Court Opinion

ID: 9567646
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:56:21.301842+00
Date Added: 2024-06-11T10:00:13.751732
License: Public Domain

WYNN, Judge,
dissenting.
A spouse claiming that separate funds deposited into a joint account represent marital property must demonstrate “that the exchange of separate property was accompanied by: (1) an intention that the account be marital property; and (2) that such intention was *225expressly stated in the conveyance,”1 In the present case, the trial court classified several joint accounts as marital property absent such a showing by Defendant. Because I would hold that the trial court erred in classifying the accounts as marital property, I respectfully dissent.
The facts of this case are not in dispute. Plaintiff James W. Langston and Defendant Jeanne E. Langston were married in 1998. Prior to the marriage, Plaintiff owned various investment accounts. During the marriage, Defendant’s name was placed on the accounts.
At the hearing conducted in this matter, Plaintiff indicated that he placed Defendant’s name on the accounts because he wanted her “to be a part of it.” On cross-examination, counsel for Defendant asked Plaintiff, “And isn’t the reason that you did that... is that you wanted to take care of her if something would happen to you?” Plaintiff replied, “yeah.” Plaintiff could not recall “any particular conversation” when he informed Defendant of this intention.
■ Also during the marriage, the parties negotiated an equity line loan with Wachovia Bank. On 23 January 2004, Defendant received a cash advance of $51,000 from the Wachovia Equity Line which she deposited into her individually owned bank account. The trial court found that this debt represented Defendant’s separate property.
Plaintiff commenced this action on 14 May 2004, seeking a divorce and equitable distribution of the marital estate. The parties were divorced by a judgment filed 9 May 2005. During the pendency of this action, Defendant died and Julie Richardson was appointed executrix of her estate. The equitable distribution case was tried during the 23 March 2009 civil session of District Court in Perquimans County. The trial court filed an equitable distribution judgment distributing the marital property on 9 June 2009. Plaintiff appealed.
On appeal, Plaintiff alleges the trial court erred in (I) concluding that the investment accounts became marital property; and (II) ordering Plaintiff to pay the equity line debt.
I
Plaintiff first argues that the trial court erred in concluding that the investment accounts became marital property.
*226N.C. Gen. Stat. § 50-20 defines separate property to include “all real and personal property acquired by a spouse before marriage[.]” N.C. Gen. Stat. § 50-20(b)(2) (2009). “However, property acquired by gift from the other spouse during the course of the marriage shall be considered separate property only if such an intention is stated in the conveyance.” Id.
We addressed a similar issue in Manes v. Harrison-Manes, 79 N.C. App. 170, 338 S.E.2d 815 (1986). Plaintiff and defendant in Manes were married in 1979. Id. at 170, 338 S.E.2d at 815. Plaintiff then acquired separate property (by inheritance) which he deposited into a bank account in his sole name. Id. Plaintiff subsequently changed the bank account to a joint account by adding defendant’s name. Id. at 170, 338 S.E.2d at 816. In an action for equitable distribution, the trial court concluded that the account remained the separate property of plaintiff, and defendant appealed. Id. at 171, 338 S.E.2d at 816. On appeal, this Court held that the trial court did not err in its disposition of the bank account.
Although the plaintiff added defendant’s name to the bank account . . ., the record discloses no evidence of any intention that the funds would not remain plaintiff’s separate property. The deposit of funds into a joint account, standing alone, is not sufficient evidence to show a gift or an intent to convert the funds from separate property to marital property.
Id. at 172, 338 S.E.2d at 816-17.
We revisited the issue of joint accounts in Friend-Novorska v. Novorska, 131 N.C. App. 508, 507 S.E.2d 900 (1998). We there stated,
The plain language of the [equitable distribution] statute requires that in order to classify a joint account created by the deposit of separate funds as marital property, the spouse claiming such a classification must demonstrate by a preponderance of the evidence that the exchange of separate property was accompanied by: (1) an intention that the account be marital property; and (2) that such intention was expressly stated in the conveyance.
Id. at 511, 507 S.E.2d at 902. The Court recognized that “we have not found an ‘express statement’ of an intent to create marital property in any of our reported cases involving personal property and the creation of joint accounts.” Id.
*227Here, Defendant attempts to distinguish these precedents by arguing that Plaintiff clearly intended to make a gift of the accounts to Defendant. Defendant essentially raises the same arguments that were considered, and rejected, by this Court in Friend-Novorska. In that case, the wife contended that the accounts were properly classified as marital property because her husband had stated that at least part of the property in controversy would be used “for the marriage.” Id. at 512, 507 S.E.2d at 903. We rejected this argument for three reasons:
First, defendant’s statement is not an express statement of intention that the IDS funds were to be the property of the marital estate. . . . Second, plaintiff was not able to offer evidence of any express statement by defendant that the IDS funds would be marital property. Third, the statement in question was made about a year prior to defendant’s exchanging his separate funds for the IDS account. Due to the passage of time, we do not believe the statement was one made “in the conveyance.”

Id.

In the present case, Defendant points to no expressly stated intention of the Plaintiff to convert the investment accounts into marital property. Rather, Defendant argues that Plaintiff’s statement that he was putting his wife’s name on the joint accounts in order to take care of her in case anything happened to him was “an express statement demonstrating an intention to directly benefit her and indirectly benefit the marital estate.” Such a statement is not adequate to transform separate property into marital property. See id. at 511, 507 S.E.2d at 902. Indeed, Plaintiff’s statement was neither an explicit statement of intention to create marital property nor an express statement in any conveyance. I would therefore hold that the trial court erred in concluding that the joint accounts were entirely marital property.
II
Plaintiff next argues that the trial court erred in ordering Plaintiff to pay the equity line debt. I agree.
N.C. Gen. Stat. § 50-20 authorizes the trial court to distribute only marital and divisible property. N.C. Gen. Stat. § 50-20(a) (2009). “Separate property is not subject to equitable distribution.” Caudill v. Caudill, 131 N.C. App. 854, 855, 509 S.E.2d 246, 248 (1998). “Debts, as well as assets, must be classified as marital or separate property.” Fox v. Fox, 114 N.C. App. 125, 134, 441 S.E.2d 613, 618 (1994).
*228N.C. Gen. Stat. § 50-20(c) allows the trial court to make an unequal distribution of the marital and divisible property “[i]f the court determines that an equal division is not equitable].]” N.C. Gen. Stat. § 50-20(c) (2009). One factor the court is allowed to consider in making an unequal distribution is “[t]he income, property, and liabilities of each party at the time the division of property is to become effective.” Id. Thus, although the trial court may consider the parties’ separate property in its scheme of equitable distribution, the trial court is empowered to divide and distribute only the marital and divisible property. Id.
In the present case, the trial court found that “[t]he Wachovia Bank equity line account totaled $57,419.78 on the date of separation. Of that amount, $51,000.00 was the Defendant’s separate debt. . . .” Notwithstanding, the trial court directed Plaintiff to pay that debt, noting that “[Plaintiff’s] obligation to do so was considered as a major factor for an unequal distribution.” Plaintiff now argues that the trial court exceeded its authority under the statute in distributing to him what is in effect Defendant’s separate property.
In support of the order, Defendant adverts to the unequal distribution of the marital property. Defendant points, however, to no statutory provision authorizing the trial court to distribute one party’s separate property to the other. Indeed, the statute contains no such provision. See N.C. Gen. Stat. § 50-20 (2009).
I conclude from this that the trial court erred in distributing to Plaintiff Defendant’s $51,000 debt.

. Friend-Novorska v. Novorska, 131 N.C. App. 508, 511, 507 S.E.2d 900, 902 (1998).