Rice v. Rice ( 1982 )

SHEPARD, Justice.

This is an appeal from a decree of divorce in which the wife was awarded a community property interest in the husband’s military retirement pay. The sole issue presented here is whether it was correctly determined that military retirement pay can constitute community property, capable of being apportioned in part to a spouse upon divorce. We reverse.

David Rice entered the United States Air Force in 1942. He and Florence Rice were married in Kansas in 1949. They lived at military stations throughout North America until he retired from the Air Force in 1967 in Illinois. Thereafter the parties moved to Idaho.

In 1976, David Rice filed suit for a divorce in Idaho. The magistrate court granted a divorce but that court held that the husband’s military retirement pay was his separate property. That holding was based on the court’s conclusion that Florence Rice had failed to establish that the military retirement pay was acquired in a community property jurisdiction. The remaining property was held to be community and divided between the parties. Florence Rice appealed the decision of the magistrate court to the district court.

Upon appeal, the district court, in a well reasoned decision, held that the magistrate court had erred in concluding that the military retirement pay was separate property. The district court concluded that even if the military retirement pay was acquired in a common law jurisdiction, i.e., Kansas or Illinois, Florence Rice nevertheless was entitled under the law of those jurisdictions to a share of the military retirement pay. Hence Florence Rice was awarded a portion of the military retirement pay. In that appeal to the district court, David Rice also contended that the magistrate court decision should be affirmed on the basis that state law regarding military retirement pay was preempted by federal law and hence the state courts of either a common law or community property jurisdiction were without jurisdiction to either determine that such retirement pay was community property, or to apportion the same between the parties to a divorce. That assertion of David Rice was rejected by the district court. This appeal followed.

Following the proceedings in lower courts, but prior to oral argument before this Court, the opinion in McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981), was issued by the United States Supreme Court. However much an invasion of the area of family law traditionally reserved to the jurisdiction of the courts of the several states, it is, nevertheless, clear that therein the Court held that Congress has preempted the area and state courts are precluded from applying community property principles and dividing military retirement pay in divorce actions. However much we may disagree with the decision in McCarty, we are nevertheless bound to follow and apply it. Hence, we are required to overrule Ramsey v. Ramsey, 96 Idaho 672, 535 P.2d 53 (1975), insofar as it conflicts with McCarty, and we reluctantly conclude in the instant case that military retirement pay must be held to be the separate property of David Rice and not subject to division between the parties in this divorce action.

It is argued by Florence Rice that the district court in the instant case determined that the retirement pay was marital property under the common law rules in Kansas and Illinois, and since McCarty applies only to community property it is not applicable here. We disagree. We find no indication in McCarty that it is intended to disable only the eight community property states from dividing military retirement pay, while allowing the remaining 42 states to do so. While it is correct that McCarty is couched in the terms of community property jurisdictions, the broad language of the opinion clearly holds that state courts may not interfere with the retiree’s receipt of military retirement pay. See also Ridgway v. Ridgway, 454 U.S. 46, 102 S.Ct. 49, 70 L.Ed.2d 39 (1981), which holds that the law of Maine, a common law jurisdiction, has been preempted by congressional enactments governing the Servicemen’s Group Life Insurance Act.

Respondent Florence Rice further asserts that the holding of McCarty should be applied only prospectively and thus applied to and include only those actions tried after the date of the McCarty decision, i.e., June 26,1981. The issue of retroapplication of an intervening ruling is far from settled. Compare State v. Mendibles, 125 Ariz. 7, 606 P.2d 825 (Ct.App.1979), which states, “As a general rule, an overruling decision is given retroactive effect unless there are special circumstances warranting the denial of retroactive application or unless the overruling court has expressly indicated otherwise”, with Reed v. Reed, 124 Ariz. 384, 604 P.2d 648 (Ct.App.1979), wherein it is stated, “It is the general rule that unless exceptional circumstances are shown, court decisions will be given only prospective application.” Both this Court, Rogers v. Yellowstone Park Co., 97 Idaho 14, 539 P.2d 566 (1975); Thompson v. Hagen, 96 Idaho 19, 523 P.2d 1365 (1974), and the United States Supreme Court, Hankerson v. North Carolina, 432 U.S. 233, 97 S.Ct. 2339, 53 L.Ed.2d 306 (1977); Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971); Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965), hold that the issue ordinarily is a matter of discretion with the overruling court. We note that McCarty itself is no guidance on the issue. Here appellant raised the precise issue of federal preemption before the district court, and we hold therefore that the appellant, David Rice, has preserved the issue on appeal to this Court. Hence the cause, not having been finally decided, and the issue being preserved before this Court, the application of McCarty to the instant cause is not correctly denominated as a retroactive application. See Sheldon v. Sheldon, 177 Cal.Rptr. 380, 124 Cal.App.3d 371 (1981); Jacanin v. Jacanin, 177 Cal.Rptr. 86, 124 Cal.App.3d 67 (1981).

We conclude that the decision of the district court must be reversed. The district court is directed to amend its judgment to provide that the military retirement benefits are the separate property of appellant David Rice and to be set over to him without any apportionment to respondent, Florence Rice.

The cause is remanded to the district court for additional proceedings. The district court, on the basis of the record made in the magistrate court, concluded that the magistrate court’s decision did not divide the property of the parties in a just and reasonable fashion. See I.C. § 32-712. The district court may take additional evidence thereon. The district court shall enter its findings, conclusions and judgment dividing the community property in such a method and proportion as it deems just. Such “just” division of the community property does not require mathematical nicety nor is it required that the property be distributed in equal parts if the court finds special circumstances justifying non-equal distribution. Guy v. Guy, 98 Idaho 205, 560 P.2d 876 (1977); See also Karr v. Karr, 628 P.2d 267 (Mont.1981), cert. denied, 454 U.S. 890, 102 S.Ct. 384, 70 L.Ed.2d 204 (1982) (holding that military retirement pay is a proper consideration in awarding alimony). In its proceedings and decision, the district court shall act in accord with Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1 (1979), which forbids an “offsetting” award in the amount of the non-beneficiary spouse’s otherwise interest in the retirement benefits.

No costs allowed.

BAKES, C. J., and McFADDEN and DONALDSON, JJ., concur.