Court Opinion

ID: 5286213
Source: CourtListenerOpinion
Date Created: 2022-01-07 08:35:55.948372+00
Date Added: 2024-06-11T08:28:40.570517
License: Public Domain

NOBLE, J.,
CONCURRING IN PART AND DISSENTING IN PART:
The wife in this case raised a “gift” claim—that her husband gave her a one-half interest in the marital home. The lower courts found that he did, but either completely misconstrued this argument, or failed to require that she prove this claim by clear, and convincing evidence.
First, if the wife was claiming the property as a gift, then she was asking the court to award her half the value of the home as her separate, or nonmarital properly. That is how a “gift” must be addressed under Kentucky law. If one half of the .marital residence was truly gifted to her, then that half lost any character as marital funds. Also, to claim the property as a gift, the wife would face the same burden the husband had in tracing the gift from his parents that went into building the home as his nonmarital property—she must prove the nature of the gift. To establish his non-marital interest in the property, the husband must prove that his parents gave him money that he spent on building the residence, which in this case, is undisputed, and then trace the funds as they were used to pay for the house, Roberts v. Roberts, 462 S.W.2d 911 (Ky. 1971), which the majority agrees he did. Likewise, for the wife to show a non-marital interest, she must prove that the husband gave her a one-half undivided interest in the marital residence outright as her non-marital property, by clear and convincing evidence.
Oddly enough, however, to "this point this property has been viewed as marital. As the Court of Appeals termed it, the husband “gifted the $247,000 to Bradley (wife) or otherwise merged it with the marital estate.” If the husband made the *762gift, it is the wife’s separate, non-marital property, not marital property to be divided. And if there was a gift, and this was the wife’s nonmarital property by gift, then the marital estate was improperly divided. The wife at that point would have owned half the residence the parties had lived in as her separate property. She and the husband together would have owned the other half. Only that half, the marital property, could be divided by the court, and the husband could make his nonmari-tal claim against that half. That is, of course, if he fully gave her one half of the marital residence free and clear of any ownership interest he had in that half.
And if the husband “merged” the gift from his parents into the marital estate as the Court of Appeals suggested, this is simply using' nonmarital money during a marriage. But if there were such a thing as a “gift to the marital estate,” then on divorce the “marital estate” (whatever that is) would still have to prove the gift by clear and convincing evidence when husband raised his nonmarital interest claim.
There is no question that the money from the husband’s parents, was a non-marital gift to him. The only question is whether the husband then in turn gave away his non-marital and marital interests up to one half the value of the property when he amended his deed to the property to include his wife’s name, in survivorship, and according to her also told her that the house was as much hers as it was his. Additionally, the wife helped, design the house, and claims it was designed partly to accommodate injuries she received from a snowmobile accident. There was also a consideration clause in the deed that added the wife’s name to the property stating that the transfer was “by gift and without consideration,” a common clause in deeds for convenience when no money exchanges hands for the transfer of all or part of the ownership of the property. See, e.g., Reitmeier v. Reitmeier, 249 S.W.2d 716, 717 (Ky. 1952) (noting that husband had purchased land with non-marital funds and “had the title placed in himself jointly with [his wife] for convenience only”).
This is all the “evidence” of the husband’s donative intent by which the wife attempted to prove her husband had made her a gift of one half the value of the marital residence. It must be noted that the burden of proving this gift would be on the wife, and that proof must be sufficient to overcome the presumption that property owned during the marriage is marital. The proof must be “clear and convincing ... that [s]he acquired h[er] interest by gift.” Browning v. Browning, 551 S.W.2d 823, 825 (Ky. App. 1977); accord Farmer v. Farmer, 506 S.W.2d 109, 112 (Ky. 1974) (noting burden is on party seeking to show a gift).
This leaves a clear problem with making the leap that the husband gave one half of the house to the wife. By placing her name on the deed as a joint tenant, she in fact became just as much an owner of the house as the husband—to the whole and not only to half, as long as they were married. And the deed (as well as any alleged comments by the husband) was silent as to the legal non-marital interest the husband would have if the parties ever divorced. Indeed, all the deed to the property did at that time was indicate' that the husband and wife owned the property jointly—the whole property, not one-half and one-half as tenants in common might. And as long as the parties remained married, the husband’s non-marital interest could not be asserted upon sale of the property. Such a non-marital interest only ripens when a divorce is intended under KRS Chapter 403. Also, had the husband died while still married to his wife, she would have then had sole ownership of the *763whole property by operation of survivor-ship law.
