King v. King

• Citation: 481 A.2d 913,332 Pa.Super. 526
• Parties: Raymond F. KING, Sr., Appellant, v. Eleanor F. KING.
• Decision Date: 24 August 1984
• Court: Superior Court of Pennsylvania

481 A.2d 913

332 Pa.Super. 526

Raymond F. KING, Sr., Appellant, v. Eleanor F. KING.

Superior Court of Pennsylvania.

August 24, 1984

Argued Feb. 7, 1984.

Frank Kroto, Jr., Erie, for appellant.

Donald W. Grieshober, Erie, for appellee.

Before BROSKY, OLSZEWSKI and JOHNSON, JJ.

BROSKY, Judge.

Appellant is the former husband of appellee. He contests the distribution of property ordered by the trial court in conjunction with the parties' divorce. Specifically he challenges the valuation of his pension plan, which was subject to equitable distribution, and what he claims was the failure of the trial court to take into consideration in making its distribution of marital property the fact that appellee had resided since the date of separation in the marital residence rent free.

Initially though, appellant contends that another hearing should be conducted on the equitable distribution issue because of the failure of Judge Jiuliante to recuse himself from reviewing the Master's findings. Appellant concedes that after writing an opinion dated February 2, 1983, Judge Jiuliante did in fact recuse himself and another en banc panel reviewed the case. He argues, however, that this panel did not actually review the Master's findings but instead merely affirmed the previous order of Judge Jiuliante. We disagree.

The opinion of the court en banc issued on August 29, 1983 indicates that it relied not only on the previous opinion but also heard argument in July and considered the record made at the Master's hearing. The court wrote: "After careful review of the testimony presented at the Master's hearings, and with the benefit of the second en banc argument, we concur with the initial opinion of the court and deny plaintiff's Motion for Reconsideration." While the August opinion did refer to Judge Jiuliante's previous opinion, we believe that the court en banc itself reviewed the evidence and we see no need for remand on this ground.

Turning to appellant's remaining claims, we note that we utilize an abuse of discretion standard of review in determining the propriety of property distribution. Ruth v. Ruth, 316 Pa.Super. 282, 462 A.2d 1351 (1983). We will not usurp the trial court's duty as factfinder nor will we adopt guidelines or presumptions in addition to those set forth by the legislature. Ruth v. Ruth, supra. ^[1]

Appellant's primary contention is that the trial court erred in valuing the pension fund as of January, 1981. Instead, he argues that it should have been valued as of the date of separation in October, 1973 or the date of the filing of the divorce complaint in 1974.

Appellee, on the other hand, believes that the valuation of the pension plan gave the husband credit for the increased value between the date of separation in 1973 and valuation date in 1981 and urges us to affirm.

We conclude that only that portion of the pension attributable to the period commencing with the marriage and ending on the date of separation is marital property within the meaning of the Divorce Code.

We have based our decision on the terms of the Divorce Code which defines marital property as all property acquired by either party during the marriage with certain exceptions. See 23 P.S § 401(e) which states in relevant part:

(e) For purposes of this chapter only, "marital property" means all property acquired by either party during the marriage except:

* * *

* * *

(4) Property acquired after separation until the date of divorce, provided however, if the parties separate and reconcile, all property acquired subsequent to the final separation until their divorce.

The statute indicates that the Legislature did not intend that property acquired after separation be treated as marital property. That portion of the pension property that was acquired after the date of final separation should therefore not be subject to equitable distribution.

Mr. and Mrs. King, who were both 53 years of age at the time of the divorce hearing, were married in August, 1951 and separated in October, 1973 at which time Mr. King was employed, as he still is, by the Erie Police Department. He has been employed by the Department since April, 1956.

The marital property consisted primarily of the residence at 1120 West 41st Street, Erie, (valued in October, 1973 at $22,100 and in January, 1981 at $37,500) and appellant's pension which had not vested as of October, 1973, but was due to vest within a few months.

