Lead Opinion
OPINION OF THE COURT
In this divоrce action, the parties’ only asset of any consequence is the husband’s newly acquired license to practice medicine. The principal issue presented is whether that license, acquired during their marriage, is marital property subject to equitable distribution under Domestic Relations Law § 236 (B) (5). Supreme Court held that it was and accordingly made a distributive award in defendant’s favor.
We now hold that plaintiff’s medical license constitutes
I
Plaintiff and defendant married on April 3, 1971. At the time both were employed as teachers at the same private school. Defendant had a bachelor’s degree and a temporary teaching certificate but required 18 months of postgraduate classes at an approximate cost of $3,000, excluding living expenses, to obtain permanent certification in New York. She claimed, and the trial court found, that she had relinquished the opportunity to obtain permanent certification while plaintiff pursued his education. At the time of the marriage, plaintiff had completed only three and one-half years of college but shortly afterward he returned to school at night to earn his bachelor’s degree and to complete sufficient premedical courses to enter medical school. In September 1973 the parties moved to Guadalajara, Mexico, where plaintiff became a full-time medical student. While he pursued his studies defendant held several teaching and tutorial positions and contributed her earnings to their joint expenses. The parties returned to New York in December 1976 so that plaintiff could complete the last two semestеrs of medical school and internship training here. After they returned, defendant resumed her former teaching position and she remained in it at the time this action was commenced. Plaintiff was licensed to practice medicine in October 1980. He commenced this action for divorce two months later. At the time of trial, he was a resident in general surgery.
During the marriage both parties contributed to paying the living and educational expenses and they received additional help from both of their families. They disagreed on the amounts of their respective contributions but it is undisputed that in addition to performing household work and managing the family finances defendant was gainfully employed throughout the marriage, that she contributed all of her earnings to their living and educational expenses and that her financial contributions exceeded those of plaintiff. The trial court found that she had contributed 76% of the parties’
Defendant presented expert testimony that thе present value of plaintiffs medical license was $472,000. Her expert testified that he arrived at this figure by comparing the average income of a college graduate and that of a general surgeon between 1985, when plaintiffs residency would end, and 2012, when he would reach age 65. After considering Federal income taxes, an inflation rate of 10% and a real interest rate of 3% he capitalized the difference in average earnings and reduced the amount to present value. He also gave his opinion that the present value of defendant’s contribution to plaintiff’s medical еducation was $103,390. Plaintiff offered no expert testimony on the subject.
The court, after considering the life-style that plaintiff would enjoy from the enhanced earning potential his medical license would bring and defendant’s contributions and efforts toward attainment of it, made a distributive award to her of $188,800, representing 40% of the value of the license, and ordered it paid in 11 annual installments of various amounts beginning November 1, 1982 and ending November 1, 1992. The court also directed plaintiff to maintain a life insurance policy on his life for defendant’s benefit for the unpaid balance of the award and it ordered plаintiff to pay defendant’s counsel fees of $7,000 and her expert witness fee of $1,000. It did not award defendant maintenance.
A divided Appellate Division, relying on its prior decision in Conner v Conner (
On these cross appeals, defendant seeks reinstatement of the judgment of the trial court. Plaintiff contends that the Appellate Division correctly held that a professional license is not marital property but he also urges that the trial court failed to adequately explain what factors it relied on in making its decision, that it erroneously excluded evidence of
II
The Equitable Distribution Law contemplates only two classes of property: marital property and separate property (Domestic Relations Law § 236 [B] [c], [d]). The former, which is subject to equitable distribution, is defined broаdly as "all property acquired by either or both spouses during the marriage and before the execution of a separation agreement or the commencement of a matrimonial action, regardless of the form in which title is held” (Domestic Relations Law § 236 [B] [1] [c] [emphasis added]; see, § 236 [B] [5] [b], [c]). Plaintiff does not contend that his license is excluded from distribution because it is separate property; rather, he claims that it is not property at all but represents a personal attainment in acquiring knowledge. He rests his argument on decisions in similar cases from other jurisdictions and on his view that a license does not satisfy common-law concepts of property. Neither contеntion is controlling because decisions in other States rely principally on their own statutes, and the legislative history underlying them, and because the New York Legislature deliberately went beyond traditional property concepts when it formulated the Equitable Distribution Law (see generally, 2 Foster-Freed-Brandes, Law and the Family — New York ch 33, at 917 et set. [1985 Cum Supp]). Instead, our statute recognizes that spouses have an equitable claim