Ex parte Chester B. HOVERMALE, Relator.
No. 04-82-00017-CV.
Court of Appeals of Texas, San Antonio.
June 30, 1982.
639 S.W.2d 828
The majority agrees except that they maintain that prejudgment interest was appropriately recoverable on the amount of money awarded for double the amount of the time price differential in connection with the answer of the jury to special issue no. 1. I have already expressed the opinion that the granting of this penalty by the trial court was error. If I am correct in that assertion, then of course there will be no interest on that amount, but even if I am incorrect, there still should be no prejudgment interest. The award of double the amount of the time price differential under the Consumer Credit Act was a penalty and not damages. Penalties do not draw prejudgment interest because a penalty does not reflect damage to the plaintiff. Penalties are assessed to discourage certain conduct on the part of the party penalized. As the Court of Appeals for the Fifth Circuit has said, “interest on a penalty does not further the purpose of making an injured party whole.” Illinois Central Railroad Company v. Texas Eastern Transmission Corp., 533 F.2d 272 (5th Cir. 1976) aff‘d in part, rev‘d in part, 551 F.2d 943 (5th Cir. 1977).
For the reasons stated above, I would reform the judgment by reducing the money award of $25,270.96 to $10,815.00 and by awarding interest on that amount from the date of judgment, May 19, 1980, and, as reformed, I would affirm the judgment.
Gary A. Beahm, San Antonio, for appellee.
OPINION
CANTU, Justice.
Relator was confined pursuant to a commitment order issued by the 285th Judicial District Court of Bexar County after sustaining a Motion for Contempt upon a finding that relator had violated a previous order of the court entered on October 30, 1979, in Cause No. 78-CI-13387, styled Elizabeth M. Hovermale v. Chester B. Hovermale, requiring relator to pay to his former wife a portion of his gross monthly military retirement pay, based on a formula set out in the decree of divorce. Relator has filed this original habeas corpus proceeding and this court, acting en banc, ordered his release upon the posting of bail.
Due to a conflict in positions taken by different panels of this Court in Ex parte Buckhanan, 626 S.W.2d 65 (Tex.App.-San Antonio 1981, no writ) and Ex parte Rodriguez, 636 S.W.2d 844 (Tex.App.1981), we
Relator and his spouse were divorced on October 30, 1979, and an order partitioning property, including U.S. Postal Service retirement and U.S. Navy military retirement, was entered awarding both parties a portion of each retirement fund based upon a formula incorporated in the decree. In each case relator was constituted a trustee for the benefit of his ex-spouse in all sums received by him for her benefit. Only the military retirement benefits were alleged to be the subject matter of the contempt motion and, accordingly, the U.S. Postal Service retirement benefits are not involved in this case.
On January 6, 1982, the trial court found that relator had violated the order of October 30, 1979, by failing to pay any portion of his military retirement benefits to his ex-spouse for the months of July through December of 1981, in the total amount of $1,400.47. As in Ex parte Buckhanan, supra, and Ex parte Rodriguez, supra, relator contends that the portion of his divorce decree ordering a division of the military retirement benefits is void because of the United States Supreme Court‘s holding in McCarty v. McCarty,1 and subsequent case law. Reliance is principally placed upon Trahan v. Trahan, 626 S.W.2d 485 (Tex.1981), Ex parte Johnson, 591 S.W.2d 453 (Tex.1979) and Ex parte Buckhanan, supra.
Numerous courts have attempted to resolve the question of retroactive application following the McCarty decision.2 Some have attempted to find consolation in the doctrine of res judicata while others prefer to repose behind a theory of “vanishing” jurisdiction. Most courts recognize that the problem arises from references in the McCarty decision to the preemption doctrine. We believe that the solution lies in the definition ascribed to the term “preemption” and demarcating situations where “preemption” applies.
PREEMPTION AND THE SUPREMACY CLAUSE
There is much confusion surrounding the term “preemption.” Even some opinions of the U.S. Supreme Court contribute to this confusion by using the term to include all situations dealing with the Supremacy Clause. However, a survey of cases by the U.S. Supreme Court dealing with preemption and the Supremacy Clause3 indicates distinct differences in application, reasoning and, presumably, results in subsequent cases.
The term “preemption” has traditionally been reserved to connote those instances in which Congress has expressly issued a peremptory prohibition of the states’ exercise of jurisdiction over certain subject matter, as in bankruptcy, where its power is plenary. See Kalb v. Feuerstein, 308 U.S. 433, 60 S.Ct. 343, 84 L.Ed. 370 (1940). Consequently, when a federal statute has vested exclusive jurisdiction of a particular type of case in the federal courts, the finding by a state court that it has jurisdiction over such a case will not preclude a collateral attack upon the judgment rendered in the state court. This is so because in speaking out, Congress has expressly stated that state
The term “preemption” has likewise been used in connection with instances in which Congress enters into an area of law not expressly reserved unto it and which is, perhaps, already occupied by state legislation as interpreted by long-standing state jurisprudence. It is not unusual for the U.S. Supreme Court to characterize this problem as falling under the mantle of the Supremacy Clause and often express the opinion that Congress has preempted the field. While the use of the term preemption in this context may be technically correct, the Court has often elected to refer to Congress’ actions as “overriding” and “superseding” action by a State, and state regulation in the area is said to “give way” and “become inoperative.” Thus preemption occurs through judicial interpretation and application of the Supremacy Clause.4
In the final analysis, it seems clear that the term “preemption” does not always imply a prohibition and, therefore, a withholding of jurisdiction or authority to act.
