OPINION
Thеse parties were married on July 3, 1976. It was a second marriage for both. It was a rather stormy marriage. They separated for the third and last time and filed for divorce in October 1981.
A trial setting for November 1982 was vacated at husband’s request. In December 1983, a stipulated partial decree was entered in which the divorce was granted and the court rеtained jurisdiction to resolve money issues. The parties also then stipulated to try the case to a special master, Fletcher Catron. Trial was held on December 22, 1983. On April 4, 1984, the special master filed his report, findings of fact and conclusions of law. On December 6, 1984, the special master filed a revised report. On December 19, 1984, wife objеcted to the special master’s report. On March 4,1985, the Honorable Art Encinias, District Judge, filed a final decree adopting the special master’s report, findings of fact and conclusions of law. Notice of appeal was timely filed by wife.
The issues wife raises are:
1. Whether it was error to allow the community to recover both principal pay-down and the аmount of interest paid during the marriage, which benefited the wife’s sole and separate residence. It was error.
2. Whether the court abused its discretion when it denied wife alimony. It did not.
The trial court is reversed as to the first issue and affirmed as to the second issue.
I. It was error to reimburse to the community both $3,000, being the principal paydown, and $24,148, being the amount of interest paid during the marriage which benefited the wife’s sole and separate residence.
The parties were married on July 3, 1976. In October 1978, wife purchased a townhouse. The purchase price was $69,-000. The cash down payment of $10,000 came from wife’s sole and separate money. The balance of $59,000 was financed by way of a real estate contract. Title was taken in wife’s name alone, as her sole and separate property, with husband’s knowledge and consent. Wife’s unrebutted and unchallenged testimony was that she bought the townhouse as an investment. The plan was that when husband received his share of the house sale proceeds from his prior marital residence, wife would sell the townhouse. Wife would contribute her townhouse sale proceeds and husband would contribute his house sale proceeds, and together they would purchase their own marital residence.
Husband received his sale proceeds of $90,000 after the October 1981, separation, and wife received no benefit therefrom.
Frоm the date of marriage until November 1978, the parties lived in a rental property. Their rent payments were $450 monthly. Apparently, in November 1978, they moved into wife’s newly-acquired townhouse, where they lived together until sometime shortly before October 1981, when this divorce action was filed. Between the date of separation and the date of trial, it seems wife alone lived in the townhouse and wife alone paid the monthly payments for the townhouse for those twenty-seven months.
The record shows that during the marriage the parties had monies available from the following sources:
Husband’s wages as a stockbroker of approximately $25,000 annually; husband’s separate trust income of approximately $6,800 annually; wife’s alimony of $400 monthly for one year; wife’s child support of $350 monthly; and wife’s earnings, which are impossible to determine from the record.
During the marriage, the record shows that the parties each kept his/her own bank account into which each deposited his/her own monies. Wife apparently paid for the parties’ day-to-day living expenses from her account. Husband contributed monies to wife’s account as follows:
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After the townhouse was purchased, wife paid the monthly payment of $438 out of her own account. How the parties paid the $450 monthly payment for the rental property in which they lived before the townhouse was purchased is not specifically revealed in the record. However, given that both parties agreed that until 1979, husband contributed only about $200 monthly toward the community expenses paid by wife from her account, one must assume husband paid that rent, in addition to the $200 per month he paid to wife.
At the time of trial, the value of the townhouse was $100,000. The balance of the real estate сontract owed thereon was about $56,000, leaving an equity (without considering costs of sale) of $44,000.
TOWNHOUSE EQUITY
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The special master held that sixty-two months elapsed from the date the townhouse was purchased until date of divorce, thus, at $438 per month, $27,156 community dollars were spent on the townhouse during those sixty-two months. Of the $27,156, $3,000 was principal paydown and $24,156 was interest. Thе monthly payment did not cover taxes or insurance which were paid separately, the amounts of which are not revealed in the record.
As stated above, during the last twenty-seven months of the sixty-two months during which payments for the townhouse were being paid, the undisputed evidence is that husband contributed nothing towards those twenty-seven payments. The community existed as a matter of law until the divorce decree was entered in December 1983; however, it appears that as a matter of reality, the parties behaved as though there were no longer a marriage or a community as of the date of separation in that husband kept and spent all of his $20,500 1982 wages and all of his $21,000 1983 wages, as well as his $6,800 trust income during each of those years of separation without contributing anything toward wife’s living expenses or toward the townhouse payments. Wife, too, kept all of her own 1982 and 1983 wages, the amounts of which are unknown. At the time of trial, she was earning wages of $400 per month; and she was still receiving the child support of $350 per month.
There are two сoncepts that should be considered here: (1) apportionment; and (2) reimbursement.
Apportionment is the principle courts apply when an asset is acquired during marriage using both separate and community monies. At divorce, the asset is apportioned between separate and community interests in a manner which achieves substantial justice.
