On certification to the Superior Court, Appellate Division, whose opinion is reported at 182 N.J. Super. 598 (1982).
For reversal and remandment -- Chief Justice Wilentz and Justices Pashman, Clifford, Schreiber, Handler, Pollock and O'Hern. For affirmance -- None. The opinion of the Court was delivered by Pashman, J.
[91 NJ Page 491] Once again the Court must interpret this state's law regarding the distribution of marital property upon divorce. The question here is whether the defendant has the right to share the value of a professional business (M.B.A.) degree earned by
her former husband during their marriage. The Court must decide whether the plaintiff's degree is "property" for purposes of N.J.S.A. 2A:34-23, which requires equitable distribution of "the property, both real and personal, which was legally and beneficially acquired . . . during the marriage." If the M.B.A. degree is not property, we must still decide whether the defendant can nonetheless recover the money she contributed to her husband's support while he pursued his professional education. For the reasons stated below, we hold that the plaintiff's professional degree is not property and therefore reject the defendant's claim that the degree is subject to equitable distribution. To this extent, we concur in the reasoning of the Appellate Division. Notwithstanding this concurrence, we reverse the judgment of the Appellate Division, which had the effect of denying the defendant any remedial relief for her contributions toward her husband's professional education and remand for further proceedings.
When the parties married in Indiana in 1971, plaintiff, Melvin Mahoney, had an engineering degree and defendant, June Lee Mahoney, had a bachelor of science degree. From that time until the parties separated in October 1978 they generally shared all household expenses. The sole exception was the period between September 1975 and January 1977, when the plaintiff attended the Wharton School of the University of Pennsylvania and received an M.B.A. degree.
During the 16-month period in which the plaintiff attended school, June Lee Mahoney contributed about $24,000 to the household. Her husband made no financial contribution while he was a student. Melvin's educational expenses of about $6,500 were paid for by a combination of veterans' benefits and a payment from the Air Force. After receiving his degree, the plaintiff went to work as a commercial lending officer for Chase Manhattan Bank.
Meanwhile, in 1976 the defendant began a part-time graduate program at Rutgers University, paid for by her employer, that led to a master's degree in microbiology one year after the parties had separated. June Lee worked full time throughout the course of her graduate schooling.
In March 1979, Melvin Mahoney sued for divorce; his wife filed a counterclaim also seeking a divorce. In May 1980, the trial court granted dual judgments of divorce on the ground of 18 months continuous separation.
At the time of trial, plaintiff's annual income was $25,600 and defendant's income was $21,000. No claim for alimony was made. The parties owned no real property and divided the small amount of their personal property by agreement.
The only issue at trial was the defendant's claim for reimbursement of the amount of support she gave her husband while he obtained his M.B.A. degree. Defendant sought 50% of the $24,000 she had contributed to the household during that time, plus one-half of the $6,500 cost of her husband's tuition.
The trial court decided that defendant should be reimbursed, 175 N.J. Super. 443 (Ch.Div.1980), holding that "the education and degree obtained by plaintiff, under the circumstances of this case, constitute a property right . . . ." Id. at 447. However, the court did not attempt to determine the value of plaintiff's M.B.A. degree. Instead, finding that in this case "[t]o ignore the contributions of the sacrificing spouse would be . . . an unjust enrichment of the educated spouse," id. at 446, the court ordered the award of a "reasonable sum as a credit [for] . . . the maintenance of the household and the support of plaintiff during the educational period." Id. at 447. Plaintiff was ordered to reimburse his wife in the amount of $5,000, to be paid at the rate of $100 per month. The court did not explain why it chose this amount.
Plaintiff appealed to the Appellate Division, which reversed the award. 182 N.J. Super. 598 (1982). It not only rejected defendant's claim for reimbursement but also held that neither a
professional license nor an educational degree is "property" for the purposes of the equitable distribution statute, N.J.S.A. 2A:34-23. In so holding, the Appellate Division stated that it was bound by Stern v. Stern, 66 N.J. 340, 345 (1975), where the Court held that "a person's earning capacity . . . should not be recognized as a separate, particular item of property within the meaning of N.J.S.A. 2A:34-23." (footnote omitted). The Appellate Division noted that if enhanced earning capacity is not property, then "neither is the license or degree, which is merely the memorialization of the attainment of the skill, qualification and educational background which is the prerequisite of the enhanced earning capacity. . . ." 182 N.J. Super. at 605. The court noted that degrees and licenses lack many of the attributes of most property rights, id. at 605, and that their value is not only speculative, id. at 609, but also may be fully accounted for by way of alimony and equitable division of the other assets. Id. at 607.
In rejecting defendant's claim for reimbursement, the Appellate Division disapproved of the attempt to measure the contributions of the parties to one another or to their marriage. The court cited with approval Wisner v. Wisner, 129 Ariz. 333, 631 P. 2d 115, 123 (Ct.App.1981), where an Arizona appeals court stated:
[I]t is improper for a court to treat a marriage as an arm's length transaction by allowing a spouse to come into court after the fact and make legal arguments regarding unjust enrichment . . . .
The Appellate Division saw no need to distinguish contributions made toward a spouse's attainment of a license or degree from other contributions, calling such special treatment "a kind of elitism which inappropriately depreciates the value of all the other types of contributions made to each other by other spouses . . . ." 182 N.J. Super. at 613. Finally, the court noted that in this case each spouse left the marriage "with comparable earning
capacity and comparable educational achievements." Id. at 615. The court ...