A third type of preemption has been recognized, and perhaps it is in this area that the greatest difficulties have arisen. Our attention must focus upon this type of preemption because it is from this area that McCarty derives its vitality.
In 1962 the U.S. Supreme Court, in the case of Free v. Bland, 369 U.S. 663, 82 S.Ct. 1089, 8 L.Ed.2d 180 (1962), was called upon to decide whether treasury regulations preempted inconsistent Texas community property law by virtue of the Supremacy Clause of the U.S. Constitution. The Court held that the survivorship provision of the regulations conflicted with state law. In doing so the Court recognized two types of preemption. The first arises where the federal statute‘s language expressly or implicitly reflects the command of Congress. 369 U.S. at 670, 82 S.Ct. at 1094, 8 L.Ed.2d at 185. The second arises where state law and federal laws are so inconsistent that the state law must give way because it stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. 369 U.S. at 666, 82 S.Ct. at 1092, 8 L.Ed.2d at 183.
At the next term, the Court in Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963), with all nine justices adopting the Hines v. Davidowitz test,5 spoke in similar terms. See also Yiatchos v. Yiatchos, 376 U.S. 306, 84 S.Ct. 742, 11 L.Ed.2d 724 (1964). More recently in DeCanas v. Bica, 424 U.S. 351, 96 S.Ct. 933, 47 L.Ed.2d 43 (1976), the Court considered whether a state statute was unconstitutional because it stood as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress in enacting the federal statute. 424 U.S. at 363, 96 S.Ct. at 940, 47 L.Ed.2d at 53.
Again, in Jones v. Rath Packing Co., 430 U.S. 519, 97 S.Ct. 1305, 51 L.Ed.2d 604 (1977), the Court considered whether Congress, pursuant to its powers granted by the U.S. Constitution, has prohibited the states from further operation in a field traditionally occupied by the states. Although the term “preempted” was again used by the Court, it is clear that the meaning ascribed to the term is one of “superseding” when the Court held
But when Congress has “unmistakably ordained,” [citation omitted] that its enactments alone are to regulate a part of commerce, state laws regulating that aspect of commerce must fall . . . Congressional enactments that do not exclude all state legislation in the same field nevertheless override state laws with which they conflict. (citations omitted) (emphasis added).
430 U.S. at 525-526, 97 S.Ct. at 1309-1310, 51 L.Ed.2d at 614.
The determination to be made in these cases is whether preemption occurs by virtue of decisional law and statutory construction as opposed to preemption by prohibition of Congress. Jones v. Rath Packing Co., supra, thus stands for the proposition that state interests may have to “give way” to federal interests even though preemption6 in the usual sense has not taken place. Perhaps it is unfortunate that the Court continues to cling to the notion of preemption in its opinions instead of simply referring to an “overriding,” “giving way” or “superseding” of state interests by federal law by virtue of the Supremacy Clause.7
We now turn our attention to Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1 (1979) and McCarty v. McCarty, supra. In Hisquierdo the Court held that Railroad Retirement Act benefits accrued during marriage are not community property subject to division upon divorce. In so doing, the Court stated the test to be applied as “whether the right as asserted conflicts with the express terms of federal law and whether its consequences sufficiently injure the objectives of the federal program to require nonrecognition.” (emphasis added) 439 U.S. at 583, 99 S.Ct. at 809, 59 L.Ed.2d at 12. In holding as it did, the Court noted that the language in the Retirement Act positively required, by direct enactment, that state law be preempted and that the type of injury the Supremacy Clause seeks to prevent was threatened by community property interests in conflict with the Act. Thus, in Hisquierdo, there were both types of preemption. So here preemption occurred by virtue of both types alluded to in Free v. Bland, supra. See also Wissner v. Wissner, 338 U.S. 655, 70 S.Ct. 398, 94 L.Ed. 424 (1950).
In McCarty v. McCarty, supra, the Court, in holding that military retirement benefits may not be divided by state courts pursuant to community property laws, premised its holding upon the same considerations discussed in Hisquierdo. Unlike Hisquierdo, however, the Court in McCarty concluded that a mere conflict between federal and state interests did not invoke preemption under the Supremacy Clause, particularly where the conflict is only one of words. Reliance was then had upon the second type of preemption recognized in Free v. Bland, supra, to determine that continued recognition of the assailed state interest threatened grave harm to clear and substantial federal interests, 453 U.S. 231, 101 S.Ct. at 2741, 69 L.Ed.2d at 606, potentially frustrated Congressional objectives, 453 U.S. 231, 101 S.Ct. at 2741, 69 L.Ed.2d at 606, and interfered with a legitimate exercise of the power of the Federal Government. 453 U.S. 233, 101 S.Ct. at 2742, 69 L.Ed.2d at 607. The same approach had been taken in the earlier case of Farmers Ed. & Coop Union of America v. W Day, Inc., 360 U.S. 525, 79 S.Ct. 1302, 3 L.Ed.2d 1407 (1959).
