Court Opinion

ID: 2792429
Source: CourtListenerOpinion
Date Created: 2015-04-09 16:13:51.40751+00
Date Added: 2024-06-11T11:29:01.064222
License: Public Domain

FILED 

                                                                       APRIL 9, 2015 

                                                                In the Office of the Clerk of Court 

                                                              W A State Court of Appeals, Division III 

         IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON 

                            DIVISION THREE 

In re the Marriage of:                       )
                                             )         No. 31523-1-111
JEANNIE KILE,                                )
                                             )
                     Respondent,             )
                                             )
       and                                   )         PUBLISHED OPINION
                                             )
GORDON B. KENDALL,                           )

                                             )

                     Appellant.              )

       SIDDOWAY, C.J. -    In this appeal from the judgment dissolving his marriage to

Jeannie Kile, Gordon Kendall challenges the trial court's characterization of farm ground

and equipment that Ms. Kile acquired during the marriage as "a married person dealing in

her sole and separate property," but that was used in a farming operation that he

thereafter ran. He also challenges the court's refusal to award him spousal maintenance

and attorney fees.

       Substantial evidence supports Ms. Kile's position that her late father wished to

lease his farm ground and equipment to her as her separate property and that Mr. Kendall
I
•   No. 31523-1-II1
    In re Marriage ofKile

    was on notice for over 20 years that leases executed by his father-in-law were explicitly

    to Ms. Kile alone. Yet it is undisputed that lease terms offered by Ms. Kile's father were

    fair market terms supported by consideration, that Ms. Kile had no separate assets,

    employees, or credit with which she could independently perform the lessee's obligations

    at the time she entered into the leases, and that Mr. Kendall and the community

    necessarily bore burdens and risks in performing the lease obligations. While Ms. Kile's

    father made gifts to his daughter in the form of payments to third parties and forgiveness

    of debt that the court could legitimately treat as separate property and that supported the

    separate character of 3 17 acres of farm ground purchased by Ms. Kile (at least at the

    inception of that purchase), the court erred by failing to recognize that the community

    had a material interest in the farming operation and its assets.

           We find no abuse of discretion by the court in denying Mr. Kendall spousal

    maintenance or an award of attorney fees. We deny Mr. Kendall's motion for relief from

    the deadline for requesting attorney fees on appeal. Because the trial court's distribution

    of the parties' assets and liabilities might have been different had the farming operation

    assets been correctly characterized, we reverse the property award and liability allocation

    portions of the decree and remand for further proceedings.

                         FACTS AND PROCEDURAL BACKGROUND

           Jeannie Kile and Gordon Kendall separated in December 2011, after almost 28

    years of marriage. The parties have two adult children. For most of their married life,

                                                  2

I   No.31523-1-III
    In re Marriage ofKite

    Mr. Kendall fanned 1,517 acres of ground in Thornton, Washington that was either

    leased or titled in Ms. Kile's name, as her separate property. The principal issue in their

    divorce was the separate or community character of the fanning operation.

           As Ms. Kile's lawyer explained to the trial court in opening statement, his client's

    father, Lester Kile, had fanned considerable acreage in Thornton for years, until losing

    half of the property to his son in a "tough divorce" from Ms. Kile's mother, in which the

    son intervened and successfully claimed a contractual interest in his parents' property.

    Report of Proceedings (RP) at 13. Mr. Kile was left owning 1,200 acres. As explained

    by Ms. Kile's lawyer and later demonstrated by evidence, Mr. Kile was "very, very

    interested and desirous-it was his hope that the fann would be left to Jeannie Kile ...

    and her children, Cody and Carly." Id.

           In 1988, Mr. Kile approached his daughter and offered to lease his fann ground to

    her on crop share basis: Ms. Kile would pay her father one-third ofthe proceeds of crops

    grown as rent, and retain two-thirds as operator. This was a standard crop sharing rate for

    dryland wheat fanning in Eastern Washington. It was anticipated that Mr. Kendall would

    actually run the fann operations. But Mr. Kile insisted on leasing the ground to his

    daughter, as her separate property. The lease agreements prepared for execution by Ms.

    Kile, Mr. Kile and his fanning corporation, Kile Farms, Inc., identified the ultimate

    lessee as "JEANNIE KILE KENDALL, a married person dealing in her sole and separate

    property." Clerk's Papers (CP) at 9.

                                                 3

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'l

I

I    No.31523-1-III
     In re Marriage ofKite

            At the time the lease was offered, both Mr. Kendall and Ms. Kile were salaried

     employees of a former brick-and-mortar retailer, Montgomery Ward. Initially Mr.

     Kendall worked on the farm part time with his father-in-law, learning the farm operation.

     In 1990 Mr. Kendall left his job at Montgomery Ward to work full time on the farm.

