Miller v. Miller

• Decision Date: 17 August 1981
• Docket Number: No. 13433,13433
• Citation: 1981 NMSC 78,632 P.2d 732,96 N.M. 497
• Parties: Thomas T. MILLER, Petitioner-Appellant, v. Karen A. MILLER, Respondent-Appellee.
• Court: New Mexico Supreme Court

Page 732

632 P.2d 732

96 N.M. 497

Thomas T. MILLER, Petitioner-Appellant, v. Karen A. MILLER, Respondent-Appellee.

No. 13433.

Supreme Court of New Mexico.

Aug. 17, 1981.

[96 NM 497] Robinson, Stevens & Wainwright, George F. Stevens, Albuquerque, for petitioner-appellant.

Clayburgh, Ashby, Rose & Paskind, Myra C. Lynch, Albuquerque, for respondent-appellee.

OPINION

EASLEY, Chief Justice.

In this divorce case, the trial court held the husband's military retirement pay, earned in Texas, to be community property and awarded a portion of it to the wife, along with granting the wife alimony. The husband appeals. We affirm in part and reverse in part.

The issues presented are:

1. Whether Veterans Administration (VA) compensation benefit is community property subject to division upon dissolution of marriage.

2. Whether a trial court may, in its discretion, award alimony where the sole source of funds for its payments is disability compensation benefits received from the VA and Social Security.

The parties were married in October of 1958, one year after husband's entry into the military service of the United States. Husband received a disability retirement from the U. S. Army on April 11, 1977 having completed nineteen years, six months and one day of service. He subsequently waived his U. S. Army disability benefit in order to receive VA disability compensation benefit. The couple were divorced in New Mexico on November 14, 1980.

The parties have stipulated that Texas law will determine whether the disability compensation received by husband can be characterized as community property. Otto v. Otto, 80 N.M. 331, 455 P.2d 642 (1969).

In Ex parte Johnson, 591 S.W.2d 453 (Tex.1979) and Ex parte Burson, 615 S.W.2d 192 (Tex.1981), the Texas Supreme Court considered our precise question and held that the supremacy clause of the United States Constitution preempts a division of appellant's VA benefits as community property. That Court found that the intent of Congress was that the benefits were intended for the use of the recipient. Johnson at 456.

Comparing the language in the applicable section of the U.S.Code, 38 U.S.C. § 3101(a) (1976), with the language contained in the Railroad Retirement Act, 45 U.S.C. § 231m (1976), and citing the U.S. Supreme Court's decisions with respect to the Railroad Retirement Act, Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1 (1979), the Texas Court concluded that "the award to (appellant's) ex-spouse of 50 percent of his anticipated future disability benefits from the Veterans Administration conflicts with the clear intent of Congress that these benefits be solely for the use of the disabled veteran." Johnson at 456.

In Burson the husband retired from the U. S. Air Force and, although his regular retirement was a vested right, he elected to receive disability retirement benefits from the Air Force pursuant to 10 U.S.C. §§ 1201-1221 (1976 & Supp. III 1979), as amended by Act of Sept. 8, 1980, Pub.L.No.96-343, Act of Dec. 12, 1980, Pub.L.No.96-513. Following his retirement he was divorced. Under Texas cases which held that military retirement benefits, even though paid for disability retirement, were community property, he was ordered to make payments out of those benefits to his ex-wife as her share of the community assets. However, after the divorce he waived his Air Force disability benefits in order to receive disability compensation from the VA, pursuant to 38 U.S.C. § 3105 (1976). He thereafter ceased making payments to his ex-wife and she brought suit for contempt. In reversing the contempt order the Court distinguished between those disability benefits received from the Air Force and those subsequently received from the VA. Citing Johnson, the Court held that VA benefits were not divisible or assignable as property. Burson at 194, 196.

In the case before us, husband, at the time of his divorce, was already receiving his disability compensation from the VA pursuant to 38 U.S.C. § 3105 in lieu of U.S. Army disability retirement benefits under 10 U.S.C. § 1201 et seq. We conclude that, under Texas law, those benefits were not divisible or assignable as community property.

Wife argues that the benefits here at issue were actually awarded in lieu of regular retirement benefits which, under Texas law, should be considered as community assets. She asserts that his choice of receiving disability benefits rather than regular retirement benefits does not serve to remove those benefits from the assets of the community, whether they had vested as regular retirement benefits or not. Wife relies on Dominey v. Dominey, 481 S.W.2d 473 (Tex.Ct.App.1973), Marshall v. Marshall, 511 S.W.2d 72 (Tex.Ct.App.1974) and Cearly v. Cearly, 544 S.W.2d 661 (Tex.1976). This reliance is misplaced. Under Texas law, the decisive act is the change of disability retirement benefits from those payable by a Military Department to those payable by the VA. Once this is done, the payments may not be characterized as community property. Burson, supra; Johnson, supra; see also Arrambide v. Arrambide, 601 S.W.2d 197 (Tex.Ct.Civ.App.1980).

The second issue raised by husband is whether a trial court in New Mexico may, in its discretion, award alimony when the sole source of funds for payment are the federal disability compensation benefits received by the husband. The Supreme Court of the United States has recently addressed the question as to what extent state courts may attach benefits awarded under federal programs. In McCarty v. McCarty, --- U.S. ----, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981), petitioner was a retired commissioned officer of the U.S. Army. Two years prior to his regular retirement he was divorced. As a party of the property settlement, the California Superior Court awarded the ex-wife an interest in his future retirement pay, holding that a serviceman's military pension and retirement rights were subject to division as community property. The U.S. Supreme Court reversed, holding that federal law precludes a California court from dividing military retirement pay pursuant to state community property laws. McCarty, supra.

However, the Court went on to address the question whether federal benefits could be subject to legal process for spousal support. The Court first noted that Congress, in 1972, had refused to single out military retirement pay for the enforcement of court orders for spousal support, which was not imposed on any other federal employee or retired employee. Instead, "Congress determined that the problem of the attachment of military pay should be considered in the context of legislation that would require all federal pays to be subject to attachment." McCarty, --- U.S. at ----, 101 S.Ct. at 2740.

In 1975 Congress amended the Social Security Act to provide that "... moneys ... payable by, the United States ... (including any agency, su...