Court of Appeals Division III                                                                                               
                               State of Washington                                                                                                    
                            Opinion Information Sheet                                                                                                 
Docket Number:       15877-2-III                                                                                                                      
Title of Case:       In RE the Marriage of L. Dianne Zahm                                                                                             
                     And Kermit A. Zahm                                                                                                               
File Date:           05/05/98                                                                                                                         
                                SOURCE OF APPEAL                                                                                                      
Appeal from Superior Court of Walla Walla County                                                                                                      
Docket No:      95-3-00030-9                                                                                                                          
Judgment or order under review                                                                                                                        
Date filed:     05/20/96                                                                                                                              
Judge signing:  Hon. Yancey Reser                                                                                                                     
Authored by Stephen M. Brown                                                                                                                          
Concurring: Frank L. Kurtz                                                                                                                            
            Dennis J. Sweeney                                                                                                                         
                                COUNSEL OF RECORD                                                                                                     
Counsel for Appellant(s)                                                                                                                              
            William S. Lowry                                                                                                                          
            102 West Main St.                                                                                                                         
            Ste 200                                                                                                                                   
            Walla Walla, WA  99362-2856                                                                                                               
            Christopher M. Constantine                                                                                                                
            Attorney At Law                                                                                                                           
            PO Box 7125                                                                                                                               
            Tacoma, WA  98407                                                                                                                         
Counsel for Respondent(s)                                                                                                                             
            Albert J. Golden                                                                                                                          
            Golden & Knowlton                                                                                                                         
            P.O. Box 1615                                                                                                                             
            Walla Walla, WA  99362-0030                                                                                                               
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON                                                                                                    
In re the Marriage of:                           )                                                                                                    
                                                 ) No. 15877-2-III                                                                                    
L. DIANNE ZAHM,                                  ) )                                                                                                  
Division Three                                                                                                                                        
Respondent,                                      ) Panel Eight                                                                                        
     and                                         ) )                                                                                                  
PUBLISHED OPINION                                                                                                                                     
KERMIT A. ZAHM,                                  )                                                                                                    
                    Appellant.                   ) FILED                                                                                              
     BROWN, J. Today we decide for the first time in Washington, whether                                                                              
indivisible social security benefits can be considered by a trial court                                                                               
when making provision in a marital dissolution for property division or                                                                               
maintenance.  We hold they can.  Because of the trial court's error in                                                                                
characterizing the benefits as community property instead of separate                                                                                 
property was harmless, we decide there was no abuse of trial court                                                                                    
discretion in its property division or maintenance award.  We affirm.                                                                                 


     Idaho residents Kermit and Diane Zahm were married June 1978 in Las Vegas,                                                                            
Nevada.  Mr. Zahm then moved into Mrs. Zahm's Idaho home.  In 1984, the                                                                               
family moved into an Idaho townhouse owned by Mr. Zahm.  Mrs. Zahm sold her                                                                           
home and deposited the money in a separate bank account for her and her                                                                               
daughters.  Mrs. Zahm left the townhouse in 1986 when the couple separated                                                                            
and relocated to Walla Walla, Washington.  Back in Idaho, dissolution                                                                                 
