Fields v. FieldsFields v. Fields
Lead Opinion
OPINION OF THE COURT
In this action for divorce, plaintiff husband seeks to divest 69-year-old defendant wife of her equitable share of their marital residence, where they have lived continuously for over 31 years and raised their only child, on the basis that the townhouse is separate property that he owns and manages with his mother, and that defendant had no impact on its increase in value. We disagree with plaintiffs as well as the dissent’s basic premise that the townhouse is separate property, and therefore affirm.
The parties were married on August 1, 1970, and approximately 2V2 years later, on March 19, 1973, the couple’s son was born. The wife continued to work outside the home until February 1973, and returned to work outside the home six months af
The husband closed on the townhouse on August 31, 1978 and conveyed a one-half interest to his mother, as a joint owner, on September 6, 1978. Thereafter, from 1982 to 2001, the husband and his mother managed the townhouse as a formal partnership. The mortgages, as well as the maintenance and most renovations, were satisfied through rents and refinancing. Certain renovations were made and paid for by the husband’s mother.
The couple and their five-year-old child moved into apartment 2 until apartment 1 was turned into a duplex with the basement apartment in 1979. The husband and his parents each paid rent to the partnership, of $1,100 per month, for their respective apartments, until 2002.
The couple lived in apartment 1 for five months, until the wife became ill. Believing that the physical conditions of the basement apartment were causing her illness, she moved into vacant apartment 3, for which she paid rent. In 1983, following a burglary in that apartment, she moved into apartment 2, but returned to apartment 1 to practice piano and take baths.
The wife purchased some furniture for apartment 1 and “occasionally” swept and vacuumed the hall in front of the apartment entrance. She testified that she would clean up the lobby during renovations. She also purchased a $600 vacuum cleaner to clean the lobby three times a week, cleaned the mailbox vestibule, swept the interior and exterior steps, used bleach to clean dog excrement from the sidewalk, and raked leaves from a
In addition to these services, the wife purchased a carpet, and a $500 Formica countertop for the marital apartment, as well as paying $700 for flooring in the foyer. She paid $400 for a foyer mirror, and paid for couches, a basement door installation, linen closet, bathroom cabinets and a chandelier.
In 1982, the husband and his mother opened a partnership account at Citibank into which rents and mortgage funds were deposited. He testified that he occasionally deposited his paychecks into this account as well as a $35,000 inheritance, which he used for personal expenses. Occasionally, the account would be used as a “pass through” for his wife’s paychecks. She would deposit the check in the account and a transfer for that amount would be “wired” to her separate account. Other times, the husband would deposit the wife’s check into the account and he would give her cash. In addition to using the account to “accommodate” other transactions, the husband deposited into this account monies he earned from tax preparing and a video business, as well as income from managing a building across the street, which he described as “very small.”
The husband commenced this action for divorce in February 2005, and on March 8, 2006, the court referred the issues of equitable distribution and counsel fees to a Special Referee. The Special Referee found that the marital property titled in the husband’s name totaled $1,234,183.81. This included one half of the $2,625,000 value of the townhouse, less the $309,396 mortgage, and less the $30,000 separate property contribution the husband made to the acquisition of the property, as well 50% of the value of the Citibank account. There were also three other bank accounts totaling a little over $20,000, titled in the husband’s name. The marital property titled in the wife’s name totaled $71,892.60.
Citing to Maczek v Maczek (
The court confirmed the Special Referee’s report in the judgment of divorce, entered June 22, 2007. A money judgment in the amount of $393,118.22 was entered on October 10, 2007 in favor of the wife. The husband appeals, in this consolidated appeal, from both the judgment of divorce and the money judgment. We now affirm.
