Lead Opinion
OPINION
Wе granted review to decide whether an equitable distribution of marital joint property upon dissolution under A.R.S. § 25-318(A) requires an equal distribution of the assets in this case. We conclude that it does not. We also hold that joint tenancy property and community property should be treated alike under A.R.S. § 25-318(A).
I. Introduction
Anthony Toth and Gloria Snyder Toth met at a senior citizens dance in Mesa in 1992. Anthony was 87 and Gloria was 66. They married a year later on December 13, 1993. The following day, Anthony used $140,000 of his sole and separate funds to buy a house for the couple. They toоk title as joint tenants with the right of survivorship. About two weeks later, Anthony moved out of the marital bedroom, and on January 10, 1994, he filed for an annulment. The court ultimately entered a final decree of dissolution on September 19, 1995. The house was the only property to be divided. The court awarded Gloria $15,000 as her share. She appealed.
The court of appeals decided that A.R.S. § 25-318(A)
II. Analysis
A. Treatment of joint tenancy property under A.R.S. § 25-318
Gloria argues that the gifted portion of the property is her sole and separate property and, therefore, the court must award her half its value under A.R.S. § 25-318(A).
Section 25-318(A) provides that “the court shall assign each spouse’s sole and separate property to such spouse.” It then provides that the court shall “divide the community,
Joint tenancy property is separate, not community, property. Becchelli v. Becchelli
Before 1973, section 25-318(A) did not include joint tenancy property in the equitable (then “just and right”) division, and, as now, prohibited divesting either spouse of sepárate property upon dissolution. From that, we concluded that joint tenancy property could not be divided equitably. E.g., Becchelli
From the 1973 modification, one could argue that the legislature abrogated the rule that joint tenancy property is separate property. But whether property is treated as separate or community has consequences beyond dissolution, particularly with respect to tax liability and the rights of creditors. See Charles Marshall Smith, Arizona Community Property Law §§ 4:4, 4:5 (1995). The statute does not provide that marital joint tenancy property is now, in all respects, community property. It only allows it to be treated as community property upon dissolution. Joint tenancy property remains separate property, but is excepted from the requirement that separate property be assigned to each spouse separately upon dissolution. Justice Holohan observed in his dissent in Becchelli
Thus, under the statute, joint tenancy property and community property are to be treated alike only for dissolution purposes. For that purpose, the court should divide all such property equitably. We thus reject Gloria’s argument that we must treat her share of property held in joint tenancy as separate property upon dissolution.
Gloria also argues that because her share of the property is designated as a “gift” from Anthony, it should be considered irrevocable under the law of gifts. Ordinarily, when property is purchased in the name of one person with money furnished by another, a resulting trust arises in favor of the person furnishing the purchase money. Becchelli
When one spouse buys property with separate funds and places it in joint tenancy, there is a presumption that the spouse intended to make a gift to his spouse of onehálf of the property. Becchelli
B. Meaning of equitable division under A.R.S.§ 25-318
Although A.R.S. § 25-318(A) requires an equitable division of joint property, it also provides that nothing shall prevent the court from considering “excessive or abnormal expenditures, destruction, concealment or fraudulent disposition” of the property in making that equitable division. Gloria argues that the statute requires an equal division of joint property absent exceptional circumstances. She contends that those circumstances are limited to the parties’ relationship to the property, rather than to each other. She characterizes other factors, such as the duration of the marriage, as inquiring into fault, which the statute prohibits.
We disagree for two reasons. First, the legislature’s intent that the division be equitable, not equal, is clearly evidenced by the legislative history of the dissolution statute. In 1973, a proposed version of the statute required an equal division of all common assets. S.B. 1007, as introduced, 31st Leg., 1st Reg. Sess. (Ariz.1973). Senator O’Con-nor then moved to replace “equally” with “equitably,” to be defined as “equаlly absent compelling reasons to the contrary.” Minutes of the Senate Judiciary Committee, Feb. 12, 1973, at 2. The version eventually adopted states only that the court shall make an “equitable” division. The legislature clearly contemplated that the trial court should not be bound by any per se rule of equality, but rather intended the court to have discretion to decide what is equitable in each ease.
