In re Vogt, Bankruptcy No. 80-00433
| Decision Date | 20 October 1981 |
| Docket Number | Adv. No. 80-0098.,Bankruptcy No. 80-00433 |
| Citation | 14 BR 743 |
| Parties | In re Henry Ludwig VOGT, Jr., Debtor. Henry Ludwig VOGT, Jr., Plaintiff, v. Kayheighe A. VOGT, Defendant. |
| Court | U.S. District Court — Virgin Islands, Bankruptcy Division |
Henry Counts, Jr., Alexandria, Va., for defendant.
Stephen H. Glickman, Washington, D.C. and Bruce Goldstein, Arlington, Va., for plaintiff/debtor.
Thomas J. Stanton, Alexandria, Va., Trustee in Bankruptcy.
MARTIN V.B. BOSTETTER, Jr., Bankruptcy Judge.
This matter came on for hearing on the Complaint of Henry Ludwig Vogt, Jr., the debtor herein, to determine whether an award to his ex-wife, Kayheighe A. Vogt, the defendant, in their divorce decree of a 9¼-/26th interest in his net military retirement income receipts constitutes a nondischargeable debt. The sole issue before the Court is whether this debt constitutes alimony, maintenance or support, or is a property division between the parties.
The debt in question arose as a result of a decree granting a divorce between the parties by the Family Court of the First Circuit, State of Hawaii. This decree, which was entered on March 23, 1977 contains two provisions relevant to this matter: (1) Section 6 entitled "Periodic Alimony" and (2) Section 9 entitled "Disposition of Property".
Under the periodic alimony section, the debtor was required to pay the defendant $100.00 per month pending the sale of their jointly-owned residence. Upon sale of the aforesaid residence, the plaintiff was required to pay the defendant the sum of $400.00 per month as periodic alimony until such time as the debtor retired from active duty in the United States Navy.
Pursuant to the disposition of property section, the defendant was awarded:
"A 9¼-/26th interest in and of Plaintiff\'s debtor net military retirement income receipts, payment of which shall begin as of the date on which Plaintiff becomes entitled to receive said retirement payments; that Defendant shall receive money equal to said 9¼-/26th interest in Plaintiff\'s retirement pay as income and in respect thereto she shall pay the Federal and State income tax obligations which relate to the money which she shall receive; that said payments shall terminate in the event of Defendant\'s death of sic in the event of the decease of Plaintiff."
The plaintiff, who retired from active service in the Navy on July 1, 1980 (after twenty-six years in service), contends that this debt is dischargeable under Section 523(a)(5)(B) of the Bankruptcy Reform Act of 1978 ("Bankruptcy Code"). This section excepts from discharge any debt:
While no definition of the term "alimony" has been included in the Bankruptcy Code, this term, nevertheless, is well-established in case law. Fundamentally, alimony arises from "the natural and legal duty of the husband to support the wife." Audubon v. Shufeldt, 181 U.S. 575, 577, 21 S.Ct. 735, 736, 45 L.Ed. 1009 (1901). The courts which have considered this question have consistently found that "it is the obligation based on this duty which is saved from discharge in bankruptcy." Norris v. Norris, 324 F.2d 826, 827 (9th Cir. 1974) citing Wetmore v. Markoe, 196 U.S. 68, 76, 25 S.Ct. 172, 175, 49 L.Ed. 390 (1904).
Notwithstanding the labels placed on the provisions within a divorce decree by a state court, it is for this Court to make an independent determination as to what constitutes alimony, maintenance, or support for purposes of dischargeability in accordance with a federal standard. See H.R. Rep. No. 595, 95th Cong., 1st Sess. 364 (1977) reprinted in 1978 U.S. Code Cong. & Ad. News, pp. 5787, 6320. Thus, payments made to the non-debtor spouse will be considered alimony if they are actually in the nature of support for the non-debtor spouse. Cartner v. Cartner, 9 B.R. 543, 546 (Bkrtcy.M.D.Ala.1981) citing Brown v. Felsen, 442 U.S. 127, 136, 99 S.Ct. 2205, 2211, 60 L.Ed.2d 767 (1979). The burden of proof is on the plaintiff inasmuch as he is the party asserting that the debt is dischargeable.
