Source: https://law.justia.com/cases/california/court-of-appeal/3d/41/642.html
Timestamp: 2019-04-25 22:25:09+00:00

Document:
James W. Edson for Appellant wife.
Granville B. Smith for Appellant husband.
Petitioner Elizabeth K. Peterson and respondent Roy Otto Peterson both appeal from those portions of an interlocutory judgment of dissolution of marriage concerning spousal support and community property. The only issue argued on appeal is the disposition of Roy's pension rights as a federal civil service employee.
The parties were married in 1941, and since July 1942 Roy has been employed by the federal government. He is a member of the United States Civil Service Retirement System.
The system permits retirement with a pension under various circumstances, which we will discuss in detail below. The case directly involves a provision that permits an employee to retire and receive a pension at age 55 or more and after 30 years of service. Roy reached the age of 55 in 1971 and achieved 30 years of service on July 2, 1972.
The interlocutory decree was entered on May 31, 1972, about a month before Roy would be eligible to retire and collect an immediate pension.
The relevant and disputed portion of the decree provides: "The [husband] is ordered to pay [wife] as and toward spousal support the sum of $320 per month payable one-half on the first and fifteenth days of each month commencing May 15, 1972 and continuing until further order of court, [wife's] remarriage, or the death of [wife] or [husband].
"The [husband] has a vested interest in the United States Civil Service Retirement System. Said interest is a community property asset when it is received. The [wife] is awarded one-half of the United States Civil Service Retirement payment when received by the [husband]. Said one-half retirement benefit shall be deemed to be the amount which [husband] would receive should he retire on or about July 2, 1972 after 30 years' employment in the United States Civil Service Retirement System. fn.  Any payments made by the [husband] to the [wife] of retirement benefits shall be credited upon the existing $320 per month support order payable to [wife] by [husband] one-half on the first and one-half on the fifteenth of each month commencing on the first and fifteenth of each month following receipt of the first retirement check and continuing. The [husband] is awarded the balance of the retirement benefits. If [wife] survives [husband], she will succeed to such benefits as are allowable under the retirement agreement."
Besides the pension, the total community assets amounted to $7,700.
On June 15 -- still before Roy was eligible to collect his pension -- his attorney filed a motion for a new trial, declaring that he had mistakenly believed that Roy "was eligible to receive his retirement pension if he had retired prior to July 2, 1972," that he had learned this was not true after the trial on May 10, and had immediately so written to the trial judge. On August 14, the motion was denied.
In denying Roy's motion for a new trial the court stated: "If I cut the pension, I'll add to the spousal support. This was a marriage of a considerable [41 Cal. App. 3d 646] period of time and this woman is entitled to adequate support one way or the other."
The pension plan allowed for a lump-sum payment on Roy's death. In July 1971, he changed the beneficiary from Elizabeth to their children. These benefits are discussed below.
More details will be added in the discussion.
The central issue is Roy's contention on his appeal that the trial court erred in awarding Elizabeth one-half of his pension in a decree entered before he was entitled to receive that pension. A second issue is Elizabeth's contention on her appeal that she has an interest in the pension rights if Roy predeceases her.
(2) An employee may be eligible for "immediate retirement" and pension when he is more than 55 years of age and has had 30 years of federal service. (§ 8336, subd. (a).) In this case this provision applied to Roy as of July 2, 1972.
(3) An employee may be eligible for "deferred retirement" if he leaves federal service at too young an age or with too few years of service to be eligible for an immediate pension. In that case, the employee will be eligible [41 Cal. App. 3d 647] for a pension at 62 years of age, provided that he has accumulated five or more years of federal service. (§ 8338, subd. (a).) Thus, as applied to this case, if Roy had quit his job as of March 4, 1972 -- the cutoff date for determining the community interest in Roy's pension rights -- he would have been entitled to an annuity when he reached the age of 62, that is, in 1978.
In this case, Roy testified that he intended to take a 100 percent pension. The interlocutory decree by stating that Elizabeth "will succeed to such benefits as are allowable," arguably requires him to take a reduced pension. We do not know what Roy did, or, indeed whether he has yet retired.
The survivor's pension is one benefit payable when the retired employee dies. There may also be a lump-sum death benefit payable if the employee's contributions exceed the amounts paid out in pensions. (§ 8342, subds. (d) through (h).) It is this lump-sum benefit to which Roy changed the beneficiary from Elizabeth to the children.
