Bensing v. Bensing NOTES AND COMMENTS DOMESTIC RELATIONS: COMMUNITY PROPERTY: TREATMENT Miss Dalphine MacMillan* I. MAJOR ROBERT G. BENSING entered service in the United States Air Force on 2 December 1942. He completed his education under the Reserve Officer Training Corps program, and he was commissioned as an officer in the Air Force on 19 September 1950. During his fifth year of duty, Major Bensing met and married Elaine Bensing. They established a legal domicile in California where they purchased a home and numerous items of personal property. After 23 years of marriage, Mrs. Bensing sued for, and was granted, a divorce by the Solano County, California, Supreme Court. The trial court found that the community assets totaled $27,683.61. It awarded a lump sum of $16,470.00 to Mrs. Bensing and the balance of $11,913.61 to Major Bensing.1 More importantly, the trial court determined that Major Bensing had been in the military service for 28 years and was therefore eligible for retirement on the date of the divorce, although he had not yet retired. The court held that the prospective retirement benefits were community property to the extent they resulted from service performed during the years of marriage. Accordingly, the court computed the life expectancy of Major Bensing, the percentage of the anticipated monthly retirement benefit ($700 per month), and then calculated the community-property portion of the retirement benefit to have an actual value of $91,149.90. The court, recognizing that Major Bensing might not live his actuarial life expectancy, accomplished substantial justice by dividing this amount and directing Major Bensing to pay $43,296.76 to his former wife, Elaine Bensing, at the rate of $271.72 per month starting on 1 April 1970. This amount was to be paid from his monthly retirement pay and terminate upon the death of either one. Major Bensing appealed the trial-court action2 claiming that the court erred in declaring his pension benefit to be community property subject to * Miss MacMillan is presently Head of the Income Tax Branch, Legal Assistance and Taxes Division, Office of the Judge Advocate General. She received her J.D. degree from George Washington University Law School in 1960. 1. The court-furnished figures do not add up correctly. 2. 25 Cal. App.3d 889, 102 Cal. Rptr. 255 (1972). division, since he had not yet retired. He contended that the benefits were contingent on both his actual retirement and survival and that, as of the date of the divorce, they were a mere expectancy not properly subject to division as community property. Held: Judgment of the trial court affirmed. Military retirement benefits earned over the period of a marriage are community property to that extent. The court, however, modified the judgment by identifying retirement benefits as monthly entitlements vice a lump-sum entitle ment. II. For years immemorial, one of the most attractive inducements in recruiting and retaining military personnel has been the statutory promise of retired pay3 for officers and certain enlisted personnel and retainer pay for specified enlisted personnel until they were eligible for retired pay. Eligibility is dependent on the completion of a specific number of years of active service or satisfactory service in the case of reservists; 6 placement on the disability retired list; or the attainment of statutory age.8 Members of the military service have been assured that their retired pay was inviolate, i.e., it was not subject to levy or garnishment. The member has believed for generations that "this is my reward for serving my country." So it is in most States. 7 In a series of fairly recent decisions, the courts of several of the community-property States have been making increasingly deeper inroads into the traditional concept that military retirement benefits are not community property even though acquired during coverture and therefore not divisible as community property in a divorce action. One of the latest in a series of decisions, Bensing v. Bensing,10 further extends the inroads made by the more recent decisions, but has nevertheless put what appears to be an ultimate limitation on the division of the pension. The courts are now taking the position that pension benefits are part of the consideration earned by the member, not mere gratuities. This position has been a gradual evolution from an early position set forth in Lynch v. United States,11 concerning the treatment of War Risk Insurance. In addressing the point of whether a pension payable to a member was a mere gratuity or a vested right, Justice Brandeis stated: 3. 10 U.S.C. §§ 6325, 6323 (1970). 4. 10 U.S.C. § 6330-1-2 (1970). 5. 10 U.S.C. § 6323 (1970) (officer); 10 U.S.C. § 6326 (1970) (enlisted). 6. 10 U.S.C. § 6327 (1970). 7. 10 U.S.C. § 1201 (1970). 8. 10 U.S.C. § 6390 (1970). 9. 23 Comp. Gen. 911 (1944). 10. 25 Cal. App.3d 889, 102 Cal. Rptr. 255 (1972). 11. 292 U.S. 571, 577 (1934). Pensions, compensation allowances, and privileges are gratuities. They involve no agreement of parties; and the grant of them conveys no vested right. The benefits conferred by gratuities may be redistributed or withdrawn at any time in the discretion of Congress. III. That characterization of the pension remained static until 1966 when the Tax Court stated, in Wilkerson v. Commissioner,12 that "Army retirement pay represented additional compensation for past services." The court held that military retirement pay was a part of the community property for Federal income tax purposes. The Tax Court interpreted the Arizona community-property law to say that the entire retirement pay, regardless of marital status or domicile at the time accrued, was community property when paid, since the member was domiciled in a community-property State at the date it was paid. The community-property States,13 were quick to pick up the fact that the Tax Court and Federal court had acknowledged that the monies received from military pensions were community property vice separate property. They rapidly began eroding the concept that a service member has a separate right to own and dispose of funds received as military retired pay, even though no deductions had been made from the retirees' active-duty salary. Federal law14 establishes the procedure for computing retired pay once the member becomes eligible, but does not establish any procedure or requirement for deducting an amount from the members' salary to create a pension fund during the period of active service. California attempted to take the lead in French v. French,15 a divorce proceeding involving a Navy enlisted member who had been on active duty for 16 years and then transferred to the Fleet Reserve wherein he was entitled to retainer pay. The trial court included the husband's Fleet Reserve pay in the community property and divided it equally between him and his wife. The husband appealed asserting that the amounts received in the interim until he completed thirty years' service did not represent compensation for services previously rendered, but in fact constituted compensation for services currently being rendered and thus not part of the community property subject to division upon divorce. He noted that, under the Naval Reserve Act of 1938, a member of the Fleet Reserve was required to perform not more than two months' active duty in each four years, obey the regulations, and perform certain training duty or be ordered to active duty. He argued that his pay in the Fleet Reserve was compensation for the demands the Government placed upon him. The California Superior Court concurred and 12. 