Opal Bernice WAGONER v. Loy WAGONER
87-228
Supreme Court of Arkansas
December 7, 1987
740 S.W.2d 915
affirm.
Peter DeStefano, for appellant.
Elcan & Sprott, by: Frank C. Elcan II, for appellee.
TOM GLAZE, Justice. This case involves the parties’ divorce action as it pertains to the lower court‘s construction of Arkansas‘s marital property law, more particularly
Because the court of appeals chose not to publish its decision, we need first to relatе the facts giving rise to this appeal. The parties were married for thirty-four years, and during that period, Opal Wagoner‘s parents gave her cash gifts which she invested in certificates of deposit bearing only her name and that of her son.1 Thоse certificates earned interest during the marriage, totalling $19,224.75. About two months before the parties separated, Opal transferred all of her certificate funds, including interest, to her mother. However, her mother said that she intended to rеturn those funds to Opal. Opal said she gave these monies to her mother because her husband, respondent Loy Wagoner, complained about having to pay her mother‘s taxes.
Opal Wagoner commenced this divorce actiоn which resulted in the trial court‘s decree of divorce, which, in relevant part to this appeal, determined the certificates of deposit, both principal and interest, to be Opal‘s non-marital property and not subject to division. As noted earlier, that court‘s finding, as to the accumulated interest, was reversed by the court of appeals and is the sole issue presented in this review.
In holding that the accumulated interest income from Opal‘s certificates was mаrital property, the court of appeals relied on its earlier decision of Speer v. Speer, 18 Ark. App. 186, 712 S.W.2d 659 (1986). There, the court, in affirming the trial court, held that any accumulation of income—during the marriage—from the husband‘s non-marital property constituted marital property. The court rejected petitioner Opal Wagoner‘s argument that the Speer decision, which involved rental income earned on pre-marital farmland, was distinguishable from the facts here. She argued the rent income in Speer was marital property, but the interest paid here on her certificates merely represents an “increase in value” of property, which is excepted from Arkansas‘s marital property definition as set out under
While we agree with the result reached by the court of appeals, we do so for a different reason. As can be discerned from the facts in this cause, the situation here involves a gift to the petitioner by her mother during the marriаge and, therefore, presents a situation covered by
Although we do not agree that
Thе phrase “increase in value” used in (B)(5) is not intended to cover the income from property acquired prior to the marriage. Such income is marital property.
Unif. Marriage and Divorce Act, § 307 (1970 Act).
We note that the Commissioner‘s comment concerning this same prоvision further states, “Similarly, income from other non-marital property acquired after the marriage is marital property.”
While we find the Commissioner‘s note to the Uniform Act‘s (B)(5) provision to be clear on the subject, our research reveаls that other jurisdictions, construing an identical (B)(5) provision, have uniformly held such income earned on pre-marital property to be marital property. See Branson v. Branson, 569 S.W.2d 173 (Ky. Ct. App. 1978); In re Marriage of Bentivenga, 109 Ill. App. 3d 967, 441 N.E.2d 336 (1982); In re Marriage of Reed, 100 Ill. App. 3d 873, 427 N.E.2d 282 (1981); In re Marriage of Williams, 639 S.W.2d 236 (Mo. Ct. App. 1982); Cain v. Cain, 536 S.W.2d 866 (Mo. Ct. App. 1976). Thus, even under petitioner‘s theory of this case, the interest she earned оn her certificates of deposit would be marital property and, therefore, distributable as such.
In conclusion of our review of the court of appeals’ decision and de novo review of the proceeding below, we find that the petitioner‘s certificates of deposit were gifts under
PURTLE, J., dissents.
JOHN I. PURTLE, Justice, dissenting. I believe the chancellor was correct in holding that the increase in the certificates of deposit remained the separate property of the wife because the certificates themselves were the result of cash gifts from her parents. The parents gave their daughter sums of money which were invested in CD accounts bearing only her name and that of her son. When interest payments accrued, the payments were simply turned back into anоther CD. In my opinion the growth in the CD account remained the separate property of the wife.
If the parents had given their daughter a block of gold and it had increased in value, I am sure this court would not treat the increase as maritаl property. Obviously the growth in value of the block of gold could not be considered income or marital property. It is easy to see that such increase is still separate property. Likewise, the CD account has grown and the intеrest, as well as the principal, remains non-marital property.
We have today taken a considerably different position, in my opinion, than we did in Day v. Day, 281 Ark. 261, 663 S.W.2d 719 (1984); and Layman v. Layman, 292 Ark. 539, 731 S.W.2d 771 (1987). I think the majority misinterprets Day because the specific holding in Day is: “What we do hold is simply that earnings or other property acquired by each spouse must bе treated as marital property, unless falling within one of the statutory exceptions, and neither one can deprive the other of any interest in such property by putting it temporarily beyond his or her own control, as by the purchase оf annuities, participation in retirement, or other device for postponing full enjoyment of the property.” I agree with this statement in Day because it holds that earnings or property acquired by either spouse must be considered maritаl property unless the statute provides otherwise. Since this property was acquired by gift, it is an exception within the meaning of the statute.
In the Layman case, the husband had received both preferred and common stock
Growth is not earnings. The growth in the present case is not the result of any skill or effort on the part of either spouse. This growth rеsulted from factors other than the ability or earning capacity of either party. Neither is it income from real property, which was held to be marital property in Speer v. Speer, 18 Ark. App. 186, 712 S.W.2d 659 (1986). Money received from the rental of property is certainly income acquired by the parties during the marriage. It is a result of the efforts and agreement of the parties. Sometimes, it seems to me, that courts strain at a gnat but swallow a camel. The legislature no doubt intended for common sense and logic to apply in cases where a statute does not specifically cover the exact factual situation before the court. The majority opinion admits that the law does not specifically require that the increase in these certificates of deposit be treated as income or that it be treated as marital property. The Speer decision was expressly within the terms of the statute. The majority opinion quotes from the Commissioner‘s Note to the Uniform Aсt as follows:
The phrase “increase in value” used in (b)(5) is not intended to cover the income from property acquired prior to the marriage. Such income is marital property.
Income from property received prior to the marriage as in Speer or income from property acquired by gift during the marriage is no different than the wages earned by the parties during marriage. It is obviously marital property. However, the growth in the value of the property should remain the separate property of the party who acquired it as a gift. It obviously would if the gift were to depreciate in value.
We frequently affirm cases for reasons other than those cited by the trial court. Certainly it seems to me that the chancellor was right but he may have given the wrong reason. The Day opinion has been relied upon as a cure for all ills; it is not. Day specifically stated that we did not attempt to lay down inflexible rules for the future. We stated: “To the contrary,
As previously stated, the marital proрerty statute does not specifically cover the issue before the court. However, by implica-tion, the increase in the value of the gift remains separate property. Moreover, I do not believe the chancellor‘s decision was an abuse of discretion.
I would affirm the chancellor.