*2 CAVANAUGH, *, Judge, President Before SPAETH SOLE, ROWLEY, **, McEWEN, BROSKY, DEL WIEAND TAMILIA, JJ. BECK
BECK, Judge: 1) in are under appeals The issues these whether increase, parties’ marriage, in during Divorce Code constitutes marital premarital assets value marital 2) if the increase in value constitutes or whether entire is marital whether the * P.J., appeals participate of these Spaeth, did not in decision expired Superior on Court before the Court because his term rendered its decision. ** Wieand, J., argument participate recused after and did himself appeals. of these the decision should be reduced to reflect the
the increase value factor inflation. increase, during parties’ entire We hold assets is premarital prop- increase is not reduced reflect inflation. erty and that the prop- defines marital as “all Divorce Code1 acquired by party during marriage____” either erty definition 401(e). excepts It from the of marital P.S. § proviso that as certain enumerated assets with marriage” “increase in to those assets the 401(e)(1) (e)(3). 23 P.S. & is marital and the appellant Both appellant Anthony increase in argue appeal on that an the value Tompkins should not be spouse’s premarital property regarded appreciation unless the value is attribut- financial able to the efforts and/or contributions joint *3 to an due to spouses and that the extent increase is both inflation, economic such as it should be excluded. factors the appeals. appeals, Similar underlie both both facts marital the exempt property seeks to from appellant-spouse spouse bought a residence the increased value of which In Anthony, appellant- the the parties’ before the prior marrying house purchased appellee-hus- wife that the market pleas court found fair band. The common $43,500 parties’ at the time the value of the house was $65,000 parties’ separation. at the time of the marriage and $21,500 market The court that the fair ruled parties’ of the mar- during period house the the subject equitable divi- riage property constituted marital Appellant divorce. upon parties’ the sion $21,500 one-half the appellee were each awarded acquired the appellant-husband increase.2 In Tompkins, 2, 1980, 401. April § 1. Act of P.L. 23 P.S. equally the Although the divided between this instance court
2. property, "equitable was marital the increase in even; concept of the the essence division often will not factors,’ considering the all relevant equitable that ‘after division is parties more may just’ one of the a division that awards court ‘deem[ ] The common marrying appellee-wife. house found that the fair market value of house court pleas $42,000 $36,000 parties’ marriage the time of the The court ruled that parties’ separation. time of the at the of the house $6,000 increase in the fair market value mari- of the constituted during period parties’ and distribution division property subject tal Appellant appellee were parties’ divorce. upon $6,000 increase.3 one-half of the each awarded I. marital inquiry comprises threshold is what value, during an increase whether
—particularly, con- spouse’s premarital either assets marriage, of parties’ Pursuant to section 401 stitutes Code, includes all real or Divorce marriage during parties’ personal, either 23 P.S. individually jointly. titled whether spouse, method, of Thus, time, rather than the 401(e)-(f). § con- determines if an item acquisition property under Code. stitutes marital exceptions enumerated limited marital Even the signifi- reflect 401(e)(l)-(7)4 of the Code in subsections Platek, share, half, property.” Platek v. perhaps the lion’s than 401(d). 16, 24, (1982); see 23 P.S. 454 A.2d two, supra. footnote 3. See 401(e) Divorce Code states:
4. Subsection property" all (e) chapter only, means purposes "marital For of this marriage except: party property acquired either *4 (1) exchange property acquired acquired Property marriage. during the marriage except in value for the increase the parties (2) by agreement of the entered Property valid excluded before, marriage. during the or after into except (3) by gift, bequest, devise or descent Property acquired during marriage. in value for the increase divorce, (4) separation date of acquired until the Property after reconcile, however, property separate all provided acquired subsequent if the their divorce. separation until the final sold, conveyed granted, or other- (5) party Property a has which prior to the time good for value disposed faith and wise of commenced. proceedings for the divorce are
593 is property acquired of the time differentiating canee nonmarital property. example, from For property marital 401(e)(1) 401(e)(3) exclude from subsections marital personal property during real or received property any exchange premarital either in parties’ marriage property Nevertheless, or descent. gift, bequest, or devise these by marital classify property as specifically any subsections exchange given such the value of property words, In other if accrued during parties’ parties’ marriage, during period appreciation repre- to either property belonging spouse in the value of itself, parties’ sents, property acquired during in and of 401(e)(1) i.e., property. marital 23 P.S. marriage, See (3). manner, time, it is the rather than the
Because
property
that determines whether
constitutes
acquisition
Code,
Pennsylvania’s
under
Divorce
property
marital
ger
efforts and/or financial contributions are
spouses’
under the
property
to definition marital
Code.5 See
mane
401(e)-(f).
on
emphasis
The Code’s
“when”—not
23 P.S. §
distinguishes Pennsylvania’s
property
acquired
is
“how”—
legislation from the marital dissolution law other
divorce
from
assets
jurisdictions
exempt
attachment,
exempt
levy or seizure
benefits
from
Veterans’
85-857,
2, 1958,
September
pursuant
Public Law
72
to the act
1229,
amended, except
by
for those benefits received
Statute
portion
military
has
of his
veteran where such a veteran
waived
Compensation.
pay in order to receive Veteran’s
retirement
(7) Property
been mort-
to which such
has
extent
value, prior
good
gaged
faith for
or otherwise encumbered
proceedings
are
for the divorce
commenced.
time
(Footnote deleted.)
course,
therefore not
is encumbered
is
5. Of
where
only
equity
encumbered
outright
spouse,
either
in the
owned
spouses
possessed by
spouse
both
should be
one
ascertaining
parties’
property.
purposes
evaluated for
such
equity
If
Accord,
Gregg,
Gregg
acquired equity is marital
(1984);
Marriage Campbell,
re
Mich.App.
N.W.2d 295
present
Colo.App.
We note that
P.2d 275
pleas
concerning
appeals,
raised
the common
no issue has been
property encumbrances.
treatment of
courts’
*5
in
title or
the united efforts
joint
and/or
See,
spouses.
e.g., Harper
financial contributions
both
v.
