Smith v. Smith

• Decision Date: 17 March 2000
• Citation: 749 A.2d 921
• Parties: William A. SMITH, Appellant, v. Mary Ann SMITH, Appellee.
• Court: Pennsylvania Superior Court

749 A.2d 921

William A. SMITH, Appellant, v. Mary Ann SMITH, Appellee.

Superior Court of Pennsylvania.

Submitted January 24, 2000.

Filed March 17, 2000.

H. Denning Mason, Bellefonte, for appellant.

Robert B. Manchester, Bellefonte, for appellee.

Before CAVANAUGH, ORIE MELVIN and BROSKY, JJ.

BROSKY, J.

¶ 1 This is an appeal from the opinion and order of June 8, 1999, equitably dividing the marital estate of William A. Smith (Husband) and Mary Ann Smith (Wife). Husband appeals the trial court's determination that certain pension benefits accruing to the benefit of husband during the parties' first marriage, which ended in divorce prior to the effective date of the Divorce Code, were marital property for purposes of equitable distribution in the parties' second marriage, and secondly that the court erred in imposing a constructive trust as to those benefits. We reverse.

¶ 2 The salient facts and procedural history are as follows:

¶ 3 Husband and wife were first married on December 1, 1972. During the first marriage, husband was employed by the Pennsylvania State Police where he accrued pension benefits under the State Employes' Retirement System. On October 2, 1979, husband, by counsel, filed a complaint for divorce under the prior divorce law.¹ On October 26, 1979, the wife, by counsel, filed an answer and counterclaim for divorce, claiming indignities to her person.

¶ 4 During the marriage, and throughout the first divorce proceeding, wife was aware that husband was entitled to receive a pension as a result of his employment with the Pennsylvania State Police. During the pendency of the proceedings wife met with her counsel on several occasions. Neither wife nor her counsel, made any inquiry or raised any claims with regard to any interest wife may have in husband's pension benefits. The parties did not enter into a property settlement agreement. A Master was appointed on January 31, 1980. On February 13, 1980, wife's counsel accepted service of a Notice of Master's Hearing scheduled for February 27, 1980. Neither wife nor her counsel appeared for the Master's Hearing. The Master filed a report on March 31, 1980, and a final decree in divorce was entered by the Court of Common Pleas of Centre County on April 2, 1980. Neither party filed an appeal, or moved to vacate or open the final decree. No petition was filed at any time by either party to proceed to equitable distribution under the Divorce Code of 1980.²

¶ 5 Despite entry of the divorce decree, the parties continued to reside in the same house. On January 22, 1983, the parties remarried. Husband retired from the State Police on June 29, 1983. At that time, husband was made aware that the value of his pension benefits with the State Employes' Retirement System was approximately $283,000. Wife was also made aware of the value of husband's pension at this time.

¶ 6 Husband filed the instant divorce action on September 1, 1993 under the Divorce Code of 1990.³ The case was bifurcated on September 26, 1994, with the Court of Common Pleas of Centre County entering a final decree in divorce, reserving however, jurisdiction to resolve the parties' respective economic claims.

¶ 7 On May 11, 1995, wife filed a Petition to Declare a Constructive Trust, and a hearing was held on July 12, 1995. Thereafter, the trial court entered an Opinion and Order on August 10, 1995, holding that "all property acquired from the date of the parties' first marriage on December 1, 1972, through the date of their remarriage in January, 1983 be considered as marital property held in `Constructive Trust' and be equitably divided."⁴ The trial court cited as authority for its decision to impose a constructive trust, this Court's ruling in Major v. Major, 359 Pa.Super. 344, 518 A.2d 1267 (1986).

¶ 8 On August 18, 1995, husband filed a Motion for Post-Trial Relief,⁵ which was denied by the trial court on July 26, 1996. The trial court held as follows:

Because of Plaintiff's (Husband) failure to disclose information regarding his Pennsylvania State Police pension, the proper remedy is for this Court to use its equitable powers and impose a constructive trust. 23 Pa.C.S.A. § 3505, Major v. Major, supra. The realities of the two marriages leads this Court to conclude that the Defendant (Wife) is entitled to equitable distribution of this substantial marital asset—the Pennsylvania State Police Pension. To hold otherwise would punish Defendant and ignore her contributions to this marriage.

