In re Marriage of Crook

• Decision Date: 24 June 2004
• Docket Number: No. 95132.,95132.
• Citation: 211 Ill.2d 437,813 N.E.2d 198,286 Ill.Dec. 141
• Parties: In re MARRIAGE OF Robert L. CROOK, Appellant, and Patricia J. Crook, Appellee.
• Court: Illinois Supreme Court

813 N.E.2d 198

211 Ill.2d 437

286 Ill.Dec. 141

In re MARRIAGE OF Robert L. CROOK, Appellant, and

Patricia J. Crook, Appellee.

No. 95132.

Supreme Court of Illinois.

June 24, 2004.

J. Steven Beckett and Brett N. Olmstead, of Beckett & Webber, P.C., Urbana, for appellant.

Arthur M. Lerner, of Lerner & Kirchner, Champaign, for appellee.

Justice KILBRIDE delivered the opinion of the court:

The petitioner, Robert L. Crook, appeals from the decision of the appellate court holding that: (1) the trial court erred in its division of retirement funds, and (2) the marital estate was not entitled to reimbursement of $40,000 for payment made on a joint loan for improvements to nonmarital property. 334 Ill.App.3d 377, 268 Ill.Dec. 323, 778 N.E.2d 309. This court allowed Robert's petition for leave to appeal. 177 Ill.2d R. 315. We reverse in part and affirm in part.

I. BACKGROUND

The petitioner, Robert L. Crook, and the respondent, Patricia J. Crook, were married for 33 years. Robert was a farmer until 2000, when he became a truck driver. Patricia worked in the home for 10 years and then as a school secretary for 22 years.

Patricia retired from her job as a secretary at Parkland College in July 2000, after accepting an early retirement incentive plan. Patricia is not eligible to receive Social Security benefits. The parties stipulated that Robert's current Social Security benefits entitlement is $850 per month and will increase as Robert continues to work. Patricia may receive a nominal Social Security benefit as Robert's former spouse if she does not remarry.

During the marriage, Robert farmed land owned by Patricia's family. Patricia was raised on the farm and had spent most of her life there. The farmhouse where Robert and Patricia lived during most of the marriage originally belonged to Patricia's parents, who deeded the farmhouse and five acres of the farm to her in 1983. The property also contained a machine shed, a barn, a crib, a shop, and a steel grain bin. The buildings on the property were used as part of the farming operation. In approximately 1993, the parties jointly borrowed money from Central Illinois Bank to build a new shed on the property to store farm equipment. The new shed replaced a barn that had burned.

When Robert quit farming, the parties agreed to sell the farm equipment. Following the sale of some of the farm equipment, $50,000 of the proceeds was placed into the parties' joint bank account. After Robert filed for a dissolution of marriage, Patricia withdrew $42,000 from the account and applied $40,000 to the parties' shed construction loan when she became concerned that Robert might file for bankruptcy. Robert withdrew the remaining $8,000.

On June 20, 2001, the trial court entered a memorandum opinion and supplemental order. The trial court awarded Robert a $18,000 SEP retirement account and a $2,000 Roth IRA. The trial court then equally divided the remaining payments on Patricia's retirement funds from the Parkland College early retirement incentive plan, her State University Retirement System benefits, and her Illinois Municipal Retirement Fund benefits. The trial court's order resulted in an equal division of Patricia's retirement benefits with each party receiving approximately $838 per month until July 2004, based on Patricia's current early retirement incentive income. After July 2004, when Patricia's early retirement incentive payments from Parkland College cease, each party will receive only $460.20 per month from Patricia's remaining retirement funds. In reaching its conclusion as to the division of Patricia's pension benefits, the trial court did not consider the $850 in anticipated Social Security benefits Robert would receive upon his retirement.

The trial court also determined that the marital estate was entitled to a $40,000 reimbursement for the funds Patricia withdrew from the joint account and applied to the debt incurred by the parties to build the shed on Patricia's nonmarital property. The trial court ordered Patricia to reimburse the marital estate by paying $40,000 of the 2000 tax liability of $67,991, plus one-half of the remaining tax liability.

Patricia appealed the trial court's division of retirement funds and its order that she reimburse the marital estate $40,000 for payment made on a joint loan for improvements to nonmarital property. The appellate court reversed the trial court's order regarding pension benefits, holding that the trial court should have considered Robert's anticipated Social Security benefits in making a division of Patricia's pension benefits. The appellate court remanded the cause for reconsideration of the division of Patricia's benefits with instructions to consider Robert's anticipated Social Security benefits in "striv[ing] to arrive at a division of property that is equitable to both parties and places each party in similar economic circumstances." 334 Ill.App.3d at 390, 268 Ill.Dec. 323, 778 N.E.2d 309.