Thus we may note that the decision in McCarty does not rest upon traditional con-
The majority in Ex parte Buckhanan, supra, while recognizing that a final judgment, that is only erroneous and not beyond the power of the court to enter, cannot be collaterally attacked, citing Humble Oil & Refining Co. v. Fisher, 152 Tex. 29, 253 S.W.2d 656 (1952) and Clayton v. Hurt, 88 Tex. 595, 32 S.W. 876 (1895), nevertheless concludes that preemption under McCarty and Hisquierdo renders a judgment, otherwise final, void ab initio. The defect in the majority opinion in Buckhanan lies in its failure to recognize the different types of preemption under consideration in the various cases relied upon and, in lumping them together without distinction. By doing so, the opinion places all cases on an identical footing and creates an inappropriate measuring device, thereby condemning all cases touched by the McCarty decision to a death and burial without benefit of autopsy.9
Ex parte Johnson, 591 S.W.2d 453 (Tex.1979), also cited in Buckhanan, relies upon Hisquierdo-type preemption. If Ex parte Johnson indeed calls for retroactive application,10 it is so only because of the type of preemption involved and upon which it relies and which by the very language of the statute involved declares a prohibition against state intervention. 591 S.W.2d, at 456.
Because state law was so firmly entrenched before the Court sounded the warning in McCarty that state interests must yield to Congressional objectives, there can be no contention that a clear prohibition existed rendering state intervention into a heretofore exclusive federal area a nullity. In declaring that Congress, by characterizing military retirement benefits as being the sole property of the retiree, preempted any state law characterization to the contrary, the Buckhanan majority disregards the core considerations in issue in McCarty.11 So viewing the premise of the Buckhanan majority, it is easy to see how they erroneously concluded that the judgment was void ab initio. See Kalb v. Feuerstein, supra.
In Kalb, relied upon by the Buckhanan majority, the Court reaffirmed the general rule that a judgment by a court of competent jurisdiction bears a presumption
JURISDICTION, FINALITY OF JUDGMENTS AND RES JUDICATA
On the subject of jurisdiction, a most respected legal writer has stated:
A court has jurisdiction of any subject-matter, if, by the law of its organization, it has authority to take cognizance of, try, and determine cases of that description. If it assumes to act in a case over which the law does not give it authority, the proceeding and judgment will be altogether void, and rights of property cannot be divested by means of them.
. . . .
Accordingly, where a court of law has no jurisdiction of the subject-matter of a controversy, a party whose rights are sought to be affected by it is at liberty to repudiate its proceedings and refuse to be bound by them, notwithstanding he may once have consented to its action, either by voluntarily commencing the proceedings as plaintiff, or as defendant by appearing and pleading to the merits, or by any other formal or informal action.
. . . .
[T]o render the jurisdiction of a court effectual in any case, it is necessary that the thing in controversy, or the parties interested, be subjected to the process of the court.
. . . .
When it is once made to appear that a court has jurisdiction both of the subject matter and of the parties, the judgment which it pronounces must be held conclusive and binding upon the parties thereto and their privies, notwithstanding the court may have proceeded irregularly, or erred in its application of the law to the case before it. It is a general rule that irregularities in the course of judicial proceedings do not render them void.
W. Carrington, Cooley‘s Constitutional Limitations, Vol. II at 846, 851, 861 (8th ed. 1926) (footnotes omitted); see also White v. Crow, 110 U.S. 183, 4 S.Ct. 71, 28 L.Ed. 113 (1884).
In Federated Department Stores v. Moitie, 452 U.S. 394, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981), decided barely eleven days before McCarty, the U. S. Supreme Court, without specifically referring to it, reaffirmed the holding in White v. Crow, supra, by stating:
A final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action. Nor are the res judicata consequences of a final, unappealed judgment on the merits altered by the fact that the judgment may have been wrong or rested on a legal principle subsequently overruled in another case. [citations omitted] . . . [A]n “erroneous conclusion” reached by the court in the first suit does not deprive the defendants in the second action “of their right to rely upon the plea of res judicata . . . A judgment merely voidable because based upon an erroneous view of the law is not open to collateral attack, but can be corrected only by a direct review and not by bringing another action upon the same cause of action.” We have observed that “the indulgence of a contrary view would result in creating elements of uncertainty and confusion and in undermining the conclusive char-
acter of judgments, consequences which it was the very purpose of the doctrine of res judicata to avert. Reed v. Allen, 286 U.S. 191, 201, 52 S.Ct. 532, 534, 76 L.Ed. 1054 (1932).
