Shill v. Shill

HUNTLEY, Justice,

dissenting.

The Justices who comprise today’s majority have frequently been strong proponents of the rules of res judicata, stare decisis, and the “law of the case.” Today those doctrines are ignored because they uncomfortably get in the way of the result sought.

In Shill I the following rules were laid down at 100 Idaho pages 436 and 437, and 599 P.2d pages 1007 and 1008:

Douglas Shill’s contributions to the fund were made from his wages, and any property interest attributable to those contributions is a community asset. Kohny v. Dunbar, 21 Idaho 258, 12 P. 544 (1912); I.C. §§ 32-903 and 906. A fire fighter’s interest in the pension fund attributable to fund income from sources other than employee contributions is not a gratuity but a form of deferred compensation accrued by reason of the individual’s service and is also a community property asset to the extent acquired during coverture.
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Factors which will affect the value of the couple’s contingent community property interest in the pension fund include the possibility that the employee-spouse will die or change jobs before satisfying the time requirements for vesting; the fact that the divorced employee might defer retirement beyond the date that an optional early retirement with monthly pension is available; and the fact that subsequent to the divorce maintenance of the employee’s interest in the pension *123fund will likely be made from the employee’s separate property, or, if he or she remarries, from the property of a subsequent community.
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The other method of dividing the rights is to reserve jurisdiction until retirement and divide the actual monetary benefit when received.
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The advantage of reserving jurisdiction over the pension rights and effecting a division of the actual monetary benefits if and when they accrue is that this approach allocates equally between the parties the risk that the rights may never vest and enables the court to better determine the actual proportion of the benefits that were derived from community property. (Emphasis supplied.)

Most importantly, Justice Bakes as author of Shill I quoted with approval from an Arizona case on all fours with the instant fact situation and approved the formula which the district court used in this case as ordered on remand, that is, one-half of the fraction of the years of marriage over the number of years of service.

In Van Loan v. Van Loan, 116 Ariz. 272, 569 P.2d 214 (1977), the Arizona Supreme Court affirmed the trial court’s award to the wife upon divorce of a share of her husband’s military retirement benefits. The husband had joined the Air Force prior to the marriage and continued to work with the Air Force during the entire seventeen year marriage. The parties divorced prior to the time the husband’s right to payment under the pension terms vested. The trial court awarded the wife “an interest in the retirement pay in an amount equal to one-half of the fraction 17 over the number of years served by [husband] in the Air Force if and when received by him.”

100 Idaho at 438, 599 P.2d at 1009.

I. THE ISSUE

Under the Idaho Firemen’s Retirement Fund, a fireman accumulates retirement benefits at the average rate of 2% per year of the average state wage for the first twenty years of service (40% total), which rate increases to 5% per year for years 21-25 (65% total).

The issue primarily raised by this appeal is whether, when a divorce occurs near the end of the 20th year and the fireman works four more years, thereby increasing the monthly benefit by about $400,1 the 3% enhancement (here amounting to about $240 per month) is separate property or whether the added $240 is 2%4 community property and 4/24 separate property.

I would affirm the ruling of the trial court that the community interest is determined by a ratio with the years service while married as the numerator and the years of total service as the denominator.

II. THE BACKGROUND

This is a continuation of the proceedings in Shill v. Shill, 100 Idaho 433, 599 P.2d 1004 (1979), which involved a divorce and the determination of the community property interest in pension benefits. Jeanette Shill filed an amended complaint on October 10, 1985, seeking a redetermination of the community property interest in the pension benefits.

Jeanette Shill and Douglas Shill were married September 29, 1957. In April, 1958, Douglas Shill was hired by the City of Burley, Idaho, fire department and commenced making contributions from his wages to the State of Idaho Firemen’s Retirement Fund, established pursuant to Title 72, chapter 14, of the Idaho Code. On October 24, 1977, appellant and respondent were divorced. At the time of the divorce, Douglas Shill had completed nineteen-and-one-half years of employment with the City of Burley fire department and had been promoted to the position of Fire Chief.

Douglas Shill was entitled to pension benefits from the Idaho Firemen’s Retire*124ment Fund, Title 72, ch. 14,1.C., but only if he had completed twenty ye^rs of employment as a fireman. If he had terminated prior to completing twenty years, he would have only received the actual contributions he had made. In that portion of the original judgment dealing with the division of the community property of March 1, 1978, the trial court held that since Mr. Shill possessed only the right to receive the cash surrender value of the contributions ($8,089.24), all of which had been contributed during the marriage, such was characterized as community property and ordered divided equally. Jeanette Shill was awarded one half the cash surrender value of Mr. Shill’s rights in the pension fund.

