No. 84-197 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1984 

JANET SOWELL, 

Plaintiff and Appellant, 

TEACHERS' RETIREMENT SYSTEM OF THE 

STATE OF FIONTANA, and CAROLYN WHEELON, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Eighteenth ~udicial District, 

In and for the County of Gallatin, 

The Honorable Thomas Olson, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Monte D. Beck argued, Bozeman, Montana 

For Respondents: 

J. Michael Young argued for Teachers' Retirement, 

Dept. of Administration, Helena, Montana 

Kirwan & Barrett; Stephen Barrett argued for Wheelon, 

Bozeman, Montana 

Submitted: November 1, 1984 

Decided: December 27, 1984 

Filed: [If. !: ' ' 1984 

Clerk 
Mr. Justice Frank B. Morrison, Jr. delivered the Opinion of 

the Court. 

This is an appeal from a judgment entered pursuant to 

findings of fact and conclusions of law filed by the Eighteenth Judicial District Court in and for Gallatin County. 

Plaintiff, the surviving widow of Larry Sowell, brought this 

action to declare her rights with respect to the retirement 

and death benefit account of Larry Sowell, deceased. The 

trial court entered judgment for Carolyn Wheelon and Janet 

Sowell appeals. 

Larry Sowell (Larry), a music professor at Montana State 

University, died of cancer on October 7, 1982. Larry was 

first married to Carolyn Wheelon (Carolyn), on December 18, 

1955. They had three children, all of whom are now a-dults. 

La.rry became a member of Teacher's Retirement System (TRS) in 

1966 while still married to Carolyn. Larry designated 

Carolyn as beneficiary on a form provided by the TRS. That 

designation remains unchanged to this date. 

Larry and Carolyn were divorced in September of 1973. 

After the 1973 divorce, Larry married Janet Sowell (Janet) , 

and they were married at the time of Larry's death, eight 

years later. Several days prior to Larry's death, and while 

in the hospital, he wrote and executed a valid holographic 

will leaving all of his estate to Janet. 

At the time of Larry' s divorce from Carolyn, a property 

settlement agreement was executed providing for the disposition of the marital property. Carolyn's lawyer prepared the 

agreement. Larry received an automobile and all his tools, 

personal clothing and effects. Carolyn received as part of 

the property settlement agreement most of the rest of the 

marital assets. The principal asset was $39,000 equity in 

the home, which was given to Carolyn. Larry was required to 
continue a Business Men's insurance policy with his children 

remaining as beneficiaries until they married or reached 

majority. Both Larry and Carolyn individually had retirement 

accounts through their respective employers. Carolyn was 

employed by the Bozeman Public Schools. After the divorce, 

Carolyn withdrew her accumulated contributions from her 

account. 

The property settlement agreement provided that the 

division of property was: 

11 . . in full settlement, satisfaction and 

relinquishment of all rights of dower, support, 

maintenance, succession, homestead, inheritance or 

heirship, which he or she may at this time or 

hereafter might be otherwise entitled to, in and to 

all property, both real and personal, which the 

other party now has or may hereafter acquire . . ." 

Testimony from Janet indicated that she and Larry had 

discussed the TRS. She stated that Larry advised her she 

would receive the death benefits should he predecease her. 

Both periodically reviewed forms listing beneficiary information and accumulation amount sent semi-annually by the TRS. 

In each case, the word beneficiary was followed by "spouse. " 

Janet testified that Larry specifically told her that since 

she was his spouse, she was also his beneficiary. 

Larry's original membership form, dated September 12, 

1966, designated Carolyn Sowell as beneficiary. During the 

sixteen years Larry was a member, he was apparently never 

provided a copy of the original form showing the named beneficiary. Rather, the TRS sent biannual statements of a 

member's a.ccount which did not show the specifically named 

beneficiary, but rather listed categories such as spouse, 

son, daughter, etc. 

Carolyn was notified of her right to benefits as Larry's 

designated beneficiary following Larry's death. Larry's TRS 

account then amounted to $20,171, of which more than $15,000 
accrued during his marriage to Janet. Janet, who is the 

widowed "spouse" of Larry, also applied for the benefits. 

Her application was denied by the TRS. 

The trial court found that Larry may have intended for 

Janet to receive his teacher's retirement account, but that 

such intent must be coupled with an affirmative act to change 

the beneficiary before Janet could prevail. Absent the 

coupling of intent and affirmative act, the trial court held 

that the designated beneficiary controlled disposition of the 

proceeds of the account. Judgment was entered in favor of 

Carolyn Wheelon. 

We are presented with the following issues on appeal: 

1. Did the property settlement agreement divest 

Carolyn Wheelon of her interest in the TRS a.ccount? 

2. Does the clear and convincing evidence show that it 

was Larry Sowell's intent to leave the proceeds of the account to Janet Sowell and, if so, is such clear evidence of 

intent sufficient without the presence of an affirmative act 

to accomplish that result? 

3. What effect, if any, does a wife's marital interest 

in her husband's pension fund have upon the ownership of the 

proceeds of the account following her husband's death? 

