Majauskas v. Majauskas

OPINION OF THE COURT Boomer, J. The judgment in this divorce action awards the defendant wife maintenance, child support and a share of the husband’s pension benefits. The parties were married on December 1, 1973 and this action was commenced on August 4, 1980. The husband has been a policeman since 1969 and has a vested but unmatured right to receive retirement benefits from the New York State Policemen’s and Firemen’s Retirement System. The husband asserts that the trial court improperly awarded the wife a share of [495] his pension rights since, under the language of the New York State Equitable Distribution Law (Domestic Relations Law, § 236, part B), pension rights do not constitute property subject to equitable distribution. We disagree and we concur with the holding of the trial court on this issue (110 Misc 2d 323). The statute provides that all marital property shall be distributed equitably between the parties (Domestic Relations Law, § 236, part B, subd 5, par c). A vested pension right is a form of deferred compensation for work performed and as such constitutes property (Damiano v Damiano, 94 AD2d 132; see, also, Reed v Reed, 93 AD2d 105; Hebron v Hebron, 116 Misc 2d 803). Thus, unless there is an exception elsewhere in the statute, vested pension rights earned during the marriage must be equitably distributed. Does clause (4) (of paragraph d of subdivision 5) create such an exception? Paragraph d lists factors the court must consider in distributing marital property. A factor, stated in clause (4), is “the loss of inheritance and pension rights upon dissolution of the marriage as of the date of dissolution”. The husband argues that since this clause mentions the loss of pension rights, all of the wife’s rights in the husband’s pension must be lost upon dissolution of the marriage and thus, the husband’s pension rights cannot be subject to equitable distribution. We do not subscribe to this reasoning. Normally, the wife would have no “rights” in her husband’s pension benefits. The Legislature, in using the word “rights” might have meant the wife’s expectancy of benefiting from the husband’s pension rights. In that case, the right or expectancy of the wife would extend not only to the husband’s pension benefits earned during the marriage, but also to any pension benefits earned prior to the marriage. The benefits earned outside of the marriage would be the husband’s separate property and any right or expectancy of the wife in those benefits would be lost upon divorce, while the benefits earned during the marriage would constitute marital property subject to equitable distribution. Thus, in speaking of the loss of pension rights, the Legislature might have had in mind the loss of any right or expectancy in the husband’s [496] pension rights other than those rights that constitute marital property. The dissent argues that the Legislature, in mentioning “inheritance * * * rights” and “pension rights” in the same clause, recognized them as being the same type of interest — a mere expectancy. True, any right the wife may have to inherit her husband’s property is not a property right, but only a mere expectancy. But this does not affect the character of the husband’s acquisitions. Property earned by the husband during the marriage is nevertheless marital property. The wife’s right or expectancy of inheritance extends not only to the husband’s property earned during the marriage, but also to the husband’s separate property. It is only the mere expectancy in the husband’s separate property that is lost by the wife upon divorce; the right to her share of his property earned during the marriage is preserved by the provisions of the statute for equitable distribution. Likewise, the wife’s interest in the husband’s pension may be characterized as a mere expectancy. This does not, however, affect the character of the husband’s vested pension rights as property. Upon divorce, the wife will lose any expectancy of benefiting from the husband’s pension rights earned outside of the marriage, but she will not lose her right to an equitable distribution of marital property, which includes the husband’s pension rights earned during the marriage. Before the New York State Legislature adopted the Equitable Distribution Law, courts in other States were almost unanimous in holding that vested pension rights earned during the marriage constitute property subject to distribution between the parties upon dissolution of the marriage (see Pension or Retirement Benefits as Subject to Award or Division by Court in Settlement of Property Rights Between Spouses, Ann., 94 ALR3d 176). Had the Legislature intended a contrary result in New York, we would expect it to say so in unequivocal language. Although the language of clause (4) does create some ambiguity, that equivocal language is not sufficient, in our opinion, to create an exception to the clear mandate of the Legislature that all marital property be equitably distributed. [497] In distributing the pension rights earned during the marriage, the judgment fixes the value of the wife’s share at $14,102 and directs the husband to pay that amount in a lump sum, with interest, or, in the alternative, to pay to the wife a portion of each of the pension payments received by him during retirement. In determining the dollar value of the wife’s share, the trial court erroneously assumed that the parties had stipulated the dollar value of the pension rights earned during the marriage. The record shows that, although the husband’s attorney did not object to the receipt in evidence of a letter from an actuary in which he computed the value of the pension rights, the attorney did object to the method used by the actuary in making those computations. The record is insufficient for us to determine whether the lump-sum award is proper in amount and, therefore, the lump-sum award should be deleted from the judgment. Moreover, although we recognize that the trial court has broad discretion in determining the method of equitable distribution of marital property, we find it appropriate in this case that the payment of the wife’s share be postponed until the husband retires, and that the wife then be paid a percentage of the payments received by the husband. Here, the pension benefits represent the only marital property and the husband lacks sufficient means to pay a lump-sum award. Little purpose will be served, therefore, in incurring the additional expense necessary to litigate the lump-sum value of the wife’s share. The court, as an alternative to a lump-sum payment, directed the husband to pay the wife a portion of each pension payment received by him, that portion being one half of a percentage derived by dividing the number of months the parties were married by the total number of months the husband will have been employed as a policeman at the time of his retirement. In illustrating the use of this formula, the court stated that the parties were married 90 months. Since the wife’s interest in the husband’s pension rights extends only to rights acquired before the commencement of this action, and also, since no provision was made for the payment of taxes, the court’s formula should be restated (see Szulgit v Szulgit, 92 AD2d 712, 94 AD2d 979). The judgment should be modified, therefore, by [498] directing the husband, upon his retirement, to pay to the wife one half of a percentage of the amount of each pension benefit payable to him, less taxes, that percentage to be derived by dividing the number of months the parties had been married before the commencement of this action (which number is 80) by the total number of months of credits the husband will have earned toward his pension as of the date of retirement. (The restatement of the divisor will account for any credit the husband may receive for service prior to the date he became a member of the retirement system.) Lastly, the judgment should be modified by deleting the provisions for future increases in payments for child support and for future decreases in payments for maintenance (see Lesman v Lesman, 88 AD2d 153, 161, app dsmd 57 NY2d 956).