In reaching such a conclusion it is appropriate for the Court to examine applicable state law and other pertinent authorities to ascertain the incidents of an award in order to determine whether such an award meets the federal standard for alimony.
Section 580-47 of the Hawaii Revised Statutes (1976 Repl.) which governed at the time the divorce decree was entered, made provision for alimony payments to the recipient spouse. In providing for a just and equitable support award, this statute states:
"The court shall take into consideration the respective merits of the parties, the relative abilities of the parties, the condition in which each party will be left by the divorce, the burdens imposed upon either party for the benefit of the children of the parties, and all other circumstances of the case. . . . "
The plaintiff avers that it is the practice in Hawaii to award rehabilitative alimony following the divorce until the recipient has had sufficient time to become self-supporting. He contends that this is the reason for the finite duration of periodic alimony awarded in Section 6 of the decree. The plaintiff explains further that it was on this basis that the payments addressed in Section 9(b)(8) of the decree (to be commenced upon his retirement, which allegedly was anticipated to commence within three (3) years), must be considered as a property settlement rather than in the nature of alimony, support or maintenance.
In support of this proposition, the plaintiff relies upon a deposition de bene esse, taken of Robert G. Hogan, Esquire, admitted into evidence as plaintiff's Exhibit 1. Hogan is licensed to practice law in Hawaii and represented the plaintiff in his divorce proceeding against the defendant. Hogan stated that Hawaii does not favor long-term alimony awards. Rather, the practice in Hawaii, according to Hogan, is to award "rehabilitative alimony" over a relatively short period of time (six months to four years) following the marital dissolution so as to provide the recipient with an opportunity to become self-sufficient. The plaintiff contends that for this reason the periodic alimony provisions found in Section 6(b) of the divorce decree were to terminate upon his retirement from active military service.
A review of the Hawaii statute in effect at the time of the entry of the decree apparently provides for alimony of limited duration pending the recipient's ability to become self-sufficient. Hawaii Revised Statute § 580-47, supra. The plaintiff would have the Court reach the conclusion, based upon this statute, that the placement of the retired pay receipts in the property settlement section (as opposed to the alimony section) dictates a finding that the former is not in the nature of alimony. Yet, it is the intention of the parties which is controlling rather than the characterization of separate provisions of the decree, putative local practice notwithstanding. As noted above, it is incumbent upon the Court to examine "the basis for creation of the obligation which , in turn, may assist the Court in determining whether it was intended as an equalization of property rights or as support and maintenance." In re Tilmon, 9 B.R. 979, 988 (Bkrtcy.N.D.Ill.1981).
In support of the proposition that the parties intended Section 9(b)(8) of the decree to be in the nature of a property settlement, the plaintiff first asserts that although the defendant's alimony payments were to terminate upon her remarriage, this was not the case with respect to her share of the plaintiff's retirement pay receipts. This, he contends, is indicative of the fact that the latter payments were not in the nature of alimony, maintenance or support.
The plaintiff correctly notes that the remarriage of the recipient spouse is one factor, among others, to be evaluated in determining whether payments specified in the decree may properly be considered alimony as opposed to a property settlement. This factor, standing alone, is certainly not dispositive in the present case however. In fact, a debt may be found nondischargeable notwithstanding the fact that the payments in question, as incorporated into a final divorce decree, would not terminate upon the recipient spouse's remarriage. In re Albin, 591 F.2d 94, 97 (9th Cir. 1979).
In the case at bar, it is significant that Section 9(b)(8) of the decree provides that in the event of the defendant's death payments from the plaintiff's retirement receipts would immediately terminate. This is supportive of the view that such payments are in the nature of alimony. As noted in one well-recognized treatise, "the basic idea of alimony is that it is an allowance for the support of the wife; and where it takes the form of stated payments, it is therefore terminated upon the death of the wife, since the object for which it was granted no longer exists." 24 Am.Jur.2d, Divorce and Separation, § 644 (1966). While alimony payments generally terminate upon the recipient spouse's death, the terms of a property settlement (unless expressly provided otherwise) will bind the estates of both spouses. Id. at § 883. In the instant matter, the divorce decree contains no such express provision to bind their respective estates upon the death of one of the spouses.
A review of the divorce decree reveals that payments...
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