Marriage of Swan, Matter of

• Decision Date: 03 June 1986
• Citation: 301 Or. 167,720 P.2d 747
• Court: Oregon Supreme Court
• Parties: , 55 USLW 2005 In the Matter of the MARRIAGE OF Stanley N. SWAN, Petitioner on Review, and Flora Elise Swan, Respondent on Review. TC D8205-69002; CA A29760; SC S32328.

Page 747

720 P.2d 747

301 Or. 167, 55 USLW 2005

In the Matter of the MARRIAGE OF Stanley N. SWAN, Petitioner on Review and Flora Elise Swan, Respondent on Review.

TC D8205-69002; CA A29760; SC S32328.

Supreme Court of Oregon.

Argued and Submitted April 2, 1986.

Decided June 3, 1986.

Leslie M. Roberts, Portland, argued the cause for petitioner on review. With her on the petition was Sullivan, Josselson, Roberts, Johnson & Kloos, Portland.

Clint A. Lonergan, Portland, argued the cause and filed a response for respondent on review.

Before PETERSON, C.J., and LINDE, CAMPBELL, CARSON and JONES, JJ.

PETERSON, Chief Justice.

Petitioner on review (husband) and respondent on review (wife) were married in 1946. In 1983 the marriage was dissolved. The dissolution decree awarded each spouse approximately one-half of the parties' property.

The trial court used the value of both parties' Social Security Act (42 U.S.C. §§ 401 et seq.) benefits in calculating the total value of the property to be divided and in determining how much of the property to award to each spouse. The court did not award spousal support.

The wife appealed, asserting that the trial court erred in not awarding spousal support. The husband cross-appealed, claiming that the trial court erred in considering the value of the social security benefits in its property division.

The Court of Appeals modified by awarding spousal support to the wife, but it rejected the husband's claim that the property division was in error because the Social Security Act prohibits consideration of social security benefits in property division calculations. Husband petitioned for review, assigning as error, inter alia, the consideration of the value of social security benefits in the division of the property.

ORS 107.105(1)(f) ¹ provides for property division upon dissolution. It provides that "[a] retirement plan or pension * * * shall be considered as property."

The trial court found the value of the marital property to be $487,656.92. This included $50,000 attributable to the husband's social security benefits and $29,000 attributable to the wife's. The husband was awarded property, including his social security benefits, valued at $249,467.02. The wife was awarded property, including her social security benefits, valued at $238,289.90. In affirming the property division, the Court of Appeals stated:

                "The trial court awarded husband these assets
                "Hawaii Lease                 $  5,000.00
                 Swan-Holtzheimer Building      32,500.00
                 Life insurance policies         3,600.00
                 Federal Civil Service
                  Retirement                   117,500.00
                 Federal Disability Pension     32,967.02
                 Public Employee Retirement      4,900.00
                 Social Security (husband's)    50,000.00
                 Household goods                 3,000.00
                                              -----------
                                              $249,467.02
                "Wife was awarded
                "Family home (equity)      $ 68,000.00
                 Bede contract               10,973.00
                 Midwest Income Trust         1,936.90
                 Franklin Money Market        1,470.00
                 CCST stock                  15,000.00
                 Dynatech stock              50,500.00
                 American Home stock         15,000.00
                 Jones Cable stock            5,000.00
                 Ford stock                  15,000.00
                 IRA                          2,300.00
                 Tri-County Retirement        2,410.00
                 Tax sheltered annuity        4,700.00
                 Social Security (wife's)    29,000.00
                 Household furnishings       17,000.00
                                           -----------
                                           $238,289.90
                

" * * * * *

"We turn now to husband's cross-appeal. He argues that federal law prohibits courts from considering Social Security benefits in property division awards. He relies on 42 USC § 407. That provision makes the right of any person to future Social Security payments nontransferrable and nonassignable and makes Social Security benefits not subject to 'execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.' 42 USC § 407(a). It precludes a court from awarding one spouse's Social Security benefits to the other; however, it does not preclude a court in a dissolution proceeding from considering Social Security benefits when dividing the parties' real or personal property 'as may be just and proper in all the circumstances.' ORS 107.105(1)(f) directs that a 'retirement plan or pension or an interest therein shall be considered as property.' Although Social Security benefits can only be awarded to the person to whom they accrue, the value of those benefits can be considered in the equitable distribution by the court." Swan and Swan, 74 Or.App. 616, 618-20, 704 P.2d 136, 137-38; clarified 75 Or.App. 764, 709 P.2d 245 (1985) (Per Curiam ) (footnote omitted; citation omitted; emphasis added).

