*1 Wayne TRAVIS, Jeffrey Appellant, TRAVIS, Appellee.
Lora Sue
No. 1998-SC-0525-DG.
Supreme Kentucky. Court of
Nov. *2 $7,500.00 only Appellant assign
court proceeds nonmarital share as his as marital remainder divided with the required to Appellant property. Was in- nonmarital contribution show general of in value as a result creased Appellant Because conditions? economic 403.190(3) pre- KRS to rebut the failed during property acquired all sumption that property, the the is marital Haverstock, Haverstock, Bell Gary R. & Appellant’s proceeds in excess of surance Pitman, Murray, Appellant. for Counsel are marital contribution initial nonmarital Cartee, Hill, Lynn Olive James E. Rita property. Appellee. Story, Eddyville, Counsel for
II. BACKGROUND MEMORANDUM OPINION Following August their THE OF COURT parties jointly the obtained $39,368.90 Valley from Fredonia Bank loan
AFFIRMING
from that loan
proceeds
and used the
$7,500.00
premarital proper-
I.
ISSUE
house,
ty
the house
purchase
relocate
pres-
This dissolution of
action
of real
onto eleven
acres
single
ents a
issue for our consideration.
separately by Appellant,1 and to
owned
$7,500.00
Appellant made a
nonmarital
improvements
including
to the house
make
ap-
contribution towards the total cost
story. Appellee
of a
addition
second
$47,000.00
proximately
used to
acquire
inte-
to the
improvements
made additional
remodel
the marital
residence.
Seven
by
wallpapering,
painting,
rior of the house
later,
years
parties separated
after the
but
Because of financial difficul-
staining.
dissolution,
prior to
destroyed
fire
during
marriage,
ties
did
casualty
paid
residence and
insurance
principal
the loan’s
balance.
reduce
$63,000.00
loss. The trial court
$20,560.44
parties sep-
August
In
after the
assigned
Appellant
as his
dissolution,
arated,
pro-
a fire de-
portion
of the insurance
but before
house,
casualty
Appeals
stroyed
insurance
ceeds.
Court
concluded
$63,000.00
paid
for the structure. With
Appellant
had failed to show his
$7,500.00
trial court en-
appreciated
parties’ agreement,
as a re-
$39,635.86
conditions,
general
directing
an order
sult of
economic
re-
tered
proceeds
pay
be used to
off
judgment,
and directed the trial
insurance
versed
unless there are
Appellant
had
income derived therefrom
As
inherited
(DRC) ap-
significant
Domestic Relations Commissioner
which
activities
either
propriately
"the eleven
is ...
found that
acres
in value of said
contributed to the increase
restored
which shall be
earned there-
property and the income
403.190(2)(a):
to him.” See
from[].”
property” means all
ac-
"[M]arital
added).
(emphasis
Appellee does not dis-
Id.
spouse subsequent to
quired
either
finding
pute
or the trial court's
the DRC’s
marriage except:
Appellant
assignment
"(a) Property acquired by gift, bequest, de-
his nonmarital
vise,
during
marriage and
or descent
outstanding
loan’s
balance and that the
eleven acres. The evidence indicated
remainder
proceeds,
money
that the total amount
expend-
$23,364.14,
placed
into an
ed on the
escrow ac-
house was
which
count
amount
for distribution
included Petitioner’s
trial court.
*3
parties
$7,500.00
The
nonmarital contribution in
stipulated that
addition to
the loan from
proceeds
Valley
these
Fredonia
Bank
represented
Appellant’s
$39,368.90.
contribution,
the amount of
Paul Riley,
nonmarital
but continue to
President,
Valley
as to
Fredonia
Bank
disagree
any of
tes-
whether
the remain-
tified that
$15,864.14
any princi-
there had not
ing
been
could be characterized as
pal
during
reduction
debt
nonmarital
Accord-
parties marriage and that
the balance
ingly,
primary
issue before the trial
plus
owed
was in
excess
court thus concerned how to distribute this
original
Riley
loan. Mr.
further testi-
$15,864.14 disputed portion of the insur-
fied that upon receipt of the fire loss
proceeds.
ance
proceeds from the insurance company,
Appellant argued that
the trial court
mortgage
indebtedness
Fredonia
should
disputed
pro-
divide the
insurance
$39,635.86
Valley Bank in the
amount
ceeds into marital and nonmarital shares
paid
in full.
using the formula articulated in Branden-
Respondent’s
[Appellee’s] counsel
burg v. Brandenburg2
enti-
would
—which
Goderwis,
has argued that
Goderwis
tle him to the
pro-
lion’s share of those
Ky.App.
