HISQUIERDO v. HISQUIERDO
Legal provision: 45 U.S.C. 231
Argument of James D. Endman
Chief Justice Warren E. Burger: We'll hear arguments next in 77-533 in Hisquierdo against Hisquierdo, if that's right.
Mr. Endman you may proceed, I think.
Mr. James D. Endman: Mr. Chief Justice and may it please the Court.
The within matter was commenced on January 9, 1975 when the petitioner filed a petition for the dissolution of his marriage.
This is equivalent to a divorce in other states.
The facts the stated in his petition indicated that the parties were married in September 1958 and separated in July 1972.
Prior to his marriage the petitioner was working for the Atchison, Topeka & Santa Fe Railroad and had been so employed since June 1942.
In April 1975, he changes his employment to the Los Angeles Union Passenger Terminal.
With over 30 years of railroad connected employment, the petitioner will be eligible for his retirement benefits when he reaches age 60 he is presently 57 years of age.
The trial court was called upon to consider whether the future benefits are community property.
It was the trial courts determination that there is no community interest in petitioner's railroad retirement fund.
The wife filed an appeal to the California District Court of Appeals and the District Court of Appeal affirmed basing their opinion on the Supremacy Clause and the preemption of this field by Congress.
Chief Justice Warren E. Burger: Under California law setting aside the community property division, could the divorce court after dividing the properties say, I'm going to give “X” dollars of alimony which will be paid out of the retirements fund when it becomes payable, now the origin be deferred presumably three years on your figures?
Mr. James D. Endman: The rules of law of property division and the rules relating to spouses support as we call it which is equivalent to alimony or completely different alimony are spouses support will be based solely on the needs and ability of the parties.
Chief Justice Warren E. Burger: Well, I'm assuming he found the need and the ability is the fund.
Mr. James D. Endman: I think then that under 42 U.S.C. 659 I think, or 28 U.S.C. 659 that that could be executed upon the railroad retirement funds in order to enforce payment.
Chief Justice Warren E. Burger: Notwithstanding any federal statute?
Mr. James D. Endman: Well, I think the federal statute specifically allows the immunity of the exemption clause not to apply to the spouses support and child support provisions.
So if California made a provision for spouses support and of course they could execute upon the railroad retirement fund as well as any other property.
Chief Justice Warren E. Burger: As a practical matter if you care to, would you suggest why that wasn't the solution to these problems instead of having it go all the route up here.
Mr. James D. Endman: Well, as a practical matter both parties waive spouses support at the initiation of the proceeding in the trials courts.
Chief Justice Warren E. Burger: You mean they wanted to have a lawsuit to decide it?
Mr. James D. Endman: No, this issue the spouse waived her right to spouses support and what their reason for Ms. Hisquierdo's attorney, I don't know but --
Chief Justice Warren E. Burger: They want to get this -- they want to get more money in the specific way they don't want it by the alimony route, was that it?
Mr. James D. Endman: That was their presumed intent I don't know what went on in their mind, I think what they attempted to do was to try and get the house free and clear of any other obligations.
Justice William H. Rehnquist: Well, may it never been of a reliance on their part on the proposition that the retirement benefit was community property and therefore that the claim for alimony would be less substantial or less compelling from the point of view of the wife?
Mr. James D. Endman: As I recall there is no attempt ever for, to obtain pro-rata payment.
The sole attempt by the spouses' attorney's and they never put any evidence to this effect although they indicated in a trial brief that they intended to find the present actuarial value of the railroad retirement benefits and offset that against the house which, was ultimately awarded to the husband in this case and out of that house he is making payments to equalized the division.
But to my recollection there were no real attempt on their part to seek a pro-rata share.
The District Court of Appeals having affirmed the lower court the petitioner or the respondent in this matter they're upon petition the California Supreme Court for hearing.
Hearing thereon was granted by the California Supreme Court and they reversed this matter holding an effect that the field had not been preempted and petitioner's entitlement to railroad retirement fund benefits could be subjected to the California community property laws.
Following that opinion petitioner herein filed to this Court for writ of certiorari pursuing to 28 U.S.C. 1257 (3) contesting the validity of the California community property laws requiring equal division of community property and the Federal Retirement Act.
The issue presented in this case is whether in a divorce proceeding the trial court can award any portion of the railroad connected employees future entitlement to benefits to anyone other than the employee.
We are really concerned with three inquiries in deciding the issue of preemption.
First, does the Act of Congress touch a field in which the federal interest is so dominant at the federal system will be assumed to preclude enforcement of state laws?
Two, has Congress either explicitly or implicitly declared that the state community property laws are prohibited from regulating in this area?
And three and even if Congress has not completely foreclose the state legislation is the state statute void because they actually conflict with a valid Federal Act?
Justice William H. Rehnquist: Mr. Endman you say the question is whether the California state court can award any part of the retirement benefit, would it make any difference if you rephrase the question to say “Is the California court entitled to treat pension benefits as community property?”
Mr. James D. Endman: I think partly true and partly incorrect.
I think the -- which ever way California treats it, whether it's community property or separate property the exemption statute makes it clear that they can't touch at all.
I'll get into this in a short while but they can't touch the railroad retirement benefit so whichever way California analogizes it whether community or not.
It's the areas been preempted by Congress.
Justice William H. Rehnquist: Well, isn't it possible that there might be a procedural impediment to the California courts directing disposition of particular federal checks received by your client?
But did it nonetheless might be entitled to treat the property which those checks embodied has community property for purposes of dividing the funds of the community upon dissolution of the marriage?
Mr. James D. Endman: Well, I think the exemption statute states that the railroad retirement benefits are not subject to any legal process and I submit that a divorce proceeding is a legal process.
The exemption statute provides that they are not subject to and anticipation and if the court in a divorce proceeding provides that in the future he's going to get some benefits and based on those future entitlement to benefits, we are going to say that the other spouse is entitled to something right now or some outside moneys then they're anticipating this future entitlement and --
Justice Harry A. Blackmun: Well as Mr. Rehnquist point that granted everything you say does that necessarily mean you win your case?
Mr. James D. Endman: I think if the trial court is prevented from taking into consideration the issue of railroad retirement fund.
Justice Harry A. Blackmun: Well this is the next step, it is taken into consideration and maybe making your client just go with something else wholly apart from the inability to touch the benefit fund.
Mr. James D. Endman: Well, I think this would be inconsistent with the prohibition against illegal process, any legal attempt on the part of the California courts to deal with the railroad retirement fund.
Justice Harry A. Blackmun: Well, all I'm suggesting that might that I think this is what Mr. Justice Rehnquist had in mind and I don't believe you've answered it is that all it's doing in adding up assets is destroying the benefit from into the computation without touching it but drawing on some other assets in determining the appropriate share of the community.
Mr. James D. Endman: Well that that --
Justice Harry A. Blackmun: You say they can't do this.
Mr. James D. Endman: I say they can't do this because that would amount to anticipation that there will be a receipt of these benefits.
Chief Justice Warren E. Burger: You mean they can't do indirectly what their prohibited by statute from doing directly is that it?
Mr. James D. Endman: Exactly.
Justice William H. Rehnquist: Well, isn't that a little simplistic in the sense counsel, certainly after that your has deposited his check in the bank that he receives from the pension benefits and it becomes in a general fund in his bank account it can be levied one, can it?
Mr. James D. Endman: I believe that there are cases dealing --
Justice William H. Rehnquist: For alimony.
For alimony only?
Mr. James D. Endman: Well for alimony, well I don't contend that --
Justice William H. Rehnquist: Well no, can't his bank account be garnished after the check is clear and that check is in the bank.
Mr. James D. Endman: I believe there is an exemption would apply to any creditors and would continue as long as it's in the bank now.
There are cases cited by the respondent which indicate in their briefs that the exemption extends with regard to social security benefits even after the receipt of those benefits.
And even after they're placed in a bank account, even after they're placed in a savings and loan account at least up until such time as they are invested in some type of an investment other than just being readily available for his necessities and needs in life.
Now I think this would apply to any creditors including the spouse other than the spouse's rights to spouses support or alimony as most states call it or a child support.
Justice William H. Rehnquist: Does your argument depend on equating a decree of a divorced court with the language garnishment, attachment or other legal process under 435 U.S.C. 231m.
Mr. James D. Endman: Yes with the other legal process portion of it rather than the garnishment or attachment.
Justice Byron R. White: So doesn't the -- most recent amendment, not to most recent amendments does forbid garnishment to satisfy community property.
Mr. James D. Endman: The prior to leaving Los Angeles at least to supplement to our code books indicated that --
Justice Byron R. White: Well, how about the 77 amendments?
