Patterson v. Patterson
| Decision Date | 05 May 1981 |
| Docket Number | No. 14985,14985 |
| Citation | 167 W.Va. 1,277 S.E.2d 709 |
| Court | West Virginia Supreme Court |
| Parties | Amanda Maxine PATTERSON v. Edward James PATTERSON and Sarah Frances Matthews. |
Syllabus by the Court
1. Under Rule 18, W.Va.R.C.P. an action to impress a constructive trust upon property acquired through joint funds or joint efforts during coverture but titled in the name of one spouse only may be joined as an independent count in a divorce complaint, and where all of the requirements for a court of equity to declare a constructive trust exist, the court may impress a trust upon real property as part of its overall relief in a divorce proceeding.
2. Since the authority of a circuit court in divorce matters is entirely statutory, the court does not have power in a divorce action to transfer title to real property from one spouse to another either in lieu of or as a supplement to alimony or child support; however, where one spouse demonstrates that he or she contributed purchase money or direct and substantial business services towards the purchase of real property and all other requirements which heretofore existed under established rules of equity for the declaration of either a constructive or resulting trust are met, a court may restore property rightfully belonging to one spouse but titled in the name of the other as part of its order in a divorce proceeding.
3. Traditional domestic services such as those as wife, mother, and housekeeper and incidental contributions to a husband's business never alone give rise to grounds for impressing the property of the husband with a trust. However, where a wife rebuts the presumption of gift and demonstrates that she contributed substantial services directly to her husband's business for which she was not adequately compensated a court may impress a constructive trust upon the property to compensate the wife for the business loss necessarily attendant on the dissolution of the marriage to the extent of her actual contribution.
4. Before a trial court may properly impress a constructive trust on property titled in the name of one spouse for the benefit of the other, the spouse seeking the trust must by a preponderance of the evidence: (1) overcome the presumption that there was a gift between the parties, and (2) show that he or she is otherwise entitled to the declaration of a constructive trust. Entitlement to a constructive trust requires: (a) a showing that the party transferred to his or her spouse money, property, or services which were actually used to procure property titled in the other spouse's name only; (b) that the transfer was induced by (i) fraud, (ii) duress, (iii) undue influence, (iv) mistake, (v) breach of implicit fiduciary duty, or (vi) that in light of the dissolution of the marriage the other spouse would be unjustly enriched by the transfer.
James M. Cagle, Charleston, for appellants.
Charles T. Bailey, Logan, for appellee.
INTRODUCTION
This appeal from a judgment in a domestic relations case presents a new and important issue. Concisely stated, the issue is whether a suit to impress a constructive trust upon property can be joined in a suit for divorce. We see no reason why the court awarding a divorce cannot also impress a trust upon property when the spouse seeking the trust has contributed either money or services to the purchase of the property.
At the outset it must be emphasized that our simple holding concerning joinder of claims does not convert West Virginia into a jurisdiction akin to a community property state. We have always followed the rule that in a divorce proceeding the circuit court does not have jurisdiction to transfer title to real property as a substitute for alimony or child support, or in addition to alimony and child support as equitable compensation for loss of the advantages of the marriage state. This is the general rule and will continue to be the law. We have held, however, in the case of McKinney v. Kingdon, W.Va., 251 S.E.2d 216 (1978), that title to personal property such as automobiles which have a short usable life may be transferred since such a transfer is merely the equivalent of an award of alimony.
The case before us involves Mr. and Mrs. Patterson, a husband and wife who, according to evidence introduced by the wife, were, for practical purposes, business partners. They both worked in the family business; with the wife's acquiescence proceeds were taken from the business and invested in new pieces of property; and, in other ways both parties behaved exactly as two unmarried individuals would have behaved if they had entered into partnership. While the partnership was informal and devoid of written agreements, it was similar to arrangements which are rather commonplace in the operation of a small business.
