In re Jenkins

• Decision Date: 21 September 1988
• Docket Number: Adv. No. 88-0457F.,Bankruptcy No. 87-06253F
• Parties: In re William E. JENKINS, Debtor. Lena Mae JENKINS, Plaintiff, v. William E. JENKINS, Defendant.
• Court: United States Bankruptcy Courts. Third Circuit. U.S. Bankruptcy Court — Eastern District of Pennsylvania

94 B.R. 355 (1988)

In re William E. JENKINS, Debtor.

Lena Mae JENKINS, Plaintiff, v. William E. JENKINS, Defendant.

Bankruptcy No. 87-06253F, Adv. No. 88-0457F.

United States Bankruptcy Court, E.D. Pennsylvania.

September 21, 1988.

Gary M. Gusoff, Edward J. Morris, P.C., Philadelphia, Pa., for plaintiff, Lena Mae Jenkins.

Oscar N. Gaskins, Philadelphia, Pa., for the debtor/defendant, William E. Jenkins.

John J. Judge, Philadelphia, Pa., Trustee.

OPINION

BRUCE I. FOX, Bankruptcy Judge:

Lena Mae Jenkins has brought an adversary proceeding, pursuant to 11 U.S.C. § 523(a)(5) and Bankr.Rule 4007, seeking a determination that a prepetition debt owed to her by her former husband, the debtor, is nondischargeable. At trial, the parties stipulated to those facts they believed relevant to this dispute. Posttrial memoranda were then filed, making this matter ripe for decision.¹

I.

The parties have stipulated to the following:

In November 1979, the plaintiff began a divorce action against the debtor which culminated in an order dated June 21, 1985. The order is quite brief and states in full:

"ORDER AND DECREE"

AND NOW, to wit, this 21st day of June, 1985, upon consideration of the Master\'s Report, the exceptions filed thereto and the Briefs and Arguments of Counsel, it is hereby ORDERED AND DECREED that the parties hereto, LENA MAE JENKINS and WILLIAM E. JENKINS, are hereby divorced from the bonds of matrimony, and the said parties shall severally be at liberty to marry again in like manner as if they had never been married.

Further, it is hereby ORDERED AND DECREED that the parties\' marital residence, 5516 Boyer Street, Phila., PA. and furnishings therein be awarded to Plaintiff; that the Defendant pay Plaintiff the sum of $35,477.56 at the rate of $250 per month as Plaintiff\'s equitable share of the marital property, i.e., Defendant\'s pension fund less credit for Plaintiff\'s pension fund and one half the value of the marital residence; that the 1980 Buick LaSabre automobile, and the parties\' stereo be awarded to Defendant.

Further, that Defendant is ORDERED to pay Alimony to Plaintiff in the sum of $250.00 per month until the date of his retirement.

(Stipulation, Exhibit A).

When this decree was entered both parties were employed, both were 52 years old, and both were in good health. Also in June 1985, there were no minor children of the marriage.

The parties further stipulated that if the plaintiff were called to testify, she would state that it was her belief that the divorce decree limited her to $250.00 in monthly alimony payments because of the award of monthly equitable distribution payments. Were the debtor called to testify, he would state that it was his belief that his equitable distribution payments were to commence at the time he received, or was eligible to receive, his retirement pension.

It is agreed that the debtor failed to comply with the provisions of the June 1985 order. As a result, he was held in contempt by orders dated March 26, 1987 and November 9, 1987.

Finally, without objection, the debtor introduced into evidence Exhibit D-1. Unhappy with the June 21, 1985 order, the debtor sought to challenge it, but waited beyond the expiration of the appeal period to file his request. Exhibit D-1 represents a true copy of his petition for leave to appeal nunc pro tunc, a request which was denied by the Pennsylvania Superior Court. This petition included the Master's Report, to which reference was made in the June 21, 1985 order.

In accordance with Pennsylvania law, 23 P.S. § 304, the state court had appointed a Master to make recommendations concerning alimony, divorce, and equitable distribution of marital property in the Jenkins divorce dispute. In making his recommendation, the Master held a hearing and evaluated the facts in accordance with the factors enumerated in 23 P.S. § 401(d) concerning equitable distribution, as well as the factors set forth in 23 P.S. § 501(b) regarding alimony.

As to alimony, the Master concluded (Report, at 7) that an award of alimony was appropriate. He determined that the plaintiff lacked sufficient resources to support herself at the modest level which she had obtained during her marriage. He further stated that the wife's employment income, both at present and in the future, would be insufficient to meet her needs. Therefore, he recommended an alimony award of $300.00 per month (Report, at 14).

