Court Opinion

ID: 4505359
Source: CourtListenerOpinion
Date Created: 2020-02-06 19:10:31.124674+00
Date Added: 2024-06-11T08:01:19.361213
License: Public Domain

J. A21039/19

                               2020 PA Super 24

JOSEPH McGOLDRICK                        :    IN THE SUPERIOR COURT OF
                                         :          PENNSYLVANIA
                   v.                    :
                                         :
MEGAN MURPHY,                            :          No. 632 EDA 2019
                                         :
                         Appellant       :

               Appeal from the Judgment Entered April 2, 2019,
                in the Court of Common Pleas of Montgomery
                   County Civil Division at No. 2018-05803

BEFORE: BOWES, J., OLSON, J., AND FORD ELLIOTT, P.J.E.

OPINION BY FORD ELLIOTT, P.J.E.:                FILED FEBRUARY 06, 2020

      Megan Murphy (“Megan”) appeals from the April 2, 2019 judgment

entered in the Court of Common Pleas of Montgomery County on the trial

court’s order entered January 17, 2019, that divided the settlement proceeds

of the home formerly owned by Megan and appellee Joseph McGoldrick

(“Joseph”). We affirm.

      The record reflects that Megan and Joseph began dating in July 2010.

A romantic relationship quickly ensued, and in the fall of the same year, Megan

moved in with Joseph.       The two lived together in Joseph’s residence for

six and one-half years.    In approximately December of 2015, Megan and

Joseph decided to marry. At this time, they also decided to look for a home

to purchase together. Due to budget constraints, the couple’s plans to buy a

home put Joseph’s purchase of an engagement ring for Megan on hold.
J. A21039/19

        In late 2016, Megan and Joseph decided to purchase a home on

Chestnut Street in Royersford, Pennsylvania (the “Home”), for $205,000.

Because Joseph had the financial means necessary to close on the Home and

Megan was more creditworthy than Joseph, the two agreed that Joseph would

withdraw the needed money from his retirement fund and Megan would solely

execute the mortgage note.1

        The record reflects that on November 9, 2016, Joseph withdrew $5,000

from an Ameriprise Financial account that he owned, which sum represented

payment of the hand money that he and Megan needed to bind the sale

contract. As part of the mortgage loan application, the bank required Megan

and Joseph to execute a gift letter to document the source of the $5,000 and

to verify that Megan’s receipt of the $5,000 constituted a gift to be applied

toward the purchase of the Home and not a loan.           The $5,000 gift letter2

reflects that Joseph certified to the bank that he withdrew $5,000 from his

Ameriprise Financial account, gifted that $5,000 to Megan whose relationship

to him is set forth on the gift letter as “fiancé,” and that the $5,000 “gift is to

be applied toward the purchase of the [Home].”            (Megan’s answer, new

matter, and counterclaim, 4/16/18 at Exhibit “C.”)         The $5,000 gift letter

further states that “[n]o repayment of the gift is expected or implied in the

form of cash or by future services of the recipient.” (Id.)

1   The record reflects that both Megan and Joseph executed the mortgage.

2   We note that the $5,000 gift letter is executed by both parties, but not dated.

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        The record further reflects that on November 23, 2016, Joseph withdrew

$47,000 from his Ameriprise Financial account, which sum represented a

20 percent down payment on the Home, together with closing costs. As part

of the mortgage loan application, the bank required Megan and Joseph to

execute a gift letter to document the source of the $47,000 and to verify that

Megan’s receipt of the $47,000 was a gift and not a loan. The $47,000 gift

letter3 reflects that Joseph certified to the bank that he withdrew $47,000

from his Ameriprise Financial account, gifted that $47,000 to Megan whose

relationship to him is set forth in the gift letter as “fiancé,” and that the

$47,000 “gift is to be applied toward the purchase of the [Home].” (Id. at

Exhibit “D.”) The gift letter further states that “[n]o repayment of the gift is

expected or implied in the form of cash or by future services of the recipient.”

(Id.)

        On December 29, 2016, Megan and Joseph closed on the Home, taking

it as joint tenants with the right of survivorship. At this time, the two began

to share all Home-related expenses. After making some renovations, Megan

and Joseph moved into the Home in March 2017. In June 2017, Joseph gave

Megan an engagement ring.

