Marriage of Berger, In re, 1
| Decision Date | 27 September 1983 |
| Docket Number | CA-CIV,No. 1,1 |
| Citation | 140 Ariz. 156,680 P.2d 1217 |
| Parties | In re the MARRIAGE OF Jacquelyn Michelson BERGER, Petitioner-Appellant, Cross Appellee, and Michael David Berger, Respondent-Appellee, Cross-Appellant. Jacquelyn Michelson BERGER, Plaintiff-Appellant, Cross-Appellee, v. Michael David BERGER and Teresi-Berger Custom Home Builders, Inc., Defendants-Appellees, Cross Appellants. 5859. |
| Court | Arizona Court of Appeals |
This appeal arises from a dissolution decree which the trial court entered on September 17, 1980 and amended on October 22, 1980 and January 30, 1981. Petitioner-appellant Jacquelyn Michelson Berger (wife) contends that the trial court improperly failed to order reimbursement of her separate funds expended in improving a lot held in joint tenancy with her husband. Mrs. Berger also maintains that the trial court applied an incorrect rate of post-judgment interest on a judgment which she obtained against her husband based on a default in payment of promissory notes.
Respondent-appellee Michael David Berger (husband) cross-appeals. He argues that the trial court erred in ordering him to pay $400 per month child support and in failing to award him spousal maintenance and attorneys' fees. Additionally, he raises issues of: whether the trial court erred in finding him indebted to his wife on three promissory notes; whether the trial court failed to make an equitable division of the community personalty; whether the trial court erred in granting the wife an option to purchase the family home; and whether the trial court erred in failing to properly dispose of $18,000 in the husband's attorneys' trust account.
The facts pertinent to a resolution of this appeal are as follows.
At the time of the parties' marriage in 1968, the wife possessed substantial separate property. The husband owned few assets and during the marriage his employment and business endeavors produced only a moderate community income. Consequently, Mrs. Berger's separate funds provided the parties' main support. In 1971, the husband started Jackie's Dress Shops, Inc. To finance the business, the parties executed a loan agreement in which Michael Berger borrowed $60,000 of his wife's separate funds and signed three promissory notes totaling that sum. These notes provided that only his sole and separate property was obligated to repay the loan. Eventually the business failed and the corporation was dissolved. Mrs. Berger, however, did not demand payment of the notes until she filed a civil complaint in August, 1979. That action was consolidated by court order with the dissolution petition previously filed by the wife on June 8, 1979.
A second transaction relevant to this appeal occurred in 1972. The Bergers purchased an unimproved residential lot in Paradise Valley at the approximate cost of $25,000. The apparent source of the funds for the lot was the wife's separate property. Title to the lot was taken in joint tenancy.
Prior to the actual purchase of the lot, the Bergers began negotiations for the construction of a house on that site. After the lot purchase, the Bergers invested $165,000 to $170,000 in building the house. Of that amount, $65,000 was borrowed and the remainder was funded by the wife's separate funds.
As noted above, Jacquelyn Berger petitioned for a dissolution of the marriage in June, 1979. After trial on the contested issues, the trial court entered its findings of fact and conclusions of law. In the final decree, the trial court disposed of the parties' substantial assets, determined the husband's obligation on the promissory notes, and issued orders concerning child support, spousal maintenance and attorneys' fees. Both parties have appealed.
With respect to the family residence, the trial court made the following findings:
6. The residence of the parties at 4707 E. Saguaro Place, Paradise Valley, Arizona 85253, was titled in joint tenancy and recorded August 25, 1972.
7. The original funds for the residential lot are from the sole and separate funds of Petitioner, but a gift of said property was made when it was placed in joint tenancy.
8. At the time the residential lot was purchased, it was placed in joint tenancy.
9. Subsequently, a house was built on the lot with the sole and separate funds of Petitioner. Prior to the purchase of the residential lot legally described above, the parties were actively engaged in having a new home built to their specifications. The plans and specifications which were used were dated April 26, 1972 (Exhibit 46). On the same day, August 25, 1972, that the deed was recorded (Exhibit 49), they entered into an agreement to have a house constructed for them (Exhibit 46) and, in connection therewith, obtained financing from the Valley National Bank (Exhibit 45).
