active duty in time of war or national emergency. Looking to precedent cases in California and Texas, the court noted that such monies were earned property rights which accrued during each year of his Navy service. The court concluded that the retirement pay to which he became entitled was not an expectancy payable at some indefinite future date after he completed all his requirements but rather was a definite vested right. The orders for his retirement were already determinative of the pay to be received by Cdr. LeClert, which was to be in payment for services performed, partly during the marriage.26 The court affirmed the trial-court division of the retired pay. This holding was consistent with the previous Texas holding in the Mora case. The State of Texas carved a little further into a service member's military retirement pay in the case of Busby v. Busby.27 Major Earl E. Busby entered the United States Air Force in September 1942. He married Mary Lou Busby in March 1946. Upon the completion of 20 years' service, he was eligible for voluntary retirement but did not elect to retire at that date. On 25 July 1963 the Air Force ordered his disability retirement following a medical determination that he was unfit for duty due to a diabetic condition and a thyroid deficiency. The transfer to the disability retired list was effective 19 July 1963. In a suit for divorce, the trial court disposed of various items of real and personal property but did not consider Major Busby's disability retirement pay. Mary Lou Busby filed a suit on 1 November 1967 to recover and have partitioned equally the disability retirement benefits which had been paid to her former husband at the date of the initial trial and to be awarded one half of all benefits accruing in the future. Major Busby replied that he never had a property right in the disability retirement benefit during the time of marriage. He contended that such right arose solely due to his physical inability to perform future duties, and that it was accordingly his separate property. He further argued that he had not voluntarily retired, predicated on the completion of the required period of service, but that he had been involuntarily retired due to his physical inability to continue to perform his duties satisfactorily. It was pointed out that his retirement was pursuant to 10 U.S.C. § 1201 (1970),28 and that retirement under such statute did not involve an election by the service member, but rather was based on a decision by the Secretary of the service concerned that the service member was disabled. 26. Id. 27. 457 S.W. 551 (Tex. Sup. Ct. 1970). 28. Upon a determination by the Secretary concerned that a member of a regular component of the armed forces entitled to basic pay, or any other member of the armed forces entitled to basic pay who has been called or ordered to active duty (other than for training under section 270 (b) of this title) for a period of more than 30 days, is unfit to perform the duties of his office, grade, rank, or rating because of physical disability incurred while entitled to basic pay, the Secretary may retire the member, with retired pay computed under section 1401 of this title, The court in arriving at its decision relied on the statutory provisions of the Code which permit disability retirement if the member has completed as little as 30 days' active duty prior to the disability, if the disability was the proximate result of active duty in time of war and was rated at 30% or higher. The requirements that it be in time of war and at least 30% phase out as the period of active service increases. The court held that, since Major Busby had already completed the 20 years of service, he had met the requirement for voluntary retirement and therefore had a vested right-particularly since the disability retirement benefits accrued during the marriage. The court quickly disposed of the argument that, since the trial court had not divided this retirement benefit initially as part of the community, the issue was res judicata. The court said that it was well settled that, where the divorce decree fails to provide for a division of the community property (the husband and wife became tenants in common or joint tenants), they could later seek a partition of the undivided community property. The court suggested that, in the future, counsel for litigants in divorce suits should call to the attention of the trial judge all of the assets of the marriage.29 During the period that the courts were partitioning the military pension in the various community-property States when a divorce was involved, the Internal Revenue Service also had occasion to look at the treatment to be accorded such income. The right to claim a retirement-income credit predicated on a military retirement pension earned while domiciled in a community-property State became the subject of an Internal Revenue Service Ruling.30 In that case, the husband and wife maintained their domicile in Arizona for thirty years, which included the entire period of the husband's service in the Armed Forces of the United States. The husband's active-duty pay in each of ten calendar years exceeded $1,200 [$600 attributable to each spouse]. When he retired, they moved to a noncommunity-property State and if the Secretary also determines that— (1) based upon accepted medical principles, the disability is of a permanent nature; (2) the disability is not the result of the member's intentional misconduct or willful neglect, and was not incurred during a period of unauthorized absence; and (3) either (A) the member has at least 20 years of service computed under section 1208 of this title; or (B) the disability is at least 30 percent under the standard schedule of rating disabilities in use by the Veterans' Administration at the time of the determination; and either (i) the member has at least eight years of service computed under section 1208 of this title; (ii) the disability is the proximate result of performing active duty; or (iii) the disability was incurred in line of duty in time of war or national emergency. 29. 457 S.W.2d 551, 555 (Tex. Sup. Ct. 1970). 30. Rev. Rul. 63–169, 1963-2 Cum. Bull. 14. 