(1982) (comparing
294 Md.
Given manner, of section time, property acquisition, the instead of categorize is construed to properly 401 Code in the value of all of a any accretion property that the premarital extent property spouse’s exceed parties’ the date of the is on parties’ the time by the value ed divorce, under applies subsection or whichever separation Reeser, Accord, 401(e)(4) In Marriage of the Code. re (Section 14-10-113(4), 930 C.R.S. Colo.App., 635 P.2d 1973). pro in another fashion would Construing Code increase in the value of any result that duce anomalous in exchange premarital property property acquired 401(e)(1), under P.S. would constitute § not premarital property any but the value mari excluded from exchanged for other is legislature presumed Inasmuch as the property. tal result, we or unreasonable to have intended absurd to accord identical treatment both interpret the Code exchanged has and that which been types property —that designate has as marital not—and hence increase, during marriage, parties’ premarital subsection spouse’s all of See 1922(1)of Act of 1 Pa C.S. Statutory Construction 1922(1); Insurance Co. Nationwide Fireman’s Fund Co., 464 A.2d Mutual Insurance injus- not create an This of the Code does interpretation his physical have dint of party may tice for the who necessary ingredients acumen provided labor mental distributing value. and conditions for increased factors into account to take these property, the court free more and make a favorable distribution or even distribute 401(d)(7); all of the asset to that individual. 23 P.S. § Platek. interpretation
Such an of section 401 comports also with “[ejffectuate the Code’s directive to economic justice be- divorced____” 102(a)(6). tween who are 23 P.S. § premarital The existence of a asset may discourage prevent parties’ obtainment of a comparable marital nonowning spouse asset and lull the into a false sense of where, This is security. especially likely occur as in the appeals a residence has judice, sub been obtained by one spouse prior to the parties’ marriage and has occupied been spouses parties’ after the both it Since was not acquired during parties’ the residence does not qualify under section 401 as marital property. *7 Yet, parties’ premarital use of the home acts as a parties’ acquisition disincentive to the of equivalent marital and therefore affords the nonowning spouse little to attain opportunity interest marital property. Nonrec- ognition increase, during period of the parties’ marriage, in the value of the residence unjustly would deprive the nonowning spouse of any economic benefit parties’ derived from the use of the premarital residence. reasons, increase, For the preceding par- ties’ the value of either spouse’s premarital assets is
II. Since the increase in the value of premarital assets is it is to ascertain necessary what consti- tutes an the value of a spouse’s premarital assets. Specifically, we address the appellants’ assertion any appreciation due to regard- inflation should not be ed as an increase in value subject equitable division and distribution.
Neither the term “value” nor the expression “increase in explained value” is by section 401 of the Divorce Code. See, 401(e)(1) 401(e)(3). Hence, 23 e.g., P.S. and the basic §
597 statutory interpretation employed. must be tenets therein, used language fails to define Where a statute according are construed to their phrases and common words usage (plain meaning), technical ordinary approved peculiar are to their according construed phrases words and 1903(a) of Subsection the Statu- appropriate meaning. 1972, 1903(a); 1 Act Fire- Construction Pa.C.S. tory Co. man’s Fund Insurance a to command commodity “the power denotes
Value itself; is exchange power this other commodities a commod- proportional quantities measured commodities____ [Pjrice all other exchanges with ity M. the value of a ‘money commodity.” name’ of simply the (2d 1974); ed. 627 Spencer, Contemporary Economics (rev. 1968). 4th ed. Stated Dictionary Black’s Law of property fair (exchange) market alternatively, willing obliged buy, not purchaser, is “the a but price owner, obliged to sell.” Chel- willing but pay Loan v. Pocono tenham Federal Association Savings 744, Inc., A.2d Sky Enterprises, is a (1982). Therefore, any property the value of i.e., its fair market its relation to other property, function of (exchange) value. logically that can eliminated is not factor
Inflation fair market value. property’s from the determination of (or price level represents general Inflation the “rise goods of all and services ... average prices) level of [or *8 of a unit purchasing power a equivalently] reduction 149, such, comprises and as money,” Spencer, supra, affects the necessarily component marketplace Thus, there is no (exchange) fair market value in distinguish increases reason to between resulting to inflation and increases due marketplace. Such from economic conditions other expressed legislative intent contravenes the distinction proof prob- insurmountable presents nearly the Code and lems.
598 purpose
The
of statutory construction is the ascertain-
ment and
of legislative
execution
intention. Subsection
1921(a)
1972,
Construction
Statutory
Act of
1 Pa.C.S.
1921(a). In
present
case we must determine what the
§
legislature
expression
meant
“increase in value”
which is not defined
the Code. “When the
words
explicit,
statute are not
the intention of the General Assem-
bly may be ascertained by considering, among other mat-
(4)
object
ters:
...
The
to be attained ...
[and]
consequences
particular
of a
interpretation.” Subsection
1921(c)of the Statutory
1972,
Construction Act of
1 Pa.C.S.
1921(c);
Cooperative
Lehigh Valley
Farmers v. Bureau
§
Employment Security, Department
Labor and In-
521,
(1982);
498 Pa.
justice
102(a)(6)
for divorced parties. Subsection
Code,
102(a)(6).
23 P.S.
Underlying this directive is the
is,
alia,
realization that “marriage
inter
an economic part-
assets,
nership whose
upon dissolution of the marriage,
may
equitably
divided and
par-
distributed between the
ties____” Flynn
Pa.Super. 76, 87,
Flynn,
491 A.2d
(1985) (Beck, J.,
concurring and dissenting).
parties’
Where the
economic partnership has existed in a
marketplace
inflation,
influenced by
it is appropriate to
have the property reflect inflation’s effect upon
partner-
ship assets by including
as marital
any increase
spouse’s
value of each
premarital assets due to inflation
parties’
Accord,
Gregg v.
Gregg,
Mich.App.