Appellant contends that the property settlement agreement relinquished Carolyn's interest in the TRS account. The 

property settlement agreement does not specifically refer to 

Carolyn's designation as beneficiary, but rather, relinquishes Carolyn's rights of "dower, support, maintenance, succession, homestead, inheritance or heirship" and her right to 

"all property, both real and personal which the other party 

now has or may hereafter acquire." This language does not 

specifically cover Carolyn's inchoate right to acquire property upon the happening of a future event. 
A similar question was addressed by this Court in Soha 

v. West (1981), 196 Mont. 95, 637 P.2d 1185. In that case, 

the husband purchased an insurance policy naming his wife as 

first beneficiary and his parents as alternate beneficiaries. 

A very short time later the parties were divorced. The 

husband then died. The former wife remained the first-named 

beneficiary. An action was instituted tc declare the rights 

of the respective parties to the insurance proceeds. The 

trial court entered summary judgment in favor of the former 

wife who was named as first beneficiary. In the Soha case, 

the decedent's parents argued that the property settlement 

agreement entered into by the parties was a relinquishment by 

the former wife of any interest in the insurance proceeds. 

The applicable language from the property settlement agreement was similar to the language before us in this case. The 

Soha agreement provided: 

"In consideration of the execution of this a.greement, and the terms and conditions thereof, each 

party hereto releases and forever discharges the 

other party, his or her personal representative, 

and assigns from any and all right, claims, demands 

and obligations except as herein specifically 

provided and each party is forever barred from 

having or asserting any such right, claim, demand 

or obligation at any time hereafter for any purpose . . ..I1 Soha, 637 P.2d at 1187. 

This Court noted that there is a division of authority 

on whether a property settlement zgreement affects 

beneficiary rights under a life insurance policy. The Court 

noted the division without adopting either position. Rather, 

we remanded the case for a factual hearing on the intent of 

the parties at the time the property settlement agreement was 

executed. We distinguish the case at bar from Soha in that 

the proceeds in the TRS account are to be paid according to 

the provisions of yj 19-4-1001, MCA. That section provides, 

in part: 
"Allowances for death of member. (1) If a member 

d.ies before retirement, his accumulated contributions shall be paid to his estate or such person as 

he may have nominated by a written designation 

filed with the retirement board prior to his death 

in the manner prescribed by the board." 

Pursuant to the provisions of the controlling statute, 

the proceeds of the Teacher's Retirement System account can 

only be paid to one nominated by a written designation or, in 

the absence of such nomination, to the decedent's estate. 

Here, there was a written designation nominating Ca.rolyn 

Wheelon. The operation of the TRS is governed by statute, 

including the payment of death benefits. We feel that the 

stability of the system depends upon adherence to the statutory scheme. Therefore, we hold that the person nominated in 

the written designation is entitled to the proceeds except as 

discussed in the next issue. 

Appellant contends that the evidence clearly showed 

decedent's intent was to have his surviving widow, Janet 

Sowell, take the proceeds and all other property owned by 

him. Appellant argues the holographic will clearly and 

unequivocally shows such intent. Respondent argues that if 

any exception be made to the provisions of .§ 19-4-1001, MCA, 

the exception be limited to the situation where intent is 

coupled with an overt act seeking to accomplish a change in 

the written designation so that all that remains to be done 

is a ministerial act. 

The court's are divided concerning whether the designated beneficiary a.bsolutely controls disposition of the survival benefits. Some courts take the position that the named 

beneficiary controls under all circumstances. See, Rogers v. 

Rogers (Fla. 1963), 152 So.2d 183; Kurtz v. Dickson (Va. 

1953) , 76 S.E. 2d 219. Other courts have adopted a view that 

literal compliance with the regulation is not necessary. 
However, before a deviation from the written nomination will 

be permitted, those courts require that an intent to change 

designation be coupled with some specific affirmative action 

evidencing a desire to make the change. Watenpaugh v. State 

Teacher's Retirement System (Cal. 1959), 336 P.2d 165; 

Aguilar v. United States (9th Cir. 1955), 226 F.2d 414. 

Appellant does not prevail on appeal under the more liberal 

view permitting one not named to take under limited 

circumstances. Here the trial court found there was no 

affirmative action evidencing decedent's desire to make a 

change. There is substantial credible evidence to support 

this finding on the part of the trial court. The record 

shows decedent never took steps to have the beneficiary 

changed on the forms. 

The third issue presented to the Court is whether Janet 

Sowell had a marital interest in her deceased husband's 

pension trust which was vested and entitled her to claim 

against the designated beneficiary. It is well established 

in Montana that retirement, annuity, pension and 

profit-sharing benefits earned by either spouse during the 

marital relationship are part of the marital estate and 

subject to equitable division upon divorce. In re the 

Marriage of Glasser and Glasser (Mont. 1983), 669 P.2d 685, 

40 St.Rep. 1518; In re the Marriage of Kis and Kis (1982), 

196 Mont. 296, 639 P.2d 1151. 

This Court has not been called upon to determine whether 

a surviving spouse has a vested interest in the pension funds 

accumulated by decedent. We have found no case from a foreign jurisdiction directly on point. In Valdez v. Ramirez 

(Texas 1977), 558 S.W.2d 88, the court held that under the 

community property laws of Texas, a wife was entitled to 

one-half of the retirement benefits as an "earned property 
right. " Likewise, the California Supreme Court in Life 

Insurance Co. of North America v. Cassidy (Cal. 1984) , 676 

P.2d 1050, held that the interest of a surviving spouse in 

life insurance proceeds could not be defeated by a gift of 

the proceeds to a third-party named as beneficiary without 

the surviving spouse's consent. The California court held 

that a. spouse placed in this position could recover his or 

her community share in the proceeds. 