[sic]
appreciation
$7,500.00
ceeds as
on his
should
applied
to the circumstances
nonmarital
Appellee argued
contribution.
surrounding
improvements
made
that Appellant
should
only
receive
parties
on Petitioner’s nonmarital
$7,500.00 as
nonmarital
and that
property. The Goderwis decision deals
under
holding
Goder-
Goderwis v.
going
with the valuation of an on
[sic]
wis,,3,
disputed
amount resulted from
repair
auto
which had in-
business
joint
efforts of the
there-
creased in
during
fore constituted marital property that the
due to
joint
parties.
efforts of the
trial court
equitably
should
distribute be-
The issue in
Goderwis deals
wheth-
parties.
tween the
er or not the increase in value of a
agreed
Ap-
Commissioner
with the
prior
business
a spouse
owned
pellant and
dividing
pro-
recommended
marriage which
in value
increased
dur-
using
ceeds
the so-called “Brandenburg
ing
could be awarded to
formula”4:
the wife on the basis of her contribution
as homemaker. The court held
FINDINGS
decision,
Goderwis
that an increase in
during
the value
could be
parties stipulated
2. Both
Peti-
awarded to the wife when it was shown
$7,500.00
[Appellant]
tioner
made a
non-
that she made
to the mar-
contributions
riage
renovation and
as a homemaker. The Commis-
construction of a
which
an
house
sioner finds that the
decision
Goderwis
improvement
on the
apply
[sic]
dose
to the case
hand
(1981).
Ky.App.,
Brandenburg,
2.
Brandenburg
supra
S.W.2d 871
4.See
note
2 at 872-874.
(1989).
Ky.,
The trial in applying court erred and the income derived Brandenburg formula. It should have significant therefrom unless there are $7,500 simply appellee awarded as his activities of either which con- nonmarital contribution and the remain- tributed to the increase value of der just divided as marital said property and the income earned proportions. KRS 403.190. therefrom; *5 (b) Property acquired in exchange
This case is for reversed and remanded property acquired for before the proceedings marriage consistent with this or in for opinion. exchange property acquired devise, descent; by gift, bequest, or Appellant sought discretionary in review (c) by Property acquired spouse a af- Court, this granted, which we and we now separation; ter a legal decree of affirm the decision Ap- of Court of (d) by Property agree- excluded valid peals. of parties;
ment and (e) property of III. DIVISION OF REMAINING acquired to before the PROCEEDS extent that increase did re- such of disposition property in a sult from the efforts of marriage governed dissolution action is during marriage. by statute: (3) by All property acquired either (1) In a proceeding dissolution of spouse marriage and after the before ..., court shall as- legal a separation pre- decree of is spouse’s each sign property to him. regard- to marital property, sumed It also shall proper- divide the marital less of whether title is held individual- ty regard without marital miscon- ly by spouses or form some in just duct proportions considering joint such co-ownership tenancy, as all including: relevant factors common, tenancy by tenancy (a) spouse each ac- Contribution of entirety, community property. quisition property, of the marital The presumption property of marital cluding contribution of a a that showing overcome homemaker; property acquired by a method (2) fisted section.5 subsection this (b) property apart Value of the set spouse; each Thus, in dissolution of (c) actions, marriage; par- Duration of the a trial court’s division of the 5. KRS 403.190. spouse after acquired either pro- property requires three-step
