Faus v. Faus

• Decision Date: 21 May 1982
• Docket Number: No. 81-500.,81-500.
• Parties: Nancy Carol FAUS, Petitioner, Respondent, v. John Jay FAUS, Appellant.
• Court: Minnesota Supreme Court

319 N.W.2d 408 (1982)

Nancy Carol FAUS, Petitioner, Respondent, v. John Jay FAUS, Appellant.

No. 81-500.

Supreme Court of Minnesota.

May 21, 1982.

Henson & Efron, Alan C. Eidsness and Sheryl Ramstad Hvass, Minneapolis, for appellant.

Barnett, Ratelle, Hennessy, Vander Vort, Stasel & Herzog, James H. Hennessy and Dale M. Wagner, Minneapolis, for respondent.

Considered and decided by the court en banc without oral argument.

AMDAHL, Chief Justice.

This is an appeal from a Hennepin County District Court judgment and amended judgment dissolving the marriage of the parties. Appellant John Faus challenges the division of property and the award of maintenance. We affirm the lower court but modify its decree.

Respondent Nancy Faus commenced this action for dissolution in September 1978. The parties were married on March 15, 1956, and lived together as husband and wife until October 1978. Their marriage was dissolved on August 5, 1980, when John was 48 and Nancy was 47 years of age. The parties have three children, one of whom was a minor at the time of trial.¹

Respondent Nancy Faus is a high school graduate with no postsecondary education. Prior to marrying appellant and during the first 2 years of the marriage she held various unskilled jobs. She was not employed from 1958 to 1978, when she raised the children and maintained the home. She is presently employed full time as a hotel desk clerk and earns average take-home wages of $495 per month.

Appellant John Faus is a high school graduate and has earned some college credits at the University of Minnesota. He joined the Minneapolis Fire Department in 1957 or 1958 and continues to work there. He earns average take-home wages of $1,376 per month as a fire department captain. He has also earned some income each year as a window washer, but has done little of that work in the past few years.

The parties' assets consisted of a homestead with a market value of $65,000 at the time of trial, rental property with a market value of $70,000, a balance due of $8,500 under a contract for deed, and appellant's pension benefits, valued at $103,481. The trial court awarded respondent the homestead, one-half interest in the future payments due under the contract for deed, a 50% interest in the present value of the pension plan "subject to any increase or decrease thereon as may occur from time to time in the future," a lien upon the rental property in the amount of $51,740 to secure payment of "maintenance"² from appellant's pension plan, and child support. Additionally, the court awarded respondent maintenance in the amount of $350 per month commencing April 1, 1980, and continuing until respondent remarries, appellant retires from the Minneapolis Fire Department, either party dies, or further court order. Appellant was awarded the rental property (subject to the lien), one-half the payments due under the contract for deed, and the remaining proceeds from the pension plan.

Appellant requests this court to remove the lien upon the rental property, to declare the homestead to be a nonmarital asset, and to modify the decree insofar as it grants to respondent future increases in the value of the pension plan. Appellant also contends that the trial court abused its discretion in awarding respondent $350 per month as maintenance. Respondent urges that the decision of the trial court be affirmed on each issue, as its judgment was well within the scope of its statutory discretion: Respondent also requests this court to award attorneys fees.

1. The trial court awarded appellant the rental property, a duplex valued at $70,000. However, the court gave respondent a lien on the duplex in the amount of $51,740, which represents one-half the present value of appellant's pension plan, "to secure payment of maintenance by John Faus to Nancy Faus." The trial court stated that respondent was awarded the lien "in recognition of the exempt nature of appellant's pension, all as more fully appears in Section 69.51, Minnesota Statutes." Minn.Stat. § 69.51 (1980), which relates to the firefighter's relief association, provides:

All payments made, or to be made, by any relief association under any of the provisions of sections 69.25 to 69.53 shall be totally exempt from garnishment, execution, or other legal process and no persons entitled to such payment shall have the right to assign the same, nor shall the association have authority to recognize any assignment or to pay any sum on account thereof, and any attempt to transfer any such right or claim, or any part thereof, shall be void.

