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In re Marriage of Brown

Supreme Court of California

January 16, 1976

L.A. No. 30463

Opinion

 [*841]  [**562]  [***634]    Since French v. French (1941) 17 Cal.2d 775, 778 [112 P.2d 235, 134 A.L.R. 366], California courts have held that nonvested pension rights are not property, but a mere expectancy, and thus not a community asset subject to division upon dissolution of a marriage. Two years ago we granted a hearing in In re Marriage of Wilson (1974) 10 Cal.3d 851 [112 Cal.Rptr. 405, 519 P.2d 165], to reconsider "the current viability of the rule of French v. French" (10 Cal.3d at p. 853), but upon examination of [****2]  the record in Wilson we discovered that the French issue had been waived by the nonemployee spouse. Properly raised in the present case by appellant Gloria Brown, the issue of division of nonvested pension rights upon dissolution of a marriage again confronts this court.

 CA(1a)(1a) Upon reconsideration of this issue, ] we have concluded that French v. French should be overruled and that the subsequent decisions which rely on that precedent should be disapproved. As we shall explain, the French rule cannot stand because nonvested pension rights are not an expectancy but a contingent interest in property; furthermore, the French rule compels an inequitable division of rights acquired through community  [*842]  effort. Pension rights, whether or not vested, represent  [**563]   [***635]  a property interest; to the extent that such rights derive from employment during coverture, they comprise a community asset subject to division in a dissolution proceeding.

Before we turn to the facts of this appeal we must devote a few words to terminology. Some decisions that discuss pension rights, but do not involve division of marital property, describe a pension right as [****3]  "vested" if the employer cannot unilaterally repudiate that right without terminating the employment relationship. (See Strumsky v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 45 [112 Cal.Rptr. 805, 520 P.2d 29]; Kern v. City of Long Beach (1947) 29 Cal.2d 848, 855 [179 P.2d 799]; Dryden v. Board of Pension Commrs. (1936) 6 Cal.2d 575, 579 [59 P.2d 104].) As we explain later, we believe that these decisions correctly define the point at which a pension right becomes a property interest. In divorce and dissolution cases following French v. French, however, ] the term "vested" has acquired a special meaning; it refers to a pension right which is not subject to a condition of forfeiture if the employment relationship terminates before retirement. 1 We shall use the term "vested" in this latter sense as defining a pension right which survives the discharge or voluntary termination of the employee.

 [****4]  As so defined, a vested pension right must be distinguished from a "matured" or unconditional right to immediate payment.  Depending upon the provisions of the retirement program, an employee's right may vest after a term of service even though it does not mature until he reaches retirement age and elects to retire. Such vested but immature rights are frequently subject to the condition, among others, that the employee survive until retirement. 2

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15 Cal. 3d 838 *; 544 P.2d 561 **; 126 Cal. Rptr. 633 ***; 1976 Cal. LEXIS 192 ****; 94 A.L.R.3d 164

In re the Marriage of GLORIA LOUCILLE and ROBERT WILLIAM BROWN. GLORIA LOUCILLE BROWN, Appellant, v. ROBERT WILLIAM BROWN, Respondent

Prior History:  [****1]  Superior Court of San Bernardino County, No. FLW-4780, Henry Milton Busch, Judge.

Disposition: The judgment of the superior court is reversed and the cause remanded for further proceedings consistent with the views expressed herein.

CORE TERMS

pension rights, Marriage, pension, nonvested, vested, retirement, spouse, community property, expectancy, rights, community asset, divide, contingent, benefits, trial court, courts, subject to division, dissolution, cases, contractual right, property interest, retroactivity, decisions, alimony, divorce, nonemployee spouse, pension payment, property right, present case, inequitable

Family Law, Property Distribution, Characterization, Community Property, Dissolution & Divorce, General Overview, Classification, Retirement Benefits, Pensions, Estate, Gift & Trust Law, Estate Planning, Community Property, Property Rights, Marital Termination & Spousal Support, Labor & Employment Law, Employment Relationships, At Will Employment, Definition of Employees, Commercial Law (UCC), Sales (Article 2), Form, Formation & Readjustment, Contracts Law, Personal Property, Choses in Action, Employment Contracts, Conditions & Terms, Formation & Letter Agreements, Spousal Support, Pensions & Benefits Law, Governments, Courts, Judicial Precedent, Real Property Law, Estates, Concurrent Ownership, Tenancies in Common, Fault Based Grounds, Abandonment & Desertion, Legislation, Effect & Operation, Retrospective Operation