Matter of Marriage of Tsukamaki

112 P.3d 416, 199 Or. App. 577, 2005 Ore. App. LEXIS 621

• Court: Court of Appeals of Oregon
• Decided: May 18, 2005
• Docket: DR0204409; A122400
• Status: Published

Opinions

ARMSTRONG, P. J.

Wife appeals from a dissolution judgment. She • assigns error to the trial court’s equal division of two Paine Webber accounts. On de novo review, ORS 19.415(3) (2001), we modify the trial court’s judgment.

The parties were married in 1972 and have no children. They separated in 2001, and husband filed for dissolution in 2002. At that time, husband was a pharmacist, and wife worked in higher education. Throughout the marriage, both parties worked outside the home.

Through frugality, the couple has accumulated assets in excess of $1.5 million. Among those assets are the Paine Webber accounts, which were worth $454,758 at the time of trial and were jointly titled in the names of husband and wife. The funds in those accounts consist of the proceeds from the sale of certain stocks and cash gifts that wife received from her parents between 1984 and 2001. Wife’s parents had owned a significant percentage of the shares in Thos. Iseri Produce Company (Iseri). As part of their estate plan, wife’s parents began in 1984 to make annual gifts of Iseri stock to wife and her brother. Although her parents had the stock certificates for the gifts to wife issued in wife’s name, they retained physical possession of the stock certificates and gave wife photocopies of them. In 1995, another shareholder purchased the Iseri interests of wife’s parents, wife, and her brother. The sale of the stock in wife’s name generated $431,578 in cash proceeds, which were deposited into an account at Paine Webber jointly titled in the names of both husband and wife. At some point between 1995 and the trial, wife transferred part of those proceeds to accounts with other brokerages and then transferred them back to Paine Webber. Paine Webber established a separate account for the transferred funds. The original account and the separate, transferred-funds account constitute the two Paine Webber accounts at issue in this appeal.

Between 1996 and 2001, also as part of their estate plan, wife’s parents gave wife several cash gifts in the amount of the federal gift tax exclusion. Those gifts were deposited in the Paine Webber accounts. On many of the occasions when they presented a cash gift to wife, wife’s parents also presented husband with a smaller cash gift.

After a one-day trial, the trial court concluded that the Paine Webber accounts were marital assets and that wife had not rebutted the statutory presumption under ORS 107.105(l)(f) of equal contribution toward the acquisition of the assets.¹ Consequently, the trial court ordered in the dissolution judgment that the Paine Webber accounts be divided equally between the parties.

On appeal, wife asserts that the trial court erred in its disposition of the Paine Webber accounts. Wife first argues that, because they were “conditional gifts,” the funds in the Paine Webber accounts are not marital assets subject to the court’s distribution power. Alternatively, wife argues (1) that, if the accounts are marital assets, then she nonetheless rebutted the presumption of equal contribution and (2) that the funds were not so commingled with the joint assets of the parties that it is just and proper to require that she share them equally with husband. We address each of wife’s arguments in turn.

First, wife argues that, although her parents purported to make gifts of stock and cash to her for tax purposes, her parents retained an interest in the gifts. Specifically, wife argues that she had an agreement with her parents to return the proceeds of the stock or the cash to them if they ever needed them.

At trial, wife’s father testified that wife’s parents and wife had a “mutual understanding” that wife would keep the money “available” in case her parents needed it for expenses, such as health care. Wife’s father further testified that, although there was no written document expressing the parties’ purported agreement, “[i]t was verbally understood, more or less.” Wife’s testimony was similar, and she stated that she could use the funds for her own purposes if her parents gave her permission or on their deaths. Although she does not articulate it as such, wife in effect contends that her parents were the settlors of an inter vivos trust, of which she was the trustee and contingent beneficiary and her parents were the present beneficiaries.

Wife argues that husband’s testimony also supports her theory. Husband testified that he understood that the funds in the Paine Webber accounts would be available to wife’s parents if they needed financial help. Husband, on the other hand, argues that he was merely testifying about a moral rather than legal obligation to help wife’s parents in a time of financial need. Husband testified at trial that he would have helped wife’s parents financially even if they had not given wife the stock and the cash gifts. He testified that he believed that he and wife would have had a similar moral obligation to provide financial support to his own parents, who had not given similarly large gifts to the couple. Furthermore, husband testified that he had never had any conversations with wife’s parents about the gifts. We agree with husband; his testimony does not support a conclusion that the transfers to wife established a trust.