That decision of the District Court was reversed upon appeal to this Court, “Shill supra. In Shill I, we held that contingent non-vested pension benefits are to be considered divisible community property in Idaho. Although this Court indicated that a lump sum award as of the date of the divorce is the preferred method of distribution, the Court realized that such a cash-out method might not always be feasible. In these cases:

the trial court should consider withholding the retirement rights from the property disposition and decreeing that the parties hold the rights to the benefits as tenants in common. If and when the employee-spouse does obtain retirement benefits the trial court can then determine what portion of the rights were derived from community property and divide the payments accordingly.

599 P.2d at 1010.

It was in this light that this Court remanded this matter to the trial court for a determination of the community property interest in the Firemen’s Retirement Fund.

On October 9, 1985, the respondent Jeanette Shill filed an amended complaint seeking a recalculation and distribution of the retirement benefits. Douglas Shill chose to continue his work with the Burley fire department after the entry of the divorce decree, and continued to make contributions to the Firemen’s Retirement Fund. By postponing retirement and continuing to work past the threshold twenty year requirement, Mr. Shill’s pension benefits increased from 40 to 60 percent of the average fireman’s salary, or from approximately $800 per month to $1,200 per month.

III.

Mr. Shill asserts that by waiting six years following the remand, Mrs. Shill procrastinated in the assertion of her rights, and the cause should have been dismissed for want of prosecution. However, either party could have noticed the case for trial following the remand. A trial court has inherent power to dismiss for want of prosecution if the plaintiff fails to prosecute with reasonable diligence. McAllister v. Erickson, 45 Idaho 211, 261 P. 242 (1927). Such question is addressed to the sound discretion of the trial court, and its ruling will not be disturbed on review in the absence of an abuse of that discretion. Ellis v. Twin Falls Canal Co., 109 Idaho 910, 712 P.2d 611 (1985). I would hold that the trial court did not abuse its discretion in failing to dismiss for want of prosecution, and I further hold that the action is not barred by any statute of limitations or the doctrine of laches.

IV.

In Shill I, this Court held that a pension fund, whether vested or non-vested, is a form of deferred compensation, which is attributable to the prior employment period in which it was accumulated, and which is a community asset to the extent that community efforts contributed to the pension benefits. Shill v. Shill, 100 Idaho 433, 599 P.2d 1004 (1979). See also, Griggs v. Griggs, 107 Idaho 123, 686 P.2d 68 (1984); Ramsey v. Ramsey, 96 Idaho 672, 535 P.2d 53 (1975). Holdings in California cases parallel these Idaho cases and state the proposition as follows:

Where the total number of years served by an employee-spouse is a substantial factor in computing the amount of retirement benefits to be received by that spouse, the community is entitled to have its share based upon the length of service performed on behalf of the commu*125nity in proportion to the total length of service necessary to earn those benefits. The relation between years of community service to total years of service provides a fair gauge of that portion of retirement benefits attributable to community effort.

In re Marriage of Judd, 68 Cal.App.3d 515, 522-23, 137 Cal.Rptr. 318, 321 (1977).

Returning to the case at bar, in this appeal we are asked to review the ruling of the district court which ruled:

[T]hat the plaintiff is entitled, as a matter of law, to one-half of the community interest in the defendant’s pension fund, and that such interest is to be determined by the husband’s monthly benefits received multiplied by a fraction which has as its numerator the total number of years the defendant was employed by the Burley Fire Department during the marriage, and as its denominator the total number of years of the defendant’s employment at the Burley Fire Department.

The formula applied by the district court operated in this case as follows to determine Jeanette’s one-half of the community interest:

½ x 7,128 days married as fireman 8,176 days employed as fireman
or
½ x .8137 or 40.7%

Thus, Jeanette's share was fixed at 40.7% of the total benefits each month (or approximately $488.40 per month) and Douglas’ share at 59.3% (or approximately $711.60 per month). Approximately 80% of the benefits were held to be community property, with 20% being Mr. Shill’s separate property. I would approve of the formula applied by the district court.

The fundamental premise of Shill I was that:

A firefighter’s interest in the pension fund attributable to fund income from sources other than employee contributions is not a gratuity but a form of deferred compensation accrued by reason of the individual’s service and is also a community property asset to the extent acquired during coverture.

599 P.2d at 1007. See also Guy v. Guy, 98 Idaho 205, 560 P.2d 876 (1977); Travelers Ins. Co. v. Johnson, 97 Idaho 336, 544 P.2d 294 (1975).

When one puts the issue as deciding whether the increase (from forty percent to sixty percent of the average state wage) is earned in part during marriage or whether it is totally the product of the husband’s separate efforts, it is clear that that issue has already been decided in Shill I. Shill I found that the post-divorce increase from mere cash surrender value to forty percent benefits which accrued six months after divorce, was the product of work performed during the nineteen-and-a-half years of marriage.

