Travis v. Travis, 1998-SC-0525-DG.
| Decision Date | 21 November 2001 |
| Docket Number | No. 1998-SC-0525-DG.,1998-SC-0525-DG. |
| Parties | Jeffrey Wayne TRAVIS, Appellant, v. Lora Sue TRAVIS, Appellee. |
| Court | United States State Supreme Court — District of Kentucky |
AFFIRMING
This dissolution of marriage action presents a single issue for our consideration. Appellant made a $7,500.00 nonmarital contribution towards the total cost of approximately $47,000.00 used to acquire and remodel the marital residence. Seven years later, after the parties separated but prior to dissolution, a fire destroyed the residence and casualty insurance paid $63,000.00 for the loss. The trial court assigned $20,560.44 to Appellant as his nonmarital portion of the insurance proceeds. The Court of Appeals concluded that Appellant had failed to show his $7,500.00 contribution appreciated as a result of general economic conditions, reversed the judgment, and directed the trial court to assign only $7,500.00 to Appellant as his nonmarital share of the proceeds with the remainder divided as marital property. Was Appellant required to show that his nonmarital contribution increased in value as a result of general economic conditions? Because Appellant failed to rebut the KRS 403.190(3) presumption that all property acquired during the marriage is marital property, the insurance proceeds in excess of Appellant's initial nonmarital contribution are marital property.
Following their marriage on August 29, 1987, the parties jointly obtained a $39,368.90 loan from Fredonia Valley Bank and used the proceeds from that loan and $7,500.00 of Appellant's premarital property to purchase a house, relocate the house onto eleven (11) acres of real property owned separately by Appellant,1 and to make improvements to the house including the addition of a second story. Appellee made additional improvements to the interior of the house by painting, wallpapering, and staining. Because of financial difficulties during the marriage, the parties did not reduce the loan's principal balance.
In August of 1994, after the parties separated, but before dissolution, a fire destroyed the house, and casualty insurance paid $63,000.00 for the structure. With the parties' agreement, the trial court entered an order directing that $39,635.86 of the insurance proceeds be used to pay off the loan's outstanding balance and that the remainder of the insurance proceeds, $23,364.14, be placed into an escrow account for distribution by the trial court. The parties stipulated that $7,500.00 of these proceeds represented Appellant's nonmarital contribution, but continue to disagree as to whether any of the remaining $15,864.14 could be characterized as Appellant's nonmarital property. Accordingly, the primary issue before the trial court thus concerned how to distribute this $15,864.14 disputed portion of the insurance proceeds.
Appellant argued that the trial court should divide the disputed insurance proceeds into marital and nonmarital shares using the formula articulated in Brandenburg v. Brandenburg2 — which would entitle him to the lion's share of those proceeds as appreciation on his $7,500.00 nonmarital contribution. Appellee argued that Appellant should receive only $7,500.00 as nonmarital property, and that under the holding of Goderwis v. Goderwis,3, the disputed amount resulted from the joint efforts of the parties and therefore constituted marital property that the trial court should equitably distribute between the parties.
The Commissioner agreed with the Appellant and recommended dividing the proceeds using the so-called "Brandenburg formula"4:
FINDINGS
. . .
2. Both parties stipulated that Petitioner [Appellant] made a $7,500.00 nonmarital contribution for renovation and construction of a house which was an improvement made on the nonmarital eleven acres. The evidence indicated that the total amount of money expended on the house was $46,868.90 which amount included Petitioner's $7,500.00 nonmarital contribution in addition to the loan from Fredonia Valley Bank in the amount of $39,368.90. Paul Riley, President, of Fredonia Valley Bank testified that there had not been any principal reduction of the debt during the parties marriage and that the balance owed plus interest was in excess of the original loan. Mr. Riley further testified that upon receipt of the fire loss proceeds from the insurance company, the mortgage indebtedness to Fredonia Valley Bank in the amount of $39.635.86 was paid in full.
The Respondent's [Appellee's] counsel has argued that Goderwis v. Goderwis, Ky.App. [sic] 780 S.W.2d 39 (1989) should be applied to the circumstances surrounding the improvements made by the parties on Petitioner's nonmarital property. The Goderwis decision deals with the valuation of an on going [sic] auto repair business which had increased in value during the marriage due to the joint efforts of the parties. The issue in Goderwis deals with whether or not the increase in value of a business owned by a spouse prior to marriage which increased in value during the marriage could be awarded to the wife on the basis of her contribution as a homemaker. The court held in the Goderwis decision, that an increase in the value during the marriage could be awarded to the wife when it was shown that she made contributions to the marriage as a homemaker. The Commissioner finds that the Goderwis decision dose [sic] not apply to the case at hand inasmuch as the valuation was not an ongoing business, that this matter involved improvements to nonmarital property which was dealt with specifically by the court in Brandenburg v. Brandenburg [sic], Ky.App., 617 S.W.d [sic] 871, (1981). Under these circumstances the Commissioner will utilize the formula of Brandenburg, supra in determining the nonmarital and marital contribution of each party.
Respondent testified that during the marriage that she had made improvements to the house which included painting and wall papering, which the Commissioner finds to have a value of $1,000.00. In applying the Brandenburg formula to the nonmarital and marital contributions, the Commissioner determines that the Petitioner's nonmarital contribution is $7,500.00 and the marital contribution is $1,000.00 for a total contribution of $8,500.00. Therefore, the marital contribution of $1,000.00 would be 12% of the total contribution and the nonmarital contribution of $7,500 would be 88% of the total contribution under the Brandenburg formula. The nonmarital percentage of the balance of the house insurance proceeds from the fire loss would be $20,560.44. The marital percentage under the Brandenburg formula would be $2,803.70 of which the Respondent would be entitled to $1,401.85. The Commissioner finds that the remaining house proceeds of $23,064.14 after payment of the $39.635.86 to Fredonia Valley Bank, shall be divided $21,962.20 to Petitioner and $1,401.85 to Respondent.