452 U.S., at 396-398, 101 S.Ct., at 2427-2428, 69 L.Ed.2d, at 108-109. Still further the court stated:
This court has long recognized that “[p]ublic policy dictates that there be an end of litigation; that those who have contested an issue shall be bound by the result of the contest, and that matters once tried shall be considered forever settled as between the parties.” Baldwin v. Traveling Men‘s Association, 283 U.S. 522, 525, 51 S.Ct. 517, 518, 75 L.Ed. 1244 (1931).
452 U.S. at 400, 101 S.Ct., at 2429, 69 L.Ed.2d, at 110-111.
The United States Court of Appeals for the Fifth Circuit, in a per curiam opinion, recently considered the holding in Federated Department Stores, Inc. v. Moitie, supra, as it applied to a McCarty situation. Finding nothing in McCarty suggesting that the Supreme Court intended to invalidate or otherwise render unenforceable prior valid and subsisting state court judgments, the appeals court declined to do so. See Erspan v. Badgett, 647 F.2d 550 (5th Cir. 1981) reh. en banc denied with opinion, 659 F.2d 26, 28.13
In Wilson v. Wilson, 667 F.2d 497 (5th Cir. 1982), the same court once again considered the question of retroactive application of McCarty and, considering itself bound by the holding in Erspan v. Badgett, supra,14 applied the doctrine of res judicata to the final judgment being assailed. We, likewise, find nothing in the language of McCarty, nor in the reasons for preemption, nor in any of the opinions of our Supreme Court,15 which mandates a retroactive application of McCarty or a holding of voidness ab initio.
RETROACTIVITY
In the absence of direction by the Court in McCarty, we are obliged to resolve the issue of retroactivity under appropriate guidelines. See Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965); see also Chevron Oil Company v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971); Annot., 65 L.Ed.2d 1219 (1981); Annot., 22 L.Ed.2d 821 (1970); Annot., 14 L.Ed.2d 992 (1966); Annot., 10 A.L.R.3d 1371 (1966).
Whether and to what extent an overruling case will be applied retroactively is a matter of judicial attitude, depending on the circumstances of the particular overruling decision involved. Linkletter v. Walker, supra. Where a decision could produce substantial inequitable results if applied retroactively, there is ample support in case law for avoiding the injustice or hardship by holding application of the law non-retroactive. Cipriano v. City of Houma, 395 U.S. 701, 89 S.Ct. 1897, 23 L.Ed.2d 647 (1969); Great Northern Railway Co. v. Sunburst Oil & Refining Co., 287 U.S. 358, 53 S.Ct. 145, 77 L.Ed. 360 (1932). Insofar as the general principles of retroactive or prospective application of an overruling decision are concerned, no distinction is to be drawn between civil and criminal cases. Linkletter v. Walker, supra.
In Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371, 60 S.Ct. 317, 84 L.Ed. 329 (1940) the United States Supreme Court, recognizing the problems of retroactive application stated:
The actual existence of a statute, prior to such a determination, is an operative fact and may have consequences which cannot
justly be ignored. The past cannot always be erased by a new judicial declaration. The effect of the subsequent ruling as to invalidity may have to be considered in various aspects, with respect to particular relations, individual and corporate, and particular conduct, private and official. Questions of rights claimed to have become vested, of status, of prior determinations deemed to have finality and acted upon accordingly, of public policy in the light of the nature both of the statute and of its previous application, demand examination. These questions are among the most difficult of those which have engaged the attention of courts, state and federal, and it is manifest from numerous decisions that an all-inclusive statement of a principle of absolute retroactive invalidity cannot be justified.
308 U.S., at 374, 60 S.Ct., at 318-319, 84 L.Ed., at 332-333.
Among the factors or circumstances to which the courts have adverted in deciding whether and to what extent a judicially changed rule of law should be given retroactive operation are (1) the degree to which the prior rule may have been justifiably relied on, especially where matters of property or contract law are involved, (2) the degree to which the newly announced rule can be effectuated without being applied retroactively, and (3) the likelihood that retroactive operation of the overruling decision may substantially burden the administration of justice.16 In determining to what extent, if any, an overruling decision is to be given retroactive effect, the crucial date is generally the date of the overruling decision. Linkletter v. Walker, supra.
The obvious and substantial inequitable results that would derive from a retroactive application of McCarty have been documented by numerous courts.17 Little would be gained by repeating them at length again. We agree with our brethen of the 3rd Court of Appeals and the 11th Court of Appeals in their recent opinions, Ex parte Gaudion, 628 S.W.2d 500 (Tex.App.-Austin, 1982) and Ex parte Welch, 633 S.W.2d 691 (Tex.App.-Eastland, 1982) respectively, holding that a retroactive application would affect the objectives of Congress only minimally, compared to the potentially destructive effect upon the settled jurisprudence of our State. In addition, the principles of res judicata and finality of judgments would become little more than historical fact, and the relatively settled areas of jurisdiction and family law would be rendered incomprehensible.
