Opinion
Kaufman & Wagner and Marcus M. Kaufman, San Bernardino, for plaintiff and appellant.
Thomas C. Lynch, Atty. Gen., and William L. Zessar, Deputy Atty. Gen., for defendant and respondent.
McCABE, Presiding Justice.
OPINION
Plaintiff filed a complaint for declaratory relief against Nicholas G. Phillipson, her former husband, and the Board of Administration, State Employees' Retirement System for the purpose of securing a judicial determination of her rights in the retirement account standing in the name of her former spouse. Plaintiff maintained that she was entitled to the $4,532.66 in the retirement fund by virtue of a divorce decree. The defendant Board accepted service and filed an answer. The defendant Nicholas G. Phillipson was served with summons and complaint, failed to appear, and his default was entered. Inasmuch as the facts are virtually undisputed, the cause was submitted without testimony being taken. The court ruled the plaintiff take nothing and entered judgment in favor The plaintiff Rose Phillipson, and the defaulting defendant, Nicholas G. Phillipson, were married in April 1948 and lived in California until their separation in January 1966. Four children were born as issue of the marriage. The plaintiff has had custody of the minors since the separation.
Now known as The Board of Administration, Public Employees' Retirement System (Gov.Code, §§ 20004, 22004.)
In September 1955, Nicholas commenced employment as a cook with the State of California at the California School for the Deaf in Riverside, California. He remained in state service until he voluntarily terminated his employment on April 1, 1966. During his state tenure, he made the required contributions to the Public Employees' Retirement System.
On April 14, 1966, plaintiff was granted an interlocutory judgment of divorce on the grounds of extreme cruelty. The superior court awarded her all the funds, moneys and credits in the state retirement account standing in Nicholas' name. On April 20, 1966, plaintiff served a written notice upon the Board in which she claimed the cash contributions in the retirement account.
On April 17, 1967, a final judgment of divorce was entered incorporating the property disposition made in the interlocutory decree. On May 18, 1967, plaintiff presented an additional demand for the funds and served a copy of the final decree upon the Board.
Nicholas, having found haven in another state, filled a claim for the retirement benefits in July 1967. He elected to receive monthly pension benefits. When he terminated his employment with the state, he had the option of withdrawing his accumulated contributions in the system with interest or, having qualified by reason of age and accumulated contributions, of electing to receive a monthly pension for life. (Gov.Code, §§ 20013, 20014, 21251.1.)
Confronted with conflicting claims to the retirement funds, the Board decided that this was a case of first impression and refused to pay either plaintiff's lump sum demand or the former employee's claim for monthly benefits.
The critical issue is whether the divorce court had the power to award or assign the state retirement benefits to the wife.
Where a divorce decree is rendered on the grounds of extreme cruelty, adultery or incurable insanity, the court shall assign the community property in such proportion as it may deem just. (Civ.Code, § 146.) All property acquired during the marriage through the work and labor of the husband is community property. (Civ.Code, §§ 162, 163, 164.) Under community property law, the husband and wife are deemed to have a present, existing and equal interest in his retirement benefits, and a divorce court may, upon appropriate grounds, award any or all of the retirement benefits to the prevailing party. (Civ.Code, §§ 161a, 146.)
The pension rights of a municipal employee are an integral part of his earnings. (Dryden v. Board of Pension Comrs., 6 Cal.2d 575, 579, 59 P.2d 104.) An employee's interest in the State Employees' Retirement System is community property. (Crossan v. Crossan, 35 Cal.App.2d 39, 40, 94 P.2d 609.) Pension rights earned and acquired during the course of a marriage constitute the community property of the employee and his spouse. (See French v. French, 17 Cal.2d 775, 778, 112 P.2d 235, 134 A.L.R. 366; Civ.Code, §§ 161a, 161b.) Pensions are subject to division in a divorce when and to the extent that the employee is certain to receive some payment or recovery of funds. (Williamson v. Williamson, 203 Cal.App.2d 8, 11, 21 Cal.Rptr. 164.)
While the foregoing principles enjoy statutory and judicial integrity, the question is squarely presented whether section 21201 of the Government Code embodied in the Public Employees' Retirement Act prohibits a California divorce court from awarding the retirement fund to the employee's spouse where the employee has qualified by age and service for retirement for service. Section 21201 of the Government Code reads, in essence, as follows: 'The right of a person to any benefit or other right under [the Retirement System] and the money in the Retirement Fund is not subject to execution, garnishment, attachment, or any other process whatsoever, and are unassignable * * *.' [Emphasis added.]