ties’ property6 legal a decree of (1) marriage and before trial court first characterizes cess: property.”9 Af- separation is ... non- property as marital7 or each item record, agree we (2) ter review marital;8 assigns the trial court then Appellant failed Appeals the Court party’s property nonmarital each disputed that the presumption to rebut equi- the trial court party; finally, proceeds were tably the marital between divides assigning the trial court erred therefore parties. proceeds to portion disputed Here, Appeals found that the Court of nonmarital Appellant the trial court erred at the outset of An will often process it found item property division when and marital both nonmarital disputed consist of portion that a occurs, a trial components, and when appreciation Ap- proceeds constituted separate parties’ pellant’s court must determine nonmarital contribution formula, and, using as- and marital shares or interests signed portion dispute in the on the basis of evi the amount Kentucky court. courts Appellant as his nonmarital dence before the 403.190(2)(e). typically applied the “source of under The Court have property or Appellant concluded had not funds” rule10 to characterize Appeals and mari to determine introduced evidence sufficient overcome 403.190(3) property.11 tal interests such “[a]ll the KRS *6 attempts by Kentucky’s appellate equitable the court. The latter 6. Previous division "property” may jurisdictions. to have phase courts define contrib- other is more common in guidelines want for uted to the of consistent determining the inter- use the “nonmarital” and 8. Courts words Robinson, in See v. ests Robinson interchangeably "separate” to describe the 178, (1978) (over- Ky.App., 569 S.W.2d 181 assigned party property to each as "each grounds by Brandenburg ruled on other v. spouse’s property.” is the "Nonmarital” 2) ("As Brandenburg, supra note used in KRS usage jurisdiction; in this more common referring 403.190 in to restoration of usage "separate,” while is more common property spouse, ‘property’ of each the word jurisdictions statutes. with similar other added)); equity." (emphasis Id. means New- Newman, 137, Ky., v. 597 138 man S.W.2d 403.190(3). 9. KRS add, (1980) (“We point to hasten at how- ever, that used in KRS 403.190 the word simply rule” means 10. The "source funds equity property' property." Id. includes i.e., property, wheth- character of the added)). (emphasis Chapter does KRS 403 nonmarital, both, marital, or is deter- er it is separately "property” define and we can by the the funds used mined source of defining “property” find no as used basis acquire property. E. & Louise Graham anything other than its in KRS 403.190 as Keller, (Do- Kentucky 15 Practice James E. meaning. Accordingly, ordinary the word Law) (2nd §§ 15.61 & 15.62 mestic Relations statute, used to a "property,” as in this refers (hereinafter Keller”); Ed.1997) "Graham & thing in a determinate or an interest determi- Graham, Using Sepa- E. Formulas Louise thing. nate See BLACK’SLAWDICTIONARY Property: A rate Poli- Marital and Nonmarital Ed.1999) (7th (defining "property” as 1232 Ap- cy Approach to the Division Oriented use, right possess, enjoy a deter- "[t]he 41, Divorce, Ky. preciated Property L.J. 73 (either thing tract land or a chat- minate Graham”). (1984-85) (hereinafter “L. 44 tel)[.]" Id.). Newman, supra at v. note 6 11. See Newman phrases property” 7. Courts use the "marital [holding] (approving trial court "community interchangeably "[t]he 138 property” subject of William the interest property that the interest to describe 910 property acquired joint
When the parties.”13 dur efforts KRS ing an includes increase in however, 304.190(3), creates a an containing value of asset both mari such increase value is marital tal components, and nonmarital trial courts and, therefore, a party asserting must determine from the evidence “why appreciation he or she should receive increase value occurred”12 because upon a nonmarital his or “where value of property [non-marital] her property carries the bur- increases after general due portion den of proving of the increase conditions, economic such increase is not in value attributable the nonmarital con- opposite marital property, but the is true By tribution.14 virtue when the increase in is a result of 900); Polly fair property market value of the mains nonmarital." Id. at Marcum v. (dissolution Marcum, 209, disposition at the time of of mar- Ky., 779 S.W.2d 210-211 riage) percentages ("There were the same as their is a between an distinction respective equity contributions to the total property increase which in value occurs Id.); Robinson, property.” v. Robinson part without on the effort of the owners and ("If supra 6 at note 181 either was the property increase the value of property subject owner pri- to indebtedness par- occurs as a result of the efforts marriage, or to the equity property in that Id.); Stallings Stallings, Ky., ties.” v. shall be considered nonmarital at 163, (1980) (" joint or ‘[T]eam separation proportion the time of in that may efforts’ ... convert the in value equity which this bore to the value of the proper- of non-marital into marital marriage.”