Mr. James D. Endman: Well, I assumed that would have been in the 78 supplement net still as contain as Mr. Justice Rehnquist indicated that garnishment, attachment or other legal process or nor shall any attempt to be made to anticipate those program.
Justice Byron R. White: Right.
Justice Thurgood Marshall: And how long does this exemption last.
He gets a check from Retirement Board 1936 and he put it in the bank, how long does it last?
Mr. James D. Endman: I think under the cases as I indicated as cited by the respondents that exemption would last so long as it is in a bank available for his needs while he's alive apparently even to the extent of where he is buried.
Justice Thurgood Marshall: So it will last a lifetime.
Mr. James D. Endman: Pardon?
Justice Thurgood Marshall: It will last his lifetime.
Mr. James D. Endman: It could last his lifetime as long as there are left in a bank or savings in a long type investment where it's immediately available to him.
Chief Justice Warren E. Burger: But the benefit of the protection would disappear if he bought some real estate and sold it to the profit and bought some more real estate.
At what point does the protection disappear, the immunity.
Mr. James D. Endman: Well, I think the protection would disappear when the moneys were place into an investment.
Now that might, I would think when he bought the first real estate that he was not living yet.
Justice Thurgood Marshall: What about it would be mutual fund?
Mr. James D. Endman: A mutual fund.
Justice Thurgood Marshall: Is that an investment?
Mr. James D. Endman: I would consider that an investment.
Justice Thurgood Marshall: Alright.
Justice William O. Douglas: Mr. Endman --
Justice Thurgood Marshall: Is that good or bad?
Can you get to him or not?
Mr. James D. Endman: I think that could be gotten to a mutual fund investment since it's no longer immediately available for his needs.
Justice Thurgood Marshall: The different between a mutual fund and the bank is?
Mr. James D. Endman: I think in the bank you can go that day to the bank to get some money for food or groceries what have you and a mutual fund is a little more difficult requiring some clearance.
Justice William O. Douglas: Mr. Endman, isn't the only issue before us as to who owns the retirement benefit before it's actually paid?
That's the only and I don't think we even have the issue you discussed earlier of whether the judge in allocating property in a divorce case could take into account the fact that there is going to be a benefit sometime down the road.
That's not before us either is it?
Mr. James D. Endman: No, that's, no as I say --
Justice William O. Douglas: So who owns the benefit.
Mr. James D. Endman: It's who owns the benefit at this point and whether the court can anticipate him receiving the benefit as I pointed out in this case --
Justice William O. Douglas: The question is whether it would be anticipation within the meaning of the federal statute to apply the community property law and say it's now owned half by the wife that's whole case, is it not?
Mr. James D. Endman: Right, I submit to the Court that under each of these inquiries the state law will be an obstacle to the preemption of the Railroad Retirement Act.
First of all the Railroad Retirement Act is in a field in which the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.
We are actually here not dealing with any property right, what we have is a social insurance benefit to the same extent to the social security as was stated in the case of Flemming versus Nestor.
The property right arises with respect to pension plans by reason of a chosen action to it the fact that an employee works for a company and it is part or an element of this compensation.
I realized that this Court has stated in the case of Herb versus Pitcairn at this Court's power over state judgments is to correct them only to the extent that they incorrectly adjudge federal rights.
I submit that this is just the case that California has adjudged these non-contractual rights to be contractual rights.
Social Security benefits and Railroad Retirement Act benefits are essentially a part of the same social insurance scheme.
Both systems are finance by a tax levied upon the payrolls of the employees and their employers.
The proceeds therefrom are paid into the United States treasury.
Each year an amount equal to the benefits and administrative expenses are appropriated to a trust fund.
Furthermore, the Social Security Act is closely coordinated with the Railroad Retirement Act.
Credits to the Social Security System may be transferred from railroad service.
Automatic adjustments are made to the railroad retirement system whenever the Social Security Act is amended.
Adjust for benefits under the Railroad Retirement Act are made whenever the employee is eligible for benefits under the Social Security Act.
Justice William H. Rehnquist: Well, if one could demonstrate that the Railroad Retirement Act were contractual, would that hurt your case.
Mr. James D. Endman: In this aspect yes, I don't think it can be demonstrated because using these facts as an example.
Mr. Hisquierdo works for Santa Fe, he works for the L.A. passenger terminal, and he does not work for the United States Government.
There was no contract between him and the United State to these benefits.
Justice William H. Rehnquist: But he had to perform services for Santa Fe in order to acquire them?
Mr. James D. Endman: He performed services in order to be eligible for the social insurance benefit that's a foundation for the satisfaction or the eligibility requirements.
Just as in Social Security there has to be 40 quarters of work in order to qualify for Social Security yet this Court has said in Flemming versus Nestor that there are not contractual rights thereto that what we are dealing with is a statutory right with no contractual elements involved.
Justice William H. Rehnquist: Well, would you think under your Flemming against Nestor analogy that Congress after this man had worked 20 years for Santa Fe Railroad and had an accrued pension where I could simply declare that he no longer had such a right.
Mr. James D. Endman: I don't think they can do that without running into some problems with the due process clause but -- and probably some other political ramifications.
I submit that both of Social Security Act and the Railroad Retirement Act are part of the same social insurance scheme.
Both are enacted pursuant to the power to spend money in aid of the general welfare.
This power I submit is strictly a federal matter and should be govern by federal law without interference by the states.
Justice William H. Rehnquist: But what money is Congress spending in this case?
Mr. James D. Endman: Congress, if the income is sufficient -- insufficient will by appropriations have to make funds and this of course one of the problems that in reading the newspapers that the social security is running into is that, they're constantly raising the taxes to the point to some support these funds.
Justice William H. Rehnquist: Well is there any indication of the Santa Fe can't meet the burden of its pensions that it's going to have to call on the Government?
Mr. James D. Endman: Well this is not a Santa Fe pension.
What we're dealing with is the U.S. Government pension whether the question is whether the Government will call upon Santa Fe?
Justice William H. Rehnquist: You mean the pension checks actually come from the Government?
Mr. James D. Endman: Yes, I believe that's the way it is.
I can only say I believe so because my client is not retired and I have no idea where the pension will eventually come from but I believe it will be from the Railroad Retirement Board itself.
Since I wish to reserve some time for rebuttal, I just want to indicate that the scheme of the Railroad Retirement Act is full and complete.
That if we look at Section 231 (a) subparagraphs (a) and (b), it is clear that the railroad retirement entitlements to an annuity are to the individual under that Section.
If we look at subparagraph (c), we see that the spouse of the individual is covered by the spouse's annuity.
And if we look under subparagraph (d), we find that survivors, widows, widowers, children and parents also receive benefits.
Congress was explicit under 231 (d) subparagraph (c) (3) (b) that entitlement of the spouse of an individual to an annuity under 231 (a) subparagraph (c) shall end on the last day of the month preceding a judgment of absolute divorce.
This Court dealing with National Service Life Insurance has spoken with the force and clarity that in directing the proceeds to belong to named beneficiary under the life insurance that the states have no power to deal with those that the areas have been preempted.
Justice William H. Rehnquist: Why do say this Court spoke of force and clarity in Wissner?
Mr. James D. Endman: Well even though it was divided opinion, the opinion itself says that they have spoken with force in Congress -- Congress has spoken excuse me, I apologized.
I submit that under the Railroad Retirement Act, Congress has spoken with equal force and clarity that the annuity it belongs to the individual and no other, at the spouse's annuity belongs to the spouse and no other and because the spouse will lose the spouse's annuity by reason of a judgment of absolute divorce does not give that spouse the right to claim a portion of the individuals annuity.
That annuity's scheme is full, it is complete, it was made to it's exclusive as state of interference and that state interference is excluded by a reason of Section 231m which, we've already talked about.
I submit the Congress has considered the possibility of termination of marriage by reason the Section 231m that they made provision as they saw fit.
That neither this Court nor California has any place second guessing the wisdom of Congress if the spouse suffers a hardship as a result.
It is most unfortunate but it for Congress to correct.
Argument of Elinor H. Stillman
Chief Justice Warren E. Burger: Mrs. Stillman.
Ms Elinor H. Stillman: Mr. Chief Justice and may it please the Court.
The decision here on review directs the California trial court in these divorce proceedings to apply California community property law to annuity payments that the petitioner is going to -- is expecting to receive under the Railroad Retirement Act when he retires.
The permitted result that the wife, the respondent will be ordered the proportional interest in those payments either now through taking the interest the value of the interest out in other property or the later time through talking it out as from the payments says they mature as they accrue.
We submit that this application of state law in either form conflicts with the Retirement Act.
