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contractappealtrial
contractappealtrial

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In re Marriage of Skaden, 19 Cal.3d 679, 566 P.2d 249, 139 Cal.Rptr. 615

Facts

Heidrun and Gary Skaden were married in 1961 and separated in 1973. Gary had been an insurance sales agent for State Farm Insurance Companies since 1965, and his contract included provisions for 'termination benefits' payable if the agreement was terminated two years or more after its effective date. The trial court concluded that these benefits were not divisible community property, but rather an expectancy and awarded them solely to Gary.

Heidrun and Gary Skaden were married in 1961 and separated in 1973. Starting in 1965 Gary was an insurance sales agent of State Farm Insurance Companies (State Farm) working under the provisions of a contract entitled ‘State Farm Agent's Agreement,’ which was executed at the commencement of the agency relationship.

Issue

Whether the 'termination benefits' contained in the husband's insurance sales agent's agreement represent a divisible property interest in the context of marriage dissolution.

We conclude that they do. To implement their division under the particular circumstances of the instant case, we deem it necessary and appropriate to indicate certain guidelines and procedures.

Rule

The court applied the principle that vested rights, whether matured or immature, are property subject to division upon dissolution of marriage, particularly when they derive from employment during the marriage.

A right which is ‘vested’ for these purposes, we stated, is one which ‘survives the discharge or voluntary termination of the employee.’

Analysis

The court analyzed the nature of the termination benefits, concluding that they are similar to pension rights, which are considered deferred compensation for services rendered. The court emphasized that the benefits are vested after two years but may be immature if conditions for payment have not been met. The court found that the benefits should be treated as property subject to division, as they arise from the employment contract and are not merely an expectancy.

We believe that the right to termination benefits involved in the instant case must be considered ‘vested’ for present purposes.

Conclusion

The Supreme Court reversed the trial court's judgment and remanded the case for further proceedings to determine the proper division of the termination benefits as marital property.

Accordingly, we think the cause should be remanded to the trial court for further proceedings consistent with the views expressed in this opinion.

Who won?

The wife, Heidrun Skaden, prevailed in the appeal because the Supreme Court found that the termination benefits were indeed a divisible property interest, contrary to the trial court's ruling.

Heidrun appeals from the judgment, contending that the above termination benefits, like the pension rights involved in Brown, represent a form of deferred compensation for services rendered.

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