398 changed their domicile. On their tax returns, they each claimed a retirement income credit under Section 37 (a) of the Internal Revenue Code. The regulation under Section 37 of the Internal Revenue Code provides that, if retirement income constitutes community property under pertinent State law, the retirement income credit of each spouse shall be computed by taking into account one half of the amount. The Internal Revenue Service looked to the Arizona State law and found that, under Arizona law, the character of the property is determined at the date of acquisition and that, in the case of a married couple, it is determined by the law of the matrimonial domicile at the time of acquisition. In speaking on one of the issues, the Internal Revenue Service stated that, for purposes of section 37 of the Code, ... retirement pay of members of the Armed Forces based on age or length of service is regarded as additional compensation for past services which qualifies as retirement income within the meaning of that section, and no part of such pay is considered attributable to services rendered during the taxable year." In addressing the other issue, the Internal Revenue Service said: "It is the general rule that a change of domicile from a community to a noncommunity property state does not affect the community character of property acquired while the spouses were domiciled in the community property state." Since the character of retirement pay based on age and length of service was determined by the marital status and domicile at the time the services were performed, each spouse was permitted to compute the retirement-income credit utilizing one half of the retirement pay as retirement income. The Internal Revenue Service later became involved in the tax treatment to be afforded monthly payments made to a wife pursuant to a community-property settlement in a divorce proceeding. A Texas taxpayer wife had obtained a divorce from her military officer husband. The property settlement stated that entitlement to retirement pay was community property; that the retirement pay would be approximately $300 per month; and that the taxpayer wife would be entitled to approximately $150 per month. The agreement further provided that the taxpayer wife relinquished her right in the first 69 payments of the retirement pay in exchange for her husband's promise to her approximately $300 per month for 36 months. pay In the ruling, the Service stated, inter alia, [slince the Federal laws providing for the payment of Armed Forces retirement benefits for age or length of service do not preclude such benefits being divided as community property for income tax purposes, the determination of whether the benefits are separate or community property in a specific situation is governed by State law.32 The Ruling continued, [s]ince the payments the wife is entitled to receive as retirement benefits are actually 31. Id. 32. Rev. Rul. 69-471, 1962-2 Cum. Bull. 10. from her share of the community property, any question of the payment being alimony is foreclosed by Section 1-71-1 (c) (4) of the Income Tax Regulations which specifically states that "Section 71 (a) (1) or (2) does not apply to that part of any periodic payment attributable to that portion of any interest in property, which interest originally belonged to the wife.” The Internal Revenue Service accordingly held that the monthly payments paid pursuant to a property-settlement agreement under a divorce decree providing for relinquishment of her rights in his retirement pay were not deductible alimony payments to him and were includible in the ex-wife's gross income as ordinary income in the year received.33 This is tantamount to dual taxation on such partitioned pension income. IV. At the conclusion of the Mora case, it began to be evident that the military retirement pay could be divided in any divorce action in a community-property State. Further, the courts appeared to have given the spouse a property right to this income which could follow the ex-spouse into any future marriages and possibly be devised to the ex-spouse's heirs or assigns. One could even envision W receiving a right to a percentage of ex-H's pension, then marrying H-2, thereafter W dies and H-2 acquires her right to a portion of H-1's pension. The pertinent question seemed to be: Where would the courts stop? The decision in Bensing tentatively appears to have laid that issue to rest in California, at least inasmuch as the courts have decreed that the spouse shall receive a monthly sum in payment of the division of the community property until the death of either one of them. The heirs and assigns of the deceased ex-spouse will have no further claim on the retirement pension should the military member survive; neither shall the estate of the military member be charged with settling a final lump sum on the ex-spouse if the military member has managed to accumulate sufficient monies to settle such claim. The second question-concerning the direction the courts will go with respect to the partition of disability retired pay-is still largely unresolved. To date only the State of Texas has taken the position that the disability retired pay is pay earned during marriage even though it is awarded due to the member's inability to continue to perform services, and not because he has served the requisite period of time to be entitled to retired pay. Congress and the military have created this benefit to provide an existence or living for a member who has become incapacitated due to his service for his country. Texas, however, has said, in essence—[t]his is money for past service-not for your inability to work in the future. The community-property States are fast lining up on the side of dividing 33. Id. military pensions. To date Arizona, California, New Mexico, Texas, and Washington have held that such pensions are divisible as community property. There is no evidence to date that noncommunity-property States may decide that this pension should be considered in awarding a property settlement in the event of a divorce involving a military pension. Military members seeking divorces in community-property States who are eligible for retirement pensions should be alerted to this pattern of cases. There appears to be little hope that the trend will be reversed. One can only anticipate that Bensing may indicate a stopping point with respect to the partition of voluntary retired pay, but that Busby is merely the prelude to opening another door with respect to the partition of disability retired pay. Future Internal Revenue Service rulings may also broaden the taxability of such income rather than restrict it. Kastigar v. United States CONSTITUTIONAL LAW: SELF-INCRIMINATION: SUFFICIENCY OF USE AND DERIVATIVE-USE IMMUNITY TO COMPEL TESTIMONY SELF-INCRIMINATION. Kastigar v. United States, 406 U.S. 441 Lieutenant Eugene A. Hechtkopf, JAGC, USNR* I. CHARLES JOSEPH KASTIGAR and Michael Gorean Stewart were directed to answer questions before a grand jury. Although they had been granted immunity under the provisions of the Organized Crime Control Act of 1970,2 they refused to answer questions, asserting their privilege against self-incrimination under the fifth amendment of the Constitution of the United States. Kastigar and Stewart first opposed issuance of the grant of immunity on the ground that the immunity which the statute provided for * Lieutenant Hechtkopf is presently serving as an appellate Government counsel, Navy Appellate Review Activity, Office of the Judge Advocate General. He received the J.D. degree from William and Mary Law School in 1969. 1. The question of whether immunity from use of compelled testimony and its fruits is sufficient to compel testimony in the military will be discussed in this casenote. The discussion will be limited to constitutional, statutory, and case-law aspects of the question and will not include a consideration of departmental regulations which may have a bearing on the question. 2. 18 U.S.C. §§ 6001-6005 (Supp. 1970). Sections 6002-6005 of the Act are set forth at note 55, infra. |