Theise v. Theise

Annotate this Case

THEISE_V_THEISE.93-395; 164 Vt 577; 674 A.2d 789

[Dated 26-Jan-1996]

NOTICE: This opinion is subject to motions for reargument under V.R.A.P.
40 as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in
order that corrections may be made before this opinion goes to press.

No. 93-395

Elizabeth Theise Supreme Court

v. On Appeal from
Rutland Family Court

Jerome Theise September Term, 1995

Silvio T. Valente, J.

Peter Langrock and William B. Miller, Jr., of Langrock Sperry & Wool,
Middlebury, for plaintiff-appellee

Eugene Rakow and Gregg M. Meyer of Biederman & Rakow, P.C., Rutland,
for defendant-appellant

PRESENT: Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.

JOHNSON, J. Both husband and wife appeal the maintenance provisions
of the family court's divorce order. We strike the provision calling for a
lump-sum maintenance payment from the proceeds of the husband's life
insurance policy in the event he predeceases the wife; in all other
respects, the order is affirmed.

The parties were married nineteen years and had two daughters, who
were eighteen and fourteen years old at the time of the final amended
divorce order. The wife was a homemaker throughout the marriage; she was
considering renewing her teaching certification or going back to school to
become a physical therapist. The husband is involved in the construction
and sale of luxury homes; his average annual income over the seven years
before the final divorce hearing was approximately $67,000. Before the
final hearing, the parties stipulated that (1) the

wife would keep two unencumbered Vermont properties worth at least
$325,000, plus another $20,000 in various accounts and personal property;
(2) the husband would keep all New York properties, his business assets and
properties, and his personal accounts, worth altogether approximately
$1,300,000; (3) the wife would have physical responsibility for the older
daughter for the few months remaining before she reached her majority,
while the husband would have physical responsibility, and waive child
support, for the younger daughter, a developmentally disabled child who
will most likely require care beyond her majority; and (4) the court would
determine the appropriate maintenance award.

The court approved the parties' stipulation and ordered the husband to
pay the wife temporary and permanent "maintenance" in the amount of
$324,000 unless terminated sooner by the wife's death, with payments of
$2000 per month for one year, $1000 per month for the next four years, and
$500 per month thereafter, notwithstanding the wife's cohabitation or
remarriage. The court also ordered the husband to name the wife, to the
extent of maintenance payments due her, as the beneficiary on an existing
"key man" life insurance policy in which one of the husband's corporations
was the beneficiary. This provision awarded the wife a lump-sum
"maintenance" payment from the proceeds of the policy in the event the
husband predeceased her.

The husband first argues that the court erred by awarding the wife
permanent maintenance when the evidence showed that she had sufficient
income and property to provide for her reasonable needs as established
during the marriage. In her cross-appeal, the wife argues that the court's
maintenance award was an abuse of discretion, given the great disparity in
the property division agreed to by the parties. Upon review of the record,
we conclude that the court did not abuse its discretion regarding the
monthly amounts and duration of its maintenance award. See Delozier v.
Delozier, 161 Vt. 377, 381, 640 A.2d 55, 57 (1994) (family court has broad
discretion in determining amount and duration of maintenance; court's award
will be set aside only when there is no reasonable basis to support it).

We reject the husband's argument that the wife failed to make a
threshold showing that she required maintenance to meet her reasonable
needs and to maintain the standard of living established in the marriage.
As we have stated before, "The longer the marriage, the more closely
reasonable needs should be measured by the standard of living established
during the marriage." Id. at 382-83, 640 A.2d at 58. The trial court
adequately considered the relevant statutory factors in determining that,
notwithstanding the potential income available to the wife from the sale of
one of the Vermont properties, rehabilitative and permanent maintenance was
appropriate. Regarding the wife's argument, we cannot conclude that the
award was an abuse of discretion, given all the circumstances of the case,
including the parties' financial needs and responsibilities as well as the
nature and status of the assets awarded to each of them. As the court
explained, most of the husband's assets were tied up in speculative
businesses that were doing poorly, while the wife's assets were
unencumbered and risk-free.

The husband also argues that the court erred by requiring him to
secure post-mortem maintenance payments by naming the wife as beneficiary
on his life insurance policy to the extent of the maintenance award. We
agree that our recent case law precludes such a provision. In Justis v.
Rist, 159 Vt. 240, 244, 617 A.2d 148, 150 (1992), we held that the family
court has "no authority to order maintenance to continue beyond the life of
the obligor spouse unless the parties have agreed otherwise." We extended
this holding to life insurance policies in Narwid v. Narwid, 160 Vt. 636,
638, 641 A.2d 85, 87 (1993) (mem.), where we struck a court order requiring
the obligor spouse to purchase and maintain a life insurance policy for the
recipient spouse's sole benefit for as long as maintenance payments were
owed. We stated that because the recipient spouse would realize benefits
from the policy only upon the death of the obligor spouse, the benefits
would "function as a form of continued maintenance to which [the recipient
spouse] will be no longer entitled." Id.; see Clapp v. Clapp, ___ Vt.
___, ___, 653 A.2d 72, 78 (1994) ("We have rejected a requirement that one
spouse purchase life insurance to ensure income to the other spouse after
the death of the insured.").

