Lawrence v. Lawrence

• Decision Date: 07 August 1990
• Docket Number: No. 8917DC1119,8917DC1119
• Citation: 100 N.C.App. 1,394 S.E.2d 267
• Court: North Carolina Court of Appeals
• Parties: Mary Mills LAWRENCE v. Kermit W. LAWRENCE, Jr.

Page 267

394 S.E.2d 267

100 N.C.App. 1

Mary Mills LAWRENCE v. Kermit W. LAWRENCE, Jr.

No. 8917DC1119.

Court of Appeals of North Carolina.

Aug. 7, 1990.

Davis & Harwell by Fred R. Harwell, Jr., Winston-Salem, for plaintiff-appellant.

Franklin Smith, Elkin, for defendant-appellee.

EAGLES, Judge.

Plaintiff argues that the trial court erred in a number of respects. First, plaintiff argues that the trial court's classification of certain property as the husband's separate property was error. Second, plaintiff asserts that the trial court erred in placing certain funds in trust for the parties' children and appointing the parties trustees. Additionally, plaintiff asserts that the trial court erred in finding that she converted marital property to her own use during the marriage and in considering that alleged conversion as a distributional factor. Finally, plaintiff argues that the trial court erred in failing to classify and distribute certain bank accounts held by the parties on the date of separation. For the reasons stated below, the order of the trial court is affirmed in part, reversed in part and remanded.

I. Classification of Property.

The first step in the equitable distribution process is the classification of the parties' property as marital property or separate property. G.S. 50-20(a). Plaintiff first argues that the trial court erred and abused its discretion in classifying portions of four parcels of real property and an interest in an investment trust as defendant's separate property. We agree in part and find that the trial court erred in its classification of the 8.6 acres in Mount Airy, the Mitchell County property, the 56.6 acres in Surry County and the Eads/Highway 601 property as separate property. However, we overrule plaintiff's assignment of error regarding the classification of 61.8% of the investment trust as separate property.

A. Industrial Park; 8.6 acres in Mount Airy.

Plaintiff excepts to the following portion of finding of fact number 5:

That on August 13, 1969, the Defendant withdrew from Workmen's Federal Savings and Loan the sum of $5,000.00 and used this said money to purchase the remaining one-half undivided interest in the 8.6 acres that he received by will from his grandmother's estate from his Uncle Claude Lawrence. That in addition to the one-half undivided interest in the 8.6 acres the Defendant received from his grandmother's estate $1,200.00 in cash. The evidence showed by way of final accounting that this property was distributed to the Defendant on October 1, 1965. This money was deposited in the Defendant's own savings account in the United Savings and Loan in Mount Airy, North Carolina. That the evidence further showed that the Defendant maintained the 8.6 acres as his own separate property and that he sold the tobacco poundage off this tract of land to an individual by the name of Guy Coe for the amount of $1,194.00.

The trial court concluded that this 8.6 acre tract is defendant's separate property, apparently based on a source of funds rationale, and "[t]hat the evidence is clear, cogent and convincing that the Defendant never intended to make a gift of any portion of this property to the Plaintiff[.]"

Plaintiff argues that the trial court erred in determining that the 8.6 acre tract is defendant's separate property since the deed for this land names "Kermit W. Lawrence, Jr., and wife, Mary M. Lawrence" as the grantees. Plaintiff relies on G.S. 39-13.6(b) in arguing that a deed naming a man and wife as grantees vests title in the two as tenants by the entireties. Plaintiff's reliance is misplaced in this instance. G.S. 39-13.6 did not become effective until 1983, while the deed in question was executed on 13 August 1969. The common law rule governs this deed transfer. In general at common law a conveyance to husband and wife creates an estate by the entirety. However, where tenants in common partition a joint estate and convey a portion of the land to a cotenant of the tenancy in common and his or her spouse (who was not a cotenant), no estate by the entirety is created and the spouse does not acquire any title. See Smith v. Smith, 248 N.C. 194, 198-99, 102 S.E.2d 868, 871 (1958).

