Shill v. Shill

• Decision Date: 30 November 1988
• Docket Number: No. 16780,16780
• Parties: Jeanette T. SHILL, Plaintiff-Respondent, Cross-Appellant, v. Douglas K. SHILL, Defendant-Appellant, Cross-Respondent, and The Public Employees Retirement System of Idaho, acting By and Through the Retirement Board of the Public Employees Retirement System, Defendant.
• Court: Idaho Supreme Court

Page 140

765 P.2d 140

115 Idaho 115

Jeanette T. SHILL, Plaintiff-Respondent, Cross-Appellant, v. Douglas K. SHILL, Defendant-Appellant, Cross-Respondent and The Public Employees Retirement System of Idaho, acting By and Through the Retirement Board of the Public Employees Retirement System, Defendant.

No. 16780.

Supreme Court of Idaho.

Nov. 30, 1988.

Parsons, Smith, Stone & Fletcher, Burley, for defendant-appellant, cross-respondent. William Parsons argued.

Jeff Stoker, Twin Falls, for plaintiff-respondent, cross-appellant.

SHEPARD, Chief Justice.

This is a continuation of the proceedings in Shill v. Shill, 100 Idaho 433, 599 P.2d 1004 (1979), which involved a divorce and the determination of the community property interest in pension benefits. The remittitur of this Court issued October 2, 1979, and it was not until October 10, 1985, that respondent Jeanette Shill filed an amended complaint seeking a redetermination of the community property interest in the pension benefits. Thereafter the district court granted summary judgment on November 7, 1986, adjudicating the community property interest in the retirement pension benefits. We reverse and remand.

The parties hereto were married September 1957, and in early 1958 Douglas Shill was employed by the fire department of Burley, Idaho, and began contributions from his wages to the Idaho Firemen's Retirement Fund. The parties were divorced by decree entered October 1977, at which time Douglas Shill had completed 19 1/2 years of employment with the Burley Fire Department. Under the provisions of the statutes, Shill was entitled to pension rights from the Idaho Firemen's Retirement Fund, Title 72, Ch. 14, I.C., but only if he had completed 20 years of such employment. If he terminated prior to completing 20 years he would have received only the contributions he had made.

Although the divorce decree was entered in October 1977, that portion of the judgment dealing with the division of the community property was not entered until March 1, 1978. In that decision the court held that since Shill possessed only the right to receive the cash surrender value of the contributions ($8,089.24), all of which had been contributed during the marriage, such was characterized as community property and ordered divided equally between the parties. Hence, Jeanette Shill was awarded one-half of the cash surrender value of Shill's rights in the Firemen's Retirement Fund.

Upon appeal to this Court the decision of the district court was reversed, Shill v. Shill, supra, and for the first time contingent non-vested pension benefits were recognized as divisible community property in Idaho. This Court there indicated that a lump sum award as of the date of divorce was the preferred method of distribution, but the Court realized that such a cash-out method might not always be feasible. It was held that where the community owns few assets, or when present value calculations were inaccurate or difficult, an apportionment to the non-retiring spouse might be made effective if as and when the actual pension benefits were received by the retiring spouse. Therefore, the decision of the trial court was reversed, and the cause was remanded,

... [i]n order to effect an equitable disposition of the retirement benefits possessed by this marital community, it will be necessary to remand this matter to the trial court to allow the parties an opportunity to present such evidence as it deems proper on the issue of the disposition of the parties' community property interest in the Firemen's Retirement Fund. See Ramsey v. Ramsey, 96 Idaho 672, 535 P.2d 53 (1975).

Inexplicably it was not until six years later, on October 10, 1985, that respondent Jeanette Shill filed an amended complaint seeking a recalculation and distribution of the retirement benefits. Following the entry of the decree of divorce in October 1977, Douglas Shill had chosen to continue his work with the Burley Fire Department, and continued to make contributions to the Firemen's Retirement Fund. After 24 years of service, Douglas Shill retired on April 14, 1982. By delaying his retirement and continuing to work past the 20-year retirement, the pension benefits increased from 40 to 60 percent of the average fireman's salary.

Upon motion therefore, the trial court on November 7, 1986, granted summary judgment in favor of Jeanette Shill.

