Majauskas v. Majauskas

• Citation: 474 N.Y.S.2d 699,61 N.Y.2d 481,463 N.E.2d 15
• Parties: , 463 N.E.2d 15, 6 Employee Benefits Cas. 1053 Henry MAJAUSKAS, Appellant-Respondent, v. Sandra MAJAUSKAS, Respondent-Appellant.
• Decision Date: 03 April 1984
• Court: New York Court of Appeals

Page 699

474 N.Y.S.2d 699

61 N.Y.2d 481, 463 N.E.2d 15, 6

Employee Benefits Cas. 1053

Henry MAJAUSKAS, Appellant-Respondent, v. Sandra MAJAUSKAS, Respondent-Appellant.

Court of Appeals of New York.

April 3, 1984.

[463 N.E.2d 17] Gerald Beckerman and Diana S. Pitts, Rochester, for appellant-respondent.

[61 N.Y.2d 485] Mark A. Drexler, Rochester, for respondent-appellant.

OPINION OF THE COURT

MEYER, Judge.

Vested rights in a noncontributory pension plan are marital property to the extent that they were acquired between the date of the marriage and the commencement of a matrimonial action, even though the rights are unmatured at the time the action is begun. The matrimonial court in the exercise of the discretion vested in it by part B of section 236 of the Domestic Relations Law may order distribution to one spouse of an equitable portion of that part of the present value of the other spouse's pension rights earned during marriage, or may provide that upon maturity of the pension rights the recipient pay a portion of each payment received to his or her former spouse or may, if it determines that valuation or other problems make equitable distribution impractical or burdensome, order a distributive award in lieu of equitable distribution. The order of the Appellate Division, 94 A.D.2d 494, 464 N.Y.S.2d 913, should, therefore, be affirmed, with costs to defendant.

I

Plaintiff and defendant were married on December 1, 1973. Plaintiff is a policeman with the Rochester Police Department and also works part time as a radio announcer. He became a participant in the department's pension plan on February 20, 1973, but had worked for the department since 1969. Because he had more than 10 years' service with the department when his divorce action was begun on August 4, 1980, plaintiff's rights under the pension plan were vested but he was not then entitled to benefits under the plan. On November 23, 1981, plaintiff having withdrawn his complaint, defendant was granted a divorce against him on her counterclaim.

The trial evidence established that the parties owned no property of substance other than plaintiff's pension rights under the provisions of section 384-d of the Retirement and Social Security Law. It included no details concerning what rights plaintiff would have upon retirement or when his right to retire matured, but defendant presented, without objection, two letters from an actuarial firm, stating the present value of plaintiff's interest in the plan, prorated for the period of the marriage, to be $28,204.81. ¹ The Judge awarded defendant custody of the two children of the marriage, maintenance of $43 per week, to be reduced if defendant obtained employment by $1 per week for every $3 of her gross earnings and child support of $60 per child, to be increased in proportion to any increase in gross salary from plaintiff's police department job. With respect to plaintiff's pension rights, the Trial Judge found that in view of the length of his service and of his membership in the retirement system, he had a vested but unmatured right to a pension which would permit him to retire at half pay on February 20, 1993, at the earliest. He held those rights to be marital property subject to equitable distribution, and of a present value as to the portion the wife was entitled to share in of $14,102.40, and directed that defendant be paid, at plaintiff's option, as follows: (1) $14,102.40 outright to be paid within 30 days; (2) at any time before retirement, $14,102.40 plus interest at the legal rate from the date of judgment; or (3) in default of either of the above, that proportion of one half of each pension check which the number of months the parties were married bears to the total number of months plaintiff was employed as a policeman prior to his retirement. The judgment, 110 Misc.2d 323, 441 N.Y.S.2d 900, directed service upon the pension plan administrator of a copy of the judgment and enjoined the administrator to withhold and forward to defendant's attorneys the amount of defendant's benefits under the third option from each payment becoming due to plaintiff unless defendant notified the administrator that she had been paid the money to which she was entitled under option 1 or 2.