. . .
CONCLUSIONS AND ORDER
. . .
2. The remaining house insurance proceeds in the amount of $23,064.14 shall be divided as follows:
a. Petitioner shall receive $21,962.29 as his nonmarital and marital portion of the house insurance proceeds.
b. Respondent shall receive $1,401.85 as her marital portion of the house insurance proceeds.
Appellee filed exceptions to the Commissioner's report and specifically challenged the Commissioner's finding that Brandenburg governed the distribution of the disputed portion of the insurance proceeds. After allowing the parties to argue the issue, the trial court denied the exceptions and entered a judgment adopting the Commissioner's report.
On direct appeal, the Court of Appeals reversed and remanded with instructions for the trial court to return Appellant's $7,500.00 nonmarital contribution and to divide the disputed insurance proceeds as marital property:
In the present case, appellee [Jeffrey Travis, now Appellant] was awarded $7,500 in nonmarital property from the insurance proceeds. The issue presented is whether appellee is entitled to a percentage of the proceeds proportionate to his nonmarital contribution or if the proceeds should be divided as marital property.
If the value of nonmarital property increases following the marriage as a result of general economic conditions, the increase is deemed to be nonmarital. If the value increases, however, because of the joint efforts of the parties, it is divisible marital property. Goderwis v. Goderwis, ky. [sic], 780 S.W.2d 39, 40 (1989). There is no evidence that appellee would have realized such a dramatic increase in his initial $7,500 contribution based on economic factors alone. During the marriage, the parties made significant improvements to the home including the addition of a second story made possible by the marital debt incurred and the parties' joint efforts. Excluding the additional $7,500 invested as nonmarital property, there is no evidence presented to overcome the presumption that the insurance proceeds are marital property. KRS 403.190(3).
The trial court erred in applying the Brandenburg formula. It should have simply awarded appellee $7,500 as his nonmarital contribution and the remainder divided as marital property in just proportions. KRS 403.190.
This case is reversed and remanded for proceedings consistent with this opinion.
Appellant sought discretionary review in this Court, which we granted, and we now affirm the decision of the Court of Appeals.
The disposition of property in a dissolution of marriage action is governed by statute:
(1) In a proceeding for dissolution of the marriage ..., the court shall assign each spouse's property to him. It also shall divide the marital property without regard to marital misconduct in just proportions considering all relevant factors including:
(a) Contribution of each...
To continue reading
Request your trial
-
Farrell v. Farrell
...that the marital contributions did not cause the increase in value. See Macdonald v. Macdonald, 532 A.2d 1046 (Me. 1987); Travis v. Travis, 59 S.W.3d 904 (Ky.2001); Young v. Young, 606 So.2d 1267 (Fla.Dist.Ct.App.1992). Moreover, this standard is commonly applied in situations where the inc......
-
Grasch v. Grasch
...defined by "its ordinary meaning[;]" to wit, property is "a determinate thing or an interest in a determinate thing." Travis v. Travis, 59 S.W.3d 904, 909 fn. 6 (Ky. 2001). Thus, we must determine whether contingency fee contracts are either "determinate thing[s]" or interests in determinat......
-
Sexton v. Sexton
...states that recognize such tenancies have concluded that a partnership interest may be held by the entireties."). 13. Travis v. Travis, Ky., 59 S.W.3d 904, 908 (2001) ("The disposition of property in a dissolution of marriage action is governed by [KRS 403.190] [.]"); Calloway v. Calloway, ......
-
Hammond v. Hammond
...is often used to achieve tracing when the property before the court includes both marital and nonmarital components. See Travis v. Travis, 59 S.W.3d 904, 909 (Ky. 2001). "The source of funds rule simply means that the character of the property, i.e., whether it is marital, nonmarital, or bo......
-
§ 6.04 Appreciation of Separate Property During Marriage
...of Grady-Woods, 577 N.W.2d 851 (Iowa App. 1998) (court emphasized that homemaking services are sufficient). Kentucky: Travis v. Travis, 59 S.W.3d 904 (Ky. 2001); Goderwis v. Goderwis, 780 S.W.2d 39 (Ky. 1989) ("joint efforts" required). Louisiana: Loyacono v. Loyacono, 618 So.2d 896 (La. Ap......
-
§ 7.05 Using Marital Funds to Pay a Premarital Mortgage or Using Separate Funds to Pay a Mortgage Loan Obtained During Marriage
...351 S.C. 329, 569 S.E.2d 393 (S.C. App. 2002). Tennessee: Kincaid v. Kincaid, 912 S.W.2d 140 (Tenn. App. 1995). [145] Travis v. Travis, 59 S.W.3d 904 (Ky. 2001).[146] Demo v. Demo, 101 Ohio App.3d 383, 655 N.E.2d 791 (1995).[147] Mirand v. Mirand, 53 A.D.3d 1149, 861 N.Y.S.2d 917 (N.Y. App.......
-
§ 7.09 Casualty Insurance
...So.2d 1098 (Fla. App. 1981). Idaho: Desfosses v. Desfosses, 120 Idaho 354, 815 P.2d 1094 (Idaho App. 1991). Kentucky: Travis v. Travis, 59 S.W.3d 904 (Ky. 2001). Louisiana: Cabral v. Cabral, 543 So.2d 956 (La. App. 1989); Trahan v. Trahan, 387 So.2d 35 (La. App. 1980). Missouri: Robertson v......