Marriage of Stenquist, In re

• Citation: 582 P.2d 96,148 Cal.Rptr. 9,21 Cal.3d 779
• Court: United States State Supreme Court (California)
• Decision Date: 07 August 1978
• Parties: , 582 P.2d 96 In re the MARRIAGE OF Richard William and Marilyn Betty STENQUIST. Richard William STENQUIST, Appellant, v. Marilyn Betty STENQUIST, Appellant. L.A. 30718.

Page 9

148 Cal.Rptr. 9

21 Cal.3d 779, 582 P.2d 96

In re the MARRIAGE OF Richard William and Marilyn Betty STENQUIST.

Richard William STENQUIST, Appellant, v. Marilyn Betty STENQUIST, Appellant.

L.A. 30718.

Supreme Court of California, In Bank.

Aug. 7, 1978.

[21 Cal.3d 782] [582 P.2d 97]

Hervey, Mitchell, Ashworth & Keeney and Thomas Ashworth, III, San Diego, for appellant Husband

Rand & Day and Roland B. Day, San Diego, for appellant Wife. Gertrude D. Chern, Santa Maria, as amicus curiae on behalf of appellant wife.

TOBRINER, Justice.

Retiring after 26 years of military service, husband received a "disability" pension of 75 percent of his basic pay in lieu of a "retirement" pension at 65 percent of basic pay. ¹ Although a military "retirement" pension is a community asset (In re Marriage of Fithian (1974) 10 Cal.3d 592, 604, 111 Cal.Rptr. 369, 517 P.2d 449), husband claims that his entire "disability" pension is his separate property under our decision in In re Marriage of Jones, supra, 13 Cal.3d 457, 119 Cal.Rptr. 108, 531 P.2d 420. Looking beneath the label of a "disability" pension, however, the trial court found that only the excess of the "disability" pension rights over the alternative "retirement" pension represented additional compensation attributable to husband's disability; the balance of the pension rights acquired during the marriage, it ruled, served to replace ordinary "retirement" pay and thus must be classed as a community asset.

We agree with the reasoning of the trial court; to permit the husband, by unilateral election of a "disability" pension, to "transmute community property into his own separate property" (In re Marriage of Fithian, Supra, 10 Cal.3d 592, 602, 111 Cal.Rptr. 369, 375, 517 P.2d 449, 455), is to negate the protective philosophy of the community property law as set out in previous decisions of this court. We therefore affirm the judgment of the trial court apportioning husband's pension rights between separate and community assets and dividing the community interest equally between the spouses.

Turning to wife's cross-appeal, we explain that the trial court's order limiting its jurisdiction over spousal support to 24 months conflicts with the policy established in our recent decision of In re Marriage of Morrison (1978) 20 Cal.3d 437, 143 Cal.Rptr. 139, 573 P.2d 41. Because any assertion that wife will attain economic self-sufficiency within 24 months of the judgment below rests on speculation, not evidence, the trial court's order divesting itself of the power to order spousal support beyond that brief period constitutes an abuse of discretion. We therefore reverse that portion of the trial court's order, remanding the matter for further proceedings in light of this opinion.

1. The trial court correctly apportioned husband's pension into community and separate assets.

In the instant case the husband joined the Army in 1944 and married in 1950. In 1953 he suffered a service-related injury leading to amputation of his left forearm, for which the Army assigned him an 80 percent disability rating. If the husband had retired immediately, his maximum "disability" pay would have been 75 percent of basic pay, compared to a maximum "retirement" pay of 22 1/2 percent of basic pay. He nevertheless continued his military service until he retired in 1970. At that time he faced the choice of taking regular "retirement" pay at the rate of 65 percent of his basic pay, or taking "disability" pay, a stipend equal to 75 percent of basic pay. ² Assuming the husband desired the higher amount, the Army began making "disability" payments to him.

1] The husband commenced proceedings for dissolution of the marriage in 1974. The trial court first determined that all pension rights attributable to the husband's military service before marriage, plus the portion of those rights earned during marriage attributable to the husband's disability, constituted his separate property. It The court finally divided this asset equally between the spouses. ³ The husband appeals from the portion of the judgment awarding his wife part of his pension as community property. The wife also appeals from the judgment below; challenging the court's apportionment, she claims that only that portion of the pension attributable to husband's employment before marriage is separate property.