Similarly, he concluded that equitable distribution of marital property was required. Taking into account certain statutory factors such as the length of the marriage (§ 401(d)(1)), the wife's lack of opportunity for a significant salary increase (§ 401(d)(5)), her contribution as a homemaker (§ 401(d)(7)), and her marital standard of living (§ 401(d)(9)), the Master recommended that the plaintiff receive one-half the value of the marital property. He determined that the marital property included the debtor's future pension benefits which he then valued. And, after suggesting that one party or the other obtain possession of the home, the automobiles, personal property, and other items, and after deducting for the disposition of such items, the Report concluded that the plaintiff should receive one-half the balance, which was computed at $35,477.56. The Master suggested that this sum be paid by the debtor in monthly installments of $300.00 until paid in full and that payments should begin when the debtor retires. Moreover, once the equitable distribution payments were to begin, the alimony payments were to stop. The Report, at 14, ended with this summary:

NOTE: It is intended that the plaintiff receive continuous payments of $300.00 per month Alimony upon the granting of the divorce decree, which shall end at the time defendant retires, and the same amount, $300.00 per month shall continue as plaintiff\'s part of the Equitable Distribution of the retirement proceeds, until the $35,477.56 is paid off.

Apparently, the debtor filed exceptions to these recommendations and obtained a review in the Court of Common Pleas of Philadelphia County. A comparison of the June 21, 1985 order with the Master's recommendations discloses that the report was not accepted in whole. The state court reduced the monthly payments of both alimony and equitable distribution to $250.00 cash; moreover, it ordered the equitable distribution payments to begin immediately, not at retirement. Until the debtor's retirement, the plaintiff was to receive $500.00 per month; at retirement, she would receive $250.00 per month until the equitable distribution obligation had been repaid. The court offered no explanation for its adjustments to the Master's report.

II.

The debtor contends that the monthly equitable distribution payments mentioned in the June 21, 1985 order are in the nature of a property division and so are dischargeable pursuant to 11 U.S.C. § 727.² The plaintiff asserts that all monthly payments are nondischargeable under 11 U.S.C. § 523(a)(5). That statutory provision states

(a) A discharge under Section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt —

(5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree or other order of a court of record, determination made in accordance with State or territorial law by a governmental unit, or property settlement agreement, but not to the extent that —

(A) such debt is assigned to another entity, voluntarily, by operation of law, or otherwise (other than debts assigned pursuant to section 402(a)(26) of the Social Security Act 42 USCS § 602(a)(26), or any such debt which has been assigned to the Federal Government or to a State or any political subdivision of such State); or

(B) such debt includes a liability designated as alimony, maintenance, or support, unless such liability is actually in the nature of alimony, maintenance, or support.

The parties are correct that a distinction exists by which obligations in the nature of support, alimony or maintenance are not dischargeable while property settlement obligations are dischargeable. E.g., Boyle v. Donovan, 724 F.2d 681, 683 (8th Cir. 1984); In re Grijalva, 72 B.R. 334 (S.D.W. Va.1987). That distinction arose from a trilogy of Supreme Court decisions issued at the turn of the twentieth century. In Audubon v. Shufeldt, 181 U.S. 575, 21 S.Ct. 735, 45 L.Ed. 1009 (1901), Dunbar v. Dunbar, 190 U.S. 340, 23 S.Ct. 757, 47 L.Ed. 1084 (1903), and Wetmore v. Markoe, 196 U.S. 68, 25 S.Ct. 172, 49 L.Ed. 390 (1904), the Court engrafted into the former Bankruptcy Act of 1898 the concept that support, alimony and maintenance payments were nondischargeable obligations because these obligations are based upon a moral and legal duty to provide for one's spouse and children which, as a matter of policy, Congress would not have intended to discharge. Indeed, Congress amended § 17 of the Act to make this policy determination express. See generally Shine v. Shine, 802 F.2d 583 (1st Cir.1986); Scheible, Defining "Support" Under Bankruptcy Law: Revitalization of the "Necessaries" Doctrine, 41 Vanderbilt L.Rev. 1 (1988) ("Scheible").

For example, in Audubon, the Supreme Court stated:

Alimony does not arise from any business transaction but from the relation of marriage. It is not founded on a contract, express or implied, but on the natural and legal duty of the husband to support the wife. The general obligation to support is made specific by the decree of the court of appropriate jurisdiction. . . . But its obligation in that respect does not reflect its nature.

181 U.S. at 577-78, 21 S.Ct. at 736.

Property divisions were viewed, in contrast, as a process by which the property acquired during marriage would be equitably divided, taking into account the monetary and nonmonetary contributions of the spouses, and...