I think I would like to clarify that this point that the United States is not claiming that there is a preemption of the field of domestic law here.
We look at this more narrowly that there is simply a conflict between terms of this Court and this particular application of California law to these annuity payments which are federal benefit.
California is perfectly entitled to set up a scheme similar to this of its own and call it property and say it can be anticipated and treated under whatever categories it wishes.
It simply can't act on these federal payments.
Justice William H. Rehnquist: Mrs. Stillman, perhaps you can answer the question that your co-counsel and I are uncertain about and that is, do these pension payments come in a form of a government check and if so is the Government paying out money that was previously paid to it by Santa Fe?
Ms Elinor H. Stillman: Your Honor, it comes out in a form from the U.S.Treasury.
The -- under the Railroad Tax Act, the railroads are taxed, the individuals are taxed, and the money goes in to the railroad retirement account.
So that the railroads tax funds are mingled in that account that the, this man's benefits from the Santa Fe so to speak are not segregated in the account that the railroad, the different railroad just pay into the fund at a certain tax right.
I might say you were asking about --
Justice William H. Rehnquist: Employee Tier II?
Ms Elinor H. Stillman: An employees tier II, although after the 74 Act employees only pay the amount on their earnings that they would pay under social security that's all they pay.
The so-called “Tier II” benefit which is the staff pension on top of this basic social security benefit is paid entirely by railroad taxes.
And I might say that when they wrote the 74 Act because they had some transition provisions to, to preserve for some long-time employees some benefits that they were phasing out and there was a cost of that phase out Congress decided to let the U.S. Treasury take out that cost.
Justice William H. Rehnquist: Is the general scheme of the Act to make it self-financing?
Ms Elinor H. Stillman: Yes, but in the sense that that the -- but it's not a funded scheme.
So it was like self social security that it attempts to be self-financing but basically present workers are paying in funds that present retirees are receiving and there is no, there is no contribution of the worker that segregated there that his contribution in which he has equity or that although generally there are certain guarantees that that the eventual payouts would equal the amount that he had paid in social security taxes to a survivors or whatever if he has a current connection with the railroad.
I would like to emphasis though that our case does not really absolutely depend on the nature of this fund.
What we're really relying on here is expressed terms of the Railroad Retirement Act.
Specifically that the purpose of the Act originally instill is to protect these funds for the worker and to determine that they go to the worker alone and we're also relying on the express terms of Title 45, Section 231m which is the anti-assignment clause.
Justice William H. Rehnquist: When you say to protect these funds for the worker, do you think Congress really meant to cut that deep into the social policy of the states and if the state policy was to say that, if the worker and was married there was a marital community to exclude the wife from the benefit?
Ms Elinor H. Stillman: Yes, we think Congress did cut this deep here and if I could, I could address the particular terms which I think show that attention Mr. Justice Rehnquist.
First, the annuity payments are not be made subject to legal process under any circumstance whatsoever.
Justice William H. Rehnquist: Do you think that a divorce decree is legal process for that to go through?
Ms Elinor H. Stillman: We think that to allow a spouse to bring the workers expected future annuity payments into the divorce action for adjudication which is what she's doing, is in effect to subject into legal process and we think this is so whether the order that she seeks is to compel a transfer of the equivalent proportion of the present value or in order to -- to collect out of the funds and out of the payments as their later paid to her.
Second, we think that a court order --
Justice John Paul Stevens: Mrs. Stillman, on that point, do you go as far as the other counsel did and argued that the divorce Court may not even take in account in figuring out what will be a fair spouse's award, the fact that such a benefit will in the future be available to the husband?
Ms Elinor H. Stillman: We think the Court is precluded from doing that by the anticipation clause and by this legal process.
Chief Justice Warren E. Burger: Does this --
Ms Elinor H. Stillman: Clause.
Chief Justice Warren E. Burger: Does this record show the value of this, the annuity value of this as so of the time?
Ms Elinor H. Stillman: I don't believe the record shows that, it would be rather high because --
Chief Justice Warren E. Burger: As you think so?
Ms Elinor H. Stillman: -- because he's two years away from retirement, two or three years away from retirement.
Chief Justice Warren E. Burger: And that kind of annuity would cause a very large sum of money.
What will his payments be just --
Ms Elinor H. Stillman: It would greatly exceed the equity that l believe the equity in the house was approximately $12,500.00 total and I'm sure that it would be very difficult to take a proportional value of that pension out of that Act.
Chief Justice Warren E. Burger: And what's the amount that he's going to receive?
Ms Elinor H. Stillman: The amount that he will receive?
Chief Justice Warren E. Burger: In per months?
Ms Elinor H. Stillman: I have -- I know that outside the record, Your Honor.
Chief Justice Warren E. Burger: Well, outside the record for the moment since it's only hypothetical, tell me.
Ms Elinor H. Stillman: I believe it's something in excess of $700.00 a month.
Chief Justice Warren E. Burger: And that would cost to for a man at the age of 60, close to a $100,000.00 to buy that as a single premium annuity.
Ms Elinor H. Stillman: It would be, it would be very high and there's the relationship between that and the equity that's available in other community.
Chief Justice Warren E. Burger: So you say this, the courts of California may not even take it into account when they divide it?
Ms Elinor H. Stillman: No, Your honor, we think that what they propose to do is to use that amount in a paper transaction here to offset other value in the community.
We think that's using it that that's anticipating it, as if it's there.
Chief Justice Warren E. Burger: But your friend whose argue -- whose supporting -- whose argument your supporting has said that they could of have done this by way alimony.
Ms Elinor H. Stillman: That's true and the reason they could this by way of alimony, we think this would be true only since 1975.
Because in 1975, Congress by enacting in the Social Security Act, Section 459 which is an override provision that overrides the anti-attachment clause such as this said that, there could be garnishment of such funds for alimony and child support.
We think that's an --
Justice Byron R. White: So that when the alimony -- amount of alimony is set --
Ms Elinor H. Stillman: That's right.
Justice Byron R. White: By the judge, let's assume that the man was going to have no income whatsoever, except his annuity --
Ms Elinor H. Stillman: Correct.
Justice Byron R. White: And $700.00 a month.
The Court could say while you're going to be getting $700.00 a month you can afford to pay so much for alimony.
Ms Elinor H. Stillman: I think they can do since 1975.
Justice Byron R. White: Yes.
Ms Elinor H. Stillman: Because there is now the correct one.
Justice Byron R. White: That to the extent that you can garnish it you could take it into account.
Ms Elinor H. Stillman: Certainly, yes and that's a sensible reflection of the policy which Congress has now.
I think probably they enacted, it's a reasonable assumption that they enacted that statute in 1975 to avoid the harsh result which should otherwise --
Justice Byron R. White: But the statute also negatives the use of it for other purposes.
Ms Elinor H. Stillman: It certainly does because in 1977 they revised the -- they didn't revise, they clarified the definition of alimony in the Social Security Act and expressly excluded community property settlements of the type of order that would result in this divorce proceeding.
Justice William H. Rehnquist: Well is that by in terms applied to railroad retirement benefits?
Ms Elinor H. Stillman: That -- well that definition applies to this override provision which by its terms does apply to benefits under the Railroad Retirement Act, yes.
It applied -- it overrode a number of federal statutes -- military pay a number of them.
It was a provision affecting any number of federal benefits.
Justice Thurgood Marshall: Why was the community property singled out, is there any reason?
Ms Elinor H. Stillman: Excuse me, Your Honor?
Justice Thurgood Marshall: Why was community property singled out for special treatment in the last Act?
Ms Elinor H. Stillman: Well that's, that's a matter for Congress Your Honor.
It's a judgment that they're entitled to make.
Justice Thurgood Marshall: There's no other reason in the history?
Ms Elinor H. Stillman: I can't say Your Honor why exactly they decided to stop at alimony and child support although I think a reasonable view would be that when you're dealing with alimony and child support, you're dealing with actual need and Congress is doing a balancing here.
There is the protection --
Justice Thurgood Marshall: When you do a community -- when you separate community property, you're dealing with need too, aren't you?
Ms Elinor H. Stillman: Well, not necessarily no, as I understand --
Justice Thurgood Marshall: Well, in this case, this woman needs some --
Ms Elinor H. Stillman: It's not established that she needs it.
Justice Thurgood Marshall: But doesn't she?
Ms Elinor H. Stillman: She has her own earnings.
She works and she'll have social security benefits and I'd like to say just on that point, I would to make this clarification for the record.
The amicus brief now and the respondent both said that she would be, that the petitioner would be entitled to take his entire Railroad Retirement Benefit, and then claim a divorce spouse's benefit based on her earnings under the Social Security Act.
