Choate v. Choate

ROSALYN B. BELL, Judge, Specially Assigned. Appellant, Henry Choate, Jr. asks us to decide four issues arising out of the granting of a divorce decree in the Circuit Court for Prince George’s County. Three of the four issues ³⁵⁰ grew out of the ownership of what became the family home, which was brought into the marriage by appellee, Ramona C. Choate. She transferred the home from her name to her name and Mr. Choate’s name as tenants by the entirety just a few months before the marriage deteriorated.

Mr. Choate asks us to decide whether the trial court erred —in ordering him from the family home on 48 hours notice when there were no children involved and no danger to Ms. Choate since she was living elsewhere; —in granting Ms. Choate the entire appraised value of the family home owned by the parties as tenants by the entirety when there was no marital property; —in not entering a judgment in favor of him for one-half the value of a $50,000 treasury bill owned jointly by the parties and converted and dissipated by Ms. Choate; and —in ordering him to provide $25,320 in contribution where the mortgage payments (except four) were made prior to the date of divorce, where he was ousted by the trial court during the final four months of joint ownership, and where the evidence presented does not support such a determination. We conclude under the facts of this case that (1) the issue of whether Mr. Choate was improperly evicted from the marital home is moot; (2) the award of the entire appraised value of the home was not authorized by the governing statutory or case law; (3) the court did not err in failing to assess half the value of the treasury bill against Ms. Choate; and (4) that the trial judge improperly calculated the contribution award. Thus, we affirm on issues (1) and (3), reverse and remand on issue (2), and remand on issue (4) without affirmance or reversal. We explain.

THE FACTS The Choates were married on March 30, 1990. They lived in the home owned by Ms. Choate, which had been purchased by Ms. Choate and her first husband. 1 Substantial repairs ³⁵¹ were needed; hence, Ms. Choate refinanced the home in August of 1990. At that time, the property was placed in the names of both parties as tenants by the entirety. The refinancing loan was for $100,000 and was used to pay off several debts, including previous mortgages on the property.

After the settlement costs, refinancing costs, and mortgage were paid off, there was $47,570.73 remaining, which was allegedly placed into a joint savings account. Although the exact amounts are not totally clear, Mr. Choate’s individual debts of between $12,000 and $16,000, which he had prior to the marriage, were also paid off as part of this process. With the money obtained from the refinancing, the needed repairs were made to the property. Subsequently, a treasury bill was purchased for $48,197 and titled in the names of both parties.

Ms. Choate testified that the house was placed in their joint names at the time of the refinancing in August of 1990 because she thought there would be a better chance of getting a loan in the desired amount if Mr. Choate’s name was on the deed. Ms. Choate indicated that no one forced her to put his name on the title to the property and, indeed, no one forced her to go to settlement when the deed was signed. She did state, however, that Mr. Choate had, at one point, exerted some pressure on her to put his name on the deed. Ms. Choate stated that Mr. Choate made it clear he would be unhappy if his name were not put on the title.

Ms. Choate acknowledged that, at her deposition taken earlier in the case, she had testified that she made a major gift to her husband when she signed the property over to him at the refinancing transaction. At trial, when she was confronted with her statement made at the deposition, she asserted that she did not mean the transfer as a gift and the inclusion of a statement to that effect was the reason why she had refused to sign the deposition. The Choates started encountering marital difficulties and on January 1, 1991, at a New Year’s Eve party, the marriage seemed to break down as a result of a dispute over a dress that Ms. Choate had worn to the party. After the New Year’s Eve difficulties, Ms. Choate moved out of the marital bedroom and into the spare bedroom in the, by then, jointly owned ³⁵² home.

On January 4, 1991, Ms. Choate cashed the $50,000 treasury bill. Once Mr. Choate learned of this, he got very angry and refused to contribute to the mortgage payments on the refinanced home; however, both parties continued to reside in the home. Ms. Choate claimed she used most of the funds from the treasury bill to repay loans to her father, and the trial judge so found. In February of 1991, Ms. Choate filed for a limited divorce.

