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Whitfield v. Whitfield

Decided: December 18, 1987.

DONNA M. WHITFIELD, PLAINTIFF-APPELLANT, CROSS-RESPONDENT,
v.
PERRY N. WHITFIELD, DEFENDANT-RESPONDENT, CROSS-APPELLANT



On appeal from the Superior Court, Chancery Division, Family Part, Salem County.

Brody, Long and D'Annunzio. The opinion of the court was delivered by Long, J.A.D. D'Annunzio, J.A.D. (concurring).

Long

The issue before us is whether that portion of a pension which was earned during coverture but which is neither vested nor matured is subject to equitable distribution upon divorce. We hold that such a pension is "property" acquired during the course of the marriage within the meaning of N.J.S.A. 2A:34-23 and that the practical difficulties inherent in its valuation in no way affect its includability in the marital estate. In so doing we part company from prior decisions of this court which have concluded otherwise. Barba v. Barba, 198 N.J. Super. 205 (App.Div.1985); White v. White, 136 N.J. Super. 552 (App.Div.1975).

Plaintiff, Donna M. Whitfield, and defendant, Perry N. Whitfield, were married in 1968. Five months later, defendant entered the United States Air Force in which he is presently serving. Because of defendant's military status, the family moved every three years and lived all over the world. Defendant was absent from home frequently, and according to plaintiff, who spent her married life as a homemaker, she was "mother (to the three children born of the marriage) father, housekeeper, everything. My husband was gone most of the time and I took care of everything." In 1984 the parties began experiencing marital problems and after 16 years of marriage, separated. Thereafter, plaintiff instituted these proceedings.

Prior to trial, a settlement was reached leaving several issues in dispute including the question of whether any portion of defendant's military pension should be distributed to the plaintiff. Pursuant to 10 U.S.C. § 8911, defendant began to accumulate time credits toward a military pension when he entered the Air Force. To be eligible to receive pension benefits an individual in the Air Force must spend twenty years or more in active service. This type of pension plan operates under a system of "cliff vesting" which requires the participant to complete the required number of years in service in order to receive a pension. Such a pension vests (becomes an absolute

entitlement) and matures (is collectible) simultaneously. Any number of years of service short of the required amount entitles the participant to nothing.

While the parties lived together defendant served 16 of the 20 years necessary to receive his pension. He will complete 20 years of service on November 26, 1988. Under the basic formula for computing military retirement pay contained in 10 U.S.C. § 3991, if defendant, who has reached the rank of Major, receives no raise in monthly base pay above the $2,864 per month he is currently receiving, as of 1988 he will be entitled to receive a pension of $17,244 per year until his death.

In an oral decision after trial, the trial judge concluded that defendant's pension rights were not includable assets in the marital estate because they were not "vested." Plaintiff here challenges this determination.

In 1971, in its first revision of the divorce laws in over half a century, the Legislature acknowledged the equal contribution of husband and wife to a marital relationship and directed courts to "effectuate an equitable distribution of the property, both real and personal, which was legally and beneficially acquired" during the course of the marriage upon its dissolution. N.J.S.A. 2A:34-23. Broad social policy considerations underpinned the act:

[T]he enactment [of the equitable distribution statute] seeks to right what many have felt to be a grave wrong. It gives recognition to the essential supportive role played by the wife in the home, acknowledging that as a homemaker, wife and mother she should clearly be entitled to a share of family assets accumulated during the marriage. Thus the division of property upon divorce is responsive to the concept that marriage is a shared enterprise, a joint undertaking, that in many ways it is akin to a partnership. [ Rothman v. Rothman, 65 N.J. 219, 229 (1974)]

In general, realization of the legislative goal embodied in the equitable distribution statute has proceeded smoothly. The one exception has been the subject of pensions which has proved a thorny problem. Indeed, after the enactment of the statute in 1971, it was argued that pensions are not marital "property" at all. Although in Painter v. Painter, 65 N.J. 196 (1974), the

Supreme Court sweepingly defined the term property to include anything attributable directly or indirectly to the expenditure of effort by either spouse,*fn1 litigants continued to adhere to the notion that their pensions, unlike other marital assets, were personal to them and not subject to being shared with a divorcing spouse.