            At or about the same time that he leased his farm ground to Ms. Kite, Mr. Kite

     agreed to lease his equipment to her, with an option to purchase. In a perpetuation

     deposition admitted at trial, Mr. Kile testified that there had been a written agreement

     setting the payments required, that the lease was solely with his daughter, and that Mr.

     Kendall was "not on there at all." CP at 378. Both Ms. Kile and her father testified that

     over the term of the equipment lease, Mr. Kite was paid most of what he was owed, but if

     Ms. Kite and Mr. Kendall were "hard up" her father would "give them some slack" and

     he ultimately forgave some of the payments due under the equipment lease. CP at 379.

     Mr. Kite estimated that he accepted "around [$]50,000" less than what he was owed, as

     "a forgiveness to Jeannie Kite." Id.

            In 1989 two parcels of farm ground that Mr. Kile did not own but that he had

     leased and farmed for 30 years were offered to him for purchase by the owners, Everett

     and Sally Flood. Mr. Kite encouraged Ms. Kile to purchase the parcels, which totaled

     317 acres. He offered to make the required down payments. Ms. Kite testified that "Dad

     and I decided this would be a good deal and a way to keep it in the family." RP at 103.

     The real estate contracts and notices of the contracts identified the purchaser of the

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No. 31523-1-111
In re Marriage ofKite

properties as "Jeannie Kile, as her separate property," or "JEANNIE KILE KENDALL,

wife of Gordon B. Kendall ... dealing in her own separate property." CP at 20,25.

Contemporaneous with Ms. Kile's purchase ofthe parcels, Mr. Kendall executed a quit

claim deed "to release community property interest," to which was attached copies of the

Flood sale documentation. Mr. Kile paid a total down payment of $40,000 on the

parcels. According to Mr. Kite, he gifted the down payments to his daughter "with the

intent that [the parcels] would be her separate property." CP at 414. Mr. Kendall farmed

the Flood land just as he farmed the land that Ms. Kite leased from her father.

       Business and accounting records for the farms reflected its operation as Ms. Kile's

sole proprietorship. A separate bank account was maintained for farm operations. Ms.

Kile was listed as the operator of farming operations with the Farm Service Agency

(FSA) office and all farm subsidy checks were made payable to her alone. During the

marriage, all revenue generated from farming operations was deposited into the farm

account, and all farm expenses were paid out of the farm account.

       Ms. Kite issued forms W-2 to Mr. Kendall reflecting the wages he paid himself;

they identified her as the "employer," and Mr. Kendall as an "employee." CP at 71. Ms.

Kile's earnings from her employment were deposited to a different, community bank

account, as were the wages that Mr. Kendall paid himself from farm operations.

       Despite Ms. Kile's being reflected on business records as the owner, employer and

operator of the farm, Mr. Kendall was its hands-on operator, at least following the initial

                                             5

No. 31523-1-III
In re Marriage ofKite

years that he worked with his father-in-law and until the parties' son became active in

farm operations many years later. Although Ms. Kite was listed as the farm operator with

the FSA, she executed a power of attorney that authorized Mr. Kendall to file reports and

otherwise deal with the FSA on her behalf. Mr. Kendall testified that Ms. Kite never

worked at the farm. She did not disagree; her own evidence was that she had a full-time

job elsewhere and she offered no evidence that she expended any community labor in the

farming operation.

       Shortly after Ms. Kendall filed for divorce, her father sent a notice terminating the

farm lease agreement, expressing dissatisfaction with Mr. Kendall's performance and

asking that Ms. Kite tum over the farming operation to the parties' son, Cody KendalL

Ms. Kile's lawyer conducted a perpetuation deposition of Mr. Kile on January 24,2012.

Mr. Kile died on March 30, 2012, leaving his farm ground in a trust in which Ms. Kile

and Cody have beneficial interests.

       In the 3-day dissolution trial conducted in September 2012, Mr. Kendall did not

claim any interest in Ms. Kile's inheritance from her father, but he did claim that the

operation of the farm had been a community endeavor and that the assets purchased from

farm revenues-the farming equipment and the 317 acres of farm ground purchased from

Everett and Sally Flood-were therefore community property. Ms. Kile argued that the

farm and all of the farming assets whose acquisition could be traced to farm profits were

her separate property.

                                             6

No. 31523-1-111
In re Marriage ofKile

       Ms. Kile contended at trial that Mr. Kendall's historical operation of the fann was

inconsequential in detennining the character of the property because he was paid a

reasonable wage from the fann account. The evidence on this score consisted of Ms.

Kile's testimony that her husband was "paid fairly" for his efforts, RP at 89, and Mr.