The deed conveying the 8.6 acres to plaintiff and defendant provides that the grantors, acting as tenants in common, agreed that 8.6 acres of the grantors' lands were Claude H. Lawrence and defendant's "fair part of the real property devised to the [grantors and grantees]." Thereafter, the deed recites that Claude H. Lawrence "desires to sell his part of the [8.6 acres] to Kermit W. Lawrence, Jr." Our reading of the deed leads us to the conclusion that defendant received one one-half interest in the 8.6 acres by a partition deed between tenants in common. Therefore, the deed did not create a tenancy by the entirety in the first one-half interest in the 8.6 acres. However, the second one-half interest received from Claude H. Lawrence was not conveyed by partition deed between tenants in common. The deed unambiguously states that Claude H. Lawrence conveyed his one-half interest in the 8.6 acres to defendant. Because plaintiff and defendant, as husband and wife, were both named grantees in this conveyance, the second one-half interest in the 8.6 acres is held by them as tenants by the entirety. Defendant bears the burden of showing by clear, cogent and convincing evidence that no gift to the marital estate was intended at the time of the conveyance. Defendant's only evidence regarding the 8.6 acres, other than the deed itself, was his testimony that he spent inherited, separate funds to purchase and improve the property and that he sold the tobacco allotment on the property. We remand for a determination of whether there is clear, cogent and convincing evidence, sufficient to rebut the gift presumption.

Parenthetically, we note that defendant relies on G.S. 39-13.5 to argue that because the deed did not contain the required statement of intent, it could not create a tenancy by the entirety. Defendant's reliance is also misplaced. G.S. 39-13.5 became effective 1 October 1969 while the deed here was executed on 13 August 1969.

B. Mitchell County Property.

Plaintiff excepts to finding of fact number 6 which states:

That the Defendant used portions of money from his own savings account which had been willed, devised and bequeathed to him by his father and grandmother to purchase his aunt Georgia Buchanan's one-sixth undivided interest in the 36 acre tract in Mitchell County, North Carolina on December 18, 1970. The purchase price was withdrawn from the Workmen's Federal Savings and Loan account in the amount of $600.00. He also purchase[d] another one-sixth undivided interest in the same tract from his aunt Betty Morgan; that he withdrew the purchase price of $600.00 from his own savings account at the Northwestern Bank in Dobson, North Carolina (originally the Surry County Loan and Trust Company). That he also purchased from his aunt Jessie McKinney a one-sixth undivided interest in the same tract in Mitchell County in the amount of $600.00. That the money was withdrawn from his own savings account at the Northwestern Bank in Dobson, North Carolina. That the Defendant later traded his four-sixths undivided interest in the 36 acre tract of land in Penland, Mitchell County, North Carolina to his Aunt Betty Morgan for a 24 acre tract located on Conley Ridge Road, Penland, Mitchell County, North Carolina. This transaction was August 14, 1981, exhibit 10(a) and 10(b) of Defendant's Exhibit 23 introduced into evidence at the trial. That the defendant also traded his one-sixth undivided interest in the 1.5 acres deeded to him by his father on the 10th day of October, 1971 to his aunt Betty Morgan in Mitchell County, North Carolina for a 2.14 acre tract located and situated on Conley Ridge Road in Penland, Mitchell County, North Carolina and adjoining the 24 acre tract that he acquired from his aunt Betty Morgan. That the Defendant retains approximately 13% undivided interest in the remaining 1.5 acre where the house is located and situated thereon. This house is presently occupied by the Defendant's aunt Betty Morgan. That even though some of these deeds were received by the Defendant with the Plaintiff's name thereon as tenants by the entirety that no monies were ever spent to acquire any of the tracts of property in Mitchell County in the names of the parties except the monies that the Defendant received by will from his father and his grandmother. This property is ancestral property and has been in the Defendant's maternal ancestry for over 100 years. The Court further finds that when the Plaintiff took an appraiser to these tracts of land for an appraisal to be made in Mitchell County to testify in this cause, the Plaintiff did not know where the 24 acres or the 2.14 acres were located on Conley Ridge Road. That the Defendant testified that at no time did he ever intend to make a gift of any of these deeds to the Mitchell County property to his wife. That the Plaintiff did not testify that she understood that the Defendant intended to make her a gift of the Mitchell County property. The Court finds that the evidence is clear, cogent and convincing and of sufficient weight to rebut the presumption of gift created by the deeds being in the form of tenants by the entirety.

The trial court concluded that "all of the real property located in Mitchell County" is defendant's separate property. Plaintiff argues that the trial court erred in its reasoning regarding the presumption of gift to the marriage. We agree that the trial court erred in relying on certain facts to classify the property as separate property.

The deed to the 24 acre tract in Mitchell County names as grantees "Kermit W. Lawrence, Jr. and wife, Mary Mills Lawrence." "If a spouse uses separate funds to acquire property titled by the entireties, the presumption is that a gift of those separate funds was made, and...