Marriage of Bishop, In re

• Decision Date: 11 December 1986
• Docket Number: No. 8460-1-II,8460-1-II
• Citation: 729 P.2d 647,46 Wn.App. 198
• Parties: In re the MARRIAGE OF Ilah A. BISHOP, Respondent, and Eugene E. Bishop, Appellant.
• Court: Washington Court of Appeals

Page 198

46 Wn.App. 198

729 P.2d 647

In re the MARRIAGE OF Ilah A. BISHOP, Respondent and Eugene E. Bishop, Appellant.

No. 8460-1-II.

Court of Appeals of Washington Division 2.

Dec. 11, 1986.

Thomas J. Majhan, Port Townsend, for appellant.

Lane J. Wolfley, Port Angeles, for respondent.

REED, Judge.

Eugene E. Bishop appeals a summary judgment that awarded his former wife, Ilah, an interest in his lump sum severance payment from Crown Zellerbach (Crown). We reverse and remand for entry of summary judgment awarding the entire payment to Mr. Bishop.

When the Bishops were married in 1956, Eugene was employed at Crown's Port Townsend mill and had been since 1950. The parties were divorced May 25, 1983.

Eleven days after the divorce, Crown notified its workers of its intention to close the mill, apparently provided a buyer could be found. Closure actually occurred on December 20, 1983.

Under the terms of a collective bargaining agreement covering the period June 1, 1981 to June 1, 1986, upon termination resulting from a mill closure, Eugene was given the option of either exercising preferential hiring rights by transferring to another of Crown's mills, or of receiving "severance pay." He elected severance pay. Based upon a formula using his years of continuous service as one factor, he received $19,622.40.

Although in the divorce settlement, Ilah had surrendered all rights to Eugene's company pension and retirement plans, no mention was made in the decree of severance pay. Accordingly, relying on the rule that community property not disposed of by a dissolution decree becomes the property of the former spouse as tenants in common, Yeats v. Estate of Yeats, 90 Wash.2d 201, 203, 580 P.2d 617 (1978), Ilah sought and obtained a judgment giving her one-half of the marital community's share of Eugene's separation pay, adjusted for taxes.

The sole issue is: How should severance pay be classified for purposes of division upon dissolution of a marriage?

We are hampered somewhat in our resolution of the issue presented for review because the matter comes to us on summary judgment. The record considered by the trial court consists only of the parties' depositions, conceding the facts as we have recited them, and copies of portions of the labor agreement pertaining to severance pay. No testimony was received from either Eugene's union or his employer regarding the purposes behind the severance pay provision. Consequently, we must determine from the face of the agreement and such law as we can muster--and there is very little on the subject--the true nature of severance or termination pay in the context of community/separate property concepts and marital dissolution.

Attempts at a definition of severance or termination pay are most often found in cases dealing with unemployment compensation, where the issue is usually whether such pay must be considered as "wages" in determining eligibility for benefits. See, e.g., McGowan v. Administrator, Unemployment Comp. Act, 153 Conn. 691, 220 A.2d 284 (1966). See, also Annot. Unenployment Benefits--Severance Pay, 93 A.L.R.2d, 1320 (1964). Consequently, and because the definitions oftentimes differ, depending upon the particular statute involved, these decisions are of little assistance.

It is of course now well settled that pension and retirement rights, whether vested or unvested, are community property to the extent the marital community contributes the labor of a spouse. Wilder v. Wilder, 85 Wash.2d 364 534 P.2d 1355 (1975); Farver v. Department of Retirement Systems, 29 Wash.App. 138, 629 P.2d 903 (1981), aff'd, 97 Wash.2d 344, 644 P.2d 1149 (1982) (under a different rationale); In re the Marriage of Pea, 17 Wash.App. 728, 566 P.2d 212 (1977); DeRevere v. DeRevere, 5 Wash.App. 741, 491 P.2d 249 (1971). Thus, if items of this nature are overlooked in the dissolution proceedings, the parties become owners thereof as tenants in common and are entitled to partition. Yeats v. Estate of Yeats, supra. Ilah argues that the same treatment must be accorded to severance pay because "the right to receive severance pay is a valuable contractual right" and is a form of deferred compensation, i.e., "remuneration for service rendered." See Barrett v. Weyerhaeuser Co. Severance Pay Plan, 40 Wash.App. 630, 700 P.2d 338 (1985), quoting from Owens v. Press Pub'g. Co., 20 N.J. 537, 546, 120 A.2d 442 (1956). ¹

