Larman v. Larman, 89141.

• Decision Date: 19 October 1999
• Docket Number: No. 89141.,89141.
• Parties: Leslie C. LARMAN, Plaintiff/Appellant, v. Frankie L. LARMAN, Defendant/Appellee.
• Court: Oklahoma Supreme Court

991 P.2d 536

1999 OK 83

Leslie C. LARMAN, Plaintiff/Appellant, v. Frankie L. LARMAN, Defendant/Appellee.

No. 89141.

Supreme Court of Oklahoma.

October 19, 1999.

As Corrected October 28, 1999.

James E. Pence, Pence and Housley, Norman, Oklahoma, for the appellant.

Peggy Stockwell, Dave Stockwell, Stockwell Law Offices, Norman, Oklahoma, for the appellee.¹

OPALA, J.

¶ 1 The dispositive issue tendered for corrective relief on certiorari is whether there was error in declaring two tracts of property inherited by the wife as marital assets. We answer in the affirmative.

I THE ANATOMY OF LITIGATION

¶ 2 Leslie [wife] and Frankie [husband] Larman were married in 1983. In 1989 they moved into a rental home [Churchill] owned by the wife's mother and took over the payment of $450.00 monthly mortgage installments. Using their joint funds, the husband and the wife expended approximately $3,600 for certain Churchill improvements. They remained at Churchill until the death of the wife's mother in 1993. The wife inherited Churchill together with her mother's residence [Luglena] and $100,000 in liquid assets. Shortly after the mother's death, the wife bought (with inherited funds) a tract of land adjoining Luglena. Without any direction from the wife, the sellers conveyed the lot to the wife and husband as joint tenants.

¶ 3 Six months after the mother's death, the wife and husband moved from Churchill to Luglena, using spousal funds to make the mortgage payments on the latter property. At this point the wife began making the Churchill mortgage payments out of inherited funds. Not long after the family moved to Luglena, the wife refinanced the existing mortgages on Churchill and Luglena to secure a lower interest rate and monthly payment. In order to obtain refinancing, she had to place title to the properties in the names of both spouses as joint tenants. The refinancing cost (approximately $7,000) was paid out of the wife's separate funds.

¶ 4 The husband and wife separated after they took up residence at Luglena. He moved to Churchill and took over the mortgage payments there while she remained at Luglena. The wife filed for divorce and the marital bond was dissolved in 1996. By the terms of the decree the spousal property² came to be divided, custody of their minor children was awarded to the wife, and the husband's child support obligation set. According to the decree's terms (1) Luglena and the adjoining lot were set aside to the wife as her separate property and (2) Churchill was declared as spousal property. The marital property set aside to the husband consists of (1) Churchill (equity of $29,500); (2) his retirement (assigned the value of $12,000); (3) 1992 Toyota (net value of $5,500), (4) a golf cart (value of $250), (5) a four-wheel vehicle (value of $2,000) and (6) miscellaneous personal property divided by agreement of the parties. Awarded to the wife as her spousal property was (1) the 1995 Ford Explorer (net value of $2,500) and (2) miscellaneous personal property. The decree also awarded her support alimony of $6,000 (payable $100 monthly) in lieu of an interest in the husband's retirement. Each spouse was directed to hold the other harmless from any indebtedness on the real property set aside to him/her. The wife appealed for review of the property-division award. She urged error in the trial court's (a) award of Churchill to the husband, (b) failure to award her an equal quantum of the husband's retirement plan, which was then valued at $11,666, and (c) unequal distribution of the equities in other spousal properties. The husband counter-appealed to challenge the trial court's declaration that Luglena and the adjoining lot constituted the wife's separate property.

¶ 5 The Court of Civil Appeals [COCA] reversed in part the property-division award, holding that spousal property consists of both Churchill and Luglena³ and that the wife was entitled to a one-half interest in the husband's retirement benefits as well as a monetary award of $1,380.⁴ On certiorari, the wife claims error only in COCA's inclusion of Churchill and Luglena in the spousal property category.

¶ 6 On certiorari granted upon the wife's petition, COCA's opinion is vacated; the trial court's property-division award is affirmed as modified;⁵ and the cause is remanded for further proceedings to be consistent with today's pronouncement.

