Sochor v. International Business Machines Corp., 60 N.Y.2d 254 (1983)

A judgment creditor cannot compel a judgment debtor’s employer to pay out retirement benefits when the debtor has not yet elected to receive them and the retirement plan’s terms require such an election.

Summary

Betty Jean Sochor, a judgment creditor, sought to collect support arrears from her former husband, Joseph Sochor, by levying his inchoate rights under IBM’s Retirement Plan. Joseph had not yet elected to receive benefits or applied for them. The New York Court of Appeals held that Betty could not compel IBM to pay out benefits because Joseph had not yet exercised his rights under the plan, and he was not a party to the action. The court reasoned that the husband’s rights were contingent on his election and application, which the court could not force him to make.

Facts

Betty Jean Sochor obtained a default judgment against her former husband, Joseph Sochor, for $15,858.48 in support arrears. Joseph was a former employee of IBM from 1942 to 1971 and was a participant in IBM’s Retirement Plan, a non-contributory plan funded solely by IBM. Joseph was eligible for reduced monthly benefits at age 55 or normal benefits at age 65, but only if he elected to receive them and made the required application. Joseph had not made an election or application. The plan also contained an anti-alienation clause preventing benefits from being subject to encumbrances.

Procedural History

Betty Jean Sochor commenced a special proceeding against IBM under CPLR 5225(b) to enforce the judgment. The Supreme Court ruled against the wife. The Appellate Division reversed. The New York Court of Appeals reversed the Appellate Division, reinstating the Supreme Court’s order.

Issue(s)

Whether a judgment creditor can reach a judgment debtor’s inchoate rights under a non-contributory retirement plan, where the debtor has not elected to receive benefits and the plan requires such an election.

Holding

No, because the judgment debtor’s right to receive payment of benefits depends on his making an election to receive benefits and filing an application, neither of which had occurred.

Court’s Reasoning

The court determined that Joseph Sochor had no proprietary interest reachable by his former wife under CPLR 5225(b) until he made an election and application to receive retirement benefits. The court emphasized that no provision was made for allocating any portion of the Plan’s assets to any employee, and the rights of the employees are only to receive payments from the assets of the Plan generally in specified amounts on meeting the requirements set forth in the Plan. The court lacked the authority to compel Joseph to make an election or file an application in a proceeding where he was not a party. The court distinguished the case from community property cases, stating those cases are not authority for according the wife the right, in a noncommunity property State, to exercise her husband’s prerogative to elect and choose benefits and to make application for their payment. As the court stated, “the rights granted to a former employee are personal to him and may neither be exercised nor forfeited in any proceeding to which the affected employee is not a party.” Furthermore, the court noted that requiring an application for benefits creates significant procedural protections for the trustees of the Plan, i.e., to eliminate, so far as practicable, factual issues as to whether an effective election has been made to receive early retirement benefits. The court explicitly declined to address the applicability of ERISA.