        On March 10, 2018, however, Megan ended the engagement and

returned the ring to Joseph. At this point, Joseph continued to live in the

3 We note that the $47,000 gift letter is executed by both parties but not
dated.

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Home and Megan stayed there occasionally. It was also at this point that

Joseph stopped paying his share of the Home-related expenses and Megan

assumed payment of all of those expenses.            In August 2018, Megan

permanently moved out of the Home but continued to pay all Home-related

expenses.

      On March 23, 2018, Joseph initiated the underlying action by filing a

complaint in equity – partition.    On September 21, 2018, the trial court

entered the following order:

            AND NOW, this 21st day of September, 2018, during a
            conference call with counsel, the parties expressed
            their agreement to list the [Home] for sale and further
            agree that the proceeds of the sale shall be placed in
            escrow with the title company. Absent an agreement
            between the parties, the [trial c]ourt shall be notified
            upon the sale of the [Home] at which time chambers
            shall promptly schedule this matter for a one hour
            hearing to address division of assets.

Trial court order, 9/21/18.

      In November 2018, the Home sold at a loss, yielding $41,884.86 in

settlement proceeds. We note that the record reflects that the parties also

received a homeowners’ insurance payment credit in the amount of $101.

Therefore, the total amount escrowed was $41,985.86, which we will refer to

as the “settlement proceeds.”

      As the parties could not agree on the division of the settlement

proceeds, the trial court held the agreed-upon hearing, at which only Megan

and Joseph testified. On January 17, 2019, the trial court entered its order

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dividing the settlement proceeds, awarding $5,688.43 to Megan, which sum

equaled 50 percent of the money she expended on Home-related expenses

from April through October 2018, and awarding $36,297.424 to Joseph, which

sum represented the remaining balance in escrow.            (Trial court order,

1/17/19.)

      On January 28, 2019, Megan filed a post-trial motion. The trial court

denied the motion on February 14, 2019. On February 25, 2019, which was

prior to entry of judgment, Megan filed a notice of appeal. On March 5, 2019,

the trial court ordered Megan to file a concise statement of errors complained

of on appeal pursuant to Pa.R.A.P. 1925(b). Megan filed her Rule 1925(b)

statement on March 12, 2019. Because judgment had not been entered, this

court entered an order on March 28, 2019, directing Megan to praecipe the

trial court prothonotary to enter judgment on the trial court’s January 17,

2019 order.5    The order further directed that within ten days of entry of

judgment, Megan was to file with the prothonotary of this court a certified

4 We note that there is a one-cent discrepancy in the amount escrowed and
the amounts awarded in the trial court’s January 17, 2019 order.

5 Pennsylvania Rule of Appellate Procedure 301 requires that an appeal be
taken from a final order. Pa.R.A.P. 301(a), (c) & (d); see also Fanning v.
Davne, 795 A.2d 388, 391-392 (Pa.Super. 2002), appeal denied, 825 A.2d
1261 (Pa. 2003) (reiterating that appeal properly lies from judgment entered
following trial court’s disposition of post-trial motions, not from order denying
post-trial motions).

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copy of the trial court docket reflecting entry of judgment.        Megan timely

complied.6 This appeal is now ripe for our review.7

        Megan raises the following issues:

              I.    With all parties and the [t]rial [c]ourt in
                    [a]greement, have the requirements of a Part 1
                    Partition Order been met?

              II.   Does a signed writing, “Gift Letter”, which
                    expressly identifies the donee as “Fiancé” and
                    states that “[n]o repayment of the gift is
                    expected or implied in the form of cash or by
                    future services of the recipient” trump prior
                    court holdings of gifts in contemplation of
                    marriage which did not involve express, written
                    waivers[?]

Megan’s brief at 7.

              When reviewing an equitable decree, our standard of
              review is limited. We will reverse only where the trial
              court was palpably erroneous, misapplied the law or
              committed a manifest abuse of discretion. Where
              there are any apparently reasonable grounds for the
              trial court’s decision, we must affirm it. Moreover,

                    [t]he function of this Court on an appeal
                    from an adjudication in equity is not to
                    substitute [our] view for that of the lower
                    tribunal; our task is rather to determine
                    whether a judicial mind, on due
                    consideration of all the evidence, as a
                    whole, could reasonably have reached the
                    conclusion of that tribunal.