The subject property, a valuable townhouse, was purchased by the husband in 1978 during his marriage to his wife and served as their marital residence. The parties raised their son in this residence and have lived in various configurations continuously ever since. That the husband used separate property for the down payment and that the property was titled in his and his mother’s name does not change the fact that his half interest in the property is a marital asset. These circumstances merely entitle the husband to a credit for his contribution of separate property toward the purchase of the marital residence,
Now, after living in the townhouse for over 31 years with his wife, where they raised their son, the husband is asking this Court to deem 100% of his half interest in the increase in the property’s value (as well as the Citibank account)
The facts of this case are similar to those in Heine (
Furthermore, “ ‘[e] quit able distribution presents matters of fact to be resolved by the trial court, and its distribution of the parties’ marital property should not be disturbed unless it can be shown that the court improvidently exercised its discretion in so doing’ ” (McKnight v McKnight,
The dissent seeks to divest the wife of her equitable share of the townhouse by reclassifying it as separate property. As such, the dissent argues that the husband is not only entitled to the down payment, but also to one half of the appreciation of the townhouse pursuant to Domestic Relations Law § 236 (B) (1) (d) (3), which states that separate property includes “the increase in value of separate property, except to the extent that
The flaw in the dissent’s analysis is that it incorrectly classifies the townhouse as a “separate” business rather than a marital residence because the husband and his mother formed a partnership, rented some of the apartments, used rent receipts to pay the mortgage and taxes, and refinanced to do major renovations. But title in property is not what defines marital property (Domestic Relations Law § 236 [B] [1] [c]), and the formal partnership between plaintiff and his mother was not formed until four years after the property was purchased. The fact that the marital residence can also be used to generate income, such as in Heine, does not therefore reclassify marital property into separate property. Thus, Hartog v Hartog (
Moreover, it is not for this Court to dictate what a “normal” marriage should be. That the wife spent most of her time in one apartment, but showered and practiced the piano in the apartment used by the husband, is of no moment. Married couples are free to live by whatever arrangement suits them best. Clearly, if the wife were an artist and used one of the units as her studio and spent most of her time there, no one would blink an eye. That the wife chose not to invest any of her funds in the down payment because her preconditions were not met by the husband is also irrelevant. Had she wanted the house without any preconditions but simply did not have funds to contribute toward the down payment, the townhouse would still have been the marital residence for the reasons stated above.
Notes
. The parties had also previously stipulated to equalizing their respective pensions. The wife’s pension was valued at $520,520.25 and the husband’s was valued at $1,173,723.07. Thus, in order to equalize them, the wife received $326,601.50 from the husband’s pension fund.
. This included: cleaning the lobby three times a week; cleaning the mailbox vestibule; purchasing and using a $600 vacuum cleaner for the building; sweeping the interior and exterior steps of the building; cleaning dog excrement from the front of the property; sweeping the building’s sidewalk; sweeping and bagging leaves each year from the maple tree in the backyard; bagging and taking out the building garbage when the husband went to France each summer; washing the lobby curtains; cleaning the lobby windows; polishing the lobby mirror; decorating the master bedroom with curtains and rugs; planting the gardens on the property; installing mirrors in the marital apartment; and washing walls in the building.
In addition to these services performed by the wife, she: purchased the rug for the son’s room; purchased a bathroom cabinet; purchased bathroom wallpaper; purchased a Formica countertop for the marital apartment; purchased flooring for the building at a cost of $700; purchased the foyer mirror at a cost of $400; and paid for couches, a basement door installation, a linen closet, a bathroom cabinet and a chandelier.
The Special Referee noted that the husband acknowledged that his wife was involved in the day-to-day maintenance of the townhouse and that she swept and vacuumed the hall and front entrance.
. The Citibank account was marital property because the husband commingled numerous marital funds in this account and failed to trace them sufficiently to delineate what might have been separate property (see McManus v McManus,
. The wife challenges this distribution, claiming 50%. However, this issue is not properly before us because she never filed a cross appeal. Were we to consider the issue, we would nonetheless affirm. “Equitable distribution does not necessarily mean equal distribution” (McKnight,
Dissenting Opinion
In this divorce action, the record establishes that defendant wife fell woefully short of meeting her burden of showing that she contributed to the appreciation of a building purchased by plaintiff husband and his mother as a business venture. Accordingly, I respectfully dissent.
The parties were married in 1970 but have lived apart for approximately the past 30 years, though sharing occasional meals until 1997. There is one child of the marriage who was born in March 1973. The record indicates that the parties contributed equally to the child’s upbringing. The record also indicates that the parties had a tacit agreement that the wife was free to keep her own money and to do whatever she wanted with it, except that both were to share equally in the costs of the child’s education and transportation expenses. The parties initially had one joint checking account (the Amalgamated Account) that they opened when they first married and that the record shows was kept solely for the convenience of depositing joint tax refund checks.
