Matthews v. Matthews

RAKER, Judge. Under the Survivor Benefit Plan, 10 U.S.C. §§ 1447-55 (1988 & 1993 Supp.), certain members of the armed services are eligible to elect to provide their dependents with survivor benefits. The issue in this case is whether Maryland courts have the authority, pursuant to a divorce decree, to order a party to maintain a former spouse as the beneficiary of the Survivor Benefit Plan. The Circuit Court for St. Mary’s County held that it did not have the power to order Herbert Matthews to maintain his Survivor Benefit Plan for the benefit of his former spouse, Jacquelyn Matthews.

We hold that Congress granted Maryland courts the authority to order a party to maintain a former spouse as the beneficiary of his or her Survivor Benefit Plan. ²⁴³ I. The Circuit Court for St. Mary’s County granted Herbert Matthews an absolute divorce from Jacquelyn Matthews after twenty-three years of marriage. Pursuant to Maryland Code (1984, 1991 Repl.Vol. & 1998 CuimSupp.) §§ 8-205, 11-101, 11-106 & 11-110 of the Family Law Article, the court granted Jacquelyn a monetary award of $25,000, indefinite alimony of $1,750.00 per month, and attorney’s fees of $9,000.00. The circuit court, however, denied Mrs. Matthews’ request that Admiral Matthews be ordered to maintain her as the beneficiary of his Survivor Benefit Plan. Following her appeal to the Court of Special Appeals, we issued a writ of certiorari on our own motion to consider the question of whether a Maryland court has the authority to require one spouse to designate a former spouse as the beneficiary of the Survivor Benefit Plan.

When Herbert married Jacquelyn on June 25, 1971, he had been in the United States Navy for thirty-one years and had attained the rank of Admiral. He designated his wife, Jacquelyn, as the beneficiary of his Survivor Benefit Plan, thereby providing a monthly income to her in the event of his death. Two years after the marriage, he retired from the military. Following the parties’ separation in May of 1989, Adm.

Matthews removed Mrs. Matthews as beneficiary by cancelling his participation in the plan. The trial court ordered Adm. Matthews to secure the survivor benefits for Mrs. Matthews but subsequently vacated the ruling as “improvidently ordered.” In the initial opinion and order dated June 24, 1992, the circuit court required Adm. Matthews to provide survivor benefits for Mrs. Matthews, conditioned on her willingness to pay the monthly cost of maintaining the benefit.

In response to motions to alter the judgment filed by both parties, the trial court entered a revised order. Finding that the court lacked authority to compel Adm. Matthews to retain Mrs. Matthews as a beneficiary of the Survivor Benefit Plan, the court vacated that portion of the order, stating two reasons: first, the benefits ²⁴⁴ accrued prior to the parties’ marriage and thus could not be considered marital property; and second, that the Survivor Benefit Plan is a form of life insurance, and as such, “forcing an individual to permit an ex-spouse to obtain a life insurance policy on them is in violation of Section 371 of the Maryland Insurance Code....” 1 Dissatisfied with this ruling, Mrs. Matthews appealed to the Court of Special Appeals, and we granted certiorari prior to review by the intermediate appellate court.

II

The Survivor Benefit Plan (SBP), 10 U.S.C. §§ 1447-55 (1988 & 1993 Supp.), purely a creature of federal law, was created by Congress in 1972. The plan was designed to provide financial security to a designated beneficiary of an active or retired military member, payable in the form of an annuity upon the service member’s death. Eligible participants include any member of the armed services who is entitled to retired pay and who is married or has a dependent child at the time he or she becomes entitled to retired pay. 10 U.S.C. §§ 1448 (a)(1)(A) & (a)(2)(A). Eligible participants are automatically enrolled in the SBP unless they elect not to participate. 10 U.S.C. § 1448 (a)(2)(A).