Although it is reasonable to expect reconsideration of the "expectancy" concept as articulated in French v. French, fn. 7 we are bound by the ruling in that case.
However, although Elizabeth had no present interest in Roy's "immediate retirement" pension, she had a very real interest in Roy's right to a "deferred retirement" pension which had become vested by any standard We have noted that if Roy had retired by March 1972 -- the cutoff date in these proceedings -- he would have been entitled to "deferred retirement" under 5 United States Code, section 8338, subdivision (a), which provides that any employee who is "separated from the service" after five or more years of service is "entitled to an annuity beginning at the age of 62 years."
 Thus, under Fithian, Elizabeth had a vested interest in whatever pension Roy was entitled to receive on a "deferred retirement" basis computed as of March 1972, although, because the condition precedent to the government's payment of that pension was Roy's survival until 1978, that interest had not "matured" within the meaning of Fithian.
Concededly, in the circumstances of this case, Elizabeth's one-half interest [41 Cal. App. 3d 651] in Roy's "deferred retirement" rights is based on a fiction, since he did not retire before March 1972 and since his failure to elect a full pension by March 1972 could in reality be remedied in his favor. However, the fiction is no different from the fiction in Waite v. Waite, supra, that the husband, a retired judge, would remain retired and thus remain eligible for his pension. The policy is the same: The husband may not, by devices within his control, defeat the wife's right to what is community property.
Moreover, the trial court made clear, in denying Roy's motion for a new trial, that if it "cut the pension," it would "add to the spousal support."
The potentially whimsical results of the French v. French rule are manifest in this case. The couple were married in 1941, and almost immediately husband became a federal employee. Some 28 years later -- when he needed only two more years of employment for an immediate pension -- the couple separated. Exclusive of the pension, the total community assets were $7,700. According to the record a mere one year's pension rights exceeded by several thousand dollars the total community assets of a 30-year marriage! fn. 13 [41 Cal. App. 3d 652] Were it not for the early vesting policies of the federal civil service, Elizabeth would be totally stripped of her fair share of the only substantial community asset.
The parties disagree concerning Elizabeth's rights to any amounts payable under the retirement plan after Roy dies. The parties' disagreement is not entirely clear. At trial, Roy stated that he intended to take a full pension "unless I remarry. ..." If the retiring employee elects to receive a full pension, the survivor is not entitled to an annuity after the retired employee dies. (§§ 8339, subd. (j); 8341, subd. (b).) However, the interlocutory decree provides that if Elizabeth "survives Roy, she will succeed to such benefits as are allowable under the retirement agreement."
At the hearing on Roy's motion for a new trial, Elizabeth expressed concern that Roy had "certain alternatives" under the retirement system which could deprive her of her entire share. Elizabeth proposed that an actuarial value be placed on Roy's pension, a suggestion that the trial court apparently did not rule on in denying Roy's motion for a new trial.
In her cross-appeal, Elizabeth asks this court to take judicial notice of the fact that in connection with a contempt order to show cause in December 1972, it developed that Roy, in July 1971 -- that is before the trial or the judgment -- had changed the beneficiaries to any lump-sum amounts payable after his death from Elizabeth to the children. She contends that the trial court, in the interlocutory judgment, made an "unenforceable order regarding the division of the Federal Civil Service retirement benefits. ..." Elizabeth's reply brief indicates that the substance of her complaint is that the trial court erred in not making a clear disposition of all benefits that might be payable under the federal retirement system.
At first glance, it would appear that Elizabeth has an interest in the entire pension package: employee's pension, survivor's pension, if any, and lump-sum death benefits.
True, federal law specifically limits payment of a survivor's annuity -- with exceptions not relevant here (e.g., § 8341, subd. (e)) -- to situations in which the retired employee is "survived by a spouse to whom he was married at the time of retirement, or by a widow ... whom he married after retirement, ..." (§ 8341, subd. (b)) -- but while these federal restrictions might affect Elizabeth's right to assert a claim against the federal government, they would not affect the court's power to order Roy to pay to Elizabeth as her share of the community, an amount equivalent to her ratable share of a survivor's pension.
The problem is, however, that -- issues of federalism aside -- a series of California Supreme Court cases has apparently established the rule that the wife's vested rights in the husband's pension plan are limited to amounts payable to him while he is living.
