Micha v. Micha

• Decision Date: 30 March 1995
• Citation: 624 N.Y.S.2d 465,213 A.D.2d 956
• Parties: Jessica L. MICHA, Appellant-Respondent, v. Paul R. MICHA, Respondent-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 465

624 N.Y.S.2d 465

213 A.D.2d 956

Jessica L. MICHA, Appellant-Respondent, v. Paul R. MICHA, Respondent-Appellant.

Supreme Court, Appellate Division Third Department.

March 30, 1995.

David H. Cohen, Vestal, for appellant-respondent.

Vitanza, Shabus & Fertig (Thomas A. Vitanza, of counsel), Norwich, for respondent-appellant.

Before MIKOLL, J.P., and MERCURE, CREW, WHITE and PETERS, JJ.

MERCURE, Justice.

Cross appeals from a judgment of the Supreme Court (Ingraham, J.) ordering, inter alia, equitable distribution of the parties' marital property, entered March 1, 1994 in Chenango County, upon a decision of the court.

These cross appeals focus on the approach Supreme Court should take, in connection with its identification and valuation of the parties' separate and marital property and equitable distribution of the latter, with regard to marital property that has been applied to reduction of one party's individual indebtedness.

At the time of the parties' marriage, defendant owned and operated a dairy farm and was liable for payment of a number of loans he had incurred in connection with the purchase, lease or improvement of farm equipment and realty. During the marriage, farm income, undisputedly constituting marital property, was used to make the scheduled payments on the loans and to reduce the principal balance thereof. Plaintiff urged before Supreme Court, as she does here, that the reduction of the principal balance of the loans effectively increased the "net" value of the separately owned assets encumbered thereby, resulting in their appreciation due at least in part to her efforts. Apparently crediting plaintiff's contention, in its identification of the parties' marital property, Supreme Court included $4,564 in principal payments on a loan secured by a purchase money security interest on defendant's trailer and $10,658 that had been paid toward the principal of his farm mortgage. As with the balance of the parties' marital property, these sums were distributed to the parties in equal shares. Apparently based upon a finding that marital funds used to make payments on other of defendant's loans "ha[d] not increased [the value of] the farm proper itself", Supreme Court refused to similarly recoup and distribute the principal portion of those payments.

Although we do not necessarily subscribe to plaintiff's reasoning that an increase in the net value of separate property by virtue of the application of marital property to reduction of indebtedness secured by a lien thereon constitutes an "appreciation [of separate property] * * * due in part to the contributions or efforts of the other spouse" within the purview of Domestic Relations Law § 236(B)(1)(d)(3), that does not leave her without a remedy. In the recent case of Carney v. Carney, 202 A.D.2d 907, 609 N.Y.S.2d 425, this court was faced with a similar situation, came to the conclusion that marital funds should not be used to pay off separate liabilities and remedied the inequity by crediting the injured spouse with a sum equal to one half of the marital property thus applied (see, id., at 908, 609 N.Y.S.2d 425; compare, Markel v. Markel, 197 A.D.2d 934, 935, 602 N.Y.S.2d 477; Lolli-Ghetti v. Lolli-Ghetti, 165 A.D.2d 426, 568 N.Y.S.2d 29, lv. denied 78 N.Y.2d 864, 578 N.Y.S.2d 879, 586 N.E.2d 62). Authority for that resolution can be found in the traditional notion that equity will intervene to remedy one spouse's breach of fiduciary responsibility or unjust enrichment by virtue of his or her expenditure of...