Mason v. Mason, 94-568

Decision Date13 March 1995
Docket NumberNo. 94-568,94-568
PartiesBetty MASON, Appellant, v. James MASON, Appellee.
CourtArkansas Supreme Court

Janice Wegener Vaughn, North Little Rock, for appellant.

Malcolm R. Smith, Stuttgart, for appellee.

HOLT, Chief Justice.

The appellant, Betty Mason, appeals the Arkansas County Chancery Court's denial of her motion for new trial, amendment of judgment, and relief from the trial court's division of marital property, accompanying a decree of divorce. The chancellor found, among other things, that appellee James Mason's Riceland Foods disability benefits and Social Security benefits were not marital property subject to division between the parties under Ark.Code Ann. § 9-12-315(b) as amended by Act 676 of 1987 and Act 1167 of 1991. We accept jurisdiction of this case pursuant to Supreme Court Rule 1-2(a)(3) because it involves the interpretation and construction of these two acts of the general assembly.

Mrs. Mason raises four points on appeal: (1) whether the chancery court erred in refusing to divide Mr. Mason's Riceland Foods disability benefits; (2) whether the chancery court erred in not dividing the parties' Social Security benefits; (3) whether the chancery court erred in awarding an unequal, and much smaller, portion of the parties' marital assets to Mrs. Mason; (4) whether the chancery court erred in finding that the $75,000 James Mason Trust was funded with inherited funds and thus the separate property of Mr. Mason.

We hold that the chancellor erred in parcelling out the marital property by treating Mr. Mason's disability retirement benefits as exempt from division and in awarding an unequal share of assets to the parties without providing a more detailed rationale for doing so. Consequently, we reverse and remand the matter for further proceedings consistent with this opinion.

Facts

James and Betty Mason were married on November 6, 1946. Living in Stuttgart, Arkansas, they reared five children over a thirty-eight-year period. In addition to holding other jobs, Mr. Mason was employed for many years by Riceland Foods, Inc., where he rose to an executive position. During the early years of the marriage, Mrs. Mason worked at home as a housewife and mother but occasionally worked outside the home, as well. In 1975, she opened Mason Realty Company, a successful real-estate business.

While serving in the South Pacific during World War II, Mr. Mason was wounded three times; one of the wounds resulted in fragmented vertebrae. A shrapnel injury subsequently required surgery. By the 1970s, when he was employed by Riceland Foods, Mr. Mason began having recurrent problems with pain. He lost the use of his left arm and ultimately underwent five operations. Two surgical procedures entailed the fusing of neck vertebrae and another two the fusing of lower-back vertebrae.

In 1980, after his fifth back operation, Mr. Mason applied for a disability determination under the Riceland Foods Disability Insurance Plan. He was approved and, having retired from the company, received disability payments until he reached actual retirement age.

Mr. and Mrs. Mason separated on September 21, 1984, and Mrs. Mason subsequently filed for divorce. At that time, she disposed of her real-estate business and moved to Little Rock. Mr. Mason was then receiving monthly income from the Riceland disability plan as well as a monthly Social Security disability payment. Nine years later, when an absolute divorce was granted, most of the disability payments had been converted to a retirement plan, though some of the disability payments continued under what the chancellor termed in a letter opinion "a complicated company disability and retirement plan."

Hearings in this matter began in September and October 1986. A trial on the merits was conducted on October 29, 1986. After some testimony was taken and some exhibits introduced, the parties announced that they had reached a settlement agreement, which later collapsed. Further hearings were held on March 1, 1988, and on August 1, 1988.

On November 7, 1988, the chancellor filed a letter opinion in which he found that Mrs. Mason was entitled to a divorce but not to an award of alimony. The letter opinion contained numerous findings concerning the parties' income and assets, including a finding that Mr. Mason currently received $3,402.41 per month in Riceland disability benefits as well as $706 in monthly Social Security disability payments. The chancellor also found that Mason Realty Company, Mrs. Mason's enterprise, had, as of March 1, 1988, $321,627.28 in liquid assets. Regarding the disability incomes, the chancery court found that the benefits constituted marital property under Ark.Code Ann. § 9-12-315(b)(6), not being based on either a workers' compensation or personal injury claim and, in any event, not being for any degree of permanent disability or future medical expenses. Mrs. Mason, the court determined, was entitled to receive one-half of Mr. Mason's Riceland and Social Security disability payments. The chancellor found that the Mason Realty assets were marital property subject to equal division, and that alimony was not warranted. Additionally, the court concluded that the James Mason Trust was funded with inheritance money received by Mr. Mason from his mother and was, therefore, not marital property.

