In re Estate of Borghi
| Decision Date | 05 November 2009 |
| Docket Number | No. 80925-9.,80925-9. |
| Citation | 219 P.3d 932,167 Wn.2d 480 |
| Court | Washington Supreme Court |
| Parties | In the Matter of the ESTATE Of Jeanette L. BORGHI, Deceased. Bobby G. Borghi, Personal Representative of the Estate of Jeanette L. Borghi, Appellant, v. Arthur R. Gilroy, Respondent. |
Catherine Wright Smith, Valerie A. Villacin, Edwards Sieh Smith & Goodfriend PS, Sheila Conlon Ridgway, Ridgway and Gafken PS, Seattle, WA, for Appellant.
Robert Kendall Ricketts, Attorney at Law, Tacoma, WA, Paulette Elaine Peterson, Law Offices of Paulette Peterson, PLLC, Bainbridge Island, WA, for Respondent.
¶ 1 This case concerns a dispute between the estate of Jeanette L. Borghi (Estate) and her son, Arthur Gilroy, over the characterization of real property acquired by Jeanette Borghi prior to her marriage to Robert1 Borghi and subsequently titled in both Robert and Jeanette Borghi's names. At the center of this dispute are apparently conflicting presumptions-on the one hand, the well-established presumption that property acquired by a person before marriage is her separate property and, on the other hand, what has been described as a "joint title gift presumption" arising from a change in title to include both spouses' names. See In re Marriage of Hurd, 69 Wash.App. 38, 848 P.2d 185 (1993); Laura W. Morgan & Edward S. Snyder, When Title Matters: Transmutation and the Joint Title Gift Presumption, 18 J. Am. Acad. Matrimonial Law, 335 (2003). The Court of Appeals concluded it could not reconcile these presumptions. Though persuaded by the reasoning of Hurd to find that the property in question should be characterized as the Borghis' community property, it held to the contrary, based on our decision in In re Estate of Deschamps, 77 Wash. 514, 137 P. 1009 (1914). We affirm the Court of Appeals and take this opportunity to expressly reject the erroneous joint title gift presumption suggested by language in Hurd as well as In re Marriage of Olivares, 69 Wash.App. 324, 848 P.2d 1281 (1993).
¶ 2 Jeanette L. Borghi purchased a parcel of real property in 1966, subject to a real estate contract. The record contains no evidence concerning the terms of or payments under the contract. On March 29, 1975, Jeanette and Robert Borghi married. On July 12 of that year, Cedarview Development Company (Cedarview) executed a special warranty deed to "Robert G. & Jeanette L. Borghi, husband and wife." Clerk's Papers at 80. The deed states that it is in fulfillment of the real estate contract.
¶ 3 The Borghis resided on the property from 1975 until 1990. In August 1979, they used the property to secure a mortgage to purchase a mobile home to locate on the property. The 1975 deed was recorded on August 13, 1979.
¶ 4 Jeanette Borghi died intestate on June 25, 2005. Her surviving heirs were Robert Borghi and Arthur Gilroy, her son from a previous marriage. Robert Borghi was appointed personal representative of Jeanette Borghi's estate and filed a petition for declaratory judgment on behalf of the Estate to determine rights in the real property.2 The superior court commissioner determined that the property was the community property of Robert and Jeanette Borghi, and passed to Robert Borghi under the laws of intestate succession. Arthur Gilroy moved for revision of this decision, which the superior court denied. He then appealed, arguing that the property was Jeanette Borghi's separate property at the time of her death, entitling him to a one-half interest.
¶ 5 The Court of Appeals reversed the superior court and "reluctantly conclude[d] that the property was Jeanette Borghi's separate property." In re Estate of Borghi, 141 Wash.App. 294, 304, 169 P.3d 847 (2007). We granted the Estate's petition for review at 163 Wash.2d 1052, 187 P.3d 751 (2008).
¶ 6 The question in this case is whether the real property acquired by Jeanette Borghi prior to her marriage to Robert Borghi changed in character from her separate property to community property by the time of her death. More specifically, we must decide whether the inclusion of Robert Borghi's name on the June 12, 1975 deed created a presumption that the property had transmuted from separate to community property, or if not, whether there is sufficient evidence to overcome the underlying separate property presumption and establish an intent to change the character of the property from separate to community property.