After residing in rental apartments during the first few years of their marriage, the husband, in August 1978, purchased a five-story building located on West 107th Street. Because the wife wanted a maid and living quarters for the maid, as well as a litany of other criteria to which the husband would not agree, the wife did not participate in the purchase.
The purchase price of the building was $130,000, with a $30,000 down payment. The husband testified that at the time of the purchase he did not have the requisite funds. He was able to produce the $30,000 down payment from money received from his grandparents: $15,000 represented a bequest that he would have received and the other $15,000 the husband’s mother was going to repay to the grandparents.
Shortly after purchasing the building, the husband conveyed a one-half interest to his mother, as a joint owner. Thereafter, from 1982 to 2001, the husband and his mother operated the building as a formal partnership. In 1982, a partnership account was opened at Citibank (the Citibank Account), into which
Shortly after the husband purchased the building, he and the wife moved into one of the 10 apartments located in the building and paid rent to the building partnership each month. For the first few months, the couple lived together in apartment 1 but after the wife got sinusitis, she moved into apartment 3, for which she paid rent. Then, after a burglary occurred in apartment 3, the wife moved into apartment 2, and used apartment 1, where husband was still living, to practice piano and take baths.
At the hearing before the Special Referee, the wife testified as follows as to her contributions to the business venture: initially, she purchased some furniture for the marital apartment; she “occasionally” swept and vacuumed the hall in front of the apartment entrance; she would clean up the lobby after workers finished certain renovations; she purchased a $600 vacuum cleaner to clean the lobby three times a week; she cleaned the mailbox vestibule; she swept the interior and exterior steps and used bleach to clean dog excrement from the sidewalk; and she raked leaves from a maple tree in the backyard starting in 1996. Furthermore, she testified that during one summer, when the husband went to France to visit his mother, she bagged the garbage and put it out because she did not like how the hired man was doing it. She also stated that she washed lobby curtains and cleaned lobby windows as well as polished the lobby mirror; finally, she decorated the marital apartment.
In addition to these services, the wife testified that she purchased a $45 carpet and a $500 Formica countertop for the marital apartment, as well as paying $700 for flooring in the foyer. She also testified that she paid $400 for a foyer mirror, and paid for couches, a basement door installation, a linen closet, bathroom cabinets and a chandelier. Not surprisingly, she offered no testimony from any appraiser or other expert that these routine and minor maintenance efforts and equally minor expenditures for ordinary costs of living somehow enhanced the value of the building itself. Indeed, it defies common sense to think that, for example, raking leaves and occasionally cleaning dog excrement contributed a farthing to the appreciation of the building. Surely a buyer would pay the same price if these maintenance efforts did not take place until the day before the building was shown to the buyer.
Undisputed evidence established as well that the husband collected rents and was in charge of the management of the build
The expert witness appraiser testified that the building was valued at $2,350,000 and that it would be attractive as either a rental property or as an owner-user property. He testified that the most attractive apartments, 3, 4 and 5, contributed to the appreciation, but the wife played no role in the appreciation attributable to these apartments. It was undisputed, after all, that these apartments were renovated and paid for by the husband’s mother. Even more critical here is that the appraiser testified without contradiction that the greatest increase in value was from “market forces.” He explained that in 2004 and 2005, passive market forces alone increased the building’s value by 2% per month, and by 1% per month since that time, up to the time of trial in July 2006.
Following the hearing, the Special Referee found that the wife “was not interested in the investment without an agreement to numerous preconditions . . . and that since husband could not meet wife’s pre-conditions, he invested in the building with his mother.” He also found that “[a]t all times building expenses were paid from rent proceeds.” He further found:
“[Wife] did not decorate the common areas, or apartments when they became vacant. She performed the following activities: sweeping or vacuuming the front hallway and stairs by her current apartment, polishing the mirror and windows in the entry hall by the mailboxes, and cleaning the front steps with pure bleach and water. At some point [in] time during one unspecified summer[ ], she became unhappy with the worker [husband] had engaged for maintenance while he was away in France, so she pitched in with bagging the garbage herself. Since her retirement, [wife] has also raked leaves each fall from the maple tree in the back yard. At no time did she engage in rent collection.”
