ROBERT LEE JOHNSON v. DORIS WILKIE JOHNSON
No. 471PA85
IN THE SUPREME COURT OF NORTH CAROLINA
12 August 1986
317 N.C. 437 | 346 S.E.2d 430
Defendant must therefore receive a new trial on the charge of first degree rape of Sonia Hasbun. We find no error in defendant‘s other convictions and the judgments based thereon.
Case No. 83CRS86775 — No error.
Case No. 83CRS86781 — No error.
Case No. 83CRS86782 — New trial.
Case No. 83CRS86783 — No error.
Case No. 83CRS86784 — No error.
Case No. 83CRS86785 — No error.
Justice BILLINGS took no part in the consideration or decision of this case.
1. Divorce and Alimony § 30 — personal injury settlement — marital or separate property — immateriality of
The statute entitling each spouse to sue and recover damages for personal injuries in his or her name alone,
2. Divorce and Alimony § 30 — personal injury award — separate or marital property — analytic approach
Courts which employ the analytic approach in determining whether an award for personal injury received during the marriage constitutes marital property consistently hold that the portion of the award representing compensation for non-economic loss, i.e., personal suffering and disability, is the separate property of the injured spousе; the portion of an award representing compensation for economic loss, i.e., lost wages, loss of earning capacity during the marriage, and medical and hospital expenses paid out of marital funds, is marital property.
3. Divorce and Alimony § 30 — personal injury settlement — separate or marital property — adoption of analytic approach
The Supreme Court adopted the analytic rather than the mechanistic approach for determining whether proceeds representing a settlement recovered by a spouse upon a claim for his or her personal injuries sustained during the marriage of the parties constitutes marital property subject to distribution upon dissolution of the marriage or whether they are the separate property of the injured spouse.
4. Divorce and Alimony § 30 — personal injury settlement — separate or marital property — remand for evidence and findings
An order of distribution of marital property which found that the proceeds of a $95,000 “net settlement” received by the husband after the separation of the parties upon his claim for personal injuries received during the marriage were the separate property of the injured husband must be reversed and remanded where the record contains no evidence as to what components or elements of recovery were represented by the “net settlement.” On remand, the injured husband will have the burden of showing what amount or proportion of the whole represents compensation for loss of, or injury to, his separate property, to wit, compensation for his pain and suffering, disfigurement, loss оf earning capacity subsequent to separation, lost wages subsequent to separation, and hospital and medical expenses incurred subsequent to separation. Should the wife claim that any portion of the “net settlement” represents compensation for loss of, or injury to, her separate property, she may attempt to so prove by a preponderance of the evidence if the pleadings are found to allege such a claim.
5. Divorce and Alimony § 30 — personal injury settlement — failure to prove compensation for separate injury
Proceeds of the husband‘s $95,000 “net settlement” for personal injuries received during the marriage will be classified as marital property to the extent that the parties fail to prove that the $95,000 compensates for injury to separate property.
There is no presumption in North Carolina that property acquired during the marriage is marital property.
Justice MARTIN concurring.
ON discretionary review of an opinion of the Court of Appeals, 75 N.C. App. 659, 331 S.E. 2d 211 (1985), affirming the 13 March 1984 equitable distribution order of Sherrill, J., presiding at the 11 July 1983 Civil Non-jury Term, District Court, MECKLENBURG County. Heard in the Supreme Court 15 May 1986.
Wray, Layton, Cannon & Parker, P.A., by John J. Parker, III, and Patricia B. Edmundson, for plaintiff-appellee.
Hamel, Helms, Cannon, Hamel & Pearce, P.A., by Nicki Levine, Thomas R. Cannon, and A. Elizabeth Green, for defendant-appellant.
MEYER, Justice.
By this case, we are confronted with an important question of first impression in this jurisdiction: whether proceeds representing a settlement recovered by a spouse upon a claim for his or her personal injuries sustained during the marriage of the parties constitute marital property subject to distribution upon dissolution of the marriage or whether they are the separate property of the injured spouse.
