Summary
In Fox v Fox (276 App. Div. 859), the court garnished respondent's interest in the "Retirement System", which respondent's employer, Macy's, had established.
Summary of this case from Matter of M H v. J HOpinion
December 19, 1949.
Appeal by plaintiff from an order denying her motion for sequestration and appointment of a receiver or, in the alternative, for a direction that certain funds be held in status quo subject to the further order of the court. Respondent Fox, and appellant, formerly husband and wife, were divorced by decree granted January 2, 1942, which decree also directed said respondent to pay appellant the sum of $20 per week for the support of their two children. He fell into arrears, on account of which a money judgment was entered against him on March 8, 1948, in the sum of $2,314.58, and an order was entered on March 10, 1949, adjudging him to be in contempt of court with respect to payments which were to have been made during a period of time following that which was covered in the judgment. He has been meeting the required payments as they accrue since January 18, 1949, plus $3 per week on account of arrears. However, as of January 18, 1949, he was in arrears in the total amount of $3,171.84. In this application, appellant sought to reach said respondent's interest in the "Retirement System" which his employer, respondent R.H. Macy Co., Inc., had established for the benefit of certain of its employees. The retirement system consists of a "Pension Plan" and a "Profit Sharing Plan". Respondent Chase National Bank, by agreement with respondent Macy, is the trustee of both plans. Respondent Fox is a "Member" of the pension plan and a "Participant" in the profit-sharing plan. Under the pension plan, benefits are payable to members who attain the age of sixty-five years while in the service of the employer or, upon request of the particular member involved, (1) at age fifty-five and completion of at least twenty years of continuous total service or, (2) regardless of attained age, upon completion of at least thirty years of continuous total service. Fox is forty-two years of age and has been in the employer's service since December 1, 1930. Accordingly, the earliest time when he would be eligible for the benefits under the pension plan is at the end of the year 1960, provided he remained continuously in the employ until that time. No money has been set apart to Fox's credit under this plan. In our opinion, his interest in the pension plan is contingent and not in the nature of property which is the proper subject of sequestration. The situation is different so far as the profit-sharing plan is concerned. Its benefits are payable in case of death of a participant while in the employer's service, or upon termination of employment by reason of disability, or termination of employment for other reasons after the participant shall have completed at least fifteen years of total service. Thus, if Fox's employment were terminated presently, he would be entitled to payments of benefits under this plan. There stands to his credit under this plan the sum of $768.40 as of January 31, 1949, and, as stated in an affidavit submitted in behalf of respondent Macy, if Fox resigned this year, his "severance benefits would be approximately $750.00 to $775.00". Payments may be made in a lump sum, in installments, or by purchase of an annuity, in the discretion of the "Administrative Committee" of the retirement system. Fox's rights to these benefits are no less in the nature of property than were the rights of the pensioner in La Hondere v. La Hondere ( 256 App. Div. 942), where this court held that sequestration was proper, although in the cited case the pensioner had actually been retired and was receiving payments, as a pension. The fact that payment or payments to Fox will not commence until some time in the future does not alter his interest as one which may be the subject of sequestration. The granting of sequestration here does not mean that the right to collect any moneys from the profit-sharing plan have accelerated, but only that the benefits will be payable to the receiver at the time or times when they would become payable to Fox. The general provision of the retirement system exempting its benefits from any claim of a creditor of any member, participant or beneficiary, and from "attachment, garnishment or other legal or equitable process" by any such creditor, is no more applicable to bar sequestration in aid of collecting arrears in payments required to be made by judicial direction for the support of a member's or participant's children than are similar exemptions in statutes with respect to municipal pensions ( Zwingmann v. Zwingmann, 150 App. Div. 358; Monck v. Monck, 184 App. Div. 656; Weigold v. Weigold, 236 App. Div. 126; Hodson v. New York City Employees' Retirement System, 243 App. Div. 480; Legler v. Legler, 244 App. Div. 55; Montgomery v. Montgomery, 153 F.2d 634), and in contracts of insurance and annuity ( Matter of Franklin v. Franklin, 176 Misc. 612, affd. 262 App. Div. 991; Matter of Jackson v. Jackson, 194 Misc. 132; 194 Misc. 134). The further provision of the retirement system to the effect that a member, participant or beneficiary shall forfeit his rights to benefits in case of fraud might serve, in a proper case, to divest him of such rights, but, in the absence of any claim that there has been any fraud, the provision is inoperative. There is no warrant in law for the granting of the alternative relief requested, that is, that the contributions by respondent Macy to the retirement system funds for the benefit of respondent Fox "be held in status quo". This determination is without prejudice to any future applications which respondent Fox might be advised to make to exclude any portion of his interest in the profit sharing plan which might be collectible, in the light of his own requirements and those of others who may be dependent upon him. (See Ferguson v. Ferguson, 247 App. Div. 24, and Weigold v. Weigold, supra.) Order reversed, without costs, and matter remitted to the Special Term for the making of an order granting appellant's motion for sequestration and appointment of a receiver, and otherwise denying the motion, in accordance with the foregoing views. Carswell, Acting P.J., Johnston, Adel, Wenzel and MacCrate, JJ., concur. [See post, p. 917.]