He further found:
“At no time did [wife] contribute funds for the townhouse from the time of purchase until the present day. At all times parties agree that [husband] carried all the maintenance expenses for the matrimonial apartment, the utilities, and phone bills, and other maintenance costs.”
The court confirmed the Special Referee’s report in the judgment of divorce, entered June 22, 2007. A money judgment was entered on October 10, 2007 in favor of the wife in the amount of $393,118.22. The husband appeals, in this consolidated appeal, from both the judgment of divorce and the money judgment.
Domestic Relations Law § 236 (B) creates two distinct categories of property: marital property that is subject to equitable distribution, and separate property, which is not (see Price v Price,
Initially, the husband met his burden of proving that the subject building was purchased as his separate property. He
The wife’s claim that the husband failed to trace the origins of the down payment, by failing to produce the cancelled checks given to him, is without merit. The husband testified that the money came from his grandparents, and the wife did not challenge this assertion in any way. She did not testify that husband possessed, or could have possessed, sufficient marital funds to pay the $30,000 down payment. Nor did she testify that the fact of the $30,000 gift was unknown to her. Indeed, she did not present any alternative account of how her husband acquired the $30,000. Her sole objection rests on the untenable claim that because the husband cannot produce the cancelled checks that would have been returned to his grandparents, he failed to meet his burden. The husband’s inability to produce checks returned to the grandparents some 28 years ago certainly does not preclude a finding that the $30,000 was a gift (see Chiotti v Chiotti,
Equally without merit is the wife’s claim that the $30,000 the husband received as a gift somehow transmuted into marital property. While the wife asserts that the checks produced by the husband at the closing came from “the parties’ joint Citibank account,” there is uncontroverted evidence in the record that the only “joint” bank account that the parties shared was the Amalgamated Account.
Turning to the main point of contention, since the husband established that the building was his separate property, it was
“In order to obtain equitable distribution of the appreciation in value of the wife’s separate property, the husband was required to demonstrate the manner in which his contributions resulted in the increase in value and the amount of the increase that was attributable to his efforts. The husband failed to sustain this burden, and the testimony at trial established that the appreciation was caused by an upturn in the real estate market” (citations omitted; see also Hartog v Hartog,85 NY2d 36 [1995] and Xikis v Xikis,43 AD3d 1040 [2007], lv denied10 NY3d 704 [2008]).
Under this controlling standard, the wife utterly failed to establish that the appreciation in value of the husband’s half-interest in the building was caused by either her direct contributions to the building or through her efforts as spouse and mother. The record is clear that the wife refused to participate in the purchase of the building. The record also makes plain that the wife’s claimed efforts made on the building’s behalf were actually performed for her own benefit and on a sporadic basis. At best, the sum total of the wife’s contributions to the building constituted basic maintenance that did nothing to increase the value of the building or to undermine the expert appraiser’s unequivocal and uncontradicted testimony.
Of course, Domestic Relations Law § 236 (B) (5) (d) (6) explicitly recognizes that indirect contributions of the nontitled spouse (e.g. services as spouse, parent and homemaker, and contributions to the other spouse’s career or career potential) are as relevant to equitable distribution calculations as direct contributions. However, nothing in the record supports the conclusion that the wife made any indirect contribution to the building’s appreciation in value by conduct that enabled the husband to spend more time in the development of the property. In fact, the record is clear that, as the Special Referee found, “[f)or the past 28 years the parties have lived apart, although they shared occasional meals until 1997.” The Special Referee noted that in 1988 through 2001, rent was paid by the husband for the marital apartment without any contribution by the wife; during this period the parties were already occupying different
Furthermore, nothing remotely indicates that the wife devoted more time than the husband to raising their son or that the husband was able to devote more time to the building because of the wife’s conduct. The evidence bearing on these subjects, in brief, is as follows. At the time of the marriage in August 1970 the husband was a teacher for the New York City Board of Education, and the wife was a full-time student pursuing a master’s degree in education with a part-time job at TWA (which she maintained for 12 years). In the winter of 1971, she obtained a job as a teacher with the Board of Education. During her pregnancy, the wife worked at both her jobs until February 1973. She returned to work in September 1973, almost six months after the couple’s son was born. As the wife testified, she and the husband both contributed to the care of their son during that six-month period. She stopped teaching in 1977 and took a one-year nursing course and then worked as a licenced practical nurse. She returned to teaching, however, in the fall of 1978, but worked two nights a week that fall at a nursing home, and continued to teach until her retirement. Until 1973, the parties lived on the husband’s paycheck. After the wife returned to work in September 1973, the husband took a one-term paternity leave to take care of their son. He also taught at night school and drove a cab during vacation. As the wife testified, the husband took care of their son when she worked nights.
