567 S.W.3d 522
Ark. Ct. App.2018Background
- Gary and Rebecca McGahhey divorced; the circuit court reserved division of certain Little Prairie Farms, Inc. stock and two certificates of deposit (CDs).
- Rebecca inherited one-third of Little Prairie Farms stock before marriage; later she and her sister bought out their stepmother for $300,000 (Rebecca borrowed $150,000 pre-marriage via a note).
- Rebecca made note payments from pre-marital/dividend income in a separate account until 2000, when Gary deposited $40,000 from his separate account to cover a payment; Rebecca said the $40,000 was a gift; Gary sought reimbursement or characterization as marital interest.
- Gary testified the two Arkansas County Bank CDs were funded by an inheritance from his father and held in his name; the trial court nonetheless directed Gary to prove nonmarital status and later found the CDs to be marital property.
- Trial court issued a letter opinion finding the stock purchased during the marriage nonmarital and the $40,000 a gift; on appeal the court reversed the stock ruling and affirmed the CDs as marital property.
Issues
| Issue | Plaintiff's Argument (Gary) | Defendant's Argument (Rebecca) | Held |
|---|---|---|---|
| Whether stock purchased during marriage is nonmarital because paid with Rebecca's inherited/nonmarital funds | Stock (or at least reimbursement) should be nonmarital because Rebecca paid the note with inherited/nonmarital funds and Gary claims contribution for $40,000 | Rebecca argued the later-purchased shares remained her separate property and $40,000 was a gift | Reversed: stock purchased during marriage is marital when acquired in exchange for a note (Kelly v. Kelly controls); court did not reach Gary's reimbursement claim on merits |
| Whether two CDs are nonmarital (inherited) or marital property | CDs are nonmarital—funded by inheritance from Gary's father; Gary provided death certificate and bank records showing joint CDs converted to his name | Rebecca did not refute inheritance; court treated CDs as marital because opened/renewed during marriage and documentation was not conclusive | Affirmed: CDs found to be marital property because evidence showed they were opened/renewed during marriage and not conclusively shown to be acquired by inheritance |
Key Cases Cited
- Kelly v. Kelly, 381 S.W.3d 817 (Ark. 2011) (stock acquired in exchange for a note during marriage is marital even if later paid with separate funds)