Spooner v. Spooner

• Decision Date: 21 May 2004
• Citation: 850 A.2d 354,2004 ME 69
• Parties: Deborah L. SPOONER v. Stephen A. SPOONER.
• Court: Maine Supreme Court

850 A.2d 354

2004 ME 69

Deborah L. SPOONER v. Stephen A. SPOONER.

Supreme Judicial Court of Maine.

Argued: March 10, 2004.

Decided: May 21, 2004.

Revised May 28, 2004.

Robert A. Laskoff, Esq. (orally), Laskoff & Associates, Lewiston, for plaintiff.

Paul F. Macri, Esq. (orally), David W. Grund, Esq., Berman & Simmons, P.A., Lewiston.

Panel: SAUFLEY, C.J., and CLIFFORD, RUDMAN, DANA, ALEXANDER, CALKINS, and LEVY, JJ.

CALKINS, J.

[¶ 1] Stephen A. Spooner appeals from the divorce judgment entered in the District Court (Lewiston, Daigle, J.), which determined that an investment account containing shares of stock was the nonmarital property of Deborah L. Spooner. Stephen contends that the stock in the account is marital property because (1) it was received from Deborah's mother's trust during the marriage; (2) Deborah's mother had intended the stock to be transferred to Deborah and Stephen jointly; (3) it was placed and remained in a joint account; and (4) a substantial amount of its proceeds were used for marital debts and purchases. Deborah argues that the stock in the account is her nonmarital property because it was a gift from her deceased mother and because Deborah never intended, by placing the stock in a joint account, to make it marital. We agree with Deborah that the stock was a gift to her alone. Because we conclude today that there is a presumption that the joint account is marital property, and because Deborah failed to rebut that presumption by clear and convincing evidence, we vacate the judgment.

I. PROCEDURE AND BACKGROUND

[¶ 2] Stephen and Deborah were married in 1988, and Deborah filed a complaint for divorce in 2001. No children were born of the marriage. The divorce hearing was held on August 29, 2002. The court issued a judgment distributing various items of marital property, including real estate, motor vehicles, and pension accounts, and naming the party responsible for the various items of marital debt. The court awarded Stephen marital property valued at $123,783 and ordered him to pay debts of $15,489. Deborah was awarded marital property valued at $97,433 and ordered to pay debts of $18,260. In addition, the court ordered Stephen to pay Deborah $14,560.50 to "equalize" the distribution of marital property.¹ This resulted in both parties realizing a net distribution of the marital estate of $93,733.50.

[¶ 3] The court further determined that a brokerage account containing assets of approximately $60,000 was Deborah's nonmarital property and set it apart to her.² Stephen appealed, and the sole issue on appeal is the court's decision that the brokerage account is Deborah's nonmarital property. The court did not make findings of fact, and none were requested.

[¶ 4] The brokerage account was opened in 1997. The title on the account is "Deborah L. Spooner and Stephen Spooner JT/ WROS." "JT/WROS" is a common acronym for "joint tenancy with rights of survivorship." A second joint account was opened at the same time with Stephen's name listed first. Beginning in 1997, for each of three years, Deborah's mother transferred stock valued at $10,000 into each account from her trust. The proceeds of both accounts were fully expended by the parties for marital debts, but the accounts remained open.

[¶ 5] Deborah's mother died in 1999, and in June 2000, Deborah received shares of stock valued at approximately $150,000 from her mother's trust. Deborah, as one of the trustees of her mother's trust, transferred her share of the trust stock into the joint brokerage account that had Deborah's name listed first. Deborah testified that her reason for putting the stock into the joint account was because she thought that an account in one person's name would be in limbo if the person died. She also testified that she considered the account to be hers.

[¶ 6] At the time of the divorce hearing, stock valued at approximately $60,000 remained in the joint brokerage account. Approximately $30,000 to $40,000 of the stock value had been spent to pay off Deborah's and Stephen's credit card debt. They both had credit cards in their own names, and they had accumulated substantial balances. Funds from the account were used also for down payments on vehicles for both Stephen and Deborah, repayment of a car loan, Deborah's dental work, and repayment of a college loan for Deborah's son. Market forces also contributed to the reduction of the account value.

