Phillipson v. Bd. of Admin. of the State Employee's Retirement System
| Decision Date | 02 September 1969 |
| Citation | 80 Cal.Rptr. 411 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Rose PHILLIPSON, Plalntiff and Appellant, v. BOARD OF ADMINISTRATION OF the STATE EMPLOYEES' RETIREMENT SYSTEM, Defendant and Respondent. Civ. 9300. |
Kaufman & Wagner and Marcus M. Kaufman, San Bernardino, for plaintiff and appellant.
Thomas C. Lynch, Atty. Gen., and William L. Zessar, Deputy Atty. Gen., for defendant and respondent.
OPINION
Plaintiff filed a complaint for declaratory relief against Nicholas G. Phillipson, her former husband, and the Board of Administration, State Employees' Retirement System 1 for the purpose of securing a judicial determination of her rights in the retirement account standing in the name of her former spouse. Plaintiff maintained that she was entitled to the $4,532.66 in the retirement fund by virtue of a divorce decree. The defendant Board accepted service and filed an answer. The defendant Nicholas G. Phillipson was served with summons and complaint, failed to appear, and his default was entered. Inasmuch as the facts are virtually undisputed, the cause was submitted without testimony being taken. The court ruled the plaintiff take nothing and entered judgment in favor of the Board on the ground that the provisions of the retirement law precluded an assignment or award of the husband's benefits by the divorce court.
The plaintiff Rose Phillipson, and the defaulting defendant, Nicholas G. Phillipson, were married in April 1948 and lived in California until their separation in January 1966. Four children were born as issue of the marriage. The plaintiff has had custody of the minors since the separation.
In September 1955, Nicholas commenced employment as a cook with the State of California at the California School for the Deaf in Riverside, California. He remained in state service until he voluntarily terminated his employment on April 1, 1966. During his state tenure, he made the required contributions to the Public Employees' Retirement System.
On April 14, 1966, plaintiff was granted an interlocutory judgment of divorce on the grounds of extreme cruelty. The superior court awarded her all the funds, moneys and credits in the state retirement account standing in Nicholas' name. On April 20, 1966, plaintiff served a written notice upon the Board in which she claimed the cash contributions in the retirement account.
On April 17, 1967, a final judgment of divorce was entered incorporating the property disposition made in the interlocutory decree. On May 18, 1967, plaintiff presented an additional demand for the funds and served a copy of the final decree upon the Board.
Nicholas, having found haven in another state, filled a claim for the retirement benefits in July 1967. He elected to receive monthly pension benefits. When he terminated his employment with the state, he had the option of withdrawing his accumulated contributions in the system with interest or, having qualified by reason of age and accumulated contributions, of electing to receive a monthly pension for life. (Gov.Code, §§ 20013, 20014, 21251.1.)
Confronted with conflicting claims to the retirement funds, the Board decided that this was a case of first impression and refused to pay either plaintiff's lump sum demand or the former employee's claim for monthly benefits.
The critical issue is whether the divorce court had the power to award or assign the state retirement benefits to the wife.
Where a divorce decree is rendered on the grounds of extreme cruelty, adultery or incurable insanity, the court shall assign the community property in such proportion as it may deem just. (Civ.Code, § 146.) All property acquired during the marriage through the work and labor of the husband is community property. (Civ.Code, §§ 162, 163, 164.) Under community property law, the husband and wife are deemed to have a present, existing and equal interest in his retirement benefits, and a divorce court may, upon appropriate grounds, award any or all of the retirement benefits to the prevailing party. (Civ.Code, §§ 161a, 146.)
The pension rights of a municipal employee are an integral part of his earnings. (Dryden v. Board of Pension Comrs., 6 Cal.2d 575, 579, 59 P.2d 104.) An employee's interest in the State Employees' Retirement System is community property. (Crossan v. Crossan, 35 Cal.App.2d 39, 40, 94 P.2d 609.) Pension rights earned and acquired during the course of a marriage constitute the community property of the employee and his spouse. (See French v. French, 17 Cal.2d 775, 778, 112 P.2d 235, 134 A.L.R. 366; Civ.Code, §§ 161a, 161b.) Pensions are subject to division in a divorce when and to the extent that the employee is certain to receive some payment or recovery of funds. (Williamson v. Williamson, 203 Cal.App.2d 8, 11, 21 Cal.Rptr. 164.)
While the foregoing principles enjoy statutory and judicial integrity, the question is squarely presented whether section 21201 of the Government Code embodied in the Public Employees' Retirement Act prohibits a California divorce court from awarding the retirement fund to the employee's spouse where the employee has qualified by age and service for retirement for service.
