Dorbin v. Dorbin

• Decision Date: 12 November 1986
• Docket Number: No. 8438,8438
• Citation: 105 N.M. 263,1986 NMCA 114,731 P.2d 959
• Parties: Jerry DORBIN, Petitioner-Appellee, v. Janette B. DORBIN, a/k/a Janet Dorbin, Respondent-Appellant.
• Court: Court of Appeals of New Mexico

Page 959

731 P.2d 959

105 N.M. 263

Jerry DORBIN, Petitioner-Appellee, v. Janette B. DORBIN, a/k/a Janet Dorbin Respondent-Appellant.

No. 8438.

Court of Appeals of New Mexico.

Nov. 12, 1986.

[105 NM 263] Saul Cohen, Sutin, Thayer & Browne, Santa Fe, for petitioner-appellee.

Randolph B. Felker, Felker & Ish, P.A., Santa Fe, for respondent-appellant.

OPINION

ANNE KASS, District Court Judge.

These parties were married on July 3, 1976. It was a second marriage for both. It was a rather stormy marriage. They separated for the third and last time and filed for divorce in October 1981.

A trial setting for November 1982 was vacated at husband's request. In December 1983, a stipulated partial decree was entered in which the divorce was granted and the court retained jurisdiction to resolve money issues. The parties also then stipulated to try the case to a special master, Fletcher Catron. Trial was held on December 22, 1983. On April 4, 1984, the special master filed his report, findings of fact and conclusions of law. On December 6, 1984, the special master filed a revised report. On December 19, 1984, wife objected to the special master's report. On March 4, 1985, the Honorable Art Encinias, District Judge, filed a final decree adopting the special master's report, findings of fact and conclusions of law. Notice of appeal was timely filed by wife.

The issues wife raises are:

1. Whether it was error to allow the community to recover both principal paydown and the amount of interest paid during the marriage, which benefited the wife's sole and separate residence. It was error.

2. Whether the court abused its discretion when it denied wife alimony. It did not.

The trial court is reversed as to the first issue and affirmed as to the second issue.

I. It was error to reimburse to the community both $3,000, being the principal paydown, and $24,148, being the amount of interest paid during the marriage which benefited the wife's sole and separate residence.

The parties were married on July 3, 1976. In October 1978, wife purchased a townhouse. The purchase price was $69,000. The cash down payment of $10,000 came from wife's sole and separate money. The balance of $59,000 was financed by way of a real estate contract. Title was taken in wife's name alone, as her sole and separate property, with husband's knowledge and consent. Wife's unrebutted and unchallenged testimony was that she bought the townhouse as an investment. The plan was that when husband received his share of the house sale proceeds from his prior marital residence, wife would sell the townhouse. Wife would contribute her townhouse sale proceeds and husband would contribute his house sale proceeds, and together they would purchase their own marital residence.

Husband received his sale proceeds of $90,000 after the October 1981, separation, and wife received no benefit therefrom.

From the date of marriage until November 1978, the parties lived in a rental property. Their rent payments were $450 monthly. Apparently, in November 1978, they moved into wife's newly-acquired townhouse, where they lived together until sometime shortly before October 1981, when this divorce action was filed. Between the date of separation and the date of trial, it seems wife alone lived in the townhouse and wife alone paid the monthly payments for the townhouse for those twenty-seven months.

The record shows that during the marriage the parties had monies available from the following sources:

Husband's wages as a stockbroker of approximately $25,000 annually; husband's separate trust income of approximately $6,800 annually; wife's alimony of $400 monthly for one year; wife's child support of $350 monthly; and wife's earnings, which are impossible to determine from the record.

During the marriage, the record shows that the parties each kept his/her own bank account into which each deposited his/her own monies. Wife apparently paid for the parties' day-to-day living expenses from her account. Husband contributed monies to wife's account as follows:

                1976  $200/mo.  $  600
                1977  $200/mo.  $2,400
                1978  $200/mo.  $2,400
                1979     ?      $3,950
                1980     ?      $4,440
                1981     ?      $6,433
                1982   --0--     --0--
                1983   --0--     --0--
                

After the townhouse was purchased, wife paid the monthly payment of $438 out of her own account. How the parties paid the $450 monthly payment for the rental property in which they lived before the townhouse was purchased is not specifically revealed in the record. However, given that both parties agreed that until 1979, husband contributed only about $200 monthly toward the community expenses paid by wife from her account, one must assume husband paid that rent, in addition to the $200 per month he paid to wife.