We can perceive no area of law requiring more stability and finality than family law. Public policy demands finality of litigation in this area to preserve surviving family structure. A retroactive application would reopen old wounds and rekindle animosities long since extinguished.18 The results would be devastating to the litigants and to the judiciary in terms of expense, time and number of cases. In many instances it would be impossible for a court to arrive at a just and equitable redistribution of assets.
Considering the nature of preemption involved in McCarty, the law‘s concern in preventing uncertainty and confusion which could undermine the conclusive character of
The holding in Ex parte Buckhanan, supra, is expressly disapproved, and the relator is remanded to the custody of the Sheriff of Bexar County.
ESQUIVEL, Justice, concurring.
Although I am in complete agreement with the majority, it is important to state specifically why McCarty does not apply in this case. It is evident that the trial court had jurisdiction of the subject matter and the parties in this case when it entered its original judgment of divorce. Since no direct attack upon the trial court‘s judgment was ever made, the decree of divorce became final. I agree that McCarty has rendered the decree of divorce erroneous, but I do not reach the conclusion of the majority in Buckhanan that McCarty rendered the decree of divorce void ab initio. Moreover, trial court judgments which, at the most, are erroneous, are entitled to sanctity of finality and must not be defeated by collateral attacks such as is present in the case at bar. Accordingly, I would expressly hold that McCarty‘s application be limited to those judgments which are not final and which are challenged on direct appeal.
I am compelled to present a further reason for denying relator‘s application for relief from the order of commitment.
The decree of divorce states that:
The Court finds that Chester B. Hovermale is a trustee for that portion of the retirement income award from the Navy retirement and that he shall provide payment by allotment to the wife Elizabeth M. Hovermale of her separate share of each monthly amount [38.37%] (including that percentage of any increased authorized by Congress); If an allotment is not possible, and only in that event, in alternative, the Court finds that Chester B. Hovermale shall hold each monthly payment in trust and he shall provide to Elizabeth M. Hovermale the amount above prescribed, with the first payment due and payable 1 July, 1979, and like payments due and payable on the first day of each month thereafter, based on the above formula.
Even though the facts of this case differ with the facts of Ex parte Rodriguez, 636 S.W.2d 844 (Tex.App.1981) with respect to the trust being created by agreement incident to divorce and subsequently being incorporated by reference in the Rodriguez divorce decree, the law which was applied in Rodriguez should be applied here as well.
It is undisputed that a trust was created by the trial court. Relator Hovermale was designated trustee under the terms of the trust and the respondent was designated the beneficiary. The trust res in issue on application for writ of habeas corpus was described as consisting of 38.37% of the total monthly military retirement retirement entitlements received by the relator.
The law is well-settled that legal title to the trust res is vested in the trustee. McCamey v. Hollister Oil Co., 241 S.W. 689, 695 (Tex.Civ. App.-Fort Worth 1922), aff‘d on other grounds, 115 Tex. 49, 274 S.W. 562 (1925); Long v. Long, 252 S.W.2d 235, 247 (Tex.Civ. App.-Texarkana 1952, writ ref‘d n. r. e.); See
Therefore, for these reasons, I would deny relator‘s writ and remand him to the custody of the sheriff.
The holding in Ex parte Buckhanan, 626 S.W.2d 65 (Tex. App.-San Antonio 1981, no writ), should be followed.
The position taken by the majority in this case rests entirely on the theory that the decision of the Supreme Court of Texas in Ex parte Johnson, 591 S.W.2d 453 (Tex. 1979), is not applicable to the facts of this case and of Buckhanan.
The attempted distinction between Johnson, on the one hand, and this case and Buckhanan, on the other, is based on what the majority opinion asserts is a distinction between the holdings in Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1 (1979), and McCarty v. McCarty, 453 U.S. 210, 101 S.Ct. 2728, 69 L.Ed.2d 589 (1981). Justice Cantu‘s argument may be summarized as follows:
- There is much confusion surrounding the term “preemption” because of the failure of the courts to recognize that there are different types of preemption.
- The effect to be given a decision holding a state regulation invalid under the preemption doctrine depends on the type of preemption involved.
- In Hisquierdo, the Supreme Court relied on two different types of preemption. Primary reliance was placed on the type of preemption which, according to the majority opinion, results when the federal statute in question requires, “by direct enactment, that state law be preempted and that the type of injury which the Supremacy Clause seeks to prevent was threatened by [the state law] in conflict with the [federal legislation].” The second type of preemption is said to occur when it is determined “that continued recognition of the assailed state interest threatened grave harm to clear and substantial federal interests.”
- McCarty, unlike Hisquierdo, is based solely on the second type of preemption.
All of the assumptions which are relied on for refusing to follow Johnson are in error.
There is no confusion surrounding the term “preemption.” In McCulloch v. Maryland, 4 Wheat 316, 436, 4 L.Ed. 579 (1819), Chief Justice Marshall made it clear that the “states have no power, by taxation or otherwise, to retard, impede, burden or in any manner control the operation of the constitutional laws enacted by Congress to carry into execution the powers vested in the general government.” This conclusion, he said, is “the unavoidable consequence of that supremacy which the constitution itself has declared.” Id. It is not necessary here to determine whether McCulloch may properly be classified as a preemption case. The doctrine of preemption rests on the Supremacy Clause and Marshall‘s words leave no doubt concerning the effect of such clause on state regulations which, if given effect, would “retard, impede, burden, or in any manner control, the operation of the constitutional laws enacted by Congress.”