¶ 7 We begin with basic principles of Washington community property law. First, presumptions play a significant role in determining the character of property as separate or community property. 19 KENNETH W. WEBER, WASHINGTON PRACTICE: FAMILY AND COMMUNITY PROPERTY LAW § 10.1, at 133 (1997) (). The presumptions are true presumptions, and in the absence of evidence sufficient to rebut an applicable presumption, the court must determine the character of property according to the weight of the presumption. Id.
¶ 8 Second, the character of property as separate or community property is determined at the date of acquisition. Harry M. Cross, The Community Property Law, 61 Wash. L.Rev. 13, 39 (1986). Under the "inception of title" theory, property acquired subject to a real estate contract or mortgage is acquired when the obligation is undertaken. Id.; see also In re Estate of Binge, 5 Wash.2d 446, 105 P.2d 689 (1940); Beam v. Beam, 18 Wash.App. 444, 453, 569 P.2d 719 (1977). Here, the parties agree that the real property in question was Jeanette Borghi's separate property at the time she married Robert Borghi.3 Once the separate character of property is established, a presumption arises that it remained separate property in the absence of sufficient evidence to show an intent to transmute the property from separate to community property. 19 Weber, supra, at 134. As we stated in Guye v. Guye, 63 Wash. 340, 115 P. 731 (1911):
Moreover, the right of the spouses in their separate property is as sacred as is the right in their community property, and when it is once made to appear that property was once of a separate character, it will be presumed that it maintains that character until some direct and positive evidence to the contrary is made to appear.
Id. at 352, 115 P. 731.4 Significantly, the evidence must show the intent of the spouse owning the separate property to change its character from separate to community property. Id. at 349, 115 P. 731 (). Where, as here, real property is at issue, an acknowledged writing is generally required. Cross, supra, at 102 & n. 485; see also Volz v. Zang, 113 Wash. 378, 383, 194 P. 409 (1920). While this could be accomplished through a quit claim deed or other real property transfer, a properly executed community property agreement may also effectuate a transfer of real property. See In re Estate of Verbeek, 2 Wash.App. 144, 467 P.2d 178 (1970).
¶ 9 The Estate argues that clear and convincing evidence of a transfer of Jeanette Borghi's separate property to community property exists based on the inclusion of Robert Borghi's name on the deed to the property subsequent to the marriage. The Estate relies on Hurd to argue that placing Robert Borghi's name on the title gives rise to a rebuttable presumption of a gift of Jeanette Borghi's separate property to the community. The Court of Appeals found this logic compelling but inconsistent with our precedent in Deschamps, a case not cited by either party below. Relying on Deschamps, the Court of Appeals rejected the Estate's argument and held the property in question was Jeanette Borghi's separate property.
¶ 10 The Court of Appeals' conclusion was correct, but its discussion of Deschamps and Hurd highlights a misunderstanding of the applicable presumption and underscores the confusion created by the Hurd opinion.5 The authors of Washington Practice have described Hurd as "most unfortunate" and encouraged us to disapprove its reasoning. 19 WEBER, supra, § 10.7 n. 4, at 142; 19 SCOTT J. HORENSTEIN ET AL., WASHINGTON PRACTICE: FAMILY AND COMMUNITY PROPERTY LAW § 10.7 n. 4, at 46 (1997 Supp.2008-09) (citing Borghi and Deschamps). National commentators have also criticized the sort of joint title gift presumption that the Court of Appeals in Hurd and Olivares adopted. Morgan & Snyder, supra, at 348 (citing Hurd). We take this opportunity to clarify the applicable community property principles and disapprove any reading of Hurd and Olivares that suggests a gift presumption arising when title to property is changed from the name of a single spouse to both spouses.
¶ 11 Preliminarily, some of the confusion in this area may be due to an unnecessarily broad reading of Hurd. In Hurd, the Court of Appeals initially articulated the proper community property presumption because the property in question was acquired during marriage. Thus, unlike in this case, the burden was on the party asserting separate property to overcome a presumption in favor of community property. Hurd, 69 Wash. App. at 50, 848 P.2d 185 (citing Estate of Madsen v. Comm'r of Internal Revenue, 97 Wash.2d 792, 796, 650 P.2d 196 (1982)). Importantly, the court in Hurd never held that the name on the deed itself supported the (already existing) community property presumption or even provided any evidence of the character of the property. Instead, the focus was on Mr. Hurd's intent, i.e., did he intend a gift to the community when he added Mrs. Hurd to the title "`for love and consideration.'" Id. at 42, 848 P.2d 185. Had the change in title alone given rise to an evidentiary presumption, then it would not have been necessary for the court to resolve the case as it did, by remanding to the trial...
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