Otherwise
ano-
produce
property value
of increased
calculation
compu-
from the
removed
If inflation were
results.
malous
asset, con-
premarital
of a
value
appreciated
tation
inflation also be eliminated
that
would demand
sistency
of all other
the increased value
the determination
from
in subsections
including that enumerated
401(e)(3)
identify
of the Code which
401(e)(1)and
marriage,
during
parties’
the increase
But neither sub-
of nonmarital
types
of certain
401(e)(3)
provisions
other
401(e)(1)
any
nor
sections
increased
that defines
language
restrictive
contain
the Code
courts are not
inflation. Because
to exclude
not
language
qualifying
into a statute
inject
empowered
Augustine,
supplied, Worley
legislatively
on the
superimpose
(1983),we should
178,
III. Anthony pleas courts of common Inasmuch as the in- Tompkins properly as marital classified marriages, crease, respective parties’ infla- regarded assets and premarital each spouse’s value of the fair market value component of inseparable as an tion assets, being appealed.7 the orders we affirm those affirmed. Orders JJ., BROSKY, SOLE, join ROWLEY
DEL BECK, J. opinion majority McEWEN, JJ., concurring and join
CAVANAUGH
TAMILIA,
J.
dissenting opinion
dissenting:
TAMILIA,
concurring and
Judge
for consideration before
were combined
appeals
These
single
issue of whether
they concern
en banc as
court
prop-
non-marital
value, during marriage, of
an increase
subject
is marital
erty
*11
1980,
401(d),
quali-
23 P.S.
Code of
under the Divorce
contained
sec-
property”
of “marital
definitions
by
fied
Court, on
(f).
of this
401(e), (1), (3)
panels
and
Two
tion
courts,
conclu-
trial
reached the
from decisions of
appeals
the
but
such increases were
sion that
in value were
computing
of
the increase
theories
underlying
the bench
among
in confusion
and could result
conflict
bar,
en
review.
and
hence this
banc
and re-
followed the rationale
has
majority
While
resolving the central
for
of
minority
purposes
search
of
case, in
increase
finding that
issue of this
mari-
is to be considered
acquired prior to divorce
distribution, its fail-
purposes
tal
increase
inflationary
effect of
state that the
explicitly
ure to
making
distribution and
the court
by
considered
may be
briefs,
Anthony
appellant Debra
respective appellate
neither
In their
7.
concerning
Anthony
the time at
appellee
an issue
David
raises
nor
contrary to the
made. Therefore
property valuation should be
ques-
concurring
dissenting opinion,
contentions made in
has been waived on
should occur
when
valuation
tion
2119;
2101, 2111, 2112, 2116, 2118,
Commonwealth
appeal. Pa.R.A.P.
Smith,
599,
(1983);
Lobiondo,
In re Estate
dence 1979, 18, 1974, separated June on October married marriage the first 1983. It was on November divorced The residence second for the wife. and the husband throughout name wife’s solely remained titled contributed appellee their During $5,400 improvement fund used for joint towards a and materials to made contributions labor property and $3,000. (These amounts are fixed uncontested.) fair market value of the real master and $43,500 and at marriage inception estate at the $65,000. court, The lower of separation the date report were filed both to the master’s exceptions after recommendations, master’s accept not to parties, chose and determined by appellee ignored the contributions in market value the difference value was separa- the date of the date of between $21,500 equally difference be- (1979). He divided the tion from this Or- appealed parties. Appellant/wife tween or due non-marital alleging any der increase was from inflation. entirely *12 on parties were married Tompkins Tompkins, December, were 22,1977 They in 1981. separated and
April the second mar- 1982. It was on November divorced Ap- appellee/wife. and riage appellant/husband for both in interest his first wife’s acquired had pellant previously taking of his the real estate $19,800 name, refinancing acquiring and his sole month were per of Mortgage payments mortgage. $184 marriage as were present funds of joint made from appellee and were appellant expenses. Both upkeep other The fund. earnings a common their employed placed and $36,000in of real estate rose from appraised The master separation the time of 1981. $42,000 $6,000. The increased value to established the be court and increased any portion recommend master would as marital distributed to the wife however, exception apportioned wife’s and court, sustained is, $3,000 to each one-half party. Tomp- and Anthony
I find the factual situations of law to establish a rule to be similar sufficiently kins present cases a matter of to both These applicable cases. appellate review impression first this Commonwealth under the Divorce Code. facts, exposition summary
As with in a clear of the law’s analysis law will assist applicable those facts. application intent, Code, 23 the Divorce
Looking legislative to the 102, provides: P.S. § findings Legislative and intent 102.
§ (a) unit in and family society is the basic preservation paramount and is of family protection Therefore, hereby it is to be the concern. declared public to: policy Pennsylvania of the Commonwealth who justice parties Effectuate economic between grant alimony and or withhold are or separated divorced and according ability pay need actual determination just and insure a fair added) (emphasis rights, settlement their as it us The cases turn on what marital before to an increase in value non-marital relates (f) 401(e) of the Divorce Code. by 23 P.S. provided 401(e) (f) provide: Sections property” “marital (e) chapter only, purpose For of this either party means all property marriage except: *13 exchange
1) property acquired for Property acquired except the increase in marriage during (emphasis added) or (3) by gift, devise de- Property acquired bequest, the increase in value the mar- except scent riage. added) (emphasis acquired real or
(f) personal, by All property, whether to be mari- party during presumed either regardless of whether title is held individual- tal co-ownership form of such as parties or some ly by tenancy by common or tenancy, tenancy joint The is over- presumption entirety. by showing come (e). listed method subsection rule as applicable after Finally, ascertainment as qualifies we what all relevant distribution as apply must factors 401(d) by section as follows: specified annulment, (d) In a for divorce court proceeding divide, shall, request party, equitably of either dis- upon assign the marital between tribute regard proportions marital misconduct such without considering after all relevant just the court deems including: factors
(1) length The of either
(2) Any prior marriage party. health, station, and sources of (3) age, amount estate, income, skills, liabilities employability, vocational parties. and needs each education, one (4) party The contribution power party. of the other training, earning or increased acquisi- for future party of each opportunity and income. capital tions of assets *14 including of of both but (6) parties, sources income The medical, retirement, insurance or other limited to not benefits. party each in the
(7) dissipation contribution or of of preservation, depreciation appreciation acquisition, of including party contribution a property, the marital homemaker. as
(8) apart party. set to each property The value parties established living The standard of during party of each at the
(10) The economic circumstances is effective. of to become property the division time constitutes must concern itself with what inquiry first Our the Divorce Code. precepts of property marital within to 23 P.S. presumption, pursuant with the begin We acquired by if 401(f), property is marital property that all § marriage presumption during the unless parties showing is a that overcome property marital a method in subsection listed property acquired reading section that A of this means (e), supra. literal prior marriage to is acquired by spouse a property However, exception an that it contains marital property. proven property, if it can that the ownership, sole be despite an increase in value it,of was result of including any part (section 401(e)(1),(3)), property, to marriage value, is We property. increased the extent of its 401(e)(1) which would possible reading section reject any only in value limit as exchange prior owned legislature It inconceivable that lacking rationality. differently treated exchanged intend that when as to increased value from owned originally regard to basic value. equivalent, with treated as both are in those states addition, that even analysis our shows value, most of increased view the most restrictive with increased accept some form allowance owned legislature, pursuant 102(a)(6), to 23 P.S. impels us “Effectuate economic justice between ... and and just
insure a fair
determination and settlement of their
Bacchetta,
See Bacchetta v.