At the time of trial, the value of the townhouse was $100,000. The balance of the real estate contract owed thereon was about $56,000, leaving an equity (without considering costs of sale) of $44,000.

                                           TOWNHOUSE EQUITY
                                                 $   10,000  Wife's cash down payment
                                                             plus
                Cash Equity          $   13,000
                                                 $    3,000  Principal paydown on R.E
                                                             contract (from purchase
                                                             date to divorce date)
                PLUS
                Appreciation Equity  $   31,000
                                     ----------
                EQUALS
                Total Equity         $   44,000
                

The special master held that sixty-two months elapsed from the date the townhouse was purchased until date of divorce, thus, at $438 per month, $27,156 community dollars were spent on the townhouse during those sixty-two months. Of the $27,156, $3,000 was principal paydown and $24,156 was interest. The monthly payment did not cover taxes or insurance which were paid separately, the amounts of which are not revealed in the record.

As stated above, during the last twenty-seven months of the sixty-two months during which payments for the townhouse were being paid, the undisputed evidence is that husband contributed nothing towards those twenty-seven payments. The community existed as a matter of law until the divorce decree was entered in December 1983; however, it appears that as a matter of reality, the parties behaved as though there were no longer a marriage or a community as of the date of separation in that husband kept and spent all of his $20,500 1982 wages and all of his $21,000 1983 wages, as well as his $6,800 trust income during each of those years of separation without contributing anything toward wife's living expenses or toward the townhouse payments. Wife, too, kept all of her own 1982 and 1983 wages, the amounts of which are unknown. At the time of trial, she was earning wages of $400 per month; and she was still receiving the child support of $350 per month.

There are two concepts that should be considered here: (1) apportionment; and (2) reimbursement.

Apportionment is the principle courts apply when an asset is acquired during marriage using both separate and community monies. At divorce, the asset is apportioned between separate and community interests in a manner which achieves substantial justice.

New Mexico case law has long recognized the principle of apportionment. In Laughlin v. Laughlin, 49 N.M. 20, 155 P.2d 1010 (1944), the court addressed the issue of whether crops grown on farmland, which was separate property, are all separate property as well because the law says that "rents, issue and profits" of separate property are separate. In Laughlin, the court concluded that the act of raising crops required the investment of time, labor, management and skills, and that the portion of the crops attributable to such time, labor, management and skills is community property. Thus, profits and increased values were to be apportioned between separate and community interests.

In Michelson v. Michelson, 89 N.M. 282, 551 P.2d 638 (1976), the court apportioned the equity in husband's sole and separate residence between the parties. The facts were as follows:

                (a)  House value at time of trial   $100,000
                (b)  The mortgage balance at trial    53,560
                (c)  Husband had purchased the
                      land on which the house
                      was built before marriage       14,000
                                                    --------
                     Equity                         $ 32,000
                

Monies were spent to improve the property during the marriage, and both parties had spent a good deal of time and effort in decorating, designing, furnishing and landscaping the home.

The court decided that half of the $32,440 equity was attributable to natural appreciation, and the other half ($16,220) represented the community's interest. A very similar result occurred in Hertz v. Hertz, 99 N.M. 320, 657 P.2d 1169 (1983).

Portillo v. Shappie, 97 N.M. 59, 636 P.2d 878 (1981), involved a residence which was the separate property of wife. When the parties married, the structure was a four-hundred-square-foot, two-room, adobe building without electricity or running water. During the parties' twenty-six year marriage, husband used community monies and his own labor to double its size, and to add plumbing and electricity. The wife died, and the husband sought an interest in the residence. Wife's children resisted. The evidence showed that had no improvements been made, the property would have been worth $8,500 at the time the wife died. As improved, it was worth $33,400. Husband had kept few or no records or receipts as to the cost of the improvements. The trial court awarded husband a $2,800 lien on the house, being reimbursement for community monies and labor spent to improve the house. This court affirmed the trial court's decision. The New Mexico Supreme Court reversed, holding that husband was entitled to one-half of the enhanced value, being the difference between the present value of the house with the improvements, and the present value of the house without...