Burnside v. Burnside

Decision Date31 March 1995
Docket NumberNo. 22399,22399
Citation460 S.E.2d 264,194 W.Va. 263
CourtWest Virginia Supreme Court
PartiesCarlos James BURNSIDE, Plaintiff Below, Appellee, v. Jacquelyn Nagle BURNSIDE, Defendant Below, Appellant.
Dissenting Opinion of

Justice Neely March 31, 1995.

Syllabus by the Court

1. In reviewing challenges to findings made by a family law master that also were adopted by a circuit court, a three-pronged standard of review is applied. Under these circumstances, a final equitable distribution order is reviewed under an abuse of discretion standard; the underlying factual findings are reviewed under a clearly erroneous standard; and questions of law and statutory interpretations are subject to a de novo review.

2. "Where, during the course of the marriage, one spouse transfers title to his or her separate property into the joint names of both spouses, a presumption that the transferring spouse intended to make a gift of the property to the marital estate is consistent with the principles underlying our equitable distribution statute." Syllabus Point 4, Whiting v. Whiting, 183 W.Va. 451, 396 S.E.2d 413 (1990).

3. When a spouse uses separate property to retire the mortgage of property titled jointly, a gift to the marital estate is presumed. This presumption is rebuttable only by clear, cogent, and convincing evidence that a gift was not intended or that the transaction under scrutiny was the result of coercion, duress, or deception.

4. The presumption of a gift to the marital estate may not be rebutted by evidence that merely reflects the motivation for making the gift or an uncommunicated and subjective state of mind of the transferring spouse or that, when viewed alone, can be considered inconsistent with the intent to maintain the property as separate.

5. "In any order making a division of marital property, the trial court [or family law master] must set out in detail its findings of fact and conclusions of law, and the reasons for dividing the property in the manner adopted. W.Va.Code § 48-232(f) (1986)." Syllabus Point 2, Somerville v. Somerville, 179 W.Va. 386, 369 S.E.2d 459 (1988).

A. Dana Kahle, Wheeling, for appellee.

David J. Sims, Yahn & Sims, Wheeling, for appellant.

CLECKLEY, Justice:

In this divorce proceeding, Jacquelyn Nagle Burnside, the defendant below and appellant herein, appeals a portion of the final order of the Circuit Court of Ohio County, which found the contribution she made to pay off the mortgage on the marital home was part of the marital estate and granted Carlos James Burnside, the plaintiff below and appellee herein, one-half interest therein. Mrs. Burnside argues she paid off the approximately $22,000 balance owed on the mortgage with separate funds she received as inheritance and she did not intend to make a gift to the marital estate. She requests we find Mr. Burnside is entitled to only one-half share of the total equity in the home less her contribution. After reviewing the record, we find the family law master and the circuit court failed to make sufficient findings on this issue. Accordingly, we remand this case.

I. FACTUAL AND PROCEDURAL BACKGROUND

The facts essentially are undisputed. The parties were married in January, 1971. One child was born during the marriage. In June, 1988, the parties purchased their home in Wheeling for $29,000 and financed the purchase price. Within a year of purchasing the home, Mrs. Burnside inherited approximately $50,000 and placed it in a separate bank account in only her name. The money was not treated as joint property. This arrangement was the source of major disagreements between the parties.

Mr. Burnside worked for the City of Wheeling, and Mrs. Burnside was self-employed cleaning houses. The parties generally had difficulty meeting their monthly mortgage payment, and Mr. Burnside urged Mrs. Burnside to use the funds from her inheritance to help make ends meet. Mrs. Burnside resisted and asserted the money was earning interest in the bank. The parties agree that every month, for over eighteen months, they argued over their financial arrangement.

In May, 1990, Mrs. Burnside paid off the $22,480.14 balance on the mortgage with part of the proceeds from her inheritance. The parties separated approximately three months later, and this divorce proceeding was instituted.

On January 22, 1993, the family law master issued his findings of fact and conclusions of law recommending the marital home be found to be joint property and the value of the home be equally divided between the parties. 1 The family law master stated: "The fact that the financial responsibilities and obligations of the parties created tensions and arguments does not raise to the level of creating coercion and duress such as to force the wife to use her inheritance to pay off the mortgage." The family law master, therefore, found the act of Mrs. Burnside's transferring her funds to pay off the home "created joint property where none previously existed."