Insofar as resolution of the problem now before us is concerned, preemption occurs when the state regulation obstructs “the accomplishment and execution of the full purposes and objectives of an Act of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 404, 85 L.Ed. 581 (1941). A state regulation will be held to be in such unconstitutionally obstructive position when the federal legislation is found to evidence a congressional intent to occupy the whole field or when there is a substantial conflict between the federal and state regulations. Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 141, 83 S.Ct. 1210, 1216, 10 L.Ed.2d 248 (1963).
It is true that the Supreme Court often speaks in terms of federal legislation having the effect of “overriding” or “superseding” state law, and when the Court finds the preemption doctrine applicable it frequently declares that the challenged state regulation must “give way” and “become inoperative.” The choice of different terms to describe the effect of preemption, however, does not establish that there are different types of preemption. In all cases where the doctrine is found to be applicable the result is the invalidation of state law under the Supremacy Clause because of the incompatibility of state law with the feder-
The majority‘s statement, “In the final analysis, it seems clear that the term ‘preemption’ does not always imply a prohibition and, therefore, a withholding of jurisdiction to act“, is nothing more than a contradiction in terms. The conclusion that congressional action has preempted an area always carries with it the consequential prevention of future state regulation in that area or the suspension of existing state regulation in such area.
After determining that there are different types of preemption, some of which apparently do not preempt, the majority opinion proceeds to distinguish Hisquierdo and McCarty on the basis of the type of preemption involved in each case. This distinction is crucial to the ultimate conclusion that Ex parte Johnson is not controlling here. Of course, if the conclusion that there are several types of preemption is incorrect, the attempted distinction must fail. Even if it be assumed that there are different types of preemption, the distinction must fail.
Justice Cantu correctly asserts that Hisquierdo describes the determinative test to be “whether the right as asserted conflicts with the express terms of federal law and whether its consequences sufficiently injure the objectives of the federal program to require non-recognition.” 439 U.S. at 583, 99 S.Ct. at 809. This is precisely the test applied in McCarty. The McCarty opinion, after quoting the very language relied on by Justice Cantu, states, “It is to this twofold inquiry that we now turn.” 453 U.S. at 220, 101 S.Ct. at 2735.
Although McCarty expressly adopts and applies the same test applied in Hisquierdo, the majority opinion insists that the two cases are distinguishable because McCarty, unlike Hisquierdo, concluded that “a mere conflict” between federal and state law is insufficient to invoke preemption, particularly “where the conflict is only one of words.” According to Justice Cantu, because of the McCarty conclusion that mere conflict in words is insufficient, “reliance was then had upon the second type of preemption . . . to determine that continued recognition of the assailed state interest threatened grave harm to clear and substantial federal interests.” The McCarty opinion does, indeed, state that a “mere conflict in words is not sufficient.” 453 U.S. at 232, 101 S.Ct. at 2741. In Hisquierdo the Court said, “a mere conflict in words is not sufficient.” 439 U.S. at 581, 99 S.Ct. at 808. The recognition that mere conflict is insufficient, then makes McCarty like, rather than unlike, Hisquierdo. The McCarty language was lifted word for word from, and expressly attributed to, Hisquierdo. McCarty, 453 U.S. at 232, 101 S.Ct. at 2741.
It is also true that McCarty, after following the Hisquierdo conclusion that mere conflict is insufficient, required a finding that continued recognition of the state interest threatened grave harm to clear and substantial federal interests. In requiring such a finding, McCarty again, was merely following Hisquierdo. The Hisquierdo opinion, after noting that mere conflict is not sufficient, described the additional requirement as follows: “State family and property law must do ‘major damage’ to ‘clear and substantial’ federal interests before the Supremacy Clause will demand that state law be overriden.” 439 U.S. at 581, 99 S.Ct. at 808. The test applied in Hisquierdo clearly requires both “conflict” and a finding that the consequences of the asserted state interest “sufficiently injure the objectives of the federal program . . .” 439 U.S. at 583, 99 S.Ct. at 809. This language was quoted, and relied on, in McCarty, 453 U.S. at 232, 101 S.Ct. at 2741. If both cases required conflict and an injury to federal interests, how can the majority opinion say that the two cases did not rely on the same type of preemption?
The majority opinion also speaks of a preemption which results “from prohibition of Congress” and a preemption which “occurs by virtue of decisional law and statutory construction.” Apparently, the theory is
Presumably, the statement that the Railroad Retirement Act positively required that state community property laws be preempted refers to that portion of the Act which places retirement benefits payable under that Act beyond the reach of legal process.
