Major v. Major

• Decision Date: 18 December 1986
• Citation: 518 A.2d 1267,359 Pa.Super. 344
• Parties: , 55 USLW 2399 Judith A. MAJOR, Appellee, v. Clyde D. MAJOR, Appellant.
• Court: Pennsylvania Superior Court

Page 1267

518 A.2d 1267

359 Pa.Super. 344, 55 USLW 2399

Judith A. MAJOR, Appellee, v. Clyde D. MAJOR, Appellant.

Superior Court of Pennsylvania.

Argued April 1, 1986.

Filed Dec. 18, 1986.

Jerry B. Chariton, Wilkes-Barre, for appellant.

John S. Fine, Jr., Wilkes-Barre, for appellee.

Before McEWEN, OLSZEWSKI and KELLY, JJ.

KELLY, Judge:

This is an appeal from the Judgment entered denying appellant's exceptions to the special master's report and granting appellee's petition to reopen the previous uncontested award of equitable distribution of marital assets. For the reasons stated below, we vacate the order of the lower court, and remand for further proceedings.

Judith and Clyde D. Major were married December 22, 1962. Clyde Major, appellant herein, had been a flight engineer in the Air Force from before the time of his marriage until his retirement in February 1981. On December 8, 1981 appellee Judith Major filed a complaint in divorce, alleging indignities to the person. A special master was appointed; his report recommending the grant of a divorce was filed on October 31, 1982. Counsel filed a stipulation permitting bifurcation of the divorce action from the marital property disposition on December 2, 1982; that same day the decree in divorce was entered.

The same special master took testimony regarding the property distribution and filed his report and recommendations on March 14, 1983. The main assets distributed included the marital home and land in Luzerne County, some undeveloped parcels of land in Texas, the two cars, home furnishings, a life insurance policy and appellee's employee stock plan assets. As no exceptions were filed to the report and recommendation of the master, a final order was entered on March 29, 1983.

Sometime on or about October 17, 1983, appellee filed a petition for rule to show cause as to why the issue of equitable distribution should not be re-opened to include appellant's military retirement pension. No mention of the pension benefits had been made in previous court records. The special master was re-appointed and filed a report on July 31, 1985, withholding a recommendation on procedural aspects of re-opening the final order, but recommending that the pension be recognized as marital property. Appellant filed exceptions which were denied by the trial court; a final order was entered and reduced to judgment on October 17, 1985, granting appellee a share of the military pension benefits. Appeal to this court timely followed.

Appellant presents four issues for review. He contends that: his military retirement pay is not marital property; 23 P.S. § 401 (j) prohibits the award of equitable distribution because at the time of the divorce in December, 1982, appellee had no vested right to the pension; assuming arguendo the pension is marital property, appellee waived her right to claim her portion by her failure to file exceptions to the March 29, 1983 order; and the lower court erred in citing in its opinion an unpublished memorandum of this court. We shall address these issues seriatim.

I

The issue of whether Pennsylvania will recognize a military retirement pension as marital property is one of first impression. Equitable distribution of marital property in the Commonwealth is governed by the Divorce Code, 23 P.S. § 401 et seq., and by the Rules of Civil Procedure, Rule 1920.1 et seq. Specifically, the applicable portions of the law relating to distribution of marital property are as follow:

§ 401. Decree of court

(c) In all matrimonial causes, the court shall have full equity power and jurisdiction....

(d) In a proceeding for divorce or annulment, the court shall, upon request of either party, equitably divide, distribute or assign the marital property between the parties without regard to marital misconduct in such proportions as the court deems just after considering all relevant factors....

(6) The sources of income of both parties, including but not limited to medical, retirement, insurance or other benefits.

(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.

* * *

(6) Veterans' benefits exempt from attachment, levy or seizure pursuant to the act of September 2, 1958, Public Law 85-857, 72 Statute 1229, as amended, except for those benefits received by a veteran where such veteran has waived a portion of his military retirement pay in order to receive Veteran's Compensation.

