Peak v. Peak

• Decision Date: 16 September 1986
• Docket Number: No. 6814DC44,6814DC44
• Parties: Daniel Thomas PEAK v. Joan Marie Welch PEAK.
• Court: North Carolina Court of Appeals

Page 353

348 S.E.2d 353

82 N.C.App. 700

Daniel Thomas PEAK v. Joan Marie Welch PEAK.

No. 6814DC44.

Court of Appeals of North Carolina.

Sept. 16, 1986.

Epting & Hackney by Joe Hackney, Chapel Hill, for plaintiff-appellant.

Maxwell, Freeman & Beason, P.A. by James B. Maxwell, Durham, for defendant-appellee.

WELLS, Judge.

The first assignments of error concern pension benefits which Dr. Peak had accrued at Duke University. Plaintiff contends that the trial court wrongly considered a part of N.C. Gen.Stat. § 50-20 which took effect only after the plaintiff filed for divorce. At the time plaintiff instituted action on 29 July 1983, the applicable portion of the statute stated that "vested pension or retirement rights and the expectation of non-vested pension rights or retirement rights shall be considered separate property." G.S. § 50-20(b)(2)(1981). Only three days later--1 August 1983--an amendment took effect making vested pension or retirement rights marital property. G.S. § 50-20(b)(1)(1983). The trial court, under the "catchall" provision of G.S. § 50-20(c)(12), considered the timing of the action in deciding whether an equal distribution of the marital property would be equitable. That factor was among nine which the judge set out as the basis of his opinion that an equal distribution would not be equitable.

Whether an equal distribution would be fair to the parties is a question left to the broad discretion of the court. In order to establish error, the reviewing court must find a clear abuse of discretion and may only reverse upon a showing that the trial court's actions are "manifestly unsupported by reason." White v. White, 312 N.C. 770, 324 S.E.2d 829 (1985). The catchall provision of G.S. § 50-20 allows the trial judge to consider "any other factor which [it] finds to be just and proper." G.S. § 50-20(c)(12). It was this subsection which the court cited when it found the following contested fact:

i. NCGS § 50-20(c)(12): The Court is aware that amendment to the Equitable Distribution Statute in North Carolina, which was effective August 1, 1983, would have allowed the pension benefits of Dr. Peak to have been included in the marital assets. The Court is further aware that the Legislature passed this amendment prior to the date this divorce action was filed, but the action was filed before the effective date. The impact upon Ms. Peak, as applied to this particular case, is considered by the Court to be harsh.

This finding did not, as plaintiff contends, "operate to invalidate a legislative enactment" thus making pension rights separate property. The trial court merely took into account the effect which that classification would have upon Ms. Peak when it was deciding whether an equal division of marital property would be equitable. This is not only allowed, it is mandated under G.S. § 50-20(c)(5) as it then existed: "The court shall consider ... vested pension or retirement rights and the expectation of nonvested pension or retirement rights, which are separate property." This the court did in an earlier finding:

c. NCGS § 50-20(c)(5): Dr. Peak has vested pension and/or retirement rights with the State of North Carolina and through TIAA, in excess of Seventy Thousand Dollars ($70,000.00) at the present time, and the benefits at Duke University through TIAA had been accumulated during the course of the marriage and while the parties were living together.

Therefore, the court's use of G.S. § 50-20(c)(12) was essentially a superfluous restatement of its finding under G.S. § 50-20(c)(5) and was not error.

Plaintiff next assigns error to the court's failure to set forth a standard of proof in its determination that an equal division of property would not be equitable. We disagree. Nine of the twelve factors set out in G.S. § 50-20(c) were addressed in detail by the court, and the weight to be given each of these lies in the judge's discretion. White, supra. This assignment is overruled.

Plaintiff next assigns error to the court's treatment of the Cheviot Street property which was bought after the couple separated. The court found that the property was part marital and part separate and placed an $8,000 judgment lien on it. This figure represents a $5,000 contribution to the purchase price of the house and a $3,000 increase in its value. Although the trial court did not specify its rationale in its conclusions, it apparently relied on our decision in Wade v. Wade adopting the "source of funds" rule. 72 N.C.App. 372, 325 S.E.2d 260, disc. rev. denied, 313 N.C. 612, 330 S.E.2d 616 (1985). That rule allows the court to determine that a single piece of property may be both marital and separate in nature. Id. In such a case, "each estate is entitled to an interest in the property in the ratio its contribution bears to the total investment in the property." Id. Plaintiff acknowledges such a rule but denies its applicability here.

When Dr. and Ms. Peak separated in 1974, they divided a savings account which consisted of the proceeds from the sale of some property. Each party received approximately $7,000. Plaintiff bought a house in Durham and lived there for about a year. During that time, the parties shared expenses, took vacations together and had free access to the other's house. Dr. Peak later left Duke University and set up practice in Milwaukee, Wisconsin. Ms. Peak withdrew $5,000 from her share of the proceeds of the property to help her husband make a downpayment on a house in Milwaukee, which was put in both names. When Dr. Peak moved back to Durham, he sold the Milwaukee house at a profit of between nine and fourteen thousand dollars. He purchased the Cheviot Street house in both names and lived there until he bought another home in Durham. The Cheviot Street house was rented out and at the time of the trial was generally paying for itself. Plaintiff never repaid the $5,000 contributed by his wife.

The threshold question is whether the court properly designated the funds as marital property. Property acquired after separation of the parties is specifically excepted from the definition of marital property contained in the 1983 cumulative supplement to G.S. § 50-20(b)(1), the applicable law in this case. See Wilson v. Wilson, 73 N.C.App. 96, 325 S.E.2d 668, disc. rev. denied, 314 N.C. 121, 332 S.E.2d 490 (1985). However, property acquired in exchange for marital funds is considered marital property to the extent of the contribution even after separation. Phillips v. Phillips, 73 N.C.App. 68, 326 S.E.2d 57 (1985). Plaintiff contends that, although the funds in question were once marital, an equal division by the parties upon separation changed the nature of the funds such that Ms. Peak's contribution was a mere loan of her separate property. We disagree.

In Weaver v. Weaver, 72 N.C.App. 409, 324 S.E.2d 915 (1985), we looked to the wording of the equitable distribution statute in deciding a similar issue. Although the statute instructs the trial court to enforce agreements providing for the distribution of marital property, these must be "written ..., duly executed and acknowledged in accordance with G.S. § 52-10 and 52-10.1." G.S. § 50-20(d). The purpose of this requirement is to prevent fraud and overreaching by one of the spouses. McIntosh v. McIntosh, 74 N.C.App. 554, 328 S.E.2d 600 (1985). In Weaver, the couple had orally agreed at the time of separation to split their furnishings among the two...