Source: https://law.justia.com/cases/california/supreme-court/3d/6/461.html
Timestamp: 2019-04-18 20:57:36+00:00

Document:
Thomas C. Lynch and Evelle J. Younger, Attorneys General, Edward M. Belasco, Deputy Attorney General, King & King and Kenneth Sperry for Defendants and Appellants.
Hennigan, Butterwick & Clepper, J. David Hennigan, Edward L. Lascher and Richard E. Rader for Plaintiff and Respondent.
On April 14, 1967, defendant Russell Waite, a retired California Superior Court judge, in an action for an ex parte divorce in Nevada obtained a judgment awarding him all benefits accruing under the Judges' Retirement Law (Gov. Code, §§ 75000-75109). Plaintiff, Jean Waite, defendant's former wife, brought the present action in the Riverside County Superior Court against defendant fn. 1 and Houston Flournoy, State Controller and administrator of the Judges' Retirement System. Following change of venue to Los Angeles County, on August 7, 1968, that court entered judgment awarding plaintiff, her devisee or heirs, one-half of all benefits payable under the Judges' Retirement Law. Defendants appeal.
We affirm the determination of the Los Angeles County Superior Court holding that the portion of the Nevada judgment that awards defendant the whole of the retirement benefits is not entitled to full faith and credit; Nevada had neither personal jurisdiction over plaintiff nor in rem jurisdiction over the asset. We further hold that the retirement benefits attributable to defendant's service as a judge during the marriage constitute community property subject to division and award upon divorce. In so dividing this asset, the superior court awarded a one-half interest not only to plaintiff but also to her heirs and devisee. Since the purpose of the Judges' Retirement Law is to ensure sustenance for the retired judge and [6 Cal. 3d 465] his spouse, not to benefit their heirs or devisees, we conclude that this mode of division of the pension rights cannot stand and that the judgment in that respect must be reversed.
The following recital rests upon the superior court's findings of fact, which are not challenged on appeal. The parties married in 1934, and separated on January 20, 1967. During the marriage defendant served as a judge of the Superior Court of Riverside County. Over these years of service he contributed $13,090.18 to the Judges' Retirement Fund, all of which was community property. He retired on October 31, 1966, without withdrawing his contributions (Gov. Code, § 75033) or electing any optional settlement (Gov. Code, §§ 75070-75071), and became entitled to a monthly pension in an amount equal to 75 percent of the salary of the judge holding defendant's former office (Gov. Code, § 75076). At all relevant times this yielded a monthly payment of $1,562.50, but since defendant will obtain the benefits of any future increase in salary of that office, the trial court did not find the actuarial value of defendant's pension.
Plaintiff was eligible to retire from her teaching position on January 20, 1967, and did retire on June 16, 1967; she receives monthly benefits from the Teachers' Retirement Fund of $111.67. Her pension rights equal an actuarial value of $14,457, of which $13,879 is attributable to her services and contributions during the marriage.
Upon separating on January 20, 1967, the parties equitably divided the community property at hand, which included cash, notes, automobiles, clothing, and furniture. Apparently the only assets not included in the agreement were the parties' respective pension rights.
Plaintiff, on March 8, 1967, filed the present action for divorce in the Riverside County Superior Court, naming Houston Flournoy, State Controller and administrator of the Judges' Retirement Fund, as an additional party. Defendant and Flournoy appeared and answered the complaint. After trial the superior court, on August 7, 1968, concluded that the Nevada decree terminated the marriage, but that Nevada lacked jurisdiction to allocate the community property or fix alimony. The court divided the property, other than the pension rights, on the basis of the separation agreement; it awarded plaintiff all benefits under the Teachers' Retirement Fund, valued at $13,879. In return defendant received the $26,562.50 which had been paid him by the Judges' Retirement Fund between the separation and the date of trial.
As to amounts payable under the Judges' Retirement Law, the court ordered that "Flournoy or his successor in office pay directly to plaintiff herein or her devisee or heirs one half of all benefits which may be payable under the Judge's Retirement Act by reason of the services of defendant Waite." (Italics added.) Finally, the court awarded plaintiff alimony of $1 a month, but provided that "During any period of time that said payment be suspended pursuant to the provisions of Government Code [suspending payments whenever a retired judge accepts temporary judicial assignment and receives a salary] or for other cause within the control of defendant Waite, defendant Waite is ordered to pay as alimony to plaintiff a sum equal to 37 1/2% of the then salary of a judge of the Superior Court. ..."
Defendant's appeal attacks only the award to plaintiff, her devisee or heirs, of one-half of all benefits payable under the Judges' Retirement Law. He raises three contentions: (1) that the Nevada judgment awarding him all the benefits should receive full faith and credit in California; (2) that the benefits do not constitute community property, but his separate property; and (3) if plaintiff should predecease him, payments thereafter should go to defendant instead of to plaintiff's heirs or devisee.
