Marriage of Benart, In re

• Citation: 160 Cal.App.3d 183,206 Cal.Rptr. 495
• Court: California Court of Appeals
• Decision Date: 20 September 1984
• Parties: In re the MARRIAGE OF Michael D. and Terry Carol BENART. Michael D. BENART, Appellant, v. Terry Carol BENART, Respondent. Civ. 29765. E000435.

Page 495

206 Cal.Rptr. 495

160 Cal.App.3d 183

In re the MARRIAGE OF Michael D. and Terry Carol BENART.

Michael D. BENART, Appellant, v. Terry Carol BENART, Respondent.

Civ. 29765.

E000435.

Court of Appeal, Fourth District, Division 2, California.

Sept. 20, 1984.

[160 Cal.App.3d 186] Daugherty, Cichy & Eckl, David J. Daugherty and David J. Rinaldi, West Covina, for appellant.

No appearance for respondent.

OPINION

BY THE COURT.

In a proceeding to dissolve the marriage of Michael D. Benart (husband) and Terry C. Benart (wife), husband has appealed from portions of the interlocutory judgment dealing with the family residence. He contends the trial court erred in failing to apply newly enacted sections 4800.1 and 4800.2 of the Civil Code.

FACTS

In January 1977, before the marriage, wife purchased a house and lot for $38,500. She paid $2,050 down and obtained a loan of $36,450 for the balance, secured by a first trust deed on the property. Wife's payments on the first trust deed note were $336 per month.

In June 1978, still before the marriage, wife borrowed $10,700 secured by a second trust deed on the property. Her payments on the second trust deed loan were $206 per month.

The parties were married on April 12, 1980, and the property was the family home. After the marriage, payments on the first and second trust deed loans were made from community funds. The fair market value of the property at the time of marriage, disregarding encumbrances, was $80,000.

On September 29, 1980, a grant deed was recorded by which wife conveyed the property to herself and husband as joint tenants. Apparently the parties were not described as "husband" and "wife" in the deed.

According to wife's trial testimony, shortly after the marriage husband had asked her to put the property in both their names, at the same time assuring her the property would always be hers and he would never take it from her. When wife did not comply with this request, husband stopped speaking to her, would not engage in sexual relations for weeks at a time, and absented himself from the home without explanation. Wife testified she was close to a nervous breakdown as a result of this treatment when she decided to execute the joint tenancy deed to save the marriage, relying on husband's assurances that the property would always be hers.

Husband, in his trial testimony, denied requesting a joint tenancy deed. He said wife executed and recorded the deed without consulting him.

The parties separated on April 20, 1981. After separation, wife continued to reside in the house and made all payments on the first and second trust deed loans.

At the time of trial, in November 1982, the fair market value of the property was $80,000, exactly the same as at the time of marriage. The balances due on the first and second trust deed loans were $34,400 and $5,600, respectively.

The parties stipulated that the balance on the first trust deed loan was reduced by $350 between the date of marriage and the date of separation, while the balance on the second trust deed loan was reduced by $1,150 during the same period.

At the conclusion of the brief trial, the judge said he found wife's testimony to be more credible than husband's. The presumption raised by the joint tenancy deed was overcome by the evidence of an oral understanding or agreement that the property was to remain wife's separate property. Under the Moore/Marsden formula (In re Marriage of Moore (1980) 28 Cal.3d 366, 373-374, 168 Cal.Rptr. 662, 618 P.2d 208; In re Marriage of Marsden (1982) 130 Cal.App.3d 426, 437-440, 181 Cal.Rptr. 910), the community acquired a pro tanto interest the value of which was equal to the reduction in the balance of the two loans, or $1,500. The trial court awarded the house to wife, ordering her to pay husband $750 to compensate for his share of the community interest. Judgment was entered accordingly, from which husband has taken this appeal.

