Hall v. Hall (In Re Hall)

51 B.R. 1002, 13 Collier Bankr. Cas. 2d 768, 6 Employee Benefits Cas. (BNA) 2219, 1985 U.S. Dist. LEXIS 18607
CourtDistrict Court, S.D. Georgia
DecidedJune 24, 1985
DocketCiv. A. 285-83
StatusPublished
Cited by25 cases

This text of 51 B.R. 1002 (Hall v. Hall (In Re Hall)) is published on Counsel Stack Legal Research, covering District Court, S.D. Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hall v. Hall (In Re Hall), 51 B.R. 1002, 13 Collier Bankr. Cas. 2d 768, 6 Employee Benefits Cas. (BNA) 2219, 1985 U.S. Dist. LEXIS 18607 (S.D. Ga. 1985).

Opinion

ORDER

ALAIMO, Chief Judge.

Debtor Thomas Hall challenges Bankruptcy Judge Herman W. Coolidge’s ruling that an obligation incurred under the terms of Hall’s divorce decree is nondischargeable in Hall’s pending Chapter 7 action. The Court has reviewed the order appealed from and considered the parties’ briefs, and shall affirm the bankruptcy court’s decision.

FACTS

The facts are succinctly set out in the bankruptcy court’s order. Thomas and Margaret Hall were married in 1950. At that time, and until his retirement in 1970, Thomas Hall served in the United States Army. Mrs. Hall was a homemaker during her husband’s service career.

In 1982, the Halls were divorced. The issues of alimony and property division were subsequently submitted to a jury in Cobb County, Georgia, the decision of which was incorporated into a 1984 judgment. The current case involves the following award:

The plaintiff MARGARET HALL is awarded as an equitable division of property thirty-eight per cent (38%) of the military retirement of the defendant THOMAS W. HALL.

The judgment provides that payments of Mrs. Hall’s share of the pension shall be made by the United States directly to Mrs. Hall. In closing, the judgment states that the jury found against Mrs. Hall on the issue of alimony.

On August 81, 1984, two months after entry of the property judgment, Thomas Hall filed his Chapter 7 petition. Among the debts from which he sought discharge, Hall included the award to his former wife of 38% of his retirement pension.

*1003 After a trial on the issue, Judge Coolidge ruled on two alternative grounds that the award to Mrs. Hall is not dischargeable. The court relied primarily on its determination that the award did not create a debt at all. The court reasoned that, with entry of the state court judgment, the right to payment of 38% of the pension was taken from Thomas Hall and vested in Mrs. Hall. The court considered itself without power to divest Mrs. Hall of her property interest in the pension. Alternatively, the court concluded that the payments were in the nature of support and, accordingly, made non-dischargeable by 11 U.S.C. § 523(a)(5). DISCUSSION

The bankruptcy court characterized Mrs. Hall’s interest in the pension as a vested property interest, rather than a debt subject to discharge. Classification of the interest which resulted from division of the pension is a mixed question of law and fact which this Court must review de novo. See In re Bedingfield, 42 B.R. 641, 644 (S.D.Ga.1983). Having independently considered the facts and the relevant law, the Court agrees that the final judgment of the state superior court gave Mrs. Hall a non-dischargeable property interest in 38% of her former husband’s pension.

The Cobb County Superior Court awarded the pension to Mrs. Hall as an “equitable division of property.” Under Stokes v. Stokes, 246 Ga. 765, 273 S.E.2d 169 (1980), Georgia courts are permitted to divide equitably between divorcing spouses property which the spouses acquired during marriage. In making an equitable distribution of marital property, a court may award to one spouse property owned during the marriage by the other. Stokes, 246 Ga. at 771, 273 S.E.2d 169.

Under Georgia’s version of equitable distribution, property which is distributed upon divorce to a spouse becomes the sole and separate property of that spouse. See Moore v. Moore, 249 Ga. 27, 28, 287 S.E.2d 185 (1982). Precisely this occurred upon entry of the judgment in the property proceeding between the Halls. The judgment set aside as Mrs. Hall’s separate property 38% of the pension proceeds due her husband. As a result of the judgment, the United States must make pension payments separately to Thomas Hall and Margaret Hall. In effect and in fact, Mrs. Hall became a federal pensioner in her own right when she received an equitable share of her former husband’s pension.

Even if Mrs. Hall’s claim were to constitute a debt, as opposed to an interest in property, the debt would not be one owed by Thomas Hall to Mrs. Hall. For purposes of Title 11 of the U.S. Code, “debt” means liability on a claim. 11 U.S.C. § 101(11) (1982). Division of the pension indeed gave Mrs. Hall a “claim” to the funds. However, “liability” for that claim rests with the United States, not with Thomas Hall. Under the state court order and federal statute, the United States is responsible for making good Mrs. Hall’s claim. Hall has no duty to make payments from the pension funds to his former wife. He has no power to terminate the Government’s payments to her without ending as well the payments to himself. The rights and responsibilities created by the property division resulted in no debt between Mr. Hall and Mrs. Hall, as the term debt is defined in 11 U.S.C. § 101(11).

In concluding that Mrs. Hall has a non-dischargeable property interest in the pension, the Court considers the federal policy expressed in the Uniformed Services Former Spouses’ Protection Act, 10 U.S.C. § 1408 (“the Act”). A brief history of the Act reveals its salutary purpose. The Supreme Court held in McCarty v. McCarty, 453 U.S. 210, 11 S.Ct. 2728, 69 L.Ed.2d 589 (1981), that military pensions were not divisible community property of the pensioner and his or her spouse. The decision drew a legislative response, aimed at protecting military spouses’ interests in military retirement pay. As Senator Jeremiah Den-ton commented: “Those wives who have loved and served as wives and mothers for many years deserve more than mere recognition. They are entitled to a degree of security.” S.Rep. No. 502 on Title X of Pub.L. 97-252, 97th Cong., 2d Sess. 43, re-printed in 1982 U.S. Code Cong. & Ad. News 1555, 1596, 1626.

*1004 Congress enacted § 1408 to overrule the McCarty decision. The section permits courts to “treat disposable retired or retainer pay payable to a member ... either as property solely of the member or as property of the member and his spouse in accordance with the law of the jurisdiction of such court.” 10 U.S.C. § 1408(c)(1) (1982). Pursuant to the authority of this statute, the Georgia court correctly considered Thomas Hall’s pension as marital property, divisible between Hall and his wife upon divorce. 1

The provisions of the Act indicate Congress’ understanding that division of a pension invests the spouse with a separate property interst in his or her share.

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Bluebook (online)
51 B.R. 1002, 13 Collier Bankr. Cas. 2d 768, 6 Employee Benefits Cas. (BNA) 2219, 1985 U.S. Dist. LEXIS 18607, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hall-v-hall-in-re-hall-gasd-1985.