6   We note that the trial court filed its Rule 1925(a) opinion on April 8, 2019.

7 Pursuant to Pa.R.A.P. 905(a)(5), this court treats a notice of appeal filed
after the announcement of a determination but before entry of an appealable
order as filed after entry of the appealable order and on the day thereof.

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            Additionally, we note that when reviewing the results
            of a non-jury trial, we are bound by the trial court’s
            findings of fact, unless those findings are not based
            on competent evidence.

Nebesho v. Brown, 846 A.2d 721, 725-726 (Pa.Super. 2004) (internal

citations, quotation marks, and original brackets omitted).

      In her first issue, Megan contends that the trial court’s September 21,

2018 order that memorialized the parties’ agreement regarding the sale of the

Home and the distribution of the settlement proceeds followed by the actual

sale of the Home abrogated the need to record a Part 1 partition order, but

nevertheless served the purpose of a Part 1 partition order. (Megan’s brief at

13-16.) In Megan’s words, “the joint tenancy was terminated on sale and the

proceeds turned into a tenancy in common – the same result as a recorded

Part 1 order under Kapcsos v. Benshoff[, 194 A.3d 139 (Pa.Super. 2018)

(en banc)].” (Id. at 15.). According to Megan, “[w]hat actually happened

here was that the net proceeds of the [Home] sale were the pie to be divided

in a Part [2] Kapcsos proceeding. Part 1 being a transaction from a joint

tenancy, and Part [2] being division of proceeds.” (Id.) Megan contends that

the December 20, 2018 hearing constituted the Part 2 hearing where the

parties presented “evidence of monetary contributions as set offs toward

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owelty.”8 (Id. at 17.) Megan further contends that to the extent the trial

court’s September 21, 2018 order was not a “technically correct” Part 1 order,

this court should overlook any procedural defect because Pennsylvania Rule

of Civil Procedure 126 requires liberal construction of civil procedure rules.

(Id. at 15-16.) Megan requests a remand for entry of a final order that awards

her one-half of the settlement proceeds plus the $5,688.43 that she was

already awarded.9 (Id. at 21.)

      Pennsylvania Rules of Civil Procedure 1551-1574 govern “the procedure

in an action for the partition of real estate.” Pa.R.Civ.P. 1551 (setting forth

form of partition action).

            [Rules] 1551-1574 split a partition action into two,
            distinct, chronological parts. Rules 1551-1557 govern
            Part 1, and Rules 1558-1574 govern Part 2. Each

8 “Owelty” has been defined as: “1. Equality as achieved by a compensatory
sum of money given after an exchange of parcels of land having different
values or after an unequal partition of real property. 2. The sum of money so
paid.” Bernstein v. Sherman, 902 A.2d 1276, 1279 n.3 (Pa.Super. 2006),
citing Black’s Law Dictionary 1230 (7th ed. 1999).                  See also
Pa.R.Civ.P. 1562 (setting forth Part II partition action procedural rule
regarding real estate not capable of a proportionate division).

9 We note that the trial court opined that Megan waived this issue because
she participated in the proceedings below and never objected or claimed that
the law entitled her to an equal distribution of the settlement proceeds. (Trial
court opinion, 4/8/19 at 7.) See Pa.R.A.P. 302(a) (stating that “[i]ssues not
raised in the lower court are waived and cannot be raised for the first time on
appeal”). A reading of the hearing transcript, however, reveals that Megan’s
counsel argued that by “operation of law set forth in our memo, the property
is divided equally” in accordance with the civil procedure rules governing
partition actions. (Notes of testimony, 12/20/18 at 108.) A reading of
Megan’s trial memorandum and post-trial motion reveals that she arguably
raised the issue with the trial court. Therefore, we decline to find waiver.

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            part, by rule, must produce its own, distinct,
            appealable order.

            The first order, under Pa.R.Civ.P. 1557, directs
            partition of the parties’ legal interests into severalty.
            See Johnson v. Gaul, 228 Pa. 75, 77 A. 399, 400
            (Pa. 1910) (“partition is a possessory action; its
            purpose and effect being to give to each of a number
            of joint owners . . . his [or her] share in severalty”).

