Equitable Distribution Law, unlike those in other states, contains specific provisions (discussed below) relevant to what they call the "student-spouse-working-spouse syndrome", which recognize the contributions of the working spouse and entrust the courts with the question of which form such recognition should take: an award of maintenance, or distribution of property in kind or by distributive award, or both (Domestic Relations Law, § 236, part B, subd. 5, par. d, cl. [6]; par. e; subd. 6, par. a, cl. [8] ).

Nevertheless, the distinction between a property settlement (whether outright division and transfer of specific property or creation of a debt in the form of a distributive award) and maintenance (an obligation of support) cannot be so easily disregarded. Judicial manipulation of the property settlement and maintenance obligation is restricted because of the significant consequences that flow from other laws (see Foster-Freed, Virtue Is Not the Only Reward for Spousal Contributions, N.Y.L.J., January 17, 1983, p. 1, col. 1, p. 3, col. 1, nn. 17, 18).

Of particular significance in the case under review, for instance, are the tax consequences flowing from the proposed characterization of plaintiff husband's business degree as...