Munroe v. Munroe
| Decision Date | 30 April 1997 |
| Docket Number | 70273,Nos. 70080,s. 70080 |
| Parties | MUNROE, Appellant, v. MUNROE, Appellee. |
| Court | Ohio Court of Appeals |
John F. Seelie, Cleveland, for appellant.
Jennifer B. Munroe, Rocky River, pro se.
Plaintiff-appellant, William C. Munroe, appeals from the divorce decree of the domestic relations court and contends that the court erred in favor of his ex-wife, Jennifer B. Munroe, defendant-appellee, in making disposition of marital and separate property and in awarding spousal support and attorney fees in the particulars hereinafter discussed. We find merit to the appeal and affirm in part and reverse in part for the reasons hereinafter stated.
Plaintiff husband and defendant wife were married October 12, 1974. They had two children, Mary K. (born October 18, 1978) and William C., Jr. (born May 5, 1980). At the time of the divorce on December 11, 1995, the husband was fifty-two years of age and the wife was age forty-eight. The husband was employed at Fairview General Hospital as a home care marketing manager with annual gross earnings of $50,460 and net earnings of $2,660 per month. The wife was employed fulltime as an office manager for Partridge Enterprises earning $16,200 annually with take-home pay of $1,034 per month.
In May 1974, prior to the marriage, the husband purchased the real property at 275 Yacht Club Drive, Rocky River for $22,000. The husband paid $4,400 down plus approximately $1,100 in closing costs for a total of $5,500. He mortgaged the $17,600 balance on his individual credit and moved into the home in July 1974.
After purchasing the property and moving in, he proposed marriage to Jennifer in September 1974 and the parties were married October 12, 1974. The wife moved into the home with her eight-year-old child from a previous marriage. At the time the husband purchased the Yacht Club Drive real estate, there were no plans to marry. After the marriage, title to the property was placed in their joint names.
In 1978, the parties took out a $25,000 home improvement loan for a new kitchen, second floor addition, garage and other improvements. The home improvement loan ($25,000) and the balance on the husband's original mortgage ($16,000) and costs were combined and refinanced in a new $42,500 first mortgage on which they were jointly liable. Before refinancing the first mortgage, the parties had reduced the mortgage by $914 with payments from marital income. The principal balance on the first mortgage is now $30,651, a reduction in principal of $11,849 from the $42,500 mortgage taken in 1978. Also, there is now $26,578 owed on a home equity line, secured by the Yacht Club Drive property, that is a marital debt not incurred in relation to the property.
The parties stopped living together during the winter of 1992 and officially separated in March 1993. The wife and two children remained in the Yacht Club Drive property. The husband filed a complaint for divorce on February 25, 1994 on grounds of gross neglect of duty. In March 1994, the wife counterclaimed for divorce for gross neglect and incompatibility. On March 30, 1995, the wife filed her motion for support pendente lite with affidavit.
The case was tried from September 12 to 14, 1995. The court's decision and judgment entry were issued on December 11, 1995, granting both parties a divorce, providing for shared parenting, dividing property (both marital and separate), and awarding temporary and permanent child support ($351.50 per month per child) and spousal support ($600 per month for six years).
The husband filed a timely notice of appeal from the trial court's final divorce judgment. A subsequent appeal by the husband from an order denying his motion to tax the trial transcript as costs has been consolidated for hearing and disposition with the original case. The wife filed no appellee's brief herein.
We will address defendant's assignments of error in the order asserted and together where it is appropriate for discussion.
Assignments of Error I and IX will be addressed together as they both deal with whether the Yacht Club Drive real estate or portions thereof constitute separate property.