rights.”
498 Pa.
401(d)(7)
DISCUSSION primary interpretation source of what constitutes is from community property increased value derived re- eight country. there are this gimes Community begin premise marriage codes with the is a property partnership respective and the owns the talents partnership of each is spouse; acquired by and efforts whatever them is equally community property. shared as Under community 1) regimes, property: there are three kinds of property husband, 2) of the separate property separate property Property wife, 3) community property. Family 8, Canada, Working Paper Law Reform Commission of Domestic Rela- 1975, 19, p. quoted Wadlington, March Materials, Inc., tions Cases and Foundation Press 1984. action or Commingling separate property by occurs when community intent of the confused with parties becomes separate To is property. property determine which had to theories such as community, which is resort has been of title” and “source of funds.” Under “inception acquisition of title title at the time of inception theory, of efforts property regardless controls the character of the community.1 or the by the individuals or contribution of a share or permits acquisition theory of funds source of the other separate property spouse lien equitable part effort on the of financial work to the extent spouse. non-titled adopted varying degrees by
These
have
concepts
been
construing
states in
equitable distribution
Fisher,
Idaho
Id.
(contribution
community)
impress
though
it
funds
...
however,
subject,
right
community
with a
lien ...
(other
community
spouse)
to reimbursement
one-half
applied
payment
funds
toward
thereof.
Id. at
608
v.
Harper
explored
Harper;
extensively
are most
They
caution,
54,
(1982).2
must
609 from Spanish codes derived ever, community property that with the less re- interchangeable are not French law and Community distribution. equitable concepts strictive whereas, “equal” eq- aims at division is under all just looks to what fair uitable distribution § 8-201 —(1) property” property, (e) means the property. “Marital Marital titled, during marriage. acquired by both 1 or however property: property” not include “Marital does marriage; (i) acquired before gift party; (ii) by or from a third inheritance (iii) by agreement; or valid excluded (iv) directly to of these sources. traceable value, provision as Maryland no for increased Code makes Since the value, Code, in inherent aside Pennsylvania increase Divorce does the lien, equitable giving is not considered rise to an contribution from specifically reasonably interpreted to be property and is interpre- Jersey and its the New statute is identical to excluded. This provides: by appellate there. N.J.S.A. 2A:34-23 courts tation judgment from bed a of divorce or divorce In all actions where may award or awards to make such is entered the court and board maintenance, alimony to effectuate parties, in addition to personal, property, equitable both real distribution of an beneficially acquired by them or either legally and which was real, However, property, per- during all such them otherwise, beneficially acquired mar- legally sonal or succession, devise, gift, riage by party by way or intestate either distribution, interspousal except subject equitable shall not be equitable gifts subject distribution. shall be 31, 181, 1, 212, 8; L.1980, L.1971, Dec. c. eff. by § c. § Amended 17, 519, 1, 1980; L.1983, Jan. 1984 eff. Mol, 196, (1974), Painter, Mol v. 147 A.2d 484 65 N.J. 320 In Painter v. N.J.Super. 5, (1977), Griffith, N.J.Su- 185 A.2d 509 Griffith Painter, 382, (1982), adopted in espousing the rule per. A.2d 1035 marriage enjoys wife at the time of property owned a husband or distribution, property, owned at immunity and if such enjoys increases in such time of later immunity elements of value immunity. does not include like Pennsylvania joint spouse, contributions. the other contributed Maine, espoused by concept acquisition not limited to the narrow specifically provides for in- Jersey Maryland as our law and New California, in In re part of matrimonial creased value Moore, Cal.Rptr. P.2d 208 Marriage 28 Cal.3d theory (1980), “equitable of funds” goes beyond lien” or “source from the contribution aside and includes as marital funds, value based on community pro in the inherent tanto increase taxes, each, excluding insurance. interest and the contribution of not contain a community property state and does California is a Pennsylvania section on increased provision in its code similar value. *18 610 Platek, 16, 309 See Platek v. circumstances. equitable “In (1982). enacting distribu- A.2d 1059
454
Code,
Legislature sought
the Divorce
provision of
tion
in
sought
than were
accomplish
objectives
far different
Law____” Bacchetta,
Community
enacting
Property
232,
For reasons discussed we nuances in their variation and entirety. these theories states on distribu- in the statutes of the various interpretations different property, and marital and the tion it as relates to “acquire” of “increased value” on concepts establish our the basis property, dictate we adopting rather than intepretation Pennsylvania law our or the of our of the courts of one other interpretation Colorado, taken in position states. We believe the sister is is holds increase in value marital that is the and un- in since that clear applicable Pennsylvania re the Marriage statement of law. qualified (1979); P.2d 275 In re Colo.App. Campbell, 43 Reeser, 635 P.2d Colo.Ct.App., Marriage statute, meaning identical virtually The Colorado as follows: adopted Pennsylvania, reads only, property” For of this “marital purposes article spouse subsequent acquired by means all either marriage except: to the devise, de- or
(a) by gift, bequest, Property acquired scent; ac-
(b) exchange Property marriage exchange prior to the or quired devise, descent; bequest, acquired by gift, spouse after decree acquired by (c) Property legal separation; par- agreement valid excluded
(d) Property ties. spouse subsequent either acquired by
(3) All property legal separation to a decree of of whether property, regardless to be presumed form of some spouses individually held title is common, tenancy tenancy, coownership joint such entirety, community tenancy by *19 a show- by is overcome of marital presumption in method listed acquired by a ing that the section. (2) of this subsection to the mar- acquired prior spouse An asset of (2)(b) (2)(a) or with subsection accordance or in riage of property, considered as marital shall be this section its the extent that only, article to this purposes of the mar- value at the time exceeds its value present of the acquisition at the time riage or after if of added) (emphasis (4). 14-10-113(2), (3), C.R.S. to will have theory, funds we
If
the source of
adopt
we
in
“increase
value”
of
which
classes
establish two
of the
the efforts
virtue of
by
increases
—that which
distribution,
that which
and
and is counted
parties
indepen-
factors
and other
of economic
by
increases
virtue
not considered
and is
or contribution
of
effort
spousal
dent
bonds,
and
consisting
realty
of
property,
if
example,
For
gift, bequest,
given by
or
marriage
to the
possessed
increase can
and that
descent,
value
increases
devise or
or
off the bond
paying
effort
spousal
to
attributed
be
“in-
it is considered
realty,
improving
mortgage
or bond
realty
An increase
value
creased value”.
