James P. Hart, III v. Marie Holt Hart

• Court: Court of Appeals of Virginia
• Decided: March 31, 1998
• Docket: 0931973
• Status: Published

Opinion

COURT OF APPEALS OF VIRGINIA

Present: Judges Coleman, Elder and Senior Judge Cole Argued at Salem, Virginia

JAMES P. HART, III

v. Record No. 0931-97-3

MARIE HOLT HART OPINION BY JUDGE SAM W. COLEMAN III MARIE HOLT HART MARCH 31, 1998

v. Record No. 0979-97-3 JAMES P. HART, III

FROM THE CIRCUIT COURT OF ROANOKE COUNTY Roy B. Willett, Judge

Charles B. Phillips (Phillips & Swanson, on briefs), for James P. Hart, III.

William H. Cleaveland (Leisa Kube Ciaffone; Rider, Thomas, Cleaveland, Ferris & Eakin; Gentry, Locke, Rakes & Moore, on briefs), for Marie Holt Hart.

James P. Hart, III (husband) and Marie Holt Hart (wife)

separately appeal the trial court's divorce decree and equitable

distribution award. Husband contends the trial court erred when

it: (1) divided in kind real property titled jointly to both

parties; (2) designated a boundary line between two of the

parcels different from the boundary recommended by the

commissioner; (3) created joint easements of ingress and egress

on the partitioned parcels and ruled that each party would bear

the entire costs of maintaining the sections of such easements

located on their respective tracts regardless of the extent of

use by the other, their tenants, and licensees; and (4) classified husband's Central Fidelity account as marital property

and distributed one-half of the account assets to wife. Wife

contends the trial court erred when it: (1) calculated the value

of husband's separate share of a certain mortgage note; (2)

failed to classify as wife's separate property certain money in a

USAA bond fund which she claims she traced to money she

inherited; and (3) estimated husband's contributions to the USAA

bond fund when it divided the fund upon consideration of the

factors under Code § 20-107.3(E). For the reasons that follow,

we affirm in part, reverse in part and remand to the trial court

for further proceedings in accordance with this opinion.

I. BACKGROUND

The parties were married in New York in 1968 and lived in a

home that husband had purchased before the marriage. In 1986,

they sold the New York home, receiving $40,000 part payment and a

$219,000 twenty-year promissory mortgage note. They relocated to

Virginia, where they purchased a forty-two acre parcel of land

adjacent to Smith Mountain Lake (Plantation Point) which they

jointly titled. At Plantation Point, they built a marital home

and eight rental units. Due to the parties' concerns over the

health of wife's parents (the Holts), they also constructed a

separate residence for the Holts on the Plantation Point property

(Hillsdale). Mrs. Holt contributed approximately $48,000 to

purchase the building materials for Hillsdale. The parties and

the Holts established neither a repayment nor lease agreement nor

- 2 - did they execute a deed that conveyed any estate or interest in

the property to the Holts. The parties merely acknowledged that

Hillsdale was built as a residence for the Holts to live in "as

long as they were able."

After selling the New York home in 1986, the parties opened

a USAA Virginia Bond Fund account using the $40,000 down payment

from the New York home as the initial deposit. Over the years,

money from various sources was deposited into the fund, including

amounts contributed by Mrs. Holt, the New York mortgage note

payments, rental receipts from the lessees of the Plantation

Point rental units, husband's IBM pension payments, and $20,500

that wife inherited from her great aunt. The parties separated on February 4, 1994. They executed a

separation agreement in which they agreed to temporarily "split

their net income" pending a judicial determination and award of

equitable distribution. Husband deposited his share of the

income into a Central Fidelity bank account that he opened after

the parties separated.

In October 1994, husband filed for divorce on the ground of

adultery. The trial court appointed a commissioner in chancery

to hear evidence, report factual findings, and make

recommendations regarding, among other matters, how to equitably

distribute the parties' marital property. After receiving the

commissioner's report, the trial court specifically found that

the wife had committed adultery but granted husband a divorce on

- 3 - the ground of having lived separate and apart and approved the

commissioner's equitable distribution recommendations with some

modifications.

II. GENERAL PRINCIPLES

Code § 20-107.3 governs how property shall be equitably

distributed when a marriage is dissolved. The statute provides

that the court shall determine legal title as between the

parties, shall classify the parties' property as separate or

marital property, shall evaluate the marital and separate

property, and shall determine the rights and interests of the

parties in the marital property. The court must then equitably

divide the marital property in the manner authorized by the

statute, taking into consideration the factors enumerated in

subsection (E). See generally Code § 20-107.3.

