Flowers v. Flowers

• Decision Date: 23 February 1978
• Docket Number: No. 1,CA-CIV,1
• Citation: 118 Ariz. 577,578 P.2d 1006
• Parties: Frederick Jarrett FLOWERS, Appellant, v. Carolyn FLOWERS, Appellee. 3457.
• Court: Arizona Court of Appeals

Page 1006

578 P.2d 1006

118 Ariz. 577

Frederick Jarrett FLOWERS, Appellant, v. Carolyn FLOWERS, Appellee.

No. 1 CA-CIV 3457.

Court of Appeals of Arizona,Division 1,Department B.

Feb. 23, 1978.

Rehearing Denied March 30, 1978.

Review Denied April 25, 1978.

Hash, Cantor & Tomanek, Virginia Hash, Phoenix, for appellant.

Mariscal, Weeks, Lehman & McIntyre, Richard A. Friedlander, Phoenix, for appellee.

OPINION

OGG, Judge.

The appellant/respondent Frederick Jarrett Flowers (husband) brings this appeal from a decree of dissolution of marriage granted to appellee/petitioner Carolyn Flowers (wife) on February 24, 1976.

It is the husband's contention that the trial court erred in awarding the wife a one-half interest in future disability payments and disability insurance benefits payable to the husband after his disability retirement from the Internal Revenue Service.

The husband presents two questions on appeal:

1. Are disability payments due to the husband under United States Civil Service to be treated the same as retirement benefits and divided upon the dissolution of marriage as part of the community assets?

2. Is the right to disability compensation for a disability which occurred after the filing of the petition for dissolution but before the dissolution of marriage a right "acquired during the marriage"?

We affirm the decision of the trial court and answer both questions in the affirmative.

The pertinent part of the decree of dissolution awarded the wife as her sole and separate property a one-half interest in the following: a) disability retirement benefits arising from husband's employment payable by the United States Civil Service Commission; b) the vested contributions in the United States Civil Service Retirement System arising from the husband's employment; c) the benefits, if any, under a Union Group Policy with the Insurance Company of North America.

The decree of dissolution further provided that the husband would not be required to pay any child support to the wife, who was awarded custody of the three minor children, due to the division of the community property as ordered by the court.

The husband testified at the dissolution hearing that as of the following day he would be entitled to receive monthly retirement annuity disability payments in the combined total sum of $838, which were tax free. During the trial the husband failed to present evidence of how the $838 payment was derived or how it interrelated with the vested retirement fund to which he had been contributing since May or June, 1970. At the time of trial no information was available on the status of his disability benefit claim from the Insurance

Company of North America. WERE DISABILITY RETIREMENT BENEFITS PROPERLY HELD TO BE COMMUNITY PROPERTY?

The Arizona Supreme Court has recently held that retirement benefits earned during the marriage are community property. Neal v. Neal, 116 Ariz. 590, 570 P.2d 758 (1977); Van Loan v. Van Loan, 116 Ariz. 272, 569 P.2d 214 (1977). The only Arizona case dealing with both retirement and disability benefits is Provinzano v. Provinzano, 116 Ariz. 511, 570 P.2d 513 (Ct.App.1977). In that case this court reversed the trial court for awarding the husband the entire community interest in his retirement and disability benefits when there were no other substantial community assets. A post office retirement benefit, together with a veteran's benefit for a service-connected disability, were both considered community assets to be equitably divided at the time of the dissolution of marriage.

The wife also relies on Busby v. Busby, 457 S.W.2d 551 (Tex.1970), wherein it was held that a husband's disability retirement benefits from the Air Force were community property at the time of the divorce, even though the retirement was for an involuntary disability rather than a voluntary retirement. See, also Dominey v. Dominey, 481 S.W.2d 473, 475 (Tex.Civ.App.1972), cert. den. 409 U.S. 1028, 93 S.Ct. 462, 34 L.Ed.2d 321 (1972). The husband wants us to follow the lead of the California decisions in which disability payments are not treated the same as retirement benefits. In Re Marriage of Loehr, 13 Cal.3d 465, 119 Cal.Rptr. 113, 531 P.2d 425 (1975); and In Re Marriage of Jones, 13 Cal.3d 457, 119 Cal.Rptr. 108, 531 P.2d 420 (1975), are two cases dealing with disability benefits awarded for disabilities incurred in military service. In Jones the court held that disability benefits are property treated as community property as long as the marriage exists, but the community loss does not continue after dissolution. In distinguishing disability payments from retirement payments, the court said:

Pain, suffering, disfigurement or the loss of a limb, as here, is the peculiar anguish of the person who suffers it, it can never be wholly shared even by a loving spouse and surely not after the dissolution of a marriage by a departed one.