/d.); time of the Id.); Smith, ty.” Ky., 497 S.W.2d Smith Woosnam, Ky.App., Woosnam v. 587 S.W.2d (1973) ("[I]f there an increase in (1979): 263-4 value of [the nonmarital] husband’s determine, rr]he chancellor should first after the due effort as con- to team Robinson, using the formula in the value of by general trasted an increase caused Surrey Patricia’s nonmarital interest in the conditions, economic to share she is entitled properly Drive it at the date was sold. Id.); Sharp, Ky., Sharp in that increase.” Then, a new ratio should determined (1973) ("The 491 S.W.2d increase in with the value of Patricia's nonmarital value not attributable to effort’ or 'team ‘team *7 Surrey property being terest the Drive Id.). property.” funds’ follows the purchase the numerator and the value or price Carriage properly being of the Drive Angel Angel, v. Ky.App., 14.See 562 S.W.2d its denominator. The new ratio should 661, (1978): 663 applied Carriage then be to the of the value property separation portion proceeds Drive at the of That of the from the date the determine value of Patricia’s sale farm of the Bethlehem Church attribut- interest to restored to her. The Angel’s method able to the investment of Ester $1,400.00 permits spouse above having described the inheritance constituted nonmari- property a nonmarital interest in at the date tal The the property. payment of balance apprecia- to realize additional price improve- purchase of the and the tion value in the of that interest after rein- ments the result of the "team effort” were vestment, proportion to its value at the marriage. parties during of the the That separation. date of portion proceeds the from the sale of the Id.; Brandenburg Brandenburg, supra v. note Church Bethlehem attributable Goderwis, 872; supra 2 at Goderwis v. note 3 improvements payment the and the 41; Keller, supra at & Graham note 10 at purchase price for the balance of the land §§ 15.61 & 15.62. property. constituted marital Unfortunate- ly, there no evidence in the record indicat- is Goderwis, supra Goderwis note 3 at 40 ing improvements. the the Conse- value of (emphasis original). quently, Angel demonstrated Ester has not Mercer, any Ky., 13. Id. also See Mercer v. 836 that there was increase in value of 897, (1992) ("[A] $1,400.00 899-900 the investment his inheritance. mere in- Except crease in value of nonmarital re- the initial investment
911
also
408.190(3)
do
made in
presumption,
the failure to
so
—the
in the form of
being
character-
marital contributions
will result
the increase
marital
property.15
ized as
a marital debt
proceeds
from
$39,368.9016
Appellee’s
amount of
in this
is the
The asset at issue
case
the trial
investment which
equity”
“sweat
acquired during
house —which was
dissolution,
$1,000.00.17 At
court valued at
at
the evidence
trial
their
—and
represented by
of the house was
the value
purchased,
this house was
showed
which
$63,000.00
settlement
renovated,
improved,
part,
Ap-
of nonmarital
than the amount
greater
was
pellant’s
property,
funds,
proceeds,
the value of the
loan
course,
$7,500.00 nonmarital
Of
parties had invested in
only
equity”
not
“sweat
contribution was
investment
fact,
inheritance,
Brandenburg.
court
Angel has
In
Ester
concept
proceeds
specifically rejected
that a non-
overcome the
contribution,
monetary
equity,
the sale
Bethlehem Church
such
sweat
farm
equity:
constituted
result in an increase in overall
could
added).
(citations
emphasis
Id.
omitted and
spouse of other
contribution of either
15. See Id.
shall not
marital or nonmarital
than
funds
equity
in the increase of
be considered
Ewing,
B.
16. See John W. Potter and Ellen
other lan-
property, and
dicta or
"Apportioning Marital and Non-Marital In-
contrary
guage
v. Robin-
to the
in Robinson
Asset,”
Bar,
Ky.