We think that would be, it would be ill-advised of him to try that because if he gets in a word of a benefit under that Social Security Act, there is an offset provision in the Railroad Retirement Act which would require that his railroad benefit be reduced to the amount that he was --
Justice Thurgood Marshall: But Mrs. Stillman, I don't think the need anything else is involved in this.
I think the same statute applies to a movie actor as it applies to a laborer.
Ms Elinor H. Stillman: Certainly.
Justice Thurgood Marshall: Isn't that right?
Ms Elinor H. Stillman: Although movie actors would not be covered by this Act but we would just say that Congress has a policy here that they've made inroad into this protection, that they've established for this payments and they've only gone so far as making it for alimony and child support.
They've not gone further to extend it to community property settlement.
We would say of cause to have called that the Court's attention also that HR 8771 which was described in our brief at page 23 and it's now been enacted as Public Law 95-366.
In the Civil Service Retirement and Disability program, Congress has now gone further for that program and done essentially what the respondent wants the Court to allow, to have done by application of state law to this statute --
Justice William H. Rehnquist: Doesn't 659 or just referred to garnishment?
Ms Elinor H. Stillman: No this is something else, Your Honor.
Justice William H. Rehnquist: I don't mean that Section you immediately just cite but 659 which is, I understand that the 75 Amendment.
Ms Elinor H. Stillman: Refers only garnishment but we think that a reasonable interpretation of the Act in the light of that now instead it would be acceptable to consider alimony since it can be garnished.
Justice William H. Rehnquist: Well but then it isn't an entirely accurate to say that the 75 Act by its terms applies to the treatment of community property, is it in Railroad Retirement Act?
Ms Elinor H. Stillman: Oh!
But the 75 Act was, as I said clarified by a redefinition of alimony in 1977 which applies specifically that the term alimony in that statute and they defined alimony to exclude community property because there had been some uncertainty on the parts of some of the Court.
Justice William H. Rehnquist: But you're still talking it about it under the umbrella of alimony or rather of garnishment, are you not?
Ms Elinor H. Stillman: That's true, Your Honor.
Justice William H. Rehnquist: And if the award of community property is not garnishment then that statute I take it would not apply?
Ms Elinor H. Stillman: That's true but we think that there still can be no anticipation.
Are you talking of that taking into account?
Justice William H. Rehnquist: That's a different argument, isn't that?
Ms Elinor H. Stillman: Yes, Your Honor.
We would say simply that Congress has this other options and the options that they chose in this recent retirement Civil Service Retirement Program was to allow garnishment out of civil service pensions for community property rewards is well as divorce and as alimony judgments.
Now Congress may wish to extend that to this Act.
It might, they're might be good policy reasons for them to do it but we simply thank that that's a matter for Congress to decide and not a matter that should be engrafted under the statute by state law.
We think that the Court recognized that in the case of Free v. Bland when it said, the relative importance to the state of its own lies not material when there is a conflict with a valid federal law for the framers of our Constitution provided that the federal law must prevail.
Therefore, we submit, the United States submits that the judgment of the Supreme Court of California should be reversed.
Argument of Howard M. Fields
Chief Justice Warren E. Burger: Mr. Fields.
Mr. Howard M. Fields: Mr. Chief Justice and may it please the Court.
The issue in this case is simply as Mr. Justice Rehnquist just stated whether the California courts, in applying California family law doctrines relating to community property may include in a total amount of assets acquired during the marriage but prior to separation, the present value of the petitioners railroad retirement benefits to the extent that they are attributable to employment during the marriage.
The issue was not one of a contractual interest and indeed the United States acknowledges on page 7 of its brief that that issue is irrelevant to the case before the Court.
Chief Justice Warren E. Burger: Under the Railroad Retirement Act, what happens if this man dies before he reaches age 60?
Mr. Howard M. Fields: Well at this point Mr. Chief Justice, the respondent would be entitled to nothing.
She would not be entitled to a survivor's benefit and she would --
Chief Justice Warren E. Burger: Well, what happens to the money?
We know they are divorced.
Mr. Howard M. Fields: It remains in the fund.
Chief Justice Warren E. Burger: It's forfeited?
Mr. Howard M. Fields: The trust account fund, it is forfeited.
Chief Justice Warren E. Burger: As treated to the fund, in other words.
Mr. Howard M. Fields: Exactly.
Chief Justice Warren E. Burger: But if they had remained marriage she would have received part of it?
Mr. Howard M. Fields: She would receive a survivor's benefit.
She would not receive a spouse benefit.
Chief Justice Warren E. Burger: In other words it's a joint and survivorship annuity in effect.
Mr. Howard M. Fields: Yes.
If on remand and the decision of the Supreme Court is affirmed the petitioner -- the respondent will not be claiming a 50% interest in petitioner's benefits.S
he would be entitled only to 50% of the community property interest that being the amount which is attributable to employment during the marriage.
That amount in this case will be less than 20%, as it respects respondent.
As it's pointed out by the respondent's brief, the Court is not required to give respondent 50% or even 20% of the benefits to respondent as they received by the petitioner because the Court can award an alternative item of community property or can award to the spouse of a portion of the railroad retirement benefits after they all received.
In answer to Mr. Justice Rehnquist's question earlier in the case, as to whether or not the funds could be garnished or executed upon -- once the funds are in the bank account, at least one court, the Superior Court in Pennsylvania and the Commonwealth versus Berfield cited in the respondents in that amicus brief filed by the National Organization for Women shows that in that case, the Court decided that funds could be garnished, once those funds were in the hands of the petitioner or in that case as they were in the hands of the bank.
Chief Justice Warren E. Burger: Generally speaking, California's, that domestic relations law on how its administered is none of our business but tell me whether the California courts still have jurisdiction to grant alimony in this case or to re-examine this case depending on the outcome -- to re-examine the case in California, depending on the outcome of this appeal in this rule?
Mr. Howard M. Fields: In this case Mr. Chief Justice, for reasons unknown to me that the attorney who tried the case did waive spousal support, and I believed that on remand, the respondent would not be entitled to claim any more spousal support.
As you correctly stated, technically the issue of family law, doctrine says they're applied in California is really not an issue.
In this Court, it's not something to be determined by this Court.
This Court stated in United States versus Yazell that both that theory and the precedence of this Court teach us solicitude for state interest.
Particularly in the field of family and property arrangements they should be overridden by federal courts only where clearance substantial interest of the national government which cannot be served consistently with respect for such interest will suffer major damage if the state law is applied.
We submit that Congress has not act too clearly in declaring that the state lawsuit was preempted and that there is no interest of the national government which will suffer major damage if the state laws applied.
In Wissner versus Wissner, there was a clear intent of the national government in protecting the morale of the servicemen in making life insurance available to them at a reasonable cause.
This was --
Justice Thurgood Marshall: How could you read the statute that will allow us to do that?
Mr. Howard M. Fields: Excuse me Mr. Justice Marshall?
Justice Thurgood Marshall: How would read the statute that says you just can't do this?
To say yes you may do it.
Mr. Howard M. Fields: I don't believe there is a statute saying that California cannot do this.
We submit that neither 231m nor 231d clearly state that California cannot do what California has done in this case.
Justice Thurgood Marshall: Well that's what I'm waiting for you to explain it and why didn't you just say so?
Mr. Howard M. Fields: With regard to the issue of the anticipation.
Anticipation is really a word of art that we submit that 231m, the exemption for execution statute was merely an exemption from an execution statute which as to be read in light of the circumstances under which the Act was passed.
This was in 1935, and in the 19 --
Justice Thurgood Marshall: Well what do you think anticipation means?
Mr. Howard M. Fields: It is a word of our taking out of spendthrift trusts.
If you read that, this the way that petitioner believe it should be read, you can also argue that the petition, that respondent has anticipating that the husband will receive this benefits but the husband himself is anticipating that he too will receive this benefit at some time in the future by varied by petitioner's own reading of that statute, this Court has to conclude we believe that the petitioner himself cannot anticipate those benefits.
It's merely a word of art.
Justice Thurgood Marshall: Yes, but the statute is not a word of art.
The statute says, “You can't collect.”
Mr. Howard M. Fields: Now, the statute does not say, the wife cannot collect and you also have to --
Justice Thurgood Marshall: Well, why was the statute amended in 75?
Mr. Howard M. Fields: The 75 Amendment, merely speaks -- are you talking about --
Justice Thurgood Marshall: Surplusage.
Mr. Howard M. Fields: We do not believe that the 75 Amendment was directed to the wife who we believe to be --
Justice Thurgood Marshall: Well, how about the 77?