New Mexico case law has long recognized the principle of apportionment. In Laughlin v. Laughlin,
In Michelson v. Michelson,
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Monies were spent to improve the property during the marriage, and both parties had spent a good deal of time and effort in decorating, designing, furnishing and landscaрing the home.
The court decided that half of the $32,-440 equity was attributable to natural appreciation, and the other half ($16,220) represented the community’s interest. A very similar result occurred in Hertz v. Hertz,
Portillo v. Shappie,
In Chance v. Kitchell,
In Chance v. Kitchell, supra, the New Mexico Supreme Court cited to In re Marriage of Mоore,
The California Supreme Court apportioned the appreсiation equity according to the ratio that the payments on the original purchase price with community funds bear to the payments made with separate funds —i.e., the percentage shares of separate and community funds in the purchase price. It then apportioned the total equity by calculating the separate property share (down payment plus percentage of appreciation equity) and the community property share (principal paydown plus the balance of the appreciation equity).
Applying the Moore formula to the case at bar results in the following apportionment:
APPORTIONMENT OF EQUITY
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While the Moore formula has never been sрecifically applied in New Mexico, it is an equitable formula. The New Mexico Supreme Court has repeatedly held that there is no one method of apportionment to the exclusion of others. The standard is substantial justice. See Portillo v. Shappie. The Moore formula is still applied in California. See In re Marriage of Marsden,
The special master erred in awarding the community $27,156, comprised of $3,000 of principal paydown and $24,156 in interest.
Applying the Moore formula, the award to wife as her separate property is $39,760 (comprised of her $10,000 down payment and $29,760, the separate property share of appreciation equity) and the award to the community is $4,240 (comprised of the $3,000 principal paydown and $1,240, the community property share of appreciation equity).
The matter should be remanded to determine what the principal paydown was in October 1981 when the parties separated and apply the Moore formula using that figure. On December 22, 1983, the error made by the special master was that he applied the concept of reimbursement rather than that of apportionment.
As stated above, apportionment is a legal concept that is properly applied to an asset acquired by married people “with mixed monies” — that is, partly with community and partly with separate funds.
When community money is spеnt to the benefit of separate property, without the acquisition of an asset, for example, when money is paid for interest, taxes and insurance, neither New Mexico statute nor case law authorizes reimbursement. Similarly, when separate money is spent for the benefit of the community, but no asset is acquired, for example, if separate money is spent for food, clothing, travel, etc., reimbursement is not authorized. It is notable that husband cites no authority, from New Mexico or elsewhere, to support the trial court’s reimbursement award. Specific authority to the contrary is found at Mitchell v. Mitchell,
Husband cites to Hughes v. Hughes,
The “interest” which the court awarded was not the interest portion of the mortgage payments. Rather, the court was applying yet another method of apportionment, which method is a four-step formula:
1) The value of the separate asset or the separate portion of an asset at the date of mаrriage is determined.
2) That pre-marriage value is treated as though it had been a well-secured, long-term investment and such interest as a well-secured, long-term investment would have earned is added to the separate premarriage value. The total is the separate property interest.
3) The fair market value of the asset is determined as of the date of divorce.
4) The fair market value of the asset as of the date of divorce is apportioned with the separate property owner taking an interest equal to the value found at step 2 while the community receives the balance of the fair market value.
This method of apportionment was applied by the New Mexico Supreme Court in Laughlin v. Laughlin, and in Katson v. Katson,
II. The trial court did not abuse its discretion in denying wife alimony.
Wife was forty-four years of age at the date of trial. The parties had been married seven years (five years to date of separation). Wife had a GED. During her first marriage, she had not worked out of the home. She was the mother of four. After her first divorce, and during this marriage, she worked as a receptionist, a sales clerk and a real estate salesperson. She does not seem to have been particularly successful at any of these occupations. She suffers from an inner ear disease which results in vertigo and causes nausea. The assets awarded her are meager enough. Clearly, had the trial judge awarded alimony, the award would not have been an abuse of discretion. The standard to determine whether an award or denial of alimony is abuse of discretion is whether the award/denial was beyond all reason, see Hurley v. Hurley,
The matter is remanded to the trial court to apply the Moore formula, using the October 1981 principal paydown figure. Wife is awarded $2,000 toward her attorney fees on appeal. This award is based largely on the fact that husband urged, both at trial and on appeal, a ruling that is contrary to existing New Mexico case law. See Chance v. Kitchell. Husband so urged without citing persuasive authority and without providing a policy аrgument as to why the Chance holding should not control. Counsel should be aware of their responsibilities as officers of the court to advise the court of the existence of case law which is on point, be it supportive or contrary to their client’s position. This is not to suggest that counsel ought not challenge existing case law, but in doing so, counsel should alert the court that such a challenge is being presented and why.
IT IS SO ORDERED.