Section 21201 of the Government Code reads, in essence, as follows: 'The right of a person to any benefit or other right under [the Retirement System] and the money in the Retirement Fund is not subject to execution, garnishment, attachment, or any other process whatsoever, and are unassignable * * *.' [Emphasis added.]
Where a public employee's governmental pension is statutorily exempt against the claims of creditors, the immunity extends to an execution for satisfaction of an alimony judgment (In re Smallbone, 16 Cal.2d 532, 534, 106 P.2d 873, 131 A.L.R. 222; Thomas v. Thomas, 192 Cal.App.2d 771, 784, 13 Cal.Rptr. 872; Miller v. Superior Court, 69 Cal.2d 14, 16, 69 Cal.Rptr. 583, 442 P.2d 663), and a judgment for child support. (Ogle v. Heim, 69 Cal.2d 7, 8-9, 69 Cal.Rptr. 579, 442 P.2d 659; Howard v. Howard, 166 Cal.App.2d 386, 387, 333 P.2d 417.)
While the retirement law expressly prohibits an assignment of pension benefits or retirement funds by the employee and exempts the benefits and funds on deposit in the system from creditors' claims, including a creditor spouse, the plaintiff here maintains that she is entitled to the retirement funds as an owner, not a creditor.
Where the right to receive retirement benefits or pension funds is a 'mere expectancy,' or is 'contingent' or has 'not vested' because of the possibility no funds may even be received or the right to receive the same is dependent upon a contingency that may never occur, there is no 'property' subject to distribution, (Williamson v. Williamson, supra, 203 Cal.App.2d 8, 21 Cal.Rptr. 164; see Thomas v. Thomas, supra, 192 Cal.App.2d 771, 13 Cal.Rptr. 872.)
In the case under review, Nicholas, who had qualified for retirement, resigned from public employment on April 1, 1966, prior to the rendition of the interlocutory judgment of divorce.
A wife of a public employee acquires a vested interest in a pension when it becomes payable to him; she has a right to assert an interest in the payments to the employee during his lifetime; upon a division of the community estate, she is entitled to claim an interest in the pension. (Benson v. City of Los Angeles, 60 Cal.2d 355, 360, 362, 33 Cal.Rptr. 257, 384 P.2d 649.) Here, the pension rights had vested in the husband at the time the divorce decree was rendered; therefore, the parties had present, existing and equal interests in the fund at the time of the default divorce. (Civ.Code, § 161a.)
However, the Board charges that the non-assignability provision of the retirement law (Gov.Code, § 21201) deprives a divorce court of the power to distribute the benefits as community property (Civ.Code, § 146), and that the non-assignability clause eliminates present, existing and equal characteristics of the retirement benefits as community property. (Civ.Code, § 161a.)
The argument is untenable. Section 161b of the Civil Code provides, in substance, that notwithstanding the present, existing and equal community interests of the spouses in funds in a retirement program, the employer is protected against possible double payment by payment to the employee prior to notice of an adverse claim. Section 161b thus expressly recognizes the community nature of a governmental retirement fund.
Likewise, there is no conflict between section 146 of the Civil Code and the non-assignability provision of section 21201 of the Government Code. The Board contends that the language in section 146 of the Civil Code that 'In case of the dissolution of the marriage * * * the court shall make an order for disposition of the community property * * *.' amounts to the 'assignment' prohibited by section 21201 of the Government Code.
Statutes are to be construed to propose harmony, not conflict. (Wemyss v. Superior Court, 38 Cal.2d 616, 241 P.2d 525; Code Civ.Proc. § 1858.) The meaning of words should also be construed in harmony with the context in which they appear. (Wallace v. Payne, 197 Cal. 539, 544, 241 P. 879.) The prohibition against assignment of retirement benefits or funds is interwoven with prohibition against levies by creditors. The section was intended to safeguard the employee against improvident voluntary assignments and involuntary assignments in the event of bankruptcy, as well as levies by creditors.
Moreover, in construing the meaning and purpose of statutes, all the pertinent provisions must be taken into account and harmonized. (Stafford v. Los Angeles Employees' Retirement Board, 42 Cal.2d 795, 799, 270 P.2d 12; Wemyss v. Superior Court, supra, 38 Cal.2d 616, 241 P.2d 525.)
Under section 21210 of the Government Code, the spouse's right to make a claim to the employee's retirement fund is expressly recognized inasmuch as it provides, in part, that 'Notwithstanding the...
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