On appeal, the trial court's award of equitable distribution

will not be reversed "unless it appears from the record that the

chancellor has abused his discretion, that he has not considered

or misapplied one of the statutory mandates, or that the evidence

fails to support the findings of fact underlying his resolution

of the conflict of the equities." Robinette v. Robinette, 10 Va.

App. 480, 486, 393 S.E.2d 629, 633 (1990) (citations omitted). A

decree confirming a commissioner's report is presumed correct and

will not be disturbed unless plainly wrong or without evidence to

support it. Pelfrey v. Pelfrey, 25 Va. App. 239, 244, 487 S.E.2d

281, 283 (1997); Gamer v. Gamer, 16 Va. App. 335, 339, 429 S.E.2d

- 4 - 618, 622 (1993).

- 5 - III. DIVISION OF PLANTATION POINT PROPERTY

Upon consideration of the factors enumerated in Code

§ 20-107.3(E), the commissioner recommended that the Plantation

Point property be divided into three parcels: one parcel to

husband, which included the marital home and four rental units; a

second parcel of equal value to wife, which included the

Hillsdale home and four rental units, and a third parcel which is

to remain titled to both parties as tenants in common. The

commissioner recommended that the parties be given the option of

purchasing the undivided interest of the other in the third tract

and if they failed to agree upon such a sale, the third tract

would be sold. The commissioner further recommended that

easements for ingress and egress be established on the

partitioned properties, which would be a joint easement along a

driveway that runs through both tracts of land. The commissioner

recommended that wife should be solely responsible for the cost

of maintaining the portion of the easement that is solely located

on and serves only her property and that both parties should be

equally responsible for the cost of maintaining the easement that

is located on husband's property and serves both tracts. The trial court approved the commissioner's recommendations

with two exceptions relevant to this appeal. First, the trial

court referenced the lake's 800-foot contour line in designating

the boundary line between the two parcels; the commissioner had

generally referenced that line as the lake's "water line."

- 6 - Second, the trial court ruled that the cost of maintaining the

joint easement "shall be the sole responsibility of the

respective owners" of the tracts across which the easements run.

A. Division In Kind

We hold that the trial court did not err by dividing the

Plantation Point property into separate parcels rather than

allotting the whole property to James P. Hart in exchange for his

agreement to purchase wife's interest at fair market value. Code

§ 20-107.3(C) authorizes the trial court to "order the division

or transfer, or both, of jointly owned marital property . . .

based upon the factors listed in subsection E." Under this

provision, the trial court may, in its discretion, order a

division in kind of the property, permit either party to purchase

the interest of the other and direct the allocation of the

proceeds, or order a public or private sale of the property. See

id.; Gaynor v. Hird, 11 Va. App. 588, 592, 400 S.E.2d 788, 790

(1991).

Code § 20-107.3(C), when enacted in 1982, did not authorize

a trial court to divide or transfer title to property except that

"in the final decree of divorce the court may partition marital

property which is titled in the names of both parties." The

initial equitable distribution statute permitted trial courts in

their final divorce decrees to partition jointly titled property

in order to effectuate a property division according to the

parties' legal title rather than be required to file a separate

- 7 - suit for partition. Morris v. Morris, 3 Va. App. 303, 309-10,

349 S.E.2d 661, 665 (1986). Partition as authorized in the

divorce case was, however, no different from partition prior to

equitable distribution and was required to conform with Code

§ 8.01-81 et seq. Clayberg v. Clayberg, 4 Va. App. 218, 221, 355

S.E.2d 902, 904 (1987). Code § 8.01-83 required trial courts,

when partitioning realty, to partition the property in kind,

except when "partition cannot conveniently be made, [in which

case] the entire subject may be allotted to any one or more of

the parties who will accept, and pay therefor to the other

parties such sums of money as their interest therein may entitle

them to," or, alternatively, to sell the property and divide the

proceeds. See Sensabaugh v. Sensabaugh, 232 Va. 250, 256, 349

S.E.2d 141, 144-45 (1986); Nickels v. Nickels, 197 Va. 498,

501-02, 90 S.E.2d 116, 118 (1955) (applying Code §§ 8-690 and

8-692). In a partition proceeding, the court was not authorized

to order a sale or an allotment of the property to one of the

owners in exchange for its value if the property could have been

divided in kind. Leake v. Casati, 234 Va. 646, 649, 363 S.E.2d

924, 926 (1988). Property rights were considered "[s]o sacred

. . . that to take it from one man and give it to another for

private use [was] beyond the power of the state itself, even upon

payment of full compensation." Id. (citation omitted).

