Anthony v. Tompkins

• Decision Date: 07 August 1986
• Citation: 355 Pa.Super. 589,514 A.2d 91
• Parties: Debra ANTHONY, Appellant, v. David ANTHONY. Kenneth C. TOMPKINS, Appellant, v. Gloria J. TOMPKINS.
• Court: Pennsylvania Supreme Court

355 Pa.Super. 589

514 A.2d 91

Debra ANTHONY, Appellant,

Supreme Court of Pennsylvania

Argued April 24, 1985

August 7, 1986

Attorney(s) appearing for the Case

Maria C. Mullane, Allentown, for appellant in No. 3430.

Glenn C. Vaughn, York, for appellant in No. 226.

Dianne M. Dickson, Allentown, for appellee in No. 3430.

Raymond R. Smith, York, for appellee in No. 226.

Before SPAETH, President Judge, and CAVANAUGH, BROSKY, ROWLEY, WIEAND, McEWEN, DEL SOLE, BECK and TAMILIA, JJ.

BECK, Judge:

The issues in these appeals are 1) whether under the Divorce Code an increase, during the parties' marriage, in the value of premarital assets constitutes marital property and 2) if the increase in value constitutes marital property, whether the entire increase is marital property or whether

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the increase in value should be reduced to reflect the factor of inflation.

We hold that the entire increase, during the parties' marriage, in the value of premarital assets is marital property and that the increase is not reduced to reflect inflation.

The Divorce Code¹ defines marital property as "all property acquired by either party during the marriage. . . ." 23 P.S. § 401(e). It excepts from the definition of marital property certain enumerated assets with a proviso that as to those assets the "increase in value during the marriage" is marital property. 23 P.S. § 401(e)(1) & (e)(3).

Both the appellant in Anthony and the appellant in Tompkins argue on appeal that an increase in the value of a spouse's premarital property should not be regarded as marital property unless the appreciation in value is attributable to the joint efforts and/or financial contributions of both spouses and that to the extent an increase is due to economic factors such as inflation, it should be excluded.

Similar facts underlie both appeals. In both appeals, the appellant-spouse seeks to exempt from marital property the increased value of a residence which the spouse bought before the parties' marriage. In Anthony, the appellant-wife purchased a house prior to marrying the appellee-husband. The common pleas court found that the fair market value of the house was $43,500 at the time of the parties' marriage and $65,000 at the time of the parties' separation. The court ruled that the $21,500 increase in the fair market value of the house during the period of the parties' marriage constituted marital property subject to equitable division and distribution upon the parties' divorce. Appellant and appellee were each awarded one-half of the $21,500 increase.² In Tompkins, the appellant-husband acquired a

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house prior to marrying the appellee-wife. The common pleas court found that the fair market value of the house was $36,000 at the time of the parties' marriage and $42,000 at the time of the parties' separation. The court ruled that the $6,000 increase in the fair market value of the house during the period of the parties' marriage constituted marital property subject to equitable division and distribution upon the parties' divorce. Appellant and appellee were each awarded one-half of the $6,000 increase.³

I.

The threshold inquiry is what comprises marital property — particularly, whether an increase in value, during the parties' marriage, of either spouse's premarital assets constitutes marital property. Pursuant to section 401 of the Divorce Code, marital property includes all property, real or personal, acquired during the parties' marriage by either spouse, whether titled individually or jointly. 23 P.S. § 401(e)-(f). Thus, the time, rather than the method, of property acquisition determines if an item of property constitutes marital property under the Code.

Even the limited marital property exceptions enumerated in subsections 401(e)(1)-(7)⁴ of the Code reflect the significance

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of the time property is acquired in differentiating marital property from nonmarital property. For example, subsections 401(e)(1) and 401(e)(3) exclude from marital property any real or personal property received during the parties' marriage either in exchange for premarital property or by gift, bequest, devise or descent. Nevertheless, these subsections specifically classify as marital property any increase in the value of such exchange or given property during the parties' marriage. In other words, if accrued during the period of the parties' marriage, an appreciation in the value of property belonging to either spouse represents, in and of itself, property acquired during the parties' marriage, i.e., marital property. See 23 P.S. § 401(e)(1) and (3).