            The second order, under Pa.R.Civ.P. 1570, does one
            of three things. A Rule 1570 order may (1) divide the
            partitioned property among the parties, (2) force one
            or more of the parties to sell their interest in the land
            to one or more of the parties, or (3) sell the land to
            the general public and distribute the proceeds among
            the parties.

Kapcsos v. Benshoff, 194 A.3d at 141-142.

      Here, Megan theorizes that when one joint tenant institutes a partition

action, but both joint tenants thereafter agree to sell the real estate and, if

need be, have a judge determine how the sale proceeds are divided, which

agreement is memorialized in a court order, the subsequent sale of the real

estate, together   with the court order memorializing the               co-tenants’

agreement, serve the purpose of a Part 1 partition order and an equal division

of the sale proceeds, as adjusted by owelty, is required because the former

joint tenants now own the sale proceeds as tenants in common.              The law

provides no support for Megan’s theory. The law holds that

            partition is a possessory action; its purpose and effect
            being to give to each of a number of joint owners the
            possession to which he is entitled of his share in
            severalty.      It is an adversary action and its
            proceedings are compulsory. The purpose of the
            action of partition is to divide property, not to sell

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            it. A sale may become an incident, but is not the
            objective point of it.

Russo v. Polidoro, 176 A.3d 326, 329-330 (Pa.Super. 2017) (quotation

marks, ellipses, brackets, and internal citations omitted; emphasis added).

      Here, before the trial court ever considered the propriety of the entry of

a Part 1 order that would have directed partition of the parties’ legal interests

in the Home into severalty, Megan and Joseph agreed to sell the Home and,

if need be, allow the trial court to divide the sale proceeds, which agreement

was memorialized in the September 21, 2018 order. When the Home sold,

Megan and Joseph no longer had legal interests in the Home. Consequently,

and despite Megan’s insistence to the contrary, at the time of the sale, the

procedural rules, as well as the case law, that govern an action for the partition

of real estate ceased to apply simply because the sale of the Home

extinguished the parties’ legal interests and there was no longer any real

estate to partition.10

      Megan next claims that the trial court erred when it concluded that the

$52,000 Joseph contributed to purchase the Home was a conditional gift in

contemplation of marriage because the plain language of the gift letters

executed by the parties constituted an “express waiver of repayment” which

“trumps case law on conditional gifting.” (Megan’s brief at 20.) According to

Megan, Joseph’s waiver of repayment as evidenced by the gift letters entitles

10We note that owelty has no application here because there was no unequal
partition of the Home. Indeed, there was no partition at all.

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her to 50 percent of the settlement proceeds, plus the $5,688.43 that she was

already awarded.

     In Nicholson v. Johnston, 855 A.2d 97, 101-102 (Pa.Super. 2004),

this court reiterated the law of conditional gifts as previously discussed in

Lindh v. Surman, 702 A.2d 560 (Pa.Super. 1997), affirmed, 742 A.2d 643

(Pa. 1999), and as set forth in the Restatement (First) of Restitution § 58

(1937), as follows:

           Gifts Made in Reliance on a Relation.

           A person who has conferred a benefit upon another,
           manifesting that he does not expect compensation
           therefor, is not entitled to restitution merely because
           his expectation that an existing relation will continue
           or that a future relation will come into existence is not
           realized, unless the conferring of the benefit is
           conditioned thereon.

           ....

           (b)     Conditional gifts. The gift may be
                   conditional upon the continuance or
                   creation of a relation, and if conditional
                   the donor is entitled to its return if the
                   relation terminates or is not entered into.
                   The condition may be stated in specific
                   words or it may be inferred from the
                   circumstances. Likewise, as in the case of
                   engagement and wedding gifts, justice
                   may require the creation of a condition
                   although the donor had no such condition
                   in mind.