• The law simply recognizes that when couples divorce, the shared interest they had during the marriage is affected by the severing of the marital bonds. Upon divorce, the court should “restore each party as nearly as possible to the condition in which he or she would have been except for the marriage.” Redmon v. United States, 471 F.2d 687, 689 (6th Cir. 1972); see also Kivett v. Kivett, 312 S.W.2d 884, 888 (Ky. 1958) (“It was intended that each party should be returned as nearly as possible to the status or condition in which the party would have been except for the marriage.”).
To get to this position, a trial court utilizes a three-step process to divide the parties’ property in a divorce: (1) characterize each item of property as marital or non-marital; (2) assign non-marital property to each party; and (3) equitably divide the marital property. Sexton, 125 S.W.3d at 264-65. In characterizing property as marital or non-marital, to the extent that gifts have come from one spouse’s side of the family or were given specifically to the spouse alone, those gifts are considered separate property of that spouse. (The same is true of gifts between spouses, such as jewelry or other personalty, unless it can be proved that the items were bought for a marital purpose such as investment.) If the gift were a piece of land given to one party, then unless the parties had increased the value of the land due to efforts during the marriage, the whole piece of land would be restored to that spouse under KRS 403.190. When the gift is money, that spouse has to be able to show, or trace (when there are both non-marital and marital interests as here), that the money was spent on acquiring whatever property is at issue. If the money solely paid for the contested property, and if it has not appreciated in value due to the efforts of the spouses during the marriage, then the entire property is separate property and must be assigned to that spouse.
It is significant that the law that applies Upon divorce is clearly different from the law that applies during marriage' or on the deáth of á spouse when it comes to the disposition of property. It is clearly defined and set apart by KRS 403.190 and cases interpreting it. Disposition of property during the marriage and upon the death of a spouse are covered by separate statutory sections.
But this is not to say that the husband could not gift to his wife his inchoate non-marital interest in property owned during the marriage. But if he did, then there must be clear and convincing evidence that he did so.
When is evidence “clear and convincing? It is generally agreed that while most cases require only a “preponderance of the evidence,” some issues, such as making a gift of property, require a higher dégreé of proof than'simply 'being “more probably true than not,” which is all that'is required to establish a preponderance. Robert G. Lawson, The Kentucky Evidence Law Handbook § 9.00; at 517 (3d ed. 1993). That higher standard is usually described as being “clear and convincing evidence.” As with most legal standards, our jurisprudence does not allow a specific definition of the term, preferring to let a jury apply its own meaning. However,- there is guidance on applying the term.
At the very least, for evidence to be clear and convincing, the trier of fact “must be persuaded that the truth of the contention is ‘highly probable.’ ” Fitch v. Burns, 782 S.W.2d 618, 622 (Ky. 1989) (quoting McCormick on Evidence § 340(b), at 796 (2d ed. 1972)). But the Court went on to describe the standard in more detail, putting it this way:
*764We conclude that where the “burden of persuasion” requires proof by clear and convincing evidence, the concept relates more than anything else to an attitude or approach to weighing the evidence, rather than to a legal formula that can be precisely defined in words. Like “proof beyond a reasonable doubt,” “proof by clear and convincing evidence” is incapable of a definition any more detailed or precise, than the words involved. It suffices to say that this approach requires the party with the burden of proof to produce evidence substantially more persuasive than a preponderance of evidence, but not beyond a reasonable doubt.
Id. (emphasis added).
This places the clear-and-convincing standard somewhere between the preponderance and beyond-a-reasonable-doubt standards. But if a preponderance of the evidence requires that the trier of fact be persuaded that the contention is more probable than not, then the clear-and-convincing standard requires still more. Instead of more probable than not, the trier of fact must be persuaded that the contention is “highly probable.” And the evidence must be “substantially more persuasive” to reach that level.
The evidence in this case upon which the wife bases her claim of owning half the house in which the couple resided is simply not clear and convincing. First, it is not undisputed evidence. The husband denies he ever told his wife that they would own the property “half and half.” The other evidence stated in support of wife’s position is equally debatable.
That she wanted to build a smaller house while husband wanted a larger one does not prove that he gave her half the house in order to get her to agree to build a larger one. If anything, this seems to indicate that she did not want to feel obligated to his parents, or feared that they would feel entitled to interfere with the property because of their gift which allowed a bigger building. The evidence indicates the wife was only interested in a certain level of mortgage debt. The gift from the parents allowed a larger house without that debt, but this fact does not support that the husband gave her half the larger house.
That the property was conveyed by a survivorship deed to a married couple is nothing but standard practice when a married couple buys a house. Including the wife’s name on the deed indicates that she is an owner of the house, by the entirety, the same as the husband. The deed is evidence that as a married couple, this properly belongs to then as a couple, completely. The survivorship clause provides for a surviving spouse to own the entire property free and clear of other heirs if the spousal death occurred during the marriage. This clearly says little about giving the wife half of the property, and it says nothing about property division on divorce, which applies different law.