proceedings began, but were dismissed when the parties reconciled in 1987.                                                                            
     The parties then lived together in a Walla Walla apartment.  They                                                                                
purchased a Walla Walla home on Bandra Drive in 1990 by combining their                                                                               
separate funds for a down payment and signing a promissory note for the                                                                               
remaining purchase price.                                                                                                                             
     Two years prior to purchasing the Bandra Drive home, Mr. Zahm sold the                                                                                
townhouse in Idaho to Elizabeth Jackson.  Mr. Zahm placed Mrs. Zahm's name                                                                            
along with his on the promissory note and deed of trust.  Ms. Jackson made                                                                            
her monthly payments to a First Interstate Bank of Washington account owned                                                                           
by both Mr. and Mrs. Zahm.                                                                                                                            
     In 1991, Mr. Zahm assigned a fraction of his interest in Ms. Jackson's note                                                                           
for $32,400.  This money was deposited into Mr. Zahm's checking account at                                                                            
the Overland Park Plaza Branch of the First Interstate Bank of Idaho along                                                                            
with his disability benefits, army retirement benefits, State of Idaho                                                                                
retirement benefits and social security benefits.  Mrs. Zahm and Ty Zahm,                                                                             
Mr. Zahm's son, were also on the signature card for this account.  In 1993,                                                                           
Mr. Zahm sold his remaining interest in the Jackson contract for                                                                                      
$23,554.20, which he deposited into the Overland Park account.  In 1994,                                                                              
Mr. Zahm withdrew $51,223.57 from the Overland Park account and paid off                                                                              
the mortgage on the Bandra Drive home.                                                                                                                
     The parties separated on January 30, 1995.  Three days later, Mrs.                                                                               
Zahm petitioned for dissolution.  On May 20, 1996, the trial court                                                                                    
dissolved the marriage.  It characterized the Bandra Drive home and the                                                                               
Overland Park account as community property.  Also under the heading:                                                                                 
"Community Property" the court noted Mr. Zahm earned 61 percent of his                                                                                
social security benefits during the marriage.  The court also awarded Mrs.                                                                            
Zahm Tier I and Tier II maintenance.  Under Tier I, Mrs. Zahm was to                                                                                  
receive $300 per month in lieu of her interest in Mr. Zahm's military and                                                                             
state retirement benefits.  Under Tier II, Mrs. Zahm received an additional                                                                           
$1,100 per month until a $30,000 judgment awarded Mr. Zahm was paid off.                                                                              
Then, Mrs. Zahm was to receive $900 a month until she reached the age of                                                                              
62, and then $500 a month.  Mr. Zahm has appealed.                                                                                                    


     A.  Social Security Benefits.  We first consider whether the trial                                                                               
court erred when listing Mr. Zahm's social security benefits as community                                                                             
property in view of federal law precluding their division.  Next, if so,                                                                              
whether the error was harmless.  Finally, regarding social security                                                                                   
benefits, we must decide whether a trial court can circumvent the                                                                                     
unavailability of social security benefits by awarding other community                                                                                
property to the non-owning spouse as a setoff.                                                                                                        
     The trial court has broad discretion to distribute marital property.  In re                                                                           
Marriage of Tower, 55 Wn. App. 697, 700, 780 P.2d 863 (1989), review                                                                                  
denied, 114 Wn.2d 1002 (1990).  We review for a manifest abuse of this                                                                                
discretion.  In re Marriage of  Washburn, 101 Wn.2d 168, 179, 677 P.2d 152                                                                            
(1984).  The standard requires proof the judge's decision was manifestly                                                                              
unreasonable or based on untenable grounds or for untenable reasons. Tower,                                                                           
55 Wn. App. at 700.                                                                                                                                   
     Section 407(a) of the Social Security Act provides in part: "The right of                                                                             
any person to any future payment under this subchapter shall not be                                                                                   
transferable or assignable" and thus, generally makes moneys payable under                                                                            
the social security laws indivisible.  Section 659(a) provides an exception                                                                           
by permitting the assignment of social security benefits to pay for alimony                                                                           
or child support.  However, section 659(i)(3)(B)(ii) expressly excludes any                                                                           
payment to a spouse in compliance with any community property settlement,                                                                             
equitable distribution of property, or other division between spouses or                                                                              