can find no
We
not.
conditions would
due to market
conclu-
this
supports
which
Code
in the Divorce
language
for no
allows
language
reading of
sion,
plain
and a
apply
simply be
To do otherwise
exceptions.
lien to the
concept
eq-
partition
law
distribution,
and far
ignoring
expan-
new
more
uitable
legislature.
intended
concept
sive
value,
To exclude
which increased
aside from
parties,
the efforts
contributions
would be
to increase in value which is not
engraft
qualification
exception
That
“except
contained in the code.
would read
value,
only
is
for increase
that
attributable
”
parties during
to the
efforts
(23
is a
legislature
unity
that the
P.S.
presumed
102)
accruing
unity
all benefits
are to be
Pa.Super. 526, 481
King,
shared
See
v.
equitably.
King
Therefore,
(1984).
any increase
A.2d 913
whatever
source,
credited to
solely
unity.
titled
if
recognizes
exceptions
parties
no
do not
code
unity
operative, they
intend the fullness
have
power
by agreement pursuant
alter the presumption
401(e)(2),
agreement
excluded
valid
(Property
to section
before,
into
entered
after
marriage.),
to exclude such consideration.
which serves
293,
The next to resolved is what question be in three may Value be said to increase increased value. 1) efforts or third through fashions: of time, function 2) through worth as a of parties, intrinsic 3) conditions, or scarcity social/economic/technological for Proper ALR4th Date inflation.3 Annot. 34 See us, testimony determine have insufficient 3. In the case before we exactly portions payment much went to interest and how what of taxes, adopted have spousal but since we not of the income went funds, community property theory it is material. of source of Property Being of Distributed Pursuant to Di- Valuation vorce.
The first two factors are considered to be an actual exponential compo- increase in value whereas inflation is an original nent of the value and not an actual increase in According to Ninth New Dic- Collegiate value. Webster’s (9th 1983) ed. inflation is “an increase tionary, and credit money goods volume of relative available resulting continuing general in a substantial and rise in the In plain language, any price level.” result- price to the dilution of the ing from inflation attributable worth not to money supply of the the enhancement of the is, therefore, property question. of the There no worth fashion, actual increase in value. an inverse should the period remain the same of price valuation, increase, to the extent there was an inflationary However, actual is diminished.4 value highest price the market value of the which is the willing willing accept, and a seller buyer pay both informed, and the being fully property being exposed for a time, has within it period any inflationary reasonable from increase as well as intrinsic increase the date premarital acquisition. may The market value be differ- is the for which a price, price ent than the market this actually given can be sold at a time. It is concerned ultimately value with which we must equitable time of distribution. inflationary aspect for the moment the
Putting aside legislative consideration of the increased we turn to increased concept intent and application distribution. equitable our consider- legislature simplified In one has respect carving special out a ation of this issue view purposes. Calif.1980, Moore, Cal.Rptr. P.2d Marriage See In Re 208. *21 in to our chosen fluctuations which are factored 4. These are economic value, therefore, discussed below as determinent of market ascertaining in value. not to be when increase excluded Decree of 23 P.S. 401. court (e) only, proper- For this “marital purposes chapter of during either property acquired by party means all ty” except: the ... marriage
(f) personal, by All whether real or property, acquired during marriage presumed is to be either party of is held regardless whether title property marital parties in some form of co-owner- byor individually tenancy, tenancy in common or ship tenancy such as joint of is presumption property marital by entirety. showing acquired by property overcome a that the by added) (e). (emphasis method in subsection listed applies the law it by Thus we are not bound 401 is applicable. or distribution when section partition its inception restrained title or before unduly by Nor are we presumption property of marital after until non- party alleging property to be by is overcome property.5 marital summarize, 401(e), pursuant property
To to 23 P.S. § marriage property acquired by is that acquired during names, any by value either or both parties, increase efforts of the either to attributable to the or maintain the equity property titled dissipation, deterioration or however avoid transmutation)6 of limited (Concept acquired. or whenever can part Thus by parties, proper- is attributed to contribution effort ty acquired community theory by majority inception espoused title 5. The that holds at least one distribution state states and marriage part part and in after property acquired in before property despite the marital contribution of does not become inception. determined title at its is funds— theory property adopted
6. Illinois has the transmutation — solely proper- commingled funds to owned contribution requires we property. Our law ty presumed be marital is no to the extent there preserve the title individual value.