In Benson v. City of Los Angeles, 60 Cal. 2d 355 [33 Cal. Rptr. 257, 384 P.2d 649], the husband, who had been collecting his pension before the parties were divorced, remarried after his divorce. ( Id., at p. 358.) His pension plan provided for survivor's benefits to the "widow." ( Id., at p. 359.) After he died, both his former and current wives filed claims for the widow's pension benefits, and, eventually both women sued the City.
"In view of the foregoing [the former wife] claims that she alone is entitled to the community assets after [the husband's] death, and that it was a denial of due process to deprive her of such property right. ... [The former wife's] claim contemplates both that she was possessed of a property right and that she was improperly deprived thereof.
Thus, Benson apparently held that although, as between the parties, the wife had an interest in the husband's entire pension package, once the husband died these rights could not be asserted against the former employer.
It should be noted that, in general, the California state employees' retirement system parallels the federal system with respect to survivor's pensions and lump-sum benefits. (Gov. Code, §§ 21332-21335.) However, the issue before the court in Phillipson, was apparently only the husband's current pension rights. The court was not required to decide what the total pension package involved as between the husband and the wife.
 Reading the cases discussed above, we are bound to hold that Elizabeth's entitlement in this case is limited to Roy's pension rights while he is living, and that she has no "vested" interest in any amounts payable after his death, even though these amounts are part of the pension package purchased with community funds.
We do not believe the rule which we must follow is fair. fn. 14 Roy's pension rights constitute a bundle to which Elizabeth, as a partner in the community during the years of marriage contributed her equal share. Why should she be deprived of her right to any single stick in the bundle? (See Kent, supra, 25 Stan.L.Rev., at pp. 462-463.) We must, however, follow Benson, Phillipson and Wilson.
Elizabeth is entitled to share in Roy's pension computed on the assumption that he retired in March 1972, and would be eligible for a deferred pension when he reaches the age of 62. Since Wilson does not in all cases forbid placing a valuation on the pension rights, the trial court is free to set a present value on the deferred pension, and is free to require Roy to [41 Cal. App. 3d 657] commence paying it in appropriate installments when he begins to receive his "real" immediate pension. The court is also free to adjust the spousal support provisions in any equitable manner.
Elizabeth does not, however, have a right to share in any benefits that may be payable after Roy dies.
The judgment is reversed for a redetermination of the community property and spousal support provisions consistent with the views expressed in this opinion.
FN 2. At least as of July 17, 1972, Roy had not yet retired.
FN . The difference between the projected amount of Roy's pension computed as of March 1972 and as of July 1972 is minimal and no one quarrels with this apparent variation from what the parties apparently agreed upon at the trial.
FN 4. All references, except as noted, are to 5 United States Code.
FN 5. The description is limited to the situation involved in this case.
FN 7. A hearing had been granted in In re Marriage of Wilson, 10 Cal. 3d 851, 853 [112 Cal. Rptr. 405, 519 P.2d 165], "to ascertain the current viability of the rule of French v. French ... that pension benefits which have not yet vested are a mere expectancy and not subject to division as community property." However, the court said that upon "further examination of the record it appears this issue is not properly before us because respondent wife expressly acquiesced in the French rule at the trial level and failed to cross-appeal from that portion of the judgment adverse to her interests. [Citation.] Accordingly, resolution of the issue must await timely presentation upon an appropriate record in another case."
FN 10. This article was published in 1950, before the statutory changes noted in footnote 8, ante.
FN 13. Indeed, the amount of the pension that will ultimately be payable to Roy at age 62 under the theory that he could have retired before March 1972 is, again, a matter of chance. Roy was born in January 1916, and thus turned 55 in January 1971 -- which just happens to be after the parties separated, but before Civil Code section 5118 took effect. Thus, just as the fortuity of dates prevents Elizabeth, under French v. French, supra, 17 Cal. 2d 775, from fully participating in Roy's real pension rights, so the fortuity of dates allows her in this case to participate at a higher level than if the parties had dissolved their marriage a year or so earlier.
FN 14. The apparent reason for the rule in Wilson that the wife be awarded only a percentage of each pension payment is a wish to limit the immediate burden on the husband where the primary, if not the sole, community asset is the prospective pension. However, where, as here, the pension package allows a survivor's pension and possibly lump-sum death benefits, any hardship is created by the husband. To avoid the burden of the husband's paying the wife projected pension amounts before he receives them, he need only designate the wife as survivor and beneficiary.

References: v. 
 v. 
 v. 
 § 8341
 v. 
 v. 
 v.