Second, the statute does not limit the inquiry to conduct regarding the property. Instead, it expressly instructs the court to divide the marital property equitably. Although the statute forecloses an argument that the listed factors are not relevant, it does not purport to define the universe' of relevance. “Equitable” means just that — it is a concept-of fairness dependent upon the facts of particular cases.
This is not a departure from the general principle that all marital joint property should be divided substantially equally unless sound reason exists to divide the property otherwise. E.g., Hatch v. Hatch,
However, there may be sound reason to divide the property otherwise. The trial court has discretion in this decision. Wayt,
In this case, equal is not equitable. Community property rests on the assumption that the two spouses worked together to accumulate property for the community, each contributing in pecuniary or other ways. Anthony paid, for this property entirely from his separate funds. Gloria made no contribution — pecuniary or otherwise — to the purchase of the house. The marriage lasted two weeks, allowing no time for a marital relationship to develop, or for other equities to come into play. This is not a determination of fault; why the marriage dissolved is irrelevant. This unusual case is one of those “rare occasions when the circumstances and facts are such that, in all fairness to the parties,
The court of appeals found that the trial judge’s division in this case was contrary to Whitmore v. Mitchell,
C. Consideration of marital misconduct
Gloria аrgues that the trial court made a finding of fault when it stated that she had not made a “good faith effort to create a viable marriage.” Amended Decree of Dissolution of Marriage, Sept. 19, 1995, at 3. While the statement does connote fault, it is unclear whether the trial court relied on it in dividing the property. The statement is part of the court’s description of the facts of the case. But in its findings, the court noted only that the marriage was of extremely short duration, and that the husband had paid the entire purchase price of the house, as well as subsequent maintenance costs, solely from his separate property. We note that the court received evidence on the parties’ ages, needs, health, income and personal situations. It heard evidence that Gloria sold her house, that Anthony continued to pay household expenses after he moved out and that Gloria lived in the house for 1½ years thereafter. The court found that Gloria should not receive an equal portion of the residence, and allocated $15,000 as her equitable share. Thus, it may be that the court did not use the “good faith” finding in dividing the property. But we cannot be sure.
III. Conclusion
We vacate the memorandum decision of the court of appeals and remand to the superior court for further consideration of the evidence in light of today’s opinion. The court may allocate equitably rather than equally and the court may consider source of funds. The court may consider other equitable factors as they may bear on the outcome, but the court may not consider fault. It may be, that after reconsideration, the court will conclude that it did not consider fault and affirm its prior allocation. We remand only to ensure that fault played no role in the court’s determination.
Notes
. Section 25-318(A) provides that:
In a proceeding for dissolution of the marriage, or for legal separation ... the court shall assign each spouse's sole and separate property to such spouse. It shall also divide the community, joint tenancy and other property held in common equitably,- though not necessarily in kind, without regard to marital misconduct____ Nothing in this section shall prevent the court from considering excessive or abnormal expenditures, destruction, concealment or fraudulent disposition of community, joint tenancy and other property held in common.
. That amendment gave courts the authority to "order division of [joint] property, or enter an order directing partition of such property.” A.R.S. § 25-318(A) (1962); Becchelli,
Dissenting Opinion
Dissenting.
I respectfully dissent. I do so because I believe the trial court’s unequal division of the home is contrary to Arizona case law, to Arizona statutory law, and to basic principles of fairness and equity. In my view, the court of appeals correctly held that the case should be remanded with instructions for a substantially equal distribution. Mr. Toth chose to make a gift of one-half of the house to Mrs.
A.R.S. § 25-318(A) (“the statutе”) does permit the trial court to divide joint tenancy property “equitably” rather than “equally.” If the legislature intended by this statute to permit courts to order the disgorgement of gifts, it did not say so. Doubtless, the 1973 enactment of the statute
All the money used to purchase the residence located at 2303 North 76th Street was the sole and separate property of the Petitioner/Husband, Anthony Toth. The Respondеnt/Wife, Gloria Toth, did not contribute any money toward the purchase of the residence. The Respondent/Wife, Gloria Toth, did sell her former residence and is now receiving monthly payments from said sale.
