In re Marriage of Green

• Court: Colorado Court of Appeals
• Writing for the Court: J
• Citation: In re Marriage of Green, 169 P.3d 202 (Colo. App. 2007)
• Decision Date: 05 April 2007
• Docket Number: 05CA2642
• Parties: In re the MARRIAGE OF Dorrance E. GREEN, Appellant, and Arlene M. Green, Appellee.

169 P.3d 202

In re the MARRIAGE OF Dorrance E. GREEN, Appellant, and Arlene M. Green, Appellee.

No. 05CA2642.

Colorado Court of Appeals, Div. V.

April 5, 2007.

Certiorari Granted October 9, 2007.

Harding & Associates, P.C., Phil Harding, April Armani, Denver, Colorado, for Appellant.

Bradley Devitt & Arp, P.C., Randall C. Arp, Golden, Colorado, for Appellee.

Opinion by Judge J. JONES.

In this dissolution of marriage proceeding, Dorrance E. Green (husband) appeals from the permanent orders regarding the division of marital property. We affirm.

I. Background

Before dissolving the twenty-three-year marriage of husband and Arlene M. Green (wife) in 2005, the district court received a series of reports from a special master retained to trace the parties' marital and separate assets. Based upon the special master's reports, the court determined that all the parties' assets were marital, and ordered that they be divided equally. Husband appeals from this ruling.

II. Discussion

A. Enforceability of Agreements Regarding Property

Husband contends that two agreements executed by the parties in 1981 and 1991 govern how their property should be divided, and that the district court erred in concluding that they are not enforceable agreements under the Colorado Marital Agreement Act, § 14-23-01, et seq., C.R.S.2006. We do not agree.

In August 1981, approximately five months before their marriage, the parties entered into a one-page agreement stating that it was their intention "to live together," to share all expenses and profits, and to purchase a specified residence together. In December 1991, shortly after wife first petitioned for dissolution of the marriage, husband and wife entered into a second agreement in which they reaffirmed the 1981 agreement and agreed that in the event of a marital breakdown, each party "shall leave the marriage with only what was contributed by them no more no less." Wife later stated in an affidavit that she had signed the 1991 agreement at husband's insistence, that it was signed in an effort to reconcile the marriage, and that after signing the agreement she had learned that the representations that husband had made concerning his net worth were substantially incomplete.

In December 2002, the district court heard the testimony of both husband and wife regarding these agreements. Applying the law in effect at the time the parties entered into each of the agreements, the court determined that the 1981 agreement was not an enforceable premarital agreement because the parties were not contemplating marriage when they entered into it, and the 1991 agreement was not an enforceable marital agreement because it was signed after wife petitioned for dissolution of the marriage and because the parties were not on an equal emotional or economic footing when they entered into the agreement.

The court correctly applied the law, and, because a transcript of the December 2002 hearing on this matter is not included in the record submitted to this court, we must assume that its findings are supported by the record. See In re Marriage of Tessmer, 903 P.2d 1194, 1197 (Colo.App.1995) (where the record is incomplete, the appellate court must presume the record supports the trial court's ruling). Accordingly, we will not disturb the district court's ruling on this issue.

B. Determination of Marital Assets

Husband contends that the district court erred in determining that his veteran's disability and Social Security disability benefits paid during the marriage were marital assets and in dividing them as marital assets. We do not agree that the court treated husband's disability benefits as marital assets. Rather, the court determined that the income husband received during the marriage that was derived from his disability benefits became a marital asset when it was commingled with marital funds. We agree with that conclusion.

Income produced by separate assets during the marriage is presumed to be marital property. In re Marriage of Foottit, 903 P.2d 1209, 1212 (Colo.App.1995). In addition where a spouse's premarital property has been commingled with marital property so that it is not possible to trace existing property to the spouse's separate property, the premarital property does not retain its separate character. In re Marriage of Goldin, 923 P.2d 376, 381-82 (Colo.App.1996).

Notwithstanding these principles, husband argues that 38 U.S.C. § 5301(a)(1), (a)(3)(A), applicable to military disability benefits, and 42 U.S.C. § 407, applicable to Social Security disability benefits, require that the district court's property division be reversed. Both provisions state, using similar language, that disability benefit payments are not subject to attachment, levy, seizure, or other legal processes. Husband reads these provisions too broadly.

These provisions preclude treating the disability payments themselves as marital property. See Mansell v. Mansell, 490 U.S. 581, 109 S.Ct. 2023, 104 L.Ed.2d 675 (1989); In re Marriage of Warkocz, 141 P.3d 926, 929 (Colo.App.2006); In re Marriage of Franz, 831 P.2d 917, 918 (Colo.App.1992). In Carrier v. Bryant, 306 U.S. 545, 59 S.Ct. 707, 83 L.Ed. 976 (1939), however, the Supreme Court held that veterans' disability payments lost their exempt character under a predecessor statute to 38 U.S.C. § 5301(a) when they were used to purchase notes and bonds held as investments. Further, in Porter v. Aetna Casualty & Surety Co., 370 U.S. 159, 82 S.Ct. 1231, 8 L.Ed.2d 407 (1962), the Court construed a predecessor statute to § 5301(a) as exempting veterans' disability benefits from attachment only if "the benefit funds . . . are readily available as needed for support and maintenance, actually retain the qualities of moneys, and have not been converted into permanent investments." Porter, supra, 370 U.S. at 162, 82 S.Ct. at 1233.

Applying Carrier and Porter, courts in other states have determined that income derived from disability benefits belonging solely to one spouse becomes marital property if commingled with marital assets. See, e.g., In re Marriage of Hapaniewski, 107 Ill.App.3d 848, 63 Ill.Dec. 535, 438 N.E.2d 466, 471 (1982) (nonmarital disability benefit payments applied to mortgage on marital property were transmuted into marital property because they were commingled with marital assets); Bischoff v. Bischoff, 987 S.W.2d 798, 799-800 (Ky.Ct.App.1998) (same); In re Marriage of Box, 968 S.W.2d 161, 166-68 (Mo.Ct.App.1998) (Social Security benefits and nonmarital pension benefits received during marriage and commingled with marital income are presumed to be marital property even though the source of the income remains nonmarital); Gray v. Gray, 922 P.2d 615, 619 (Okla.1996) (items of personal property that were purchased with disability benefits were marital property); Pfeil v. Pfeil, 115 Wis.2d 502, 341 N.W.2d 699, 702-03 (Ct. App.1983) (real property purchased with disability benefits was marital property). We agree with these decisions.

Here, the special master determined that "significantly all of the assets of the parties" were commingled early in the marriage, and that husband's contention that his Social Security income was...