Trial Court Opinion and Order, 7/26/96 at 6. ¶ 9 An Equitable Distribution hearing was held on June 9, 1998, at which point the parties entered into an agreement disposing of all other property issues except the husband's pension and retirement benefits. The parties then submitted proposed Findings of Fact, Conclusions of Law and Orders for the trial court's consideration. On June 8, 1999, the trial court entered an Opinion and Order: 1) adopting and incorporating the reasoning and directives of the Opinions and Orders of August 10, 1995 and July 26, 1996; 2) holding that husband's pension and retirement benefits with the State Employes' Retirement System shall be equitably divided based upon husband's contributions during the parties' first marriage from December 1, 1972, through the date of separation from the second marriage, April 12, 1994; and 3) awarding wife fifty percent (50%) of husband's State Employe's Retirement System pension.⁶ Husband filed this timely appeal.

¶ 10 Our scope of review in equitable distribution matters is limited. Awards of alimony, counsel fees, and property distribution are within the sound discretion of the trial court and will not be disturbed absent an error of law or abuse of discretion. Berrington v. Berrington, 409 Pa.Super. 355, 598 A.2d 31, 34 (1991) citing Ruth v. Ruth, 316 Pa.Super. 282, 462 A.2d 1351 (1983).

¶ 11 Marital Property is defined by § 3501 of the Divorce Code as follows:

§ 3501 Definitions

(a) General Rule.—As used in this chapter, "marital property" means all property acquired by either party during the marriage, including the increase in value, prior to the date of final separation, of any nonmarital property acquired pursuant to paragraphs (1) and (3), except:

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

...

(4) Property acquired after final separation until the date of the divorce, except for property acquired in exchange for marital assets.

23 Pa.C.S.A. § 3501(a) (emphasis added).

¶ 12 Section 3502(a) provides the general rule that "[i]n an action for divorce or annulment, the court shall, upon request of either party, equitably divide, distribute or assign, in kind or otherwise, the marital property between the parties..." 23 Pa.C.S.A. § 3502(a) (emphasis added).

¶ 13 Assets that are acquired before the marriage are not marital property, and therefore are not subject to equitable distribution under the Divorce Code. Id. See also Bower v. Bower, 531 Pa. 54, 611 A.2d 181 (1992) (property acquired 11 days prior to marriage not marital property and not subject to equitable distribution upon divorce); Estep v. Estep, 326 Pa.Super. 404, 474 A.2d 302 (1984), rev'd on jurisdictional grounds, 508 Pa. 623, 500 A.2d 418 (1985) (property acquired prior to marriage is not marital property and not subject to equitable distribution; trial court erred in equitably dividing property acquired by husband during cohabitation with wife prior to marriage); Barrett v. Barrett, 418 Pa.Super. 334, 614 A.2d 299 (1992) (entireties property converts to tenancy in common by operation of law upon entry of divorce decree, entireties property cannot be recreated by subsequent remarriage, trial court erred in equitably dividing spouse's tenancy in common interest upon second divorce action).

¶ 14 The issue in the instant case is whether the pension benefits accruing to the benefit of husband prior to date of the second marriage are marital property subject to equitable distribution. We hold that they are not. Wife's property rights in the pension, which may have accrued during the first marriage, if any, were terminated when the first marriage ended in divorce with entry of the final decree in divorce on April 2, 1980. Although the Divorce Law did not provide the procedure for equitable distribution found in the Divorce Code, it is instructive to consider the general effect of the divorce decree as to property rights set forth in 23 Pa.C.S.A. § 3503, (formerly 23 P.S. § 401(j)) which provides:

§ 3503. Effect of divorce on property rights generally

Whenever a decree or judgement is granted which nullifies or absolutely terminates the bonds of matrimony, any and all property rights which are dependent upon such marital relation, save those which are vested rights, are terminated unless the court otherwise expressly provides in its decree. All duties, rights, and claims accruing to either of the parties at any time theretofore in pursuance of the marriage shall cease, and the parties shall severally be at liberty to marry again as if they had never been married. (emphasis added)

¶ 15 In Bastion v. Bastion, 324 Pa.Super. 569, 472 A.2d 226, 228 (1984) this Court considered whether the lower court erred in denying wife's application to proceed to equitable distribution under the Divorce Code, when a decree had been entered three months after the effective date of the code. This Court held in applying 23 P.S. § 401(j), that "[w]hen the divorce decree was granted with no specific reservation of property rights, under this section appellant lost any right to equitable distribution under the Code".⁷

¶ 16 Section 3503 is in accord with the law existing prior to the enactment of the Divorce Code. In Barrett v. Barrett, 418 Pa.Super. 334, 614 A.2d 299 (1992) husband and wife were married in 1973 and owned real estate as tenants by the entireties. The parties separated in June 1977 and were...