Under the SBP, the government bears a portion of the cost of maintaining the SBP for its participating members; after retirement from the service, the member’s cost of participation is withheld from the participant’s monthly retirement pay. 10 U.S.C. § 1452 . Upon the death of the participating member, the benefits are dispersed to the designated beneficiary through a monthly annuity. 10 U.S.C. § 1450 (a). The Survivor Benefit Plan has undergone several amendments since its enactment in 1972. When first enacted, the plan did not expressly provide that a former spouse was an ²⁴⁵ eligible beneficiary, and participation by a former spouse was limited to circumstances where the former spouse retained an “insurable interest” in the participating service member.

Recognizing the limited situations where a former spouse would retain an insurable interest in a former husband or wife, the unusual circumstances often facing a former spouse, and the need to provide a measure of financial protection to a former spouse in the event of termination of a marriage, Congress amended the SBP in 1982 to expressly authorize participants to elect to provide annuities to former spouses. 10 U.S.C. § 1448 (b)(2). Significantly, however, the amendment provided that “[n]othing in this chapter authorizes any court to order any person to elect under section 1448(b) of this title to provide an annuity to a former spouse unless such person has voluntarily agreed in writing to make such election.” In 1986, Congress amended the SBP, deleting the provision requiring a voluntary written agreement for former spouse protection and inserting the language: “[a] court order may require a person to elect or to enter an agreement to elect ... under section 1448(b) of this title to provide an annuity to a former spouse----” 10 U.S.C. § 1450 (f)(4). At issue today is whether this amendment confers authority upon Maryland courts to require a party to maintain a former spouse as the beneficiary of the SBP, or whether the Maryland General Assembly must enact enabling legislation to complement 10 U.S.C. § 1450 before Maryland courts may affect the military survivor benefits.

III

According to Mrs. Matthews, the language of 10 U.S.C. § 1450 (f)(4) which authorizes any state court to enter an order requiring a person to elect to provide an annuity to a former spouse makes it clear that Congress intended courts of record of this State to have the power that 10 U.S.C. § 1450 (f)(4) purports to grant. In response, Adm. Matthews maintains that it was the intent of Congress that, absent enabling legislation enacted by the Maryland Legislature, Maryland ²⁴⁶ courts are without authority to order service members to elect to provide an annuity to a former spouse under the SBP. It is Adm.

Matthews’ position that 10 U.S.C. § 1450 merely permits a state court to order a person to designate a former spouse as a beneficiary without conferring authority on state courts to effectuate that power. Asserting that the authority of Maryland courts to adjust the property rights of spouses incidental to a divorce is derived solely from Maryland statutes, he further argues “that a Maryland divorce court has no power, unless conferred by the Legislature, to transfer property of either spouse to the other.” He concludes that, a court could order him to maintain Mrs. Matthews as a beneficiary only under the court’s authority to transfer ownership interest in a pension or retirement plan pursuant to § 8-205 of the Family Law Article, which permits a court to transfer ownership interest in a pension, retirement, profit sharing, or deferred compensation plan. Conspicuously absent, he asserts, is the authority to order one spouse to name, retain, or designate the other spouse as beneficiary of a survivor benefit or annuity plan. Finally, Adm.

Matthews maintains that because the SBP is “a right to receive an annuity; an insurance benefit,” under Maryland statutory and case law, Maryland courts may not require a party to maintain a former spouse as a beneficiary of the SBP. We agree with Mrs. Matthews that Maryland courts are vested with the authority to require Adm. Matthews to maintain her participation in the Survivor Benefit Plan. We shall explain.

A. The legislative history of 10 U.S.C. § 1450 (f)(4) reveals that Congress intended to “provide state courts with the option of ordering military service members to participate in the Survivor Benefit Plan and to designate a former spouse as beneficiary as part of a divorce agreement.” 1986 U.S.C.C.A.N. 6413, 6542. As one commentator notes, SBP’s “were traditionally held immune from division by state courts. ²⁴⁷ In late 1986, however, Congress expressly changed the law. Under [§ 1450(f)(4) ] state courts can now compel service members to elect or not elect certain persons as beneficiaries of their SBP’s. Thus, SBP’s are now divisible by state courts.” Brett R. Turner, Equitable Distribution of Property, at 186 (1993 Cum.Supp.).