It is clear that the “overriding” of state law in Hisquierdo resulted from “decisional law and statutory construction,” since the conclusion that a provision immunizing benefits from garnishment and attachment “positively” prohibits the enforcement of state law recognizing a joint ownership of the benefits can only be arrived at by resorting to the process normally called statutory construction. Stated differently, an exemption from legal process cannot be transformed into an invalidation of state community property laws except by statutory construction.
It may be argued that the Railroad Retirement Act positively required preemption of state community property laws because the Hisquierdo opinion relied solely on that Act and disregarded all other federal legislation. This argument, however, is simply false. For example, the Hisquierdo opinion expressly refers to the Social Security Act
The Eastland Court of Appeals declined to follow Ex parte Johnson in a case involving nondisability military retirement benefits, using the same reasoning as that relied on by the majority here. Ex parte Welch, 633 S.W.2d 691 (Tex.App.-Eastland, 1982) (not yet reported). The Eastland Court argued that Congress had not positively required by direct enactment that state community property laws be preempted as to nondisability military retirement benefits. Both the majority opinion here and the Welch opinion gratuitously and erroneously assume that the positive requirement of preemption by “direct enactment” must be found in the very statute which establishes the retirement system. As already pointed out, Hisquierdo did not rely solely on the Railroad Retirement Act; it referred to the Social Security Act at least twice. 439 U.S. at 576, 578, 99 S.Ct. at 805, 806. The test applied in Hisquierdo is phrased in terms of conflict with “federal law” and injury to the objectives of a “federal program.”
If the Hisquierdo decision is based on the fact that federal law placed Railroad Retirement Act Benefits beyond the reach of legal process, there is a “federal law” which has the same effect as to nondisability military retirement benefits. Section 659(a) of the Social Security Act (
. . . moneys (the entitlement to which is based upon renumeration for employment) due from, or payable by, the United States . . . to any individual, including members of the armed services, shall be subject, in like manner and to the same extent as if the United States . . . were a private person, to legal process brought for the enforcement, against such individual of his legal obligation to pay child support or make alimony payments.
Section 662 of the Social Security Act makes it clear that the term “alimony” as used in Sec. 659(a) “does not include any payment or transfer of property . . . in compliance with any community property settlement, equitable distribution of property, or other division of property between spouses or former spouses.”
The Social Security Act clearly and unmistakably provides that military retirement pay shall be subject to legal process “brought for the enforcement” of the retiree‘s “legal obligations to provide child support or make alimony payments“, but not for the purpose of enforcing compliance “with any community property settlement, equitable distribution of property, or other division of property between spouses or former spouses.”
The Supreme Court, in Ridgway v. Ridgway, 454 U.S. 46, 102 S.Ct. 49, 54-55, 70 L.Ed.2d 39 (1981), pointed out that Hisquierdo and McCarty followed the same approach in determining that state community property law was unacceptably obstructive of the program established by federal law. Since McCarty applied precisely the same test as did Hisquierdo, the majority‘s conclusion that Hisquierdo and McCarty are somehow different must be rejected.
Ex parte Johnson, 591 S.W.2d 453 (Tex. 1979), clearly held that when a state court‘s power to treat disability retirement benefits as community property has been preempted by federal legislation, a final state court decision purporting to divide such benefits cannot be given res judicata effect and the order of division cannot be enforced by contempt proceedings.1 The argument that the preemption found in Johnson somehow differs from the preemption found in McCarty cannot be accepted. The Johnson decision, like the McCarty decision, is based squarely on Hisquierdo. The Texas court relied on statutory language relative to the rights of the veteran‘s dependents and on language similar to that found in the Social Security Act declaring the payments immune from legal process. Ex parte Johnson, 591 S.W.2d at 455.
Johnson shows that the majority‘s reliance on the doctrine of res judicata is misplaced. According to the majority theory, the prior divorce decree in Johnson would be immune from collateral attack, since the “defense” of federal preemption could have been raised in the divorce trial. It is generally true that an erroneous conclusion reached by a court and embodied in a final judgment does not prohibit a party in a subsequent action from relying on the plea of res judicata. It is also true that a judgment “merely voidable because based upon an erroneous view of the law is not open to collateral attack.”
What happened in Johnson? At a time when the preemptive effect of federal law had not been judicially declared concerning military disability retirement benefits, a Texas court entered a judgment disposing of such benefits as community assets. This judgment was not appealed and, therefore, became a final judgment. If the judgment were merely “erroneous“, it was beyond attack. But, when the ex-spouse sought to enforce the previous judgment, the highest tribunal in Texas declared that enforcement was impossible because the federal law had preempted the Texas rules of marital property rights. Johnson unequivocally permitted a collateral attack on the prior final judgment of a Texas court. Stated bluntly, Johnson necessarily holds that a prior divorce decree rendered by a Texas court that treats as community property, benefits, that cannot be subjected to the state‘s community property rules under federal law, is void insofar as the decree purports to divide the benefits or to treat them as community property. See also Ex parte Burson, 615 S.W.2d 192 (Tex.1981).
