Marriage of Joiner, Matter of

• Decision Date: 31 May 1988
• Docket Number: No. 07-87-0182-CV,07-87-0182-CV
• Parties: In the Matter of the MARRIAGE OF Verne S. JOINER and Charlotte R. Joiner.
• Court: Texas Court of Appeals

Page 496

755 S.W.2d 496

In the Matter of the MARRIAGE OF Verne S. JOINER and

Charlotte R. Joiner.

No. 07-87-0182-CV.

Court of Appeals of Texas,

Amarillo.

May 31, 1988.

Motion for Rehearing Sustained in Part,

Overruled in Part and Judgment

Set Aside July 6, 1988.

Rehearing Denied Aug. 12, 1988.

John J.C. O'Shea, O'Shea Hall Hart & Forcum, Lubbock, for appellant.

Donald M. Hunt, Carr Evans Fouts & Hunt, Lubbock, for appellee.

Before REYNOLDS, C.J., and DODSON and BOYD, JJ.

REYNOLDS, Chief Justice.

Verne S. Joiner initiated this appeal from a judgment, which decreed the dissolution of his marriage to Charlotte R. Joiner and the division of their estate, to challenge the division of their estate, the award of attorney's fees to Charlotte, and the order for her temporary support. By a point of error, Charlotte, as cross-appellant, contends that the trial court erred in its characterization, and consequently in the division, of Verne's employee's profit sharing stock plan account. Because we agree there was a mischaracterization of the plan account, which constitutes a major portion of the parties' estate, we reverse and remand in part and affirm in part.

Verne and Charlotte were married on 18 August 1973 and divorced on 27 March 1987. Both at the time of the marriage and the divorce, Verne was employed by Ranger Insurance Company, a division of Anderson, Clayton & Co., where he began work on 9 January 1967, six and one-half years before the marriage.

Anderson, Clayton & Co. maintains a profit sharing stock plan, which embraces its employees and those of its subsidiaries and affiliated companies who for five fiscal years have been salaried employees. The company and its subsidiaries and affiliates make annual contributions to the plan, based on a percentage of the net profits for that fiscal year, at the end of the company's fiscal year on June 30. The contributions are paid to trustees who, crediting the employee-participants with their proportions of the contributions determined by the amount of the company's profits and the employees' compensation paid for that year, then invest the contributions in the stock of the company. The employee-participants do not make any contributions to the plan.

The allocated shares of stock and credits to an employee-participant are paid upon severance of employment by death, disability, or retirement to the employee or to his or her heirs. Upon severance of employment for any other reason, the employee receives the portion of his or her account that has vested, and the portion not vested, if any, is redistributed among active participants in the plan in the same way as company contributions. By the terms of the plan, a 20% interest in the employee's account vests after six years of service, i.e., after the first fiscal year of participation in the plan, and a 20% interest vests each year thereafter until the tenth year of service, i.e., the fifth fiscal year of participation in the plan, when the account becomes 100% vested.

Ranger Insurance confirmed that after meeting the requirement of five full years of service, Verne began his participation in the plan on 1 July 1972. As a result, his first fiscal year of participation ended on 30 June 1973, shortly before he and Charlotte were married on 17 August 1973. Then, the marriage, when dissolved on 27 March 1987, had spanned thirteen of the fourteen fiscal years Verne had participated in the plan.

At the time of divorce, the amount in the plan credited to Verne, which was valued in excess of $100,000 and constituted the bulk of the properties of Verne and Charlotte, was fully vested. Though not immediately reducible to possession, the community interest in the plan account was subject to division. Herring v. Blakeley, 385 S.W.2d 843, 846-47 (Tex.1965).

The trial court found that 33.5% of Verne's account in the plan is his separate property and 66.5% of it is community property. In making a division of the estate of the parties, the court awarded Charlotte 70% and Verne 30% of the community's 66.5% interest in the plan account.

Applying the ratio of the time of marriage to the time of participation in the plan to reach its 33.5% separate-66.5% community characterization of the plan, the court obviously calculated the time of participation in the plan by including the years of In our view, the court mischaracterized the nature of the plan and, to this extent, we agree with Charlotte's disputation, but we do not agree with her characterization. The explanation of our view will address the pertinent reasons advanced by Verne and Charlotte for their respective positions without specifying them seriatim.

employment required for participation in the plan. Charlotte disputes the calculation, contending that, for various reasons, only the years of contributions to the plan count, and since they were married for 13 of the 14 years in which contributions were made, the correct ratio is 13/14's, or a 93% community interest in the plan account. For other reasons, Verne defends the court's characterization, albeit he challenges the division made of the community interest, on the theory that the required preparticipation period of employment creates an expectancy to participate, much like a military pension plan, in deferred compensation by continued employment.

Unlike a military retirement or pension plan under which benefits are earned by reason of years of service, Cearley v. Cearley, 544 S.W.2d 661, 662 (Tex.1976), Anderson, Clayton & Co.'s employee's profit sharing stock plan manifests that benefits are not earned during the five-year period of employment required for participation in the plan; instead, the employee first acquires a vested interest in the benefits of the plan at the end of the sixth fiscal year of employment. Thus, the initial five-year employment period only generates a mere expectancy which, by not fixing any benefit in any sums at any future date, is not a property interest to which property laws apply. Hughes, Community-Property Aspects of Profit-Sharing Plans in Texas, 44 Tex.L.Rev. 860, 869 (1966). It follows that since the character of property as separate or community is fixed at the very time of acquisition, Colden v. Alexander, 141 Tex. 134, 171 S.W.2d 328, 334 (1943), the crucial time for determining the character of interests in and benefits of the plan is the time when the vested interests are acquired. Hughes, supra, at 871. Accord, Busby v. Busby, 457 S.W.2d 551, 553 (Tex.1970).

By the application of these principles to the provisions of the plan, a 20% interest in the benefits of the plan was acquired and vested on 30 June 1973 and a similar 20% interest was acquired and vested on each June 30 thereafter through 30 June 1977, at which time the plan account was fully vested. The initial 20% interest was acquired and vested while Verne was a single man, and it is his separate property, Colden v. Alexander, supra ; the remaining 80% was acquired and vested during the marriage, and it is community property. Herring v. Blakeley, supra, 385 S.W.2d at 845-46. Therefore, the extent of the community interest in the plan account is 80%; however, since the amount of the account was not payable at the time of the...