Court Opinion

ID: 7018515
Source: CourtListenerOpinion
Date Created: 2022-07-24 04:31:04.61353+00
Date Added: 2024-06-11T16:10:28.785799
License: Public Domain

Mr. JUSTICE KASSERMAN, dissenting: I do not agree with the holding of the majority that under the Illinois Marriage and Dissolution of Marriage Act (Ill. Rev. Stat. 1977, ch. 40, par. 101 et seq.) “assets purchased with separate funds [of one of the parties to the marriage] remain separate property, regardless of the manner of holding title and regardless of the number of post-marital exchanges.” Section 503(a) of the Illinois Marriage and Dissolution of Marriage Act defines “marital property” as all property acquired by either spouse during the marriage, except the following, which is to be designated as “non-marital property:” “(1) property acquired by gift, bequest, devise or descent; (2) property acquired in exchange for property acquired before the marriage or in exchange for property acquired by gift, bequest, devise or descent; # # * » (Ill. Rev. Stat. 1977, ch. 40, par. 503(a)(1) and (2).) Section 503(b) of the Act provides: “(b) All property acquired by either spouse after the marriage and before a judgment of dissolution of marriage or declaration of invalidity of marriage is presumed to be marital property, regardless of whether title is held individually or by the spouses in some form of co-ownership such as joint tenancy, tenancy in common, tenancy by the entirety, or community property. The presumption of marital property is overcome by a showing that the property was acquired by a method listed in subsection (a) of this Section.” Ill. Rev. Stat. 1977, ch. 40, par. 503(b). After property is determined to be marital or nonmarital, applying the provisions of sections 503(a) and 503(b) of the Act, the court must then “assign” each spouse’s nonmarital property to that spouse and “divide” the marital property, without regard to marital misconduct, in the manner specified by section 503(c) of the Act (Ill. Rev. Stat. 1977, ch. 40, par. 503(c)). Section 503 of the Act thus both defines and limits “marital property” and “non-marital property” and requires the court to “assign” nonmarital property and “divide” marital property after its category is determined. Therefore, the court is required to first make the determination whether the property in question is marital or nonmarital property and then make an assignment or a division of it. In the consideration of controversies relating to the disposition of property in marriage dissolution cases, it is essential at the outset to classify the property in question as marital or nonmarital without regard to the question of its ultimate disposition. I believe that the failure to recognize this need has led to the lack of uniformity in the reported cases which have dealt with this troublesome problem. When section 503 is applied in this manner to the innumerable factual situations being presented to the courts at this time, I submit that each case may be similarly approached by the trier of fact. It is my opinion that the lack of uniformity in the decisions in which this problem is considered is the result of the courts’ haste to properly assign or divide the property in question, resulting in the initial determination (whether the property is marital or nonmarital) being utilized as the vehicle to enable the court to make what it considered to be the proper disposition of such property. In the instant case, Mr. Preston’s two inheritances were unquestionably nonmarital property. Although they were acquired after the marriage and before a judgment of dissolution of the marriage, section 503(a)(1) excepts them from the definition of “marital property.” He subsequently placed the $12,000 inheritance in a joint savings account with his wife and purchased securities with the balance of the $10,000 inheritance which were registered in both their names as joint tenants. These funds, together with the $3,000 payment from the sale of his father’s and uncle’s business, were later used to purchase real estate, title to which was originally transferred to him and his wife in joint tenancy. In considering the evidence introduced on trial, the majority states that it notes “the scarcity of evidence concerning the title of the bank accounts; petitioner testified that he did not know whether the accounts were held in his name alone or jointly and the respondent testified that they were joint accounts.” It is impossible for me to consider such evidence as scarce evidence of the title to the bank accounts. It is certainly a novel application of the rules of evidence for any court to consider that joint title to the bank accounts had not been established. Section 503(a)(1) and (2) of the Act provides that “property acquired by gift, bequest, devise or descent” and “property acquired in exchange for property acquired before the marriage or in exchange for property acquired by gift, bequest, devise or descent” shall be considered as non-marital property. Consequently, it must be determined whether it can be said that the $22,300 invested in the home of the parties was the result of an “exchange” for the property acquired by petitioner by inheritance; and, if so, whether by purchasing the property in joint tenancy a gift to respondent was intended by petitioner. The petitioner testified at trial that even though title to the home was taken in joint tenancy, the creation of the joint tenancy was for inheritance and tax purposes and that he did not intend to make a gift of any portion of