The panel below, affirming the order of the district court, held that such proceeds are the separate property of the spouse who sustained the personal injuries. The “majority” opinion below, authored by Phillips, J., is grounded on the premise that
We reverse and remand.
The plaintiff-husband and the defendant-wife were married in 1957. On 28 February 1981, the husband was involved in a serious motorcycle accident which resulted in a fifty percent permanent disability of his right foot. The parties separated on 5 August 1981. One year later, on 13 August 1982, the husband filed a complaint for divorce based on the one-year separation. At approximately the same time, he received a “net settlement” of his personal injury claim in the amount of $95,000. The wife filed a motion for equitable distribution on 8 Septembеr 1982. Each party filed affidavits in support of his or her contentions as to the marital property subject to division. The wife listed the assets resulting from her husband‘s personal injury settlement as marital property; the husband claimed these assets as his separate property.
The trial court specifically found in its 13 March 1984 order that the $95,000 settlement, its proceeds, and property purchased therewith are plaintiff-husband‘s separate property as defined by
Defendant-wife assigns as errоr the trial court‘s finding, conclusion, and order that “the personal injury settlement received by the Plaintiff as the result of a motorcycle accident in 1981, its proceeds and property purchased therewith are his separate property as the same is defined in
I.
[1] We must first eliminate any confusion engendered by the Court of Appeals’ misinterpretation of
Chapter 52 of our General Statutes is entitled “Powers and Liabilities of Married Persons.” (Emphasis added.) The predecessor of
The earnings of a married woman by virtue of any contract for her personal service, and any damages for personal injuries, or other tort sustained by her, can be recovered by her suing alone, and such earnings or recovery shall be her sole and separate property as fully as if she had remained unmarried.
C.S. 2513 (1919).
As pointed out in Patterson v. Franklin, 168 N.C. 75, 79, 84 S.E. 18, 21 (1915) (Clark, C.J., concurring), this provision was apparently enacted in response to Price v. Charlotte Electric Ry. Co., 160 N.C. 450, 76 S.E. 502 (1912). The majority opinion in Price intimated that the Martin Act of 1911 (“which practically constitutes married women free traders as to all their ordinary dealings,” id. at 452, 76 S.E. at 503) did not abrogate the ancient rule that the right of action for a married woman‘s earnings and for damages resulting from her tortiously inflicted personal injuries belongs to her husband who is a necessary party in a suit to recover those damages оr earnings. See N.C. Code of Civil Procedure, Title V, § 56 (1868) (when married woman is a party, her husband must be joined unless the action concerns her separate property); Syme v. Riddle, 88 N.C. 463 (1883) (husband entitled jure mariti to the proceeds of his wife‘s services (her wages); he alone could sue for and recover these proceeds. He is vested with this right in exchange for his obligation to support his wife and children.). Cf. Baker v. Jordan, 73 N.C. 145 (1875) (woman who sold her real property the day before her marriage to plaintiff without his knowledge or consent defrauded him). See generally Com-
These antiquated rules were grounded on the theory that a married woman‘s legal existence merged into that of her husband; she lost all of her property and her legal capacity.1 By definition, these rules did not apply to single or divorced women. The eventual statutory abrogation of the common law rules finally resulted in married women having personal and individual rights, during coverture, to their own wages and claims for their personal injuries, and the right to sue for these individually.
In his foresighted opinion recognizing a wife‘s cause of action for loss of consortium, Chief Justice Clark, an early champion of women‘s rights, explained the need for, and the result of, the enactment of C.S. 2513, now
At common law the husband could maintain an action for the injuries sustained by his wife for the same reason that he could maintain an action for injuries to his horse ... or any other property; that is to say by reason of the fact that the wife was his chattel. . . .
. . . .
By the married women‘s provision in the Constitution of 1868, Art. X, sec. 6, this conception of ownership by the husband whereby upon marriage all the personal property of the wife became the property of the husband and he became the owner of her realty during his lifetime, was abolished. The courts in this State continued for a long while, notwithstanding, to hold that the husband could recover his wife‘s earnings and the damages for injuries done her; but by the act of 1913, now C.S. 2513, it was provided that her earnings and damages for torts inflicted upon her were her sole and separate property for which she could sue alone.