Ms. Choate finally left the home with her daughter in June 1991. After five days of taking testimony, the trial judge granted an absolute divorce decree to Ms. Choate on the ground of constructive desertion and ordered that $158,000 of the total value of the marital home, which was titled as tenants by the entirety, was the separate nonmarital property of Ms. Choate; that the home be sold by judicial sale; that the proceeds were to be distributed in accordance with the findings of the court; 2 and that Mr. Choate was to vacate the home immediately. The trial judge also found that the funds that were used to purchase the treasury bill came from a savings account Ms. Choate had maintained, which contained $35,000 of her funds, plus $12,000 netted from the refinancing. The judge also found that Ms. Choate had paid over $12,000 for Mr. Choate’s nonmarital bills and the additional sum required for the purchase of the treasury bill came from Ms. Choate’s checking account.

The trial judge refused to award a judgment to Mr. Choate for one-half of the value of a treasury bill liquidated by Ms. Choate just prior to the separation of the parties. Mr. Choate appealed the court’s order. After the sale of the residence, the trial judge ordered Mr. Choate to pay $25,320 in contribution. Mr. Choate again appealed.

These appeals are consolidated and are being considered together by us. ³⁵³ MR. CHOATE’S EVICTION On July 29, 1991, at the conclusion of the trial, the trial judge ordered Mr. Choate to leave the family home within 48 hours. Mr. Choate contends that the trial judge erred in ordering him to leave because (1) there were no children of the marriage and, hence, no use and possession order was involved; and (2) there was no danger to Ms. Choate because she was living elsewhere. The trial judge, after hearing the case in full, concluded that the house, which had been owned by Ms. Choate’s former husband and herself, was Ms. Choate’s and that Mr. Choate had contributed nothing to it; that at the time of trial, Mr. Choate was living in the house; and that Ms. Choate had left under conditions that the judge ruled constituted a constructive desertion.

The trial judge also concluded that he had the authority to order Mr. Choate out under Cote v. Cote, 89 Md.App. 729, 733-34 , 599 A.2d 869 (1992). 3 The trial judge gave his oral opinion and order from the bench and confirmed it by written order the next day. He also appointed a trustee to sell the property and to distribute the proceeds “after considering [Mr. Choate’s] contribution toward mortgage payments made by [Ms. Choate].” The trial judge then ordered Mr. Choate to vacate the property by noon on July 31, 1992, and enjoined him from going to or entering upon the premises after July 31, 1992. Mr. Choate admits that, at least arguably, the issue is moot as the house has now been sold, although he still asks us to reach the issue for the assistance of bench and bar. We decline to do so except in a limited manner.

We cannot help but note that Mr. Choate coyly failed to tell us that he was the ³⁵⁴ purchaser of the property at the judicial sale. This certainly renders the order moot except to the extent that the order provides: “ORDERED, that Defendant be and he hereby is enjoined from going to and/or entering the residence at 12848 Holiday Lane, Bowie, Maryland, after vacating it on July 31, 1992....” For the same reason that the order is moot, namely, Mr. Choate’s purchase of the property, the portion of the order that enjoins Mr. Choate from going to or entering the residence after leaving it must be vacated. Mr. Choate contends that the order is not moot because the issue of contribution following the eviction remains open. In view of our disposition of the contribution issue, which will be explained in detail later in this opinion,, it is not necessary that we decide whether the court had the authority to evict.

Moreover, Ms. Choate advises us that the portion of the record that would support the court’s order was omitted, based on Mr. Choate’s representation that the alleged abuse of Ms. Choate was not being contested. Mr. Choate did not contest this position at argument. AWARD OF THE APPRAISED VALUE OF THE HOUSE TO MS. CHOATE Mr. Choate next contends that the court erred in awarding the appraised value of the home to Ms. Choate.