Where a public employee's governmental pension is statutorily exempt against the claims of creditors, the immunity extends to an execution for satisfaction of an alimony judgment (In re Smallbone, 16 Cal.2d 532, 534, 106 P.2d 873, 131 A.L.R. 222; Thomas v. Thomas, 192 Cal.App.2d 771, 784, 13 Cal.Rptr. 872; Miller v. Superior Court, 69 Cal.2d 14, 16, 69 Cal.Rptr. 583, 442 P.2d 663), and a judgment for child support. (Ogle v. Heim, 69 Cal.2d 7, 8-9, 69 Cal.Rptr. 579, 442 P.2d 659; Howard v. Howard, 166 Cal.App.2d 386, 387, 333 P.2d 417.)
While the retirement law expressly prohibits an assignment of pension benefits or retirement funds by the employee and exempts the benefits and funds on deposit in the system from creditors' claims, including a creditor spouse, the plaintiff here maintains that she is entitled to the retirement funds as an owner, not a creditor.
Where the right to receive retirement benefits or pension funds is a 'mere expectancy,' or is 'contingent' or has 'not vested' because of the possibility no funds may even be received or the right to receive the same is dependent upon a contingency that may never occur, there is no 'property' subject to distribution, (Williamson v. Williamson, supra, 203 Cal.App.2d 8, 21 Cal.Rptr. 164; see Thomas v. Thomas, supra, 192 Cal.App.2d 771, 13 Cal.Rptr. 872.)
In the case under review, Nicholas, who had qualified for retirement, resigned from public employment on April 1, 1966, prior to the rendition of the interlocutory judgment of divorce.
A wife of a public employee acquires a vested interest in a pension when it becomes payable to him; she has a right to assert an interest in the payments to the employee during his lifetime; upon a division of the community estate, she is entitled to claim an interest in the pension. (Benson v. City of Los Angeles, 60 Cal.2d 355, 360, 362, 33 Cal.Rptr. 257, 384 P.2d 649.) Here, the pension rights had vested in the husband at the time the divorce decree was rendered; therefore, the parties had present, existing and equal interests in the fund at the time of the default divorce. (Civ.Code, § 161a.)
However, the Board charges that the non-assignability provision of the retirement law (Gov.Code, § 21201) deprives a divorce court of the power to distribute the benefits as community property (Civ.Code, § 146), and that the non-assignability clause eliminates present, existing and equal characteristics of the retirement benefits as community property. (Civ.Code, § 161a.)
The argument is untenable. Section 161b of the Civil Code provides, in substance, that notwithstanding the present, existing and equal community interests of the spouses in funds in a retirement program, the employer is protected against possible double payment by payment to the employee prior to notice of an adverse claim. Section 161b thus expressly recognizes the community nature of a governmental retirement fund.
Likewise, there is no conflict between section 146 of the Civil Code and the non-assignability provision of section 21201 of the Government Code. The Board contends that the language in section 146 of the Civil Code that 'In case of the dissolution of the marriage * * * the court shall make an order for disposition of the community property * * *.' amounts to the 'assignment' prohibited by section 21201 of the Government Code.
Statutes are to be construed to propose harmony, not conflict. (Wemyss v. Superior Court, 38 Cal.2d 616, 241 P.2d 525; Code Civ.Proc. § 1858.) The meaning of words should also be construed in harmony with the context in which they appear. (Wallace v. Payne, 197 Cal. 539, 544, 241 P. 879.) The prohibition against assignment Moreover, in construing the meaning and purpose of statutes, all the pertinent provisions must be taken into account and harmonized. (Stafford v. Los Angeles Employees' Retirement Board, 42 Cal.2d 795, 799, 270 P.2d 12; Wemyss v. Superior Court, supra, 38 Cal.2d 616, 241 P.2d 525.)
Under section 21210 of the Government Code, the spouse's right to make a claim to the employee's retirement fund is expressly recognized inasmuch as it provides, in part, that 'Notwithstanding the provisions of Sections 161a and 172 of the Civil Code, whenever payment or refund is made by [the Board] to a member, * * * such payment shall fully discharge [the Board and System] from all adverse claims thereto unless, before such payment or refund is made [the Board or System] has received * * * written notice by or on behalf of some other person that such person claims to be entitled to such payment or refund.'