Kendall's deposition testimony that the fann paid him a reasonable wage-although

elsewhere in his deposition, when he was asked, "Did you pay yourself fairly?" he

answered, "That's a relative question. To be honest with you, I think the family was

compensated fairly for the services that I provided." RP at 485, 510. No evidence of

market wages or benefits for a person of Mr. Kendall's experience perfonning custom

dryland wheat fanning in Eastern Washington was presented.

       A summary of Mr. Kendall's W-2 earnings revealed that between 1991 and 2010,

he drew gross wages of between $22,209 and $48,500, with an exception in 2008, when

he drew $60,000. When asked how Mr. Kendall's monthly wage was detennined, Ms.

Kile testified, "He decided that he had -- he was managing, again, the fann. Basically I

trusted him to do what was good for the fann, and he paid himself whatever he decided."

RP at 318.

       Both parties testified that Mr. Kendall had cashed in his Montgomery Ward

retirement account early in the farm operation to pay taxes or other expenses of the fann.

They differed as to the amount. Mr. Kendall offered records showing that he took

retirement distributions of$30,924 in 1990, while Ms. Kile testified to figures of$15,000

                                             7

No. 31523-1-111
In re Marriage ofKite

or $20,000. Ms. Kile presented evidence that by the end of 1992, Mr. Kendall had an

individual retirement account worth $17,607 and she contended that when their finances

permitted, Mr. Kendall reimbursed himself for the retirement assets he had used for farm

expenses. She characterized his use of his retirement assets to pay expenses in 1990 as a

"convenience," rather than a contribution. RP at 317. Both parties agreed that Mr.

Kendall had been required to co-sign a purchase/loan agreement to acquire a combine,

but Ms. Kile testified that she had no intention that the combine would thereby be a

community asset.

       Ms. Kile presented the testimony of an expert witness who had performed a cash

flow analysis of farm operations demonstrating that the cash flow from farm operations

between 1989 and 2010, all of which was deposited to the farm account, was more than

sufficient to pay Mr. Kile his crop share under the lease, all unforgiven equipment lease

payments, all of the contract installments for the purchase of the Flood property, and all

other farm expenses. I

       The trial court ultimately found that the farm operation had been Ms. Kile's

separate property from its inception, and, because there had been no commingling of

farm and community revenues, the farm equipment and the Flood property-traceable to

       1 Ms. Kile stipulated that personal expenditures had been made out of the farm
account for personal items and household expenses.

                                             8

No. 31523-I-III
In re Marriage ofKile

those revenues-was also her separate property. It awarded Mr. Kendall the vast

majority (about 80 percent) of the parties' community property.

       The trial court rejected Mr. Kendall's request for spousal maintenance. In

announcing its decision following the trial, the court recounted the statutory factors that it

was required to consider, observed that Mr. Kendall had offered only vague support for

maintenance, and explained that its disproportionate award of the parties' community

property to Mr. Kendall adequately addressed any demonstrated need.

       Mr. Kendall's motion for reconsideration was denied. He appeals.

                                        ANALYSIS

       Mr. Kendall appeals both the dissolution decree and the trial court's denial of his

motion for reconsideration. He assigns error to (1) the trial court's characterization of the

profit from farming operations, the farm equipment, and the Flood properties as Ms.

Kile's separate property; (2) its refusal to award him spousal maintenance; and (3) its

refusal to order Ms. Kile to pay his attorney fees and costs.

       We address the issues in tum.

                        1. Characterization offarming profits, farm
                            equipment, and the Flood property

       Mr. Kendall assigns error to virtually all of the trial court's findings of fact and

conclusions of law bearing on its determination that the results of farming operations, the

farm equipment, and the Flood properties are Ms. Kile's separate property.

                                              9

No. 31523-1-111
In re Marriage 0/ Kite

       He asserts several broad challenges: that the court erred in treating Mr. Ki1e's offer

of a market-rate lease as a gift to Ms. Kile rather than a community endeavor; that it

failed to take into account the fact that Mr. Kendall never agreed to change the character

of property acquired during the marriage from community to separate; that Ms. Kile's

separate funds, if any, were insufficiently traceable to overcome the presumption that

proceeds from separate property that are commingled with community funds become

community property; and that the trial court failed to recognize the fiduciary duty he was

owed in his dealings with Ms. Kile. We find the first and second challenges to be

dispositive.

       In performing its obligation to make a just and equitable distribution of properties

and liabilities in a marriage dissolution action, the trial court must characterize the

property before it as either community or separate. In re Marriage o/Gillespie, 89 Wn.

App. 390, 399, 948 P.2d 1338 (1997); Pollock v. Pollock, 7 Wn. App. 394,399,499 P.2d

231 (1972). The status of the property is determined "as of the date of its acquisition."

