White v. White
| Decision Date | 30 March 2001 |
| Docket Number | No. 23917-5-II.,23917-5-II. |
| Citation | 20 P.3d 481,105 Wn. App. 545,105 Wash. App. 545 |
| Court | Washington Court of Appeals |
| Parties | In re the Marriage of Carol Ann WHITE, Respondent, v. William Frank WHITE, Petitioner. |
Christopher R. Sundstrom, Vancouver, for Respondent.
Douglas O Whitlock, Whitlock & Saunders, Vancouver, for Appellant.
The husband in this dissolution action appeals the trial court's division of property. We think the trial court had discretion to divide the property as it did, but we cannot sustain its reasoning. Accordingly, we grant the husband an opportunity for reconsideration.
Carol Ann White (Carol) and William Frank White (Frank) were married in 1973, separated in 1997, and divorced in 1998. During marriage and before 1993, they acquired a family home subject to a mortgage and a family car subject to a security interest.1 It is undisputed that the home and car were community property when initially acquired.
In early 1993, Carol received an inheritance from her father. Later in 1993, she used $4,000 of it to pay off the family car. In May 1994, she used $26,511 of it to pay off the family home. The sum of those payments, $30,511, is the amount presently in dispute.
In June 1997, Carol petitioned for dissolution. A year later, the case went to a bench trial. Carol asked that she be awarded $30,511 as her separate property, and that the remaining property be divided equally. She reasoned that the $30,511 was her separate property when she acquired it by inheritance; that it remained her separate property even after she applied it to the family home and car, unless she intended to give it to the community; that Frank had the burden of proving she intended to give it to the community; that Frank had not met his burden; and thus that the $30,511 was still her separate property at the time of trial. She concluded that her separate property should be awarded to her.
Frank asked that the parties' property be divided equally. He reasoned that the $30,511 was Carol's separate property when she acquired it by inheritance; that it became community property when Carol applied it to the house and car, unless Carol intended not to give it to the community; that Carol had the burden of proving the lack of such intent; that Carol had not met her burden; and that the $30,511 was community property at the time of trial. He concluded that community property should be divided equally.
The trial court embraced Carol's reasoning. It found or concluded in its oral ruling, written findings, or both, that the $30,511 was Carol's separate property when she first inherited it; that the $30,511 was not transformed into community property at the time Carol used it to pay off the house and car unless Carol intended to give it to the community; that Frank had the burden of proving such intent; that Frank had failed to meet his burden; and that the $30,511 was still Carol's separate property at the time of trial.2 In its decree, however, the trial court awarded Carol the first $26,511 of value in the family home, and each party "[o]ne half the net equity of the family home ... minus the [$]26,511.30 the wife was awarded as her separate property."3 It also awarded Carol the first $4,000 of value in the family car, "which shall be considered the wife's separate property[,]"4 and each party one half the remainder. It distributed the other assets and debts in approximately equal fashion.
The question on appeal is whether the trial court properly characterized and awarded the $30,511 as separate property. Carol answers yes, while Frank answers no. A trial court has broad discretion when distributing property in a dissolution case.5 Under appropriate circumstances, it need not divide community property equally,6 and it need not award separate property to its owner.7 According to RCW 26.09.080, the court need only "make such disposition of the property and the liabilities of the parties, either community or separate, as shall appear just and equitable after considering all relevant factors[.]"
When exercising this broad discretion, a trial court focuses on the assets then before it-i.e., on the parties' assets at the time of trial.8 If one or both parties disposed of an asset before trial, the court simply has no ability to distribute that asset at trial.