* * *
The parties lived together as husband and wife for only two weeks. For one additional week, Petitioner/ Husband, Anthony Toth, lived in a separate room in the marital residence. After approximately three weeks, Petitioner/Husband moved out of the marital residence and has lived in a separate residence since that time.
Petitioner/Husband, Anthony Toth, expected that the parties would each make a good faith effort to live together as husband and wife for the rest of their lives. No evidence has been presented that Respondent/Wife, Gloria Toth, made a good faith effort to create a viable marriage.
THE COURT FINDS that the facts and circumstances of this case indicate that this was a marriage of extremely short duration. Respondent/Wife contributed nothing economically either toward the purchase of the marital residenсe or toward the necessary expenses of utilities and taxes on the residence since its purchase, even though she has remained in the residence since January of 1994....
THE COURT FURTHER FINDS it would be unjust enrichment and a windfall to Respondent/Wife to award her an equal disposition of the value of the marital resi*224 dence. While this Court may not set aside a transaction merely because one of the parties to a marriage contract may have been imprudent or made a poor bargain, nonetheless, the Court must make an еquitable disposition pursuant to A.R.S. sec. 25-318(A).
Any reasonable reading of these findings compels the conclusion that the trial judge made the unequal division because of some perceived fault on Mrs. Toth’s part and to reimburse Mr. Toth because he paid for the house out of his separate funds. Under Arizona law, neither reason authorizes an unequal division of the joint tenancy property.
In Valladee v. Valladee,
First, while § 25-318(A) makes jointly held property susceptible to the same equitable division as community property, we do not believe it eliminates the distinctions between the two forms of ownership. Arizona has long recognized that the general rules of joint tenancy apply between husband and wife. Thus, some consideration must be given to the genеral principles of joint tenancy law when dividing jointly held property under § 25-318(A).
Id. at 309,
The Valladee court next focused on the gift aspect of the ease, which was identical to the situation here. It held that the trial court’s reimbursement scheme conflicted with the presumption of a gift. “The gift to the wife of an interest in the property clearly encompasses any monies spent in the past by husband to acquire it. Thus, to award husband reimbursement here for the sole reason that he used his own funds to acquire the joint properties is, without more, inсonsistent and inequitable.” Id. at 310,
joint tenancy property is not identical to community property. Community property “rests on the assumption that the two spouses worked together to accumulate property for the community, each contributing in pecuniary or other ways.” See maj. op. at 221,
I am unpersuaded by the majority’s effort to distinguish Valladee and Whitmore on the ground that in those cases the unequal division was based “solely” on principles of reimbursement. See maj. op. at 221-222,
The majority readily acknowledges that fault, even if it exists, cannot support an unequal division. Maj. op. at 222-223,
The trial court also found and relied upon the obvious: that this was a short marriage. The trial court obviously blamed Mrs. Toth for the brevity of the marriage. I find no authority for thе proposition that a spouse must remain married for a certain number of years before her right to retain a gift vests, nor has the majority or Mr. Toth cited any. The marriage was as short for Mrs. Toth as it was for Mr. Toth. Because fault cannot be considered, I find no relevance to the length of the marriage.
Under Arizona case law, equitable division has been interpreted to mean a substantially equal division “unless some sound reason exists for a contrary result.” Valladee,
Factors permitting unequal distribution of joint tenancy property should be limitеd to
In summary, no proper reason supports an order requiring Mrs. Toth to return the gift Mr. Toth chose to make. The court of appeals correctly concluded that a substantially equal division should have been ordered. The remand should be limited to ordering an equal division.
. Arizona law establishes that when Mr. Toth used his separate funds to purchase the home in joint tenancy, he presumptively made a gift of one-half of the home to Mrs. Toth. Becchelli v. Becchelli,
. A.R.S. § 25-318 was enacted by Laws 1973, Ch. 139, § 2. Former § 25-318, enacted as part of the 1956 revision to Article 2 of Title 25, amended by Laws 1962, Ch. 45, § 1 and relating to division of. property, was repealed by Laws 1973, Ch. 139, § 1.
