Whiting v. Whiting

• Citation: 396 S.E.2d 413,183 W.Va. 451
• Decision Date: 17 July 1990
• Docket Number: No. 19049,19049
• Parties: Harry J. WHITING v. Evelyn L. WHITING.
• Court: West Virginia Supreme Court

Page 413

396 S.E.2d 413

183 W.Va. 451

Harry J. WHITING v. Evelyn L. WHITING.

No. 19049.

Supreme Court of Appeals of West Virginia.

July 17, 1990.

Dissenting Opinion of Chief Justice Neely July 18, 1990.

Syllabus by the Court

1. Equitable distribution under W.Va.Code, 48-2-1, et seq., is a three-step process. The first step is to classify the parties' property as marital or nonmarital.

The second step is to value the marital assets. The third step is to divide the marital estate between the parties in accordance with the principles contained in W.Va.Code, 48-2-32.

2. Unless the parties have made a joint stipulation or property settlement agreement, under Rule 52(a) of the West Virginia Rules of Civil Procedure the circuit court is required to make findings of fact and conclusions of law in its final order which reflect each step of the equitable distribution procedure. The same obligation is imposed upon a family law master under W.Va.Code, 48A-4-4(d).

3. W.Va.Code, 48-2-1(e)(1) (1986), defining all property acquired during the marriage as marital property except for certain limited categories of property which are considered separate or nonmarital, expresses a marked preference for characterizing the property of the parties to a divorce action as marital property.

4. Where, during the course of the marriage, one spouse transfers title to his or her separate property into the joint names of both spouses, a presumption that the transferring spouse intended to make a gift of the property to the marital estate is consistent with the principles underlying our equitable distribution statute.

5. W.Va.Code, 48-2-1(e)(2) (1986), provides for a marital property component to separate property to the extent that the value of the separate property is increased by the expenditure of marital resources. In this instance, the statute permits a tracing of the parties' respective contributions to the property in order to determine the marital and nonmarital components. This statute has no application where the property has been jointly titled and the presumption of gift to the marital estate has not been rebutted.

6. The source of funds doctrine is ordinarily not available to characterize as separate property that property which has been transferred to joint title during the marriage.

7. Under W.Va.Code, 31A-4-33 (1969), where separate funds are deposited in a joint account in the names of both husband and wife, such funds are presumed to be marital property for purposes of equitable distribution.

Roy David Arrington, Marlinton, for Evelyn L. Whiting.

Walter W. Weiford, Marlinton, for Harry J. Whiting.

MILLER, Justice:

This is an appeal from a final order of the Circuit Court of Pocahontas County, dated May 17, 1988, which granted the parties, Harry J. Whiting and Evelyn L. Whiting, a divorce and ratified and confirmed findings and recommendations of a family law master (master) as to the division of their property. Mrs. Whiting contends on appeal that the trial court erred in not awarding her one-half of a final payment on a note obtained from the sale of the parties' jointly owned real estate and of the funds in the parties' joint bank account at the time they separated. We conclude that these assets were marital property subject to equitable distribution, and we reverse the judgment of the circuit court.

I.

In 1965 Mr. Whiting purchased a residential property in Maryland for $25,500. The property was titled jointly in the names of Mr. Whiting and his first wife, Dorothy Clancy Whiting, as tenants by the entirety. When Dorothy Clancy Whiting died in 1974 or 1975, her one-half interest in the property was placed in trust for her daughter. Mr. Whiting subsequently arranged to repurchase this interest from the trustees.

The parties to this action were married on June 7, 1975. Two days later, on June 9, 1975, the repurchase of the trust interest was consummated. At that time, title to the Maryland property was placed in the names of the parties jointly as tenants by the entirety. In order to accomplish this transaction, the parties borrowed $34,000 from a Maryland savings and loan. ¹ The note and deed of trust, also executed on June 9, 1975, were signed by both Mr. and Mrs. Whiting.

The parties lived on the Maryland property until 1981, when they sold it for $120,000. They financed a portion of the sales price by taking a $20,000 note from the buyers. Mr. and Mrs. Whiting used part of the proceeds from the sale, approximately $54,000, to purchase a home in Marlinton, Pocahontas County, West Virginia. The house in Marlinton was titled in the names of both parties as joint owners. They lived there until June 1, 1985, when they separated.

Sometime thereafter, Mr. Whiting received a check in the amount of $15,022.91, which represented the final payment on the $20,000 note from the sale of the Maryland property. The check was made payable to Mr. Whiting only. He deposited $5,700 in the parties' joint bank account, but kept the remaining $9,322.91 as his own property.

