Wallace v. Fuller

• Decision Date: 10 June 1992
• Docket Number: No. 3-91-079-CV,3-91-079-CV
• Citation: 832 S.W.2d 714
• Parties: Wilbur WALLACE, Appellant, v. Mary Lee FULLER, Appellee.
• Court: Texas Court of Appeals

Page 714

832 S.W.2d 714

Wilbur WALLACE, Appellant, v. Mary Lee FULLER, Appellee.

No. 3-91-079-CV.

Court of Appeals of Texas Austin.

June 10, 1992.

Penny A. Wilkov, Wilkov & Wilkov, Austin, for appellant.

Fred McLeroy, McLeroy & Alberts, P.C., Austin, for appellee.

Before CARROLL, C.J., and ABOUSSIE and SMITH, JJ.

SMITH, Justice.

Wilbur Wallace appeals from a judgment partitioning forty-one percent of his military disability benefits to his ex-wife, Mary Lee Fuller. Wallace maintains that the Uniformed Services Former Spouses' Protection Act ¹ removes the state court's jurisdiction to divide military disability benefits at divorce. We reluctantly agree and will reverse and render judgment in favor of Wallace.

THE CONTROVERSY

The question presented in this appeal is whether military disability benefits accrued during marriage are marital property divisible by the court in a divorce proceeding in Texas. To answer that question we review the Former Spouses' Protection Act and the United States Supreme Court's interpretation of that Act in Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1990).

BACKGROUND

Wilbur Wallace enlisted in the United States Marine Corps Reserve in 1948. The next year, he transferred into the United States Air Force. Wallace served on active duty for twenty-four years before voluntarily retiring in 1973. During a medical examination associated with his retirement, Wallace was diagnosed as suffering permanent back and spinal injuries. An Air Force Physical Evaluation Board recommended that he be retired with sixty-percent disability. See 10 U.S.C.A § 1201 (West 1988 & Pamph.1992). On April 30, 1973, Wallace permanently retired from the Air Force with a sixty-percent disability.

Wallace was married for fifteen years of his military career; he and Mary Lee Fuller married September 13, 1951, and divorced October 4, 1966. Their divorce decree did not mention Wallace's military benefits. ²

Absent specific language of preemption in a federal statute, Texas courts treat military retirement and disability benefits as community property subject to division upon dissolution of marriage. See Busby v. Busby, 457 S.W.2d 551 (Tex.1970) (disability benefits); Kirkham v. Kirkham, 335 S.W.2d 393 (Tex.Civ.App.1960, no writ) (retirement benefits). But see Ex parte Burson, 615 S.W.2d 192 (Tex.1981); Ex parte Johnson, 591 S.W.2d 453 (Tex.1979) (Veterans' Administration disability benefits are non-divisible separate property). When the divorce occurs before the service member's retirement, Texas courts have awarded to the non-member spouse a percentage of the service member's future benefits "if, as and when" they are received. Cearley v. Cearley, 544 S.W.2d 661, 665-66 (Tex.1976). The divorce court can distribute only that portion of the retirement benefits which accrued during marriage. Several Texas cases suggest formulas to calculate the community property portion, see Berry v. Berry, 647 S.W.2d 945 (Tex.1983), and Taggart v. Taggart, 552 S.W.2d 422 (Tex.1977). Frequently the court will award one-half of the community portion of these benefits to each spouse, but it has the discretion to award any portion of this community asset to either party. Tex.Fam.Code Ann. § 3.63(a) (Supp.1992). Community property not divided at divorce continues to be jointly owned by the former spouses, subject to a suit for partition. Harrell v. Harrell, 692 S.W.2d 876 (Tex.1985); Busby, 457 S.W.2d at 554. In a post-divorce partition of jointly-held assets, the court has discretion to divide the assets in any manner that is just and reasonable. Tex.Fam.Code Ann. § 3.91(a) (Supp.1992).

On December 17, 1984, eighteen years after the divorce and eleven-and-one-half years after Wallace retired, Fuller filed for partition of her ex-husband's military benefits. She served Wallace by publication, and on October 9, 1986, took a default judgment of partition. Wallace received a copy of the judgment on May 12, 1989. The trial court granted his bill of review and held a new partition hearing; Mary Lee Fuller again prevailed.

