Marriage of Rogers, Matter of

• Decision Date: 14 April 1980
• Docket Number: No. D7809-15243,D7809-15243
• Citation: 45 Or.App. 885,609 P.2d 877
• Parties: In the Matter of the MARRIAGE of Lucille ROGERS, Respondent, and Ronald A. Rogers, Appellant. ; CA 14842.
• Court: Oregon Court of Appeals

Page 877

609 P.2d 877

45 Or.App. 885

In the Matter of the MARRIAGE of Lucille ROGERS, Respondent and Ronald A. Rogers, Appellant.

No. D7809-15243; CA 14842.

Court of Appeals of Oregon.

Argued and Submitted Dec. 14, 1979.

Decided April 14, 1980.

Ira L. Gottlieb, Portland, argued the cause and filed the brief for appellant.

Kevin O'Connell, Portland, argued the cause for respondent. With him on the brief was O'Connell, Goyak, Hagen, Elliott & Krage, P. C., Portland.

Before BUTTLER, P. J., and GILLETTE and ROBERTS, JJ.

ROBERTS, Judge.

In this dissolution-of-marriage case, husband appeals from that portion of the trial court's decree which awarded a portion of husband's foreign service retirement benefits to wife, contending (1) that such distribution is prohibited by federal law and (2) that if the court could properly consider the retirement benefits as property it should be limited to the amount of husband's contributions during the marriage.

The parties were married for 20 years, during which time the husband was employed by the Agency of International Development, an agency of the United States Department of State. The parties and their children lived overseas for all but a few months of the marriage. Husband, during his 22 years of government service, has contributed approximately $22,000 to a retirement fund. If he terminates service, he can withdraw this sum or leave it in the fund until he reaches age 50, when he can begin to draw a pension. The amount of pension is based upon a percentage of final average salary and increases with every year that husband works until he reaches age 60 when retirement is mandatory (under present law). ¹

In addition to awarding spousal support and child support for the parties' three minor children, the trial court, in dividing the marital assets, awarded one-third of husband's retirement benefits to wife "to be received in the same fashion as he receives the other two-thirds."

We address first husband's contention that such distribution is prohibited by federal law.

Relying upon 22 U.S.C. § 1104, husband contends that federal law prohibits this award to wife. 22 U.S.C. § 1104 as relied upon by husband provides:

"None of the moneys mentioned in this subchapter (Foreign Service Retirement and Disability System) shall be assignable either in law or equity, or be subject to execution, levy, attachment, garnishment, or other legal process, except as provided in section 1004(c) of this title."

In making this argument, husband overlooks an amendment to this section by Executive Order effective September 15, 1978, ² which added the following language:

"(b)(1) Payments under this title which would otherwise be made to a participant or annuitant based upon his service shall be paid (in whole or in part) by the Secretary to another person if and to the extent expressly provided for in the terms of any court decree of divorce, annulment, or legal separation, or the terms of any court order or court-approved property settlement agreement incident to any court decree of divorce, annulment, or legal separation. Any payment under this paragraph to a person bars recovery by any other person."

Thus, federal law specifically provides for the disposition made by the decree in this case.

A more difficult question is presented by husband's contention that the court, if it could consider the retirement benefits as property, is limited to a division of that amount contributed by husband during the marriage.

This court has decided very few cases dealing with the treatment of retirement benefits in dissolution proceedings. The most recent case was Roth and Roth, 31 Or.App. 65, 569 P.2d 693 (1977), ³ where it was held that husband's unvested right to a pension should not, under the facts of that case, be considered as a marital asset to be divided between the parties, particularly in light of the fact that the pension would be the fund for permanent spousal support.

Retirement benefits were also considered in Anderson and Anderson, 27 Or.App. 193, 555 P.2d 816 (1976), rev. den. (1977), where husband's vested interest in retirement income was taken into account in denying husband a lien on the family home awarded to wife. In McKibban and McKibban, 21 Or.App. 39, 533 P.2d 362 (1975), the availability to husband of retirement benefits accrued during the marriage was a factor in the award of a disproportionate amount of marital property to wife. In Tann and Tann, 12 Or.App. 441, 507 P.2d 404 (1973), we held that the availability of retirement benefits was relevant to the amount of alimony paid, especially where the marriage was of long duration.

