Burgess v. Burgess

• Decision Date: 06 December 1985
• Docket Number: No. S-532,S-532
• Citation: 710 P.2d 417
• Parties: Carole Ann BURGESS, Appellant, v. Larry Lee BURGESS, Appellee.
• Court: Alaska Supreme Court

Page 417

710 P.2d 417

Carole Ann BURGESS, Appellant, v. Larry Lee BURGESS, Appellee.

No. S-532.

Supreme Court of Alaska.

Dec. 6, 1985.

Sema E. Lederman, Groh, Eggers & Price, Anchorage, for appellant.

William J. Moran, Anchorage, for appellee.

Before RABINOWITZ, C.J., and BURKE, MATTHEWS, COMPTON and MOORE, JJ.

OPINION

BURKE, Justice.

This appeal concerns the trial court's division of the parties' property in a divorce decree.

Carole and Larry Burgess were married in June, 1969. They lived together in a house on Primrose Street, in Anchorage, until Carole moved out permanently in September, 1980. No children were born of the marriage, but Carole and Larry both have children from previous marriages.

In 1964, Larry and a former spouse bought the Primrose Street house for $28,499.28. The purchase was made through two notes, a primary note for $27,000 and a side note for $1500. At trial the parties stipulated that by the time Larry and Carole married, the original note had decreased to $24,300, and Larry had accrued $2700 in equity. ¹ At the time of divorce the value of the house was $110,000, the remaining balance on the mortgage was $13,982, and the equity equalled $96,018.

Carole and Larry lived together in the Primrose Street residence for eleven years. Although the property remained solely in Larry's name, both Carole and Larry contributed from their salaries to mortgage payments. Both actively participated in the property's management and maintenance.

Approximately seven weeks after Carole and Larry separated, Carole signed a quitclaim deed assigning to Larry all interest in the Primrose Street property. Carole maintains that, on the advice of Larry's attorney, she signed the documents solely to evidence her lack of substantial property and thus discourage an impending lawsuit. She testified that Larry told her that the instrument would not affect their settlement on the divorce, and that she would still receive her share of the property. While Larry agreed that the document was executed to protect the property from a possible lawsuit, he testified that the quitclaim also expressed the parties' oral agreement for a property division.

After entering a Partial Decree of Divorce, the superior court determined that the Primrose Street residence was Larry's premarital asset, and that he was entitled to retain the entire equity of $96,018. The personal property was divided so that Carole's share totalled $16,575 ² and Larry's totalled $10,774. The court also awarded Carole one-half of the present worth of the difference between the parties' retirement benefits and ordered Larry to contribute $1500 towards Carole's attorney's fees and costs.

While the trial court has broad discretion to divide property in a divorce proceeding, AS 25.24.160(6), "[i]n limited circumstances invasion of one spouse's property acquired before coverture may be required as a matter of law." Wanberg v. Wanberg, 664 P.2d 568, 571 (Alaska 1983) (footnote omitted). One such circumstance arises when the parties demonstrate their intent to treat certain premarital property as joint property, e.g., when both spouses have taken an active interest in the ongoing maintenance, management and control of specific assets. Id. ³

In Wanberg we held that the entire equitable value of a lot was subject to distribution, even though John Wanberg owned the property before the marriage. We explained:

The Wanbergs consistently combined their efforts in improving and managing the property, and used the building as their joint personal residence for nearly two years. Although Dianne's name never appeared on the title to the Grandview lot, she signed jointly with John when a permanent $120,000 loan was taken against the property. Under these circumstances, we hold that it was an abuse of discretion for the trial court to shield the property from equitable distribution merely by affixing to the property the label of "pre-marital asset."

664 P.2d at 572. We also characterized another of John's premarital properties as a marital asset. This commercial property served as the Wanberg's residence for most of their five year marriage. Diane played an important role in the ongoing business affairs of the property, and she contributed towards maintenance and improvements on it. Id. at 573.