To some extent this approach was institutionalized by courts which, from the beginning, accorded differential treatment to pensions vis-a-vis run of the mill marital assets such as real estate, jewelry, bank accounts and securities which were distributed with relative ease. The judicial perspective on pensions has been colored by several factors. The most significant are that pensions, unlike most other marital assets, are intangible and difficult to value and that the myriad of variations in pension structures evades the formulation of a simple rule of includability. Coupled with litigants' intransigent attitudes on the subject, these factors led courts to accept, without critical analysis, theories barring the includability of pensions and set the stage for the long struggle toward equity in the distribution of pensions which followed.

It was not until 1975 that the first case declaring a pension theoretically includable for distribution purposes was decided by an appellate court. Pellegrino v. Pellegrino, 134 N.J. Super. 512 (App.Div.1975). To be sure, the approach adopted in that case was primitive considering that it declared only the pensioner's contributions to the plan as marital property; the pensioner alone enjoyed the employer's contributions. Nonetheless, Pellegrino enunciated the general principle of pension includability, an issue which the Supreme Court did not have occasion to lay to rest for two more years. Kruger v. Kruger, 73 N.J. 464 (1977). Kruger was expected to establish an angle of repose for the issue of pension distribution, but this did not

happen. Courts continued to be troubled by the uncertainities connected with future pension benefits. In essence, any contingency to the receipt of benefits was viewed as barring distribution and "vesting" emerged as the bright line test for includability. White v. White, 136 N.J. Super. 552 (App.Div.1975); Mueller v. Mueller, 166 N.J. Super. 557 (Ch.Div.1979); But see Weir v. Weir, 173 N.J. Super. 130 (Ch.Div.1980).

This occurred notwithstanding that in Stern v. Stern, 66 N.J. 340 (1975), the Supreme Court had already signaled the inapplicability of vesting as an equitable distribution standard:

Finally, it is urged that the accounts receivable should be excluded from consideration because they are not a property interest that has "vested" in the defendant. What we have already said would seem an adequate answer to this argument. We take the opportunity, however, to suggest that the concept of vesting should probably find no significant place in the developing law of equitable distribution. The notion of a vested interest came into being in a feudal society and was intimately associated with the medieval concept of seisin. Holdsworth, An Historical Introduction to the Land Law, (1927) 68; Jenks, A Short History of English Law, (4th ed. 1928) 84-5. It has played an important part in the development of the law of future interests, and early assumed a crucial role in the portion of the law dealing with the rule against perpetuities. On the other hand and in a quite different context the phrase, "vested rights," is occasionally used to denote something to which constitutional guaranties may apply. 1 Simes and Smith, The Law of Future Interests (2nd ed. 1956) sec. 130, 116-18; Rothman v. Rothman, 65 N.J. 219, 225 (1974). These now customary usages of the concept of vesting are clearly in no way relevant to the question of effecting an equitable distribution upon the occasion of a divorce. Our statute requires, in order that property be available for distribution incident to a divorce, that it shall have been acquired during marriage. There is no reference to vesting. With only this brief word upon the subject, which is not really before us, we leave for another day any further discussion of the important and possibly difficult question as to what future interests may qualify as "property" within the meaning of N.J.S.A. 2A:34-23. [66 N.J. at 348-349 (emphasis in original)]

In spite of this language, vesting continued to be invoked as a requirement for the includability of a pension in the marital estate with the effect that divorcing spouses were denied a share in future pension benefits solely because of the possibility that they might not be received. Those pensions which were received after the divorce were enjoyed by the pensioner alone.

In McGrew v. McGrew, 151 N.J. Super. 515 (App.Div.1977), we addressed the inequity presented by this approach and rejected the view that any contingency would defeat a spouse's claim.*fn2 Following the Supreme Court's cue in Stern, we said that:

While the uncertainty of enjoying benefits may be a factor to be considered in awarding distribution, the failure of the property interest to have vested in the sense essential to the alienability of real estate does not disqualify it as property acquired during the marriage for purposes of equitable distribution. [ McGrew, supra, 151 N.J. Super. at 518]

Positing the critical question in this kind of an analysis to be the nature of the interest and how it was earned, we went on to conclude that:

Although some question exists as to when or whether the retirement benefits will be enjoyed, the consideration critical to the issue of distribution is the extent to which the anticipated benefits will have been generated by the mutual effort of the parties. [ Id. ]

Thereafter in 1981, in Kikkert v. Kikkert, 177 N.J. Super. 471 (App.Div.1981), aff'd o.b. 88 N.J. 4 (1981), a case which addressed a vested but unmatured pension, the Supreme Court approved the approach we took in McGrew and set forth the analytical ...


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