Furthermore, the fact that property may be less valuable when

divided in kind is "insufficient to deprive a co-owner of his

- 8 - 'sacred right' to property." Sensabaugh, 232 Va. at 258, 349

S.E.2d at 146.

In 1988, the General Assembly amended Code § 20-107.3(C) to

delete the provision authorizing partition and substituted in its

stead the authority, "based upon the factors listed in subsection

E, [to] divide or transfer or order the division or transfer, or

both, of jointly owned marital property, or any part thereof."

The statute expressly authorized the court either to divide the

property, permit one party to purchase it with the court

allocating the proceeds, or direct that it be sold, in whole or

in part, by public or private sale "without the necessity of

partition." Id. The amendment has the effect of permitting the

court to divide jointly owned realty as a marital asset subject

to equitable distribution according to the rights and equities of

the parties and subsection (E) factors rather than partition the

property according to legal title and adjust the equities by a

monetary award. See Frazer v. Frazer, 23 Va. App. 358, 371-72,

477 S.E.2d 290, 296-97 (1996).

We hold that the trial court did not err in accepting the

commissioner's factual findings and conclusions of law to support

the in-kind division of the property.

The commissioner found that "the lifetime goals of both parties for retirement was the occupancy of this unique parcel of

land." The commissioner visually inspected the property and

heard testimony from an expert witness describing how the

- 9 - property could be partitioned. Based on these facts, the

commissioner concluded that Plantation Point should be

partitioned so that both husband and wife could occupy the land.

The evidence supports the commissioner's finding that Mrs.

Hart's mother, Mrs. Holt, contributed substantial funds to buy

materials for the construction of the Hillsdale home on the

property and that the parties contemplated that Mrs. Holt would

live in the Hillsdale home for her lifetime. Although a third

party cannot be granted a monetary award or a trust in marital

property, Wooley v. Wooley, 3 Va. App. 337, 349 S.E.2d 422

(1986), on these facts the commissioner did not err in awarding

Mrs. Hart an equal in-kind share of the Plantation Point property

in view of her monetary and non-monetary contributions to the

acquisition, improvement, maintenance and construction on the

property, including the monetary contributions from Mrs. Hart's

mother, Mrs. Holt. Both the commissioner and the trial judge

considered the factors under Code § 20-107.3(E) in arriving at

the in-kind division. See Frazer, 23 Va. App. at 372, 477 S.E.2d

at 296. "Fashioning an equitable distribution award lies within

the sound discretion of the trial judge and that award will not

be set aside unless it is plainly wrong or without evidence to

support it." Srinivasan v. Srinivasan, 10 Va. App. 728, 732, 396

S.E.2d 675, 678 (1990). Accordingly, we cannot say the trial

court's decision to divide in kind Plantation Point was plainly

wrong or without evidence to support it, or that it was an abuse

- 10 - of

discretion. 1

B. Boundary Lines

Husband contends the trial court abused its discretion when

it referenced the lake's 800-foot contour line as one boundary

between the parties' properties. He claims the commissioner, in

recommending a division of the property, intended that the

boundary be referenced to the 795-foot contour line of the lake.

The trial court's adjustment of the boundary line will have the

effect of reducing the size of husband's tract and increasing the

size of wife's tract by a small strip of property. Thus, he

argues, the trial judge abused his discretion when he "overruled

the Commissioner and set the line to the 800-foot contour line"

without specifying his reasons for doing so. Husband's contention lacks merit. In recommending an

in-kind division, the commissioner referenced the boundary line

in dispute to the "water line." The commissioner's report does

not indicate whether the "water line" refers to the 795-foot

contour line, as husband presumes, or the 800-foot contour line.

It appears from the record that the commissioner alluded to the

"water line" because no plat or geological survey had been made

1 On brief, husband contested the trial court's assignment of sixty percent of the Hillsdale property to wife in partitioning the property. At oral argument, husband conceded that the trial court did not abuse its discretion in dividing the partitioned property, and, therefore, we shall not consider that argument in this appeal.

