Smith v. Smith

• Decision Date: 23 November 1988
• Docket Number: No. 17271,17271
• Citation: 376 S.E.2d 97,180 W.Va. 203
• Parties: Katherine N. SMITH, Plaintiff Below, Appellee, v. John Paul SMITH, Defendant Below, Appellant.
• Court: West Virginia Supreme Court

Page 97

376 S.E.2d 97

180 W.Va. 203

Katherine N. SMITH, Plaintiff Below, Appellee, v. John Paul SMITH, Defendant Below, Appellant.

No. 17271.

Supreme Court of Appeals of

West Virginia.

Nov. 23, 1988.

Syllabus by the Court

1. " 'Where a husband purchases real property and causes deeds therefor to be made to himself and wife, jointly, it is presumed that he intended a gift to his wife of a moiety of the property and that she should be vested with full legal and equitable title to such interest, in the absence of clear evidence to the contrary.' Syl. pt. 2, Edwards v. Edwards, 117 W.Va. 505, 185 S.E. 904 (1936)." Syllabus, Dodd v. Hinton, 173 W.Va. 69, 312 S.E.2d 293 (1984).

2. Under W.Va.Code, 37-4-3, when partition in kind "cannot be conveniently made, the entire subject may be allotted to any party or parties who will accept it, and pay therefor to the other party or parties such sum of money as his or their interest may entitle him or them to...."

3. "By virtue of W.Va.Code, 37-4-3, a party desiring to compel partition through sale is required to demonstrate that the property cannot be conveniently partitioned in kind, that the interests of one or more of the parties will be promoted by the sale, and that the interests of the other parties will not be prejudiced by the sale." Syllabus Point 3, Consolidated Gas Supply Corp. v. Riley, 161 W.Va. 782, 247 S.E.2d 712 (1978).

4. A court, in the absence of a statute, is not authorized, prior to a judicial sale of real estate, to set a specific dollar amount for an owner's interest in such real estate to be guaranteed out of the proceeds of such sale.

John Yeager, Jr., Weirton, for appellant.

Raymond A. Hinerman, Weirton, for appellee.

MILLER, Justice:

John Paul Smith appeals from a May 1, 1986 final order of the Circuit Court of Hancock County which ordered a partition sale of real estate jointly titled with Katherine N. Smith, his former wife. The order set a minimum recovery for Mrs. Smith from the sale in the amount of $62,500 less her share of the costs. The order taxed the appraisers' costs to Mr. Smith and taxed all other costs jointly to the parties.

Katherine N. Smith and John Paul Smith own a 5.54 acre parcel of real estate upon which is situated a two and one-half story brick dwelling house and other outbuildings. The real estate is located on Route 2, Newell, West Virginia. On June 8, 1979, the Smiths, while husband and wife, acquired the property to be used as a retirement home. They were divorced on January 8, 1981, in Nueces County, Texas. The divorce decree expressly provided that it did not affect their interests in this West Virginia real estate.

On May 13, 1981, Mrs. Smith filed a partition action and asked the Circuit Court of Hancock County to sell the real estate, contending that it could not be conveniently or equitably partitioned between the owners. Mr. Smith answered, denied that Mrs. Smith owned an interest in the property, and sought a constructive trust in any share of the realty the circuit court might decide she owned.

The circuit court held in December, 1981, that Mrs. Smith owned an undivided one-half interest in the real property and that such property could not be conveniently partitioned in kind. Mr. Smith then sought allotment of the entire tract and offered to pay Mrs. Smith the value of her one-half share under W.Va.Code, 37-4-3 (1957). ¹ Pursuant to this statute, the court appointed three appraisers and subsequently on August 3, 1983, held a hearing upon Mr. Smith's objection to the property valuation and Mrs. Smith's claim to the property. Basically, Mr. Smith contended that all the funds used to purchase the property were his separate assets, that he intended no gift to Mrs. Smith, and that she would be unjustly enriched if awarded a one-half interest in the real estate.

Upon completion of the hearing, but before entry of a final order, the circuit court judge resigned his position. The newly assigned judge reviewed all pleadings, exhibits, and a transcript of the August 3, 1983 hearing. The circuit court again found that Mrs. Smith owned an undivided one-half interest in the property, that the property was not divisible in kind, and that if allotment was not sought by either co-owner, the property should be sold by order of the court. Mr. Smith again sought allotment, which the court granted on September 20, 1985. In its order, the court determined the fair market value of the real property to be $125,000.

At a subsequent status conference, the parties agreed to a schedule for execution of a deed by Mrs. Smith, its delivery to the court, and payment for the undivided one-half interest in the property. Mrs. Smith delivered to the court a fully executed deed pursuant to this order. On January 10, 1986, Mr. Smith notified the court that he waived allotment and intended to appeal the court's findings regarding Mrs. Smith's one-half ownership interest and the property value.

