Case Name: Opal Bernice WAGONER v. Loy WAGONER
Court: Arkansas Supreme Court
Jurisdiction: Arkansas
Decision Date: 1987-12-07
Citations: 294 Ark. 82
Docket Number: 87-228
Parties: Opal Bernice WAGONER v. Loy WAGONER
Judges: Purtle, J., dissents.
Reporter: Arkansas Reports
Volume: 294
Pages: 82–88

Head Matter:
Opal Bernice WAGONER v. Loy WAGONER
87-228
740 S.W.2d 915
Supreme Court of Arkansas
Opinion delivered December 7, 1987
Peter DeStefano, for appellant.
Elcan & Sprott, by: Frank C. Elcan II, for appellee.

Opinion:
Tom Glaze, Justice.
This case involves the parties' divorce action as it pertains to the lower court's construction of Arkansas's marital property law, more particularly Ark. Stat. Ann. § 34-1214(B)(5) (Supp. 1985). On July 22, 1987, the Arkansas Court of Appeals, Division II, reversed the Newton County Chancery Court's decision and, in doing so, held interest income accumulated from the petitioner Opal Wagoner's non-marital certificate of deposit accounts to be marital property. We granted petitioner's request for review of the court of appeals' decision pursuant to Ark. Sup. Ct. R. 29(l)(c) and (6). We affirm the court of appeals' decision.
Because the court of appeals chose not to publish its decision, we need first to relate the facts giving rise to this appeal. The parties were married for thirty-four years, and during that period, Opal Wagoner's parents gave her cash gifts which she invested in certificates of deposit bearing only her name and that of her son. Those certificates earned interest during the marriage, totalling $ 19,224.75. About two months before the parties separated, Opal transferred all of her certificate funds, including interest, to her mother. However, her mother said that she intended to return those funds to Opal. Opal said she gave these monies to her mother because her husband, respondent Loy Wagoner, complained about having to pay her mother's taxes.
Opal Wagoner commenced this divorce action which resulted in the trial court's decree of divorce, which, in relevant part to this appeal, determined the certificates of deposit, both principal and interest, to be Opal's non-marital property and not subject to division. As noted earlier, that court's finding, as to the accumulated interest, was reversed by the court of appeals and is the sole issue presented in this review.
In holding that the accumulated interest income from Opal's certificates was marital property, the court of appeals relied on its earlier decision of Speer v. Speer, 18 Ark. App. 186, 712 S. W.2d 659(1986). There, the court, in affirming the trial court, held that any accumulation of income — during the marriage — from the husband's non-marital property constituted marital property. The court rejected petitioner Opal Wagoner's argument that the Speer decision, which involved rental income earned on pre marital farmland, was distinguishable from the facts here. She argued the rent income in Speer was marital property, but the interest paid here on her certificates merely represents an "increase in value" of property, which is excepted from Arkansas's marital property definition as set out under § 34-1214(B)(5). In rejecting the petitioner's argument, the court of appeals held that the interest accumulated and reinvested in the certificate of deposit accounts, earned during the parties' marriage, amounted to an accumulation of income within the meaning of Speer.
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 covered 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 earned 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 court 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 controls the facts at hand, we do agree with the court of appeals that the interest earned on petitioner's certificates during her marriage is income and marital property, and, therefore, that interest could not be said to represent an increase in value of non-marital property. Section 34-1214(B) (5) contains language identical to that found in the Uniform Marriage and Divorce Act. The Commissioner's note to that Act's (B)(5) provision states:
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.
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-marital property acquired after the marriage is marital property."
While we find the Commissioner's note to the Uniform Act's (B)(5) provision to be clear on the subject, our research reveals that other jurisdictions, construing an identical (B)(5) provision, have 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 would be marital property and, therefore, distributable as such.
In conclusion of our review of the court of appeals' decision and de novo review of the proceeding below, we find that the petitioner's certificates of deposit were gifts under § 34-1214(B)(1). However, because the interest earned on those exceptions listed in § 34-1214(B), we hold that interest to be marital property (income), as that all inclusive term is defined by Arkansas's statutory law.
Purtle, J., dissents.
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.