Long v. Long

• Decision Date: 24 July 1997
• Docket Number: Docket No. WCB-95-779
• Citation: 1997 ME 171,697 A.2d 1317
• Parties: Mary E. LONG v. Richard J. LONG.
• Court: Maine Supreme Court

Page 1317

697 A.2d 1317

1997 ME 171

Mary E. LONG v. Richard J. LONG.

Docket No. WCB-95-779.

Supreme Judicial Court of Maine.

Submitted on Briefs April 25, 1997.

Argued June 16, 1997.

Decided July 24, 1997.

Susan R. Kominsky (orally), Marvin H. Glazier, James C. Munch, III, Vafiades, Brountas & Kominsky, Bangor, for plaintiff.

Martha J. Harris (orally), Paine, Lynch & Harris, Bangor, for defendant.

Before WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, RUDMAN, DANA, and LIPEZ, JJ.

WATHEN, Chief Justice.

¶1 Defendant Richard J. Long appeals from the judgment entered in the Superior Court (Piscataquis County, Kravchuk, J.) affirming a divorce judgment entered in the District Court (Dover-Foxcroft, Gunther, J.) on a complaint brought by plaintiff Mary E. Long. Defendant contends that the District Court ignored precedent in ruling that real estate held in joint tenancy was marital property even though it was acquired in exchange for property he acquired before the marriage. He also contends that the court erred in dividing the property by failing to give due consideration to his contribution of nonmarital funds and to the economic circumstances of the parties. Finally, he contends that the court abused its discretion by conditioning its award of the residence to him on an unreasonable timetable for purchasing Mary's equity. For the reasons stated below, we overrule Young v. Young, 329 A.2d 386 (Me.1974), and Tibbetts v. Tibbetts, 406 A.2d 70 (Me.1979), and their progeny. We now hold that jointly owned real property is subject to division as marital property pursuant to 19 M.R.S.A. § 722-A (1981), even though parts of it were acquired with nonmarital funds. Finding no abuse of discretion in the court's division of the property, we affirm the judgment.

¶2 At the time of the marriage, ¹ Richard owned, subject to a mortgage, a residence in Pennsylvania. The parties lived in this home and made mortgage payments until Richard sold the property in 1977. After satisfying the debt secured by the mortgage, Richard received $38,234.38 from the sale of the Pennsylvania property. He placed $35,000 of those proceeds in a savings account made payable to him or Mary. After the sale, they lived in rented apartments in Pennsylvania until they moved to Maine in 1980. The parties purchased a home in Blanchard, Maine in December 1979 for $38,000. They applied the $35,000 account balance to the purchase of that home and took title as joint tenants. The record does not establish the source of the additional $3,000 applied to the purchase. ² Thereafter, a $10,000 revolving home equity loan was taken out on the property. The loan proceeds were drawn on at unspecified times and were used to renovate and improve the property and to purchase a bulldozer for plowing the driveway. Loan repayments were made with marital funds on a monthly basis for an unspecified number of years.

¶3 The parties separated and Mary filed a complaint for a divorce in June of 1993. Although the proceedings required a determination of the custody and support of two minor children, the distribution of the residence proved to be the primary source of contention between the parties. They agreed that the value of the house and land was $47,500. At the time of the hearing, the outstanding balance on the home equity loan was $3,700, resulting in a $43,800 equity in the property. Defendant has paid the mortgage, taxes, and insurance on the property since the separation. The court ruled that the real estate was marital property in its entirety, notwithstanding the source of funds. The court reasoned that Richard's transfer of funds to the joint savings account "evidences a gift to the marital estate, later reflected in joint title to the real estate." In dividing the marital property, the court ruled that the real estate should be shared equally. The court, however, awarded title to the real estate to defendant provided that he pay plaintiff one-half of the equity, $21,900, on or before April 1, 1996. Defendant appealed to the Superior Court which affirmed the judgment.

I. Marital Property

¶4 Pursuant to our existing case law, the real property in question is a mixture of marital and nonmarital components that fits awkwardly into the legal framework for the disposition of property involved in a divorce. Mary acknowledges that most of the proceeds of the sale of the Pennsylvania property were nonmarital, at least until they were deposited in the joint savings account. Richard acknowledges that a small part of the $35,000 was marital to the extent that marital funds were used to pay the debt secured by the mortgage on his first house, thereby contributing to the equity. Neither party has established the character of the additional $3,000 that went into the purchase of the residence in Blanchard, nor do they address the impact of the home equity loan.