Mr. Howard M. Fields: The 77 Amendment regarding garnishment expressly -- it does not recognize a community interest but you have to look in light of the purpose of the enactment of that legislation.
Congress was trying to combat welfare recipient increases in the rate of the welfare rules because husbands and fathers were able to avoid their support obligations.
And under the 77 Amendment, Congress determined that it would waive the sovereign immunity in order to permit the states to have the recipients of welfare benefits assigned to those benefits.
Justice Thurgood Marshall: It didn't waive without the community property, it did?
Mr. Howard M. Fields: No, it did not.
There is really no --
Justice Thurgood Marshall: It could have but it didn't.
Mr. Howard M. Fields: It could have Mr. Justice Marshall but --
Justice Thurgood Marshall: But you recognize that it did prohibit it, didn't you?
You now recognize that it does prohibit it?
Mr. Howard M. Fields: It prohibits garnishment of the retirement funds by the respondent but that statute does not prohibit --
Justice Thurgood Marshall: No, my question was that, it didn't take our community property so they lifted in and you must take and they say that's right.
We really didn't mean to say that.
Mr. Howard M. Fields: I meant -- we submit Mr. Justice Marshall that Congress was only addressing that one problem, that problem of fathers and husbands evading their support obligations rather than their community property obligations.
There is absolutely no history in the legislature that the Congress intended to prohibit wives from obtaining any type of benefit.
Justice Thurgood Marshall: Except they said no legal proceeding.
Mr. Howard M. Fields: Well, legal proceeding is also what we contend in a word of art.
Justice Thurgood Marshall: It has certain exceptions like divorce.
Mr. Howard M. Fields: Yes, but the mere adding up of an asset in a community --
Justice Thurgood Marshall: Well, if divorce is not legal proceeding, why do you lawyers charge fees?
Let me take a simple way of looking at it.
Mr. Howard M. Fields: Well, the divorce is a legal proceeding but the aspect of adding up this benefit as a community property asset is really not a legal process per se.
Justice John Paul Stevens: Mr. Fields can I just follow up on one thought.
Mr. Justice Marshall asked you of what in your view the word “anticipated” meant and I didn't understand your answer.
Mr. Howard M. Fields: My answer was that again, this was a word included in an exemption statute enacted during the depression.
It was -- we believed taken out of contexts, out of the language of the spendthrift trust and if we follow through in petitioner's argument that the court cannot evaluate the community interest in this benefit because the respondent would be anticipating that benefit.
It must also be concluded that the petitioner himself is anticipating that --
Justice John Paul Stevens: Well, but that may be a reason why their interpretation is wrong.
I'm asking you what your interpretation of the word is.
Do you have it or do you think it's just redundant?
Mr. Howard M. Fields: I believe that it's redundant, that it was inserted in there by someone who is drafting that particular --
Justice John Paul Stevens: You don't think it means anything more than the preceding clause which refers to garnishment, attachment and other legal process?
Mr. Howard M. Fields: No, I personally do not believe it means anything more than that and there's no history especially as indicated in the 1935 hearing reports cited on our brief that Congress intended by that schedule to preempt --
Justice John Paul Stevens: Well, your answer is it's totally redundant?
Mr. Howard M. Fields: It's totally redundant.
There is no intent that Congress intended to preempt state family law concepts.
Chief Justice Warren E. Burger: Would it be possibly also be speculative since Mrs. Stillman said that if he died before reaching age 60 that whole fund is wiped out, that is there is no fund, there is no asset anymore.
Mr. Howard M. Fields: Well, That is correct Mr. Chief Justice.
If he dies before age 60, the amount of his contributions to the fund would be forfeited.
Justice William H. Rehnquist: Well, the redundancy if there is one is really between the prohibition against anticipation and the statutory requirement for benefits, service time and so forth rather than the statutory prohibition against anticipation and the statutory prohibition against garnishment, isn't it?
Justice William H. Rehnquist: Yes, we believe so.
As is brought out in the respondent's briefs and then in the two amici briefs filed on her behalf that this Court does not under established law pursuant intent where no intent to exist.
There is no indication anywhere in the legislative history thoroughly discussed in the briefs that Congress intended to preempt a state community property law.
The existence of the spouse's benefits cited by the petitioner in his brief does not imply that Congress intended to preempt state community property law that the mere existence of that spouse's benefit is an interesting question in itself.
We believe that it was enacted in 1951 in response to the demands of the railroaders who had traditionally been receiving an amount of benefits for an excess of social security.
By 1950, however, Congress had amended the Social Security Act so that there was an average benefit increase of 77%.
At this point, the railroaders who were receiving less than the social security recipients in the railroads themselves which were upset that they were contributing greater amounts of money into the railroad retirement fund than social security recipient employers would be contributing, that greater benefits were in order.
We believe that the existence of the spouses benefit was merely to an explanation for Congress' intent to provide greater benefits in order to make the railroad retirement recipients receiving more than the social security recipients.
The fact that the spouses benefit terminates upon divorce, merely supplements at Section 231 (d) because at the conclusion of the marriage there is no spouse.
The spouse receives a separate benefit, separate and apart from her husband.
She receives a separate check.
This could be a good explanation for why the Court -- why the Congress determined that the spouse's benefit terminates upon divorce.
Congress did not determine that the spouse is not -- is precluded under the Supremacy Clause from establishing any community property interest in husbands, right to receive the federal railroad retirement benefits.
To conclude that Congress by enacting House Bill 8771 in which was signed by President Carter on September 15th and enacted as Public Law 95-366 recognizes that Congress can in effect affirm the California Supreme Court decision in this case is merely in support of respondent's argument that what California is doing does not conflict congressional intent.
8771 was enacted in order -- in recognition of -- by Congress of the greater needs that are present in today's society by older divorced women.
Congress is receptive to this point of older divorced women and --
Justice Potter Stewart: But that legislation if I have identified it correctly as specifically applicable only to civil service retirees isn't it?
Mr. Howard M. Fields: Yes.
Yes Mr. Justice Stewart that is correct.
Justice Potter Stewart: Because that illustrates that Congress could do this if they wanted to.
Mr. Howard M. Fields: Yes.
But as pointed out by the brief filed on behalf of members of Congress, one of the objections post during the period in which the Congress was considering this piece of legislation was that community property and the state domestic relations law is really an area of state concern, not an area of federal concern.
In the area of family law, this Court frequently defers to state law in that regard.
It is simply not a federal -- it's not an area of federal involvement.
It would to accept the respondent's argument as further advanced by the United States which I might add was contradicted this morning by Mrs. Stillman, the point that the California court cannot take into account alimony.
This is contradicted on pages 22 and 23 of the brief filed on behalf of the United States in which the United States is really advanced in the argument that the federal government should somehow get involved in needs of the divorce spouses.
Argument of Herma Hill Kay
Chief Justice Warren E. Burger: We'll resume there at 1 o'clock counsels.
Has your friend, is Mr. Fields completed?
Ms Herma Hill Kay: Yes, Your Honor.
Chief Justice Warren E. Burger: Very well.
Mrs. Kay you may proceed when you're ready.
Ms Herma Hill Kay: Thank you Mr. Chief Justice, may it please the Court.
As Mr. Fields said to the Court this morning, the only issue before this Court in this case is whether California may list under the heading of community assets arising from this marriage, the present value of Mr. Hisquierdo's right to receive in the future benefits attributable to his work during the marriage and payable from the Railroad Retirement Act.
Chief Justice Warren E. Burger: In your view, if the judge simply said perhaps to himself first, “I'm going to take into account that there is about a $100,000.00 asset here, contingent upon the man's surviving.
Take it into account, not anticipate it in the sense that word is used as a word of art.
Would you think he could properly do that?
Ms Herma Hill Kay: Yes, Your Honor.
That is exactly what the California Supreme Court said could be done in the pension cases in, In re marriage of Brown where the court said that we no longer had to wait for pension rights to vest.
It was enough if there was a right attributable to work perform during the marriage --
Chief Justice Warren E. Burger: But then --
Ms Herma Hill Kay: It could be taken into account.
Chief Justice Warren E. Burger: Then, then what if the gentleman died either a week before or a year after?
Ms Herma Hill Kay: Well, Your Honor, if the gentleman dies --
Chief Justice Warren E. Burger: And after they had vested, after it vested?
Ms Herma Hill Kay: If the gentleman dies or indeed in a private pension case, if he leaves employment and is no longer entitled under the private plan any benefits, then the Court has to retain jurisdiction on the theory that there is insufficient evidence on which to value the plan and the Court can do that and does do it quite commonly --
Chief Justice Warren E. Burger: You mean the continuing jurisdiction of the domestic court?