In a ruling from the bench, the trial court expressly stated that it determined the Paine Webber accounts to be marital assets. Thus, the court implicitly rejected the only evidence supporting wife’s position — her own testimony and that of her father. If the trial court had believed that testimony, it would have had no option but to conclude that the funds in the Paine Webber accounts were not marital assets subject to division because they were held in trust by wife for her parents. Implicitly, the court’s conclusion to the contrary necessarily required it to find that the evidence regarding the conditional nature of the transfers was not credible. Although we are exercising de novo review, “we defer to the trial court’s express and implied credibility findings.” Tomos and Tomos, 165 Or App 82, 87, 995 P2d 576 (2000) (citing Short and Short, 155 Or App 5, 18, 964 P2d 1033 (1998), and Patterson and Patterson, 39 Or App 423, 428, 592 P2d 576, rem’d, 286 Or 631, 596 P2d 554 (1979)). Because the trial court did not credit the testimony supporting wife’s inter vivos trust theory, neither do we. The transfers of stock and cash to wife were unconditional, completed gifts.

Having concluded that the funds in the Paine Webber accounts are indeed the “personal property * * * of either or both of the parties,” ORS 107.105(l)(f), we turn to their proper disposition. Kunze and Kunze, 337 Or 122, 92 P3d 100 (2004), provides the analytical framework applicable under ORS 107.105(l)(f).²

ORS 107.105(1) provides, in part:

“Whenever the court renders a judgment of marital annulment, dissolution or separation, the court may provide in the judgment:

* * * *

“(f) For the division or other disposition between the parties of the real or personal property, or both, of either or both of the parties as may be just and proper in all circumstances. * * * The court shall consider the contribution of a spouse as a homemaker as a contribution to the acquisition of marital assets. There is a rebuttable presumption that both spouses have contributed equally to the acquisition of property during the marriage, whether such property is jointly or separately held.”

Because the funds in the Paine Webber accounts were acquired during the marriage, they are marital assets and, as such, are subject to the rebuttable presumption of equal contribution. Kunze, 337 Or at 133. If the presumption is not rebutted with regard to a particular asset, then, in the absence of other considerations, the appropriate “just and proper” division of that asset is an equal division. Id. at 134. But, “[w]hen a party has proved that a marital asset was acquired free of any contributions from the other spouse, * * * absent other considerations, it is ‘just and proper’ to award that marital asset separately to the party who has overcome the statutory presumption.” Id. at 135.

To rebut the presumption, a party must prove by a preponderance of the evidence that the disputed marital asset’s acquisition did not result from an equal contribution from the other spouse. Id. at 134. If one spouse can establish that the marital asset was acquired by gift and that the other spouse neither contributed to its acquisition nor was the object of the donative intent, then the statutory presumption is rebutted. Jenks and Jenks, 294 Or 236, 241, 656 P2d 286 (1982); see also id. (“The presumption may be overcome * * * by a finding that property was acquired by one spouse by gift or inheritance, uninfluenced by the other spouse. In such a case, there has been no economic or other contribution by the other spouse to the acquisition of the asset.”).

In this case, wife’s father testified that he and wife’s mother intended to benefit only wife with their gifts of stock and cash to her. He testified that, at times, he made separate cash gifts to husband simultaneously with the gifts to wife. Wife also testified that her parents gave husband separate cash gifts on many occasions. Wife introduced into evidence letters that accompanied the gifts in 1992, 1993, 1994, 1996, 1997, 1998, and 2001. The 1996, 1997, 1998, and 2001 letters are from wife’s parents and are addressed only to wife. They all read:

“Dear Diane:

“Enclosed with this letter please find my gift to you of $9,500 cash. The gift is effective as of the date of this letter. This gift is consistent with my gifts of recent years.”

The 1992,1993, and 1994 letters are from the parents’ attorney and are similar in substance to the later letters. Husband initially testified that he considered the Iseri stock gifts to be gifts solely to wife, as opposed to gifts to both of them. He later testified that he believed the cash gifts to be gifts to both of them and changed his position as to the stock gifts as well.

The evidence in the record, notwithstanding husband’s fluctuating position on whether he was an object of the donative intent of wife’s parents, is sufficient to overcome the presumption that husband contributed equally to the initial acquisition of the funds in the Paine Webber accounts. Nonetheless, the trial court concluded that wife had not rebutted the presumption. In its ruling from the bench, the court stated:

“I don’t believe that the presumption of marital contribution has been rebutted in this case. * * * [B]asically, what we have in this case, and I think if you look at the cases which have kept this out, you end up, really, with two gifts. You end up with a gift from the parents to the respondent in this case, who then gifts her interest in that to the petitioner by putting his name on those accounts.”