The trial court found that Fuller was a co-tenant of that portion of Wallace's "military retirement benefit and Air Force disability benefit" that accrued during their marriage. The court calculated that eighty-two percent of Wallace's military benefits accrued during the marriage, a calculation not challenged on appeal. The court then ordered Wallace to pay Fuller one half of this community portion of his benefits, calculated as follows: (1) forty-one percent of all benefits received from the date of retirement through the date of In four points of error, Wallace alleges that the trial court erred: (1) by partitioning military disability benefits which are not included in the Former Spouses' Protection Act's definition of "disposable retired or retainer pay"; (2) by awarding prejudgment interest on the partition judgment; (3) by applying the prejudgment interest from the time of Wallace's retirement rather than from the filing of the partition action; and (4) by applying the state's community property law to military disability benefits received before June 25, 1981, the retroactive effective date of the Former Spouses' Protection Act.

trial, plus prejudgment interest (a total of $123,720); and (2) forty-one percent of all future benefits as they are received monthly.

ANALYSIS

Wallace contends in his first point of error that the Former Spouses' Protection Act precludes a state court's authority to divide his military disability benefits. The following provision states the essence of the Act:

Subject to the limitations of this section, a court may treat disposable retired pay payable to a member for pay periods beginning after June 25, 1981, either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court.

Former Spouses' Protection Act, § 1408(c)(1). Wallace argues that the Act expressly subjects disposable retired pay to state marital property laws but excludes military disability benefits from such treatment:

(4) The term "disposable retired pay" means the total monthly retired pay to which a member is entitled less amounts which--

....

(C) in the case of a member entitled to retired pay under Chapter 61 of this title, are equal to the amount of retired pay of the member under that chapter computed using the percentage of the member's disability on the date when the member was retired....

Former Spouses' Protection Act, § 1408(a)(4)(C). One-hundred percent of Wallace's benefits are disability benefits received pursuant to 10 U.S.C.A. § 1201 ("Chapter 61" benefits). We agree that the Act's definition of disposable retired pay does not include the military disability benefits at issue in this case. The question then presented is whether Texas courts may treat as community property only disposable retired pay, as that term is defined in the Act.

Prior to the United States Supreme Court's ruling in McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981), Texas courts considered military retirement benefits and Chapter 61 military disability benefits as community property subject to division upon divorce. Busby, 457 S.W.2d at 551-52, 554; Kirkham, 335 S.W.2d at 394. In McCarty, the Court prohibited the division of military retirement benefits upon divorce. The Court invited legislative correction if the Court had misinterpreted Congressional intent to preempt state marital property laws in this area. McCarty, 453 U.S. at 235-36, 101 S.Ct. at 2742-43.

Congress responded swiftly, enacting the Uniformed Services Former Spouses' Protection Act. See Department of Defense Authorization Act, 1983. Pub.L. No. 97-252, § 1001, 96 Stat. 730-735 (1982). The Former Spouses' Protection Act restored to the states their authority to apply marital property laws to military retirement benefits:

Subject to the limitations of this section, a court may treat disposable retired pay payable to a member for pay periods beginning after June 25, 1981, either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court.

See id. at Sec. 1002, § 1408(c)(1). Texas courts viewed the Act as restoring community property principles to military retirement benefits. "Congress intended that the Act nullify the effect of McCarty, that Fuller urges us to follow this interpretation of the Act. She suggests McCarty and the Act control only the divisibility of military retirement benefits. Fuller maintains that because military disability benefits were divisible in Texas before McCarty, state law in this area is unaffected by either McCarty or the Former Spouses' Protection Act. Texas courts have split on whether the Act affects divisibility of military disability benefits under our marital property laws. Compare Conroy v. Conroy, 706 S.W.2d 745, 748 (Tex.App.1986, no writ) ("We conclude that the military disability retirement pay is divisible community property.") with Patrick v. Patrick, 693 S.W.2d 52, 54 (Tex.App.1985, writ ref'd n.r.e.) ("10 U.S.C.S. § 1408 [Former Spouses' Protection Act] ... expressly exempted from division disability retirement benefits under 10 U.S.C.S. § 1201 [Chapter 61 military disability retirement benefits]"). Both of these cases were decided before Mansell.

is, state courts were to apply state substantive law as if McCarty had never existed." Trahan v. Trahan, 682 S.W.2d 332, 335 (Tex.App.1984, writ ref'd n.r.e.), cert. denied 475 U.S. 1002, 106 S.Ct. 1171, 89 L.Ed.2d 291 (1986); see also Koepke v. Koepke, 732 S.W.2d 299 (Tex.1987); Allison v. Allison, 700 S.W.2d 914 (Tex.1985).

Wallace argues that the Former Spouses' Protection Act only partially restores to the states their pre-McCarty jurisdiction over military benefits. Although the Act grants to states the power to divide retirement benefits, Wallace argues...