to things of value arising out of the marital relationship and classifies them as subject to distribution by focusing on the marital status of the parties at the time of acquisition. Those things acquired during marriage and subject to distribution have been classified as "marital property” although, as one commentator has observed, they hardly fall within the traditional property concepts because there is no common-law property interest remotely resembling marital property. "It is a statutory creature, is of no meaning whatsoever during the normal course of a marriage and arises full-grown, like Athena, upon the signing of a separation agreement or the commencement of a matrimonial action. [Thus] [i]t is hardly surprising, and not at all relevant, that traditional common law property concepts do not fit in parsing the meaning of 'marital property’ ” (Florescue, "Market Value”, Professional Licenses and Marital Property: A Dilemma in Search of a Horn, 1982 NY St Bar Assn Fam L
We made such a determination in Majauskas v Majauskas (
Section 236 provides that in making an equitable distribution of marital property, "the сourt shall consider: * * * (6) any equitable claim to, interest in, or direct or indirect contribution made to the acquisition of such marital property by the party not having title, including joint efforts or expenditures and contributions and services as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other party [and] * * * (9) the impossibility or difficulty of evaluating any component asset or any interest in a business, corporation or profession” (Domestic Relations Law § 236 [B] [d] [6], [9] [emphasis added]). Where equitable distribution of marital property is appropriate but "the distribution of an interest in a business, corporatiоn or profession would be contrary to law” the court shall make a distributive award in lieu of an actual distribution of the property (Domestic Relations Law § 236 [B] [5] [e] [emphasis added]). The words mean exactly what they say: that an interest in a profession or professional career potential is marital property which may be represented by direct or indirect contributions of the non-title-holding spouse, including financial contributions and nonfinancial contributions made by caring for the home and family-
The history which preceded enactment of the statute confirms this interpretation. Reform of section 236 was аdvocated because experience had proven that application of the tradi
The determination that a professional license is marital property is also consistent with the conceptual base upon which the statute rests. As this case demonstrates, few undertakings during a marriage better qualify as the type of joint effort that the statute’s economic partnership theory is intended to address than contributions toward one spouse’s acquisition of a рrofessional license. Working spouses are often required to contribute substantial income as wage earners, sacrifice their own educational or career goals and opportunities for child rearing, perform the bulk of household duties and responsibilities and forego the acquisition of marital assets that could have been accumulated if the professional spouse had been employed rather than occupied with the study and training necessary to acquire a professional license. In this case, nearly all of the parties’ nine-year marriage was devоted to the acquisition of plaintiff’s medical license and defendant played a major role in that project. She worked continuously during the marriage and contributed all of her earnings to their joint effort, she sacrificed her own educational and career opportunities, and she traveled with plaintiff to Mexico for three and one-half years while he attended medical school there. The Legislature has decided, by its
The majority at the Appellate Division held that the cited statutory provisions do not refer to the license held by a professional who has yet to establish a practice but only to a going professional practice (see, e.g., Arvantides v Arvantides,
Plaintiff’s principal argument, adopted by the majority below, is that a professional license is not marital property because it does not fit within the traditional view of property as something which has an exchange value on the open market and is capable of sale, assignment or transfer. The position does not withstand analysis for at least two reasons. First, as we have observed, it ignores the fact that whether a professional license constitutes marital property is to be judged by the language of the statute which created this new species of prоperty previously unknown at common law or under prior statutes. Thus, whether the license fits within traditional property concepts is of no consequence. Second, it is an overstatement to assert that a professional license could not be considered property even outside the context of section 236 (B). A professional license is a valuable property right, reflected in the money, effort and lost opportunity for employment expended in its acquisition, and also in the enhanced earning capacity it affords its holder, which may not be revoked without due process of law (see, Matter of Bender v Board of Regents,
Plaintiff also contends that alternative remedies should be employed, such as an award of rehabilitative maintenance or reimbursement for direct financial contributions (see, e.g., Kutanovski v Kutanovski,
Turning to the question of valuation, it has been suggested that even if a professional license is considered marital property, the working spouse is entitled only to reimbursement of his or her direct financial contributions (see, Note, Equitable Distribution of Degrees and Licenses: Two Theoriеs Toward
in
Three additional issues remain for our consideration.