- 11 - of the property at the time of the commissioner's report. We do

not believe the trial court "overruled" the commissioner's

recommendation. Moreover, the 800-foot contour line was used by

the surveyor in determining the acreage of the respective

parcels. It was from these measurements that the trial court

determined the property value of each parcel in fashioning the

equitable distribution award. Accordingly, we cannot say the

trial court abused its discretion by designating the boundary

line of the respective properties in reference to the 800-foot

contour line.

C. Maintenance of Joint Easement

Husband next argues the trial court erred when it ruled that

the costs of maintaining the driveway as a joint easement shall

be the sole responsibility of the party who owns the parcel over

which the easement runs. We agree.

Under the common law, the power to grant easements in a suit

for partition is necessarily implied in the court's power to make

the partition. See Martin v. Martin, 95 Va. 26, 29-30, 27 S.E.

810, 811-12 (1897) (upholding creation of easement to allow

access to water source located on servient estate after

partition); see also 59A Am.Jur.2d Partition § 299 at 172-73

("Since the beneficial and convenient partition of real estate

will often require that a right of way . . . or easement, be

given to one share in the parts assigned to other shares, the

power to create such rights and privileges is held to be

- 12 - necessarily implied in the grant of jurisdiction to make

partition."). Partition, as it was authorized under Code

§ 20-107.3, is no different from partition at common law and as

codified in Code § 8.01-81 et seq., except that it could be done

in the divorce proceeding rather than a separate suit. Clayberg,

4 Va. App. at 221, 355 S.E.2d at 904. Thus, although the power

of the divorce court to divide jointly owned property has been

expanded beyond the power to partition property according to

legal title, it follows that a trial court has the same power to

establish easements for ingress and egress when dividing real

estate in a divorce case as it would have had in a partition

suit. However, the trial court abused its discretion by ruling

that the cost of maintaining the joint easement "shall be the

sole responsibility of the owners" across whose property the

easement runs. The effect of this ruling is to place the sole

responsibility of maintaining and repairing a jointly used

roadway upon the owner and successors in title of the servient

tract, with no responsibility of the owner or lessee of the

dominant tract who may use and benefit from the easement equally.

Generally, under the common law, the owner of an easement has a

duty to maintain the easement and must bear the entire cost of

its maintenance and upkeep. See Anderson v. Lake Arrowhead Civic

Assoc., 253 Va. 264, 273, 483 S.E.2d 209, 214 (1997); Oney v. West Buena Vista Land Co., 104 Va. 580, 585, 52 S.E. 343, 344

- 13 - (1905). This general rule only applies where the dominant estate

owner is the sole user of the easement. See 1 Friedman,

Contracts and Conveyances of Real Property § 4.9(m) (5th ed.

1991). "[W]here the easement owner is not the sole user of a

private right-of-way, but uses it in common with the servient

[estate], then the costs of repair and maintenance should be

[proportionately] distributed among all users" between both the

dominant and servient estates. Lindhourst v. Wright, 616 P.2d

450, 454-55 (Okla. App. 1980) (quoted in Marvin E. Nieberg Real Estate Co. v. Taylor-Morley-Simon, 867 S.W.2d 618, 623 (Mo. App.

1993)); see Bowen v. Buck and Fur Hunting Club, 550 N.W.2d 850,

851 (Mich. App. 1996); Janes v. Politis, 361 N.Y.S.2d 613, 615-16

(Sup. Ct. 1974); McManus v. Sequoyah Land Assoc., 20 A.L.R.3d

1015, 1023 (Cal. App. 1st Div. 1966); see also 25 Am.Jur.2d

Easements and Licenses § 85 at 492 (1966) ("[W]here a private

road is used in common by the owner of land across which such

road runs and by a person who has an easement of way over it, the

burden of reasonable repairs must be distributed between them in

proportion as nearly as possible to their relative use of the

road."). Thus, we hold "that the duty of repair [for a jointly

owned easement for ingress and egress] should fall where reason,

convenience and equity require" and should be apportioned among

all those who own and have the right to use the easement.

Lindhourst, 616 P.2d at 455 (citation omitted).

Because both parties and their tenants will use the joint

- 14 - driveway easements to access the public road and the waterfront,

the costs of maintaining and repairing the easements should be

apportioned between the parties. Accordingly, we reverse the

trial court's ruling concerning the maintenance costs of the

easements and remand the case for the trial court to enter a

decree and take such further action in conformity with this

holding that shall be necessary to define the parties' property

rights and responsibilities upon the appropriate real estate

records.