Single
in a
&
terests
Bench
son,
(1978),
Ky.App.,
signed eighty-eight Now, Counsel: after the Bank Fredonia proceeds remaining Appel- made, Payoff is it was correct lant. trial findings The court’s and conclu- there was left? sions, however, implicitly upon the rest Jeff Travis: Yes. nearly inference that all of the house’s Although Appellant claims that KRE increase in general value resulted from 403.190(2)(e) placed proof the burden of economic joint conditions instead of the upon Appellee prove whether in- parties. efforts of the agree We with the joint crease resulted from efforts Appeals Court of that Appellant intro- parties, we allegation find this without support duced no evidence to such an 403.190(3) merit explicitly because KRE ference, and we therefore find that proof party allocates the burden of to the trial court it erred when utilized the Bran- claiming property nonmarital: denburg formula assigned portion (3) property acquired by All either Appellant this increase to as nonmarital after before a decree legal separation pre is sumed be marital testimony regard direct examination less of whether title is held individual only established the amount of money ly spouses or in some form of invested the house and the co-ownership joint tenancy, such amount proceeds of the insurance received common, tenancy tenancy by destroyed: when the house entirety, community property. In Counsel: addition to the to, you just testified is it correct that showing overcome you took also of which has $7500.00 acquired by a method stipulated been to? listed in sect subsection Jeff Travis: correct. That’s ion.18 Counsel: So the total money amount of Appellant no from introduced evidence you put into the house was approxi- which why the trial court could determine $47, 48,000.00, mately cor- is that — in value. property increased
rect? 304.190(3) presumption placed Appellant burden to show an increase That is correct. Jeff Travis: general value as result of economic Counsel: You had the house insured for Although Appellant circumstances. $63,000.00. Is true? *9 with presumption could have rebutted the Travis: That is true. Jeff which, “evidence in the mind of fact
finder, person would cause a reasonable 403.190(3) Underwood, 439, added). (emphasis 18. KRE See Ky.App., S.W.2d 441 836 Marcum, Culver, (1992); Ky., Ky.App., also Marcum v. 779 S.W.2d v. 572 S.W.2d Culver 209, Brosick, 617, Adams, (1989); (1978); Ky.App., Ky.App., 210 Brosick v. 620 Adams (1998); (1978). 974 S.W.2d 502 170-171 Underwood 565
913 KELLER, C.J., GRAVES, LAMBERT, presumption justifiably disregard the to JJ., WTNTERSHEIMER, STUMBO and in is marital property question that concur. agree the Court of property,” we with to so. Appellant failed do Appeals that COOPER, J., separate by dissents that introduced evidence Appellant only J., JOHNSTONE, joining opinion with approximately invested that dissent. $47,000.00 (including Appellant’s COOPER, Justice, dissenting. contribution) house analysis erro- opinion’s majority $63,000.00in they that received (1) its conclusion respects: neous two This proceeds after the fire. evidence property of marital presumption that probative inqui- as to the relevant was not 403.190(3) applies to an set forth KRS ry, suggests and the evidence at trial property; of nonmarital repre- alleged “appreciation” might (2) its that there was insuf- conclusion than on good bargain little more sent trial support judge’s to ficient evidence purchase of the or an increase home in value the increase of finding resulting parties’ from the efforts in value was at least parties’ marital residence remodeling residence. i.e., in- appreciation, partly passive due to merely The trial court assumed flation, opposed marital contribu- from some windfall resulted A error is the tions. more fundamental and at- opinion’s of majority complete disregard tempted use formula of a marital contribu- evidence substantial proportion pro- to determine the value of the equity tion to ultimate ceeds that contribution. payoff attributable viz: the question, However, assumption mortgage the initial that some with marital funds. prop- in value
of the increase is nonmarital I. erty is inconsistent with the KRS act present dissolution of Our 304.190(3) all enacted the 1972 General Assem- acquired during (including ch, Acts, Section 9 of bly. Ky. value) appreciation in assets’ is marital proper- pertaining disposition the act property. Appellant Because introduced 403.190, at ty, compiled now KRS presumption, no to rebut evidence from adopted verbatim almost when trial court erred it characterized Mar- 307 of the Uniform version section disputed proceeds as nonmarital Act riage promulgated and Divorce thus agree We the Court National Conference Commissioners decision trial Appeals’s to reverse the Laws. 9A State See Uniform Uniform court’s and remand the matter judgment Annotated, Marriage and Laws Uniform disputed the trial court to distribute the Comment, Act, § Divorce as marital amount under (West 1987). (In 1973, (“Amendments”) 304.190(1). Act relating the Uniform portions those as marital or classification of IV. CONCLUSION (nonmarital) were deleted. individual reasons, affirm the now addressed For the above we Those issues are Section Id., Property Act. 4 of the Uniform Marital Appeals. decision the Court *10 Underwood, Underwood, supra v. 18 at 441 n. 1. note 914 Act, 4,
Uniform Marital Property § For purpose chapter, “marital 109-10.) only The two subsections property” of KRS all property means acquired 403.190 present relevant to the inquiry are spouse either subsequent to the mar- (2)(e) (3). subsections riage except: Since subsec- (2) exceptions tion creates to the marital
presumption (3), established in subsection (e) The value of property the subsections will be considered in re- acquired before to the 403.190(3) verse order. provides: KRS extent that such increase did not result
All property acquired by
spouse
either
from
efforts of
during marriage.