From that statement, we glean that the trial court believed that the Paine Webber accounts had become so commingled with the parties’ other assets, particularly because they were titled jointly, that wife could no longer rebut the presumption, in essence considering the commingling of assets to be a factor in the analysis of whether the statutory presumption has been rebutted. In the past, this court has made the same error. See, e.g., Kunze and Kunze, 181 Or App 606, 618, 47 P3d 489 (2002), aff'd as modified, 337 Or 122, 92 P3d 100 (2004); Van Horn and Van Horn, 185 Or App 88, 94-95, 57 P3d 921 (2002), rev den, 335 Or 267 (2003); Butler and Butler, 160 Or App 314, 320-21, 981 P2d 389 (1999); Rykert and Rykert, 146 Or App 537, 542-43, 934 P2d 519 (1997). Thus, the trial court’s analysis is understandable. However, Kunze, issued after the trial court’s decision in this case, makes clear that whether assets have been commingled with the marital estate ordinarily is not a consideration in the analysis of whether the statutory presumption of equal contribution has been rebutted. 337 Or at 142 n 12. Rather, commingling is a factor in analyzing whether the statutory presumption has been rebutted only when an “act of commingling may preclude the court from identifying that spouse’s separate contribution with sufficient reliability to rebut the statutory presumption that both spouses have contributed equally to the disputed asset.” Id. at 138. Otherwise, commingling is considered at the “just and proper” division stage of the analysis. Id. at 142 n 12. Here, the preponderance of the evidence shows that wife was the sole object of her parent’s donative intent and that husband did not contribute to the acquisition of the gifts. Therefore, we hold that the trial court’s legal conclusion that wife had not rebutted the statutory presumption was error.

Once the presumption has been rebutted, Kunze instructs us to determine a “just and proper” division of all marital property. Id. at 145. As in Kunze, “[b]ecause she has established that husband did not contribute to their acquisition, wife presumptively is entitled to receive [the funds in the Paine Webber accounts] unless other considerations require a different result.” Id. Kunze identified “the extent to which a party has integrated a separately acquired asset into the common financial affairs of the marital partnership through commingling” as one such equitable consideration. Id. at 136 (citing Jenks, 294 Or at 242-43). Surveying our cases, the Supreme Court highlighted three of the factors that we have considered to discern whether a spouse intended for a particular asset to remain separate or intended the asset to become a joint asset of the marital partnership:

“(1) whether the disputed property was jointly or separately held; (2) whether the parties shared control over the disputed property; and (3) the degree of reliance upon the disputed property as a joint asset.”

Kunze, 337 Or at 141.

The Supreme Court’s ratification of those three factors neither establishes a three-step commingling analysis nor sets forth an exclusive list of considerations. Instead, it identifies three out of many possible indicia of “whether a spouse demonstrated an intent to retain that spouse’s separately acquired asset as separate property or whether, instead, that spouse intended for that property to become the joint property of the marital estate.” Id. at 142. The various factors are alternative methods by which assets can become commingled. For example, commingling can occur through joint titling, through shared control, or through reliance on a separately titled property as a joint asset. See, e.g., Albers and Albers, 174 Or App 243, 249, 23 P3d 430 (2001) (holding that inherited funds deposited in joint account were commingled); Rykert, 146 Or App at 544 (holding that funds solely in wife’s name were commingled because husband had control over the funds); Becker and Becker, 122 Or App 567, 571, 858 P2d 480 (1993), rev den, 318 Or 60 (1994) (holding that trust interests solely in wife’s name and control were commingled because husband relied on their existence in retirement planning). But no matter how commingling is established, the court explained

“that acts of commingling do not mandate in all cases the inclusion of separately acquired property in the property division. Instead, the court must evaluate the extent to which a spouse has integrated a separately acquired asset into the joint finances of the marital partnership and also evaluate whether any inequity would result from the award of that asset to that spouse as separate property.”

Kunze, 337 Or at 142 (emphasis added). That is, commingling itself is not enough; equity must demand that the disputed asset be divided between the spouses.

Because it is an equitable consideration, commingling is not an all or nothing proposition. Instead, commingling falls along a spectrum. In some cases, a particular asset may be commingled to such an extent that it would be inequitable to divide it in any manner other than equally. In other cases, an asset may be less commingled and therefore subject to a split into unequal shares. See, e.g., Taylor and Taylor, 121 Or App 635, 640, 856 P2d 325, adh’d to as modified on recons, 124 Or App 581, 863 P2d 473 (1993), rev den, 319 Or 626 (1994) (awarding wife one third of husband’s inheritance because it was commingled through wife’s reliance on it as a source of retirement income).

