Robert C. S. v. Barbara J. S.

• Decision Date: 18 August 1981
• Citation: 434 A.2d 383
• Parties: ROBERT C. S., Petitioner, Appellant, v. BARBARA J. S., Respondent, Appellee.
• Court: Supreme Court of Delaware

Page 383

434 A.2d 383

ROBERT C. S., Petitioner, Appellant, v. BARBARA J. S., Respondent, Appellee.

Supreme Court of Delaware.

Submitted June 11, 1981.

Decided Aug. 18, 1981.

Upon appeal from the Family Court. Reversed and remanded.

Francis J. Trzuskowski (argued), and Daniel F. Kelleher, of Trzuskowski, Kipp, Kelleher & Pearce, P. A., Wilmington, for petitioner, appellant.

A. Gary Wilson (argued), Wilmington, for respondent, appellee.

Before HERRMANN, C. J., and DUFFY and HORSEY, JJ.

DUFFY, Justice:

In this domestic relations case, the husband appeals from an order of the Family Court dividing marital property following a divorce decree. The issue presented is whether the husband's pension benefits, which had accrued in part during the marriage but which had not matured at the time of the Family Court's decision, constitute "marital property" under Delaware law.

I

The relevant facts are these:

The parties were married in 1955, separated in 1978 and divorced in 1979. Three children were born of the marriage, one of whom was a minor at the time of the hearing.

The husband has been a union sheet metal worker since 1956 and is currently the Business Agent for his union. He is covered under two (non-contributory) pension plans: one with his local union that is vested and payable upon retirement, and a second with the international union that will not vest until he has completed his current term as Business Agent, which at the time of the hearing was approximately three years hence. The husband remarried in October 1979 and his present wife is also employed.

The wife, after completing a "refresher course" at a local college followed by a brief period of work for a retailing firm, is currently employed as a file clerk by a chemical company. She resides in the marital home and, at the time of the hearing, all three children were living with her, two of whom pay her a total of $173. per month for rent.

The Family Court awarded the wife $200. per month in alimony from June 1, 1980, until May 31, 1985, $1,500. in counsel fees and costs and divided the marital property. The Court determined that since the husband had "acquired a substantial and indivisible interest in (the pension) plans during the marriage," they were marital property under the Statute. On the basis of evidence of actuarial value submitted by the husband during and after the hearing, the Trial Judge established the value of the vested local pension at $10,046. and the value of the nonvested international pension at $9,000. He then awarded both pensions, in total, to the husband and gave a greater share of the remaining assets, including the marital residence and its contents, to the wife.

After the Family Court had denied the husband's motion for reargument, he docketed this appeal.

II

Delaware's Divorce and Annulment law is codified in Chapter 15 of Title 13 of the Delaware Code and provides for division of marital property following divorce. The pertinent Statute, 13 Del.C. § 1513, provides, in part, as follows:

"(a) In a proceeding for divorce or annulment, the court shall, upon request of either party, equitably divide, distribute and assign the marital property between the parties without regard to marital misconduct, in such proportions as the Court deems just after considering all relevant factors including:

(1) The length of the marriage;

(2) Any prior marriage of the party;

(3) The age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties;

(4) Whether the property award is in lieu of or in addition to alimony;

(5) The opportunity of each for future acquisitions of capital assets and income;

(6) The contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as homemaker or husband;

(7) The value of the property set apart to each party;

(8) The economic circumstances of each party at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to the party with whom any children of the marriage will live;

(9) Whether the property was acquired by gift, bequest, devise or descent;

(10) The debts of the parties; and

(11) Tax consequences.

(b) For purposes of this chapter only, 'marital property' means all property acquired by either party subsequent to the marriage except:

(1) Property acquired in exchange for property acquired prior to the marriage;

(2) Property excluded by valid agreement of the parties; and

(3) The increase in value of property acquired prior to the marriage."

The husband concedes that his vested local pension constitutes "marital property" and was properly considered by the Trial Court in its division of property under § 1513. Husband B. v. Wife B., Del.Super., 396 A.2d 169, 172 (1978). But, he argues, the non-vested international pension is a mere expectancy which cannot be fairly characterized as property for purposes of the Statute. For that reason, says the husband, the Trial Judge erred by including the international pension benefits, which are non-vested and may never become payable, in the marital assets of the parties.

A.

There are, of course, many types of pension plans available to both private and public employees. The plans vary widely in funding, in administration and in the rights which the beneficiaries have. See the discussion in Husband B. v. Wife B., supra at 172. Some rights flow from the contract creating the plan, some are required by statute, some may arise under both contract and statute. The plans are regulated under Federal law, ¹ and the benefits they provide are often of substantial economic value.