IV. CENTRAL FIDELITY ACCOUNT

The parties' separation agreement provided that they would

"split" their net income earned from the time of separation until

the court's equitable distribution decree. Husband was to

"arrange the split by sending a check on the first of each month

to the wife in the amount of $3,630.22," which represented

one-half of the income derived from the couple's rental receipts,

mortgage note payments, and IBM pension payments. The agreement

further provided that "[a]fter 45 days, [one-half] of the cost of

Husband's efforts to manage, maintain, but not to improve, the

rental properties shall be credited in the final division of assets." (Emphasis added). Contrary to the terms of the

agreement, husband contemporaneously deducted the expenses

associated with the rental units from the couple's share of gross

total income each month. He paid wife one-half of the net income

and placed his net share into the Central Fidelity account, which

- 15 - he opened after separation.

The commissioner recommended that under the terms of the

agreement husband was required to pay wife one-half of the

couple's post-separation income each month and subsequently

receive "credit" for the rental expenses when the court made its

equitable distribution award. In determining the amount of

rental expense to credit husband, the commissioner calculated the

amount of the expenses that had been deducted from wife's monthly

payments and subtracted that amount from one-half of husband's

total rental expenses incurred after separation. The

commissioner determined from his calculation that husband was

entitled to an additional credit for expenses that he had paid in

the amount of $2,199.39, which amount was to be offset against

the wife's total equitable distribution award. Additionally,

the commissioner recommended classifying the account as

marital property and dividing the account assets as part of the

court's monetary award. The trial court approved the

commissioner's recommendations. Husband contends the

post-separation income was not marital property subject to

equitable distribution under Code § 20-107.3(A)(2) and,

therefore, the trial court erred in classifying it as marital and

including it in the equitable distribution award. The trial court did not err when it classified the account

as marital property. Under Code § 20-107.3, all property

acquired during the marriage and before the last separation of

- 16 - the parties is presumed to be marital property in the absence of

satisfactory evidence that it is separate property. See

Stainback v. Stainback, 11 Va. App. 13, 17, 396 S.E.2d 686, 689

(1990); see also Stratton v. Stratton, 16 Va. App. 878, 881, 433

S.E.2d 920, 922 (1993) ("[T]he character of property at the date

of acquisition governs its classification pursuant to Code

§ 20-107.3."). The fact that a portion of the parties' income in

the fund was received after the separation does not control the

classification of income from jointly titled property whether

received before or after the separation. The evidence

established that the account accumulated payments from assets

that were acquired during the marriage. Moreover, under Code

§ 20-107.3(A)(2)(i), "all property titled in the names of both

parties, whether as joint tenants, tenants by the entirety, or

otherwise" is marital property. The rental properties were

titled in the names of both parties, and, thus, any income from

such jointly owned properties was also jointly owned and was

properly classified as marital property. See Dietz v. Dietz, 17

Va. App. 203, 211, 436 S.E.2d 463, 468 (1993). "[M]arital

property, in the absence of a valid, express agreement by the

parties, cannot become the separate property of one of the

parties." Wagner v. Wagner, 4 Va. App. 397, 404, 358 S.E.2d 407,

410 (1987). Here, rather than stipulate that the post-separation

income is separate property, the separation agreement states that

the parties shall divide "their" net income.

- 17 - Although the commissioner correctly found that the account

assets were marital property and recommended that the monetary

award be properly adjusted by crediting husband for rental

expenses that had not been previously deducted from the wife's

share of the income, he improperly included the husband's

post-separation income as marital property in calculating the

monetary award. Code § 20-109 provides that divorcing parties

may agree to the "terms of a monetary condition or

consideration." Here, the separation agreement stipulated how

the parties would split their post-separation income. Husband

paid wife her share of the income in accordance with the

agreement. The trial court may not enter a decree that is

inconsistent with a valid agreement between the parties. See

Westbrook v. Westbrook, 5 Va. App. 446, 452, 364 S.E.2d 523, 527

(1988) (reversing court's classification of real estate as

separate where parties executed postnuptial agreement stating

that property was marital property). Because the parties'

post-separation income had already been distributed according to

the terms of the separation agreement, the trial court erred in

accepting the commissioner's recommendation to include husband's

share of the income in its equitable distribution award.

According to the agreement, the trial court's only task was to

calculate husband's "credit" for rental expenses not already

deducted. The Central Fidelity account assets should have been

- 18 - left alone. 2 Accordingly, we affirm the trial court's ruling

crediting husband against the monetary award with having paid

wife's one-half of the rental expenses. However, we reverse the

trial court's inclusion and division of the Central Fidelity

account assets in the monetary award. On remand, the trial court

shall deduct from the marital estate one-half of the total

Central Fidelity account assets.