That the couple' argued heatedly about the kind of house they wanted to build and taking a gift from his parents, which may have resulted in husband angrily throwing a pot of green beans in the yard after one such argument, provides no support for a claim that he gave wife half the house. At best, it shows that the couple had a contentious relationship, which is hardly conducive to the giving of such a gift as claimed here.
And even if we take the wife’s claim as true that husband said each of them owned half of the house, we are required to speculate that he meant this ambiguous and erroneous statement to be the gifting of half the house to wife.
*765Indeed, what we have here is not so different from countless cases where a spouse has asserted a non-marital interest in property owned during the marriage when the parties are divorcing and the court is doing property division. In most instances, spouses will have a joint, surviv-orship deed for real property owned during the marriage. Standing alone, this cannot be reasonably construed as waiving or gifting any non-marital interest either spouse may have on divorce. And when the husband told the wife the house was as much hers as it was his, he stated nothing but the truth—as long as the parties were married under a joint deed. It would have been a false statement to tell her only one half of the house was hers. And if he died while still married to her, she would own more than one half—she would own the whole. The legal reality is that while spouses remain married to each other, personal money or gifts that are invested in the marital home do not give that spouse more of an ownership interest than the other. Such a claim does not spring into existence until a divorce proceeding is begun.
A similar Court of Appeals case, Fehr v. Fehr, 284 S.W.3d 149 (Ky. App. 2008), is illustrative. During their marriage, the Fehrs bought a villa in St. Maarten as a second home. Each of them put significant non-marital money into the purchase, although the husband contributed roughly twice as much as the wife did. The villa’s value increased significantly during the marriage. Despite the husband’s contribution, the trial court awarded the entirety of the villa to the wife.
On review, the Court of Appeals noted that the trial court had failed to follow its mandatory statutory duty to assign non-marital interests to the parties, even though it had found that the husband’s contribution to the purchase was not a gift to the wife, as she claimed. Considering the wife’s contention that the husband’s contribution to the villa was a gift to her, and thus should not be restored to him, the Court of Appeals cited four factors from a landmark case, O’Neill v. O’Neill, 600 S.W.2d 493 (Ky. App. 1980), as dispositive of the gift question: “(1) the source of the money; (2) the intent of the donor at the time of the transfer; (3) the status of the marriage relationship at the time of the transfer; and (4) whether there was a valid agreement that the transferred property was to be excluded from the marital property.” Fehr, 284 S.W.3d at 158 (citing O’Neill, 600 S.W.2d at 495). The Court of Appeals found that the fact.that the husband used non-marital funds for the purchase as an investment as well as a residence and that his testimony (“most telling,” id.) that he did not intend his contribution as a gift was substantial support for the trial court’s finding that the money was not a gift. The trial court, therefore, erred in not assigning the husband’s non-marital interest to him.
The law clearly provides for a “take back” when and if the parties ever divorce, following the source-of-funds rule. Rearden v. Rearden, 296 S.W.3d 438, 441-42 (Ky. App. 2009). If husband had indeed given wife one half ownership of the house free and clear of him and his claims, then she was entitled to take her half, leaving only the remaining half as marital property subject to division. The lower courts got it wrong, if the wife individually owned one half of the house, and she is the party aggrieved.
The wife’s evidence here falls far short of clear and convincing, and at best invites speculation about what the husband was thinking rather than proving his thoughts. At most, the statements she claims he made about the property are ambiguous. *766Ambiguous statements cannot be “clear and convincing” proof of any fact.
Also, from another perspective, if a court believes that the equities lie with the spouse that does not have a non-marital interest, equity can be addressed by assigning a larger share of the total marital estate to that spouse, since the law allows the court to consider the amount of non-marital property a spouse has when making the equitable division of marital property. Russell v. Russell, 878 S.W.2d 24, 25 (Ky. App. 1994). Otherwise, under the majority’s view, all a divorcing spouse has to do to claim property she is not otherwise entitled to under divorce law is to say, “He gave it to me.” That is essentially all' that the evidence shows here, and the majority allows an erroneous view of “gift” to circumvent the well-reasoned law of property division on divorce without reaching the clear and convincing standard.
Consequently, I would reverse the Court of Appeals’ holding that the husband gifted the wife one half of the marital residential property, and remand this case to the trial court to assign to the husband his non-marital share of the marital residence. Had there been clear and convincing evidence of a gift of one half the house to the wife, I would reverse the Court of Appeals and remand for the lower court to give her nonmarital interest to her. I concur with the majority on all other issues.
Venters, J., joins.