Kruger v. Kruger

• Decision Date: 06 July 1977
• Citation: 73 N.J. 464,375 A.2d 659
• Parties: Barbara W. KRUGER, Plaintiff-Respondent, v. Richard O. KRUGER, Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 464

73 N.J. 464

375 A.2d 659

Barbara W. KRUGER, Plaintiff-Respondent, v. Richard O. KRUGER, Defendant-Appellant.

Supreme Court of New Jersey.

Argued March 8, 1977.

Decided July 6, 1977.

Monroe Ackerman, Short Hills, for defendant-appellant (Rudd & Ackerman, Short Hills, attorneys; Neil Braun, Short Hills, on the brief).

William E. Ozzard, Somerville, for plaintiff-respondent (Ozzard, Rizzolo, Klein, Mauro & Savo, Somerville, attorneys; William E. Ozzard and Richard M. Meth, Somerville, on the brief).

The opinion of the court was delivered by

SCHREIBER, J.

This appeal projects the issue of whether federal military retirement pay and disability benefits, all conditions precedent to their receipt having been satisfied, are "property" "legally and beneficially acquired" during marriage and, accordingly, subject to equitable distribution upon divorce. N.J.S.A. 2A:34-23. This question arose in proceedings instituted by Barbara W. Kruger in March 1973 for a divorce on grounds of extreme cruelty. Her husband, Richard O. Kruger, had counterclaimed for a divorce on grounds of desertion and extreme cruelty.

The parties had been married on May 6, 1950. They had three children, who at the time of the trial were 15, 19 and 21 years old. The defendant had been in the Army between July 1939 and February 1968, when he retired as a Lieutenant Colonel. Subsequently, he had been employed for approximately one year in the securities business for Laidlaw & Co. At the time of the trial in October 1973, he was no longer working because of economic conditions and poor health. However, Mrs. Kruger was engaged as a secretary in the municipal offices of the Borough of Bernardsville. The trial court, finding that both parties had been guilty of acts of extreme cruelty, granted a divorce to each. The wife was awarded custody of the minor child and $30 weekly support for that child. No alimony was granted.

The trial court found the major assets available for equitable distribution to be the marital home and the husband's interests in the military retirement pay and disability benefits. It ordered that the house be sold and the net proceeds after payment of a mortgage and other joint debts be divided equally. The plaintiff's mother, who had died in 1970, devised the house to her. Thereafter the plaintiff created a tenancy by the entirety with the defendant in the property. As to the monthly military payments of $753 for retirement and $106 for disability, both of which commenced in 1968, the trial court found that, since the parties had been married 213 months during the husband's military career of 343 months, 213/343rds of those benefits was acquired during marriage and subject to equitable distribution. It apportioned those benefits by awarding one-third to the plaintiff and two-thirds to the defendant.

Upon appeal the Appellate Division generally agreed with the trial court's findings and conclusions, except that it believed the apportionment of the military payments should terminate upon the wife's death. 139 N.J.Super. 413, 354 A.2d 340 (App.Div.1976). It remanded the case to the trial court to consider the income tax impact attributable to the payments. The case is before us by virtue of a dissent. R. 2:2-1(a). The dissenting judge opined that the pension and disability benefits "are income and not capital assets" subject to equitable distribution. Id. at 422, 354 A.2d at 345.

Equitable distribution is to be made of "the property, both real and personal, which was legally and beneficially acquired by them (the husband and wife) or either of them during the marriage." N.J.S.A. 2A:34-23. Justice Mountain in Painter v. Painter, 65 N.J. 196, 320 A.2d 484 (1974), after noting that there was no legislative history which illuminated the legislative intent of this provision, stated that the word "acquired" should be given a comprehensive meaning so as to include gifts and inheritance received by either spouse during marriage. Id. at 217, 320 A.2d 484. He also concluded that:

We therefore hold the legislative intent to be that all property, regardless of its source, in which a spouse acquires an interest during the marriage shall be eligible for distribution in the event of divorce. (Id.)