V. MORTGAGE NOTE Husband purchased the New York home prior to the marriage

for $27,000 financed by a mortgage on the property. Husband

testified that he improved the property before the marriage by

installing a pool and adding carpet to the home "at a cost of

$10,000." At the time of marriage, the balance on the mortgage

was $20,835. Eighteen years later, the parties sold the home for

$259,000, receiving a $40,000 cash down payment and a $219,000

mortgage note payable over twenty years.

Citing Code § 20-107.3(A)(3)(d-e), the commissioner

classified the mortgage note as hybrid property and determined

the respective marital and separate property portions of the note

using "the methodology of hybrid tracing." The commissioner 2 The trial court found that an additional $10,000 repaid by husband's sons in satisfaction of a previous loan was marital property and should also be distributed in the decree. The loan was made with funds that had already been distributed pursuant to the separation agreement and should not have been redistributed in the equitable distribution award. Because husband used funds from the Central Fidelity account in order to make this loan, the trial court also erred in including this amount in the monetary award.

- 19 - found that husband separately contributed $16,265 to the purchase

and improvement of the home, which included $2,700 from husband's

down payment on the house, pre-marital mortgage payments in the

amount of $3,565, and "the pool construction and carpet costs [in

the amount of] $10,000." (Emphasis added). He further found

that the parties contributed $17,335 of marital property to the

post-marital mortgage payments. Based on these figures, the

commissioner found that 48.4% of the New York property was

husband's separate property and that 51.6% was marital property.

Thus, the balance of the mortgage note was 48.4% the husband's

separate property and 51.6% was marital property. Pursuant to the 1990 amendments, the General Assembly

adopted the concept of hybrid property and established principles

to govern its classification and distribution. 3 See Code

3 Code § 20-107.3(A) provides, in pertinent part:

(3) The court shall classify property as part marital property and part separate property as follows:

* * * * * * *

d. When marital property and separate property are commingled by contributing one category of property to another, resulting in the loss of identity of the contributed property, the classification of the contributed property shall be transmuted to the category of property receiving the contribution. However, to the extent the contributed property is retraceable by a preponderance of the evidence and was not a gift, such contributed property shall retain its original classification.

- 20 - § 20-107.3(A)(3). Wife does not challenge the commissioner's

classification of the promissory note as hybrid property under

Code § 20-107.3(A)(3). Rather, she contends the commissioner

erred when he calculated the value of husband's separate property

in the home and promissory note by including the amount husband

paid for the improvements rather than the value which the

improvements added to the property. The issue has not been

previously decided in Virginia. The hybrid tracing methodology employed by the commissioner

(..continued)

e. When marital property and separate

property are commingled into newly acquired

property resulting in the loss of identity of

the contributing properties, the commingled

property shall be deemed transmuted into

marital property. However, to the extent the

contributed property is retraceable by a

preponderance of the evidence and was not a

gift, the contributed property shall retain

its classification.

- 21 - was adopted in the case of Brandenburg v. Brandenburg, 617 S.W.2d

871 (Ky. Ct. App. 1981). In Brandenburg, the Kentucky Court of

Appeals approved a formula that apportioned the marital and

non-marital components of hybrid property in "the same

percentages as their respective contributions to the total equity

in the property." 617 S.W.2d at 872. It stated: [T]here is to be established a relationship between the nonmarital contribution and the total contribution, and between the marital contribution and the total contribution. These relationships, reduced to percentages, shall be multiplied by the equity in the property at the time of distribution to establish the value of the nonmarital and marital properties. With this principle established, we provide the following definitions:

Nonmarital contribution (nmc) is defined as the equity in the property at the time of marriage, plus any amount expended after marriage by either spouse from traceable nonmarital funds in the reduction of mortgage principal, and/or the value of improvements made to the property from such nonmarital funds.

Marital contribution (mc) is defined as the amount expended after marriage from other than nonmarital funds in the reduction of mortgage principal, plus the value of improvements made to the property after the marriage from other than nonmarital funds.

Total contribution (tc) is defined as the sum of nonmarital and marital contributions.

Equity (e) is defined as the equity in the property at the time of distribution. This may be either at the date of the decree of dissolution, or, if the property has been sold prior thereto and the proceeds may be traced, then the date of the sale shall be

- 22 - the time at which the equity is computed.