In his oral opinion, after giving ample and cogent reasons for so finding, the trial judge commented that he believed Mr. Choate to be a liar. 4 The trial judge then said: “As I said earlier, Mr. Choate, you came in only with your socks and underwear to this marriage, and you want to walk out with half of everything that this lady has, and that is not ³⁵⁵ right. [Counsel for Mr. Choate] tells me that might not be right, but that is the way the law is. I cannot believe that.” The trial judge then determined that “$158,000 of the value of the real property titled in both parties names is the nonmarital property of ‘Ms. Choate.’” 5 The trial judge made no monetary award. The equity of the court’s position does not escape us. What does elude us, however, is how the judge is able to make an award in this case under the governing statutes and case law.

We are presented with that anomalous situation where the party who claims the property is nonmarital would have been better off if he or she could establish that the property was marital. In this case, no marital property existed; 6 hence, no marital assets were available out of which to make a monetary award. Approximately six times in recent memory, a bill has been before the Legislature in an attempt to modify the results of Grant v. Zich, 300 Md. 256 , 477 A.2d 1163 (1984), and its progeny. Each time the bills have been rebuffed.

This case brings the continuing problem of Grant into clear focus. In Kline v. Kline, 85 Md.App. 28, 42 , 581 A.2d 1300 (1990), cert. denied, 322 Md. 240 , 587 A.2d 246 (1991), Judge Bloom, writing for this Court, pointed out: “In Grant , the Court of Appeals held that the presumption of gift that arises from the conveyance of one spouse to another has no applicability to the determination of whether property is marital or nonmarital. Dorsey v. Dorsey, 302 Md. 312 , 487 A.2d 1181 (1985), recognized the possibility of proving a gift of the marital status of property as well as the property itself. In Watson [v. Watson, 77 Md.App. 622 , 551 ³⁵⁶ A.2d 505 (1989) ], however, we explained that a gift of property, whether proved by presumption, by testimony as to expression of intent, or by documents conclusively establishing donative intent, does not transmute the status of that property, for purposes of the Act, from nonmarital to marital.

To effect such transmutation, we pointed out, there must be an express intent to give up, waive, or surrender the nonmarital status as well as to give the property itself.” In the instant case, Ms. Choate made several statements as to why she placed Mr. Choate’s name on the deed; none, however included an expressed intent to give up, waive, or surrender the nonmarital status of the property. The trial judge found, and we agree, that the property was nonmarital. If the parties had marital property, out of which an adjustment could be made in the form of a monetary award, then the trial judge in his or her discretion may adjust for the nonmarital property and determine an amount not exceeding the amount of the marital property after considering the 10 factors specified in Md.Fam.Law Code Ann. § 8-205(b) (1984, 1991 Repl.Vol.). The court may also determine the method of payment.

Those 10 factors are: “(1) the contributions, monetary and nonmonetary, of each party to the well-being of the family; “(2) the value of all property interests of each party; “(3) the economic circumstances of each party at the time the award is to be made; “(4) the circumstances that contributed to the estrangement of the parties; “(5) the duration of the marriage; “(6) the age of each party; “(7) the physical and mental condition of each party; “(8) how and when specific marital property or interest in the pension, retirement, profit sharing, or deferred compensation plan, was acquired, including the effort expended by each party in accumulating the marital property or. the interest in the pension, retirement, profit sharing, or deferred compensation plan, or both; ³⁵⁷ “(9) any award of alimony and any award or other provision that the court has made with respect to family use personal property or the family home; and “(10) any other factor that the court considers necessary or appropriate to consider in order to arrive at a fair and equitable monetary award or transfer of an interest in the pension, retirement, profit sharing, or deferred compensation plan, or both.” Under the provisions of Md.Fam.Law Code Ann. § 8-201(e)(2) (1984, 1991 RepLVol.): “ ‘Marital property does not include property: (i) acquired before the marriage; (ii) acquired by inheritance or gift from a third party; (iii) excluded by valid agreement; or (iv) directly traceable to any of these sources.” 7 ³⁵⁸ A gift by one spouse to the other has an effect on ownership, but does not have an effect on whether it is marital or nonmarital property. Kline, 85 Md.App. at 43-44, 581 A.2d 1300 . Once that ownership is altered, as it was here, it becomes “joint property” and, with limited exceptions, “the court may not transfer the ownership of personal or real property from 1 party to the other.” Md.Fam.Law Code Ann. § 8-202(a)(3) (1984, 1991 Repl.Vol.). That is precisely what this trial judge indirectly attempted to do.