Hipp v. Dupont, 182 N.C. 9, 12, 108 S.E. 318, 319 (1921). See also Mims v. Mims, 305 N.C. 41, 48-49, 286 S.E. 2d 779, 785 (1982);
Chapter 52 has no application to single or divorced men and women.
On the other hand,
The North Carolina equitable distribution scheme has been characterized as falling “into what has aptly been characterized as a ‘deferred community property law’ system.” Sharp, Equitable Distribution in North Carolina: A Preliminary Analysis, 61 N.C. L. Rev. 247, 249 (1983) (footnote omitted). Pursuant to the “deferred community property” equitable distribution scheme in North Carolina, community property principles do not apply during marriage. “If, however, the marriage ends in divorce, the property is distributed according to community property principles.” Comment, The Development of Sharing Principles in Common Law Marital Property States, 28 U.C.L.A. L. Rev. 1269, 1282 (1981). See also Unif. Marital Prop. Act § 4, 9A U.L.A. 21, 30 comment (1983) (“Those family-law interеsts set forth in marital property definitions in equitable distribution statutes are delayed-action in nature and come to maturity only during the dissolution process.“). Cf. Mims v. Mims, 305 N.C. 41, 54, 286 S.E. 2d 779, 788 (“The primary focus of our common law rules is to determine beneficial ownership of property acquired during marriage by giving effect to what was intended at the time the property was acquired. . . . The Equitable Distribution Act is designed, on the other hand, to divide property equitably, based upon the relative positions of the parties at the time of divorce, rather than on what they may have intended when the property was acquired.” (Emphasis added.)).
The most important difference in the community property system and the common law system upon which the North Car-
Under the community system, the nonacquiring spouse has a vested, present ownership interest in one-half of the community рroperty. If the same property were similarly acquired in a common-law state, the nonacquiring spouse would have no vested, present interest in the property. At most, such a spouse would have a form of inchoate expectancy in a portion of the property in the event that the acquiring spouse predeceases or a potential right to a portion of the acquiring spouse‘s property on divorce.
Greene, Comparison of the Property Aspects of the Community Property and Common-Law Marital Property Systems and Their Relative Compatibility With the Current View of the Marriage Relationship and the Rights of Women, 13 Creighton L. Rev. 71, 87 (1979).
Under North Carolina‘s equitable distribution scheme, the fact that legal title to property acquired during the marriage is in one or the other spouse, or in both, is not controlling in the initial classificаtion of property pursuant to
Therefore, because
II.
Resolution of the issue before us must be based on аpplication of the facts to
§ 50-20. Distribution by court of marital property upon divorce.
. . . .
(b) For purposes of this section:
(1) “Marital property” means all real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of the separation of the parties, and presently owned, except property determined to be separate property in accordance with subdivision (2) of this section. . . .
(2) “Separate property” means all real and personal property acquired by a spouse before marriage or acquired by a spouse by bequest, devise, descent, or gift during the course of the marriage. . . . Property acquired in exchange for separate property shall remain separate property regardless of whether thе title is in the name of the husband or wife or both and shall not be considered to be marital property unless a contrary intention is expressly stated in the conveyance. The increase in value of separate property and the income derived from separate property shall be considered separate property.
A.
In her brief submitted to the Court of Appeals, defendant-wife contended that the proceeds of her former husband‘s personal injury settlement are “marital property” because the proceeds are not “separate property” since they were not “acquired by [plaintiff] before marriage or acquired by [plaintiff] by
The mechanistic approach is literal and looks to the general statutory definitions of marital and separate property and concludes that since the award was acquired during the marriage and does not fаll into the definition of separate property or into any enumerated exception to the definition of marital property, it must be marital property. 2 Valuation and Distribution of Marital Property § 23.07[1][a] (J. McCahey ed. 1985). E.g., In re Marriage of Fjeldheim, 676 P. 2d 1234 (Colo. App. 1983); In re Marriage of Gan, 83 Ill. App. 3d 265, 38 Ill. Dec. 882, 404 N.E. 2d 306; Nixon v. Nixon, 525 S.W. 2d 835 (Mo. App. 1975); Maricle v. Maricle, 221 Neb. 552, 378 N.W. 2d 855 (1985); In re Marriage of Mack, 108 Wis. 2d 604, 323 N.W. 2d 153 (Wis. Ct. App. 1982) (result should now be different under Wisconsin‘s new Marital Property Act; see infra note 2).
