Butler v. Butler

• Court: New York Supreme Court — Appellate Division
• Writing for the Court: BRACKEN
• Citation: Butler v. Butler, 171 A.D.2d 89, 574 N.Y.S.2d 387 (N.Y. App. Div. 1991)
• Decision Date: 23 September 1991
• Parties: Pamela Payton-Wright BUTLER, Appellant-Respondent, v. David A. BUTLER, Respondent-Appellant.

Page 387

574 N.Y.S.2d 387

171 A.D.2d 89

Pamela Payton-Wright BUTLER, Appellant-Respondent, v. David A. BUTLER, Respondent-Appellant.

Supreme Court, Appellate Division Second Department.

Sept. 23, 1991.

Cheri K. Targoff, White Plains, for appellant-respondent.

Valletta & Dorf, Mahopac (Kathleen M. Valletta, on the brief), for respondent-appellant.

Before MANGANO, P.J., and THOMPSON, BRACKEN and SULLIVAN, JJ.

BRACKEN, Justice.

The principal question presented on this appeal is: How should a court distribute an asset which was acquired, and which has significantly increased in value during a marriage, where the asset in question was originally acquired in exchange for unequal amounts of each spouse's separate property? In light of the malleability of the Equitable Distribution Law (Domestic Relations Law § 236[B], we conclude that the answer to this question cannot be reduced to any strict mathematical formula, but generally rests in the discretion of the trial court and will depend on the circumstances of each particular case.

The parties' primary financial asset consists of the marital home. The trial court found that this asset was originally purchased with a down payment of $105,000 (the remainder of the $155,000 purchase price having been financed). The trial court also found that each party contributed separate property to this $105,000 purchase price, but in different amounts: the plaintiff wife contributed $86,442.32 of her separate property (86.2% of the down payment) and the defendant husband contributed $10,378 ($13.8% of the down payment). The court fixed the current value of the marital residence at $285,000. These findings are supported by the weight of the evidence. The house was purchased in 1982, and the parties separated in 1984.

These facts set the stage for examination of the primary question brought up for review on appeal, that is, how should the proceeds of the sale of the marital residence be distributed? The plaintiff wife argues that pursuant to the terms of Domestic Relations Law § 236(B)(1)(d)(3), because her separate property (and one half of $8,179.88 in marital property) provided 86.2% of the down payment she should receive 86.2% of the proceeds of the sale. The defendant husband contends instead that upon the sale of the marital residence, each party should, after having received a dollar-for-dollar "credit" in the amount of their original contributions of separate property, receive 50% of the proceeds of the sale. Pursuant to this argument, each party would in effect receive 50% of the post-acquisition appreciation of this asset.

An example will serve to illustrate how the two different approaches taken by the parties in this case may often lead to markedly different results. Assume that after their marriage the parties had acquired real property (held in joint title) for $100,000. One spouse contributed $10,000 and the other $90,000 to the down payment. Assume further that at the commencement of a matrimonial action this property (originally worth $100,000) had appreciated to the point where it was worth $500,000. Under the plaintiff wife's approach, the distribution of the $500,000 would be made in accordance with the proportion of each party's contribution to the down payment, that is $50,000 (10%) to one spouse and $450,000 (90%) to the other. Under the defendant husband's approach, each party would be credited only with the actual amount of his or her initial contribution ($10,000 and $90,000, respectively) and the remaining $400,000 would be divided equally. Thus, under the husband's approach, the spouse who paid 90% of the original purchase price receives $290,000 and the spouse who paid $10,000 receives $210,000.

One could argue that the husband's position infringes upon the rule that the appreciation in the value of separate property remains separate property unless the appreciation is attributable to the direct or indirect efforts of the other spouse (see, Domestic Relations Law § 236[B][1][d][3]; Cappiello v. Cappiello, 66 N.Y.2d 107, 109, 495 N.Y.S.2d 318, 485 N.E.2d 983). His position is sustainable only if an asset acquired during a marriage in exchange for the separate property contributed by both parties, and held in joint title, is deemed to be a marital asset. The cases hold that such an asset is marital property, and it is upon these cases that the trial court relied (see, e.g., Vogel v. Vogel, 156 A.D.2d 671, 549 N.Y.S.2d 438; Nalbandian v. Nalbandian, 135 A.D.2d 621, 522 N.Y.S.2d 199; Lisetza v. Lisetza, 135 A.D.2d 20, 523 N.Y.S.2d 632; Monks v. Monks, 134 A.D.2d 334, 520 N.Y.S.2d 810; Coffey v. Coffey, 119 A.D.2d 620, 501 N.Y.S.2d 74; see also, Guarnier v. Guarnier, 155 A.D.2d 744, 745, 547 N.Y.S.2d 455 [holding that "credit" received for contribution of separate property should include interest on original contribution].

However, if rigorously applied, the husband's approach could lead to unjust results. For example, in a case where one spouse contributes $99,990 toward the acquisition of a $100,000 asset, and the other contributes only $10, and where that asset then doubles in value, the husband's approach would lead to a distribution of this asset ($149,990 to the larger contributor, $50,010 to the smaller contributor) in such a way as to permit one spouse to obtain a spectacular windfall to the detriment of the other. We, therefore, reject the rigorous application of this analysis as being inconsistent with the basic premises of the Equitable Distribution Law.

On the other hand, pursuant to the wife's approach, when both parties to a marriage contribute their separate property towards the acquisition of an asset during the course of a marriage, the asset would be regarded not as marital property, but rather as an amalgam of separate property, with each party's interest therein being proportionate to the amounts of their original contributions (see generally, Zuch v. Zuch, 117 A.D.2d 397, 503 N.Y.S.2d 343; Ackley v. Ackley, 100 A.D.2d 153, 472 N.Y.S.2d 804; Alwell v. Alwell, 98 A.D.2d 549, 471 N.Y.S.2d 899). Under this approach, an asset acquired during the course of a marriage would, in general, be distributed in accordance with the parties' "relative economic contributions" ( Kobylack v. Kobylack, 111 A.D.2d 221, 222, 489 N.Y.S.2d 257).

Given the flexibility of the Equitable Distribution Law, the characterization of property as separate or marital property is not necessarily determinative. In any case, both parties' approaches are legally flawed.

The husband's approach (divide the proceeds of the sale of the home equally, after having credited each party with the amount of their original contribution) runs contrary to the widely recognized principle that marital property need not always be distributed equally (see, e.g., Maloney v. Maloney, 137 A.D.2d 666, 524 N.Y.S.2d 758 [35% of value of husband's professional license awarded to wife]; Kawasaki v. Kasting, 124 A.D.2d 1034, 508 N.Y.S.2d 762 [distribution of 65% of marital assets to husband]; Kobylack v. Kobylack, supra [distribution of 72% of marital assets to husband]; see also, Moody v. Moody, 172 A.D.2d 730, 569 N.Y.S.2d 116). In other words, that the marital residence is marital property does not mandate that 50% of the appreciation in the value of that asset must be awarded to each spouse.

The wife's approach (divide the marital home in accordance with the parties' original contributions to the down payment, that is, 86.2% versus 13.8%) is equally flawed, because it runs contrary to the rule that the appreciation in separate property during the course of a marriage can itself be considered marital property to the extent that it is attributable to the efforts of the other spouse (Price v. Price, 69 N.Y.2d 8, 511 N.Y.S.2d 219, 503 N.E.2d 684; Fish v. Fish, 161 A.D.2d 979, 980, 557 N.Y.S.2d 549; Smith v. Smith, 154 A.D.2d 365...