Van Loan v. Van Loan, CA-CIV

• Decision Date: 20 January 1977
• Docket Number: CA-CIV
• Parties: Jack Linwood VAN LOAN, Appellant, v. Verna Evelyn VAN LOAN, Appellee. 22174.
• Court: Arizona Court of Appeals

Page 1076

568 P.2d 1076

116 Ariz. 178

Jack Linwood VAN LOAN, Appellant, v. Verna Evelyn VAN LOAN, Appellee.

2 CA-CIV 2174.

Court of Appeals of Arizona, Division 2.

Jan. 20, 1977.

Rehearing Denied March 29, 1977.

Review Granted April 19, 1977.

Stompoly & Even, P. C. by John G. Stompoly, Tucson, for appellant.

Whitehill, Berger, Karp & West, P. C. by David D. West, Tucson, for appellee.

OPINION

HOWARD, Chief Judge.

Does the community estate have a property interest, subject to division upon divorce, in the pension due one of the spouses prior to the time that spouse is eligible to receive the pension? That is the main issue to be decided here.

The record shows that the parties were married on March 9, 1957. At that time appellant was a member of the United States Air Force. When the marriage was dissolved on February 27, 1974, appellant had been in the service for nineteen years and five months. Before a member of the armed forces can receive retirement benefits he must serve a minimum of twenty years.

A property settlement was entered into by the parties and incorporated by reference into the divorce decree. Neither the property settlement agreement nor the judgment mentioned military retirement benefits.

On July 1, 1975, appellee petitioned the trial court for modification of the divorce decree to award her a share of appellant's military retirement benefits. She also petitioned for an order to hold appellant in contempt for failure to pay certain amounts of spousal maintenance which she alleged he owed under the decree.

The trial court modified the decree by awarding appellee an interest in the retirement pay in an amount equal to one half of the fraction 17 over the number of years served by appellant in the armed forces if and when, received by him. ¹ The court also ordered spousal maintenance payments terminated effective September 1975.

Paragraph 18 of the property settlement agreement provides that any property acquired after the divorce shall be the separate property of the parties so acquiring it. Appellant contends that since the parties had no vested right in the military retirement benefits prior the lapse of twenty years, by virtue of paragraph 18 appellee has no interest in the benefits. We do not agree.

There are two views on this subject. Lumpkins v. Lumpkins, 519 S.W.2d 491 (Tex.Civ.App.1975) represents the view that pension rights are not divisible by the court upon divorce unless they are "vested", the term "vested" meaning that it survives discharge or voluntary termination of employment. Thus in Texas such a pension is a mere expectancy and not subject to division upon dissolution of the marriage. The states of California and Washington have held to the contrary. In re Marriage of Brown, 15 Cal.3d 838, 126 Cal.Rptr. 633, 544 P.2d 561 (1976); DeRevere v. DeRevere, 5 Wash.App. 741, 491 P.2d 249 (1971).

The key in determining if the pension is subject to division is whether there exists at the time of dissolution a property interest or right which has been purchased with community funds or labor. There can be no doubt that in Arizona a pension is a mode of employee compensation for services performed. Everson v. Everson, 24 Ariz.App. 239, 537 P.2d 624 (1975). An employee's right to receive retirement benefits is a contractual right derived from the terms of his employment contract and cannot be unilaterally modified. Yeazell v. Copins, 98 Ariz. 109, 402 P.2d 541 (1965). We reject the characterization of this pension as an "expectancy". As stated in In re Marriage of Brown, supra:

"The term expectancy describes the interest of a person who merely foresees that he might receive a future beneficence, such as the interest of an heir apparent (citations omitted), or of a beneficiary designated by a living insured who has a right to change the beneficiary (citations omitted). As these examples demonstrate, the defining characteristic of an expectancy is that its holder has no enforceable right to his beneficence." (Emphasis in original) ...