Opinion
For Opinion on Hearing see, 119 Cal.Rptr. 113, 531 P.2d 425
Opinions on pages 786-803 omitted.
HEARINGS GRANTED
Jones, Tellam, Irving & Estes and Joel C. Estes, San Diego, for appellant and respondent Michiele G. Loehr.
Hervey, Mitchell, Ashworth & Keeney and Thomas Ashworth III, San Diego, for respondent and appellant David D. Loehr.
OPINION
COLOGNE, Associate Justice.
Michiele and David Loehr both appeal from portions of an interlocutory judgment of dissolution of marriage entered January 23, 1973. Michiele attacks the portion ordering David to pay her $1.00 per year as child support. David challenges the trial court's awarding Michiele a percentage of all military pension and retirement benefits he receives as a result of his military service.
Michiele and David married July 9, 1966, and separated on June 13, 1972. They had one child. David received a commission as a Naval officer on June 12, 1965, and was placed on the temporary disability retired list February 1, 1972 (see 10 U.S.C. §§ 1202 and 1376(b)). The marriage thus lasted 133/159ths or 83.6 percent of David's [114 Cal.Rptr. 537] approximately six and one-half years of active duty.
Section 1202 requires the Secretary of the Navy to place certain non-permanently disabled persons on the list, with retired pay, as follows: 'Upon a determination by the [Navy] 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, would be qualified for retirement under section 1201 of this title but for the fact that his disability is not determined to be of a permanent nature, the Secretary shall, if he also determines that accepted medical principles indicate that the disability may be of a permanent nature, place the member's name on the temporary disability retired list, with retired pay computed under section 1401 of this tittle.' (Emphasis added.)
David received a temporary physical disability rating of 90 percent as a result of an accident on November 29, 1970, causing him 40 percent loss of hearing in the left ear, blindness in the right eye, inability to scan with the left eye, partial loss of taste, skull damage and possible brain damage. He thus became entitled to retired pay amounting to $735.84 per month which was 75 percent of his base pay. The retired pay is nontaxable to David for income tax purposes.
The dollar figure is computed with reference to the monthly basic pay of grade to which the serviceman is entitled under certain provisions (see 10 U.S.C. §§ 1372 and 1401, formula 2). The figure cannot be less than 50 percent or more than 75 percent of the pay upon which the computation is based. (10 U.S.C. § 1401, formula 2.)
The accident also resulted in a personal injury claim settlement totalling $43,583.47 to David. He received and invested the first $35,000 of the settlement at five percent interest.
At the time of trial Michiele was in her third year of teaching, receiving $584 per month net salary and $124 per month social security disability payments for the benefit of the child. As her share of the community property the trial court assigned her certain household furniture and furnishings, pension and retirement rights as a teacher, the balance of a credit union account, and a life insurance policy on her life, all of which the parties stipulated were of equal value to furnishings, insurance policies and a car assigned to David.
In addition, the court assigned to Michiele, as part of her share of the community property, 41.8 percent (1/2 of 83.6%) of all military pension and retirement benefits received by the husband. This amounted to $307 per month.
This figure was computed as representing Michiele's entitlement based on the duration of David's military service while married (133/159ths of the time in service). The parties do not contest the computation.
The Trial court denied Michiele any spousal support and ordered David to pay $1.00 per year as child support for the minor child of the parties. The court ordered David to retain or designate the child as beneficiary (until she reaches age 21) of two life insurance policies having a total face value of $20,000. Michiele's financial declaration showed monthly expenses (including those attributable to the minor child of the parties) of $1,135; and her net worth at the time of trial was between two and three dollars.
The court assigned David the entire amount of $43,584.47 as community property personal injury damages. (See Civ.Code § 4800(c).) Aside from interest income on this amount his monthly income under the court's order included the $428 balance of the retired pay and a social security disability payment of $331. His financial declaration showed total monthly expenses of $736.70.
Civil Code section 4800(c) provides, in part: '. . . community property personal injury damages shall be assigned to the party who suffered the injuries unless the court, after taking into account the economic condition and needs of each party, the time that has elapsed since the recovery of the damages, and all other facts of the case, determines that the interests of justice require another disposition. In such case, the community property personal injury damages shall be assigned to the respective parties in such proportions as the court determines to be just, except that at least one-half of such damages shall be assigned to the party who suffered the injuries. As used in this subdivision, 'community property personal injury damages' means all money or other property received by a married person a community property in satisfaction of a judgment for damages for his or her personal injuries or pursuant to an agreement for the settlement or compromise of a claim for such damages, unless such money or other property has been commingled with other community property.' (Emphasis added.)
