Dogu v. Dogu, 17603

• Decision Date: 02 August 1982
• Docket Number: No. 17603,17603
• Citation: 652 P.2d 1308
• Parties: Edith Ellen DOGU, Plaintiff and Appellant, v. Turhan S. DOGU, Defendant and Respondent.
• Court: Utah Supreme Court

Page 1308

652 P.2d 1308

Edith Ellen DOGU, Plaintiff and Appellant, v. Turhan S. DOGU, Defendant and Respondent.

No. 17603.

Supreme Court of Utah.

Aug. 2, 1982.

Pete N. Vlahos of Vlahos, Perkins & Sharp, Ogden, for plaintiff and appellant.

C. Gerald Parker of Parker, Thornley & Critchlow, Ogden, for defendant and respondent.

OAKS, Justice:

This appeal from a divorce decree challenges the district court's division of (1) the assets and value of the husband's professional corporation, (2) his rights under various retirement funds, and (3) a condominium located in Turkey.

The parties were divorced in 1981, after nearly 24 years of marriage. Of the three children born during the marriage, only one was not yet emancipated, a 17-year-old daughter who resided with her mother. At the time of the divorce, the husband was 56 years of age. He had a well-established medical practice in anesthesiology. His wife, appellant here, was 60 years of age. She had been employed only minimally during the marriage, was unemployed at the time of the divorce, and was entirely dependent on her husband for her financial support.

With the exceptions challenged on appeal and described hereafter, the district court ordered an essentially equal division of the parties' property, including the net proceeds from sale of the family home. Appellant was granted custody of their minor daughter, together with $200 per month child support. Appellant was awarded alimony of $1,500 per month, to be reduced to $750 per month on respondent's retirement.

I. PROFESSIONAL CORPORATION

The district court awarded respondent as his separate property the entire interest in his professional corporation, of which he is the sole shareholder and only employee and from which he draws a salary and bonuses as needed. Aside from its liquid assets of $25,000 in accounts receivable and $26,300 in bank accounts and savings certificates, the corporation's only earning power is in respondent's ability to work. Consequently, the corporation's value and respondent's income fluctuate. In 1977, his taxable income from the corporation was $36,973; in 1978, it was $60,854. In 1979, his income was $108,675, but that amount of salary and bonuses reflected a year in which respondent consistently worked between 60 and 110 hours a week. He testified that he would be unable to sustain that pace because of his age and ill health. In addition, the hospital where he worked as one of three anesthesiologists would soon engage a fourth, which would reduce his hours and income in the future.

We find no abuse of discretion in the district court's disposition of the value of the professional corporation. The value of the corporation's bank accounts and savings certificates were an equitable offset to the court's award of an equivalent amount in savings certificates, bank accounts, and stock to appellant. The corporation's accounts receivable represent deferred income from which respondent may meet his ongoing alimony and child support obligations to appellant.

II. RETIREMENT FUNDS

Respondent argues that since none of his separate retirement funds can be withdrawn until he retires, the total value of these funds, $86,730, should not be subject to division between the parties even though they were accumulated during the marriage.

In Bennett v. Bennett, Utah, 607 P.2d 839 (1980), we held that it was error for the trial court to view as a marital asset that half of a husband's retirement fund contributed by his employer. But that holding reflected a failure of proof. It was based on the fact that the employer's contribution had "no present value" and therefore should not have been used "as one of the significant predicates in the Court's determination of property division between the parties...." Id. at 840-41. In contrast, the district court included in the marital property the portion of the retirement fund contributed by the husband, even though he had not yet retired and his actual enjoyment of any retirement benefit was purely prospective. This inclusion, which was not challenged on appeal, is in accord with the general rule established in Englert v. Englert, Utah, 576 P.2d 1274, 1276 (1978), that the trial court's duty to make an equitable division of property in a divorce action "encompasses all of the assets of every nature possessed by the parties, whenever obtained and from whatever source derived; and that this includes any such pension fund or insurance."

Although the record in this case indicates that respondent has not yet retired and therefore cannot withdraw any of his retirement funds, there is no question on the value of these funds. Respondent himself testified that his retirement funds consist of (1) TIAA and CREF accounts created while he was a medical school professor in Pennsylvania, and totalling approximately $27,000; (2) a Keogh account containing $10,075; and (3) a pension and profit-sharing trust, set up through his professional corporation, totalling $49,655 in certificates and savings accounts. Under the rule of Englert, supra, these retirement funds, totalling $86,730 at the time of the divorce, were a marital asset which the court was required to consider in its determination of an equitable property division between the parties. Since it appears that this was not done, this portion of the property settlement decree will be vacated and remanded for reconsideration by the district court.

To aid in that reconsideration, we elaborate on considerations appropriate to the division of marital property in retirement funds where, as in this case, that subject is inextricably involved with the court's award of alimony.

Respondent argues that even if his retirement funds are considered a marital asset, the district court made a fair and equitable decision to award him the entire $86,730 as a res from which he would pay the $750-per-month alimony to appellant after his retirement. If the decree had been drawn so that this marital asset would assure the payment of alimony in all events, it would be well within the bounds of discretion on the facts of this case. But respondent's argument fails because there is no such assurance.

The decree fails to treat the contingency of respondent's predeceasing appellant, either before or after respondent's retirement. This is not a remote contingency. At the time of trial, respondent was 56 years old. He testified that he was tired and in ill health, that he had suffered a slight stroke and had been hospitalized for double vision in 1978, and that a surgeon on the hospital staff told him informally that with his condition he had only a 50% likelihood of surviving 5 years.

If respondent predeceased her, appellant would lose her means of support. Under the district court's decree, the right to alimony terminates "upon the death of either [party] ...." ¹ Appellant has no retirement benefits of her own. So far as the record discloses, she has no social security entitlement. ² Neither would she have any claim against respondent's estate for her support since an ex-wife does not qualify as a "surviving spouse" entitled to an elective share of her husband's estate. U.C.A., 1953, Secs. 75-2-201, 75-2-803(1). Hence, under the decree challenged here, where respondent receives all retirement funds accumulated during the marriage, appellant may be deprived of all ongoing financial support at the very time of life when she is most in need. Such a result frustrates the purpose of alimony to "provide support for the wife ... and to prevent the wife from becoming a public charge." Georgedes v. Georgedes, Utah, 627 P.2d 44, 46 (1981); English v. English, Utah, 565 P.2d 409, 411-12 (1977). Such a result is also at odds with the closely related equitable principles that govern the division of the parties' marital property.

As this Court...