The Painter holding makes it clear that all personal property, tangible and intangible, in which a spouse acquires an interest is includable. Choses in action, rights and other interests, the benefits of which may be receivable now and in the future are classifiable as intangible personal property. See N.J.S.A. 1:1-2 which defines personal property to include "rights and credits." Perhaps the easiest method to utilize in determining whether a particular item is property is to view the financial status of the husband and wife at a particular point in time, generally the date upon which the complaint is filed. Painter v. Painter, 65 N.J. at 218, 320 A.2d 484. That status may be ascertained only by marshalling the economic resources of the parties. A weekly wage represents income, but after its receipt the dollars on hand are an asset. Likewise, a contract entitling a person to a certain number of dollars per week for services to be rendered over a fixed period is a valuable right and an asset, though the receipt of the weekly sum represents income. The equitable distribution provision is not concerned with income but with a person's assets in an economic sense on a date certain.

The right to receive monies in the future is unquestionably such an economic resource. In most situations its present dollar value can be computed. See our rule for calculating gross sums in lieu of dower or curtesy or an estate for life or years devised in lieu of dower or curtesy. R. 4:63-3. No one would quarrel with the proposition that the recipient of a life estate created by a testamentary or inter vivos trust owned a valuable asset which would be subject to equitable distribution. So, too, if one purchased or acquired an insurance annuity which paid a weekly sum certain to the beneficiary for life, the right to collect those funds would also be considered property subject to distribution. There are many different types of employee benefits, which employees or former employees receive, which everyone would readily admit are assets that have been acquired during employment. Deferred compensation, stock options, profitsharing and pensions are typical examples.

None of the decisions in this State involving pensions has considered the situation where the husband or the wife during the marriage acquired and is enjoying the pension. In Pellegrino v. Pellegrino, 134 N.J.Super. 512, 342 A.2d 226 (App.Div.1975), a husband's contribution to a pension prior to his retirement was held to be subject to equitable distribution. Scherzer v. Scherzer, 136 N.J.Super. 397, 346 A.2d 434 (App.Div.1975), remanded the matter to the trial court to determine what the husband's interest was, prior to retirement, in a corporate pension trust fund. White v. White, 136 N.J.Super. 552, 347 A.2d 360 (App.Div.1975), involved a situation where the husband had not received and was not eligible as yet for a pension under a non-contributory plan. Blitt v. Blitt, 139 N.J.Super. 213, 353 A.2d 144 (Ch.1976), found that a vested right to funds under a non-contributory pension plan which accrued during the marriage represented an asset subject to distribution. Each of these cases acknowledged expressly or implicitly that, if the spouse acquired during the eligible period of the marriage a nonforfeitable or vested interest in the pension prior to retirement, that interest was subject to equitable distribution. That principle is sound. In passing, it may be noted that the Pension Reform Act of 1974, 29 U.S.C. § 1001 (1975) et seq., may have a significant impact in this respect because of its minimum vesting standards, 29 U.S.C. § 1053 (1975), which are nonforfeitable, 29 U.S.C. § 1002(19) (1975).

Military retirement pay, as other public employees' statutory pensions, earned because of years of service, is comparable to the pension which a retired employee is receiving under a private plan. Although federal governmental pensions may be eliminated or reduced, Lynch v. United States, 292 U.S. 571, 54 S.Ct. 840, 78 L.Ed. 1434, 1439 (1934) (this is also the rule in New Jersey, see cases cited in Annot., 52 A.L.R.2d 437, 465-467 (1957)), the employee's interest in such a pension, where all conditions precedent have been satisfied, may properly be designated as property. No sound reason justifies the treatment of this type of interest differently from other types of property, whose value could become worthless in the future, e.g., the corpus of a trust may dry up or a pension plan may become bankrupt.

Authority for the position that a governmental pension may be considered property may be found in decisions in community property states. Ramsey v. Ramsey, 96 Idaho 672, 535 P.2d 53, 56-57 (1975); In re Marriage of Fithian, 10 Cal.3d 592, 111 Cal.Rptr. 369, 371, 517 P.2d 449, 451, cert. den., 419 U.S. 825, 95 S.Ct. 41, 42 L.Ed.2d 48, reh....