2. The Nevada court lacked jurisdiction to divide and award the benefits accruing under the Judges' Retirement Law.
 Accordingly, we enumerate the relevant "contacts" of each state in the present case. The benefits here at issue arise from defendant's contributions while a judge in California, augmented by California tax revenues. The laws of California, not those of Nevada, define defendant's pension rights, and the laws of this state likewise fix the character of those rights as separate or community property. It was his service as a judge in California that entitles defendant to a pension, and during those years he was, of course, a resident of California. The pensioner's former wife, the plaintiff, remains a resident of California. The obligor of the claims asserted [6 Cal. 3d 469] here, the Judges' Retirement Fund, is a fund established in the State Treasury of California and administered by California's State Controller. fn. 2 Under these circumstances the fact that defendant, after retirement, established domicile in Nevada is far outweighed by the multiple relevant contacts of California.
We believe, moreover, that assignment of the "situs" of the pension benefits to California will promote the more efficient judicial administration (see Texas v. New Jersey (1965) 379 U.S. 674, 683 [13 L. Ed. 2d 596, 602, 85 S.Ct. 626]) and will be the more likely to aid in achieving a satisfactory division of the community property. When the foreign court lacks personal jurisdiction over the California spouse and in rem jurisdiction over the real and personal property which remains in California, the grant of jurisdiction over intangible assets to the foreign court may result in a piecemeal, inefficient, and sometimes inequitable disposition of the community property. In such a case the California court, as the only court that can exercise jurisdiction over all the parties and all community assets, constitutes the better equipped tribunal to adjudicate an equitable division of the community property.
 3. The benefits payable under the Judges' Retirement Law are community property.
In Phillipson v. Board of Administration (1970) 3 Cal. 3d 32 [89 Cal. Rptr. 61, 473 P.2d 765], we held that the accumulated contributions of a retired employee to the Public Employees' Retirement System were community property, subject to the jurisdiction of the divorce court; we upheld that court's award of those funds to the wife of the former employee. Although defendant seeks to distinguish Phillipson, most of his arguments run squarely into conflict with the express and considered language of that opinion.
Finally, defendant contends that Phillipson is limited to pensions under the Public Employees' Retirement System, and that pensions paid pursuant [6 Cal. 3d 471] to the Judges' Retirement Law are not community property. He notes that pensions under the Public Employees' Retirement System are payable in predetermined dollar amounts. Judges' pensions, however, are fixed as a percentage of the salary of the judicial office; an increase in pay to the judge's successor in office increases the retired judge's pension. (Gov. Code, § 75072.) Furthermore, the acceptance by a retired judge of a temporary judicial assignment reduces his pension to the extent of the salary he receives. (Gov. Code, § 68543.5.) Thus defendant argues that retired judges, unlike all other retired public employees, do not enjoy an unconditional and vested right to pension payments.
Yet, as we shall explain, defendant's points of alleged difference between judicial and non-judicial pensions cannot realistically affect our determination as to whether the judicial pension constitutes community or separate property.
The plan of payment of the pension -- whether fixed, or reflective of subsequent salary increases in the relevant position -- does not change the nature of the right to the pension. The right flows from the services rendered by the employee during marriage; the manner of the expression of the right does not distort it or alter its community characteristic.
Defendant correctly points out that in Phillipson we spoke of the retired employee's "unconditional" right to a pension (3 Cal.3d at p. 41), while in this case defendant's right carries the condition that the judge not accept judicial assignment at a salary in excess of his pension.  Yet the choice of whether or not the judge accepts future judicial assignments, if any are offered by the Chairman of the Judicial Council, lies with the judge; the exercise of any right accorded by the Judges' Retirement Law is completely within his control; hence this option does not reduce the pension to a "conditional" one. Defendant's rights under the Judges' Retirement Law, coupled with his power to refuse further judicial assignment, render his pension fully as secured, as "vested," as that of any other public employee.
Defendant would, in essence, invite us to declare that the matured pension rights of all public employees except judges are community property; that those of judges somehow are separate property. As we have seen, however, the differences between the Public Employees' Retirement Act and the Judges' Retirement Law, either do not exist at all or are relatively minor, and from a realistic view do not render judicial pensions less certain and secure than pensions of other employees. We conclude that judicial pensions must also be classed as community property.
4. The superior court exceeded its discretion in awarding benefits to plaintiff's heirs and devisees.
The superior court ordered the Controller to "pay directly to plaintiff herein or her devisee or heirs one half of all benefits which may be payable under the Judge's Retirement Act by reason of the services of defendant Waite." (Italics added.)  Defendant objects to the italicized language favoring plaintiff's heirs or devisees; fn. 6 he correctly contends that if plaintiff dies before him, her share of the monthly pension payments should then go directly to him, and not to plaintiff's estate.