44 T.C. No. 718, affirmed, 368 F.2d 552 (9th Cir. 1966). 13. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, and Washing ton. 14. 10 U.S.C. § 1401 (1970). 15. 17 Cal.2d 775, 112 P.2d 235 (1941). reversed the lower court with respect to the character of the retainer pay.16 It held that that portion of the decree should be reversed. In Kirkham v. Kirkham,17 a Texas trial court determined that the husband had served in the Armed Forces for a period of 221⁄2 years; that he was eligible to receive retired pay; and that the retired pay represented a vested property right which had accrued by reason of his years of active service. The Court distinguished the case from the French case on the basis that Kirkham had met the basic requirement for retirement (completion of 20 years' active duty) and thus had a vested interest, whereas French was required to perform duties and could possibly be separated from the service before he perfected entitlement to retired pay. The trial court held that the retired pay was therefore community property subject to distribution pursuant to the divorce. Bonnie Jean and John Kirkham had been married 122 years of the total period of 221⁄2 that Kirkham served in the Armed Forces. On this basis the trial court awarded her a money judgment for an arbitrary 30% of the retired pay, since it was one of the very few property rights which they had acquired during the marriage. The Court of Civil Appeals of Texas affirmed the lower court decision both with respect to the interest in the retired pay and the division of the funds.18 At about the same time, the courts in the State of Washington in a divorce action, Morris v. Morris,19 became interested in the division of the military pension. The trial judge, on the assumption that a military pension was a gratuity to the husband from the Federal Government and not community property, made no distribution of the pension. He did award the wife alimony of $125 per month until she remarried or became employed and earning more than $300 per month. The wife appealed, contending that her former husband's military retirement pension was not a gift but rather was in fact a divisible asset of the marital community. On appeal the Supreme Court of Washington stated that "[a]ll of the property of divorce litigants, whether it be separate or community in nature, is subject to fair, reasonable and equitable disposition by the divorce court." The use of the phrase "[a]ll of the property . . . whether it be separate or community... may have opened an even-wider wedge. The court went on to say that "[t]he wife would have been provided more of an element of security if the arrangements worked out by the trial judge had given her an interest in a specific amount of the military pension." The court affirmed the lower court holding except to change the substance and security aspect of the property division.20 The position that retired pay is not a gift but rather 16. Id. 17. 335 S.W.2d 393 (Tex. Civ. App. 1960). 18. Id. 19. 69 Wash.2d 506, 419 P.2d 129 (1966). 20. Id. 1 additional compensation for past service which is a part of the community property was thus being established in another of the community-property States. Texas continued to struggle with problems incident to the division of community property. In Mora v. Mora21 the appellant had completed over 25 years of service in the Marine Corps at the date of his divorce. Captain Mora was eligible for retirement, but he had not yet retired. The trial court made distribution of those items enumerated as community property. His military pension was not one of the enumerated items. On appeal, his wife raised the issue that this military pension was a part of the community property and should have been divided. Captain Mora, on the other hand, argued that he had not yet retired and that his retirement was subject to forfeiture if he received a dishonorable discharge or died while he was still in the service. The court, relying on Herring v. Blakely,22 decided that Captain Mora had served in the Marine Corps for a sufficient period of time to entitle him to retirement rights and that he had thus ". . . obtained a property right which is vested even though the benefits were not payable at the time the divorce was granted." The court further held that “[t]he fact that a right may be forfeited does not reduce it to the base status of a ‘mere expectancy'. . . . [T]he contingencies relied on by appellee in support of his argument that his interest in the retirement plan is not 'property' merely make his interest subject to divestment." The court concluded that the lower court should have considered the pension prior to dividing the community assets and remanded the case to the trial court for further proceedings.23 The New Mexico courts encountered a similar issue in LeClert v. LeClert.24 The plaintiff, a naval officer who commenced his active duty in 1943, married the defendant in 1949. They obtained a divorce on 12 March 1968 just prior to the plaintiff's scheduled retirement which was to be effective on 1 July 1968. The trial court found that 73% of the retirement pay to which the plaintiff would become entitled upon his retirement was earned during coverture and accordingly was community property, one half of which it awarded to the former wife. LeClert appealed, relying strongly on the holding in French v. French.25 He contended that, since he was not yet retired, his pension was only an expectancy and not a vested right. The court distinguished the two cases, noting that Mr. French was an enlisted man transferred to the Fleet Reserve wherein he had a continuing obligation to serve in the Navy and to be subject to orders to active duty; whereas LeClert was being ordered to the retired list with no similar demands placed upon him, except to be recalled to 21. 429 S.W.2d 660 (Tex. Civ. App. 1968). 24. 80 N.M. 235; 453 P.2d 755 (1969). |