Reeves v. Reeves

• Decision Date: 21 November 1997
• Docket Number: Docket No. 187577
• Citation: 575 N.W.2d 1,226 Mich.App. 490
• Parties: Carol Joy REEVES, Plaintiff-Appellee/Cross-Appellant, v. Clyde G. REEVES, Defendant-Appellant/Cross-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 1

575 N.W.2d 1

226 Mich.App. 490

Carol Joy REEVES, Plaintiff-Appellee/Cross-Appellant, v. Clyde G. REEVES, Defendant-Appellant/Cross-Appellee.

Docket No. 187577.

Court of Appeals of Michigan.

Submitted May 14, 1997, at Lansing.

Decided Nov. 21, 1997, at 9:15 a.m.

Released for Publication March 10, 1998.

Allsopp, Kolka & Wackerly, P.C. by William W. Allsopp, Bay City, for plaintiff-appellee/cross-appellant.

Patrick R. Winter, P.C. by Patrick R. Winter, Standish, for defendant-appellant/cross-appellee.

Before NEFF, P.J., and WAHLS and TAYLOR, JJ.

TAYLOR, Judge.

Defendant appeals as of right from a judgment of divorce, claiming that several of the trial court's factual findings were clearly erroneous and that the property division is inequitable because the trial court erroneously included nonmarital assets in the marital estate. Plaintiff cross appeals, claiming that the trial court erred in failing to award her attorney fees. We reverse in part and remand for further proceedings.

The parties met and became romantically involved in 1986 and began cohabiting in 1987. When the parties met, defendant was working as a real estate broker and plaintiff was a bartender. Defendant had an interest in several real estate investments before meeting plaintiff, including a one-sixth ownership interest in the Standish Plaza shopping center resulting from a capital investment made in 1982. When the parties began cohabiting in 1987, defendant purchased a condominium, supplying a $14,000 down payment and financing the remainder of the purchase price. The parties lived together at the condominium, with defendant making all subsequent payments on the mortgage. During the period of cohabitation, two rental properties on Warner and Catherine Streets in Bay City were bought in both parties' names. As with the condominium, defendant alone made the down payment for each rental property. In March 1991, the parties married. During the period of cohabitation and marriage, plaintiff worked intermittently as a real estate salesperson and as a waitress and also performed housekeeping duties for the parties. The marriage did not produce any children.

Plaintiff filed for a divorce in June 1994. The court included as marital property that was later divided the entire $50,000 equity value of the condominium where the parties resided, the entire equity value of the Warner Street rental property, the entire equity value of the Catherine Street rental property, and defendant's interest in the Standish Plaza, which had appreciated $100,000 over the years the parties cohabited and were married. The trial court awarded no alimony and denied plaintiff's request for attorney fees.

Defendant claims that the trial court erred in considering the entire equity value of the condominium and the $100,000 appreciation of the Standish Plaza as part of the marital estate. We agree.

The distribution of property in a divorce is controlled by statute. M.C.L. § 552.1 et seq.; M.S.A. § 25.81 et seq.; Charlton v. Charlton, 397 Mich. 84, 92, 243 N.W.2d 261 (1976). In granting a divorce, the court may divide all property that came "to either party by reason of the marriage...." M.C.L. § 552.19; M.S.A. § 25.99 (emphasis added). When apportioning marital property, the court must strive for an equitable division of increases in marital assets "that may have occurred between the beginning and the end of the marriage." Bone v. Bone, 148 Mich.App. 834, 838, 385 N.W.2d 706 (1986) (emphasis added). ¹ Thus, the trial court's first consideration when dividing property in divorce proceedings is the determination of marital and separate assets. Byington v. Byington, 224 Mich.App. 103, 114, n. 4, 568 N.W.2d 141 (1997). This distinction between marital and separate estates has long been recognized in this state. Charlton, supra at 92-94, 243 N.W.2d 261; Davey v. Davey, 106 Mich.App. 579, 583, 308 N.W.2d 468 (1981). Generally, the marital estate is divided between the parties, and each party takes away from the marriage that party's own separate estate with no invasion by the other party. However, a spouse's separate estate can be opened for redistribution when one of two statutorily created exceptions is met. M.C.L. §§ 552.23 and 552.401; M.S.A. §§ 25.103 and 25.136; Charlton, supra at 92-94, 243 N.W.2d 261.

