Guy v. Guy

• Decision Date: 03 March 1977
• Docket Number: No. 12112,12112
• Citation: 98 Idaho 205,560 P.2d 876
• Parties: Walter J. GUY, Plaintiff-Appellant, v. Elizabeth GUY, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 876

560 P.2d 876

98 Idaho 205

Walter J. GUY, Plaintiff-Appellant, v. Elizabeth GUY, Defendant-Respondent.

No. 12112.

Supreme court of Idaho.

March 3. 1977.

Samuel Eismann, Coeur d'Alene, for plaintiff-appellant.

James Michael English, Coeur d'Alene, for defendant-respondent.

SHEPARD, Justice.

This is an appeal from a judgment by the district court which in trun affirmed a judgment and decree of the magistrate court in a divorce action which distributed property determined to be community. We affirm the decisions of the lower courts.

In 1964 the plaintiff-appellant Walter Guy, while employed by Litton Industries, became insured under the provisions of a group term disability insurance policy. That policy acquired no cash or loan value and the premiums were paid solely by the employer. During 1971 the insurance carrier was changed, however, the terms remained substantially the same and the employer continued to pay the premiums.

The relationship between appellant and respondent Elizabeth Guy dates to at least 1965 during which they participated in a void marriage ceremony. Thereafter the relationship continued until a valid marriage of October 30, 1970. At that time appellant was approximately 49 years of age and respondent was 28 years of age. On June 30, 1973, appellant was determined to be totally disabled due to advanced arteriosclerosis and other complications. Five days later his employment with Litton was terminated. Under the provisions of the disability insurance policy appellant began to receive payments of $1,313.00 per month in January, 1974. Those payments are reduced by appellant's Social Security benefits ($297.00 per month) and retirement benefits from previous employment ($24.00 per month). So long as his disability exists, those payments will continue until he reaches the age of 65.

Respondent has education and experience skills in the field of biological computer systems and is a laboratory technician. She also is totally disabled due to a hip separation and back problem. She receives monthly disability benefits from Social Security in the amount of $264.00.

Following hearing, a painstaking and well reasoned memorandum decision was rendered by the magistrate court, much of which is the basis for this opinion. Thereafter judgment was rendered and upon appeal to the district court it was affirmed. Although other issues may appear present, we emphasize that the sole error urged upon appeal is the determination that the future benefits to be paid under the terms of the disability insurance policy are community property and the allocation of those net monthly benefits equally between the parties. Hence, while the problem presented is broad in scope and of first impression in this jurisdiction, the issue is narrow and quickly stated.

Our legislative frame of reference is likewise narrow and easily stated. I.C. § 32-903 provides:

'All property of either the husband or the wife owned by him or her before marriage, and that acquired afterward by either by gift, bequest, devise or descent, or that which either he or she shall acquire with the proceeds of his or her separate property, by way of moneys or other property, shall remain his or her sole and separate property.'

I.C. § 32-906 provides:

'All other property acquired after marriage by either husband or wife, including the rents and profits of the separate property of the husband and wife, is community property, unless by the instrument by which any such property is acquired by the wife it is provided that the rents and profits thereof be applied to her sole and separate use * * *.'

Any asset acquired during marriage is rebuttably presumed to be community property and the burden of proof rests with the party asserting a separate property interest. Suter v. Suter, 97 Idaho 461, 546 P.2d 1169 (1976); Ramsey v. Ramsey, 96 Idaho 672, 535 P.2d 53 (1975); Simplot v. Simplot, 96 Idaho 239, 526 P.2d 844 (1974); Houska v. Houska, 95 Idaho 568, 512 P.2d 1317 (1973), 97 Idaho 316, 543 p.2d 869 (1975).

If these benefits were acquired during the marriage, we must uphold the presumption that they were community property since the record is devoid of any contrary evidence. It is not disputed that they were fringe benefits or emoluments of appellant's employment and therefore they derive from the community labors of the appellant. A group term disability policy, like a similar life insurance policy, is a unique form of property interest. It has no cash surrender value, no loan value and interest does not accumulate thereon. Here over the course of appellant's employment it actually constituted a series of unilateral contracts, each beginning with the payment of a premium for a specified period (presumatbly annual) and terminated at the expiration of that annual period.

'Protection for the coming year depends exclusively upon payment of an advance premium. The length of time the insured has had the policy and the number of premiums previously paid are irrelevant. If the term passes without the insured's death, the protection purchased expires without loss. The insured has had the benefit of protection for the year and it has been 'used up.' He must pay another premium to enjoy further protection.

'The risk payment doctrine correctly treats term insurance as a series of unilateral contracts rather than as one bilateral contract * * * (E)ach premium payment is both a condition precedent to and a consideration necessary for the insurance company's promise to pay a benefit upon the death of the insured.' Comment, Community and Separate Property Interests in Life Insurance Proceeds: A Fresh Look, 51 Wash.L.Rev. 351, 353, 374 (1976) (emphasis supplied).

Here appellant initially began his employment and the disability insurance policy was initiated prior to the marriage. Nevertheless, during the course of the marriage at the end of each term period a new contract of insurance arose and thus for the nearly three years between the marriage and the determination of disability new policies of term length originated.

This Court has found a community property interest to exist in two similar fringe benefits or emoluments of employment in the form of life insurance and military retirement benefits. See, Ramsey v. Ramsey, supra; Travelers Ins. Co. Johnson, 97 Idaho 336, 544 P.2d 294 (1975). See also, In re Marriage of Brown, 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561 (1976); Smith v. Lewis, 13 Cal.3d 349, 118 Cal.Rptr. 621, 530 P.2d 589 (1975); In re Marriage of Fithian, 10 Cal.3d 592, 111 Cal.Rptr. 369, 517 P.2d 449 (1974); Payne v. Payne, 82 Wash.2d 573, 512 P.2d 736 (1973); LeClert v. LeClert, 80 N.M. 235, 453 P.2d 755 (1969). As stated by the court in Stephen v. Gallion, 5 Wash.App. 747, 491 P.2d 238 (1971):

'A retirement pension under a noncontributory, employer-financed plan is not a gratuity, but is pay withheld, and constitutes delayed compensation for services rendered. (citations) Just as the pension benefits do not constitute a gratuity, so also the premiums paid or payable by the employer are not gratuities. They are paid by the employer as an essential part of employment based upon the continuing employment of each and every employee covered under the plan during any given monthly period. Although no portion of any given premium passes through the pockets of any given employee, and thus he receives some tax advantage, nevertheless, it does constitute something produced by such employee by his toil or talent. The benefit to the employee is part of the consideration for his services. To that extent, if he is married, it is earned by and belongs to the community. 'For purposes of determining the legal status of policy proceeds, we see no logical reason to distinguish between an insurance plan which provides for a retirement or pension benefit and one which provides for a death or disability benefit.' At 240 (emphasis added).

We deem it clear that in the case at bar the disability benefits are to be paid as partial consideration for past employment. It has been held such benefits are community property, not only where the premiums are paid with community funds, but also where the funds are paid by the employer. Cf. Chase v. Chase, 74 Wash.2d 253, 444 P.2d 145 (1968); Mathews v. Mathews, 414 S.W.2d 703 (Tex.Civ.App.1967), with Marshall v. Marshall, 511 S.W.2d 72 (Tex.Civ.App.1974); Busby v. Busby, 457 S.W.2d 551 (Tex.1970).

Appellant argues for adoption of the apparent...