This section recognizes the right of a spouse to make an adverse claim; otherwise, the section is meaningless. A court will not construe statutes to make portions thereof meaningless or unnecessary. (Stafford v. Los Angeles Employees' Retirement Board, supra, 42 Cal.2d 795, 270 P.2d 12.) It is obvious that section 21210 contemplates an adverse claim during the lifetime of the employee for one alternative is payment to the 'member.' No other person than the spouse could make a claim during the lifetime of the member as the fund is completely immunized against creditors under section 21201 of the Government Code. The spouse could only make an adverse claim during the lifetime of the member on the basis of ownership derived by virtue of a property division in a divorce or separate maintenance action. The spouse would be definitely barred from making any claim as a creditor. (Gov.Code, § 21201; Ogle v. Heim, supra, 69 Cal.2d 7, 69 Cal.Rptr. 579, 442 P.2d 659; Miller v. Superior Court, supra, 69 Cal.2d 14, 69 Cal.Rptr. 583, 442 P.2d 663.) Therefore, it necessarily follows that since no one else could assert a valid claim during the member's lifetime, only the spouse could assert a claim as an owner.
The Board also urges by way of analogy that a divorce court lacks power to award or assign the husband's interest in a federal government insurance policy to the wife; therefore, since a disposition of a serviceman's policy is improper under section 146 of the Civil Code, similarly, a distribution of state retirement benefits is also invalid because of the non-assignability provision contained in the State Retirement Act.
While there is authority that state community property laws are inapplicable to a serviceman's life insurance policy (Wissner v. Wissner, 338 U.S. 655, 70 S.Ct. 398, 94 L.Ed. 424; Thoen v. Thoen, 248 Cal.App.2d 354, 56 Cal.Rptr. 614), the decisions are premised on two grounds: (1) The federal government has provided a comprehensive program which is to be administered on a uniform national basis so that it cannot be controlled or varied by state law (Wissner v. Wissner, supra); and (2) the federal statute expressly and mandatorily provides that the insured serviceman shall at all times have the right to designate and change the beneficiary, and the federal statute cannot be abridged by state property laws or private contract. (Wissner v. Wissner, supra; Thoen v. Thoen, supra.)
In the case at bar, there is no conflict between federal and state laws. Nor is there any conflict between the community property and the retirement laws. Therefore, the analogy is inappropriate.
The Board concedes that Nicholas' funds in the retirement system are community property, but urges that the divorce court must award other compensating community property to the spouse. While it is obvious Crossan v. Crossan,
Ogle v. Heim, Miller v. Superior Court,Finally, the Board asserts that section 21203 of the Government Code deprived the divorce court of the power to award the retirement benefits to the plaintiff. The statute provides: '[A]fter a member has qualified * * * as to age and service for retirement for service, nothing shall deprive him of the right to a retirement allowance * * *.' [Emphasis added.]
It is apparent that the section has application to the Public Employee's Retirement System itself. The section and its predecessor, section 103a of the State Employees' Retirement Act [1943 Stats., ch. 640, § 23.5, p. 2277], were enacted to make it a certainty that once an employee had qualified for a pension, no change or modification in the retirement law could deprive him of his vested right to a pension. While the government may undoubtedly make reasonable modifications and changes in a retirement program (Allen v. City of Long Beach, 45 Cal.2d 128, 131, 287 P.2d 765; Martin v. Los Angeles Met. Transit Auth., 238 Cal.App.2d 183, 187, 47 Cal.Rptr. 653), the section obviously prohibits the system from precluding an employee from receiving his pension. The section was not intended to abrogate the court's power of awarding retirement benefits. Moreover, section 21203 must be read in conjunction with section 21210 of the Government Code which recognizes that a spouse may have a vested right in the employee's retirement funds. Otherwise, there would be absolutely no purpose in immunizing the system from the danger of double payment.
While not relevant here, section 21201.5 of the Government Code also expressly recognizes that state retirement benefits are community property.
If we were to support the judgment of the trial court, in effect, we would be stating the spouse is excluded from claiming any part of the retirement fund here involved. This would lead to a conclusion that no part of the fund is community property. The latter conclusion is not sound for, as we have stated, it has been judicially determined that there is a vested community interest in each spouse.