Because it is the time, rather than the manner, of acquisition that determines whether property constitutes marital property under Pennsylvania's Divorce Code, the spouses' efforts and/or financial contributions are not germane to definition of marital property under the Code.⁵ See 23 P.S. § 401(e)-(f). The Code's emphasis on "when" — not "how" — property is acquired distinguishes Pennsylvania's divorce legislation from the marital dissolution law of other jurisdictions which exempt from marital property any assets

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not acquired in joint title or by the united efforts and/or financial contributions of both spouses. See, e.g., Harper v. Harper, 294 Md. 54, 448 A.2d 916 (1982) (comparing and explaining the inception of title, source of funds, and transmutation of property concepts employed in some sister states); Robinson v. Robinson, 569 S.W.2d 178 (Ky.Ct.App. 1978); Suter v. Suter, 97 Idaho 461, 546 P.2d 1169 (1976).

In construing Pennsylvania's Divorce Code, we must follow the Pennsylvania legislature's scheme which separates the factors for defining marital property from the factors for distributing marital property. Time of acquisition is the factor that the legislature mandates the courts use in determining whether property is a marital asset. See 23 P.S. § 401(e)-(f). In contrast, a list of ten factors found in subsection 401(d) of the statute are considerations that the legislature mandates courts use in determining distribution of marital property. Those ten factors relate to the personal and economic circumstances of the parties and the parties' contributions in bringing about an increase or decrease in the value of the marital assets. 23 P.S. § 401(d)(1)-(10). In other words, under the statute the court first determines what is marital property based upon the time of acquisition and then determines the equitable distribution of that property taking into account the factors in subsection 401(d).

Subsection 401(d) concerns the fair apportionment of marital property between the parties following a divorce, not the designation of assets as marital or nonmarital property.

Once the parties' property has been earmarked as either marital or nonmarital property according to the time of its acquisition and the subsection 401(e) exceptions, see 23 P.S. § 401(e)-(f), then the court may, in conformity with subsection 401(d) of the Code, equitably divide and distribute the parties' marital property after due regard for all relevant factors among which are those listed in subsection 401(d) such as the "contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as homemaker." 23 P.S. § 401(d)(7). In Platek v. Platek, 309 Pa.Super. 16,

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454 A.2d 1059 (1982), we noted that factors such as the parties' efforts or contributions toward procurement, preservation or enhancement of property are appropriately considered for purposes of equitable division and distribution of marital property under subsection 401(d) of the Code.

Given the Pennsylvania Divorce Code's focus on the time, instead of the manner, of property acquisition, section 401 of the Code is properly construed to categorize as marital property any accretion in the value of all of a spouse's premarital property to the extent that the value of the property on the date of the parties' marriage is exceeded by the value of the property at the time of the parties' separation or divorce, whichever applies under subsection 401(e)(4) of the Code. Accord, In re Marriage of Reeser, Colo.App., 635 P.2d 930 (1981) (Section 14-10-113(4), C.R.S. 1973). Construing the Code in another fashion would produce the anomalous result that any increase in the value of property acquired in exchange for premarital property would constitute marital property under 23 P.S. § 401(e)(1), but any increase in the value of premarital property not exchanged for other property would be excluded from marital property. Inasmuch as the legislature is presumed not to have intended an absurd or unreasonable result, we interpret the Code to accord identical treatment to both types of property — that which has been exchanged and that which has not — and hence to designate as marital property any increase, during the parties' marriage, in the value of all of a spouse's premarital property. See subsection 1922(1) of the Statutory Construction Act of 1972, 1 Pa C.S. § 1922(1); Fireman's Fund Insurance Co. v. Nationwide Mutual Insurance Co., 317 Pa.Super. 497, 464 A.2d 431 (1983).

This interpretation of the Code does not create an injustice for the party who may have by dint of his physical labor or mental acumen provided the necessary ingredients and conditions for the increased value. In distributing the property, the court is free to take these factors into account

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and make a more favorable distribution or even distribute all of the asset to that individual. 23 P.S. § 401(d)(7); Platek.

Such an interpretation of section 401 also comports with the Code's directive to "[e]ffectuate economic justice between parties who are divorced. . . ." 23 P.S. § 102(a)(6). The existence of a premarital asset may discourage or prevent the parties' obtainment of a comparable marital asset and lull the nonowning...