the marriage and before a decree
after
legal separation
presumed
to be
added.)
(Emphasis
emphasized
lan-
marital property, regardless of whether
guage was not contained in section
title is
individually
held
or by
spous-
307(b)(5) of the 1970
version
the Uni-
es in some form of co-ownership such as
form Marriage and Divorce Act. Professor
joint tenancy, tenancy
common,
ten- Louise
posits
Graham
that the added lan-
ancy by
entirety,
community
guage
engrafted
was
onto KRS
property. The presumption
403.190(2)(e)
pre-existing
from
Kentucky
property is overcome by showing
a
law,
e.g.,
case
Colley
Colley, Ky.,
460
the property
acquired by
(1970).
method S.W.2d
826-27
Louise E. Gra-
(2)
listed in subsection
ham,
this section.
Using Formulas to Separate Marital
and Nonmarital
A
Property:
Policy Ori-
added.)
(Emphasis
Except for a number-
Approach
ented
Appre-
to the Division of
variation,
403.190(3)
ing
KRS
is a verbatim
Divorce,
ciated Property Upon
Ky.
L.J.
307(c)
adoption of section
of the 1970 ver-
(1984-85).
parallel
54n. 68
excep-
sion of
Marriage
the Uniform
and Divorce
307(b)(5)
tion in section
of the 1970version
Act,
course,
supra. Of
the converse of the
only
Uniform Act was
for
“the
premise
first
of subsection
prop-
is that
crease in value of property acquired before
erty acquired by
spouse
either
before
Thus,
307(b)(5)
marriage.”
section
did
marriage or after a
legal separa-
decree of
provide
for the creation of a marital
tion is not
Sousley v.
in nonmarital property by “team
Sousley, Ky.,
(1981);
Polly argued proper disposi- did to you you the house after had it tion would have been to constructed with this mortgage reimburse William for the full amount $7,500? money and ($55,000) his contribution and the differ- you A. doWhat mean? ence, which would be Q. you improvements Did do any other divided other marital later you after borrowed this money (60%-40%).... The trial court did not $7,500? with the concur in that formula. Court of Yes, we, A. I wallpapering, did all the formula, Appeals not did concur in that painting and staining. and neither does this court. We do Q. you question, Let me ask this as far concur in formula by used the trial as wallpapering, staining paint- and court in arriving monetary at the ing, did you and Jeff say you did (sic) parties. that? Id. at 139. The trial ap- court’s formula A. I did most of that. proved in Newman was similar to that borrowed, Q. money Was the used to more fully defined buy paint, the stain and the Brandenburg, Ky.App., 617 wallpaper money of the borrowed and utilized the trial court this $7,500? and the case. things A. I made some crafts money used some of that and as
II. got money, soon as we a little at Even if Appellant required were to dis- time. prove improve- existence Q. you question. Let me ask Do ments to the value of the resi- you opinion have an as to how much dence, majority opinion’s conclusion paint, stain, wallpaper you he to do so failed is belied put there? record. It uncontested resi- A. No. dence purchased with a down payment Q. and a loan of mortgage you, trying Let me ask I’m not $39,368.90, you down I’m put spot, trying on the was idea, the increase in value that since an it be more than
get would contributions, it was due or less? As far as cost $500 *13 to inflation? probably due them? attorney persist- really I know.