Disability pay, consequently, compares to compensation for personal injury rather than to retirement pay.

California has followed this legal principle in a case dealing with workmen's compensation, In Re Marriage of McDonald, 52 Cal.App.3d 509, 125 Cal.Rptr. 160 (1975), and in a case dealing with disability benefits to a policeman, In Re Marriage of Olhausen, 48 Cal.App.3d 190, 121 Cal.Rptr. 444 (1975).

Although the California cases are persuasive, Arizona does not follow the rationale of the California rule as set forth in Jones with regard to personal injuries. Unlike California, in Arizona damage claims for personal injuries sustained by a spouse during marriage are community property, even if payment of the damages are recovered after divorce. Tinker v. Hobbs, 80 Ariz. 166, 294 P.2d 659 (1956); Pacific Construction Co. v. Cochran, 29 Ariz. 554, 243 P. 405 (1926); Kenyon v. Kenyon, 5 Ariz.App. 267, 425 P.2d 578 (1967).

We cannot rationally distinguish disability benefits from personal injury benefits. Therefore, following Provinzano and the Arizona decisions relating to personal injury benefits, we hold that the disability benefits in this case are community property to be equitably distributed by the court at the time of the dissolution of the marriage.

We believe our statute, ARS § 25-318, which provides for an equitable distribution of the community property, is a proper safety valve to take care of any inequitable fact situations which may arise by treating disability benefits in the same manner as retirement benefits. Under the facts of this case we find no inequity in the manner in which the trial court divided the

community property. IS THE WIFE ENTITLED TO SHARE IN DISABILITY BENEFITS WHEN THE DISABILITY OCCURRED AFTER THE PETITION FOR DISSOLUTION WAS FILED?

The husband argues that since his right to disability compensation did not arise until after the petition for dissolution had been filed, this was not a community property right acquired during the marriage and therefore the wife is not entitled to any part of such benefits.

ARS § 25-211 reads:

All property acquired by either husband or wife during the marriage, except that which is acquired by gift, devise or descent, is the community property of the husband and wife. (Emphasis added)

The husband reasons that the words "during the marriage" in the statute mean that period from the marriage ceremony until the filing of the petition for dissolution of marriage. The husband cites a case from New Jersey, a common-law state, which held that no property acquired after the date of the divorce complaint was subject to distribution in the divorce decree. Painter v. Painter, 65 N.J. 196, 320 A.2d 484 (1974).

If Arizona cases were to follow the New Jersey rule, it would cause great problems in this state. A significant percentage of the petitions for dissolution of marriage are never carried forward to the final decree of termination. To set the date of the filing of such a petition as the date determining all future community property rights would cause great inequities and uncertainty in the law. The appellate courts of this state in recent opinions have consistently held that the community continues to exist, together with its rights and obligations, even when the parties may be living separate and apart. Neal v. Neal; Guerrero v. Guerrero, 18 Ariz.App. 400, 502 P.2d 1077 (1972); Rodieck v. Rodieck, 9 Ariz.App. 213, 450 P.2d 725 (1969).

Case law in Arizona dictates that a marriage continues, with the community rights and obligations, after a petition for dissolution is filed, until the final dissolution is ordered by the court.

Interrelated with the two major questions presented is the argument of the wife that the insurance policy must also be treated as community property because the payments for it were made out of the community bank account. Although we believe we have disposed of this issue by our holdings on the other issues, we will briefly address this matter.

It appears the husband failed to show by clear and convincing evidence that the payments were made from his separate funds. The law is clear that when separate funds are so co-mingled with community funds that they can no longer be identified, the funds are presumed to be community funds. Blaine v. Blaine, 63 Ariz. 100, 159 P.2d 786 (1945); Ivancovich v. Ivancovich, 24 Ariz.App. 592, 540 P.2d 718 (1975).

We find the trial court made an equitable distribution of the community property in this case and we affirm.

EUBANK, P. J., concurring.

JACOBSON, Judge, specially concurring:

This specially concurring opinion deals solely with the result reached by the majority on the issue of the community property status of the husband's disability benefits. On all other issues dealt with by the majority opinion, I concur wholeheartedly.

On the disability benefit issue, my concurrence is on a very narrow ground the failure of the husband to prove the nature of his disability benefits. Because of this failure of proof, I must assume by virtue of the...