In their arguments to this Court, however, both parties seem to urge us to adopt what has been characterized as an “analytic” approach to the resolution of the issue. The analytic approach asks what the award was intended to replace, 2 Valuation and Distribution of Marital Property § 23.07[1][a] (J. McCahey ed.
[2] In this case, plaintiff-husband argues that the settlement proceeds are his separate property because they represent “[p]roperty acquired in exchange for separate property,”
In the same fashion as pointed out in Soto, the body which [the husband] brought to the marriage is certainly his separate property. The compensation for injuries to his personal well-being should belong to him as his separate property. Any expenses incurred by the community for medical care and treatment and any loss of wages resulting from the personal injury should be considered community in nature, and the community is entitled to recover for such losses.
Jurek v. Jurek, 124 Ariz. 596, 598, 606 P. 2d 812, 814. Accord In re Marriage of Brown, 100 Wash. 2d 729, 675 P. 2d 1207 (1984) (en banc, overturning ninety-two-year-old Washington rule that personal injury recoveries are community property). See also W. S. McClanahan, Community Property in the United States § 6.27 (1982); 4A Powell on Real Property § 625.2[2] (1982).
Although the analytic approach is most often associated with community property states, it has been adopted in decisions from equitable distribution jurisdictions. E.g., Gloria B.S. v. Richard G.S., 458 A. 2d 707 (Del. Fam. Ct. 1982); Campbell v. Campbell, 255 Ga. 461, 339 S.E. 2d 591 (1986); In re Marriage of Gerlich, 379 N.W. 2d 689 (Minn. App. 1986); Van De Loo v. Van De Loo, 346 N.W. 2d 173 (Minn. App. 1984); In re Marriage of Blankenship, Mont. ---, 682 P. 2d 1354 (1984) (by implication; Supreme Court remanded for findings as to purpose and terms of workers’ compensation award).
In the very recent case of Campbell v. Campbell, 255 Ga. 461, 339 S.E. 2d 591 (1986), the Georgia Supreme Court said this:
The property which we have found to be outside the maritаl estate is property which is very personal to the party to whom it belongs and property which was in no sense generated by the marriage. A personal injury claim settlement, to the extent that it represents compensation for pain and suffering and loss of capacity is peculiarly personal to the party who receives it. For the other party to benefit from the misfortune of the injured party would be unfair. However, to the extent that the settlement amount represents compensation for medical expenses or lost wages during the marriage, the settlement may be considered an asset of the marriage.
Id. at 462, 339 S.E. 2d at 593.
On the other hand, at least one equitable distribution state court has expressly rejected the analytic approach rationale in interpreting its statute. Platek v. Platek, 309 Pa. Super. 16, 454 A. 2d 1059 (1982) (legislative history compels result).
Our own Court of Appeals was recently presented with the question of whether insurance proceeds, paid to a husband when he was permanently injured in a motorcycle accident during the marriage, were properly classified as marital property. Little v. Little, 74 N.C. App. 12, 327 S.E. 2d 283 (1985). In Little, the husband had been issued a life insurance policy with accident benefits. After his injury — which left him partially paralyzed from the waist down — and before the parties separated, the insurance company paid proceeds in a lump sum of $100,000 as “Family Accident Benefits” and also paid the husband‘s medical and hospital expenses. The wife‘s insurer also paid the medical and hospital expenses.