Although the Court of Appeals did not transfer or assign the respective social security benefits of the parties, it did use the respective values of the benefits in dividing the property. For the reasons that follow, we hold that it was error to consider the value of any social security benefits in making a property division under ORS 107.105(1)(f).

The federal Social Security Act contains a clause--sometimes referred to as an antiassignment clause--42 U.S.C. § 407, that provides:

"(a) Inalienability of right to future payments

"The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

"(b) Inamendability of section by inference

"No other provision of law, enacted before, on, or after the date of the enactment of this section, may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section."

42 U.S.C. § 659(a) excepts from § 407(a) "legal process" to collect "child support" and "alimony." It provides:

"Notwithstanding any other provision of law (including section 407 of this title) effective January 1, 1975, moneys (the entitlement to which is based upon remuneration for employment) due from, or payable by, the United States or the District of Columbia (including any agency, subdivision, or instrumentality thereof) to any individual, including members of the armed services, shall be subject, in like manner and to the same extent as if the United States or the District of Columbia were a private person, to legal process brought for the enforcement, against such individual of his legal obligations to provide child support or make alimony payments." (Emphasis added.)

The exception contained within 42 U.S.C. § 659(a) is not, however, limited to 42 U.S.C. § 407(a). The exception applies to all "moneys (the entitlement to which is based upon remuneration for employment) due from, or payable by, the United States." This is significant, as will be seen below.

In turn, 42 U.S.C. § 662(c) limits the meaning of "alimony" and provides:

"The term 'alimony', when used in reference to the legal obligations of an individual to provide the same, means periodic payments of funds for the support and maintenance of the spouse (or former spouse) of such individual, and (subject to and in accordance with State law) includes but is not limited to, separate maintenance, alimony pendente lite, maintenance, and spousal support; such term also includes attorney's fees, interest, and court costs when and to the extent that the same are expressly made recoverable as such pursuant to a decree, order, or judgment issued in accordance with applicable State law by a court of competent jurisdiction. Such term does not include any payment or transfer of property or its value by an individual to his spouse or former spouse in compliance with any community property settlement, equitable distribution of property, or other division of property between spouses or former spouses." (Emphasis added.)

The provisions of 42 U.S.C. §§ 659 and 662(c) that allow social security benefits to be reached by proceedings to enforce the beneficiary's legal obligations to "provide child support or make alimony payments" are exceptions to the general rule of immunity from legal process provided social security benefits by 42 U.S.C. § 407. But 42 U.S.C. § 662(c) specifically excludes from the definition of alimony the "transfer of property or its value by an individual to his spouse or former spouse in compliance with any * * * division of property between spouses or former spouses." (Emphasis added.)

Including the value of the social security benefits of the spouses in a division of marital property under ORS 107.105(1)(f) is contrary to the Social Security Act. State law, even state domestic relations law, must yield if Congress positively has required by direct enactment that state law be preempted. Hisquierdo v. Hisquierdo, 439 U.S. 572, 581, 99 S.Ct. 802, 808, 59 L.Ed.2d 1, 11 (1979).

Hisquierdo v. Hisquierdo, supra, involved a divorce suit between a husband, the petitioner, and his wife, the respondent. The husband had worked on the railroad for many years. Although the issue before the court involved the Federal Railroad Retirement Act of 1974 (45 U.S.C. §§ 231 et seq.), the issue there is identical to the issue here.

The Railroad Retirement Act contained an antiassignment clause that, for the purposes of this case, is indistinguishable from the antiassignment clause in the Social Security Act, 42 U.S.C. § 407(a). 45 U.S.C. § 231m provided:

"Notwithstanding any other law of the United States, or of any State, territory, or the District of Columbia, no annuity or supplemental annuity shall be assignable or be subject to any tax or to garnishment, attachment, or other legal process under any circumstances whatsoever, nor shall the payment...