Goode v. Goode

692 S.W.2d 757, 286 Ark. 463, 1985 Ark. LEXIS 2118

• Court: Supreme Court of Arkansas
• Decided: July 15, 1985
• Docket: 85-29
• Status: Published

Opinions

David Newbern, Justice.

In this divorce case the central issue is whether a workers’ compensation claim resulting from an injury which occurred during marriage, but which was not adjudicated or paid at the time the divorce was rendered, was subject to division as marital property pursuant to Ark. Stat. Ann. § 34-1214 (Supp. 1983). As this is a statutory interpretation question, our jurisdiction arises from Arkansas Supreme Court and Court of Appeals Rule 29. 1. c.

The parties were married in 1968. The appellant suffered a work-related injury in OctQber, 1982, and he filed a Tennessee workers’ compensation claim in May, 1983. The workers’ compensation hearing was set for July 5, 1984, but it remained unadjudicated when the divorce decree was rendered after a hearing which occurred on August 6, 1,984.

The chancellor took under advisement the question whether the pending claim was marital property. After receiving briefs from the parties he ruled and ordered on October 17, 1984, that the claim was marital property to be divided equally between the parties pursuant to § 34-1214.

In his order the chancellor recited his finding that the appellant had refused a $10,000 offer to settle his claim. He ordered that upon receipt of a settlement or other payment of the claim the appellant would pay one half of it to the appellee.

Section 34-1214(B) provides that all property acquired by either spouse subsequent to the marriage is marital property. Prior to our decision in Day v. Day, 281 Ark. 261, 663 S.W.2d 719 (1984), our decisions were that unless an asset were “fully distributive” during the marriage it did not qualify as marital property. In Dayv. Day, however, we recognized that our prior holdings were incorrect because they failed to note the statute’s requirement that all property acquired subsequent to the marriage is marital property. Our position, announced in Day v. Day, was that a retirement pension which was vested but not to be paid out as an annuity until an indefinite future date was more than a mere expectancy. We noted and followed this language from Re Marriage of Brown, 15 Cal. Rpt. 633, 544 P.2d 561 (1976):“. . . the defining characteristic of an expectancy is that its holder has no enforceable right to his beneficence.”

It is clear in this case that an enforceable right to workers’ compensation benefits accrued to the appellant subsequent to the marriage and prior to its termination.

The cases cited by the appellant as ones having dealt with division of workers’ compensation benefits upon divorce are, without exception, from community property jurisdictions. The rationale used generally in such jurisdictions is that an award compensating an injured worker for lost earning capacity during the marriage is property of the marital community, but that to the extent it is for lost earning capacity after divorce, it is the separate property of the injured spouse. See Bugh v. Bugh, 125 Ariz. 190, 608 P.2d 329 (1980); Hicks v. Hicks, 546 S.W.2d 71 (Tex. Civ. App. 1976).

Arkansas, by contrast, is one of the common law property jurisdictions which have adopted an equitable distribution scheme for property upon divorce. A survey of the law on whether workers’ compensation benefits constitute marital property was conducted in Note, 10 N.Ky.L.Rev. 531 (1983). The note’s author concluded that:

In the few common law property states which have squarely met this issue, there is unanimous agreement that the pending claim is subject to equitable division as marital property. No allowance is made for any portion which may represent post-dissolution earnings. [Footnote omitted.]

The cases cited for that statement are: Smith v. Smith, 113 Mich. App. 148, 317 N.W.2d 324 (1982); In re Marriage of Dettore, 86 Ill. App. 3d 540, 408 N.E.2d 429 (1980); and Hughes v. Hughes, 132 N.J. Super. 559, 334 A.2d 379 (1975). To those cases can be added: Johnson v. Johnson, 638 S.W.2d 703 (Ky. 1982), and Quiggins v. Quiggins, 637 S.W.2d 666 (Ky. App. 1982).

The appellant also cites Lowery v. Lowery, 260 Ark. 128, 538 S.W.2d 36 (1976), in which we held that an unliquidated personal injury claim was not personal property for the purpose of property division under the former § 34-1214. That decision relied on cases holding such a claim was not-considered personal property in bankruptcy proceedings. As that case was decided well before our statute was changed to emphasize that all property acquired subsequent to marriage is marital property, we need no longer follow it.

As in Day v. Day, supra, our ruling that the chancellor was correct in this case would hardly mean that in every case workers’ compensation awards accrued during marriage would have to be divided equally. To the contrary, they may be divided as the chancellor sees fit upon application of the criteria stated in § 34-1214(A)(1). Some of them are: age, health,, occupation, amount and sources of income, and vocational skills. Obviously the chancellor will be able to consider the effect of the injury which gave rise to the claim upon the needs of the injured worker.

The Dettore case, supra, contains the following language which may have furnished the chancellor’s reason for emphasizing the unaccepted settlement offer in this case:

We cannot condone a result which invites workmen’s compensation claimants to protract the arbitration for their award so as to shield that award from equitable division by the dissolution court. We must hold that if a claim for a compensation award accrues during the marriage, the award is marital property regardless of when received.

It might be argued that pension cases such as Day v. Day, supra, Gentry v. Gentry, 282 Ark. 413, 668 S.W.2d 947 (1984), and Morrisonv. Morrison, Case No. 85-35, July 1, 1985, are distinguishable from the case before us because contributions were made by at least one spouse during the marriage to assure the future pension payments which were held to be marital property in those cases. That argument, however, ignores § 34-1214 which makes no general distinction as to the manner in which any item of property is acquired. The statute does make some specific exceptions to its requirement that all property acquired subsequent to marriage be considered marital property, and some exceptions, e.g., property acquired by gift, bequest, devise or descent, are based on the property’s origin immediately before it comes to a spouse. Workers’ compensation claims are not so excepted. See § 34-1214(B)(1).

We cannot distinguish from the workers’ compensation claim involved here the disability pension involved in Morrison v. Morrison, supra. Nor can we distinguish Morrison v. Morrison from the longevity pension in Day v. Day, supra. To make such distinctions would not only be contrary to the authorities which have decided this question, but it would be a too restrictive interpretation of the term “all property.”

Affirmed.

Chief Justice Holt and Justices Hickman and Purtle dissent.