A unanimous panel of the Court of Appeals seemed to use the mechanistic approach in holding that “[a]s the insurance proceeds were not acquired by bequest, devise, descent, оr gift, [
We note that the majority opinion of the panel below states a basic premise of the analytic approach in support of its holding:
The obvious purpose of the Equitable Distribution Act is to require married persons to share their maritally acquired property with each other — it is not to require either party to contribute his or her bodily health and powers to the assets for distribution — and the funds that the appellant [wife] claims to have a right to shаre in were paid to the appellee [husband] for injuries suffered by his body, which, of course, he had before the marriage.
Johnson v. Johnson, 75 N.C. App. 659, 661, 331 S.E. 2d 211, 212. Indeed, as early as 1921, this Court recognized the uniquely personal aspect of an injured party‘s action and recovery for pain and suffering incident to negligently inflicted personal injury. Then Chief Justice Clark wrote, “We do not think that the husband could now recover compensatory damages for [his wife‘s] physical and mental anguish . . . which are matters purely personal to her, and for which she alone can recover.” Hipp v. Dupont, 182 N.C. 9, 14, 108 S.E. 2d 318, 320.
B.
[3] We have carefully reviewed the reported opinions of the several states which have addressed the issue before this Court, and we have studied the views of the various commentators on the subject. After weighing the relative strengths and weak-
We recognize that by this decision we assume a minority position among the equitable distribution states which have addressed the issue. However, we are convinced that the analytic approach is consistent with the spirit and letter of our Equitable Distribution Act. Because we agree with the reasoning of those equitable distribution states which have adopted the analytic approach to resolving the issue before us, we also adopt that approach.
As the New Jersey Superior Court stated in Amato v. Amato, 180 N.J. Super. 210, 434 A. 2d 639 (App.Div.1981):
The literal language of the statute ought not limit our inquiry to the time when the compensation is received. The purpose for which the property is received should control. Insurance funds, for example, paid to replace property destroyed by fire would remain the separate property of a spouse if the destroyed property had been owned by the spouse before marriage. So, too, we must look at the purpose for which the compensation was received during the marriage to determine if it is subject to distribution. If we view the recovery here simply as the replacement or restoration, so to speak, of the physical and mental health a spouse brought to the marriage, it is like an exchange for property possessed before the marriage. Under both the common law and community property systems an injured spouse should keep funds which replace assets brought to the marriage.
Id. at 219, 434 A. 2d at 643 (quoting Harmon v. Harmon, 161 N.J.Super. 206, 214-218, 391 A.2d 552, 556-57 (App.Div.1978) (Botter, J.A.D., concurring)); see also Jurek v. Jurek, 124 Ariz. 596, 598, 606 P. 2d 812, 814 (1980); Cook v. Cook, 102 Idaho 651, 653, 637 P.2d 799, 801 (1981).
Characterizing a personal injury recovery based on the purpose for which it was received permits separаte treatment of the various components of the recovery.
Van De Loo v. Van De Loo, 346 N.W. 2d 173, 176 (Minn. App. 1984).
[4] The record on appeal in the instant case contains no clue whatsoever as to what “various components” or elements of recovery are represented by the $95,000 “net settlement.” The defendant-wife, in her affidavit listing items she claimed to be “marital property,” listed a “personal injury settlement” valued by her at $100,000. She did not claim that plaintiff-husband‘s cause of action for personal injuries was marital property — probably because plaintiff‘s claim on his cause of action had already been liquidated as the result of his receipt, after the separation of the parties, of a “net settlement” in the amount of $95,000.
To summarily classify the $95,000 as separate property of the plaintiff-husband merely because a check in that amount was received by him after separation of the parties would ignore the classification scheme of our Equitable Distribution Act. In order to classify the $95,000 for equitable distribution purposes, the trial court was required to determine the nature of the asset. Was it a gift? An inheritance? Earnings of a spouse? Proceeds from the sale of marital property? Compensation for injuries to the body of one spouse, as well as for medical expenses and/or lost wages during the marriage? Only after determining the nature of the asset received by one spouse after separation, yet claimed by the other to be “marital property,” may a classification be made of that asset as between “marital” or “separate” property.