Ms Herma Hill Kay: Of the divorce court, that is correct Your Honor.
So that as and when the benefits become payable, the court will then know exactly what can be allocated to each spouse.
So that if for example in this case, it were difficult to value Mr. Hisquierdo's rights in the Railroad retirement benefits, the court could retain jurisdiction until 1981 when he is scheduled to retire could then award the wife as Mr. Fields said, 20% of the share of the benefits and could order Mr. Hisquierdo to pay them.
Now I'd like to add that that is not to say that the court could order the Railroad Retirement Board to pay them.
It is not even to say that you could attach those benefits in Mr. Hisquierdo's hands.
It is merely to say the court could make an order to Mr. Hisquierdo that this amount be paid to his wife.
That is commonly done Your Honor and indeed has been done contrary to the argument that Mrs. Stillman made this morning in cases arising under the predecessor, the Section 231m, namely Section 231l of the Railroad Retirement Act, where in several cases, the courts took into account the value of the railroad retirement benefits and both alimony and child support situations and said that those benefits can be payable even though the specific benefits may not be payable, an order can be entered against the broker himself.
Justice Potter Stewart: Well but this does not involve alimony or child support?
Ms Herma Hill Kay: That's correct, Your Honor, it does not.
Justice Potter Stewart: Well, whether or not California can consider this community property and that is the only issue, isn't it?
Ms Herma Hill Kay: I absolutely agree with you, Your Honor.
I think the 1974 Amendment, the 1975 Amendment and the 1977 definitional Amendment are totally irrelevant to the question of congressional intent in this case.
We are not relying on any need on the part of the wife.
We are relying on her rights as an owner of this property.
Justice Potter Stewart: Right.
Justice John Paul Stevens: Mrs. Kay, as another way of stating the issue you say, the question is whether the present value of the pension can be listed as a community asset.
Could it also be correct to say that the issue is whether when that present value is listed?
Shall it be listed as a husband asset or as a joint asset?
Isn't that another way of stating the same issue?
Ms Herma Hill Kay: Well, not under California practice, Your Honor.
It is true that when you file in the California court for dissolution of marriage, you have two separate forms, the petitioner list the community asset of the marriage.
They are not usually listed as husband's assets or wife's assets.
They're simply listed as community assets.
So in this case, as indeed happened in this very proceeding, the wife would list under community assets, husband's railroad retirement benefits.
That does not mean that they belong to the husband, not to the wife.
It means that they have been attributed to his labor during the marriage.
Justice John Paul Stevens: No, but would it not be your view that if the Government is correct here and of course it has not been decided, that all that would mean would be that this particular asset would be treated in the total picture as an asset belonging to the husband.
It could still be taken into account by the judge in making whatever alimony or support or whatever the --
Ms Herma Hill Kay: No, Your Honor.
It would not be treated as an asset belonging to the husband.
It would be treated if you please as an asset generated by the husband's work during marriage.
Justice Potter Stewart: Well if it is community property --
Ms Herma Hill Kay: That is correct, if it is --
Justice Potter Stewart: But Mr. Justice Stevens said if the Government is correct in this case.
Then it's a husband's assets and it is not going to --
Ms Herma Hill Kay: Well, oh, I beg your pardon here, Your Honor.
If the Government is correct then it is not a community asset at all.
If the Government is corrected as separate property and separate property is not subject to division upon dissolution under California law.
So, it would not be listed at all.
Justice John Paul Stevens: Is it not a -- may not -- maybe I'm just terribly ignorant about California law.
I would mean that California Judge could not even take into consideration the separate properties and what --
Ms Herma Hill Kay: That is correct.
That is correct.
The trial court judge could take into account separate property only for the purpose of establishing an alimony award but not for the purpose.
Not for the purpose of dividing the community properly.
Justice John Paul Stevens: Well, I understand but he could do that?
Ms Herma Hill Kay: Yes, he could do that.
Justice John Paul Stevens: I take your opponent said he could not and I just want to --
Ms Herma Hill Kay: No, I don't.
I didn't understand my opponent to say that Your Honor.
Justice John Paul Stevens: Well then, I guess I did misunderstand.
That's why I'm trying to get help.
Ms Herma Hill Kay: The -- I think one fundamental point that that has been overlooked here, the Chief Justice put his finger on it early this morning by asking what made the difference whether the defendant's spouse took this property as community property or as an alimony award.
The difference that makes is that alimony awards are traditionally modifiable, can be terminated.
Alimony rights or a subject to the discretion of the trial court, community property rights are not so that there is a great deal more of security involved for the dependent's spouse under the community property laws and being able to say, this asset is property right and not simply an alimony award.
Justice William H. Rehnquist: Alimony awards are also a taxable, are they not?
Ms Herma Hill Kay: I beg you pardon?
Justice William H. Rehnquist: Aren't alimony awards generally taxable to the recipient?
Ms Herma Hill Kay: They are generally taxable to the recipient, that is correct Your Honor.
Justice Potter Stewart: But now -- if you're correct and if this property the present value of the expectancy is therefore properly includable as property of the community.
And there is a division of that property half-and-half on the dissolution of the marriage, then what happens if two weeks after the husband becomes eligible for the return of benefits, he dies.
Ms Herma Hill Kay: Well, Your Honor that's the question of valuation if --
Justice Potter Stewart: Well, it is but now we're talking about the present value.
Ms Herma Hill Kay: That's correct and --
Justice Potter Stewart: At which is let's say, $20,000.00 for it.
Ms Herma Hill Kay: Well, if for example the court --
Justice Potter Stewart: And that's divided in half and the wife on the dissolution of the marriage therefore gets half of that $10,000.00 or whatever it is.
Then a week after the husband becomes eligible, he does live long enough to become eligible but he promptly dies.
She still has the $10,000.00?
Ms Herma Hill Kay: No, Your Honor in the case that you pose, because of the uncertainty of his living until the pension matures.
Justice Potter Stewart: He has lived by my -- in my hypothesis, he has lived that long.
Ms Herma Hill Kay: What I'm saying is that the trial court who has acted presumably before the husband has lived to the time in your hypothetical.
The trial court realizing that the husband might die could and very likely would simply not order the payment to the wife at the time of dissolution of $10,000.00 but with retained jurisdiction and with then simply began ordering the husband the pay to the wife add some when the benefits become due, 20% of each monthly payments.
So that that when you died, since the fund would then as you said this morning revert to the treasury there being no children involved in this case then the wife would have nothing further against what she could have assert the community interest.
Justice Potter Stewart: But if you're correct, the judge would have to do that.
If this is community property, it's an asset.
Ms Herma Hill Kay: That is correct but the burden.
Justice Potter Stewart: It's not income.
It's an asset.
Ms Herma Hill Kay: hat's correct.
Justice Potter Stewart: And he and the judge if you're correct could simply order the division of half to the wife on the solution of the marriage of the present value of the expectancy.
Ms Herma Hill Kay: Yes, Your Honor he could do that.
All I'm say --
Justice Potter Stewart: And if she got that then the -- she could keep it.
Ms Herma Hill Kay: Oh!
That's absolutely right.
All I'm saying is that assumes that the evaluation is certain enough to be divided at the time of the divorce.
It would have to be discounted under actuarial practices to take account of this life expectancy.
Justice Potter Stewart: Well, I'm assuming all the discounting and the problem --
Ms Herma Hill Kay: If that's true, Your Honor --
Justice Potter Stewart: Unless you end up with the value of $20,000.00 and you divide it in two.
Ms Herma Hill Kay: That's true, Your Honor.
Chief Justice Warren E. Burger: Well, but there again is a practical matter and it's beyond our jurisdiction.
It's a matter for California.
As a practical matter, certainly the judge would not be unaware and if he was, some of the counsel would make him aware the fact that this was a highly speculated asset.
Ms Herma Hill Kay: That's correct.
Chief Justice Warren E. Burger: And he would hardly ascribed any fixed value to it but does that not also suggest and again, this is not our business that the railroad retirement pension or any other similar pension is a subject for due to be dealt with under alimony not under community property.
Ms Herma Hill Kay: Well, Your Honor, I don't think so.
The -- as people spend more of their working time accumulating benefits towards retirement and specially as you talked about families where there is only one spouse working outside the home towards the end of a lengthy marriage, it is very lively that the rights and the pension or the future expectations in the pension will be the single largest item of community property and if one takes account of that is alimony, as the California Supreme Court said in the Phillipson case.
It really leaves the defendant spouse to the mercy of the divorce court and not to the dignity of the community property award.
Justice William H. Rehnquist: Isn't it true, Mrs. Kay that California for a long time has treated insurance and nobody is paid by private insurance companies as community property rather than the alimony?