615 The second level of consideration is an increase in value of property owned at the time of marriage by one of the spouses acquired after the marriage gift, devise or in exchange for separate property, aside from efforts of the parties after marriage. Any value resulting from the considerations above, immediately or due to fluctu- ations market or economic conditions, which enhances the market value of the property, whether or not any effort by involved, was is an increase in value which subjects the consideration as marital property. This conforms to the Colorado view: divorce,
In the following separation, or dissolution of cases, marriage the courts rejected the notion that as a general rule the appreciation in separate value of proper- ty during a marriage constitutes separate or nonmarital the absence of a contribution to the enhance- ment by either spouse. 189, Re 39 Marriage Wildin Colo App 563 P.2d (1977), a dissolution marriage action, the court
pointed out that increases in the value of separate proper- ty were expressly statute, made marital property by that as property, such increases were subject to division under the conditions set forth in the statute. The out, pointed however, court that the fact that in- such creases are marital property does not mandate that such property be divided equally, nor does it necessarily pre- clude the award of all of substantially such only spouse. one
Similarly, (1979, Re Marriage Campbell ColoApp) 72, 275, App Colo 599 P2d divorce action which the upheld court the trial court’s declaration that equity accumulated marriage on the marital resi- dence, which had separate been husband’s was marital property, the court said that the mandate of the statute that separate property separate remains subject to the exception increase in value during marriage is marital (1981, P2d Marriage App)
And Reeser Colo Re effect. is to same 24 ALR4th 460 § 3[b]. construing a state statute to the effect that the
And interest amount of marital asset deter- present its its “the extent that value exceeds mined or at the time value at time (1981, if after the marriage,” Colo acquisition *23 P2d held that the husband in a divorce App) in the total entitled to share action was of former marital appreciation of the value amount of reconciliation period that accrued residence sole owner of the home. after the wife became 453, 465 24 ALR4th § 4[b]. limiting increase adopted Harper, supra,
The view
contribution,
from the holding
of
came
spousal
to that
Maine,
which,
Tibbetts, supra,
the court in
Tibbetts
however,
proper
exclusion as to increase in
specific
has
13 Del.C.
marriage. Also see
acquired prior
ty
“
all
1513(b)(3),
property’
‘marital
means
provides
which
mar
party subsequent
either
property acquired
of property acquired
increase
...
riage except
W.,M.
marriage;”
and Frank G.W. v. Carole
prior (1983).
Those states which theory precepts of title follow inception or the theory acquisition separate which community property law conditions) (as of market a result into “lucrative” (as a result of efforts and contribution and “onerous” Marriage at Krauskopf, Property Marital parties) means. 157, 178-79 Dissolution, 43 Mo.L.Rev. above,
Illinois, exception of its special because means” and allow acquired by “lucrative exempt property by transfer any commingling if transmutation there total or marital contribution. in value receives an increase of inflation as
The treatment throughout country. this treatment unequal varying increase is not considered inflationary jurisdictions, most departing underly- Since we are from the increased value. concepts upon jurisdictions which those ing theories value, reject discounting increased we also arrive applies inflation on value as it to matrimonial effect of First, reason for this is twofold. those of in- eschewing inflation from consideration jurisdictions or work only product creased value look contribution invariably as a maesure of increased market or economic influ- through increase conditions reject spouse, far outside the control of either which would ences Eight statutorily states classify include inflation. separate separate property in the value of distinction as to how the increased value was making no Colorado, above, makes no as noted distinction achieved.7 states, and, alone, statutory provisions all has it therefore, We, find Pennsylvania. policy similar no precedent jurisdictions consideration or from other us to consideration of increases impels reject inflationary of increased value of owned computation proper- from reading The second consideration is that a close ty. to those sections of *24 legislative background statute and the here, no provides the Divorce Code which are under review impose for us to limitations as to the factors any basis in market of matrimonial go which to the increase property. thorough development
I have conducted a review as it relates to this issue. Much country law this law development community property of that focused on clearly that a review to necessary and it is we conduct such court, The lower distinguish application its from ours. Birkel, Birkel Anthony, Pgh.Leg.J. on entirely relied case, (1983), 24 Pa. D That & C3d community property its from specifically authority derived above, law, analyzed favorably cited the cases we would separate property effect that marital contribution to Arkansas, Columbia, Illinois, Delaware, District of 7. Those states are: Maine, Minnesota, "Equitable Carolina. Distribu- Missouri and North Reporter, Update,” Equitable Vol. 2. tion —An Distribution (a more of increased value restrictive measure view be the here). analyzed Numerous the cases were we hold than appellant/appellee authority briefs of and it cited in the permit do not theories espoused that we those is essential legislation. confused with our Not discuss cases to be to leave our in a findings would vacuum the distinctions disputation. confusion invite APPLICATION application legislative intent to a To convert is marital to determine what straightforward procedure any consideration must include that property when apply: following process during marriage pre- is ) acquired 1. All (23 P.S. to be marital at outset. sumed 401(e)) § ) pre- is irrelevant to this
2. The title to such 401(f)) (23 P.S. sumption. § ) showing presumption by 3. rebutted (23 401(f)): acquired P.S. as follows § or in ex- ) marriage before the Property
a. (23 P.S. prior acquired for such change 401(e)(1)) § (23 P.S. ) or descent. gift, bequest, devise By
b. 401(e)(3)) required to ) party is met 4. the burden When above, then shifts to exceptions the burden establish increase in value to establish party the first (§ 401(e)(1),(3)) excepted property marriage proving: and the value at the )
a. The value time divorce, separation time point relevant between enhance- or contributions considering the effort retention, and/or ment or *25 time, condi- economic ) in value increase virtue
b. the market. tions or value, is increased as related to
Once distri- equitable for ascertained, relevant factors all of the 401(d), bution, apply independent in section considered to the division of the property.8 determination distribution, determining it is within the point At this if judge give weight, any, of the trial whatever discretion value, including increased inflationary he desires to factors to multiple be considered under section as one 401(d). given In we note the particular broad discretion 401(d)(7), section “The regard by in this contribu- judge trial of each dissipation party acquisition, preserva- tion tion, appreciation proper- the marital depreciation including party the contribution of a as homemaker.” ty, added) (emphasis there is no formula which to simple note that
We method of de- divide marital from the facts of the individual case. list of rives consideration, 401(d) guideline serves as a for factors although specific the list is neither exhaustive nor as to Thus, factors. weight given to be the various flexibility concomitantly court has of method and as- in rendering sumes its decisions. The con- responsibility equal distribution is not an division of cept marital property. 1, 11, Semasek, A.2d v.