On the husband's appeal to the Appellate Division, that court, two Justices dissenting, agreed that vested but unmatured pension rights constitute marital property, but, concluding that the record was insufficient for it to determine the propriety of the lump-sum award decreed by the Trial Judge and that there was little purpose to be served in ordering retrial of that question in view of plaintiff's lack of means with which to pay such an award, deleted the alternate provisions for lump-sum payment. It also modified the judgment to provide that payments out of plaintiff's retirement benefits when received be made to defendant by plaintiff, be measured against the payment received by plaintiff less taxes, and that defendant's entitlement be measured by the period between the date of the marriage and the commencement of the action, and deleted from the judgment the provisions for future increase of child support and decrease of maintenance.

On plaintiff's appeal to us he argues that pension rights are not marital property and that an award to defendant of any part of those rights violates the constitutional prohibition against diminishment or impairment of the benefits derived from the pension system of a civil division of the State (N.Y.Const., art. V, § 7). He contends also that the Appellate Division erred in deleting the provision for future reduction of maintenance. Defendant wife cross-appeals so much of the Appellate Division order as modified the method of computation and the procedure for payment of her portion of plaintiff's pension benefits and the deletion of the provision for future increases in child support.

II

Marital property is defined by statute as "all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action" (Domestic Relations Law, § 236, part B, subd. 1, par. c). Expressly excluded from the definition is separate property which, as defined in paragraph d, includes only property acquired before marriage or through gift or inheritance, compensation for personal injury, property exchanged for or acquired through increase in value of separate property, or property designated as separate by written agreement of the spouses. The only express reference to pension rights, however, is contained in subdivision 5 (par. d, cl. 4 [Factor 4] ), which specifies that one of the factors to be considered by the court in determining an equitable distribution of marital property is "the loss of inheritance and pension rights upon dissolution of the marriage as of the date of dissolution." Plaintiff husband argues that the explicit reference to loss of pension rights upon dissolution of the marriage requires the conclusion that they cannot be marital property, that pension rights are not acquired until they mature, which will be after commencement of the action, that they are only a contingent right to future income, that if they constitute property they originated prior to the marriage and, therefore, constitute separate property and its increase, and that to order him to pay to defendant by way of distribution part of his future pension income, which when received may constitute the basis for maintenance payments to defendant, constitutes impermissible "double-dipping."

Those arguments misperceive the legislative intent behind the enactment of part B and the nature of rights under a pension plan. As the Governor noted on approving the statute (L.1980, ch. 281) which enacted part B of section 236 of the Domestic Relations Law, it was enacted after consideration over a six-year period and in response to his urging of the adoption of legislation which would consider the economic impact on spouses and children of the dissolution of a marriage, and it recognized "that the marriage relationship is also an economic partnership" (McKinney's Session Laws of N.Y., 1980, p. 1863). Moreover, that the Legislature intended the contribution of both spouses to the partnership to be recognized with respect to property acquired through the efforts of either becomes evident when the statutory scheme is considered as a whole. The court is empowered "in order to achieve equity between the parties," not only to make an equitable disposition of marital property between them, but also to make a distributive award "in lieu of or to supplement, facilitate or effectuate the division or distribution of property where authorized in a matrimonial action, and payable in a lump sum or over a period of time" (Domestic Relations Law, § 236, part B, subd. 1, par. b; subd. 5, par. e). Importantly, not only is marital property defined broadly as all property acquired during the marriage prior to commencement of the action, but also the exception for separate property is narrowly written and expressly excludes from the increase in separate property which will be deemed separate property "such appreciation [as] is due in part to the contributions or efforts of the other spouse" (Domestic Relations Law, § 236, part B, subd. 1, par. d, cl. [3] ). Significantly also, the court is enjoined in determining an equitable disposition of marital property to consider the "direct or indirect contribution made to the acquisition of such marital property by the party not having title, including * * * contributions and services as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party" ( § 236, part B, subd. 5, par. d, cl. [6] ).

If, against that statutory background, we consider, as the Legislature may be deemed to have by reason of its specific reference to "pension rights," the rights commonly accorded an employee...