(f) All property, whether real or personal, acquired by either party during the marriage is presumed to be marital property regardless of whether title is held individually or by the parties in some form of co-ownership such as joint tenancy, tenancy in common or tenancy by the entirety. The presumption of marital property is overcome by a showing that the property was acquired by a method listed in subsection (e).

* * *

(j) whenever a decree or judgment is granted which nullifies or absolutely terminates the bonds of matrimony, any and all property rights which are dependent upon such marital relation, save those which are vested rights, are terminated unless the court otherwise expressly provides in its decree in accordance with subsection (b)....

(Emphasis added).

From the clear language of the Divorce Code we find military pension benefits to be includable as marital property. First, a pension is property acquired by the enlisted party during the marriage. In this case, appellant was enlisted in the Air Force at the time of the marriage in 1962 and remained in the military until his pension fully vested after 20 years, retiring in 1981. Thus 18 of the 20 years of pension fund assets are attributable to the period of the marriage. Second, none of the seven exceptions listed under Section 401(e) apply to military retirement funds; subsection (6) refers to the exemption of military disability compensation, not pension benefits. Finally, we are persuaded by the unambiguous statutory purpose as stated in Section 401(f), that all property acquired during marriage is presumed to be marital. Since this presumption has not been overcome by a demonstration that the pension falls within a statutory exception, we hold that military pension benefits are marital property, to the extent that they are acquired during marriage.

Our holding today is in accord with the trend of recent decisions in Pennsylvania. Although the issue of whether military pensions are marital property has not been decided in Pennsylvania prior to this case, the issue of whether other pensions are marital property has been decided. Pension benefits, both vested and non-vested, have been designated as marital property by the courts of this Commonwealth. See Barnhart v. Barnhart, 343 Pa.Super. 234, 494 A.2d 443 (1985); Flynn v. Flynn, 341 Pa.Super. 76, 491 A.2d 156 (1985); Braderman v. Braderman, 339 Pa.Super. 185, 488 A.2d 613 (1985); King v. King, 332 Pa.Super. 526, 481 A.2d 913 (1984). "[O]nly 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." King, 481 A.2d at 915. "Since a pension benefit is an economic resource acquired with funds that would otherwise have been utilized by the parties during their marriage to purchase other assets, it constitutes marital property." Flynn, 491 A.2d at 160. Moreover:

In many equitable distribution cases, an employee's retirement plan represents one of the most valuable assets accumulated by the marital parties. Often, the marital home is the only other major asset. As a result, questions relating to whether these benefits should be classified as marital property subject to equitable distribution are vital to Pennsylvania's system of equitable distribution.

Braderman, 488 A.2d at 616. (Footnotes omitted).

Military pensions are as other pensions and vital to equitable distribution. Appellant argues that because federal pensions are not deducted from employee paychecks, but represent current income for inactive duty status, the rationale of Flynn, etc., is not applicable to military pensions. However, we disagree. In light of the sacrifices of those families in the armed services, including long periods of separation while on duty or on assignments overseas, the contributions of both spouses to the household enable the enlisted spouse to continue serving until the pension vests after 20 years of service. Thus we reject appellant's argument that military pension benefits are not marital property.

II

Appellant's second argument arises due to the unique circumstances surrounding the law of military pensions that existed when the parties herein filed for divorce in 1981. On June 26, 1981 the United States Supreme Court filed its decision in McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981). The Court in McCarty held that military pensions were exempted from inclusion in equitable or community property distributions because the federal regulation of military pay and benefits preempted states from exercising dominion over the funds. Thus, when the parties herein filed for divorce in December 1981, appellant's military pension was ineligible for inclusion in the marital property division ¹.

McCarty did not remain the law. The Congress, responding quickly to the widespread criticism of that decision, enacted the Uniformed Services Former Spouses' Protection Act (USFSPA), Department of Defense Authorization Act, 1983, Pub.L. 97-252, § 1006(a), 96 Stat. 737 (1982), effective February 1, 1983, 10 U.S.C. § 1408 note (1982). The USFSPA returned to the states the authority to determine whether military pensions are to be considered individual property of the...