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 not marital 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.
    • See O’Brien v. O’Brien (489 N.E.2d 712 (1985)).