Because each of these cases turns on its own facts, none provides a definitive rule to guide our treatment of the facts before us. Due to the paucity of case law on the subject in this state, we have examined the case law of other jurisdictions for guidance in our disposition of the facts before us.

I

Before analyzing the various approaches to the disposition of retirement monies, it is important to define the terms "vested" and "matured" as they relate to retirement benefits in dissolution cases. The Supreme Court of California provided the following comprehensive discussion of the terms in In re Marriage of Brown, 15 Cal.3d 838, 544 P.2d 561, 126 Cal.Rptr. 633 (1976).

"* * * Some decisions that discuss pension rights, but do not involve division of marital property, describe a pension right as 'vested' if the employer cannot unilaterally repudiate that right without terminating the employment relationship. * * * In divorce and dissolution cases * * * however, the term 'vested' has acquired a special meaning; it refers to a pension right which is not subject to a condition of forfeiture if the employment relationship terminates before retirement. * * * (T)he term 'vested' in this latter sense (defines) a pension right which survives the discharge or voluntary termination of the employee.

"As so defined, a vested pension right must be distinguished from a 'matured' or unconditional right to immediate payment. Depending upon the provisions of the retirement program, an employee's right may vest after a term of service even though it does not mature until he reaches retirement age and elects to retire. Such vested but immature rights are frequently subject to the condition, among others, that the employee survive until retirement." (Emphasis supplied.) (Citations omitted.) (Footnotes omitted.) 544 P.2d 563, 126 Cal.Rptr. 635.

For purposes of analysis we conclude that there are three distinct periods in any retirement benefit plan. Retirement benefits may be non-vested, vested but not mature or mature. The facts of this appeal present us with a vested, but unmatured right to retirement benefits, i. e., husband has the right to terminate employment immediately without losing his right to retirement benefits, but must wait until age 50 to begin drawing those benefits. ⁴

II

The initial question we are confronted with is how a retirement benefit is to be treated by the court in a property distribution plan. While some jurisdictions have held to the contrary, the great weight of authority in both community and non-community property states supports subjecting retirement funds or benefits to marital distribution. See Divorce and Separation, 24 Am.Jur.2d § 932.5; Community Property, 15A Am.Jur.2d § 53. Spousal Rights in Retirement Benefits, 16 Journal of Family Law 187 (1977-78). The authority for this position is particularly strong where the benefits have vested. See, e. g., Payne v. Payne, 82 Wash.2d 573, 512 P.2d 736 (1973); In re Marriage of Pope, 37 Colo.App. 237, 544 P.2d 639, 639-41 (1975); Schafer v. Schafer, 3 Wis.2d 166, 87 N.W.2d 803 (1958); Pinkowski v. Pinkowski, 67 Wis.2d 176, 226 N.W.2d 518 (1975), and Pellegrino v. Pellegrino, 134 N.J.Super. 512, 342 A.2d 226 (1975).

The reasoning of these cases is that vested retirement rights are a valuable asset earned through contributions which would otherwise have been available to the parties during the marriage. Even where contributions have been made entirely by the employer, the courts have concluded that retirement benefits are a mode of employe compensation and as such are an earned property right of the marriage. As noted by the California Supreme Court in Brown, 544 P.2d at 566, 126 Cal.Rptr. at 638:

" * * * Over the past decades, pension benefits have become an increasingly significant part of the consideration earned by the employee for his services. As the date of vesting and retirement approaches, the value of the pension right grows until it often represents the most important asset of the marital community. * * * A division of * * * property which awards one spouse the entire value of this asset, without any offsetting award to the other spouse, does not represent (an) equal division of * * * property * * *." ⁵

The Brown court was presenting an analysis of the treatment of non-vested retirement benefits as property of the marriage, a question which does not confront us here. However, the above argument is even stronger when applied to vested retirement rights.

In McKibban and Anderson, retirement benefits, while not actually divided, were treated as property which equalized the division of other items of marital property.

Although the courts in the above cases were necessarily considering the question of the proper treatment of retirement accounts in light of the facts before them, the holdings are often stated broadly as if always applicable to every possible combination of facts relevant to any retirement plan.

We think such a broad-brush approach is unwise and unwarranted because the details of various retirement plans and programs are almost infinite. As noted above, retirement rights can be non-vested, vested but not mature, or mature. Moreover, retirement programs can be funded entirely by employe contributions, entirely by employer contributions, or...