Ms Herma Hill Kay: That's correct Your Honor and we also treat good will attributable to legal practice as community property even though it can't be sold by the lawyer.
Now, it may be worth emphasizing what the issues are in this case, now that I think we have discussed what the issues or not.
The issue in this case is whether the United States congress in enacting the Railroad Retirement Act has indicated in clear and direct terms and intent to supersede state law.
The only two sections of the Railroad Retirement Act that are relied on either by the petitioner or by the Government in expressing that clear intent or the anti-assignment provisions of section 231m and the termination of the spousal benefit and the Railroad Retirement Act itself.
The anti-assignment provision has been mentioned earlier this morning.
We believe that that provision, borrowed language from spendthrift trust ideas that was meant to protect the worker against his own failure to provide for himself.
It was to protect the worker against the claims of creditors under California law, the Supreme Court has made it clear that the wife claiming as an owner does not claim as a creditor and that there is no anticipation or assignment involved in awarding to her the property that her own.
While it is true that there is, a federal question that this Court must decide as to whether that rule has been superseded, I don't believe anyone who suggested that there is a different definition of the legal terms, assignment or anticipation for the purpose of federal law and state law.
Therefore, in this Court's longstanding practice of refusing to interfere with the state domestic relations law and in refraining from promulgating a federal law of domestic relations, this Court ought to leave the content of that definition to state law.
There have been a series of cases in which the court has looked at the question of federal preemption of property laws.
Those cases are cited in all the briefs in this case --
Justice Thurgood Marshall: But the Government says this is not a preemption case.
Ms Herma Hill Kay: Your Honor, I don't understand the Government to say it's not a preemption case.
They rely very heavily on the Wissner case.
Justice Thurgood Marshall: I heard the Government's standing is moot, standing right where you are?
Ms Herma Hill Kay: Yes, they rely in their brief on the Wissner case which is a preemption case.
The Wissner case involved the national service life insurance policy which was a policy, a form of property that was created by Congress for the benefit of --
Justice Thurgood Marshall: How can I understand the Government position be that there's a specific statute that doesn't say preemption or anything else?
It merely says that this money that it comes from the Retirement Board shall not be used with this purpose.
Well, that's not preemption anyway, not just a prohibition.
Ms Herma Hill Kay: Well, Justice Marshall, the only two provisions the Railroad Retirement Act that they rely on to say that or the anti-assignment provision.
And the failure to provide a benefit for divorce spouses and neither of those two provisions, we submit has anywhere near the clear congressional intent as a language used in the Wissner case where Congress said this beneficiary and no other shall own the proceeds.
Justice Thurgood Marshall: But does this apply?
Ms Herma Hill Kay: I beg your pardon?
Justice Thurgood Marshall: Does the provision apply to all of the class sections all over the country?
Ms Herma Hill Kay: Does what apply --
Justice Thurgood Marshall: Does it limit it to community property?
Ms Herma Hill Kay: I'm sorry I didn't hear you.
Justice Thurgood Marshall: Will the decision in this case apply to all 50 States of America?
Ms Herma Hill Kay: No, Your Honor.
It will apply only to the eight community property states.
Justice Thurgood Marshall: Why?
Ms Herma Hill Kay: Because only in the eight community property states is the wife treated as a co-owner of property as and when it is acquired.
And more over it may not apply in those community property states that have not yet arrived that the position that California has come to in Marriage of Brown and have not yet decided that it will award pension rights unless they are vested.
Justice Thurgood Marshall: Does that apply to maximum of eight with no certainty and not all eight?
Ms Herma Hill Kay: That is correct, Your Honor.
Now, the cases at this Court has decided earlier, dealing with the question of preemption.
Begin with the case of Wissner versus Wissner and as I indicated, the Court had made very clear in that case that there was only one beneficiary of the policy and the beneficiary was the person selected by the serviceman and that beneficiary and no other would be allowed to have the proceeds of the policy.
There is nothing like any such statement in the Railroad Retirement Act, which is before the court today.
In the --
Chief Justice Warren E. Burger: So there's nothing -- there's nothing speculative about the value of a life insurance policy is there?
That is it has cash value on any given day and upon death while the policy is still enforced, it has a face value measurable but how?
If -- would you advise a judge to place a value on this retirement annuity?
Ms Herma Hill Kay: Well, Your Honor, the question of how this retirement annuity is valued.
I submit is not before the Court.
Chief Justice Warren E. Burger: No, I know it isn't but there are some practical aspects to this case which we've all been exploring and they are very importance to the element resolution to the problem perhaps.
So how would you tell the judge if he said now, will you counsel, tell us how to value this.
Ms Herma Hill Kay: Yes, well Your Honor if (Voice Overlap).
Chief Justice Warren E. Burger: How do you use survivorship rights here?
Ms Herma Hill Kay: Yes.
Well, Your Honor in California practice a great amount of money, I understand is spent on actuarial consultants who attempt to place a value on this intangible property rights and --
Chief Justice Warren E. Burger: But how do you do that on annuity which will terminate on the incident of the death of this man?
Ms Herma Hill Kay: Well, you look for example at mortality tables indicating how long his likely to live.
Chief Justice Warren E. Burger: Well, but what if he steps off of the curve and gets hit by a truck and mortality table isn't going to help that?
Ms Herma Hill Kay: That's right but actuaries, I understand are able to take account of factors of that kind and at any event, the California courts or saved by the fact that if the actuarial figures are not sufficient in the discretion of the court to make an immediate award, all the court need to do is retain jurisdictions.
So that provides a very practical back up, which the court can fall back on.
In this case, the court would only have to wait until 1981 to find out whether Mr. Hisquierdo gets hit by a car as he steps off the curve.
Justice William H. Rehnquist: Do the California courts face similar problems, and value, and purely private pension rights?
Ms Herma Hill Kay: Absolutely, Your Honor and that was one of the major arguments in Marriage of Brown against the position that the court took.
And it was because the court felt that it had to carry out this strong state law of policy of preserving the community property interest as against some more speculative alimony award that the court decided that it was necessary to fall in community property interest in that case.
So we do know how difficult it is to value these kinds of things in California but nevertheless, the courts are facing this problem as a practical matter everyday.
Now, in the -- the case following Wissner which also involved the question of federal preemption, the case Free versus Bland, there was again an effort that to borrow money on the federal credit and in that case, this Court decided that the husband and a community property state buying co-owner bonds with his wife with the right of survivorship were allowed to overcome the contrary Texas rule, which would have said that the spouses could not agree in effect to convert what, was community property into survivorship property that would belong to the owner.
The court overcame the contrary state law interest in that case because of that necessity to raise money in the public credit but in the case following Free versus Bland written by Mr. Justice White, the Yiatchos against Yiatchos.
The Court refused to permit that prior holding in Free against Bland to be used by a husband in the State of Washington to defraud his wife of her community property interest.
In that case, the husband had invested something like $15,000.00 worth of community funds as to which he was a sole manager in bonds naming his brother as a survivor.
And after his death, the wife in effect said, my community property rights have been taken away by the conjunction of this court's holding in Free and the husband's managerial rights under state law.
And this court said, we will not allow the federal provisions here to be used as an instrument of fraud to take away the wife's rights.
The court used a federal definition of fraud but in looking to the content of the wife's rights, it's looked to state law to define her property rights.
So that it did admit that even in a case where preemption was otherwise clear, the wife's rights on the state community property law would be preserved.
Justice Thurgood Marshall: Have we met this in Court, the survivorship provision as a federal law which must prevail if it conflicts with state law?
Ms Herma Hill Kay: Yes, Your Honor but the Court also said that it would seem obvious that the bonds may not be used as a device to deprive the widow of property rights, which she enjoys under Washington law and which would not be transferable by her husband but for the survivorship provisions of the federal bonds.
So the court was willing to admit in that case that the strong federal interest which it had found in Free against Bland must itself give way to federal doctrine filled with the content of state property law to prevent the wife from being defrauded her rights by an unscrupulous husband.
What I'm suggesting is, that this Court has even in that context that adhered to its longstanding practice of not trying to write for the country, a federal domestic relations law but rather has conceded that state should be followed to the extent possible where not necessary to protect the federal interest.
The statement that was made --
Justice John Paul Stevens: Mrs.Kay, let me interrupt just a second, you're saying that they void the -- they voided here avoiding the Congress writing a federal domestic relations law but really you're arguing that you don't want this property to be substitute to any domestic relations law.
You want it to be the dignity of a community property law rather than the mercy of the divorce court to be controlling as I remember you were saying?
Ms Herma Hill Kay: Well, Your Honor the -- in California, we speak of community property law as domestic relations law.