Here, the family court expressly stated that the provision was
intended to protect and preserve the wife's maintenance award should the
husband predecease her. The family court is not authorized to accomplish
such a purpose either directly or indirectly by securing post-mortem
maintenance payments through a life insurance policy. Bell v. Bell, ___
Vt. ___, ___, 643 A.2d 846, 851 (1994) ("Vermont law does not . . . require
life insurance to effect indirectly what [15 V.S.A.] § 752 does not mandate
directly -- the continuation of maintenance after the death of either
party."). While the court has the discretion to order a spouse to maintain
an existing life insurance policy for the benefit of the other spouse,
Quesnel v. Quesnel, 150 Vt. 149, 152, 549 A.2d 644, 647 (1988), in this
case the court ordered the husband to name the wife as the new beneficiary
of an existing policy that had been assigned to the husband in the parties'
court-approved stipulation. The parties' stipulation awards the husband
all interest in his businesses, which includes the insurance policy. The
policy is a "key man" policy that provides benefits to one of the husband's
corporations upon his death. Under these circumstances, the court's order
cannot stand.

The wife points out that the court's order merely secures the
husband's maintenance obligation and would not require the husband's estate
to continue paying maintenance after the husband's death. Further,
according to the wife, the order does not disturb the parties' stipulation
because the wife will not receive anything unless the husband dies first.
The fact remains that the family court's order seeks to secure payment of
post-mortem maintenance, to which the wife is not entitled. See Kurz v.
Kurz, 443 N.W.2d 782, 788 (Mich. Ct. App. 1989) (at moment insurance
proceeds become payable, recipient spouse was no longer entitled to very
award insurance policy was meant to secure). Furthermore, the order allows
proceeds from the husband's policy to go to the wife rather than the
husband's chosen beneficiaries even though the policy had been awarded to
the husband in the parties' court-approved stipulation.

Here, as in the cases cited above, the family court is without
authority to award post-mortem maintenance, either directly or indirectly.
We are not persuaded that Quesnel requires

a different result. In that case, we held that § 762 authorizes the court
in a divorce case to order an insured spouse to maintain an existing life
insurance policy for the benefit of the other spouse. Quesnel, 150 Vt. at
152, 549 A.2d at 647. We did not hold that trial courts could do what the
court did here -- order one spouse to maintain a life insurance policy for
the benefit of the other spouse to assure continued maintenance payments
following the death of the obligor spouse. To the extent Quesnel may be so
interpreted, it is overruled as contrary to the case law cited above. Our
holding does not violate § 762, which merely authorizes the trial court to
"assign insurance benefits to a spouse or children." Finally, though we
strike the offending provision, we need not remand the case for
reconsideration of the maintenance award. Clapp, ___ Vt. at ___, 653 A.2d
at 78.

The family court's July 28, 1993 order is affirmed, except that
paragraphs five and six are stricken and paragraph three is amended by
striking the words beginning with "of" in line two through "made" in line
six.

FOR THE COURT

___________________________________________
Associate Justice

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Dissenting

No. 93-395

Elizabeth Theise Supreme Court

On Appeal from
v. Rutland Family Court

Jerome Theise September Term, 1995

Silvio T. Valente, J.

Peter F. Langrock and William B. Miller, Jr. of Langrock Sperry &
Wool, Middlebury, for plaintiff-appellee

Eugene Rakow and Gregg M. Meyer of Biederman and Rakow, P.C., Rutland,
for defendant-appellant

PRESENT: Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.

MORSE, J., dissenting. I respectfully dissent from the reversal of
the lump-sum payment in the event the husband predeceases the wife.

No matter how the family court labeled the conditional distribution of
life insurance proceeds, it believed an equitable distribution of the
marital estate required that provision. The critical point is not the
label attached, but whether the policy was marital property. It was, and,
the parties' stipulation notwithstanding, the court was authorized to
assign the benefits of the policy. Lewis v. Lewis, 149 Vt. 19, 22, 538 A.2d 170, 172 (1987) (court not bound by stipulation); see 15 V.S.A. § 751
(property owned by either or both of parties is subject to equitable
division).

I gather the Court recognizes that Quesnel v. Quesnel, 150 Vt. 149,
549 A.2d 644 (1988), is overruled, because that case involved the
assignment of life insurance benefits to

protect a wife from losing maintenance should her husband predecease
her.(FN1)

The Court has also overruled a statute, 15 V.S.A. § 762 (insurance
benefits may be assigned to spouse), in cases where the purpose is to
replace maintenance. The statute makes no such distinction. The purpose
of § 762 is to accomplish what the trial court did here. The Court says
that § 762 "merely authorizes the trial court to `assign insurance benefits
to a spouse,'" ante, at 5, which is, of course, what the family court did.
The legislative history of § 762 is as simple and straight-forward as the
statute itself. House Judiciary Committee Chairman Hoyt spoke about the
purpose of the section by saying, "[Section 762] is reasonable. [An]
insurance policy is another asset, like real property, and the court ought
to be able to say what happens to it." House Judiciary Committee, January
21, 1981, at 35.

The equitable balance of the family court's distribution of property
has been upset by the Court's reversal. In such a case, we ordinarily
remand so that the trial court may reconsider the financial balance it set
out to accomplish between the parties. See Semprebon v. Semprebon, 157 Vt.
209, 216, 596 A.2d 361, 365 (1991) (property and maintenance awards
interrelated -- where court is to reconsider maintenance on remand,
property award also reopened for reconsideration); Cleverly v. Cleverly,
151 Vt. 351, 357, 561 A.2d 99, 103 (1989) (any change

in property settlement necessitates reexamination of maintenance).

_______________________________________
Associate Justice

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Footnotes

FN1. In Quesnel, wife was not the beneficiary, and the trial court
ordered husband to name wife as the beneficiary instead. The trial court
in Quesnel stated:

Defendant [husband] shall name the plaintiff [wife] primary
beneficiary of the life insurance policy until defendant's obligation
to pay separate maintenance shall cease . . . . If the defendant
predeceases the plaintiff, at which time the defendant's obligation
to pay separate maintenance has not yet ceased . . . then at that
time the plaintiff shall place the proceeds of defendant's life
insurance policy in trust with a qualified banking institution to pay
separate maintenance to the plaintiff . . . .

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