Appellant contends that the lien upon his rental property was unnecessary to protect respondent's maintenance award because there is a common-law exception to the exemption statute in favor of claims by family members, as opposed to claims by other creditors. In support of this argument appellant cites Knapp v. Johnson, 301 N.W.2d 548 (Minn.1980), in which we held that a dependent of a beneficiary was entitled to garnish the beneficiary's interest in an ERISA-regulated pension plan for the purpose of satisfying unpaid child support and alimony obligations. Id. at 549.³ In so holding, we distinguished between creditors who are dependents or family members and other creditors, reasoning that Congress enacted ERISA "to provide for the well-being of beneficiaries' dependents." Id. However, this court's holding in Knapp was based on our interpretation of ERISA, not on section 69.51. While ERISA is silent with respect to involuntary transfers ordered by a court, see 321 N.W.2d at 548, section 69.51 makes explicit reference to "garnishment, execution, or other legal process." Thus, the rationale of Knapp does not by itself provide an adequate ground upon which to find a family law exception to section 69.51.

The issue has been litigated many times in other jurisdictions and a substantial majority of the decisions has held that dependents' claims for child support or alimony are excepted from similar statutory exemptions. See, e.g., Mahone v. Mahone, 213 Kan. 346, 517 P.2d 131 (1973); Collida v. Collida, 546 S.W.2d 708 (Tex.Civ.App.1977); Saunders v. Saunders, 243 Wis. 94, 9 N.W.2d 629 (1943). Even where the exemption provision is absolute on its face, it has been held that exemptions contained in pension statutes are inapplicable to a claim for alimony or child support. See, e.g., Fischer v. Fischer, 13 N.J. 162, 98 A.2d 568 (1953); Hodson v. New York City Employees' Retirement System, 243 A.D. 480, 278 N.Y.S. 16 (1935); Courtney v. Courtney, 251 Wis. 443, 29 N.W.2d 759 (1947). These courts have reasoned that the purpose of the exemption statutes is to preserve the retirement benefits for the dependents as well as for the pensioner. In Courtney v. Courtney, 251 Wis. 443, 29 N.W.2d 759 (1947), the Wisconsin Supreme Court refused to apply a statutory exemption clause to a wife's claim for enforcement of a maintenance award against the ex-husband's police pension fund. After summarizing other decisions, the court stated:

Underlying these decisions is the reasoning that the funds involved, pension funds and disability insurance, are created for the protection, not only of the employee or insured, but for the protection of his family. Similarly, the purpose of exemptions is to relieve the person exempted from the pressure of claims that are hostile to his and his dependents\' essential needs. Keeping those purposes in mind, it becomes clear that the Policemen\'s Annuity and Benefit Fund of Milwaukee is within the reach of a process of the court when it is an alimony judgment that is sought to be enforced.

Id. at 449, 29 N.W.2d at 762.

Proponents of the contrary view argue that where the statutory exemption is drafted in such clear and unambiguous language, courts should respect the legislative intent and not carve out exceptions for the pensioners' dependents. However, this court's construction of section 69.51 is consistent with giving the statute full effect. The protection that remains is broad, applying to assignment, garnishment, execution, and other legal process. Moreover, it renders the statute consistent with others that provide methods to enforce the obligor's duty of maintenance and support. See Minn.Stat. §§ 518.24, .41-.52, .611, 609.375 (1980). We do not believe that the legislature intended to create an exemption so broad and so inconsistent with the policy that it has declared in other acts. We therefore conclude that appellant's legal dependents should not be classified, for purposes of section 69.51, with strangers holding claims hostile to his interest and their own. Accordingly, we modify the lower court's judgment by removing the lien upon appellant's property.

2. Appellant next contends that the trial court erred by classifying the entire value of the homestead as marital property.⁴ In addition, appellant argues that the trial court invaded his nonmarital property⁵ without a finding of unfair hardship, as required by Minn.Stat. § 518.58 (1980).⁶ We disagree with appellant and affirm the trial court.

John Faus brought $12,000 into the marriage. In 1956 the parties used this money, which covered the entire purchase price, to buy their first home. In 1958 the parties sold the first residence and used the proceeds from that sale ($14,000) to buy their second home. The second home, which is the homestead at issue in this case, cost $18,000. As a result of appreciation and improvements over the years the value of the homestead at the time of trial was $65,000. Appellant argued that the trial court erred by including in the marital estate the increased value of the homestead because the present value of the homestead represents merely an increase in the value of appellant's nonmarital cash contribution of $12,000.

We summarily reject appellant's contention that the entire current market value of the homestead is attributable to his $12,000 cash contribution. Evidence at trial showed that...