Although it may be argued that the wife, who has no control over the management of or control over the community personal property, can reach, by court decree only, one-half of the contribution of community funds, there is no legislative history indicating that the Legislature intended to enact a law inferentially declaring a part of the contribution to be separate property, unawardable [or unassignable as the word assignable is used in section 146 of the Civil Code] by a court of competent jurisdiction. We cannot so hold. The fact the Legislature has enacted laws protecting the retirement fund from predatory procedures of creditors or from judgments awarding alimony or child suppport does not present reasonable and arguable foundation for a contention that a wife, having a vested community interest, may not reach the fund by competent court decree.
Nor can it be reasonably contended that a spouse, although granted a power of election by the Legislature, can prevent a court The judgment is reversed with directions to enter judgment for plaintiff and appellant declaring that she is the owner of, and entitled to payment of, all funds, credits and moneys standing in the name of her former spouse, Nicholas G. Phillipson, in Account No. 073-14-5679 in the Public Employees' Retirement System [formerly State Employees' Retirement System]; and further declaring that upon payment of said moneys, the Board of Administration, Public Employees' Retirement System shall be fully discharged from all liability in and to said account, including any adverse claim of the employee, Nicholas G. Phillipson.
GARDNER, J. pro tem ., concurs.
Assigned by Chairman of the Judicial Council.
KERRIGAN, Justice (concurring and dissenting).
I concur with the majority that the pension in this case is community property subject to distribution by the divorce court, and agree that the judgment should be reversed. However, I would limit the plaintiff's recovery to one-half of the employee's interest in the retirement system and, therefore, dissent with the majority decision awarding the plaintiff all funds, credits and moneys in the account standing in the name of her former husband.
An employee's interest in the State Employees' Retirement System [Public Employees' Retirement System] is community property (Crossan v. Crossan, 35 Cal.App.2d 39, 40, 94 P.2d 609), subject to a division in a divorce when and to the extent that the employee is certain to receive some payment or recovery of funds. (Williamson v. Williamson, 203 Cal.App.2d 8, 11, 21 Cal.Rptr. 164; Benson v. City of Los Angeles, 60 Cal.2d 355, 360, 362, 33 Cal.Rptr. 257, 384 P.2d 649.) The employee here qualified by reason of age and service for retirement, had actually terminated his state employment, and had attained retirement status at the time the interlocutory decree was rendered. Consequently, the husband and wife enjoyed present, existing and equal interest in the fund. (Civ.Code, § 161a.)
None of the authorities relied upon by the majority have ever considered whether the provisions of section 21201 of the Government Code preclude a divorce court from awarding the entire interest in a governmental employee's retirement fund to the non-employee-spouse. The statute absolutely prohibits levies and assignments. The effect of the statute is to immunize the retirement fund from the claims of creditors (Miller v. Superior Court, 69 Cal.2d 14, 69 Cal.Rptr. 583, 442 P.2d 663), including claims for alimony (Thomas v. Thomas, 192 Cal.App.2d 771, 784, 13 Cal.Rptr. 872) and child support (Ogle v. Heim, 69 Cal.2d 7, 69 Cal.Rptr. 579, 442 P.2d 659.)
Inasmuch as the law of California favors the enforceability of clauses protecting retirement benefits from the claims of creditors, the nonassignability provision contained City of San Jose v. Forsythe,
The retirement law is special legislation; the community property laws are general in nature. Where two statutes treat the same subject, one in a special way, and the other in a general way, unless they are irreconcilably inconsistent, the latter will not be held to have repealed or superseded the former, but the special act will prevail in its application to the subject matter. (County of Placer v. Aetna Casualty Co., 50 Cal.2d 182, 189, 323 P.2d 753.) The retirement act should prevail over the community property law insofar as it applies to the employee's one-half interest in the retirement system.
Two statutes should be harmonized, if possible, and effect given to both. (Brandt v. Superior Court, 67 Cal.2d 437, 442, 62 Cal.Rptr. 429, 432 P.2d 31.) The interpretation advanced herein would recognize the divorce court's power to award the community property interest to the wife under the community property law (Civ.Code, § 146), would constitute a meaningful interpretation of the prohibitory provisions of the Public Employees' Retirement Law (Gov.Code, § 21201), and would also give validity to the right of the spouse of an employee to assert a community interest in the fund during his lifetime. (Gov.Code, § 21210.)
I would reverse the judgment with directions to enter judgment declaring that plaintiff and her former spouse are entitled to share equally in all funds, credits, moneys and rights in the account standing in his name in the Public Employees' Retirement System.