Appellant's pension plan is apparently considered to be both a contributory and non-contributory plan. By October, 1973 Mr. King had contributed $4,197.34 to the plan, by January, 1981, he had contributed another $5,389.92. The Master found the $4,197.34 to be marital property and awarded it to the husband.

Exceptions were filed to the Master's Report and the court reversed his proposed finding that the value of the pension was limited to the dollar amount contributed by appellant. Instead the court found that the pension had a value based on the likelihood of its being paid. ^[2]

An actuary testified at the Master's hearing and his written report was entered into evidence. At the hearing the actuary, Randall M. Luzader, testified that in October, 1973 the value of the pension was $67,893. The witness explained that he reached that figure by considering Mr. King's vital statistics; the provisions of the pension plan; the form of benefits, eligibility to retire; the basic format; a cost of living adjustment; the discount factor and 1973 group annuity mortality rates. As the witness explained, he was not saying that Mr. King could withdraw $67,893 from the pension fund in 1973 (in fact he could at that time withdraw only his $4,197.34 contribution). Instead, the $67,893 figure represented what the actuary said was the financial equivalent to the stream of payment to which Mr. King was entitled at that time.

Mr. Luzader was asked what was his opinion of the value of the pension in January, 1981 but he did not answer because appellant's counsel objected and the Master said that he did not believe the testimony would be material.

In a written report prepared by Mr. Luzader for appellee's counsel, the attorney estimated the value of the pension in January, 1981 to $151,272. The court en banc used that figure in dividing the pension fund although our review of the record does not indicate that the report was ever actually admitted into evidence.

We believe the lower court erred in relying on facts not in evidence. Additionally, we have concluded that the method used by the court to divide the pension was faulty in that it utilized a present value in ordering a deferred payment.

The lower court made a determination of the present value of the pension and awarded a portion of that value to Mrs. King, although it ordered that actual payment would be deferred until the pension entered pay status.

The method used by the court involved multiplying the estimated present value ($151,272) by a fraction known as the "coverture fraction". The fraction represents that portion of the value of the pension that is attributable to the marriage. The numerator of the fraction is the total period of time the employee spouse was participant in the plan from date of marriage until date of separation, and the denominator is the total period of participation in the pension plan. The court found the numerator to be 19.67 years and the denominator 26.83, as of January, 1981. Therefore, the court found that .733134 of the value of the plan was marital property, since that is the portion of the value of the pension earned during marriage.

The trial court determined that the pension should be divided equally and therefore awarded to Mrs. King 1/2 of .733134 of $151,272.00 or $55,451. This amount was reduced by $12,750 which represents 1/2 of the net equity in the marital residence which had been awarded to the wife as an offset against the pension. Although $42,701.00 in marital property was thus awarded to Mrs. King, the court noted that there is no practicable way that Mr. King can pay that amount to his former wife. The court therefore ordered a deferred distribution to take place when Mr. King begins to receive his pension.

While we agree with the court's order of a deferred distribution, we would so order without assessing a present value to the pension. See Troyan, "Pension Evaluation and Equitable Distribution", 10 Family Law Reporter No. 4, Monograph No. 1, Nov. 22, 1983. ^[3] Mr. Troyan contends and we agree that when a deferred distribution is used, present value should not be employed because there are too many variables projected into the future for this calculation to have any merit. Instead, the "coverture" fraction is to be applied to the benefit when it enters pay status. We believe that this approach should be used in the present case where it is undisputed that there are insufficient assets to offset the pension immediately.

If the pension fund were to be divided between the parties at the time the equitable distribution order was entered, we would agree that the coverture fraction should be used in conjunction with the present value. As we have indicated earlier in this opinion, we agree further that in determining the number of years participation in the pension plan attributable to the marriage, the period should be computed from the date of marriage to the date of separation. We also would value the plan as of the date of the hearing, as the court did instantly. We would therefore multiply the coverture fraction by the estimated present value of the pension to find the present value of the entitlement which was acquired during marriage. For a discussion of the computation of present value see Troyan, "Pension Evaluation and Equitable...