Here, there is no evidence in the record that husband made any particular financial decisions in reliance on the existence of the Paine Webber accounts. Nor is there any evidence that he ever exercised any control over the accounts despite being their joint owner. Nonetheless, it is undisputed that title to the disputed marital assets had been held jointly since they were deposited in the Paine Webber accounts in 1995. However, it appears from Kunze that joint title, in and of itself, may not be enough to demonstrate that wife intended her parents’ gifts to become joint property of the marital estate. In Kunze, one of the properties at issue — the Germantown Road property — had been owned by the wife at the time she married the husband. Four years before the dissolution, in order to obtain a loan against the property, the wife deeded a joint interest in the Germantown Road property to the husband. The Supreme Court concluded that that action alone did not demonstrate that the wife intended to commingle the Germantown Road property with the financial affairs of the couple. Kunze, 337 Or at 146. Without elaborating, the court stated that the wife introduced evidence “that showed that she had intended to retain her separately acquired equity in that property as her separate property.” Id. at 146-47. The court likely relied on the fact that the wife had maintained the Germantown Road property as her separate asset for 15 years of the 19-year marriage and had added husband’s name on the title only to secure financing for the husband’s business venture.

Here, in contrast, wife deposited the cash proceeds of the stock sale in a joint account as soon as the stock was liquidated in 1995. Thereafter, each time she received a cash gift from her parents, she deposited that gift into a joint account. Wife testified that it was her practice to title all of their assets jointly and that that practice was “cultural.” She explained that she did so “[b]ecause of our upbringing, and because I thought we would be together forever * * Wife’s words echo the Supreme Court’s sentiment in Jenks: “[B]y the nature of the marital relationship, couples ordinarily pledge their troth for better or worse until death parts them and their financial affairs are conducted accordingly.” 294 Or at 242. The Supreme Court explained in Kunze that the legal import of its musing about marriage in Jenks is that, “when a spouse has treated a separately acquired asset as a joint asset of the marital partnership, then the parties’ shared financial decisions during the marriage have been made in reliance on that asset without consideration of whether it was separately or jointly acquired.” 337 Or at 140. We conclude that wife’s joint titling of the Paine Webber accounts from their inception demonstrates her intent to make them joint assets of the marital estate.

As previously discussed, however, that conclusion does not automatically lead to the result that the trial court reached, i.e., an equal division of the Paine Webber accounts between the parties. The facts of this case lead us to conclude that, although wife demonstrated an intent to make the Paine Webber accounts joint assets of the marital estate, the commingling of the accounts was not so complete that an equal division is appropriate. Wife largely preserved the separate existence of the gift funds in the Paine Webber accounts. The only significant exception to that preservation was that she deposited approximately $2,000 from her paychecks in the Paine Webber accounts in order to save toward the purchase of a car, which she ultimately bought with funds from the Paine Webber accounts and titled jointly in both her and husband’s names.³ Although that transaction bolsters our conclusion that the Paine Webber accounts were sufficiently commingled with the marital estate to the point that it would be inequitable to allow wife to retain the accounts in their entirety, the de minimis nature of the transaction, in light of the fact that the vast majority of the funds was kept separate and intact from the inception of the account, does not lead to the conclusion that husband should receive an equal share.

Furthermore, although we conclude that wife is under no legal obligation to return the funds in the Paine Webber accounts to her parents if they need them, we are not unsympathetic to the moral obligation that she may feel to do so. Her testimony indicates that that was the reason she maintained the accounts separately. Notwithstanding husband’s suggestion that he too felt a moral obligation towards wife’s parents, we recognize the reality that, following this dissolution, wife’s share of the Paine Webber accounts likely will be the primary, if not the sole, source of emergency funds for her parents. Thus, we hold that the trial court’s equal division of the Paine Webber accounts was not just and proper in all the circumstances. We conclude, for the reasons stated above, that a just and proper division of those accounts is for wife to receive 75 percent of the funds in those accounts and for husband to receive 25 percent of the funds.

Judgment modified to award wife 75 percent and husband 25 percent of funds in disputed Paine Webber accounts; otherwise affirmed.

1 ORS 107.105 (2001) was in effect when the trial court entered its judgment. That statute was amended in 2003. Or Laws 2003, ch 576, § 109. Those amendments do not affect the analysis in this case.

2 Strictly speaking, Kunze applied ORS 107.105 (1997), but, as the Supreme Court noted, the subsequent amendments to ORS 107.105 “do not affect [the] analysis as to the significance of commingling in determining the just and proper’ division of marital property under that statute.” Kunze, 337 Or at 124 n 1.

3 Wife withdrew approximately $25,000, or just over 5 percent, of the gift funds in the Paine Webber accounts to purchase the vehicle. We also note that in 1997 wife used funds from the Paine Webber accounts to remedy a cash flow problem: The balance was due on her business credit card before her employer reimbursed her for her expenses. Wife deposited the reimbursement from her employer in the Paine Webber account to replace the funds she had withdrawn. Wife also withdrew $4,415 to pay some of her attorney fees related to the dissolution proceeding. Neither the 1997 transaction nor the attorney fee transaction affects the result in this case.