former spouses.                                                                                                                                       
     In Hisquierdo v. Hisquierdo, 439 U.S. 572, 99 S. Ct. 802, 59 L. Ed. 2d 1                                                                              
(1979), the United States Supreme Court held the Supremacy Clause precluded                                                                           
California's community property laws from overcoming the Federal Railroad                                                                             
Retirement Act.  The Court likened railroad retirement benefits to social                                                                             
security benefits in that both are non-contractual agreements.  Id. at 575.                                                                           
The Court then concluded federal railroad retirement benefits were not                                                                                
subject to distribution in a dissolution proceeding.  Id. at 584.                                                                                     
Washington courts have not addressed the issue of federal preemption as it                                                                            
relates to social security benefits.  However, the Arizona and California                                                                             
appellate courts have held that social security benefits are not community                                                                            
property, and therefore, not subject to division.  See Luna v. Luna, 125                                                                              
Ariz. 120, 608 P.2d 57, 60 (1979); In re Marriage of Hillerman, 109 Cal.                                                                              
App. 3d 334, 345, 167 Cal. Rptr. 240 (1980).  If they are not community                                                                               
property, they must be separate property.  Nevertheless, all property,                                                                                
community and separate, is before the court when considering what is just                                                                             
and equitable in the disposition of property and liabilities.  RCW                                                                                    
     Based on the holdings of the United States Supreme Court and other                                                                               
jurisdictions, we conclude federal statutes regarding social security                                                                                 
benefits preempt state community property laws.  We hold the social                                                                                   
security benefits are the separate indivisible property of the spouse                                                                                 
earning them.  This holding ensures the benefits actually reach the                                                                                   
beneficiary and protects the benefits from the legal process.  Hisquierdo,                                                                            
439 U.S. at 584. Here, the trial court should not have listed Mr. Zahm's                                                                              
social security benefits as  "Community Property."  However, the trial                                                                                
court acknowledged in its oral decision that social security benefits were                                                                            
not to be apportioned.  Therefore, it was harmless error to list the                                                                                  
benefits under "Community Property."                                                                                                                  
     The crucial issue then becomes whether a trial court can still                                                                                   
consider social security benefits as part of the parties' property and                                                                                
liabilities when deciding a just and equitable distribution of their                                                                                  
property.  Despite the language in Hisquierdo, 439 U.S. at 588 that "{a}n                                                                             
offsetting award . . . would upset the statutory balance and impair                                                                                   
petitioner's economic security just as surely as would a regular deduction                                                                            
from his {or her} benefit check," jurisdictions are split on this issue.                                                                              
In Mahoney v. Mahoney, 425 Mass. 441, 681 N.E.2d 852, 856 (1997), the                                                                                 
Supreme Judicial Court of Massachusetts held a judge may consider a                                                                                   
spouse's anticipated social security benefits as one factor, among others,                                                                            
in making an equitable distribution of marital assets.  See also In re                                                                                
Marriage of Brane, 21 Kan. App. 2d 778, 908 P.2d 625 (1995); Pongonis v.                                                                              
Pongonis, 606 A.2d 1055 (Me. 1992); Rudden v. Rudden, 765 S.W.2d 719 (Mo.                                                                             
Ct. App. 1989).                                                                                                                                       
     Alternatively, the Supreme Court of Nevada in Wolff v. Wolff, 112 Nev.                                                                                
1355, 929 P.2d 916, 921 (1996) held a court may not consider such benefits                                                                            
when dividing a marital estate.  See also Olson v. Olson, 445 N.W.2d 1                                                                                
(N.D. 1989); In re Marriage of Swan, 301 Or. 167, 720 P.2d 747 (1986).                                                                                
Washington courts have yet to address this issue.                                                                                                     
A significant argument for not allowing social security benefits to be                                                                                
considered is that future benefits would be hard to evaluate.  Furthermore,                                                                           
a recipient could die before he or she receives the benefits.  These are                                                                              
practical, but not insurmountable problems a trial court should consider.                                                                             
However, we need not resolve them here because Mr. Zahm is currently                                                                                  
receiving his social security benefits.                                                                                                               
     When deciding a just and equitable distribution, relevant factors include:                                                                            