The first exception to the doctrine of noninvasion of separate estates is found at M.C.L. § 552.23; M.S.A. § 25.103. Subsection 1 of this statute permits invasion of the separate estates if after division of the marital assets "the estate and effects awarded to either party are insufficient for the suitable support and maintenance of either party...." As interpreted by our courts, this means that invasion is allowed when one party demonstrates additional need. In Charlton, the Court allowed invasion of a separate estate because a division of the marital assets alone would have been insufficient for suitable support in the manner to which the Charltons were accustomed. Charlton, supra at 94, 243 N.W.2d 261. Holding consistently with this, where no showing of need was made, this Court reversed an invasion of separate estates in Davey. The other statutorily granted method for invading a separate estate is available only when the other spouse "contributed to the acquisition, improvement, or accumulation of the property." M.C.L. § 552.401; M.S.A. § 25.136. When one significantly assists in the acquisition or growth of a spouse's separate asset, the court may consider the contribution as having a distinct value deserving of compensation.

In Grotelueschen v. Grotelueschen, 113 Mich.App. 395, 399-400, 318 N.W.2d 227 (1982), this Court held that a separate estate was unavailable for invasion because the other spouse had no involvement with that estate. Accordingly, one spouse's inheritance that had been left alone in a separate bank account could not be redistributed. Subsequently, in Hanaway v. Hanaway, 208 Mich.App. 278, 294, 527 N.W.2d 792 (1995), this Court held that the defendant's inherited stock in a family-owned company was available for invasion because the plaintiff's handling of child-rearing and domestic duties had freed the defendant to concentrate on building up that company. The Hanaway Court found that the defendant's stock had "appreciated because of defendant's efforts, facilitated by plaintiff's activities at home." Id. at 294, 527 N.W.2d 792.

We first consider the propriety of the trial court's inclusion of the entire equity value of the condominium as part of the marital estate. As previously indicated, defendant provided a $14,000 down payment for the condominium before the parties married, and equity was built up in the condominium as a result of payments solely made by defendant before the parties married. Further, the condominium may have appreciated after defendant purchased it but before the parties married. The sharing and maintenance of a marital home affords both spouses an interest in any increase in its value (whether by equity payments or appreciation) over the term of a marriage. Such amount is clearly part of the marital estate. However, the down payment, the equity built up before the parties' marriage, and any appreciation that occurred before the parties' marriage should have been considered defendant's separate estate. Thus, we find the trial court erred in considering the entire equity value of the condominium as part of the marital estate. On remand, the trial court may not consider as part of the marital estate the equity value of the condominium immediately before the parties married.

For the same reasons set forth above, we also find the court erred in including the entire equity value of the rental properties in the marital estate. As previously noted, these properties were purchased before the parties married and defendant alone supplied the down payments. The increase in value (whether by equity payments or appreciation) that occurred between the beginning and the end of the marriage, Bone, supra, was part of the marital estate. However, it was error for the court to consider as part of the marital estate the increase in value (by the down payments and equity payments) that occurred before the parties married. Thus, we find the trial court erred in considering the entire equity value of the rental properties as part of the marital estate. On remand, the trial court may not consider as part of the marital estate the down payments and equity payments made before the parties married.

Finally, we consider the propriety of the trial court's inclusion of defendant's appreciated interest in the Standish Plaza as part of the marital estate. The trial court held that defendant's interest in the Standish Plaza had increased $100,000 over the six years before the divorce was granted and considered this amount as part of the marital estate. It was clear error to include any amount that the Standish Plaza may have appreciated before the parties married. Bone, supra. Unlike the situation with the condominium and the rental properties, defendant's minority interest in the Standish Plaza was wholly passive at all times. It cannot be stated, as was done in Hanaway, supra at 294, 527 N.W.2d 792, that the property "appreciated because of defendant's efforts, facilitated by plaintiff's activities at home." Therefore, it was also error to include any amount defendant's interest in the Standish Plaza may have appreciated even after the parties married. On remand, the trial court may not consider as part of the marital estate any such amount as part of the marital estate.

The court's property division in this case inequitably favors plaintiff when defendant's separate estate is deleted from the property the court divided. As noted in Grotelueschen, supra at 402, 318 N.W.2d 227, it does not matter if the division of the entire holdings appears one-sided, what is important is the division of the marital estate. Under the...