Generally speaking, State Courts have recognized that pensions are a form of deferred compensation and, at least as to private plans like those under review here that characterization is probably accurate. ² To that extent, at least, a non-employee spouse enjoys a co-extensive entitlement with the employee spouse to a portion of any pension benefits earned and paid during the marriage. But the problem before us concerns the right, if any, of a non- employee spouse to pension benefits earned during the marriage but which were not yet mature at the time of the divorce. ³

Unmatured pension benefits have been regarded by the courts in different ways when considered in a family law context. Some courts consider unmatured pension benefits, which are conditioned on the employee's survival, as a contingent future interest rather than as a property right subject to division between the parties. Paulsen v. Paulsen, Ark.Supr., 601 S.W.2d 873 (1980); In re Ellis, Colo.App., 538 P.2d 1347 (1975); Wilson v. Wilson, Ind.App., 409 N.E.2d 1169 (1980); Hill v. Hill, Md.App., 47 Md.App. 460, 424 A.2d 779 (1981); Howard v. Howard, Neb.Supr., 196 Neb. 351, 242 N.W.2d 884 (1976); Baker v. Baker, N.H.Supr., 421 A.2d 998 (1980); Baker v. Baker, Okl.Supr., 546 P.2d 1325 (1976). ⁴ Those jurisdictions, however, generally permit a trial judge to consider future pension benefits in allocating marital assets and/or as an income source for the payment of alimony. Paulsen, 601 S.W.2d at 875; Ellis, 538 P.2d at 1350; Wilson, 409 N.E.2d at 1178; Hill, 424 A.2d at 783; Howard, 242 N.W.2d at 888; Baker, 421 A.2d at 1001; Baker, 546 P.2d at 1326.

Other courts have characterized vested, ⁵ unmatured pension benefits as property, but have either distinguished nonvested pension benefits as mere expectancies not subject to division, or have not yet specifically addressed that issue. Miller v. Miller, Mich.App., 83 Mich.App. 672, 269 N.W.2d 264 (1978); Daffin v. Daffin, Mo.App., 567 S.W.2d 672 (1978); In re Miller, Mont.Supr., 609 P.2d 1185 (1980); Copeland v. Copeland, N.M.Supr., 91 N.M. 409, 575 P.2d 99 (1978).

A more recent trend in the law, however, rejects any distinction between pension benefits on the basis of vesting. Thus in In re Marriage of Brown, Cal.Supr., 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561 (1976), the California Supreme Court abandoned its prior decision in French v. French, Cal.Supr., 17 Cal.2d 775, 112 P.2d 235 (1941), and held that French was erroneous in ruling that non-vested pension benefits are mere expectancies not subject to division upon divorce. In Brown, the Court determined that non-vested pension benefits are a form of property, reasoning that "(s)ince pension benefits represent a form of deferred compensation for services rendered, the employee's right to such benefits is a contractual right, derived from the terms of the employment contract" and, consequently, "an employee acquires a property right to pension benefits when he enters upon the performance of his employment contract." 126 Cal.Rptr. at 638, 544 P.2d at 565. In Husband B. v. Wife B., supra, the Superior Court agreed with that view. And several other courts in other jurisdictions have also adopted the Brown rationale in arriving at the same conclusion regarding non-vested pension benefits. Van Loan v. Van Loan, Ariz.Supr., 116 Ariz. 272, 569 P.2d 214 (1977); Linson v. Linson, Haw.App., 618 P.2d 748 (1980); Shill v. Shill, Idaho Supr., 100 Idaho 433, 599 P.2d 1004 (1979); In re Hunt, Ill.App., 78 Ill.App.3d 653, 34 Ill.Dec. 55, 397 N.E.2d 511 (1979); Cearley v. Cearley, Tex.Supr., 544 S.W.2d 661 (1976); Leighton v. Leighton, Wis.Supr., 81 Wis.2d 620, 261 N.W.2d 457 (1978); see also Wilder v. Wilder, Wash.Supr., 85 Wash.2d 693, 534 P.2d 1355 (1975); compare Weir v. Weir, N.J.Super., 173 N.J.Super. 130, 413 A.2d 638 (1980), with Mueller v. Mueller, N.J.Super., 166 N.J.Super. 557, 400 A.2d 136 (1980).

California is a community property State but, in this context at least, we find the rationale adopted in Brown helpful in determining whether a pension is "marital property" under our Statute. The reasoning and rationale...