Even though Montana recognizes that the pension fund of 

one spouse must be included in the marital estate at the time 

of a divorce action, we have not adopted the community property concept in this state. Property can be owned and separately controlled by one spouse without the permission of the 

other. We hold that, consistent with this separate ownership 

concept, a spouse has the right to nominate the beneficia-ry 

of retirement account proceeds without consultation or permission from the other spouse and can designate a beneficiary 

other than the spouse. Although the retirement account 

proceeds must be included as a marital asset at the time of 

divorce, at the time of death those proceeds can be excluded 

from the decedent's estate and from any claim by the 

survivor. 

We affirm the jud.gment of District Court. 

We concur: 
Justices 

Mr. Justice John C. Sheehy, dissenting: 

In my opinion, the marital dissolution agreement 

settled the rights of both parties f~lly and finally. 

I would therefore disregard the lack of change of benef iciary in this case. 

Mr. Justice John Conway Harrison joins in the dissent of 

Mr. Justice Sheehy. 

Mr. Justice Daniel J. Shea dissents and will file a written 

dissent later. 
DISSENT OF MR. JUSTICE DANIEL J. SHEA 

NO. 84-1.97 

SOWELL V. TEACHERS' RETIREMENT SYSTEM 
?4r. Justice Daniel J. Shea, dissenting: 

T dissent. 7: would reverse the judgment of the trial 

court and order that plaintiff, Janet Sowell, is entitled to 

the retirement benefits of her deceased husband. I believe 

the majority applied the wrong law in reaching its result, 

and if it had applied the correct law, it would have reached 

the opposite result. 

Al-though it is not dispositive of the entire issue, Soha 

v. West (Mont. 1981), 637 P.2d 1185, does apply, and its 

application requires a starting point from which it was the 

duty of the first wife (the defendant here), to prove that 

after the divorce and property dissolution, Larry Sowell by 

his conduct and words, intended that she remain the 

beneficiary of his retirement fund. Not a scintil-la of 

evidence supports this conclusion (certainly not substantial 

evidence) and therefore the second wife, Janet Sowell, is 

entitled to the benefits of the retirement fund. 

When the parties signed the property settlement 

agreement, they agreed that it was a final settlement, and 

that each would make no claim on the other's property. T~arry 

Sowell had a retirement fund and his first \rife had a 

retirement fund (in another system). At the time of divorce, 

these retirement funds became marital assets. Although not 

disposed of in the settlement agreement, based on the 

authority of Soha, supra, Larry's retirement fund no longer 

was a marital asset and his first wife's retirement fund was 

no longer a marital asset. Therefore, each no longer had a 

claim to the other's after the distribution agreement was 

approved by the trial court. The first wife withdrew her 
retirement fund; unfortunately, Larry Sowell did not withdraw 

his, and even more unfortunatel-y, he did not withdraw the 

name of hj s first wife as the designated beneficiary. As a 

legal. consequence, however, this did not impose the burden of 

proof on the second wife. 

Mot a scj-ntilla of evidence supports a finding that 

after the property settlement, Larry Sowell, by his acts and 

words, intended to leave the name of his first wife on the 

retirement fund as the designated beneficiary. To the 

contrary, all the circumstantial evidence supports a 

conclusj.on that Larry Sowe11 intended his second wife to 

receive all of - his property upon his death. 

The majority, in effect, a.pplies the wrong presumption. 

They require Janet Sowell, the second wife, to prove that 

Larry Sowell, by his acts and words, evinced an unequivocal 

intent to remove the first wife as the designated 

beneficiary. While I believe the record does demonstrate 

this intent, nonetheless, the majority in effect presumes 

that even after the marital settlement agreement, the first 

wife is entitled to the property simply because her name 

remained as the designated beneficiary. I would, on the 

other hand, apply a presumption that should apply under Soha, 

supra. We should have applied a presumption that Larry 

Sowe11 did intend that his first wife no longer have an 

interest in the retirement fund because she released this 

right as a result of the settlement agreement. Therefore, 

even if the first wife's name remained as the designated 

beneficiary after the settlement agreement was approved by 

the trial court, I would require the first wife to prove that 

Larry Sowell, by his acts and words after the property 

settlement, evidenced an unequivocal intent to continue her 
as the designated beneficiary of - his retirement fund. That 

proof is manifestly lacking. 

I therefore would vacate the jud.gment and ord.er the 

benefits to go to the second wife, Janet Sowel.1.