In Kalb v. Feuerstein, 308 U.S. 433, 438-39, 60 S.Ct. 343, 345-346, 84 L.Ed. 370 (1940), the Supreme Court held that judicial action taken with respect to the person or property of a debtor, who is protected by the bankruptcy law, is a nullity and vulnerable to collateral attack, despite the general principle that a court judgment bears a presumption of regularity and is not thereafter subject to collateral attack. Justice Cantu brushes Kalb aside with the comment that it involved some peculiar type of preemption which results when Congress acts in an area concerning which it has plenary power. This purported distinction is of no avail here because there can be little doubt that Congress has the plenary and exclusive power to determine the compensation which will be paid to members of the armed forces.
Here, as in Kalb, Congress, acting in an area over which it has plenary and exclusive power, has protected military retirement pay benefits from the reaches of the
In Hoffman v. United States, 391 F.2d 195 (9th Cir. 1968), a state court divorce decree ordered the husband to keep his ex-spouse as beneficiary on his government life insurance policy. On August 23, 1963, the husband changed the beneficiary and, after his death in 1964, the former wife sought to recover the insurance money. According to the court, the question before it was: “Does a state court have the power to effectively require an unwilling veteran to maintain his former wife as beneficiary on his National Service Life Insurance Policy?” Hoffman, 391 F.2d at 196. In holding that the state court lacked such power, the court said that the state divorce decree “nullifies the soldier‘s choice and frustrates the deliberate purpose of Congress” and that, therefore, the divorce decree “cannot stand.” Id. Hoffman refused to accord any effect to the prior final state court divorce decree.
The last relevant pronouncement by the Supreme Court on the question of federal preemption of state community property law appears to be Ridgway v. Ridgway, 454 U.S. 46, 102 S.Ct. 49, 70 L.Ed.2d 39 (1981), which involved an attempt by a state court to embody in a divorce decree a provision requiring the serviceman to keep his children beneficiaries of his service life insurance policy. When the serviceman subsequently remarried, he ignored the state court‘s order and changed the beneficiary. After his death, the first wife sought to recover the proceeds of the policy for the benefit of the children. This effort failed.
Pointing out that applicable federal law gave the serviceman the absolute right to designate beneficiaries, the Supreme Court said:
The relative importance to the State of its own law is 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. . . . And, specifically, a state divorce decree, like other law governing the economic aspects of domestic relations, must give way to clearly conflicting enactments [citing McCarty and Hisquierdo].
Ridgway, 454 U.S. at 55, 102 S.Ct. at 54. Whatever construction one desires to place on Ridgway, it is clear that the Supreme Court in that case refused to give anything resembling res judicata effect to the previous final state court divorce decree.
What we have in this case is simply an instance in which the state court lacked power to divest the serviceman of his interest in the retirement benefits because of federal legislation. As Chief Justice Marshall said in McCulloch v. Maryland, supra, we simply are faced with a situation in which the “States have no power . . . to retard, impede, burden or in any manner control, the operation of the constitutional laws enacted by Congress . . .” Absent such power, the attempt by Texas courts to impede the operation of the federal laws governing the retirement program must be considered a nullity and subject to collateral attack.
Justice Esquivel‘s reliance upon Texas trust law, as was done in Ex parte Rodriguez, 636 S.W.2d 844 (Tex.App.1981), is wholly insupportable. If the trial court has jurisdiction over military retirement pay, it is not essential to make the retiree a trustee in order to enforce the court‘s division of community property. If retired pay is not community property and the trial court has no jurisdiction to divide it, the trial court may not gain jurisdiction over the retired pay by the simple expedient of calling it a trust res. The trust theory is a strained effort to divest the retired person of a beneficial interest in his retired pay, contrary to the intent of Congress. This “back door” approach to the problem was categorically rejected in Ridgway, and we reject it here.
There remains only what might be called the “policy” argument advanced by Justice
This approach has one serious flaw. It overlooks entirely the language in Hisquierdo which recognizes that “an offsetting award . . . would upset the statutory balance and impair petitioner‘s economic security just as surely as would a regular deduction from the benefit check,” and that the harm resulting from such an offsetting award “might well be greater.” 439 U.S. at 588-89, 99 S.Ct. at 811-812.
We cannot, in good conscience, accept the argument that because former spouses have in the past been the recipients of awards that state courts had no power to make, such impermissible awards must be allowed to continue. No matter how appealing the “policy” argument may be, it nonetheless would have us disregard express holdings of the United States Supreme Court and the Supreme Court of Texas. We simply are not at liberty to do so.
Ex parte Simon Y. RODRIGUEZ, Relator.
No. 04-81-00333-CV.
Court of Appeals of Texas, San Antonio.
Dec. 10, 1981.
Rehearing Denied June 30, 1982.
Notes
- considers whether decision establishes new principle of law;
- weighs merits and demerits in each case by looking to prior history of rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation;
- and weighs any inequity imposed by retroactive application.
325 U.S., at 230, 65 S.Ct., at 1095, 89 L.Ed., at 1581-1582.Divorce, like marriage, is of concern not merely to the immediate parties. It affects personal rights of the deepest significance. It also touches basic interests of society.