[582 P.2d 99] then ruled that that portion of the pension rights earned after the marriage equivalent to an ordinary retirement pension, computed on the basis of longevity of service and rank at retirement, constituted a community asset.

We begin our discussion of this issue by reviewing the procedure by which a disabled serviceman may compute the amount of "retired pay" to which he is entitled. He may elect, first, to compute his "retired pay" on the basis of his rank and disability by multiplying his monthly basic pay by his percentage of disability. Alternatively, he can compute his "retired pay" on the basis of rank and longevity of service by multiplying his monthly basic pay by 2 1/2 percent times his years of service. (10 U.S.C. § 1401.) Under either formula, he cannot receive more than 75 percent of his last monthly basic pay. The amount of retired pay the serviceman receives under either option therefore depends largely on his monthly pay at retirement, a function of longevity of service and rank; rank itself is closely related to length of service.

In In re Marriage of Jones, supra, 13 Cal.3d 457, 119 Cal.Rptr. 108, 531 P.2d 420, and In re Marriage of Loehr (1975) 13 Cal.3d 465, 119 Cal.Rptr. 113, 531 P.2d 425, its companion memorandum decision, we held that a serviceman's right to "disability" pay, acquired before he had earned a "vested" right to ordinary retirement pay, was separate property. Subsequently in In re Marriage of Brown (1976) 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561, we held that "vested" and "nonvested" pension rights should be treated alike. Relying on those decisions, the husband contends that all military pensions based on disability are now separate property. ⁴ Closer examination, however, reveals that the reasoning of Jones and Brown supports the division of the husband's pension which the present trial court ordered.

In Jones, we held that when a spouse is entitled to receive a pension only because he is disabled, and Has no right to a pension because of longevity of service, the disability benefit payments are his separate property upon dissolution of the marriage. At the time Jones was decided, however, we deemed the community interest in a nonvested retirement pension a mere expectancy, and not a property interest. (See French v. French (1941) 17 Cal.2d 775, 112 P.2d 235.) Since Jones retired before his right to a "retirement" pension vested, his acceptance of "disability" pay did not affect any present community asset, but merely prevented an expectancy from coming into fruition. Recognizing, however, that the principles in Jones might not govern a case in which the serviceman had acquired a vested right to retired pay wholly apart from his disability, we expressly limited our decision to cases involving nonvested pensions.

One year following our decision in Jones we overturned past precedent and held in In re Marriage of Brown, Supra, 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561, that pension rights, whether or not vested, constituted a property interest; that to the extent that such rights derive from employment during coverture, they now comprise community assets. This holding undermines the fundamental premise of Jones : that the award of a serviceman's "disability" pension to the serviceman as his separate property would not impair any community interest of his spouse. Under current law in contrast to the law prevailing when Jones was decided both the nonvested retirement pension in Jones and the husband's vested right to a "retirement" pension in the present case constitute valuable community assets deserving of judicial protection.

Our reasoning in Brown is particularly appropriate to the present case. As we stated there, "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 community property which awards one spouse the entire value of this asset, without any offsetting award to the other spouse, does not represent that equal division of community property contemplated by (the Family Law Act)." (In re Marriage of Brown, supra, 15 Cal.3d 838, 847, 126 Cal.Rptr. 633, 638, 544 P.2d 561, 566.)

2] We cannot permit the serviceman's election of a "disability" pension to defeat the community interest in his right to a pension based on longevity. In the first place, such a result would violate the settled principle that one spouse cannot, by invoking a condition wholly within his control, defeat the community interest of the other spouse. (See Waite v. Waite (1972) 6 Cal.3d 461, 472, 99 Cal.Rptr. 325, 492 P.2d 13; In re Marriage of Peterson (1974)41 Cal.App.3d 642, 650-651, 115 Cal.Rptr. 184.) ⁵ As the court explained in In re Marriage of Mueller (1977) 70 Cal.App.3d 66, 137 Cal.Rptr. 129, a case indistinguishable from the present appeal, the employee spouse retains the right to determine the nature of the benefits to be received. ⁶ It would be inconsistent with community property principles "to permit that spouse to transmute what would otherwise be community property into his or her separate In the second place, "only a portion of husband's pension benefit payments, though termed 'disability payments,' is properly allocable to disability. It would be unjust to deprive wife of a valuable property right simply because a misleading label has been affixed to husband's pension fund benefits." (...