Semasek mind, can precepts apply With these we them to the cases before us. the facts establish fair Anthony Anthony, marriage time of
market value of the at the was $65,000. $43,500 in 1979 separation and at the date of $5,400 appellant alleged gifts The master found and $3,000 improvements and for work and materials toward court, in master’s disregarding the real estate. The 8. To the extent is encumbered at the time of marriage comparison value at of actual value at the time of to actual distribution, point key is still the consideration. ascertained existing point less the then encum- The value at each is determined brance. — = E.g. at the time of Market value less encumbrance pre-marital value. — — pre-marital existing Market value less encumbrance less = value). (marital property increased value *26 620 $21,500 increase of and it took the stated divided
report, the parties. Observing abuse of discre- between the equally Ruth, Ruth v. enunciated tion standard (1983), I this A.2d 1351 believe was error. above, the outlined we first consider procedure Applying any of marital to presumption relevance the Although acquired during marriage. the resi- name, clearly titled in wife’s falls within was dence 401(e)(1), of 23 P.S. increase exception § property acquired to either becomes dur- party attributable to marriage marital distribution. The hus- ing subject $8,400 becomes marital sub- contribution band’s equitable consideration for distribution under to ject 401(d). $21,500 accepting P.S. Even guidelines below) $13,100 (which is there remains questioned figure which must evaluated as to appraisal the increased contribution, by appellee’s virtue enhancement only value and/or as affected inflation. in actual suffi- appraisal of the increase of which there is portion consider distribution is cient evidence to equal to distribu- $8,400. clearly subject Even this is not tion, particularly must be considered with other factors but 401(d)(7): including 23 P.S. § of each dissipation party The contribution appreciation preservation, depreciation
acquisition, party the contribution of a including the marital as homemaker. account, $5,400 into placed was from joint improvements to were made such
substantial as, conditioning, air roofing, landscaping, papering, central addition, doors and windows. painting, lighting, storm $3,000 labor at appellee’s the master estimated the value of same improvement At the completing projects. the home time, support income appellant’s savings, employment children were into account payments going her could The increased value appellee. the income from degree greater have been attributable well although no appellee, financial work contribution Also, produced evidence was establish this. other main- items improvement throughout tenance continued marriage separation and must length be evaluated. continued financial on Appellee contributions an “as needed separation. after there Additionally, basis” was neither might consideration of encumbrances which have existed at distribution, the time of or at the time of nor was there consideration of the benefits to *27 appellant remaining accounting in the residence without for rental value. Final- in ly, the total intrinsic increase and that attributable inflation, apparent should be ascertained. It is that an equal apportionment, the trial is no judge, decreed equitable percentage more than a based on financial contri- bution, work and labor as recommended by the master. factors, Given the above it should possible to ascertain the increase in value from the of marriage date to the date I repeat significance established distribution. that the of the individual in contribution becomes relevant ascertain- ing whether or not there was an increase value and increase, determining the effect of inflationary as these application proper factors have to the proper- division ty are relevant when determination the distribution 401(d). is made under section There are insufficient find- ings aspect to determine either of this case. My formula 1) reduces itself factors: to five market or other value at 2) time of marriage; market or other value at ascertained (see 3)
distribution date footnote the increase supra)-, 4) attributable to effort and of either party; contributions value; 5) increase attributable to intrinsic inflationary effect.
In concluding analysis application its to the cases sub judice, the affirm the courts majority would below both cases. I agree appropriate that affirmance would be in Tompkins parties stipulated as the had to the increased court, value so there is no need to apply lower our rationale to a determination of what the increased value however, would be. is a different matter. Af- Anthony, equivalent firmance on our injustice would be and the part lead the to a constructing superhighway to fulfill the function end; have failed to basic we would dead completed only in this case court lower appeal. of this to a necessary and consideration the evaluation one-half of marital It failed distribution and fair just and, fixing there- time appropriate ascertain determine how the fairly equitably after, failed does distributed. Our law should have been increased equal distribution community property as do require with the conjunction regimes, but Semasek, supra. Divorce Code. mandate factors: following considered the The trial court the time of at ) market value 1. Fair $43,500. was set marriage which $65,- set at separation, at time of ) market value 2. Fair 000. $21,500, these two valuations was
The difference between This evaluation. equally, divided without the court not con- and does unacceptable manner of distribution Sergi. v. Sergi enunciated procedure form Winters, Winters (1986); A.2d 928 *28 1211 512 A.2d factors, equal which are of those It did not consider importance: hearing at the time of ) market value
1. Fair and di- separation at ($72,000), the between value point equitable. Sergi, most to be appear which would vorce Winters, supra. supra; reconcilia- attempted ) points at two
2. The valuation ($69,000), and ($68,000), December July tion: efforts, for one and lasting reconciliation whether on bearing had some separation, after years one-half at distribution. setting value to the increase ) dissipation or The contribution
3. continuing particular, and in parties, respective in-kind work of and monetary separation effect after value. toward that the husband so, and if a factor ) inflation was 4. or not Whether consideration. it is a relevant whether deter- find that once the lower court would majority The Code, was, under increased mined that the erroneous reliance legal if its basis was even Birkel, supra, (increased value to be measured contri- on its and our period marriage), inquiry bution appeal entire focus of this on the end. The inquiry the distribution of the assets. parties was part Anthony above, on this Sergi, exactly identical cited Sergi, of a the increased value In the issue involved issue. $50,000 $36,000 at the date acquisition, at on home valued hearing on $63,000 at the date of the and separation affirming the lower court on its equitable distribution. $27,765, the value of marital finding that at distribution price and value purchase increase between as the separation appropri- date of it ruled out the hearing, Sergi The court fixing value of ate time for provides: Divorce Code which relied on the who parties between justice Effectuate economic grant alimony or withhold separated are divorced ability pay actual need and according to the determination just and insure a parties fair rights, added) their (emphasis settlement of Winters, supra, Accord we where 102(a)(6). 23 P.S. § to increased value reasoning same applied the owned securities. report master’s entirely relied on the court
The lower Rudd, 65 Erie Rudd Pa. D. rejected that it except excluded increase (1982), which & C.3d 699 Birkel, supra, allowed increased instead, followed as a result was increased extent that value value to the established valuation court also marital effort. lower its explain justify and did not separation the time of at doing so. reason acknowledged the efforts master *29 at cohabitation.