Under newly enacted R.C. 3105.171(B) (effective Jan. 1, 1991), "the court shall * * * determine what constitutes marital property and what constitutes separate property" in accordance with specified definitions contained in the statute. A court dividing property upon divorce "shall disburse a spouse's separate property to that spouse." R.C. 3105.171(D). "Separate property" includes "any real or personal property or interest in real or personal property that was acquired by one spouse prior to the date of the marriage; [and] passive income and appreciation acquired from separate property by one spouse during the marriage." R.C. 3105.171(A)(6)(a)(ii) and (iii); Peck v. Peck (1994), 96 Ohio App.3d 731, 734, 645 N.E.2d 1300, 1301-1302.
Under the new statutory scheme, "the commingling of separate property with other property of any type does not destroy the identity of the separate property as separate property, except when the separate property is not traceable." R.C. 3105.171(A)(6)(b).
Peck, 96 Ohio App.3d at 734, 645 N.E.2d at 1302.
We agree with the trial court that plaintiff's premarital down payment on the home ($4,400) was the husband's separate property. However, we find that the trial court erred in not awarding plaintiff the value of any appreciation on the down payment as separate property despite commingling. It is a matter of economic certainty that some of the current enhanced market value of the home was traceable to the original down payment twenty-one years earlier.
Marital property includes "all income and appreciation on separate property, due to the labor, monetary or in-kind contributions of either or both spouses that occurred during the marriage." R.C. 3105.171(A)(3)(a)(iii); Simoni v. Simoni (1995), 102 Ohio App.3d 628, 639, 657 N.E.2d 800, 807-808. At the same time, separate property also includes "passive income and appreciation acquired from separate property by one spouse during the marriage." R.C. 3105.171(A)(6)(a)(iii); Sauer v. Sauer (May 30, 1996), Cuyahoga App. No. 68925, unreported, at 9, 1996 WL 284873. Appreciation as the result of the increase in the fair market value of the separate property due to its location or inflation is passive income pursuant to the statute. Id. at 9-10; Nine v. Nine (Mar. 1, 1995), Summit App. No. 16625, unreported, at 5, 1995 WL 89478. In the instant case, the Yacht Club Drive residence increased in market value from $22,000 in 1974 to $184,000 today.
The critical issue under this assignment of error is what portion of the current net market value of the home is separate property of the husband versus marital property to be divided with the wife. See Sauer at 10; Nine at 5.
The trial court found that the plaintiff paid $22,000 in 1974 prior to the marriage, of which $4,400 was the down payment with a mortgage of $17,600. Therefore, plaintiff's separate property is traceable pursuant to R.C. 3105.171(A)(6)(b) since "[t]he commingling of separate property with other property of any type does not destroy the identity of the separate property as separate property except when the separate property is not traceable."
The court below found that the separate property of the husband in the Yacht Club Drive property was only the down payment he had made at the time of purchase and that "the entire appreciation in the house value from the date of marriage through the date of trial is not passive, pursuant to Ohio Revised Code § 3105.171 and therefore it is not the separate property of the Plaintiff [husband]." We disagree.
We find that the trial court did not follow the dictates of the statute and gave the plaintiff no credit for appreciation over the last twenty-one years of his investment in the separate property prior to the marriage. This court recently in Sauer v. Sauer, supra, at 10, provided the formula for determining the appreciation of separate property under such circumstances as follows:
Separate Investment x Total appreciation = Separate
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Total Investment during the marriage Property
Marital Investment x Total appreciation = Marital
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Total Investment during the marriage Property
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This court in Sauer defined "separate investment" in the equation to be "the value of the property on the date the parties were married." Sauer at 6, citing Nine v. Nine, supra. However, it is more accurate to say that "separate investment" is the value of that spouse's interest in the property, not the whole value of the property, on the date the parties were married. The "total investment" portion of the equation was defined as the separate property plus the investment of the marital funds. Id.
Therefore, in the instant case, the amount of the separate investment would be the value of the husband's interest in the property on the date of the marriage, which was the $4,400 down payment. The investment of the marital funds would include the $914 reduction in the first mortgage, and the $11,849 reduction in the refinanced mortgage....
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