We first consider David's appeal asserting the retired pay is a disability payment [114 Cal.Rptr. 538] and as such is his separate property under Civil Code section 5126(a)(3).
Civil Code section 5126(a)(3) provides:
Since the trial of this case the California Supreme Court decided In re Marriage of Fithian, 10 Cal.3d 592, 111 Cal.Rptr. 369, 517 P.2d 449. The Fithian case dealt with the community property status of military retired pay accruing to a non-disabled serviceman who completed over 20 years of active service (10 U.S.C. § 6323(a)).
The court stated the rule 'that retirement benefits which flow from the employment relationship, to the extent they have vested, are community property subject to equal division between the spouses in the event the marriage is dissolved' (In re Marriage of Fithian, supra, 10 Cal.3d 592, 596, 111 Cal.Rptr. 369, 371, 517 P.2d 449, 451). It concluded the military retired pay of a Marine Corps officer with 22 years of active service could properly be held to be within the rule as community property subject to equal division, and this holding in no way interfered with the administration or goals of the federal military retirement pay system. (In re Marriage of Fithian, supra, 10 Cal.3d 592, 604, 111 Cal.Rptr. 369, 517 P.2d 449.) It thus upheld other California cases determining federal military retirement pay was community property subject to equal division on dissolution (see In re Marriage of Brown, 27 Cal.App.3d 188, 103 Cal.Rptr. 510; Bensing v. Bensing, 25 Cal.App.3d 889, 102 Cal.Rptr. 255; In re Marriage of Karlin, 24 Cal.App.3d 25, 101 Cal.Rptr. 240).
In all of those cases the serviceman had fulfilled the minimum years of active service (usually 20 years) required for entitlement to the military retirement pay (see, e. g., 10 U.S.C. § 6323(a)). There was no question in those cases whether the right to the retirement benefit had 'vested.' (Cf. French v. French, 17 Cal.2d 775, 778, 112 P.2d 235.) As pointed out in the Fithian case the right vests 'when an employee acquires an irrevocable interest in a fund created by his own contributions and/or the contributions of his employer.' (In re Marriage of Fithian, supra, 10 Cal.3d 592, fn. 2, p. 596, 111 Cal.Rptr. 369, p. 371, 517 P.2d 449, p. 451, emphasis added.)
In David's case there has been no vesting of the type involved in the 20 or more years active service cases and as defined in Fithian. David's retired pay rests solely on his continued status as a temporarily disabled person. Under 10 U.S.C. section 1210(a) he is required to take a physical examination at least once every 18 months under penalty of termination of his disability retired pay if he fails to report for an examination without just cause. He can maintain the temporary disability status for no longer than five years; if after five years the Navy Secretary determines the physical disability for which he was placed on the temporary disability list still exists, the disability is required to be considered a permanent one. (10 U.S.C. § 1210(b) and (h).)
If his disability is determined at the periodic (18 month) or final (five year) physical examination to be permanent he is subject to be retired as a permanently disabled person. (10 U.S.C. § 1210(c).) The permanent disability status would entitle him to retired pay if the disability at the time is at least 30 percent (10 U.S.C. §§ 1201, 1210(c)). If the disability is less than 30 percent, he is subject to separation from the service, with severance pay but not retired pay (10 U.S.C. §§ 1203, 1206, 1210(e)). Finally, if at the time [114 Cal.Rptr. 539] of the periodic or final physical examination he is determined to be physically fit he is subject to recall to duty with his consent or to termination of retired pay if he does not consent to recall (10 U.S.C. §§ 1210(f), 1211(b), (c) and (d)).
These possibilities distinguish David's rights in continued retired pay from those irrevocable vested rights of retired military personnel with over 20 years of active service. David's retired pay rights are not so vested and, though being received, are little more than an expectancy in lieu of income to which the requirement of equal division is inapplicable (French v. French, supra, 17 Cal.2d 775, 778, 112 P.2d 235).
The continued right to the retired pay in David's case rests solely upon his continued status as a disabled person. It is entirely revocable.
This conclusion does no violence to the holding of cases such as Busby v. Busby (Tex.), 457 S.W.2d 551, which held disability retired pay of a serviceman with over 20 years of active service was community property subject to equal division on dissolution of the marriage. (See also Dominey v. Dominey (Tex.Civ.App.), 481 S.W.2d 473.) A feature of the precedent cases was the fact the right to voluntarily retire had vested. In David's situation no vested right to retire exists by virtue of length of service. (See 10 U.S.C. § 6323(a).) David's retired pay status is thus distinguishable.