reconciliation, attempts including actual following: stated report marital occupancy July joint Following his knee ... rehabilitation home for defendant’s to attempt and to each other to see parties continued marriage. They psychologist their consulted reconcile marriage during at the try to make another agreed Year’s Be- holidays. and New the 1980-81 Christmas the end of that the husband year, 1980 and July tween 44) remaining (N.T. p. although not all the time’ ‘came together made to live attempts were overnight. Several 1980, The last intimate each failed. but July after (N.T. 71). p. of 1980-81 on New Year’s Eve moment was report. Master’s Page of efforts of reconciliation finding this clear
Despite contact from June 1979 December maintaining fixed the value the master purposes so is doing His reason for as of June 1979. property separation he the date of though stated unclear even that the appears of value. It the determination critical to of 23 incorporated exception inadvertantly has master 401(e)(4) (from property): P.S. § date of after until the acquired separation Property however, separate if divorce, provided final subsequent reconcile, all until their divorce. separation separa- the date of beyond value treated increased He has of a continuum part instead of acquisition distinct tion as a to be already determined changing became distribution. subject time of from the to its increased value the time of such at did not cease marriage and Winters, supra. Sergi See separation. formula, the master and untenable a convoluted
Through toward gift of the husband’s the ratio determined ($8,400/$43,- cent per was 19.3 maintenance until the increase 500) of the value $21,500), actually $22,000 (error, as it was separation was 22,000) x $4,246 (19.3% entitled defendant/husband judge The trial increased value. share of pro as his rata reason for of his and, explanation without this rejected separation, the date as of the time to set value selecting distribution, making his reason explaining and without *30 ($21,500) of and it separation at date divided took the value equally. unsupported in law. of this distribution
Thus the basis Rudd, supra, relied on determin- erroneously The master distribution, subject was not to but ing increased value “gift” the of refurbishment by permitting compromised benefit, inure to to the wife’s in-kind contribution funds and allowing percentage husband the compensating to the the husband contributed degree in value to increase consistent, If the were master property. the contribution to continue permitted have this he would the date the the inure to of defendant/husband benefit principle upon on the which charge as a distribution accrued, instead, increased held applied he it but husband, The his through separation. to the date of only and contribution, mortgage the paying had also assisted contribu- taxes, the master considered rent and which 15. report, p. tion the value of the Master’s rationale, adopted master’s rejected trial the judge The Birkel, supra, and above, the as stated took increase and this amount separation divided value to date for the supportable Thus no basis we can find equally. finding, decision, the master’s modifying master’s law, court, court case on the basis lower partly trial Birkel, supra, findings on the partly we reject, which master, made improper, were distribution. on court, reasoning rejecting master’s trial while value, adopted separation increased application doing so, fixing for the value. without date of June 1979 date appropriate this was why discussion as to fair, comply he failed to with why equal division that: requirement of the Divorce Code chapter for the distribution an order made under this [i]n forth reason or reasons shall set the court order. the distribution 404. P.S. § determination continue to a final inquiry must in value to the time all of consider the court must hearing. Specifically, below appropriate fixing Sergi, date determine the dissipation the effect of individual contribution supra, if of inflation on weight, any, increased value distribution. *31 decision, Pa. Court Supreme Duff,
In a recent Duff (1986), in the 251, reversing Superior A.2d 371 Court an additional tax assessment on a tax holding that and joint liability considered a of the marital should be liability Court, through in estate, speaking the a footnote and McDermott, J., stated: to the trial court to this case order allow
We remand
stock,
distribution of the Rorer
equitable
re-evaluate
of the tax
joint liability
into consideration
taking
interest,
circumstances
assessment,
and the
penalties
assessment, penalties
the accrual of such
surrounding
no recommendation as to how
interest. We make
made.
should be
this division
254,
In Tompkins, agreement for the fact that except pertinent equally determined $6,000 the amount parties, In light of owned to be to increased value is no issue as finding, there this not contest do Since this Court. considered *32 value is not increased distribution, whether or only but discretion apparent is no abuse there property, I and would distributing that court the trial by of the court below. the decree affirm 1983, I Philadelphia Anthony Anthony, As to to the pertaining of the Decree portion that would vacate real increased value equitable distribution establish the hearings to for further estate and remand issue raised majority’s 7 denies there is footnote 9. The concerning property valuation time at which in their briefs therefore, and, majority is issue is waived. should be made increase in value what was the the central issue of incorrect because point at some be determined prior-owned must Court, pursuant equity, the Divorce As a court of time. Code, equitable point for the fair and must determine mandate of the argue, particularly when there specious to ascertaining It is value. guide the court or the time to appellate decisions at the were no have value should they particularity when parties, state with must brief, to the reconcilia- appellant referred In his been established. 13) (p. contributions entitling and to the possibly him to more tions 14) raised (p. so that issues appellant of the home in and out on abandoned fixing value were never as to the time lower court appeal. value and its conformance with Opinion. this I would affirm the Decree all other respects.
As to Tompkins v. Tompkins, 226 Harrisburg 1984, I would affirm the Decree of the lower court. McEWEN, JJ.,
CAVANAUGH and join in this concurring and dissenting opinion.