the $22,300 to his wife. The testimony of both parties demonstrated that before the inherited funds were used to purchase the property, they were put into either a joint savings account or used to purchase jointly held securities. Further, petitioner also testified on rebuttal that the property was purchased and title was conveyed to both parties in joint tenancy as he believed that most marriages are or should be a “fifty-fifty proposition.” At the time of the purchase of the property, petitioner stated that he believed their marriage was a “fifty-fifty proposition.” The majority concludes “[i]t should follow that if the manner of holding title is of no consequence in applying the presumption of marital property, then under the last sentence of section 503(b), the manner of holding title is not to be considered in determining the status of non-marital property, including property acquired in exchange for non-marital property, under section 503(a). Otherwise, the presumption of marital property under section 503(b) would engulf and render largely meaningless the exception in 503(a) (2) by limiting the exchange exception to separate property which the owner retains in its original form, a patent contradiction in terms.” The construction placed on section 503(b) of the Act by the majority distorts its provisions. The Act does not provide that the presumption of marital property created by the section may be overcome by a showing that the property was acquired by a method listed in subsection (a) of the section, regardless of whether title is held individually or by the spouses in some form of co-ownership such as joint tenancy, tenancy in common, tenancy by the entirety, or community property. This was not the enactment of the legislature; and, I submit, this was not its intention. Reasonable standards of statutory construction require a construction of section 503(b) of the Act to indicate a legislative intent to create the presumption of marital property as to property acquired by either spouse during the marriage regardless of how title is held. I know of no rule of statutory construction by which it may be said that the legislature intended the presumption of marital property may be overcome by a showing that, regardless of the manner in which title to it is held, the replacement property was acquired in exchange for property acquired by gift, bequest, devise or descent. Section 503(b) of the Act (Ill. Rev. Stat. 1977, ch. 40, par. 503(b)), provides that all property acquired by either spouse during the marriage is presumed to be marital property regardless of whether title is held individually or by the spouses in some form of co-ownership such as joint tenancy, tenancy in common, tenancy by the entirety, or community property. This section further provides that the presumption of marital property is overcome by a showing that such property was acquired by gift, bequest, devise or descent or that such property was acquired in exchange for property acquired by gift, bequest, devise, or descent. Before the passage of the Illinois Marriage and Dissolution of Marriage Act, the court in Brongel v. Brongel (1977), 48 Ill. App. 3d 27, 362 N.E.2d 750, held that when a husband and wife hold property in joint tenancy, a rebuttable presumption arises that the spouse actually furnishing the consideration for the property has made a gift to the other spouse of an undivided one-half interest in such property. This decision thus restated the well-settled rule established in Lawyer v. Lawyer (1974), 19 Ill. App. 3d 571, 312 N.E.2d 7; Larocco v. Larocco (1973), 10 Ill. App. 3d 366, 293 N.E.2d 756; and Baker v. Baker (1952), 412 Ill. 511, 107 N.E.2d 711, and extended the application of such rule to instances in which either spouse furnished the consideration for the acquisition of joint property. It was equally well established before the passage of the act that such presumption, although it was not conclusive, can only be overcome by clear, convincing and unmistakable evidence that no gift was intended. Lawyer v. Lawyer; Larocco v. Larocco; and Baker v. Baker. The majority concludes that the legislature, in adopting section 503 of the Act, intended property acquired exclusively with nonmarital property to remain nonmarital property, so long as the source of funds can be traced to the initial nonmarital assets without affirmative proof of an intention to transmute the nonmarital property into marital property. I do not agree. They cite with approval In re Marriage of Dietz (1979), 76 Ill. App. 3d 1029, 395 N.E.2d 762, in which it was held that the Illinois Marriage and Dissolution of Marriage Act destroyed the presumption previously existing that a transfer or conveyance of property from one spouse to another or to their joint names is presumptively a gift of the property or funds to the other spouse by the spouse making such transfer or conveyance. In its attempt to justify such a conclusion, the majority analogizes the problem presented by the instant case to the situation where the contested property was “grandmother’s brooch that a spouse had inherited and put into a jointly owned safe deposit box, or kept in a jointly owned home.” The majority goes on to say that it saw no reason to regard other forms of personal property, such as boats, stocks, bank accounts, or the sale proceeds thereof, any differently so long as the parties did not intend conversion of the exchanged property. This analogy obfuscates the problem presented by the instant case. At the outset it should be noted that