DISCUSSION

Civil Code sections 4800.1 and 4800.2 did not become effective until January 1, 1984, but the Legislature expressly provided for their retroactive application to any action in which an appeal was pending. ¹ (In re Marriage of Anderson (1984) 154 Cal.App.3d 572, 577, 201 Cal.Rptr. 498; In re Marriage of Neal (1984) 153 Cal.App.3d 117, 121, fn. 1, 200 Cal.Rptr. 341.) The retroactive application of these statutes does not violate due process. (In re Marriage of Martinez (1984) 156 Cal.App.3d 20, 30, 202 Cal.Rptr. 646.) ² Accordingly, they apply to this case.

Section 4800.1 provides, in brief, that a joint tenancy deed to a husband and wife during marriage raises a presumption of community property which may be overcome only by a contrary recital in the deed or by a written agreement. ³ Section 4800.2 provides, in brief, that a spouse who contributes his or her separate property to the acquisition of community property is entitled to reimbursement unless the right has been waived in writing. ⁴

Section 4800.1 is not limited to acquisitions of property by the spouses from third parties during the marriage; it also applies where one spouse deeds separate property to both spouses in joint tenancy during the marriage. (In re Marriage of Anderson, supra, 154 Cal.App.3d 572, 577-579, 201 Cal.Rptr. 498; In re Marriage of Neal, supra, 153 Cal.App.3d 117, 123-124, 200 Cal.Rptr. 341.)

Application of section 4800.1 to the facts of this case means the joint tenancy deed raised a presumption of community property which could be overcome only by a writing. There was no writing to overcome the presumption and therefore the property was converted to community property by the deed.

Where one spouse deeds separate property to the community, the spouse is entitled to reimbursement under section 4800.2 in the absence of a written waiver. The measure of the reimbursement is "the value of the separate property equity in the property at the time of conversion, that is, the fair market value of the property less outstanding encumbrances and less any community property contributions prior to its conversion which are found not to be a gift to the separate property." (In re Marriage of Neal, supra, 153 Cal.App.3d 117, 124, fn. 11, 200 Cal.Rptr. 341; original emphasis. See also, In re Marriage of Anderson, supra, 154 Cal.App.3d 572, 581, 201 Cal.Rptr. 498.)

Husband disputes this interpretation. He says wife should be reimbursed only for the amount she paid into the property by downpayment and payments against principal on the loans, without regard to the property's fair market value at the time of the joint tenancy deed. Husband's argument is based on a misreading of section 4800.2. The definition of "contributions to the acquisition of the property" contained therein refers to the acquisition of the property by the community and not an earlier acquisition as separate property by one of the spouses. Both Anderson and Neal hold that a spouse who converts separate property to community property by a joint tenancy deed is entitled to reimbursement based on equity in relation to fair market value at the time of conversion. These holdings, in turn, are based on very clear evidence of legislative intent. A report by the California Law Revision Commission was incorporated into the Senate Journal for the express purpose of providing evidence of legislative intent. According to the report, section 4800.1 "also governs property initially acquired before marriage, the title to which is taken in joint tenancy form by the spouses during marriage. The measure of the separate property contribution under Section 4800.2, in such a case, is the value of the property at the time of its conversion to joint tenancy form." (In re Marriage of Neal, supra, 153 Cal.App.3d 117, 124, 200 Cal.Rptr. 341.)

The trial court's reasoning was correct regarding the rights of the parties in the property from the time of marriage to the execution and recording of the joint tenancy deed. During that time, the community acquired what is commonly called a pro tanto interest in the property because community funds were used to make payments on the first and second trust deed loans. Under the Moore/Marsden formula, the community's pro tanto interest was "the amount of capital appreciation attributable to community funds ... added to the amount of equity paid by community funds ...." (In re Marriage of Moore, supra, 28 Cal.3d 366, 374, 168 Cal.Rptr. 662, 618 P.2d 208.) Because the property did not appreciate in value from the time of marriage to the time of trial, the community's share of the appreciation was zero. The community's pro tanto interest was therefore limited to the amount of equity paid by community funds or, in other words, the amount by which the principal on the loans was reduced. The trial court correctly disposed of the community's pro tanto interest by ordering...