Similarly, it is equally clear that the higher percentage was earned only by virtue of the first nineteen-and-a-half years of work; without those first nineteen-and-a-half years during marriage, there would be no ability to accumulate benefits at the higher level for years 21 through 24. Indeed, the very contingent which we now face was anticipated in Skill I when Justice Bakes wrote for the court:

Factors which will affect the value of the couple’s contingent community property interest in the pension fund include the possibility that the employee-spouse will die or change jobs before satisfying the time requirements for vesting; the fact that the divorced employee might defer retirement beyond the date that an optional early retirement with monthly pension is available; ...

599 P.2d at 1008.

In addition, Shill I states that “[t]he other method of dividing the rights is to reserve jurisdiction until retirement and divide the actual monetary benefit when received.” 100 Idaho at 437, 599 P.2d 1004 (emphasis added). The “actual monetary benefit” in this case is approximately $1,200 per month (or 60%), not $800 per month (40%).

The district court correctly followed Skill I when it ruled that four-fifths was *126community property and subject to division, and one-fifth was Mr. ¿hill’s separate property.

The increases in the pension fund in the instant case over the final four years of employment are not completely due to the separate efforts of the employee-spouse, but rather, the right to the increase from forty to sixty percent of the average state wage was built upon the first twenty years of work, which were during marriage. The increase from forty to sixty percent was not earned by the last four years of work alone.

Sixteen percent more work did not in and of itself produce fifty percent more benefits. The increase, instead, is a deferred compensation for the aggregate of twenty-four years, not four years alone.

The issue in the instant ease is straightforward: Was the enhancement in pension benefits due to postponed retirement the product of the total aggregate of service (i.e., twenty-four years) both during and after marriage, or was it solely the result of the last four years of Mr. Shill’s employment? Shill I stands for the proposition that the enhancement in benefits, whether from cash surrender value to 40%, or from 2% per year to 5% per year, is the product of the aggregate of employment. The first year on the job was equally as important to the final level of benefits as is the twenty-fourth.2

Accordingly, I would affirm the trial court’s methodology and remand for entry of judgment in accordance therewith. However, on remand, the computation should take into consideration the extent that the increase in benefits due to a continuation of work after divorce was the result of higher income based upon more work or greater responsibility, because that portion of the enhancement in benefits would be separate property. On remand, the trial court should be directed to ascertain whether there was an increase in work or responsibility after divorce which influenced the ultimate level of benefits and calculate that portion, if any, as the separate property of the husband.

On remand, the trial court should also consider whether the sum of $4,044.62 is an offset to the judgment to be entered in favor of Jeanette. Although the record is not totally clear, it suggests that there was disbursed to the respondent on June 21, 1979, the sum of $27,898.55. Included in that sum was $4,044.62 which represented one-half of the cash surrender value of the Firemen’s Retirement Fund pension. If this is correct, and since the award of the cash surrender value of the pension fund has been reversed in Shill I, Jeanette may be overcompensated in the sum of *127$4,044.62 unless an adjustment is made in the final order. The trial court should be directed to ascertain those facts and make the appropriate adjustments, if any.

V. INTEREST

As to Jeanette’s cross-appeal from the denial of interest on previously paid benefits, I would reverse the ruling of the trial court on this issue and further remand.

The record establishes that as of the time of entry of the trial court’s order, Douglas had received $24,146.25 in retirement benefits, no part of which he paid over to Jeanette.

Even though there was some delay in noticing this case to trial following remand, Jeanette has not waived her right to receive her share of previously paid benefits. Because the husband had use of money which legitimately was owing to the wife, and did not even pay over to her that amount which would be due even under his theory of the case, the wife should be awarded interest on her share of the previously paid benefits.

The foregoing analysis is totally consistent with what the law is, what it ought to be, and with the law of the case as settled in Shill I. The bench and bar may wonder why the majority fails to address or distinguish or overrule the law of this case as set forth in Shill I —I have the same question.

. For ease of illustration, I use an average state wage of $2,000 per month. (The actual figure at time of retirement was $1,896). Thus, the benefit accrued in the first twenty years was $800 and that accrued in the last four years was $400.

. There are two ways to mathematically compute the result, the first of which demonstrates the logic of the apportionment between community and separate property, with the second and simpler formula (used by the trial court) reaching the same mathematical result.

METHOD I

Community Separate of H

The $800 from 1st 20 years: $800 -0-

The $400 from last 4 years

(a) 2% x 4 years or 8% X $2,000 = -0-$160

(b) 3% x 4 years or 12% x $2,000 = $240 200(2%i) 40(4/24)

$1,000 $200

‘A of Community Property to each 500(wife) 500(husb)

Separate Property to Husband -0-200

TOTAL to each $500Wife $700Husb

METHOD II

Wife Husband

Com. Prop. = 20/24 or 5A x $1,200 = $1,000 500 500

Sep. Prop. = V24 or '/ó x $1,200 = 200 -0- 200

$500 $700