A. don’t reason Appellee the mon- questioning in about ed than Q. youDo think it’s more $500? contri- her claimed marital etary value of (Inaudible.) A. nonmonetary contributions butions is Q. you give a closer estimate or Can Brandenburg until have, today, been from not, can’t, all you right. if that’s in marital and disregarded apportioning (Inaudible.) A. proper- in interests transmuted give Q. you opinion Do have an Brandenburg, supra, Brandenburg ty. staining, as to court what Robinson, overruling Robinson 873, at wallpaper, how painting and the the view of supra. This is consistent with much it increase the value of would on State the Commissioners Uniform the house? Laws, expressed the official Com- as 4(g)(3) ment section of the Uniform Quite bit, a I mean that’s A. what Act, supra, pro- Property Marital it was I mean the the inside. ponent the marital interest must estab- decorating of the inside. strong “a show- very lish Q. opinion as you Do have an to how Brandenburg, that burden is ing.” Under value, much increased the expenditure marital bymet of an proof words, money other when the funds, equi- by evidence of “sweat but not borrowed and the house was built Id. at 873. ty.” Apportionment Ken- $47,000 roughly, you do have an tucky traditionally what Pro- has followed as opinion to what the value of the fessor characterizes Graham painting, wallpapering and the Graham, supra, rule. “source funds” at if staining, you you have one? If By equity” as a recognizing “sweat don’t, I understand that. contribution, majority has A. I don’t know. silentio, and, Brandenburg, sub overruled During presentation of her proof, so, any hope has eviscerated for doing Appellee testified as follows: divorce consistency in divisions virtually trial by vesting cases courts with
Q. you Now to the painting, testified amorphous to “find” unfettered discretion staining and like that? things apportion “sweat contributions to equity” A. Yes. thereby reduce into nonmarital assets and do Q. you anything Did else? This the value of nonmarital estates. case (inaudi- Yes, I ... A. made curtains perfect example. ble). requirement that marital or the sum substance Such was in nature before monetary contributions be respect any marital im- evidence apportionment purposes considered provements contributing to the increase judge, who ignored the trial first I am unable to value residence. found marital contribution majority what other evidence the testi- Appellee’s equity” discern based “sweat Worse, Appeals Appellant pro- mony. have both the this Court would Court effectively disprove marital contributions have found duce to now this Court based on of this residence. Branden- testimony. that same Under expert testify he have hired an Should burg, Appellee’s nonmonetary the early contribu- life are marriage) assigned tions to the value of the residence should primarily very to interest and little to However, not have considered. been since principal. John W. Potter Ellen B. Appellant did not from cross-appeal the Ewing, Apportioning Marital Nortr- apportionment, would, trial I court’s at Asset, Marital in a Single Ky. Interests worst, affirm the finding trial court’s of a Bar, Bench <& Vol. No. $1,000.00marital contribution. (1983). Thus, in a marriage short dura-
tion, as mortgage pay- much 90% of *14 III. during ments made the may assigned have been and majority opinion What the to interest as little completely ie., is that payoff principal, equity; overlooks the the mort- 10% to creation of was, itself, gage yet, indebtedness a marital payments assigned to interest are not to equity the value of this considered marital contributions under case, residence. This is not a as New- course, Brandenburg. Of the Branden- man or Brandenburg, where we are re- burg approach to mortgage reduction can- quired to determine the marital and non- applied because, fairly not be in this case marital in an existing interests asset that although mortgage payments some may by mortgage encumbered indebted- made, have been on balance owed ness. purchased This residence was par- mortgage August actually 1994 was tially Appellant’s $7,500 with greater than the original mortgage loan in money partially with a August 1987. mortgage paid loan that off during was Graham, by As suggested Professor marital funds. promised but delivered in Branden- Brandenburg, any Under reduction of burg, approach a true “source of funds” the mortgage principal by application of apportionment would credit the marital in- other than nonmarital funds is marital expended terest with amounts from other Actually, Brandenburg contribution. first (1) than nature nonmarital funds said that the marital contribution included mortgage applied payments, whether “the expended amount after the marriage (2) interest, principal or taxes and insur- from than other nonmarital funds in the payments, ance expenditures for (and/or principal” reduction of mortgage Graham, capital improvements. supra, Cfi capital improvements). Brandenburg, su- approach at 69-73. This “investment” added). pra, (emphasis However, at 872 Brandenburg formula was advocated the apportionment actually formula