Wagoner v. WagonerWagoner v. Wagoner
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Lead Opinion
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 relate the facts giving rise to this apрeal. 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 Those certificates earned intеrest 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 return those funds to Opal. Opal said she gave thеse monies to her mother because her husband, respondent Loy Wagoner, complained about having to pay her mother’s taxes.
Opal Wagoner commenced this divorce action which resulted in the trial court’s decree of divorсe, 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 marital property, the court of appeals relied on its еarlier 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 premarital 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 marriage and, therefore, presents a situation сovered by § 344214(B)(1), rather than § 344 214(B)(5). Under § 344214(B)(1), a gift acquired by a spouse is excepted from the definition of marital property, which definition otherwise includes all property acquired by either spouse subsequent to marriage. Thus, by statutory definition, a gift to a spouse is non-marital property. Section 344214(B)(1), however,.does not except from the marital property definition any income from, or increased value of, a gift. That being so, we conclude that, in the instant case, the petitioner’s interest еarned from her certificates, during the period she was married to respondent, is marital property. Such a holding is consistent with this court’s understanding of the marital property concept as we explained that concept in Day v. Day, 281 Ark. 261, 663 S.W.2d 719 (1984). In Day, this сourt held that all earnings or other property acquired by each spouse subsequent to marriage must be treated as marital property, unless falling within one of the statutory exceptions. Day, 281 Ark. at 268, 663 S.W.2d at 722.
Although we do not agree that § 344214(B)(5) applies or сontrols the facts at hand, we do agree with the court
The phrase “increase in value” used in (B)(5) is not intеnded 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 provision further states, “Similarly, income from other non-maritаl 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 reveals that other jurisdictions, construing an identical (B)(5) provision, havе uniformly held such income earned on premarital 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.W.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 on her certificates of deposit wоuld 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
Notes
We note that, throughout the proceeding below and on appeal, the parties treated the certificates of deposit as non-marital property and made no issue of the fact that the petitioner actually acquired the certificates during her marriage by use of the cash gifts from her mother. Thus, in this appeal, we accept without further comment the parties’ treatment of the certificates as non-marital gifts from her mother.
Dissenting Opinion
dissenting. I believe the chancellor was correct in holding that the increasе 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 invеsted in CD accounts bearing only her name and that of her son. When interest payments accrued, the payments were simply turned back into another CD. In my opinion the growth in the CD account remained the separate property of the wife.
If thе 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 marital property. Obviously the growth in value of the block of gold could not be considered income or marital рroperty. It is easy to see that such increase is still separate property. Likewise, the CD account has grown and the interest, as well as the principal, remains non-marital property.
We have today taken a considerably differеnt 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 be treated as marital property, unless falling within onе 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 of 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 marital 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 resulted 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 specifiсally 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 Act 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 property statute does not specifically cover the issue before the court. However, by implication, 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.