When exercising its broad discretion, a trial court characterizes each asset as separate or community property.9 The asset is separate property if acquired before marriage;10 acquired during marriage by gift or inheritance;11 acquired during marriage with the traceable proceeds of separate property;12 or, in the case of earnings or accumulations, acquired during permanent separation.13 The asset is community property if it is not separate property,14 which generally means that an asset is community property if acquired onerously during marriage.15 An asset is characterized as of the date of its acquisition,16 and its character does not change thereafter,17 subject to exceptions not pertinent here,18 regardless of whether the asset is improved, or its value enhanced, by property of a different character.19
When exercising its discretion, a trial court is permitted to consider, as one relevant factor, a spouse's unusually significant contributions to (or wasting of) the assets on hand at trial. As Division Three has noted, "Washington courts recognize that consideration of each party's responsibility for creating or dissipating marital assets is relevant to the just and equitable distribution of property."20
Applying these principles here, we hold that the trial court had discretion to do what it did, for the following reasons: (1) The assets before the court at trial, and thus the assets to be distributed at trial, were the family home and family car. (2) The home and car were community property when first acquired, because they were acquired onerously during marriage. (3) The home and car remained community property, even after Carol used part of her separate-property inheritance to pay them off, because the character of an asset does not change after acquisition. (4) The home and car were community property at trial, regardless of whether Carol intended, in 1993 and 1994, to donate the $30,511 to the community. (5) Even though the home and car were community property at trial, the court had discretion to award them, or their value, in any way that was just and equitable; it was not required to divide them equally. (6) Given that Carol made an unusually significant contribution to the value of the home and car when she used $30,511 of her inheritance to pay the debts against them, it was just and equitable to distribute the home and car (a) by awarding Carol the first $4,000 of value in the car and the first $26,511 of value in the home; and (b) by awarding each party half the remaining value.
Although the trial court had discretion to do what it did for the foregoing reasons, it did not use those reasons. Instead, as already seen above, it reasoned as follows: (1) The asset to be distributed at trial was the $30,511 that Carol received from her father. (2) The $30,511 was Carol's separate property when she first acquired it, because she acquired it by inheritance. (3) The $30,511 remained her separate property after she spent it to pay off the house and car-unless, when she spent it, she intended to give it to the community. (4) Frank had the burden of proving that she intended to give it to the community, and he did not meet that burden at trial. (5) Accordingly, the $30,511 was Carol's separate property at trial, and it should be awarded to her as such.
The first of these propositions is incorrect. The family home and family car, not the $30,511, were the assets before the court for distribution at trial. The $30,511 did not exist as an asset after it was spent.
The second of these propositions is correct-and also immaterial to the characterization of the home or car. It may be considered as a factor bearing on the distribution of the home and car, given that the $30,511 was contributed to the home and car.
The third proposition is incorrect. When the $30,511 was spent to pay off the debts on the home and car, it ceased to exist as a separate asset, and it lost whatever character it previously had. In effect, it merged into the home and car without altering their community character, whether or not Carol intended a gift and whether or not she later traced her contribution to her separate inheritance.21
The fourth proposition is immaterial to the characterization of the home and car. Whether Carol intended to make a gift to the community is a relevant factor to consider when dividing the community estate, but it is not a fact that either party had to prove or disprove before the trial court could exercise its discretion.
The fifth proposition is as incorrect as the others. The $30,511 had no character after it was spent, and it could not be awarded as a separate-property asset on hand at trial.
In reaching these conclusions, we do not overlook Frank's reliance on In re Marriage of Hurd.22Hurd holds "that a spouse's use of his or her separate funds to purchase property in the names of both spouses, absent any other explanation, permits a presumption that the purchase or transaction was intended as a gift to the community."23Hurd would apply, assuming it is correct, if Carol had used the $30,511 to purchase the family home or family car. In that situation, her intent to give (or lack of intent to give) would determine the character of the $30,511; the character of the $30,511 would determine the character of the home and car at least in part; and thus her intent to give (or lack of intent to give) would be highly material. Hurd does not apply, however, even assuming it is correct, where Carol used the $30,511 to pay off the home and car that had previously been acquired. Regardless of her intent to give, if any, the use of $30,511 in...
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