¶5 If the entire purchase price had been provided from defendant's separate funds, our precedents require that it remain nonmarital property unless "transmuted" into marital property by an interspousal transfer in joint tenancy. See Carter v. Carter, 419 A.2d 1018 (Me.1980); but see McCracken v. McCracken, 617 A.2d 1034, 1035 (Me.1992) (third-party joint tenancy purchase using wife's nonmarital funds was an interspousal transfer in joint tenancy). If defendant provided something less than the entire purchase price, our precedents require that a corresponding portion of the jointly owned property be set apart in accordance with the "source of funds" rule. See Tibbetts v. Tibbetts, 406 A.2d at 76, and Dubord v. Dubord, 579 A.2d 257 (Me.1990).

¶6 Because we have been inconsistent in recognizing the legal significance of joint ownership, the rules developed in our case law have produced conflicting and inequitable results. Even though a degree of reliance may have developed with regard to precedent, the facts of the present case compel the adoption of a rule that provides greater certainty and clearer guidance to litigants, family law practitioners, and trial courts. The rule we now adopt is consistent with the form of ownership, the statutory scheme, and the partnership theory of marriage that effectuates the reasonable expectations of wives and husbands acquiring jointly owned property.

¶7 Maine's statutory scheme for the disposition of property in a divorce proceeding, 19 M.R.S.A. § 722-A (1981) (effective January 1, 1972), is modeled on the 1970 Uniform Marriage and Divorce Act. Zillert v. Zillert, 395 A.2d 1152, 1154-55 (Me.1978). In modernizing the law of divorce, the Legislature sought to remedy the inequities produced by the past practice of relying on the form of title and fault as the exclusive basis for dividing real property. At common law, marriage did not create rights to property held during the marriage, and a spouse could acquire an interest in the property of the other only by dower or curtesy rights on the death of the other. Under the prior law when a divorce was based on the fault of one spouse, the other spouse was entitled to the same one-third individual interest as though the spouse had died. Any interest that the spouse at fault held in the other spouse's property was dissolved by the divorce judgment. 19 M.R.S.A. §§ 721, 723 (1961). Thus, when one spouse held legal title to property, courts were required to set it aside to that spouse with an allowance only for fault. When property was held jointly, courts were required to set apart each spouse's one-half interest, subject to a similar allowance. Inequities resulted from the failure to recognize spousal contributions to the property during the marriage. See Comment, The Maine Marital Property Act: The Duties of Divorce Courts and the Right to an Equitable Share of Marital Assets, 31 Me.L.Rev. 333, 337-38 (1980). To overcome these inequities, the Legislature followed the lead of the uniform act and adopted the "shared enterprise or partnership theory" of marriage recognized in community property states. Tibbetts v. Tibbetts, 406 A.2d at 76.

¶8 Section 722-A provides for the equitable or "just" division of shared or partnership property, designated by the statute as "marital property." The statute provides a mechanism for identifying marital property, creates for spouses a right to an equitable share of marital property, and empowers the court to equitably divide the property. Subsection 3 of the statute provides that all property acquired by either spouse during the marriage is presumed to be "marital property," regardless of the form of ownership. 19 M.R.S.A. § 722-A(3). Thus, property held in the name of one spouse may still be treated as "marital property." The "marital property" designation grants no present rights in the property during the marriage but, on divorce, the court must divide all marital property "as the court deems just" granting an equitable share to each spouse. The court must consider all relevant factors, including the contributions of each spouse to the property, the value of property set apart to each spouse, the economic circumstances of each spouse, and other relevant factors. 19 M.R.S.A. § 722-A(1). The marital presumption gives effect to the shared enterprise theory of marriage. The power to divide the property, after considering all relevant factors, provides the divorce court with the flexibility needed to ensure that spouses receive their equitable shares.

¶9 Section 722-A also recognizes that some property should be treated as separate in recognition of the principle that each spouse should be able to maintain a separate estate. Grant v. Grant, 424 A.2d 139 (Me.1981). Subsection 2 identifies property that is part of a spouse's "separate estate." Property acquired prior to the marriage is separate. Property acquired during the marriage can be treated as part of a spouse's separate estate only by rebutting the subsection 3 presumption that it is marital. This can be done by establishing that the property is:...