The formula to be utilized is:

nmc x e = nonmarital property tc

mc x e = marital property tc

Id. (emphasis added).

We hold that the Brandenburg formula is an acceptable method

of tracing and determining the value of the marital and separate

property components of hybrid property under Code 4 § 20-107.3(A)(3). However, the commissioner misapplied the

Brandenburg formula to the facts of this case. Brandenburg

specifically provides that a party's non-marital contributions to

hybrid property may include "the value of improvements" to the

property. 617 S.W.2d at 872 (emphasis added). It is the value

that improvements add to the property, not their cost, that is

the proper consideration because the court is apportioning the

equity in the hybrid property when it traces the sources of

contributions to that property. Here, the commissioner made no

finding as to the value added to the equity in the New York home by the addition of the pool and carpeting. Rather, the

commissioner accepted the total cost of the improvements as

though they increased the value of the property to that degree

when he calculated husband's separate property portion of the 4 By approving this formula, we do not intend to imply that this is the only acceptable method of tracing and determining the marital and separate property interests of hybrid property.

- 23 - promissory note. Accordingly, the trial court erred in accepting

the commissioner's finding concerning the values of the separate

and marital shares of the mortgage note. On remand, the

chancellor shall determine the husband's separate interest based

on the value added by the improvements rather than their cost.

VI. USAA BOND FUND

As previously noted, the USAA bond fund consisted of monies

the parties accumulated from different sources, including rental

receipts, the husband's IBM pension fund, contributions from Mrs.

Holt, and $20,500 that wife inherited as her separate property.

The commissioner classified the bond fund as marital property.

He found that the parties had extensively commingled separate and

marital property in the fund and that neither party had traced

his or her separate contributions as a discrete identifiable item

in the account, including wife's deposit of $20,500 from her

inheritance. The commissioner concluded that because the

parties' respective contributions to the fund could only be

approximated, the entire fund was marital property that would be

subject to equitable distribution based upon consideration of the

source of contributions as provided in Code § 20-107.3(E)(2). In order to approximate husband's contributions to the bond

fund, the commissioner performed a series of calculations.

First, he calculated the deposits of IBM pension payments and

the contributions from Mrs. Holt. Then, he determined the gross

rental receipts and deducted from that figure the rental expenses

- 24 - as shown on husband's tax forms, from which he was able to

determine the amount of the deposits that were net marital rental

income. Then, he subtracted the total of these amounts from the

total deposits to the fund to determine the portion of deposits

attributable to the mortgage note payments. Finally, the

commissioner determined the value of the marital and separate

property shares of the mortgage payments by multiplying the

balance in the fund by the separate and marital property

percentages calculated in the hybrid trace of the mortgage note.

After consideration of the subsection (E) factors, the

commissioner recommended dividing the fund's assets in the amount

of fifty-seven percent (57%) to husband and forty-three percent

(43%) to wife. The trial court approved the commissioner's

recommendations and divided the fund accordingly. Wife argues the trial court erred when it failed to credit

her $20,500 deposit of inheritance proceeds as separate property.

We agree. We recently held that: [i]n order to trace the separate portion of hybrid property, a party must prove that the claimed separate portion is identifiably derived from a separate asset. This process involves two steps: a party must first (1) establish the identity of a portion of hybrid property and (2) directly trace that portion to a separate asset.

Rahaban v. Rahaban, 26 Va. App. 195, 208, 494 S.E.2d 135, 141

(1997). When a party satisfies this test, and by a preponderance

of the evidence traces his or her separate contributions to

commingled property, the Code states that the contributed

- 25 - separate property "shall retain its original classification."

Code § 20-107.3(A)(3)(d-e) (emphasis added).

Here, the commissioner found that wife deposited $20,500

from an inheritance into the account on March 25, 1991. Under

Code § 20-107.3(A)(1)(ii), wife's inheritance was separate

property which she commingled with marital property in the USAA

bond fund. The evidence established that no withdrawals were

made from the account after wife deposited the inheritance money. See Brown v. Brown, 324 S.E.2d 287, 289 (N.C. App. 1985)

(separate property deposited into marital bank account was

retraceable where no withdrawals were made after deposit and

balance never fell below amount of deposit); cf. Pollock v.