Unlike pensions, retirement funds, and other types of true deferred compensation, see In re the Marriage of Skaden, 19 Cal.3d 679, 139 Cal.Rptr 615, 566 P.2d 249 (1977), termination or severance pay, under the contract in question, is a mere expectancy, completely dependent for its payment upon the happening of a condition--the involuntary termination of Eugene's employment because of a mill closure. Should such an event never occur, there is no contractual right to payment. Thus, any chance that severance pay will be received terminates upon voluntary retirement, death, or termination of the employee for cause. Commodore v. Armour & Co., 201 Kan. 412, 441 P.2d 815 (1968). Severance pay carries with it no contractual right to a payment that arises after a certain number of years of employment and which will definitely be paid in the future. In re the Marriage of Kuzmiak, 176 Cal.App.3d 1152, 222 Cal.Rptr. 644 (1986), cert. denied, --- U.S. ----, 107 S.Ct. 276, 93 L.Ed.2d 252 (1986); In re the Marriage of Wright, 140 Cal.App.3d 342, 189 Cal.Rptr. 336 (1983); In re the Marriage of Flockhart, 119 Cal.App.3d 240, 173 Cal.Rptr. 818 (1981). ²

Severance pay compensates the wage earner for the economic exigencies and detriments resulting from permanent separation from service without fault on his part. Such a payment is intended primarily to alleviate the consequent need for economic readjustment and to compensate the worker for certain losses attributable to dismissal. It has been said that the objectives of dismissal or severance pay is to ease the employee's financial burden while looking for new employment and is partial compensation for loss of seniority rights, pension rights, and other benefits hinging on employment and as compensation for retraining or acquiring new skills. See Ackerson v. Western Union Telegraph Co., 234 Minn. 271, 48 N.W.2d 338, 25 A.L.R.2d 1063 (1951). See, also Severance Pay Provisions in Collective Bargaining Agreements, 70 Monthly Labor Law Review, No. 4, at 384 (April 1950).

In In re the Marriage of Kuzmiak, supra, the court found that the legislative intent behind military separation pay was not to compensate for past services, but to assist the member financially during the transition period from separation to employment in the private sector ³.

The separation pay is a contingency payment for an officer who is career committed but to whom a full military career may be denied. It is designed to encourage him to pursue his service ambition, knowing that if he is denied a full career under the competitive system, he can count on an adequate readjustment pay to ease his reentry into civilian life.

In re the Marriage of Kuzmiak, 22 Cal.Rptr. at 646. See

also Perez v. Perez, 587 S.W.2d 671 (Tex.1979) (former husband's military separation pay received several years after divorce, held his separate property).

Although the amount of Eugene's severance pay is correlated with his many (32) years of past service, we believe that the pay does not serve as additional compensation for those past services, so as to qualify as "deferred compensation." In our view, such a formula merely recognizes that, as a worker gets older, the consequences of involuntary dismissal become more devastating in terms of the economic impact. We all know that as workers age they become less employable. Many face mandatory retirement upon reaching a certain age. Severance pay so computed also can be looked upon as a reward--a gratuity--to a good and faithful servant. Although his labor is that of the marital community in the general sense, the quality of service and personal devotion to duty is something that only the individual can give. It is something of value over and above the community's contribution, and cannot truly be considered as having been onerously traded by the community. Dismissal pay plans also help maintain the good will of employees and the community generally. Monthly Labor Law Review, supra.

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