II. DISCUSSION

A. Standard of Review

[¶ 7] The determination as to whether property is marital or nonmarital is a question of fact. See, e.g., Murphy v. Murphy, 2003 ME 17, ¶ 20, 816 A.2d 814, 820. We review questions of fact for clear error. However, the determination of the law that is applied to the facts is reviewed de novo. Thus, when we are called upon to determine whether the source of funds rule, the transmutation doctrine, or other rule should be utilized in deciding whether property is marital or nonmarital, we do so de novo without deferring to the trial court's view of the law but honoring the trial court's finding of the facts as long as they are supported by the evidence. See, e.g., Long v. Long, 1997 ME 171, ¶¶ 4-18, 697 A.2d 1317, 1320-24.

B. Gift

[¶ 8] The shares of stock in the contested account were acquired during the marriage and, therefore, are presumed to be marital property. See 19-A M.R.S.A. § 953(3) (1998). This statutory presumption is overcome if the party claiming the nonmarital status of the property demonstrates that the property is one of the exceptions set forth in 19-A M.R.S.A. § 953(2). Property acquired by "gift, bequest, devise or descent" is nonmarital. Id. § 953(2)(A).

[¶ 9] The parties agree that the shares of stock in the brokerage account were acquired by gift. Their disagreement is whether the gift was to Deborah solely or to Deborah and Stephen jointly. Stephen argues that the stock in the account is marital because it came to the parties jointly as a gift, just as the earlier inter vivos gifts of stock were made jointly to the parties by Deborah's mother. Deborah counters that the stock transferred to the brokerage account from the trust after her mother's death came to her solely as a gift as shown by the trust document in which she, and not Stephen, was a beneficiary.

[¶ 10] Stephen argues that this case is similar to Lee v. Lee, 595 A.2d 408 (Me. 1991), in which the wife's father caused land to be conveyed from his trust to the parties jointly, and we held that because the wife had not shown that her father intended that the gift was not to the marital estate, it was marital. Id. at 411. In this case, unlike Lee, Deborah has shown that the gift was made to her and not to her and her husband jointly. The trust document naming Deborah, and not Stephen, as a beneficiary demonstrates that the stock was intended to go to Deborah solely, and not to the parties jointly. The trust document provided that the trust property, not otherwise distributed, was to be divided into equal shares for the settlor's living children and the descendants of any deceased children. Deborah, as one of the living children, was a beneficiary of the trust, and the stock distributed to her was her equal share of the remaining trust property. Stephen was not mentioned in the trust document, and the distributed stock was not intended to go to him.

[¶ 11] In summary, Deborah initially met her burden of rebutting the statutory presumption that the property acquired during marriage was marital by proving that it was a gift to her alone.

C. Placement of the Gift into a Joint Account

[¶ 12] Stephen argues, however, that Deborah's placement of the stock in the parties' joint account and the parties' use of the account to pay marital debts evidenced Deborah's intent to transfer the stock to the marital estate. We have not previously decided whether shares of stock received as a gift by one spouse and then transferred into the joint ownership of both spouses becomes, as a matter of law, marital property. If the gift to Deborah had been real estate instead of stock, and she had deeded the real estate to herself and Stephen jointly, the rule established in Long, 1997 ME 171,697 A.2d 1317, would dictate that the property is marital. Id. ¶ 1, 697 A.2d at 1319. We have not extended the holding in Long to non-real estate property, but neither have we rejected it. This case requires us to determine whether we will apply the source of funds rule, which we have applied when assets are held in an account in one party's name, or whether we will extend the holding in Long to assets in a joint account.

D. Precedent Characterizing Real Estate Held in Joint Tenancy

[¶ 13] To determine which rule is appropriate, we examine the rules that we have applied in the past for determining marital and nonmarital property. Most of the cases have involved real estate. In Tibbetts v. Tibbetts, 406 A.2d 70 (Me.1979), we adopted the source of funds rule for real estate in joint tenancy acquired after marriage with funds that came, at least in part, from one spouse's separate property. Id. at 75. The source of funds rule traces the contribution of funds and sets apart, as nonmarital property, a portion of property in joint tenancy in proportion to the contribution of the nonmarital funds to the acquisition of the property.

[¶ 14] In Carter v. Carter, 419 A.2d 1018 (Me.1980), we adopted the transmutation doctrine and said that when one spouse transferred title of real estate from sole ownership into joint ownership with the spouse, the transfer evidenced the spouse's intent to gift the property to the marital estate. Id. at 1022. Carter established a presumption that real estate transferred into joint tenancy was marital, and the presumption could be rebutted by clear and convincing evidence that it was not the transferring spouse's intent to place the property in the marital estate. We rejected the husband's argument that the transfer evidenced an intent to avoid...