On May 1, 1986, the court entered its order charging Mr. Smith with all costs incurred as a result of his previous allotment election and guaranteed Mrs. Smith recovery of her share of the fair market value of the property. It appears the court concluded that Mr. Smith's numerous delays warranted inclusion in the order of a provision that he guarantee payment of one-half of the fair market value of the property, i.e., $62,500, to Mrs. Smith. The court then appointed a special commissioner to proceed with a sale of the property. Mr. Smith appealed and no sale has been held.

I.

We first address Mrs. Smith's interest in the real property. ² Mr. Smith first claims that he has overcome the presumption of gift contained in W.Va.Code, 48-3-10 (1931), which provides: "Where one spouse purchases real or personal property and pays for the same, but takes title in the name of the other spouse, such transaction shall, in the absence of evidence of a contrary intention, be presumed to be a gift by the spouse so purchasing to the spouse in whose name the title is taken." ³ As a second theory, Mr. Smith sought to impose a constructive trust on Mrs. Smith's one-half interest since he had contributed the bulk of the money for the purchase of the property. It appears that Mrs. Smith may have contributed some money and joined on the deed of trust and note of $20,000, which represented the balance of the purchase price of $70,000.

We spoke to these same issues in Dodd v. Hinton, 173 W.Va. 69, 312 S.E.2d 293 (1984). Dodd involved the presumption of gift under W.Va.Code, 48-3-10 (1931), prior to the 1984 amendment which, as indicated in note 3, supra, removed the presumption of gift in divorce cases where equitable distribution of property is involved. The husband had purchased a home and titled it in his and his wife's names shortly after their marriage. Subsequently, he sold a house which was in his name alone. The proceeds were used to pay off the deed of trust on the new home. A year later, his wife divorced him. The trial court did not dispose of the real estate in the divorce action. Thereafter, a partition suit was filed and the husband sought to rebut the presumption of gift and also sought to impose a constructive trust on the theory of unjust enrichment.

In Dodd, we declined to overturn the trial court's finding that there had been insufficient evidence to rebut the presumption of gift by way of any prior agreement. A similar situation exists in the present case. There was nothing to demonstrate that any specific understanding had been reached by the parties that limited Mrs. Smith's interest. Furthermore, it appears that part of the initial down payment came from joint funds. We affirm the trial court's holding on this point and reaffirm Dodd 's Syllabus:

" 'Where a husband purchases real property and causes deeds therefor to be made to himself and wife, jointly, it is presumed that he intended a gift to his wife of a moiety of the property and that she should be vested with full legal and equitable title to such interest, in the absence of clear evidence to the contrary.' Syl. pt. 2, Edwards v. Edwards, 117 W.Va. 505, 185 S.E. 904 (1936)."

See also Wachter v. Wachter, 178 W.Va. 5, 357 S.E.2d 38 (1987); Myers v. Myers, 176 W.Va. 326, 342 S.E.2d 294 (1986); Coffman v. Coffman, 108 W.Va. 285, 150 S.E. 744 (1929).

The constructive trust argument was also rejected in Dodd: "In Patterson v. Patterson, 167 W.Va. 1, 277 S.E.2d 709 (1981), we did not disturb this presumption of a gift regarding transfers between spouses, but noted that it may be rebutted by a clear showing of unjust enrichment." ⁴ 173 W.Va. at 71, 312 S.E.2d at 295. We went on in Dodd to make it clear that in order to prove unjust enrichment, it was necessary to show "fraud, duress, undue influence, mistake, breach of fiduciary duty, or wrongful disposition of the property." 173 W.Va. at 71, 312 S.E.2d at 295. No such facts were shown in Dodd nor in the present case. We, therefore, affirm the trial court's ruling on this issue.

II.

Perhaps the more novel issue in this case is the trial court's order that the property be sold and that Mrs. Smith be guaranteed the right to obtain $62,500, which is one-half of the fair market value of $125,000 as found by the court. ⁵ It may well be that the court was honoring the repeated requests made earlier for an entire allotment of the property to Mr. Smith. This is a procedure recognized under W.Va.Code, 37-4-3, which provides that when partition in kind "cannot be conveniently made, the entire subject may be allotted to any party or parties who will accept it, and pay therefor to the other party or parties such sum of money as his or their interest may entitle him or them to...."

This is a procedure that we have had little occasion to discuss. In our earliest and leading case, Corrothers v. Jolliffe, 32 W.Va. 562, 565, 9 S.E. 889, 890 (1889), we acknowledged the right to allotment, but indicated it requires more than a mere offer by one...