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Kruger v. Kruger

Decided: July 6, 1977.


For modification and affirmance -- Chief Justice Hughes, Justices Mountain, Sullivan, Clifford and Schreiber and Judge Conford. For reversal -- Justice Pashman. The opinion of the court was delivered by Schreiber, J. Pashman, J., dissenting.


This appeal projects the issue of whether federal military retirement pay and disability benefits, all conditions precedent to their receipt having been satisfied, are "property" "legally and beneficially acquired" during marriage and, accordingly, subject to equitable distribution upon divorce. N.J.S.A. 2A:34-23. This question arose in proceedings instituted by Barbara W. Kruger in March 1973 for a divorce on grounds of extreme cruelty. Her husband, Richard O. Kruger, had counterclaimed for a divorce on grounds of desertion and extreme cruelty.

The parties had been married on May 6, 1950. They had three children, who at the time of the trial were 15, 19 and 21 years old. The defendant had been in the Army between July 1939 and February 1968, when he retired as a Lieutenant Colonel. Subsequently, he had been employed for approximately one year in the securities business for Laidlaw & Co. At the time of the trial in October 1973, he was no longer working because of economic conditions and poor health. However, Mrs. Kruger was engaged as a secretary in the municipal offices of the Borough of Bernardsville. The

trial court, finding that both parties had been guilty of acts of extreme cruelty, granted a divorce to each. The wife was awarded custody of the minor child and $30 weekly support for that child. No alimony was granted.

The trial court found the major assets available for equitable distribution to be the marital home and the husband's interests in the military retirement pay and disability benefits. It ordered that the house be sold and the net proceeds after payment of a mortgage and other joint debts be divided equally. The plaintiff's mother, who had died in 1970, devised the house to her. Thereafter the plaintiff created a tenancy by the entirety with the defendant in the property. As to the monthly military payments of $753 for retirement and $106 for disability, both of which commenced in 1968, the trial court found that, since the parties had been married 213 months during the husband's military career of 343 months, 213/343rds of those benefits was acquired during marriage and subject to equitable distribution. It apportioned those benefits by awarding one-third to the plaintiff and two-thirds to the defendant.

Upon appeal the Appellate Division generally agreed with the trial court's findings and conclusions, except that it believed the apportionment of the military payments should terminate upon the wife's death. 139 N.J. Super. 413 (App. Div. 1976). It remanded the case to the trial court to consider the income tax impact attributable to the payments. The case is before us by virtue of a dissent. R. 2:2-1(a). The dissenting judge opined that the pension and disability benefits "are income and not capital assets" subject to equitable distribution. Id. at 422.

Equitable distribution is to be made of "the property, both real and personal, which was legally and beneficially acquired by them [the husband and wife] or either of them during the marriage." N.J.S.A. 2A:34-23. Justice Mountain in Painter v. Painter, 65 N.J. 196 (1974), after noting that there was no legislative history which illuminated

the legislative intent of this provision, stated that the word "acquired" should be given a comprehensive meaning so as to include gifts and inheritance received by either spouse during marriage. Id. at 217. He also concluded that:

We therefore hold the legislative intent to be that all property, regardless of its source, in which a spouse acquires an interest during the marriage shall be eligible for distribution in the event of divorce. [ Id. ]

The Painter holding makes it clear that all personal property, tangible and intangible, in which a spouse acquires an interest is includable. Choses in action, rights and other interests, the benefits of which may be receivable now and in the future are classifiable as intangible personal property. See N.J.S.A. 1:1-2 which defines personal property to include "rights and credits." Perhaps the easiest method to utilize in determining whether a particular item is property is to view the financial status of the husband and wife at a particular point in time, generally the date upon which the complaint is filed. Painter v. Painter, 65 N.J. at 218. That status may be ascertained only by marshalling the economic resources of the parties. A weekly wage represents income, but after its receipt the dollars on hand are an asset. Likewise, a contract entitling a person to a certain number of dollars per week for services to be rendered over a fixed period is a valuable right and an asset, though the receipt of the weekly sum represents income. The equitable distribution provision is not concerned with income but with a person's assets in an economic sense on a date certain.

The right to receive monies in the future is unquestionably such an economic resource. In most situations its present dollar value can be computed. See our rule for calculating gross sums in lieu of dower or curtesy or an estate for life or years devised in lieu of dower or curtesy. R. 4:63-3. No one would quarrel with ...

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