In June of 1986, Mr. Whiting instituted divorce proceedings in the Circuit Court of Pocahontas County. The matter was referred to the master, and a hearing was conducted on June 18, 1987. In his report dated October 20, 1987, the master recommended that the marital home be sold and the proceeds divided equally between the parties. Most of the parties' tangible personal property was divided by agreement. ² The master recommended that Mr. Whiting be allowed to keep the $9,322.91 remaining from the sale of the Maryland property and the money in the parties' joint bank account on the date of separation. By order dated May 17, 1988, the circuit court ratified and confirmed the findings and recommendations of the master.

II.

At the outset, we note that the trial court and the master apparently experienced some confusion in applying our equitable distribution statute to the facts of this case. We begin, therefore, with a brief discussion of the statute.

Under W.Va.Code, 48-2-32, equitable distribution is a three-step process. The first step is to differentiate between the parties' marital property and their separate property. For purposes of equitable distribution, "marital property" is defined in W.Va.Code, 48-2-1(e)(1) (1986), as "[a]ll property and earnings acquired by either spouse during a marriage, ... regardless of the form of ownership, ... except that marital property shall not include separate property...." ³ "Separate property" is defined in W.Va.Code, 48-2-1(f), as including property acquired by a spouse before the marriage. ⁴ Whether a particular unit of property is marital or separate property is primarily a question of law. Wanberg v. Wanberg, 664 P.2d 568 (Alaska 1983); Thomas v. Thomas, 259 Ga. 73, 377 S.E.2d 666 (1989); Weiss v. Weiss, 122 Wis.2d 688, 365 N.W.2d 608 (App.), review denied, 122 Wis.2d 783, 367 N.W.2d 223 (1985).

The second step of the process is valuation of the marital property. Under W.Va.Code, 48-2-32(d)(1), the measure of value is the net value of the marital property, ordinarily as of the date of the commencement of the action. ⁵

The final step in the equitable distribution process is division of the marital property between the parties. W.Va.Code, 48-2-32(a), provides a presumption of equal division of the marital estate. ⁶ Under W.Va.Code, 48-2-32(c), this distribution may be altered only if the circuit court determines that equal division of the marital property is inequitable in view of certain economic and noneconomic contributions to or devaluations of the marital estate by either spouse. We recently summarized the provisions of W.Va.Code, 48-2-32(c), in Syllabus Point 1 of Somerville v. Somerville, 179 W.Va. 386, 369 S.E.2d 459 (1988):

"In the absence of a valid agreement, the trial court in a divorce case shall presume that all marital property is to be divided equally between the parties, but may alter this distribution, without regard to fault, based on consideration of certain statutorily enumerated factors, including: (1) monetary contributions to marital property such as employment income, other earnings, and funds which were separate property; (2) non-monetary contributions to marital property, such as homemaker services, child care services, labor performed without compensation, labor performed in the actual maintenance or improvement of tangible marital property, or labor performed in the management or investment of assets which are marital property; (3) the effect of the marriage on the income-earning abilities of the parties, such as contributions by either party to the education or training of the other party, or foregoing by either party of employment or education; or (4) conduct by either party that lessened the value of marital property. W.Va.Code § 48-2-32(c) (1986)."

See also Romine v. Romine, 180 W.Va. 68, 375 S.E.2d 432 (1988); Vance v. Vance, 180 W.Va. 63, 375 S.E.2d 427 (1988). Where an unequal distribution is contemplated, there are additional adjustments that must be considered as set out in W.Va.Code, 48-2-32(d)(2). ⁷

In summary, then, equitable distribution under W.Va.Code, 48-2-1, et seq., is a three-step process. The first step is to classify the parties' property as marital or nonmarital. The second step is to value the marital assets. The third step is to divide the marital estate between the parties in accordance with the principles contained in W.Va.Code, 48-2-32. ⁸ Courts of other jurisdictions have reached the same conclusion with respect to their equitable distribution statutes. E.g., Wanberg v. Wanberg, supra; Brandenburg v. Brandenburg, 83 N.J. 198, 416 A.2d 327 (1980); Rothman v. Rothman, 65 N.J. 219, 320 A.2d 496 (1974); Willis v. Willis, 85 N.C.App. 708, 355 S.E.2d 828, rev'd on other grounds, 86 N.C.App. 546, 358 S.E.2d 571 (1987); Little v. Little, 74 N.C.App. 12, 327 S.E.2d 283 (1985); Smoot v. Smoot, 233 Va. 435, 357 S.E.2d 728 (1987). See generally 27B...