 The state's concern, then, lies in provision for the subsistence of the employee and his spouse, not in the extension of benefits to such persons or organizations the spouse may select as the objects of her bounty. Once the spouse dies, of course, her need for subsistence ends, and the state's interest in her sustenance reaches a coincident completion. When this termination occurs, the state's concern narrows to the sustenance of the retired employee; its pension payments must necessarily be directed to that sole objective.
The wife complains that this reasoning deprives her of an "equal" portion of the pension; if the judge enjoys a right to payments for his lifetime but her right is limited to the period of the judge's life or her life (whichever is shorter), her interest would be unequal in length to his, and actuarially of lesser value. fn. 8 The wife, however, can claim no right to precise equality in the division of community assets; in fact, in Phillipson we suggested [6 Cal. 3d 474] that if feasible the court should award the entire pension to the employee, and compensate his spouse with property of equivalent value. (3 Cal.3d at p. 46.)  Thus a spouse suffers no injury when the court, in effectuating the purposes of the pension program, awards the employee more than half the actuarial value of the pension rights; the court, if it sees fit, may compensate the spouse by an award of more than half the value of some other community asset.
We conclude that the statutory design for judges' pensions negates the spouse's contention that her legatees should inherit pension payments payable for the balance of the judge's life. Whatever community interest the wife may claim, it cannot transcend the legislation upon which the pension itself rests.  The legislation grants to the wife, not an inheritable legacy, but a continuing economic protection for her lifetime, a state-secured provision for subsistence.
Since the Nevada judgment was not binding as to the division of community property, the superior court in the instant case had jurisdiction to divide the community assets. That court correctly determined that pension payments under the Judges' Retirement Law are community property, but in dividing that community asset, it erred in awarding benefits to the devisee or heirs of the plaintiff.
The judgment is therefore reversed. fn. 9 Each party shall bear his own costs on appeal.
FN 1. The term "defendant," in the singular, will be used to refer to Judge Waite alone; "defendants," in the plural, refers to Judge Waite and State Controller Houston Flournoy.
FN 3. See O'Dea v. Cook (1917) 176 Cal. 659, 661 [169 P. 366]; Brummund v. City of Oakland (1952) 111 Cal. App. 2d 114, 121 [244 P.2d 441].
FN 4. Defendant also seeks to distinguish Phillipson on the ground that, unlike Mr. Phillipson, defendant did not abscond with any community assets. We based our holding in Phillipson, however, on principles of community property, not upon any desire to punish Mr. Phillipson. The fact that he absconded with community funds became relevant only because the trial court did not divide the pension rights between the spouses, as in the present case, but awarded the entire accumulated contributions to Mrs. Phillipson -- an award that might have been questioned as inequitable if Mr. Phillipson had not left the jurisdiction and taken community assets of greater value.
FN 6. Defendant also complains that the language of the judgment awarding plaintiff and her successors "one half of all benefits which may be payable ... by reason of the services of defendant" (italics added) could be interpreted as awarding plaintiff one-half of any benefits paid to a surviving spouse, contrary to the holding of this court in Benson v. City of Los Angeles (1963) 60 Cal. 2d 355, 360-362 [33 Cal. Rptr. 257, 384 P.2d 649]. We doubt that the trial court intended an interpretation of its judgment directly contrary to controlling authority. Since plaintiff herself does not contend for any interpretation of the judgment which would give her the benefits of a surviving spouse, we interpret the superior court judgment as awarding plaintiff only one-half of the monthly pension benefits payable in the lifetime of defendant, and not awarding her any share in the benefits, if any, which may be payable to a surviving spouse of defendant.
FN 7. Under one optional program, if the employee dies before he has received pension payments equal to his accumulated contributions, the balance of those contributions go to his estate. (Gov. Code, § 75071, subd. (a).) The estate, however, receives no funds contributed by the state.
FN 8. Our refusal to sanction an award to the heirs or devisees of plaintiff creates in itself no inequality, since the pension system provides no benefit for the heirs or devisees of defendant. There is, arguably, an inequality in the failure of the Judges' Retirement Law to provide subsistence to the non-employee's ex-spouse after the employee's death. (The judge's own pension, of course, continues after his wife's death.) It is this inequality which gives defendant's share of the pension benefits a higher actuarial value than plaintiff's share. But this unequal treatment of the spouse who survives her employee husband would not be redressed by providing windfall benefits to the heirs or devisees of the spouse who dies before the employee.
FN 9. The judgment could be corrected by simply striking the award to plaintiff's devisee or heirs in paragraph 2 of the judgment. This modification, however, would transform the superior court's equal division of this community asset into an actuarially unequal division. The trial court, if it sees fit to do so, may compute that difference in actuarial value and alter other portions of its judgment to compensate plaintiff for this loss in value. In making the computation of actuarial value, the trial court may disregard the possibility that defendant's pension benefits may be affected by legislative amendment to the Judges' Retirement Law, by an increase in the salary paid to the judge holding defendant's former office, or by defendant's accepting temporary judicial assignment.

References: § 75033
 § 75076
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 § 75072
 § 68543
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 § 75071