The principal issue on this appeal is whether the community interest in Mr. Shill's retirement benefits should be determined, valued, and divided as of the date of the divorce, or at the time the benefits are actually received. We hold that the trial court incorrectly determined the community interest and the value thereof as of the time pension benefits were actually received.

At the outset, we note that had the trial court in the original divorce proceedings determined the then present value of the community property in the pension fund, the non-employee spouse could have been awarded assets of equal value. That present value of the community in the pension fund was before the trial court, but was then rejected by the trial court by reason of its erroneous view of the law. That decision of the trial court was reversed.

Further, if upon remand the matter had been diligently pursued, the then trial court may have been able to make such an equitable division without being required to enter the morass of an attempted division of the pension rights. However, by the time the matter did reach the trial court for the second time, its options were limited because of the disposition of community assets awarded under the original decree. Thus, the preferred cash-out method of pension division has been thwarted in the instant action. Such an immediate settlement would have disentangled the parties, and would have fully and finally divided the marital property without any contingency.

It is asserted that by waiting six years following the remand, respondent procrastinated in the assertion of her rights, and the cause should have been dismissed for want of prosecution. A trial court has inherent power to dismiss for want of prosecution if the plaintiff fails to prosecute with reasonable diligence. McAllister v. Erickson, 45 Idaho 211, 261 P. 242 (1927). Such question is addressed to the sound discretion of the trial court, and its ruling will not be disturbed on review in the absence of an abuse of that discretion. Ellis v. Twin Falls Canal Co., 109 Idaho 910, 712 P.2d 611 (1985). We hold that the trial court did not abuse its discretion in failing to dismiss for want of prosecution, nor do we find that the action is barred by any statute of limitation or the doctrine of laches.

The question presented in the instant case is whether the value of the pension benefits should be calculated as of the date of the divorce, or as of the date of actual receipt of the pension benefits. In the instant case the importance of that issue is reflected by the base value of the monthly pension benefits at the various times. Within six months of the time of divorce the pension benefits would have been calculated on a basis of forty percent of the average wage of an Idaho fireman. I.C. § 72-1430(1)(a), (e) (authorizes firemen who voluntarily retire and who are entitled to benefits after twenty years of service, forty percent of the average paid fireman's salary or wage, and after twenty-four years, sixty percent of the same.) As of 1982 when Mr. Shill retired, the pension benefits had risen to sixty percent of the average fireman's wage. The award of the trial court included the increase in the pension benefits which had accrued following the date of divorce.

The question thus presented is one of first impression in Idaho. In a divorce action in Idaho the trial court has broad discretion to equitably divide the community property. However, that discretion is strictly circumscribed by our statutes which delineate separate and community property interests. All property owned by a spouse before marriage is separate property. I.C. § 32-903. Property acquired during marriage is presumed to be community property. Stanger v. Stanger, 98 Idaho 725, 571 P.2d 1126 (1977); Speer v. Quinlan, 96 Idaho 119, 525 P.2d 314 (1974); Stahl v. Stahl, 91 Idaho 794, 430 P.2d 685 (1967). Our statute, I.C. § 32-906, defines community property as all the property acquired after marriage by either husband or wife.

I.C. §§ 32-601 and 32-602 provide that marriage is dissolved by death of one of the parties, or by the judgment of a court of competent jurisdiction, and the effect of such a divorce decree is to restore the parties to the state of unmarried persons.

In the instant case the trial court awarded the respondent one-half of the pension benefits, valued at the time of actual retirement in 1982. That award included increases in pension benefits accruing after the date of divorce, and hence not acquired during marriage, but during the time the appellant was an unmarried person. As such, those increases constituted the separate property of the appellant, and to the extent that an interest in those post-divorce increases was awarded to respondent, it constituted an impermissible invasion of appellant's separate property.

Although as stated, the question is of first impression in Idaho, it has been ruled upon by courts of other jurisdictions.

The Supreme Court of Arizona, in the case of Koelsch v. Koelsch, 148 Ariz. 176, 713 P.2d 1234 (1986), had before it a factual pattern which in part was substantially similar to the case at bar in that it presented the question of a non-employee spouse having the right to share in increased retirement benefits accrued following divorce. The Court of Appeals in Arizona had so ruled for the non-employee spouse, and the Supreme Court of Arizona reversed. The court stated:

We base our analysis on clearly established community property principles. First, pension plans are a form of deferred compensation...