In accordance with 10 U.S.C. § 1450 (f)(4), other states have recognized this authority to award survivor benefits to former spouses. In Smith v. Smith, 190 W.Va. 402 , 438 S.E.2d 582 (1993), the trial court refused to designate the wife as the beneficiary of her former spouse’s Survivor Benefit Plan. Reversing the trial court, the Supreme Court of Appeals of West Virginia recognized that, by the 1986 amendment to the SBP, “courts were authorized to order a military member to provide the annuity to a former spouse regardless of the intentions of the military member.” Id. 438 S.E.2d at 584 . The court remanded the case to the trial court with directions to enter an order designating the wife as the beneficiary of the former husband’s SBP “in order to assure her continued support should her former husband predecease her.” Id. 438 S.E.2d at 585 .

In Davis v. Davis, 626 So.2d 111 (Miss.1993), the Supreme Court of Mississippi affirmed the chancellor’s award which required the husband to maintain his former wife as a beneficiary of the Survivor Benefit Plan. The court noted that “[p]rior to the 1986 amendment to Title 10, U.S.C.A., § 1450 (f)(3), the state court’s authority to make this requirement absent voluntary agreement of the military personnel covered by the plan was questionable.” Id. at 113 . The court held that, in light of the 1986 amendment, the trial court had the authority to make such an award and, under the facts of the case, did not abuse its discretion in doing so. Id.

Similarly, in Paul v. Paul, 410 N.W.2d 329 (Minn.Ct.App. 1987), the Court of Appeals of Minnesota affirmed the trial court order which required the former husband to “within 30 days of the date hereof irrevocably re-elect the military Survivors Benefit Plan (SBP) naming [wife] herein as beneficiary ²⁴⁸ thereof.” Id. at' 330-31. The husband’s claim of error was based on the pre-1986 language of 10 U.S.C. § 1450 (f)(3) which required a voluntary agreement in writing before a spouse could be required to make such election. Rejecting the husband’s argument, the Minnesota court relied on the federal grant of authority in the 1986 amendment as the sole basis for the order: “[§ 1450] permit[s] state courts to order persons to elect the SBP.” Id. at 333. Florida courts have also held, pursuant to 10 U.S.C. § 1450 (f)(4), that a state court has the power to order that a military member maintain an annuity for a former spouse.

In Heldmyer v. Heldmyer, 555 So.2d 1324 (Fla.Dist.Ct.App.1990), the Florida District Court of Appeal noted that Congress amended 10 U.S.C. § 1450 (f)(4) to provide a trial court the discretion to order a spouse to maintain an annuity for a former spouse under the SBP. Id. at 1325 . Likewise, in Haydu v. Haydu, 591 So.2d 655 (Fla.Dist.Ct.App.1991), the court stated that “[c]ontrary to appellant’s assertion, trial courts have the discretion to order a spouse to maintain an annuity for a former spouse under the Survivor Benefit Plan.” Id. at 657 n. 2. In each of the above cases in which it was held that state courts have the power to require a party to maintain an SBP for the benefit of a former spouse, 10 U.S.C. § 1450 (f)(4), standing alone, served as the basis for the decision.

None of the courts in the above cases identify any state enabling legislation in support of their holdings, nor do they discuss the need for such legislation to enable a state court to have authority pursuant to 10 U.S.C. § .1450(f)(4). Indeed, in our own search of the law of each of those jurisdictions, we uncovered no state enabling legislation concerning the SBP. Admiral Matthews directs our attention to Wakefield v. Little Light, 276 Md. 333 , 347 A.2d 228 (1975), to support his argument that state enabling legislation is required to effectuate 10 U.S.C. § 1450 (f)(4). In Wakefield , this Court was