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Hipsley v. Hipsley

Decided: July 13, 1978.

CAROL HIPSLEY, PLAINTIFF,
v.
GEORGE HIPSLEY, DEFENDANT



Havey, J.c.c. (temporarily assigned).

Havey

[161 NJSuper Page 120] The narrow issue raised in this divorce action is whether the wife is entitled to equitable distribution of her husband's interest in a pension

fund under the Federal Railroad Retirement Pension Act, into which the husband made contributions throughout the course of the marriage.

Because of the execution of a property settlement agreement during the prior separate maintenance action, the court must also concern itself with whether the wife's right, if any, is barred by the terms of that written agreement.

The parties were married on January 7, 1968. Prior to and throughout the marriage the husband worked as a railroad employee, having begun his employment in 1963. Monies were deducted from his pay and contributed to a pension fund created by the Railroad Retirement Act of 1937, as amended, 45 U.S.C.A. ยง 228a et seq. It was agreed that during the marriage over $6,000 was contributed by the husband to the fund through deductions from his pay. It is also clear that 8/13ths of the time he participated in the fund the parties' marriage was still viable and alive. The parties stipulated that if the husband had left his employment as of the date of the filing of the complaint for divorce in 1977, he would be entitled to $550.52 a month upon his retirement.

Sometime prior to September 1976 the marriage began to fail and as a result plaintiff wife commenced a separate maintenance action. On October 29, 1976 an amended judgment for separate maintenance was entered. As part of the amended judgment the parties incorporated a written property settlement agreement dated December 2, 1975, as amended January 12, 1976. The agreement sets forth the terms of support for the infant children of the marriage and disposes of all personal property, automobiles, boats, furnishings and life insurance. The agreement specifically provides a means of disposition of the marital home. Nowhere in the agreement is there mentioned an existing pension fund. Plaintiff seeks a distribution of the husband's interest in the railroad retirement pension fund, arguing that it is "property" under N.J.S.A. 2A:34-23. The husband resists this

effort, arguing that the pension fund is not "property" subject to equitable distribution and that even if it were, the wife gave up her right to this asset by the terms of the written property settlement agreement. It is to this contention that the court will address itself first.

I

Does the written property settlement agreement entered into between the parties in this matter bar plaintiff's right to equitable distribution of a pension fund under the Railroad Retirement Act?

Since adoption on September 13, 1971 of the amendments to our Divorce Act, the courts have been perplexed over the extent to which a property settlement agreement should bar a party's right to equitable distribution under N.J.S.A. 2A:34-23. As a contract between husband and wife such a property settlement agreement is unenforceable at law. N.J.S.A. 37:2-5; Bendler v. Bendler , 3 N.J. 161 (1949). Such a contract may, however, be enforceable in equity if found to be fair and equitable. Wolff v. Wolff , 134 N.J. Eq. 8 (Ch. 1943). In Smith v. Smith , 72 N.J. 350 (1977), the Supreme Court dictated the terms under which equitable distribution may be barred by agreement.

We now hold that where equitable distribution is sought pursuant to N.J.S.A. 2A:34-23, an earlier separation agreement will be a bar to such relief only if, and to the extent that, it can qualify as a property settlement, and can likewise be shown to have been fair and equitable. Only then can it be said to be the substantial equivalent of an equitable distribution of marital assets, sufficient to justify denial of such relief.

We readily concede that in many cases this distinction will be difficult of application. Many separation agreements contain both elements of support and of property settlement; provisions touching one or other of these categories ...


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