10. The parties were knowledgeable of the legal significance of joint tenancy, community property and sole and separate property.
11. There was a gift to the community by the Wife of her sole and separate property as it relates to both the lot and the improvements on the lot of the residence.
12. The residence has a value of $470,000 and is subject to a deed of trust with the principal balance due in the amount of $53,000.
The wife contends that the trial court erred in awarding the husband a one-half interest in the combined value of the lot and residence. She acknowledges that pursuant to the rule in Blaine v. Blaine, 63 Ariz. 100, 159 P.2d 786 (1945), and Becchelli v. Becchelli, 109 Ariz. 229, 508 P.2d 59 (1973), the husband is entitled to a one-half interest in the lot. 1 In Blaine and Becchelli, our supreme court recognized a presumption of gift to the wife when the husband purchased property with his separate funds and took title jointly with his wife. This presumption also applies when the spouse expending separate funds is the wife. See Noble v. Noble, 26 Ariz.App. 89, 546 P.2d 358 (1976).
Mrs. Berger argues, however, that the presumption of gift does not extend to improvements subsequently placed upon the property. She maintains that under the ordinary rules of joint tenancy, a co-tenant improving joint tenancy property with separate funds is entitled to reimbursement upon partition of the property, citing Collier v. Collier, 73 Ariz. 405, 242 P.2d 537 (1952); Graham v. Allen, 11 Ariz.App. 207, 463 P.2d 102 (1970); and Bowart v. Bowart, 128 Ariz. 331, 625 P.2d 920 (App.1980). According to Mrs. Berger, to apply the presumption of gift to improvements placed on the property after its acquisition would deny her the right to reimbursement recognized in Collier, Graham and Bowart.
In response, the husband argues that the real issue is whether the trial court erred in finding that a gift of the improvements was made when the lot was placed in joint tenancy. He maintains that the evidence was more than sufficient to demonstrate the wife's donative intent with respect to the residence. In addition, the husband contends that due to the "contemporaneous" nature of the lot purchase and construction plans, the Becchelli presumption of gift applies.
This court will not set aside the trial court's findings of fact unless clearly erroneous. State ex rel. LaSota v. Arizona Licensed Beverage Association, 128 Ariz. 515, 627 P.2d 666 (1981); Rule 52(a), Arizona Rules of Civil Procedure, 16 A.R.S. We therefore review the record to determine whether the finding of gift of the improvements was clearly erroneous.
In finding that the improvements paid for by the wife with her separate funds constituted a gift to her husband, the trial court emphasized the contemporaneous nature of the lot purchase and home construction plans. However, the proximity of the construction plans to the lot purchase has no independent relevance to whether she intended a gift of the improvements. Apparently the trial court considered the contemporaneous nature of the transactions to require application of the Becchelli presumption to both lot and home, without regard to actual intent.
We agree with the wife, however, that extension of the Becchelli presumption to improvements placed on property soon after its acquisition violates the principles of Collier v. Collier, supra; Graham v. Allen, supra; and Bowart v. Bowart, supra.
In Collier, the husband caused real property which he owned as separate property to be deeded to both himself and his wife in joint tenancy. Thereafter, the wife invested her separate funds in improving the property. The supreme court recognized a co-tenant's right to reimbursement for funds expended in improving joint tenancy property with the consent of the other co-tenant. The court further recognized that the general rules pertaining to joint tenancy apply when the joint tenants are husband and wife.
Similarly, in Bowart, Division Two of this court recognized that a presumption of gift arises when title to real property is taken in joint tenancy. However, the court properly concluded that:
Appellee is correct in maintaining that she is entitled to reimbursement for the separate funds she expended on property known as the Barnes property. The trial court found there was a gift of one-half of the property to appellant when title was taken in joint tenancy with right of survivorship. Both parties testified there was no agreement regarding the division of the property nor for reimbursement of the wife's contribution. When one joint tenant expends sums to benefit the other joint tenant, as appellee did here by using her separate funds to pay the joint obligation, the paying joint tenant is entitled to...
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