Landay v. Landay, 60948

• Decision Date: 31 March 1983
• Docket Number: No. 60948,60948
• Citation: 429 So.2d 1197
• Parties: Sumner LANDAY, Petitioner, v. Barbara J. LANDAY, Respondent.
• Court: Florida Supreme Court

Page 1197

429 So.2d 1197

Sumner LANDAY, Petitioner, v. Barbara J. LANDAY, Respondent.

No. 60948.

Supreme Court of Florida.

March 31, 1983.

Wayne O. Smith of the Law Offices of Wallace, Smith & Finck, St. Petersburg, for petitioner.

Robert L. McDonald, Jr., Tampa, for respondent.

EHRLICH, Justice.

This is a petition to review the decision of the Second District Court of Appeal reported at 400 So.2d 43 (Fla.2d DCA 1981). It alleges conflict with Sudholt v. Sudholt, 389 So.2d 301 (Fla. 5th DCA 1980) and Snider v. Snider, 371 So.2d 1056 (Fla. 3d DCA 1979), cert. denied, 383 So.2d 1202 (Fla.1980). We have jurisdiction pursuant to article V, section 3(b)(3), Florida Constitution. We approve the result of the district court below in all respects except the formula used to measure a contributing spouse's special equity, in which case we partially adopt the position set forth in the concurring and dissenting opinion of Judge Danahy.

This case concerns the determination in dissolution proceedings of a "special equity" in the marital home. Barbara and Sumner Landay were married in May 1973. One year later they purchased a house for $15,700 taking title as tenants by the entireties. Barbara Landay paid the entire down payment ($6,486.57) from her separate funds, accumulated by her before the marriage. During the marriage, except for brief periods, both parties were employed. The mortgage was paid from income earned by both parties, rental income from a garage apartment, and a small amount of rental income from the house itself. Except for two short periods of time, the couple lived in this house during the union.

They separated in 1979. Dissolution occurred in January 1980. The only property subject to division was a coin collection, a mirror, household furniture and furnishings, and the marital home.

The transcript reveals that at trial Barbara Landay attempted to establish entitlement to a special equity in the home by her unrebutted claim that she paid the entire down payment from her separate funds. This payment constituted 41% of the purchase price. In spite of her claim, the trial court refused, on the authority of Ball v. Ball, 335 So.2d 5 (Fla.1976), to find a special equity inuring to her benefit and only awarded her one-half interest emanating from record title. ¹

Upon review, the Second District Court of Appeal disagreed with the trial court's interpretation of Ball and reversed. That court addressed the central issue as follows:

Where one marriage partner contributes funds from a source unconnected with the marriage to payment of some but not all of the consideration for property acquired by the parties as a tenancy by the entireties, does a special equity arise in favor of the contributing spouse and, if so, to what extent?

400 So.2d at 44.

After reviewing the earlier opinions in its own district, that court retreated from its holding in Smith v. Smith, 382 So.2d 1242 (Fla. 2d DCA), dismissed, 392 So.2d 1379 (Fla.1980), overruled, Landay v. Landay, 400 So.2d 43 (Fla. 2d DCA 1981). The Smith decision had interpreted Ball as holding that no special equity arises unless the contributing spouse provides all of the consideration from separate funds.

After finding that a special equity did exist in Barbara Landay's favor the district court reviewed the various methods being used by the courts to calculate the value of that interest. In attempting to do equity, it adopted a percentage ratio approach, finding Barbara Landay's interest to be "[a] percentage interest in the property equal to the ratio of the cash down payment she made to the entire purchase price of the property with the remainder of the property shared equally with the husband." 400 So.2d at 45. This formula calculation allowed Barbara Landay to benefit from the appreciation of the real property, ultimately evaluating her share as 70.5% of the market value. ²

In a concurring and dissenting opinion, Judge Danahy noted but a single area of disagreement with the majority opinion. He opined that the correct formula to be used to measure a spouse's special equity begins with an equal division of marital property as per record title and then carves the special equity out of the other spouse's half share. He reasoned that while the percentage interest would be the same as that using the majority's formula, the legal underpinning would more closely comport with both the dictates of Ball and the special equity concept itself.

Sumner Landay sought review of the district court holding, urging that the Smith interpretation of Ball was correct and that the trial court order be reinstated. In the alternative, he argued that if we do find a special equity in Barbara Landay's favor, we should adopt the "vested interest" approach and limit the value of that interest to the actual amount of the contribution, i.e., $6,486.57. We find the same uncertainty that the Second District Court of Appeal observed within its district exists in other districts.

Since our pronouncement in Ball, at least one court has followed the Smith approach. Sudholt v. Sudholt; see also Snider v. Snider (where the court indicated it would follow an "all" approach, but found that a gift was made). Others have adopted a "vested interest" approach finding a special equity to the extent of the contribution only. Evers v. Evers, 374 So.2d 1117 (Fla. 1st DCA 1979); Sanders v. Sanders, 362 So.2d 284 (Fla. 1st DCA 1978). Still another court has awarded a percentage ownership based on the amount of the contribution only. Malkemes v. Malkemes, 357 So.2d 223 (Fla. 2d DCA 1978), overruled, Landay v. Landay, 400 So.2d 43 (Fla. 2d DCA 1981).

Ball dealt with a wife who had inherited one-half interest in a house. Using inherited funds she purchased the other one-half interest from her brother and remodeled the house substantially. She then transferred the property to herself and her husband as tenants by the entireties. When dissolution was granted, we held:

The premise that record title bespeaks an equal division is, of course, only the starting point for a property division. Either spouse has the right to attempt to establish a "special equity" in the realty by reason of his or her extraordinary contribution toward its acquisition, either financially or through personal industry and service to the other party. The other party, of course, can negate the attempted showing or affirmatively attempt to show that a gift was intended. We are not now called upon to determine the range of circumstances which might create a special equity. Consistent with prior decisional law, however, we hold that a special equity is created by an unrebutted showing, as was developed here, that all of the consideration for property held as tenants by the entireties was supplied by one spouse from a source clearly unconnected with the marital relationship. In these cases the property should be awarded to that spouse, as if the tenancy were created solely for survivorship purposes during coverture, in the absence of contradictory evidence that a gift was intended.

335 So.2d at 7 (footnotes omitted).

The thrust of our holding in Ball was twofold. First, the Court eliminated the judicially created presumption that when separate property is used to purchase marital property, the presumption arises that one spouse makes a gift of those separate funds to the other spouse. See, e.g., Steinhauer v. Steinhauer, 252 So.2d 825 (Fla. 4th DCA 1971), disapproved, Ball v. Ball, 335 So.2d 5 (Fla.1976). Second, that opinion outlined a method for establishing a special equity on behalf of either spouse, by tracing the separate funds which were used to purchase jointly-held assets. That holding did not eliminate the possibility that a gift from one spouse to another could be made, nor was it to be interpreted to mean that in order to establish a special equity interest one spouse must contribute all and nothing less of the consideration used to purchase the jointly held property. While in Ball we did use the words "all of the consideration," that was the factual context of that case, and we did not intend to imply that its holding would not apply where less than "all of the consideration" was contributed...