He properly found that the value of the home was Ms. Choate’s nonmarital property. The implication of his order was that Ms. Choate would receive up to $158,000 prior to any distribution. The parties agreed at oral hearing that she did receive all the net proceeds. In what was apparently an effort to get around Grant, Watson v. Watson, 77 Md.App. 622 , 551 A.2d 505 (1989), and Kline , the court’s order of July 30,1992 does not state that the proceeds of sale should be distributed to Ms. Choate, but rather directs the trustee to sell the property and make equitable distribution after considering mortgage payments.

The opinion of the court, however, given from the bench July 29, 1992, makes clear that the court intended that $158,000, 8 the value of the house at the time of the marriage, was to be given to Ms. Choate. This the trial judge could not do under these facts. Ms. Choate would distinguish Watson and Kline on their facts. In Watson, 77 Md.App. at 622 , 551 A.2d 505 , the parties purchased a home in November 1971, titled it in both their names as tenants by the entirety, and used it as their marital residence.

This home became too small so, in order to purchase a larger one, Mr. Watson secured $40,000 from his mother. The sum was deposited into a savings account subject to the order of either Mr. or Ms. Watson. The parties then sold their home and deposited the proceeds into the same joint saving account. In November 1979, the parties pur ³⁵⁹ chased a new home, titling it in both names as tenants by the entirety.

The money that was left over paid off marital debts and went toward purchasing new furniture. Watson, 77 Md. App. at 628 , 551 A.2d 505 . The Watsons separated in May 1982 and an absolute divorce was granted to Ms. Watson on January 20, 1983. Mr. Watson sought a return of the $40,000 on the theory that it remained his property because it was nonmarital.

Watson, 77 Md.App. at 632 , 551 A.2d 505 . Ms. Watson claimed that either the $40,000 or the property purchased with that sum was a gift to her. Watson, 77 Md.App. at 632 , 551 A.2d 505 . The master, chancellor, and an en banc court dealt with the issue as one of a gift of property.

In reviewing the decision, Judge Bloom, writing for this Court, said: “Whether appellant made a gift of property, i.e., either co-ownership interest in the $40,000 by depositing it in a joint savings account or a fee simple estate in the realty as co-tenant by the entireties by so titling the house purchased with that $40,000, is irrelevant to our consideration. It is also irrelevant whether a party establishes the fact of such a gift by relying on a presumption or by the production of evidence sufficient to prove all the elements of gift set out in Dorsey [v. Dorsey, 302 Md. 312 , 487 A.2d 1181 (1985) ]. As a consequence of that gift, Mr. and Mrs. Watson became equal tenants in common of the realty upon the severance of their marriage, with each being legally entitled to one-half of the proceeds of any sale of the property. The making of a gift of an ownership interest or estate in the property, however, does not affect a transmutation to marital property of the partial nonmarital property status derived from the application of the ‘source of funds’ rule announced in Harper [v. Harper, 294 Md. 54 , 448 A.2d 916 (1982) ].

The master found, as a matter of fact, that $40,000 of the funds used to acquire the Bowie home was directly traceable to the money advanced to appellant by his mother. What is at issue here, therefore, is not whether appellant gave appellee a legal estate or interest in his property, but whether he ³⁶⁰ also gave, surrendered, released, or waived his right, in the event of a future divorce, to claim whatever benefits the nonmarital status of the property would afford him when the court determines whether to grant either party a monetary award in order to effect an equitable adjustment.” Watson, 77 Md.App. at 636 , 551 A.2d 505 . Thus, in Watson , we held that, even if a party proves a gift of the title, it does not transmute the property from nonmarital to marital. In Kline, 85 Md.App. at 28 , 581 A.2d 1300 , Mr. Kline, a widower with children, married a divorcee with children.