"(1) The nature and extent of the community property; (2) The nature and                                                                              
extent of the separate property; (3) The duration of the marriage; and (4)                                                                            
The economic circumstances of each spouse at the time the division of                                                                                 
property is to become effective . . . ."  RCW 26.09.080.  A trial court                                                                               
could not properly evaluate the economic circumstances of the spouses                                                                                 
unless it could also consider the amount of social security benefits                                                                                  
currently received.  We agree with the authorities cited from                                                                                         
Massachusetts, Kansas, and Missouri and hold  the trial court did not abuse                                                                           
its discretion in considering Mr. Zahm's social security benefits when                                                                                
evaluating the economic circumstances of the parties.                                                                                                 
     B.  Characterization of Property.  We consider whether the trial court                                                                           
erred in characterizing the Idaho bank account and the Bandra Drive                                                                                   
residence as community property.  Washington has long accepted the                                                                                    
principle that the character of property is determined under the law of the                                                                           
state where the couple is domiciled at the time of its acquisition.  In re                                                                            
Marriage of Landry, 103 Wn.2d 807, 810, 699 P.2d 214 (1985); Rustad v.                                                                                
Rustad, 61 Wn.2d 176, 179, 377 P.2d 414 (1963).  Since the Overland Park                                                                              
account was established while the parties were domiciled in Idaho, Idaho                                                                              
law governs.                                                                                                                                          
     In Idaho, it is presumed all property acquired by spouses during                                                                                 
marriage is community property.  Weilmunster v. Weilmunster, 124 Idaho 227,                                                                           
858 P.2d 766, 771 (1993) (citing Stahl v. Stahl, 91 Idaho 794, 430 P.2d                                                                               
685, 688-89 (1967)).  However, if a spouse has separate property and that                                                                             
property is identifiable and traceable, commingling of such separate                                                                                  
property with community property will not convert the separate property                                                                               
into community property.  Id.  The spouse asserting that the assets are                                                                               
separate has the burden of proving the property is such with reasonable                                                                               
certainty and particularity.  Weilmunster, 858 P.2d at 772 (citing Houska                                                                             
v. Houska, 95 Idaho 568, 512 P.2d 1317, 1319 (1973)).                                                                                                 
     Here, both Mr. and Mrs. Zahm's names were on the Overland Park                                                                                   
account.  Furthermore, from the accounting provided by Mr. Zahm, there was                                                                            
commingling of community property and separate property.  Mr. Zahm also                                                                               
deposited other community property funds into this account and used this                                                                              
account to pay off community debts.                                                                                                                   
     Based on the record, the trial court had tenable grounds to conclude                                                                             
under Idaho law the Overland Park account had been so commingled that the                                                                             
account became community property.  Even if all the funds in the account                                                                              
could be traced with certainty and particularity rendering the account to                                                                             
be Mr. Zahm's separate property, it was still within the trial court's                                                                                
discretion to divide it under RCW 26.09.080 to reach a just and equitable                                                                             
distribution.  Either way, the court did not abuse its discretion in                                                                                  
characterizing the Idaho bank account as community property.                                                                                          
     We next consider the Bandra Drive property.  In Washington property                                                                              
acquired during marriage is presumed to be community property.  In re                                                                                 
Marriage of Short, 125 Wn.2d 865, 870, 890 P.2d 12 (1995).  However, this                                                                             
presumption may be rebutted with clear, cogent, and convincing evidence.                                                                              
In re Marriage of Olivares, 69 Wn. App. 324, 336, 848 P.2d 1281, review                                                                               
denied, 122 Wn.2d 1009 (1993).  Mr. Zahm contends the "mortgage rule"                                                                                 
rebuts this presumption.                                                                                                                              
     The mortgage rule is used to assist in characterizing assets acquired                                                                            
over time, by a combination of community and separate funds.  Harry M.                                                                                
Cross, The Community Property Law in Washington, 61 Wash. L. Rev. 13, 39-49                                                                           
(1986).  The mortgage rule focuses on whether the parties become obligated                                                                            
to make payments in order to acquire an asset.  Where there is such an                                                                                