           (c)     Wedding and engagement gifts. Gifts
                   made in the hope that a marriage or
                   contract of marriage will result are not
                   recoverable, in the absence of fraud. Gifts
                   made in anticipation of marriage are not

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                   ordinarily expressed to be conditional
                   and, although there is an engagement to
                   marry, if the marriage fails to occur
                   without the fault of the donee, normally
                   the gift cannot be recovered. If, however,
                   the donee obtained the gift fraudulently or
                   if the gift was made for a purpose which
                   could be achieved only by the marriage, a
                   donor who is not himself at fault is entitled
                   to restitution if the marriage does not take
                   place, even if the gift was of money. If
                   there is an engagement to marry and the
                   donee, having received the gift without
                   fraud, later wrongfully breaks the promise
                   of marriage, the donor is entitled to
                   restitution if the gift is an engagement
                   ring, a family heirloom or other similar
                   thing intimately connected with the
                   marriage, but not if the gift is one of
                   money intended to be used by the donee
                   before the marriage.

             . . . . Additionally, the Reporter’s notes recognize:

                   As to gifts other than services or
                   engagement rings the decided cases have
                   generally allowed recovery upon the same
                   basis as in the case of the rings. It is to
                   be noted, however, that in all the cases in
                   which recovery was allowed the money or
                   other   things    were    transferred    in
                   contemplation of marriage in the sense
                   that they were to be used by the parties
                   after marriage.

Nicholson, 855 A.2d at 101-102 (internal citations omitted; emphasis in

original).   The Reporter’s Notes to Section 58 also provide that “[i]t is

suggest[ed] that gifts of considerable size may be assumed to be conditional,

that other gifts not involving peculiar features, such as heirlooms, and not for

the primary purpose of being used after marriage by the parties, should be

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regarded as absolute and should be incapable of recovery.”          Restatement

(First) of Restitution § 58, Reporter’s Notes. Additionally, in affirming this

court’s decision in Lindh, our supreme court adopted a no-fault approach to

gifts given in contemplation of marriage which requires such a gift to be

returned to the donor regardless of who was at fault for ending the

relationship. Lindh, 742 A.2d at 647.

       The facts of this case are similar to those in Nicholson, supra. There,

Nicholson and Johnston, intending to marry, purchased a home as joint

tenants with the right of survivorship. Nicholson, 855 A.2d at 98. Johnston

supplied the down payment and closing costs and agreed to be financially

responsible for the mortgage. The marriage never occurred. Nicholson filed

a partition action and litigation ensued. This court ultimately affirmed the trial

court’s finding that Johnston’s down payment constituted a conditional gift

contingent upon the occurrence of the marriage, and because the marriage

did not occur, Johnston was entitled to recover the down payment. Id. at

101.

       Here, Megan contends that the execution of the gift letters constituted

a waiver by Joseph that his gift of $52,000 toward the purchase of the Home

was conditioned on marriage because the gift letters that they signed state

that “no repayment is expected or implied.” (Megan’s brief at 16-17.)

       By their very nature, however, gifts are given without the expectation

of repayment. See Black’s Law Dictionary, 709 (8th ed.) (defining a “gift”

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as “[t]he voluntary transfer of property to another without compensation”);

see also Restatement (First) of Restitution § 58, Reporter’s Notes (explaining

that donor of gift made in reliance on creation of a relation, manifesting no

expectation of repayment, is entitled to restitution if the relation is not entered

into even though donor had no such condition in mind).            Indeed, Joseph

testified that at the time he transferred the funds, he did not expect to be

repaid because he “felt [he and Megan] were going to live in the [Home]

forever. Get married and have a great life.” (Notes of testimony, 12/20/18

at 18.) Megan echoed Joseph’s testimony and stated that when the parties

signed the gift letters, she was Joseph’s fiancé and that she and Joseph were

purchasing the Home because they intended to live together as a married

couple. (Id. at 97.) Megan and Joseph also consistently testified that the

sole purpose of the gift letters was to secure the mortgage loan to buy the

Home that they intended to live in together as a married couple. (Id. at 18,

33-35, 97, 112.)

      The record clearly demonstrates that Joseph made the $52,000 gift for

the purpose of purchasing a marital residence for him and Megan to live in

as husband and wife. The gift letters were necessary to achieve that purpose

and did not extinguish the condition upon which the gift was given – the

occurrence of marriage. Therefore, when the relationship between Megan and

Joseph ended, the gift’s purpose could no longer be achieved. Consequently,

Joseph was entitled to recover the remaining escrow balance in the amount

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of $36,297.42 which represented partial reimbursement of his payment of the

hand money and down payment needed to purchase the Home.

     Judgment affirmed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 2/6/20

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