A community property exists only between persons who are legally married to each other and in order to have that kind of property one has to enter in to a valid marriage.
So, that in its regulation of the rights between husband and wife California has established a community property regime.
It has also permitted alimony awards to be made to either spouse.
And indeed, the interdependence of those two factors is very important because depending on the amount of community property awarded, the Court may vary the alimony award so that if for example in this case, the wife is awarded 20% of the railroad retirement benefits as community property.
The Court will take that into account in determining how much spousal support, if any she should get and of course on the facts of this case that's not in point since the wife waived alimony but if you take a different case in which the wife did not waive alimony, the Court would take those two factors into account.
And the amount of community received would go towards both diminishing her future need for support and in this case, since it comes out of the husband's railroad retirement benefits his ability to pay.
Justice Potter Stewart: Yes, but my Brother Stevens' point is that community property law is property law.
It's not confined to divorce situation --
Ms Herma Hill Kay: But it's confined to married people, Your Honor.
Justice Potter Stewart: -- it's very app -- it's certainly but it's applicable in terms of inheritance and bequest and all sorts of other property transactions and concepts.
And if you're correct, the division of the community property is wholly unrelated to need to be true of both these people were (Voice Overlap) --
Ms Herma Hill Kay: That's correct, Your Honor.
Justice Potter Stewart: -- wholly unrelated.
Ms Herma Hill Kay: That's correct.
I have never contended anything before --
Justice Potter Stewart: And alimony by contract has to do with or spousal support as you call it in California has to do with need and ability to pay?
Ms Herma Hill Kay: That's right.
Justice Potter Stewart: And community property has nothing whatsoever to do with either?
Ms Herma Hill Kay: That's correct Your Honor.
But it's still I submit has to do with domestic relations law as it relates the property rights of persons who were married to each other.
And it is not I submit simply a suggestion that has nothing to do with that particular kind of interaction because the whole sweep of California in domestic relations law is based around the idea of community property.
For example, I'm sorry this case isn't cited in my brief because I didn't know that you're going to make this argument but the in deciding the case of Marvin versus Marvin which has attracted a great deal of publicity.
The California Supreme Court expressly refused to apply community property concepts to persons living in non-marital cohabitation.
And the Court said, we'll enforce contracts but they are not married and therefore community property law does not apply.
And I submit that that is a correct evaluation of the policy underlying state law.
Justice William H. Rehnquist: Community property really depends upon the concept of the contribution of each of the partner to the marriage where its alimony depends on the need of the partners after the marriage is dissolved.
Ms Herma Hill Kay: That's absolutely right, Your Honor.
And it seems to me again that therefore that the point that's made throughout the brief of the United States namely that this Court might be willing to create exceptions if need could be shown is really totally irrelevant to the argument that we're making and it's also I think totally irrelevant to the question of congressional intent to preempt the fact that an exception might be implied to exemption laws or the spendthrift laws and indeed even written and now to some of the government benefit provisions has nothing to with this case at all.
Justice Potter Stewart: Well, I didn't understand the Government to be saying his brief with what you understand that we're saying my perception of it was that the Government simply conceded that of course in determining whether and to what extent and what amount to grant an alimony award or spousal support award, the Court may consider the ability to pay of the husband and part of that ability to pay depends upon his expectancy of retirement that's all it said.
Ms Herma Hill Kay: That's right, Your Honor but the point I'm making is that the Government then throughout its brief at four or five points contrast what it refers to as the mechanical division of property under community property laws with this need on the theory I think that it is better to relegate the spouse to the alimony award rather than to a court or to dignity the property right.
What I'm suggesting is --
Justice Potter Stewart: Maybe what the Government says in its brief lies in the eye of the beholder but I didn't -- I read it little differently.
Ms Herma Hill Kay: Well, I hope upon reflection Mr. Justice Stewart you have reason to read it differently again.
The -- in conclusion, I would like to say that this case does not involve a far-reaching principle.
It does not involve an effort to interfere with what the government is trying to do in the Railroad Retirement Act.
It merely simply refers to the right of a state court in its domestic relations law to take account of the equal contributions by both spouses to the marriage and their right to rely upon the expectation of having that labor fulfilled when the marriage is dissolved.
Thank you very much.
Rebuttal of James D. Endman
Chief Justice Warren E. Burger: Thank you Mrs. Kay.
You have a few minutes left counsel.
Mr. James D. Endman: Yes, Your Honor.
Mr. Chief Justice, gentlemen of the Court, I would again like to indicate to the Court that in offset of other community property will be just as damaging to the annuitant as taking of other part of the exact annuity.
I'd also like to clarify one point that even though we use the word “annuity” here we are not talking of it the same as life insurance type annuity.
We are talking of congressional act similar --
Chief Justice Warren E. Burger: (Voice Overlap) because the statute doesn't apply to life insurance annuity and it does apply here, is that it?
Mr. James D. Endman: No, I believe it's more than that Mr. Chief Justice.
Chief Justice Warren E. Burger: What else?
Mr. James D. Endman: What we have here is a situation identical to Social Security that those who are presently working are paying a tax under the Railroad Retirement Tax Act that goes into the Government and then is appropriated to take care of those who are presently retired.
There is no purchase situation involved here as we would have in a life insurance contract situation that there is no contract involved here.
It is merely a welfare type program providing that those who work are --
Chief Justice Warren E. Burger: Would you mean that a recipient, the railroad retiree doesn't have a contractual right to recover the payments?
Mr. James D. Endman: His right should he die prematurely would extend only to a code section that provides --
Chief Justice Warren E. Burger: No, I'm talking about during his lifetime.
Suppose, they didn't pay it, he could force the payment, could he not?
Mr. James D. Endman: Well, under the -- yes, he would the right to enforce that under Fourteenth Amendment.
Justice Potter Stewart: Well he run under -- he run under the decision of Flemming against Nestor, wouldn't he in trying that?
Mr. James D. Endman: Yes, that's what we are referring to as this Court stated in the Flemming case I submit is the exact same situation that we are dealing with in railroad retirement that they are part of that same exact scheme.
Justice Potter Stewart: It's a statutory entitlement until the statute is amended.
Mr. James D. Endman: Yes.
The Congress with regard to Section 231m if they intended to limit the assignment provisions only to creditors could've provided as they did in National Service Life Insurance that only creditors shall be prohibited from garnishment, attachment, etcetera.
But they didn't put that word in and intended to be much broader.
We simply “we submit” that there's a conflict between the federal law and a community property laws that it's a physical and possibility within this scheme to give part of the proceeds to the annuitant under the code and then take away part of it.
It's impossible to give him his entire statutory due.
I would like to also indicate that it's my understanding that even though railroad retirement will apply to the eight community property states I understand that there are other states that have equal division requirements as an example.
I believe Illinois contacted by an attorney is just passed such a statute.
So, this statute will extend beyond just a community property states.
I think the effect of this statute will also apply not only to railroad retirement but because social security is the same scheme as goes railroad retirement so probably Social Security and there are some cases I understand pending regarding pension plans under the risk of program whether they also too would be involved.
I'd also like to point out that under the Yiatchos case referred to by the amicus for now.
In that case, it involved the ability of the husband in that case to take community funds put them into savings bonds and thus defraud his wife.
The railroad retiree does not have that ability to move around to his annuity funds or there can be no frauds involved unless we're to say that by taking a railroad job he's trying to deprive his wife in that railroad annuity.
Unless, I don't think that that Yiatchos case applies to this situation.
Justice William H. Rehnquist: Why, suppose the California courts would say that if he'd worked on a railroad for 40 years and had a pension and she'd worked at home raising kids and keeping house for 40 years, that if he simply walks off with the major asset that's accrued from his income during that time.
And that is a form of fraud.
Mr. James D. Endman: I don't see that as being a fraud.
That's an accumulation of a property right and if it's separate property for instance a case I recently had was involved the man who would inherited property which was a substantial portion of what these people had.
He had worked on that properties that he had inherited and under California law, that's separate property and the fact that he was worth probably a millionaire at least he admitted to being a millionaire -- had nothing to do with the fact that she got no part of it but it could be taken into.
Justice William H. Rehnquist: Well, but that (Voice Overlap) whether it's separate property or not?
Mr. James D. Endman: Well, that would be up to the state to decide --
Justice William H. Rehnquist: Yes, and here the state has said it is not separate property.
Mr. James D. Endman: Right, the state has said it's a community property but we submit is because of the conflict involved that even if it is community property the state has no right to touch it.
Any further questions?
Thank you, Your Honor.
Chief Justice Warren E. Burger: Thank you counsel.
The case is submitted.