Although the chancellor had stated in his letter opinion that Mrs. Mason was entitled to a divorce, a decree of divorce and property division was not entered of record. Instead, the chancellor granted Mr. Mason's request that a Master be appointed to ascertain, for purposes of distribution, the assets of the parties based on the accumulation and expenditure of assets since the previous court orders. A Master was appointed on August 16, 1989, and completed his report on August 18, 1992.

Meanwhile, on September 25, 1991, Mr. Mason filed a motion requesting that the chancery court reopen the issue of whether the Riceland disability benefits were marital property in light of recent amendments to Ark.Code Ann. § 9-12-315(b)(6) regarding marital-property exemptions and allow the introduction of an evidentiary deposition of Mr. Mason's physician for the purpose of showing that the disability was permanent. He asserted that, because Act 1167 of 1991, codified at § 9-12-315(b)(6), excluded benefits for Social Security claims from the statutory definition of marital property, the case should be reopened for additional evidence.

The chancery court reopened the matter, and, on August 24, 1992, further proceedings were held. At that time, Mr. Mason testified about the permanency of his disability. He was also permitted to introduce the deposition of his physician, Dr. Stephen D. Holt, who stated that Mr. Mason's disability was permanent.

On January 26, 1993, the chancellor issued a second opinion letter, filed on February 1, 1993, in which he reiterated his view that Mrs. Mason was not entitled to alimony. He ordered the marital home and other real estate to be sold at public auction. Noting that no final order or decree had been filed granting a divorce to the parties or a division of their property and that the law on marital-property exemptions had changed since his November 1988 letter opinion, the chancellor revised his earlier conclusion, finding that, under the amended § 9-12-315(b)(6), Mr. Mason's Riceland and Social Security benefits were for "permanent disability" and therefore outside the category of marital benefits to be evenly distributed.

Since, however, most of the disability payments had by then been converted to retirement benefits due to the fact that Mr. Mason had attained sixty-five years of age, the court found that the retirement-plan payments were marital property and were to be equally divided. Both parties were allowed to continue to draw their own Social Security payments.

As in the November 1988 letter opinion, the chancellor found that the Mason Realty Company assets were marital property to be divided equally and that the James Mason Trust was funded through an inheritance from Mr. Mason's mother and thus not marital property. Regarding the apparently unequal distribution of property and incomes in Mr. Mason's favor, the chancery court observed that it had considered Mr. Mason's amounts and sources of income and his estate and liabilities, "along with the fact that Mrs. Mason has lived on a substantial amount of marital income during the pendency of the divorce."

The court found it equitable that Mr. Mason should keep all of his non-marital property and his equal share of marital property, while allowing Mrs. Mason to have the use of marital income and her equal share of the marital property. The chancellor further found that, based on the entire record, there should be no equalization between the parties regarding expenditures and that Mrs. Mason would not be required to account to Mr. Mason for her expenditures, nor would he be required to account to her for his.

On October 18, 1993, a formal decree of divorce was entered. Mrs. Mason then filed a motion for new trial, amendment of judgment, and relief from decree, which was denied by the chancery court on November 24, 1993. From that order, this appeal arises.

I. Riceland Foods disability benefits

Mrs. Mason subdivides her first argument into three subpoints.

a. Whether the Riceland Foods disability plan fits within the statutory exceptions to marital property

According to Mrs. Mason, the Riceland Foods disability benefits do not fit within the exceptions to the definition of marital property set forth in Ark.Code Ann. § 9-12-315(b)(6) (Repl.1993). Under Ark.Code Ann. § 9-12-315(a), at the time a divorce decree is entered, the chancery court must distribute all martial property "one-half ( 1/2) to each party unless the court finds such a division to be inequitable." The term "marital property" is defined in § 9-12-315(b) as "all property acquired by...

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