The appellate court also reversed the trial court's order requiring Patricia to reimburse $40,000 to the marital estate, determining that the debt was marital and that the marital estate was not entitled to reimbursement because it "had been more than compensated for this contribution" through the use of the property during the marriage. This court allowed Robert's petition for leave to appeal. 177 Ill.2d R. 315.

II. ANALYSIS

Robert presents two issues for review: (1) whether a court may offset a perceived disparity in Social Security benefits by awarding one party to a divorce a greater share of marital pension benefits; and (2) whether the marital estate is entitled to reimbursement of $40,000 for payment made on a joint loan for improvements to nonmarital property.

A. Division of Retirement Benefits

The issue of whether a court may offset a perceived disparity in Social Security benefits by awarding one party to a divorce a greater share of marital pension benefits is an issue of first impression in this court. Section 503(d) of the Illinois Marriage and Dissolution of Marriage Act (750 ILCS 5/503(d) (West 2000)) requires the trial court to divide marital property in "just proportions," taking into account enumerated statutory factors and any additional factors the court deems relevant. Pension benefits attributable to contributions made during the marriage are marital property. 750 ILCS 5/503(b)(2) (West 2000). Thus, in this case we must examine the interplay between the Illinois Marriage and Dissolution of Marriage Act and the Social Security Act. This presents a question of law that we review de novo. People v. Chapman, 194 Ill.2d 186, 217, 252 Ill.Dec. 474, 743 N.E.2d 48 (2000) (de novo standard of review is applicable when there are no factual or credibility issues and the issue presented is purely a question of law).

In enacting the Social Security Act (Act), Congress created an extensive and highly regulated public benefit plan. See Helvering v. Davis, 301 U.S. 619, 57 S.Ct. 904, 81 L.Ed. 1307 (1937). As part of this plan, Congress reserved to itself the exclusive power to alter, amend, or repeal any provision of the Act. 42 U.S.C. § 1304 (2000). Because Congress reserved the authority to amend or repeal provisions of the Act, the United States Supreme Court has held that Social Security beneficiaries have a "noncontractual interest" in Social Security benefits, and that these benefits are not to be considered as an accrued property right. Flemming v. Nestor, 363 U.S. 603, 609-610, 80 S.Ct. 1367, 1372, 4 L.Ed.2d 1435, 1443-44 (1960). The Court has contrasted an individual's noncontractual interest in Social Security benefits with a person's contractual interest in a private pension plan: in the latter, the right to benefits is assured and is based upon that person's payments into the plan. Flemming, 363 U.S. at 610,80 S.Ct. at 1372,4 L.Ed.2d at 1443-44. Indeed, the Court has observed that "[t]o engraft upon the Social Security system a concept of `accrued property rights' would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands." Flemming, 363 U.S. at 610,80 S.Ct. at 1372,4 L.Ed.2d at 1444.

Germane to this case, Congress has also specifically provided for division of Social Security benefits where a husband and wife seek divorce. Section 402 of the Act enumerates the benefits to be received by divorced spouses, providing to them, under circumstances specified by Congress, a portion of their former spouse's benefits. 42 U.S.C. § 402(b)(1) (2000). Thus, Congress has crafted a statutory scheme that strictly regulates and limits the payment of derivative Social Security benefits to a divorced spouse.

Emphasizing Congress' desire to regulate payments of benefits under the Act, section 407(a) (42 U.S.C. § 407(a) (2000)) prohibits a beneficiary from transferring or assigning his or her benefits to another. Specifically, this provision provides that

"[t]he right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment or other legal process, or to the operation of any bankruptcy or insolvency law." 42 U.S.C. § 407(a) (2000).

Thus, section 407(a) "imposes a broad bar against the use of any legal process to reach all social security benefits." Philpott v. Essex County Welfare Board, 409 U.S. 413, 417, 93 S.Ct. 590, 592, 34 L.Ed.2d 608, 612 (1973). Although Congress has carved a narrow exception to this rule to allow the collection of past due child support or alimony ("maintenance" in Illinois) from Social Security benefits (42 U.S.C. § 659(a) (2000)),¹ congress has also explicitly excluded any SIMILAR PAYMENT OBLIGATION arising from a "community property settlement, equitable distribution of property, or other division of property between spouses or former...