First, plaintiff notes that thе statute requires the trial court to state the factors it considered and the basis for its decision in making distribution and that neither the parties nor counsel may waive that requirement (see, Domestic Relations Law § 236 [B] [5] [g]). He contends that the court failed to adequately do so in this case. We have held recently that while section 236 (B) (5) (g) does not require the court to analyze each of the factors stated in subdivision (5) (d) and give reasons as to each, it still must set forth all the factors it considered and the reason for its decision (Cappiello v Cappiello,
The evidence before the trial court in this case supported its factual findings but its decision does not indicate what factors it considered, or the weight it attributed to them, in making the distributive award to defendant. Nevertheless, the Appellate Division has the same authority to make an award of marital property as does the trial court (see, Majauskas v Majauskas,
Plaintiff also contends that the trial court erred in excluding evidence of defendant’s marital fault on the question of equitable distribution. Arguably, the court may consider marital fault under factor 10, "any other factor which the court shall expressly find to be just and proper” (Domestic Relations Law § 236 [B] [5] [d] [10]; see, Scheinkman, 1981 Practice Commentary, McKinney’s Cons Laws of NY, Book 14, Domestic Relations Law C236B:13, pp 205-206 [1977-1984 Supp Pamphlet]). Except in egregious cases which shock the conscience of the court, however, it is not a "just and proper”
Finally, рlaintiff contends that the trial court erred in allowing defendant an award of counsel fees and defendant contends the Appellate Division erred in deleting the trial court’s award of expert witness fees. The decision to award either expert witness fees or attorney’s fees lies, in the first instance, in the discretion of the trial court and then in the Appellate Division whose discretionary authority is as broad as the trial court’s is (see, Domestic Relations Law § 237 [a], [c]; Majauskas v Majauskas,
Accordingly, in view оf our holding that plaintiff’s license to practice medicine is marital property, the order of the Appellate Division should be modified, with costs to defendant, by reinstating the judgment and the case remitted to the Appellate Division for determination of the facts, including the exercise of that court’s discretion (CPLR 5613), and, as so
Notes
The action was originally instituted by plaintiff husband and defendant wife asserted a counterclaim in her answer. Subsequently, the husband withdrew his complaint and reply to the counterclaim and the wife received an uncontestеd divorce.
Concurrence Opinion
(concurring). I concur in Judge Simons’ opinion but write separately to point up for consideration by the Legislature the potential for unfairness involved in distributive awards based upon a license of a professional still in training.
An equity court normally has power to " 'change its decrees where there has been a change of circumstances’ ” (People v Scanlon,
The present case points up the problem. A medical license is but a step toward the practice ultimately engaged in by its holder, which follows after internship, residеncy and, for particular specialties, board certification. Here it is undisputed that plaintiff was in a residency for general surgery at the time of the trial, but had the previous year done a residency in internal medicine. Defendant’s expert based his opinion on the difference between the average income of a general surgeon and that of a college graduate of plaintiff’s age and life expectancy, which the trial judge utilized, impliedly finding that plaintiff would engage in a surgical practice despite plaintiff’s testimony that he was dissatisfied with the general surgery program he was in and was attempting to return to the internal medicine training he had been in the previous year. The trial judge had the right, of course, to discredit that testimony, but the point is that equitable distribution was not intended to permit a judge to make a career decision for a licensed spouse still in training. Yet the degree of speculation involved in the award made is emphasized by the testimony of the expert on which it was based. Asked whether his assumptions and calculations were in any way speculative, he replied: "Yes. They’re speculative to the extent of, will Dr. O’Brien
The equitable distribution provisions of the Domestic Relations Law were intended to provide flexibility so that equity could be done. But if the assumption as to cаreer choice on which a distributive award payable over a number of years is based turns out not to be the fact (as, for example, should a general surgery trainee accidentally lose the use of his hand), it should be possible for the court to revise the distributive award to conform to the fact. And there will be no unfairness in so doing if either spouse can seek reconsideration, for the licensed spouse is more likely to seek reconsideration based on real, rather than imagined, cause if he or she knows that the nonlicensed spouse can seek not only reinstatement of the original award, but counsel fees in addition, should the purported circumstance on which a change is made turn out to have been feigned or to be illusory.
Concurrence Opinion
(concurring). I join in the majority opinion by Judge Simons for the court, and, like Justice Jackson, forthrightly surrender my contrary views in Conner v Conner (
Chief Judge Wachtler and Judges Jasen, Meyer, Kaye, Alexander and Titone concur with Judge Simons; Judges Meyer and Titone concur in separate concurring opinions.
Order modified, with costs to defendant, and case remitted to the Appellate Division, Second Department, for further proceedings in accordance with the opinion herein and, as so modified, affirmed. Question certified answered in the negative.