obligation, the character of the property is determined as of the date of                                                                             
its acquisition, by the character of the down payment and any credit                                                                                  
pledged.  Mr. Zahm contends his separate property was used as credit to                                                                               
secure the home loan, therefore, the home should be his separate property.                                                                            
Assuming Mr. Zahm is correct, his argument neglects the fact both parties                                                                             
contributed their separate property toward the down payment.  Therefore,                                                                              
Mr. Zahm's assertion that his separate property was used as credit to                                                                                 
secure the loan on the home does not alone convincingly rebut the                                                                                     
presumption that the home is community property.  This is a tenable ground                                                                            
for the trial court to deem the home community property.  Accordingly, the                                                                            
trial court did not abuse its discretion in characterizing the home as                                                                                
community property.                                                                                                                                   
     C.  Maintenance.  Did the trial court err by awarding Mrs. Zahm                                                                                  
maintenance?  A trial court has discretion to grant a party maintenance in                                                                            
an amount it deems just after considering all relevant factors.  RCW                                                                                  
26.09.090(1); In re Marriage of Williams, 84 Wn. App. 263, 267-68, 927 P.2d                                                                           
679 (1996), review denied, 131 Wn.2d 1025 (1997).  On appeal, an award of                                                                             
maintenance is reviewed for an abuse of discretion.  In re Marriage of                                                                                
Mathews, 70 Wn. App. 116, 123, 853 P.2d 462, review denied, 122 Wn.2d 1021                                                                            
(1993).  Here, Mr. Zahm argues the court abused its discretion in awarding                                                                            
Mrs. Zahm maintenance by not applying the factors in RCW 26.09.090 and                                                                                
relying on Mr. Zahm's social security benefits in making the award.                                                                                   
     In its oral decision on November 8, 1996, the court distinctly set                                                                               
forth its analysis of the factors in RCW 26.09.090.  The court discussed                                                                              
Mr. and Mrs. Zahm's incomes and resources, the age of the parties, the                                                                                
parties' medical conditions, and the ability of Mr. Zahm to pay                                                                                       
maintenance.  The record supports the reasoning; thus, tenable grounds                                                                                
existed for the court to decide Mrs. Zahm's need for maintenance and Mr.                                                                              
Zahm's ability to pay.  We also conclude it was not error for the trial                                                                               
court to consider the social security benefits when deciding Mrs. Zahm's                                                                              
maintenance award for the same reasons discussed when considering the                                                                                 
property division.  Additionally, as we just discussed, the trial court                                                                               
properly applied the RCW 26.09.090 factors.  Accordingly, we hold the trial                                                                           
judge did not abuse his discretion in making the award of maintenance.                                                                                
     D.  Attorney Fees.  Mrs. Zahm has requested an award of attorney fees.                                                                           
RCW 26.09.140 and RAP 18.1 allow such fees on appeal.  The primary                                                                                    
consideration for awarding attorney fees in a dissolution proceeding is if                                                                            
it would be equitable.  In re Marriage of Van Camp, 82 Wn. App. 339, 342,                                                                             
918 P.2d 509, review denied, 130 Wn.2d 1019 (1996).  Here, both parties are                                                                           
in a position to pay their own fees.  Therefore, Mrs. Zahm's request should                                                                           
be denied.                                                                                                                                            


     A trial court when making provision in a marital dissolution for                                                                                 
property division or maintenance can consider social security benefits                                                                                
notwithstanding the indivisibility of these benefits under federal law.                                                                               
Therefore, the trial court did not err when considering the social security                                                                           
benefits as a relevant factor when deciding the property division and                                                                                 
maintenance issues.  Although the trial court should have characterized the                                                                           
social security benefits as Mr. Zahm's separate property because of federal                                                                           
preemption, the error was harmless.  The trial court did not abuse its                                                                                
discretion when deciding the property division and maintenance issues.                                                                                
Accordingly, we affirm the trial court.                                                                                                               
                                   Brown, J.                                                                                                          
WE CONCUR:                                                                                                                                            
                                   Kurtz, A.C.J.                                                                                                      
Sweeney, J.