The evidence introduced by Mrs. Patterson showed that her situation differed significantly from that of the ordinary housewife not involved in such a partnership. Her labor comprised more than the routine duties that a housewife normally performs such as taking care of children, entertaining business friends, and otherwise being supportive of her husband who earned a living in the workaday world. Her evidence showed that she was an actual partner with her husband; she was physically present with him in his place of business; she engaged in activities of a business character for which employees are customarily compensated; and her activities contributed materially to the advancement of the business and were of a substantial nature, requiring long hours of arduous labor. Lastly there was no evidence that Mrs. Patterson was ever compensated, as a business employee is normally compensated, for her services which, absent evidence to the contrary, gives rise to the inference that she expected her husband to act in her fiduciary interest.
We wish to point out as emphatically as possible that the property which the Circuit Court of Logan County impressed with a trust in favor of the wife was business property in which the wife had an interest because of her active, diligent, and regular participation in the business. All wives contribute to their husbands' business by providing a home, taking care of the children, entertaining business friends, and otherwise being supportive of the husband; however, these types of activities do not give rise to a claim against property which the husband has purchased with his own money, notwithstanding that he earned it with the help of the wife.
We distinguish business participation and domestic services because the law of domestic relations has developed the remedy of alimony for compensating a wife for her previous contribution to the family as wife, mother, and homemaker and for her loss of the advantages of the married state. Haynes v. Haynes, W.Va., 264 S.E.2d 474 (1980); Dyer v. Tsapis, W.Va., 249 S.E.2d 509 (1978). Only when a wife (or husband) has contributed her (or his) own separate funds, either acquired during the marriage or before the marriage, or has contributed direct business services of a type which an employee or partner of the same sex would contribute, may a trial court impress the type of trust which we shall discuss below. 1
This is an appeal by Edward James Patterson and his daughter, Sarah Frances Matthews, from an order of the Circuit Court of Logan County which disposed of two consolidated cases. The first case was a divorce proceeding instituted by Amanda Maxine Patterson against her husband and the second was a property action in which Mrs. Patterson petitioned the court to set aside two deeds from Mr. Patterson to Sarah Frances Matthews, his daughter by his first marriage, and declare a trust in Mrs. Patterson's favor in that property.
Mr. and Mrs. Patterson were married in 1953 and from then on engaged in the retail grocery business at various places in Logan County. It was that grocery business which provided their primary source of income, but in 1962, using profits jointly earned in the grocery business, Mr. Patterson purchased a tract of land in Island Creek District, Logan County. In 1966, again using profits jointly earned, he purchased a second parcel in Logan District. Both pieces of property were titled in his name alone and on both parcels he operated laundromats.
In 1974, after the divorce proceedings between the parties had been instituted, Mr. Patterson conveyed the two parcels of property in question to Sarah Frances Matthews for $4,500.00. It is not seriously argued that the purchase price represented fair market value; the record demonstrates that the income from both pieces of property in 1973, the year immediately before the transfer, was $18,343.00.
In early March 1974, Mr. Patterson sued Mrs. Patterson for divorce in the State of Nevada. On 25 March 1974 Mrs. Patterson sued the appellant for divorce in Logan County; however, on 16 April 1974, before the Logan County action was complete, Mrs. Patterson received a divorce decree from the Nevada Court. The Circuit Court of Logan County found that the Nevada Court did not have jurisdiction of the subject matter because Mr. Patterson was not a bona fide resident of Nevada and, consequently, did not afford that decree full faith and credit.
The circuit court ruled that Mrs. Patterson was entitled to a divorce on the ground that the parties had lived separate and apart for one year and the court also held that the transfers of property from Mr. Patterson to his daughter were fraudulent and declared a trust in the property in favor of Mrs. Patterson. Mr. Patterson appeals on the grounds that the circuit court erred in: (1) entertaining the property dispute in the same proceeding as the divorce; (2) declaring a trust in the property; (3) failing to give full faith and credit to the Nevada decree; and, (4) concluding that the conveyance from Mr. Patterson to his daughter was fraudulent. 2
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