The record is devoid of any evidence or findings of fact as to the actual nature of the $95,000 exсept for the following stipulation of the parties, apparently entered for purposes of appeal:
[T]he plaintiff was injured in an automobile accident on February 28, 1981, and as a result, the plaintiff had a cause of action for personal injuries. The plaintiff recieved [sic] a net settlement of $95,000.00, which was paid to him in 1982, after the separation of the parties but before the judgment of divorce was entered.
We have already discussed the well-known fact that awards or settlements arising from a “personal injury” claim frequently are composed of many elements of recovery, some of which represent compensation for injury to, or loss of, marital property and some for injury to separate property of the injured spouse. Many
In the instant case, the trial court‘s identically worded conclusion of law and judgment in its equitable distribution order of 13 March 1984 relating to the disputed property states:
1. The personal injury settlement received by the Plaintiff as the result of a motorcycle accident in 1981, its proceeds and property purchased therewith are his separate property as the same is defined in
N.C. G.S. 50-20(b)(2) free of all claims of the Defendant.
In support of this conclusion and judgment, the trial court entered its “finding of fact” that:
5. In 1982, the Plaintiff received the sum of $95,000.00 as a settlement for personal injuries sustained by him as the result of a motorcycle accident in 1981; the said personal injury settlement, its proceeds and аll property purchased therewith are not marital property as claimed by the Defendant, but rather, is separate property as those terms are defined by
N.C. G.S. Section 50-20(b)(1) and(2) and belongs to the Plaintiff free and clear of any claims of the Defendant.
This record contains no factual basis upon which the trial judge could conclude (as he apparently did) that the $95,000 “net settlement” represented compensation solely for loss to the separate property of the plaintiff-husband. There is no indication of what, if any, evidence was produced as to the composition of the “net settlement“; indeed, the defendant-wife admits in her brief that “[w]e do not know how much of the plaintiff‘s award was for lost wages, medical care or lost services.” Therefore, the record “evidence” does not support the trial court‘s conclusory finding of fact, conclusion of law, and order to the effect that the entire $95,000 is the sole and separate property of the plaintiff-husband. We must therefore remand the matter for proceedings at which evidence will be received and findings of fact and conclusions of law entered as to what elements of recovery are represented by the $95,000 “net settlement” and in what amounts or proportion to the whole.
[5] Because each element of recovery comprising the $95,000 “net settlement” must necessarily compensate for loss of, or injury to, the injured spouse‘s separate property, or the non-injured spouse‘s separate property, or the marital property of the spouses, any portion of the “net settlement” not proved by a preponderance of the evidence to compensate for loss to a spouse‘s separate property must, necessarily, fall into the category of “marital property.” Therefore, to the extent that the parties fail to prove that the $95,000 compensates for injury to separate property and is therefore properly classified as separate property in the amounts proved, the proceeds of the plaintiff-husband‘s personal injury “net settlement” shall be classified as marital property4 and subject to distribution according to
[6]
Reversed and remanded.
Justice MARTIN concurring.
I write to state that although the majority does not expressly hold tо the contrary, I conclude that the mandate of the statute creates a presumption that a settlement award representing the value of a cause of action which arose during the marriage of the parties and before separation is marital property.
In addition to the foregoing, I disagree with a minor aspect of the majority‘s opinion. The majority states that:
On remand, the injured spouse, plaintiff-husband, will have the burden of showing what amount or proportion of the whole represents compensation for loss of, or injury to, his “separate property,” to wit, compensation for his pain and suffering, disfigurement, loss of earning capacity subsequent to separation, lost wages subsequent to separation, hospital and medical expenses incurred subsequent to separation. He may satisfy that burden by a preponderance of the evidence.
While I agree that compensation for pain and suffering, loss of earning capacity subsequent to separation, lost wages subsequent to separation, and hospital and medical expenses incurred by the injured party subsequent to separation may be separate property, I do not agree that compensation for “disfigurement” occurring during marriage and prior to separation should always be considered separate property. Disfigurement distinctly may affect the earning capacity of a marital partner, as is recognized in our workers’ compensation statutes. See
Otherwise, I concur with the majority opinion.