On September 9, 1993, the Circuit Court of Ohio County entered a final order specifically addressing the other issues litigated by the parties, such as child custody and alimony, and adopting the equitable distribution as calculated by the family law master. Mrs. Burnside appeals the portion of the order involving the equitable distribution of the marital home.

II. STANDARD OF REVIEW

In reviewing challenges to findings made by a family law master that also were adopted by a circuit court, a three-pronged standard of review is applied. Under these circumstances, a final equitable distribution order is reviewed under an abuse of discretion standard; 2 the underlying factual findings are reviewed under a clearly erroneous standard; and questions of law and statutory interpretations are subject to a de novo review. Stephen L.H. v. Sherry L.H., --- W.Va. ----, --- S.E.2d ---- (No. 22084 3/6/95). Although factual findings are reviewed under the clearly erroneous standard, mixed questions of law and fact that require the consideration of legal concepts and involve the exercise of judgment about the values underlying legal principles are reviewed de novo. This standard has particular force when a family law master interprets the equitable distribution statute and draws conclusions based on the characterization of statutory legal principles.

In the present case, although the family law master found that coercion and duress did not force Mrs. Burnside to use her inheritance to retire the mortgage on the marital home, the family law master did not reach the issue of whether Mrs. Burnside lacked the intent to make a gift and whether equitable distribution should be altered based on factors stated in W.Va.Code, 48-2-32(c) (1984). For these and other reasons expressed in the text of this opinion, we find it necessary to remand this case for further consideration of this issue.

III. DISCUSSION

This case presents us with the opportunity to review our decisions dealing with the marital gift presumption, the equitable distribution statute, and the procedural steps that a family law master and a circuit court must follow in making a final equitable distribution judgment.

A. Presumption of Gift to Marital Estate

The initial step in any equitable distribution action is the initial classification by a family law master of all property owned by the parties as marital or separate. As a general rule, W.Va.Code, 48-2-1(e)(1) (1992), provides that property acquired by either spouse after the marriage but prior to separation of the parties or dissolution of the marriage is presumed marital property regardless of how title is actually held. W.Va.Code, 48-2-1(f), which is relevant to this case, excepts certain property from this general rule, including property acquired by gift, bequest, devise, and descent or distribution.

What is designated as nonmarital property, however, still may be presumptively determined to be marital property by the affirmative action of a spouse. This principle of transmutation is based upon the presumption that the owner of the nonmarital property intends to make a gift of that property to the marital estate. 3 This presumption may be rebutted by competent evidence offered by the transferring spouse showing lack of intent to make a gift or by circumstances showing fraud, coercion, or duress. When the presumption of gift persuasively is rebutted, a family law master may treat the property as nonmarital and separate. See generally W.Va.Code, 48-2-1, et seq., and 48-3-10 (1984). With this summary in mind, we now review the specific cases and statutes supporting these conclusions.

In the seminal case of Whiting v. Whiting, 183 W.Va. 451, 396 S.E.2d 413 (1990), we described equitable distribution as a three-step process. We set forth this procedure in Syllabus Point 1 of Whiting:

"Equitable distribution under W.Va.Code, 48-2-1, et seq., is a three-step process. The first step is to classify the parties' property as marital or nonmarital. The second step is to value the marital assets. The third step is to divide the marital estate between the parties in accordance with the principles contained in W.Va.Code, 48-2-32 [1984]."

The issue presented in Whiting, however, primarily focused upon the first of these steps, i.e., whether the act of titling separately owned property in the joint names of a husband and wife converts the property into marital property.

In Syllabus Point 4 of Whiting, we resolved any doubt as to the efficacy of transmutation in West Virginia:

"Where, during the course of the marriage, one spouse transfers title to his or her separate property into the joint names of both spouses, a presumption that the transferring spouse intended to make a gift of the property to the marital estate is consistent with the principles underlying our equitable distribution statute."

We further emphasized that taking joint title to separate property creates a...

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