Mahoney v. Mahoney
91 N.J. 488, 453 A.2d 527 (1982)
Melvin and June were married.
Melvin went to school to get an MBA. During this time, June was the sole
income earner for the family.
Melvin's tuition was paid
for by his veteran's benefits, but she paid for all the household
expenses.
Later, June went to school
to get a degree, but continued to work during that time, and her tuition
was paid by her employer.
The couple filed for divorce.
They had very little marital property
and their incomes were similar so there was no claim for alimony. However, June requested reimbursement for the money she put into the household while
Melvin was in school, as well as for part of the educational benefits he
received from the Air Force.
The Trial Court found that
June should be reimbursed. Melvin appealed.
The Trial Court found that
"the education and degree obtained by Melvin, under the
circumstances of this case, does constitute a property right."
However, the Court found
that the proper way to handle it was to give June a reimbursement for the cost of the degree, as opposed to a
percentage of what the degree was worth in enhanced earning capacity.
The Appellate Court reversed.
June appealed.
The Appellate Court found
that the educational degree is not property, for the purposes of equitable distribution.
The Court found that the
decision to obtain Melvin's degree was a mutual decision and took into
account what sacrifices the community needed to make in furtherance of
that decision.
The New Jersey Supreme Court
reversed.
The New Jersey Supreme Court
noted that a degree is non-transferable and has no inherent value. The
value of any increased earnings from the degree are uncertain and
speculative.
The Court noted that in
general, a marriage should be considered a partnership, not a business
contract. Therefore money spent by one spouse is generally not
reimbursable.
However, in situations
where it would be unfair, the courts can make an exception.
The Court created the
concept of reimbursement alimony
as an equity device.
Reimbursement alimony gives a spouse half of all financial
contributions made towards one spouse's education; including tuition,
books, household expenses, etc.
There is an expectation that they would get some benefit for
supporting their spouse's education.
Reimbursement alimony is not to be granted in every case. It is
only for monetary contributions made with the mutual and shared
expectation that both parties to the marriage will derive increased
income and material benefits from the degree.
The basic rule is that a
degree is notmarital
property. There are three reasons for
this:
The value of the degree is
speculative,
How much money the degree
is worth depends on what particular job a person takes later in life.
That could be vastly different.
Working for a law firm or
a non-profit makes a big difference after law school.
A degree is personal to the
holder,
June didn't do the work to
get the degree, only Melvin.
The degree produces income
after the period of marital property has ended.
Melvin shouldn't have to
pay June for income he earns after
the divorce.
The only State that does not
follow this decision in New York. They have a Statute that makes a degree
marital property.