pro- opinion the author this at domestic mulgated ease treated the marital University relations seminars at contribution as the amount which the Kentucky April University mortgage principal during was reduced Louisville in and the annual October the marriage, expended not the amount meeting Kentucky Bar Association accomplish that By emphasiz- reduction. Unfortunately, June like the ing equity the creation of instead of funds approach, “investment” Brandenburg expended create equity, Branden- approach applied cannot be in this case burg formula usually leverages the non- party presented any evi- because neither interest to the detriment of the because, dence actually expended of amounts interest in a normal mort- contract, gage payments way mortgage taxes during monthly payments, (and, early insurance, life of the or mortgage usually, capital improvements. mort- Nevertheless, made on the payments have been all do know that the re- we mortgage maining loan, balance of the applied or principal gage whether paid during mar- in full residence should no different interest. The result an proceeds with the riage here, payoff the final except If during marriage. policy purchased Thus, $39,635.86. including unautho- e.g., mortgage paid by, been off had rized, uncontested, Ap- application of but over du- monthly payments mortgage equity” “sweat contribu- pellee’s the marital contri- mortgage, ration of (MI) tion, and the under would have bution (NMI) in this nonmarital interest $39,368.90. the investment been Under can be as follows: calculated the marital contribution would approach, *15 $39,635.86 arriving equitable at an mortgage payoff “utilized ... Since contribution, pay- long treated as a marital as division of as the relation- against must be the marital off credited par- ship the contributions of between interest. thus be- Often, ties is Id. established.” comes: here, the to be used be dictat- formula will parties.
ed offered evidence in this apportionment formula used de- opinion virtually mirrors formula judge The trial concluded under Ewing Potter by Judges scribed facts of this case that a division marital article, only supra, and is the their 1983 proportions,” “in just being fairly applied capable formula 403.190(1), equal an division. Ac- would be proven the facts in this case. have Appellee should been cordingly, reasons, respectfully I foregoing For the Appellant awarded dissent. respective their shares remaining proceeds: JOHNSTONE, J., joins dissenting
opinion. specific dis- contains apportionment formulas other
claimer may in that case
than the one defined of trilli notes 4(g)(3) tween sections and the Uni- 403.190(2)(e) an exception an to parallels Act “contains Property form Marital Petrilli, Ralph Kentucky S. exception.” relationship between subsections (2d 24.9, (2)(e) Law, § at 301 ed. Family of KRS 403.190. official Com- 1988). agree I hold to Anderson would 4(g)(3) ment section Uniform ac- Act that interest Property Marital that evidence explains: is but an quired during mar- spouse one comes to a Assume that in or crease value of nonmarital asset riage subject to the Act as owner interest rebuts the marital It is piece a valuable of real estate. thus, presumption, disappears. and the quadruples If it in property. individual 301, KRE Rules Commentary to Evidence value, it still individual is Committee, (1989); Study Final Draft income While its is marital cf. Fox, Magic Ky., Coal Co. appreciation in itself and its (2000). proof, Absent other 95-96 proper- always value is almost individual value follows the exception special ty. One is the rule interest, part all or any but evidence that 14(b). That rule is announced Section due marital contribu- of the increase is application concerned with to the exception exception tions creates an per- individual one apportionment of the marital necessitating spouse. It sonal effort the other interests. Newman situations, could es- apply limited but (1980). Newman, 137, 139 Ky., 597 S.W.2d tablishing requires very strong it (Emphasis original.) showing. proponent of inter- the nonmarital Thus, prove have burden to while National Conference est should not Commissioners on State Laws the increase due to “inherent Uniform i.e., causes,” Graham, exception supra, passive subsequently adopted an similar inflation, 403.190(2)(e), by disproving appreciation to KRS the Commissioners due recognized every possible that the should be on other influence on the value burden Nevertheless, the proponent of the marital interest to of the asset. $63,000.00; make an case very strong showing” payoff “a that, at infla- spouse’s simple increase in mathematics shows an value one individual (a (nonmarital) per percent rate five annum property was attributable tion period 1987- conservative estimate for the efforts. 1994), August purchased a house majority opinion I agree with would increase proponent is initial burden on $65,949.26by August viz: prove prop- nonmarital interest erty falls acquired during the exceptions within in KRS one 403.190(2). However, agree I also with the State Laws Commissioners Uniform that once it is that a established acquired during