Two common factors characterize the properties involved in the Wanberg case--(1) the use of the properties as the parties' joint personal residences, and (2) the active interest taken by both parties in the ongoing management and maintenance of the properties. In the case at bar, these factors are also present. Larry and Carole used the Primrose property as their joint personal residence for eleven years. Carole managed the couple's books and finances, including transactions regarding the property. Loan and maintenance payments were made from the couple's joint checking account, to which they both contributed. ⁴ Thus, we conclude that the trial court erred in characterizing the Primrose Street property as Larry's separate asset. The value of the equity accumulated during the marriage was a marital asset and should have been treated as such. On remand, the value of this equity should be divided between the parties, ⁵ with a possible offset of $8200 for Larry's improvements to the property since the separation. ⁶

The existence of the quitclaim deed does not change this result because the deed is fraudulent and the product of undue influence. ⁷ In marital relationships a transaction in which one spouse gains an advantage over the other is presumptively fraudulent. Trujillo v. Padilla, 79 N.M. 245, 442 P.2d 203, 206 (1968) (warranty deed conveyed by the wife to the husband prior to divorce set aside). To overcome this presumption, the spouse gaining the advantage must show: (a) payment of adequate consideration; (b) full disclosure to the other spouse of his or her rights and the value of the property; and (c) that the spouse conferring the benefits has competent and independent advice. Id. Moreover, a fraud is committed when one spouse, without consideration, transfers property to the other in order to place the property beyond the reach of creditors. Jayhawk Equipment Co. v. Mentzer, 193 Kan. 505, 394 P.2d 37, 41 (1964).

The parties agree that the deed was signed to create the appearance that Carole had no substantial holdings and thus deter a potential lawsuit. The existence of fraud is reinforced by the payment from Larry to Carole of a mere $10 for quitclaiming property worth $110,000. Carole executed the deed under the advice of Larry's attorney and without independent counsel. She claims she understood that the deed would not impact their property settlement. When asked whether it was agreed that he would reconvey the property if the threatened lawsuit were not filed, Larry responded: "We said we should work out something." Despite this statement, Larry still maintains the quitclaim deed reflected their oral agreement for the division of property.

The trial court abused its discretion in considering the existence of this quitclaim deed as a factor in characterizing the property subject to distribution. The quitclaim deed represents nothing more than the parties' efforts to prevent a possible lawsuit.

The division of marital assets in a divorce proceeding is governed by the application of the factors announced in Merrill v. Merrill, 368 P.2d 546 (Alaska 1962). ⁸ In its Findings of Fact and Conclusions of Law, the trial court listed the following factors as influencing its decision: (1) the parties' ages; (2) the parties' earnings; (3) Larry's acquisition of the Primrose Street property before his marriage to Carole and his retention of sole title; (4) the parties' use of the property as their family residence for eleven years; (5) Larry's support of Carole's children from a prior marriage (6) Larry's payments to Carole after separation and his assumption of certain joint debts, totalling $20,177; (7) Carole's quitclaim of the Primrose Street property; (8) Larry's expenditure of $8200 on improvements to the property after the parties' separation; (9) the fact that Larry's earnings were twice as much as Carole's; and (10) the fact that the present value of the Primrose Street property was largely due to an increase in property values.

Carole contends that the trial court's property division was clearly unjust because the court either misapplied or ignored certain relevant factors, the court relied on inappropriate factors, and the court erred in its findings regarding debts Larry assumed and payments he made to Carole.

While the trial court need not make findings on all of the Merrill factors, ⁹ the record reflects no determination of the parties' future needs and their respective abilities to meet those needs. Such a determination requires findings on future earning capacity, station in life, financial condition, health and physical condition, and circumstances and necessities of each party. Given that at the time of divorce, Larry was 45 and Carole was 48 a consideration of their respective future needs and abilities is particularly relevant. On remand, we direct the trial court to rectify this inadequacy in the findings. Compare Brooks v. Brooks, 677 P.2d 1230, 1233 (Alaska 1984) (similar inadequacies).

The trial court found that Larry supported Carole's two children from her previous marriage and one of her grandchildren. Carole argues that the trial court abused its discretion in considering such support in dividing the property. At common law, a stepparent-stepchild relationship imposes no obligations and confers no benefits on either the stepparent or the child. Marriage of Dawley, 17 Cal.3d 342, 131 Cal.Rptr. 3, 551 P.2d 323, 331 (1976); Harper v. New Mexico Department of Human Services, 95 N.M. 471, 623 P.2d 985, 987 (1980); State v. Gillaspie, 8 Wash.App. 560, 507 P.2d 1223, 1224 (1973); see also 4 H. Clark, The Law of Domestic Relations in the...