Pollock, 499 P.2d 431, 437 (Wash. App. 1972) (separate property

deposited into marital bank account was community property where

party failed to establish character of funds withdrawn

thereafter). Wife identified the $20,500 portion of the USAA

bond account and directly traced that portion to her deposit of

separate property in the form of inheritance proceeds. Under

these circumstances, the Code mandates that wife's deposit be

classified as separate property. See Peter N. Swisher et al.,

Virginia Family Law § 11-6 at 408-09 (2d ed. 1997). Accordingly,

the commissioner erred in finding that wife failed to trace the

$20,500 inheritance deposit, and the trial court's approval of

this finding and classification of the bond fund as marital

property was plainly wrong.

- 26 - We also hold that the trial court erred in accepting the

commissioner's division of the bond fund. As noted in Part V,

the commissioner erred in tracing husband's separate property in

the mortgage note based on the costs of improvements rather than

value added. Because the commissioner also based his calculation

on the erroneous separate property percentage of the note in

approximating husband's separate contributions to the bond fund,

the commissioner's calculations to divide the fund on this basis

were also erroneous. Accordingly, we hold that the trial court's

division of the bond fund was erroneous. On remand, the

chancellor shall allow Mrs. Hart $20,500 from the fund as her

separate property and shall redetermine how the balance shall be

distributed in accordance with the subsection (E) factors. To

the extent the mortgage note payments are to be reclassified as

marital and separate, the chancellor shall apply the correct

formula according to our holding in Part V. Finally, we disagree with wife's contention that the

commissioner erred when he approximated the source of

contributions to the bond fund by attempting to calculate the net

amount of marital rental income deposited to the fund rather than

the gross rental receipts received. She claims that because of

the extensive commingling of funds in the account, the

commissioner could not accurately determine whether marital or

separate funds were used to pay for the rental expenses and that

his determination of net rental income was speculative. In this

- 27 - respect, she argues, the commissioner underestimated the amount

of funds attributable to marital rental income and thereby

overestimated the amount of funds that had been deposited from

the mortgage note payments, a substantial part of which the

husband was awarded as his separate property. Thus, she

contends, the trial court's approval of the commissioner's

application of the statutory factors was erroneous.

In reviewing an equitable distribution award on appeal, "we

rely heavily on the discretion of the trial judge in weighing the

many considerations and circumstances presented in each case."

Artis v. Artis, 4 Va. App. 132, 137, 354 S.E.2d 812, 815 (1987)

(citations omitted). "The court need not quantify or elaborate

exactly what weight was given to each of the factors." Taylor v.

Taylor, 5 Va. App. 436, 444, 364 S.E.2d 244, 249 (1988). "The

judgment of the trial court is presumed to be correct and the

party who asserts the contrary is required to overcome the

presumption by record proof." Broom v. Broom, 15 Va. App. 497,

504, 425 S.E.2d 90, 94 (1992) (citation omitted).

Here, the wife's primary concern that she was not awarded

from this fund her separate property which she inherited has been

addressed and should eliminate much of her concern that the

husband will receive an undue proportion of the fund as his

separate share of the mortgage note payments. Furthermore, the

proportion of the fund attributable to separate and marital

property from the mortgage payments must also be adjusted on

- 28 - remand. On this record, we cannot say the commissioner erred in

making his calculation by approximating the amount of net rental

income deposited into the bond fund by extrapolating data from

the couple's tax forms or by estimating the balance attributable

to the mortgage payments. The process of determining the

contributions of each party to the acquisition, care and

maintenance of marital property necessarily entails approximation

and estimation by the chancellor or commissioner. We cannot say

the commissioner erred when he approximated the rental income by

considering the rental expenses claimed on husband's tax forms.

VII. CONCLUSION

In summary, we affirm the trial court's partition of the

Plantation Point property and designation of the boundary lines.

We reverse the trial court's rulings: (1) concerning the

maintenance costs of the joint easements; (2) distributing the

Central Fidelity account as part of the monetary award; (3)

determining husband's separate property part of the mortgage

note; and (4) classifying and dividing the USAA bond fund. On

remand, the trial court must: (1) redetermine the parties'

responsibilities for the maintenance costs of the joint easements

in accordance with our holding in Part III; (2) deduct from the

marital estate one-half of the Central Fidelity account assets in

accordance with our holding in Part IV; (3) redetermine husband's

separate property portion of the mortgage note in accord with our

holding in Part V; and (4) reclassify the USAA bond fund taking

- 29 - into account wife's separate property contribution of her

inheritance proceeds as well as the correct separate property

percentage of the mortgage note. Affirmed in part, reversed in part, and remanded.

- 30 -