Aside from the revocability aspect which takes David's retired pay out of the Fithian case definition of a vested retirement benefit (see In re Marriage of Fithian, supra, 10 Cal.3d 592, fn. 2, p. 596, 111 Cal.Rptr. 369, 517 P.2d 449), the retired pay he receives, though flowing from his employment relationship during marriage, does not accrue primarily or even substantially as a right to which the husband and wife can be said to have contributed. Rather, it is a right primarily resulting from a serious personal injury to David.
As a right devolving from David's personal injury the temporary disability retired pay he receives takes on the same characteristics as the $43,584.47 community property personal injury damages assigned to him and is fully within the policy underlying Civil Code sections 4800(c) and 5126(a). It takes no strained statutory construction to conclude the temporary disability retired pay was, before the interlocutory judgment, within the phraseology 'money . . . received . . . as community property in satisfaction of a judgment for damages for his . . . personal injuries or pursuant to an agreement for the settlement or compromise of a claim for such damages . . .' (Civ.Code § 4800(c)) and, since the interlocutory judgment, the same (Civ.Code § 5126(a)). (See Estate of Rogers, 24 Cal.App.3d 69, 72-77, 100 Cal.Rptr. 735, holding personal injury damage money received by way of compromise settlement within statute making personal injury damages awarded 'in a civil action' the separate property of the recipient spouse.)
Cases holding disability payments, such as workmen's compensation, made or accruing during marriage are community property are entirely consistent with the conclusion we reach. (See Northwestern R. Co. v. Industrial Acc. Com., 184 Cal. 484, 486-487, 194 P. 31; Estate of Simoni, 220 Cal.App.2d 339, 344, 33 Cal.Rptr. 845.) So too are cases which look to the closes relationship between the particular benefit and the employee's earnings for his services before concluding the benefit is a community property asset (see, e. g., Estate of Foy, 109 Cal.App.2d 329, 332-333, 240 P.2d 685, dealing with an employer-purchased policy of life insurance on the employee's life). Where continued disability rather than the employment relationship, is the dominant reason for continuing the payment (as in David's situation), the compensation for employment factor is not present.
David's temporary disability retired pay was not an asset of the community to be divided upon a theory of contribution during the marriage. Rather, it is to be considered his separate property within the scheme of law applicable to accumulations of persons with respect to whom an interlocutory judgment of dissolution has been entered. (See, e. g., Civ.Code, § 5119.) [114 Cal.Rptr. 540] The retired pay must, nevertheless, be considered by the trial court in determining child support (Civ.Code § 4700).
On Michiele's appeal she asserts the trial court erred in making an award of child support in the nominal sum of one dollar per year.
Review of the record, particularly those portions dealing with the parties' relative abilities to work and the child's needs, do not permit our concluding the trial court abused the broad discretion reposed in it to establish an amount necessary for the child's support, maintenance and education. (Civ.Code § 4700; see Gudelj v. Gudelj, 41 Cal.2d 202, 209, 259 P.2d 656.) In this connection the different facts of the parties' earning abilities and the children's needs in the case of Winn v. Winn, 143 Cal.App.2d 184, 299 P.2d 721, relied on by Michiele, make it distinguishable from the case at hand.
The child support order did not constitute an abuse of discretion under the circumstances before the court at the time the order was made. The trial court did say, however, it was making the order for child support relying on the 'large percentage of his retirement pay' it assigned to Michiele. Inasmuch as this portion of the order is being reversed the court should review the facts relative to child support and make the order based on the appropriate disposition of such retirement pay.
In light of the foregoing the portion of the interlocutory judgment awarding Michiele 41.8 percent of all military pension and retirement received by David, requiring his payment of this percentage to her, and awarding David 51.2 percent of the military pension and Retirement benefits is reversed with directions to assign to David all the military pension and retirement benefits as are before the court at this time.
The portion of the interlocutory judgment ordering David to pay Michiele one dollar per year child support is reversed. On remand the trial court shall redetermine the amount of child support to be awarded Michiele. Each party shall bear his own costs of appeal.
GERALD BROWN, P. J., and WHELAN, J., concur.
'(a) All money or other property received by a married person in satisfaction of a judgment for damages for personal injuries or pursuant to an agreement for the settlement or compromise of a claim for such damages is the separate property of the injured person if such money or other property is received as follows:
'. . ..
'(3) After the rendition of an interlocutory decree of dissolution of a marriage [and while the injured person and his spouse are living separate and apart].' (1972 amendments deleted the condition relating to living separate and apart (Ch. 905, Stats.1972).)