It bears emphasizing once again that the only evidence of the property’s appreciation was supplied by the expert witness appraiser, who testified that the increase in the building’s value was almost entirely attributable to “market forces” (see Price,
The majority assumes that because the building was purchased during the parties’ marriage the husband’s interest in the building is entirely marital property. Thus, although it acknowledges “[t]hat the husband used separate property for the down payment and that the property was titled in his and his mother’s name,” the majority baldly asserts that plaintiffs “half interest in the property is a marital asset.” In doing so, the majority ignores basic statutory precepts regarding equitable distribution, namely that separate property includes both property “acquired before marriage or property acquired by bequest, devise, or descent, or gift from a party other than the spouse” (Domestic Relations Law § 236 [B] [1] [d] [1]) and “the increase in value of separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse” (Domestic Relations Law § 236 [B] [1] [d] [3] [emphasis added]). Thus, to obtain an interest in the building, the burden rested on the wife to demonstrate the extent to which the building’s appreciation was due to her contributions or efforts. As discussed above, she failed to do so. The majority is correct in suggesting that the wife was not required to establish with mathematical, causative or analytical precision the nexus between her contributions to improve the building and the appreciation in value of the building (see Hartog,
At bottom, the majority’s conclusion that all of the appreciation of the husband’s interest in the building is marital property is not grounded in either the facts or the law. Instead, the majority repeatedly stresses that the building “served as the[ parties’] marital residence” and that the parties “raised their son in [the building].” In addition, the majority characterizes the building as “valuable” and makes repeated references to the length of the parties’ marriage and the wife’s age. Of course, none of this has any relevance to the critical legal issue here— whether the wife demonstrated the extent that the building’s appreciation was due in part to her contributions or efforts.
Finally, I concur with the majority that the record demonstrates that the Citibank Account is marital property. Although the account was opened to maintain rents and mortgage funds obtained by the partnership, those funds were commingled with marital property, i.e., deposits of money earned by the husband from his management of a separate building, proceeds from the husband’s other business interests and wages earned by the husband. The husband acknowledged that he could not attribute any portion of the funds in the Citibank Account to any particular source of money because the funds in the account were “a mishmash.” Thus, he failed to trace adequately the source of the funds in that account and consequently failed to rebut the presumption that all of the funds in the account are marital property (see McManus v McManus,
Mazzarelli, J.P., and Renwick, J., concur with Acosta, J.; Catterson and McGuire, JJ., dissent in a separate opinion by McGuire, J.
. The Special Referee determined that husband’s one-half interest in the building, minus a $309,396 mortgage and minus $30,000 of husband’s separate property used to purchase the property, was marital property. He valued the property at $2,625 million, making the husband’s interest, minus these deductions, equal to $1,127,802.
. At the outset of the trial, the parties stipulated to equalize their pensions and tax deferred annuities with the New York City Board of Education. As a result, the husband transferred $326,601 from his total fund to the wife’s total fund of $520,520.
. Even if there were some factual basis for finding that indirect efforts of the wife played some causative role in the appreciation of the building (and there is not), only that part of the appreciation would be marital property. As the Court of Appeals stressed in Hartog, “to the extent that the appreciated value of separate property is at all aided or facilitated by the nontitled spouse’s direct or indirect efforts, that part of the appreciation is marital property subject to equitable distribution” (85 NY2d at 46 [emphasis added; other emphasis deleted; internal quotation marks omitted]).