the petitioner did not place his inherited funds into a jointly owned safe deposit box nor did he keep them in a jointly owned home. He placed them in a jointly owned bank account or used them to purchase jointly owned securities. Further, the example of “grandmother’s brooch” fails to take into consideration the fact that rarely, if ever, is there written evidence of ownership of such an item of personal property, whereas bank accounts and securities do expressly indicate the individual, or individuals, who own them. I see nothing in the Illinois Marriage and Dissolution of Marriage Act which alters the law as it existed prior to its passage with respect to joint property purchased with the funds of only one spouse. In the instant case, the inherited funds were either placed in a joint account or used to purchase jointly owned securities and then used to acquire real estate, the title to which was originally transferred to the parties in joint tenancy. Further, the $3,000 petitioner received from the sale of his father’s and uncle’s business was also invested in such real estate. In my opinion, the establishment of these facts gives rise to the presumption that a gift was intended, and this presumption can be overcome only by clear, convincing and unmistakable evidence to the contrary. Brongel v. Brongel; Lawyer v. Lawyer; Larocco v. Larocco; and Baker v. Baker. I am not unmindful of the recent decision of this court in In re Marriage of Dietz, in which I concurred. In Dietz, the wife’s funds were used as the greater portion of the construction costs of a marital home on real estate owned by the husband which was acquired by him prior to the marriage. The trial court there ordered the husband to pay the wife $43,000 as her share of the marital home. In affirming the judgment of the trial court, this court held that the wife did not intend a gift of her nonmarital funds when she used them to construct the home of the parties on land owned by the husband. We further stated that the effect of section 503(a)(2) of the Illinois Marriage and Dissolution of Marriage Act (Ill. Rev. Stat. 1977, ch. 40, par. 503(a)(2)) “is to destroy the presumption heretofore existing that a transfer or conveyance of property from one spouse to another or into their joint names is presumptively a gift of the property or funds even though the property or funds were acquired before marriage.” In re Marriage of Dietz (1979), 76 Ill. App. 3d 1029, 1032, 395 N.E.2d 762, 764. In re Marriage of Key (1979), 71 Ill. App. 3d 722, 389 N.E.2d 963, was relied upon by this court in Dietz in arriving at its decision. The court in Key stated: “Since the trial judge awarded special equities to the petitioner [wife], we conclude that he too found that the petitioner had established by clear and convincing evidence that she did not intend to effectuate a gift of her non-marital assets to the respondent.” (In re Marriage of Key, 71 Ill. App. 3d 722, 724, 389 N.E.2d 963, 964.) Thus, both Dietz and Key were decisions based on the findings of the court that the evidence in the trial court established that a gift was not intended. The decisions in Key and Dietz appear to be equitable and just and in conformity with the ends that were sought to be attained by the Illinois Marriage and Dissolution of Marriage Act. However, neither required a determination that the Illinois Marriage and Dissolution of Marriage Act destroyed the presumption of gift existing prior to its adoption. In Dietz, the same results could have been obtained by classifying such property as marital property and awarding it to the party shown to be entitled to it under the provisions of section 503(c) (1) of the Act. To the extent that we held in Dietz that section 503(a)(2) of the Act destroyed the presumption theretofore existing that such a transfer is presumptively a gift of the property or funds, I would decline to follow the same. Further, it is my opinion that the court in Dietz misapplied section 503 of the Act in holding that section 503(a) (2) of the Act was applicable. As stated above, Dietz involved a situation in which the wife, during the marriage, used her own nonmarital funds for the greater portion of the cost of constructing a house on real estate owned by the husband before the marriage and at the time of the construction of the house. Section 503(a)(2) of the Act defines, as nonmarital property, “property acquired in exchange for property acquired before the marriage or in exchange for property acquired by gift, bequest, devise or descent.” It cannot be said that the marital home of the parties was acquired by Mrs. Dietz “in exchange” for either property acquired before the marriage or for property acquired by gift, bequest, devise or descent. Since title to the real estate upon which the home was constructed was in her husband’s name, it cannot be said that Mrs. Dietz “acquired” any interest in the marital home constructed thereon during the marriage. The majority in the instant case stated that there are inevitable difficulties in proving intent retrospectively. They state that “[t]he parties’ intention to devote their separate property to their mutual welfare is rarely articulated in a functioning marriage; only after the union has faltered do the parties recognize that it is an issue, as, no doubt, when individuals marry, they always think in terms of a ‘fifty-fifty proposition.’ ” They further concede that to the extent that proof of contemporaneous intent must be regarded as a legal fiction, it is no stranger to the law and arises in conveyancing and probate matters with regularity. By what I believe to be an illogical line of reasoning, the majority states that while the parties may intend to devote their separate property to their mutual welfare on a fifty-fifty basis in a “functioning marriage,” when the “union has faltered” either spouse may then disregard this intent and nullify a written transfer or conveyance of property. Such an approach to this problem lacks the adhesiveness of reason. While recognizing that a spouse whose funds are used to create a joint tenancy contemplates the marriage being a “fifty-fifty proposition” at the time of the creation of the joint tenancy, the majority reaches the conclusion that such spouse should be capable of extracting from the marriage any assets he is able to manipulate at the time of its dissolution. The fault of such reasoning lies in the permissive latitude given such spouse to change his or her intention if later the “union has faltered.” The majority fails to recognize that in instances in which a spouse creates a joint tenancy, the intent of such spouse at the time of its creation is controlling. I submit that at the time the petitioner created the joint tenancy, he intended to make a gift to the respondent of an undivided one-half interest in such property since it was his testimony that he considered his marriage a “fifty-fifty proposition” at the time he purchased the real estate and caused title to be registered in the name of the parties as joint tenants. It is not necessary to reach such conclusion, however, for the reason that under Brongel v. Brongel; Lawyer v. Lawyer; Larocco v. Larocco; and Baker v. Baker, the law creates a rebuttable presumption that such was his intent. The majority, in. the instant case, further states that under an interpretation of section 503 of the Act such as suggested by this dissent, the presumption of marital property under section 503(b) would engulf and render largely meaningless the exception in 503(a)(2) “by limiting the exchange exception to separate property which the owner retains in its original form, a patent contradiction in terms.” This reasoning fails to take into consideration that a spouse may retain property he had acquired by gift, bequest, devise or descent as nonmarital property. He or she is not required to retain such property in its original form, but may convert it into any other form so long as he or she does not indicate an intent to transfer any ownership thereof to the other spouse. For example, if such property was real estate, it may be converted to cash and then transferred in form to a checking or savings account or to securities so long as they are registered in his own name or in some manner that does not indicate a desire to make a gift to some other person. It is only "when such spouse transfers such property and indicates that the replacement property is to be owned by the spouses in some form of co-ownership such as joint tenancy, tenancy in common, tenancy by the entirety, or community property (referred to in section 503(b) of the Act) that he evinces a donative intent. Such transfers historically have been held by the courts to create a presumption that such spouse intended a gift of such property, or some portion thereof, to his spouse. As indicated by the record, the petitioner did not present evidence of the kind necessary to sufficiently rebut the presumption of gift. To the contrary, the petitioner’s testimony is indicative of the fact that a gift was intended. Therefore, it is my opinion that the trial court erred in setting aside $22,300 as petitioner’s separate nonmarital property; and it would be my decision that the marital home was the joint property of both petitioner and respondent to be divided as marital property. If it were found that the marital home is the marital property of both petitioner and respondent, it would be unnecessary to address the question of whether petitioner is entitled to any accretion in the value of the investment of his inherited funds in the property. The petitioner also contends that certain items of personal property should be considered as nonmarital property as they were purchased from funds in the joint checking account and those funds included money received from his annual escrow payment. It is my opinion that this contention is without merit. In Klingberg v. Klingberg (1979), 68 Ill. App. 3d 513, 386 N.E.2d 517, the court, after a consideration of other jurisdictions’ decisions analyzing similar property disposition provisions, held failure to properly segregate nonmarital and marital funds indicates an intent to have the nonmarital funds treated as marital property. Here, there was insufficient evidence in the record to establish that the furniture was treated as nonmarital property, which resulted in its properly being considered by the trial court as marital property. Moreover, as the court in Klingberg pointed out, to allow the return of funds or property which had changed in form would result in “the adoption of tracing of non-marital property into marital property [citations] * * * [and] would in many instances result in complicated financial determinations and potential marital discord * ° Klingberg v. Klingberg (1979), 68 Ill. App. 3d 513, 517, 386 N.E.2d 517, 521. Cf. Turley v. Turley (Ky. 1978), 562 S.W.2d 665. For the reasons stated above, I would reverse that portion of the judgment of the trial court ordering the payment of $22,300 to the petitioner out of the proceeds of the sale of the home of the parties.