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French v. French, 112 P.2d 235 (1941), which holds that non-vested pension rights are not property, but a mere expectancy, and thus not a community asset subject to division upon dissolution of a marriage, is overruled. The French rule cannot stand because non-vested 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 effort. Pension rights, whether or not vested, represent 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.
In a marriage dissolution proceeding, the trial court held that since the husband had not yet acquired a "vested" right to a retirement pension from his employer, the value of his pension rights did not become community property subject to division. The court relied on a California Supreme Court decision (French v. French, 112 P.2d 235 (1941)), which held that nonvested pension rights were not property, but a mere expectancy, and thus not a community asset subject to division upon dissolution of a marriage. At the time the parties separated, the husband did not have enough "points" under his employer's system to retire and if he had quit or been discharged at that time, he would have forfeited his pension rights. His eligibility for a pension would occur on a date about three years after the separation. Appellant wife sought review of the decision.
Did the husband’s pension rights belong to the community property, notwithstanding the fact that the husband has not yet acquired a vested right to the same?
The Supreme Court reversed and remanded the cause for further proceedings consistent with the views expressed in the opinion. Overruling its former decision, the court held that pension rights, whether or not vested, represented a property interest, and that, to the extent that such rights derived from employment during coverture, they comprised a community asset subject to division in a dissolution proceeding. In rejecting the husband's contention that the decision should be given purely prospective effect, the court held that it should not apply retroactively to permit a nonemployee spouse to assert an interest in nonvested pension rights when the property rights of the marriage have already been adjudicated by a decree of dissolution or separation which has become final as to such adjudication, unless the decree expressly reserved jurisdiction to divide such pension rights at a later date, but that it would apply retroactively to any case in which the property rights arising from a marriage have not yet been adjudicated, to such rights if such adjudication is still subject to appellate review, or if in such adjudication the trial court has expressly reserved jurisdiction to divide pension rights.