II THE WIFE'S PRESUMPTIVE INTERSPOUSAL GIFT OF HER SEPARATE PROPERTY TO THE HUSBAND IS REBUTTED BY CLEAR AND CONVINCING PROOF THAT THE DEEDS BY WHICH HE WAS INCLUDED AS A JOINT TENANT-GRANTEE WERE NOT INTENDED AS A GIFT OF THE WIFE'S INTEREST IN THE LANDS

¶ 7 The wife argues that COCA erred in holding that all her inherited real estate was spousal property. According to the wife, the presumption of joint ownership was clearly rebutted by evidence that title to Churchill and Luglena was placed in the husband's name (as joint tenant with the wife) solely for economic reasons, not for the purpose of effecting a gift. The husband counters that the law presumes an interspousal gift when the wife transfers title of her property to the husband as a joint tenant.

¶ 8 Gifts of realty are governed by the principles of personal property law.⁶ An essential element of a gift is the donor's intent gratuitously to pass the title to donee.⁷ A transfer by one spouse of separate property to another does not by itself erase the separate character of the asset (or the real property transferred). The original ownership regime must be respected unless there is proof of an interspousal gift.

¶ 9 Oklahoma's extant jurisprudence allows a rebuttable presumption of a gift where title to separately held real estate is placed by one owner-spouse in both spouses' names as joint tenants.⁸ If a joint tenancy deed facially effects an unconditional transfer, it is deemed to be a presumptive interspousal gift, whose effect can be overcome by clear and convincing evidence of a contrary intent.⁹

¶ 10 Where, as here, the record shows that title was passed without intent to invest the spousal grantee with an interest in the property, but rather for a purpose that is clearly collateral to any intended change in the existing ownership regime, the conveying marital partner will not be deemed to have made an unconditional, presently effective interspousal gift of separate property.¹⁰ The burden would then shift to the donee (grantee) spouse to prove the factum of a gift in praesenti.¹¹

The Luglena and Churchill Properties

¶ 11 The wife argues she did not intend to make a gift to the husband of a joint interest in her separate real property (in Churchill and Luglena), which she had inherited from her mother. According to the wife, she included the husband's name upon the deeds as a joint tenant for the sole purpose of refinancing the mortgage loans on both properties in an effort to secure a lower interest rate and reduced monthly payments.¹² The husband benefitted financially by the refinancing process, the wife urges, because joint funds were used to pay current household bills (including the Luglena mortgage).

¶ 12 After the family moved from Churchill to Luglena, the wife contacted the bank about refinancing the existing loans at a lower interest rate. She was then paying the Churchill mortgage with her separate funds and the Luglena mortgage with joint funds. According to the bank lending officer, the Federal National Mortgage Association (Fannie Mae)¹³ requires that title to property stand in the name of all individual borrowers if there be more than one in number. The officer advised the wife that the loans could not be made if title to both properties remained solely in her name. The lending institution prepared the deeds and mortgages, which were then signed by both spouses. By the deeds title was conveyed to them in the Luglena and Churchill properties as joint tenants.

¶ 13 Before placing title to Luglena and Churchill in the joint tenancy of the spouses, the wife talked to the lawyer for her mother's estate. The latter advised her against taking this action. According to the wife, she did not understand the legal consequences of changing the ownership regime by transferring title to her and her husband as joint tenants in the land.

¶ 14 The husband confirmed by his testimony that the wife did not tell him she was making to him a gift of her inherited real estate. He was not aware that the property was in joint tenancy or that he even had a "claim of ownership" in it until after his wife had commenced the divorce action. The husband first learned that he was listed on the three deeds as a joint tenant when, at the suggestion of counsel, he obtained a copy of the documents.

¶ 15 In short, where, as here, the "owning spouse" is unable to refinance mortgaged property because the lender requires that, in order to qualify for a loan, both spouses be record owners and sign the loan-related documents, the presumption of a gift (arising from a joint-tenancy ownership regime) is overcome.

¶ 16 We hence hold that on this record, absent any contrary proof, the transfer to the husband by a joint tenancy deed clearly was not intended to constitute a gift in praesenti — a presently effective, unconditional interspousal gift to the husband.

III THE RECORD IS INSUFFICIENT FOR THIS COURT'S FINAL DIVISION OF THE MARITAL ESTATE

¶ 17 Divorce suits are of equitable cognizance. A trial court has discretionary power equitably to divide the marital estate.¹⁴ The reviewing court will not disturb the division absent an abused discretion¹⁵ or a finding that the nisi prius decision is clearly contrary to the weight of the evidence.¹⁶ Oklahoma's statutory law mandates a fair and equitable division of spousal property.¹⁷ The enhancement in value of one spouse's separate estate, when attributable to personal efforts of labor by either spouse, constitutes spousal property that is subject to division (frequently effected by an award of...