Neither wanted to live in the other’s home, so they sold their respective properties, pooled the proceeds, and purchased a home, as joint tenants, before they got married. Mr. Kline put in $69,000, Ms. Kline put in about $10,000, and they took out a mortgage for $20,750. Three weeks later, the Klines got married and after a few months retitled the home as tenants by the entirety. At the time of divorce, they had reduced the mortgage debt to $20,000.

Kline, 85 Md.App. at 37-39 , 581 A.2d 1300 . The issue presented on appeal was whether the property was marital or nonmarital and, if nonmarital, which party contributed what nonmarital portion. Mr. Kline argued that he was entitled to recoup his $69,000. We disagreed and Judge Bloom, again writing for this Court, stated: “When the parties in this case pooled their money to purchase the ... property, they gave to each other undivided ownership interests in property that was ... neither marital nor nonmarital, for prior to their marriage those concepts did not exist.

The mutual gifts were of all rights of property, legal and equitable, which each donor had. Unlike the situation in Watson [ 77 Md.App. at 622 , 551 A.2d 505 ], where the gift was made, during the marriage, of property that by virtue of marriage had acquired a nonmarital status, here there was no nonmarital status to be either retained or given, waived, released, or surrendered at the time of the gift. When they married, three weeks later, the ³⁶¹ parties jointly owned the property; therefore, they were equal joint nonmarital contributors of the entire property. “The second fallacy, the mistaken belief that a contribution of nonmarital property somehow entitles the contributor to get back the property or its value, as if the contribution is deemed to create an indebtedness for which the contributor should have a lien, is a total distortion of the Act. As we pointed out in Watson , when one makes a valid gift of property, whether that property is ... marital or nonmarital, the donee acquires a vested interest in the property.

The court, when it grants a divorce, cannot return to the grantor spouse the legal interest that he or she had earlier given just because the gift was of nonmarital property; to do so would violate § 8-202(a)(3) of the Act, which expressly prohibits the divorce court from transferring ownership of property, real or personal, from one spouse to the other. Watson, 77 Md.App. at 631, 632 , 551 A.2d 505 . See also Rogers v. Rogers, 80 Md.App. 575, 586 , 565 A.2d 361 (1989); Nisos v. Nisos, 60 Md.App. 368, 380-81 , 483 A.2d 97 (1984).” (Emphasis in original.) Kline, 85 Md.App. at 43-44 , 581 A.2d 1300 . We held that at the instant of the marriage the Klines became the co-owners of a $79,000 asset.

This mutual gift giving made the Klines joint, nonmarital contributors to the entire property, and this did not create an indebtedness for which Mr. Kline should have a lien. Kline, 85 Md.App. at 44 , 581 A.2d 1300 . In adjusting the equities between the parties, the Court said: “The fact of the gift, the value of the property given, and the circumstances under which the gift was made are important factors to be considered by the court in determining whether to grant the donor spouse a monetary award ... provided there is sufficient marital property to support such an award. Watson , 77 Md.[App.] at 638 n. 5, 551 A.2d 505 .” (Emphasis added.) Kline, 85 Md.App. at 44 , 581 A.2d 1300 .

Thus, with respect to Kline, when the property was transferred is irrelevant. The contribution made by each spouse ³⁶² was nonmarital because it went into the purchase and their interest was directly traceable to that nonmarital investment. There are no distinguishing factors in either Watson or Kline that help Ms. Choate’s case. Both set forth the law that governs the classification and disposition of property, and the factors to be considered in adjusting the equities between the parties.

These same principles govern the disposition of the Choates’ property. Ms. Choate claims that it would produce an absurd result if we were to hold