In re Marriage o/Shannon, 55 Wn. App. 137, 140,777 P.2d 8 (1989).

       Because Washington law favors community property, "all property acquired

during marriage is presumptively community property, regardless of how title is held."

Dean v. Lehman, 143 Wn.2d 12,19,18 P.3d 523 (2001); RCW 26.16.030. "The burden

of rebutting this presumption is on the party challenging the asset's community property

status, and 'can be overcome only by clear and convincing proof that the transaction falls

                                              10 

NO.31523-1-III
In re Marriage ofKite

within the scope of a separate property exception.'" Id. at 19-20 (citation omitted)

(quoting Estate ofMadsen v. Comm'r, 97 Wn.2d 792, 796, 650 P.2d 196 (1982),

overruled in part on other grounds by Aetna Life Ins. v. Wadsworth, 102 Wn.2d 652,

659-60,689 P.2d 46 (1984)).

       A trial court's characterization of property as separate or community presents a

mixed question oflaw and fact. In re Marriage ofMartin, 32 Wn. App. 92, 94, 645 P.2d

1148 (1982). "The time of acquisition, the method of acquisition, and the intent of the

donor, for example, are questions for the trier of fact." Id. at 94. We review the factual

findings supporting the trial court's characterization for substantial evidence. In re

Marriage ofMueller, 140 Wn. App. 498, 504,167 P.3d 568 (2007). The ultimate

characterization of the property as community or separate is a question of law that we

review de novo. Id. at 503-04.

       Mr. Kendall challenges the trial court's characterization of the April 1988 leases

of Mr. Kile's farms to his daughter and the profits from farming the leased ground as Ms.

Kile's separate property.

       Notwithstanding the fact that Ms. Kile was named as the sole lessee under both

farm leases, we begin with the required presumption that any property interest acquired

by Ms. Kile during marriage was a community interest. The burden was on her to

demonstrate, clearly, that the leases and the profits derived from operating under them

were her separate property. Separate property includes property acquired either before

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No. 31523-1-111
In re Marriage ofKile

marriage, or-relevant here-property acquired after marriage by "gift, bequest, devise,

descent, or inheritance" or with "the rents, issues and profits thereof." RCW 26.16.010.

                                  1. Separate property by gift

       Ms. Kile asserts that the farm leases were gifts to her from her father. She

contends that no consideration was paid for the farm leases and that she, "as donee," and

her father, "as donor," both intended that the leases would be her separate property. Br.

of Resp't at 9. A gift "is a voluntary transfer of property without consideration." City of

Bellevue v. State, 92 Wn.2d 717,720,600 P.2d 1268 (1979) (citing Andrews v. Andrews,

116 Wash. 513, 521, 199 P. 981 (1921)). While the court's findings and conclusions did

not explicitly state that Mr. Kile's leases to his daughter were a "gift," it found that Mr.

Kile "intended that his daughter alone would have the sole benefit of the lease[s] ... on

the farm ground," and that "[n]o consideration was paid for these leasehold interests."

CP at 537-38.

       But there was an exchange of consideration for Ms. Kile's rights under the farm

leases. "[I]nherent in [the] concept [of a gift] is the necessity of a donative intent," City of

Bellevue, 92 Wn.2d at 720, but if a contract is supported by mutual consideration-as the

farm leases were-a professed donative intent does not transform a contract into a gift.

This was recognized by our Supreme Court in Andrews, 116 Wash. 513, in which a

husband entered into an agreement with his elderly father under which the son would care

for and support his parents in consideration of which the father would leave property to

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No. 31523-1-111
In re Marriage ofKite

his son when he died. Andrews, 116 Wash. at 514. The court held that the property the

husband was to acquire under the contract was community property, since it was not

acquired by gift as defined by a former version of the separate property statute. Id. at

520. 2 It explained that "[t]he 'gift, bequest, devise or descent' contemplated by the

statute as constituting separate property is not based upon contract or consideration." Id.

at 521.

          Under the farm leases between Mr. Kile and his daughter, he received a third of

the revenue from the farming operations in exchange for use of his land, while Ms. Kile

received two-thirds in exchange for performing the duties and assuming the risks required

to generate the crop proceeds that they would share. It is undisputed that this was a

standard crop sharing arrangement for dryland wheat farming in Eastern Washington. It

may be true that for reasons of his own, Mr. Kile would not have entered into the same

lease with Ms. Kile and Mr. Kendall jointly that he was willing to enter into with his

daughter alone. But that does not alter the fact that offering a contract on market terms is

not a gift. The trial court's finding that "[n]o consideration was paid for [the fann]

leasehold interests" is not supported by the evidence. CP at 537-38 (finding 1).

                            2.     Separate property by purchase

         Section 5915 defined a husband's separate property as that "owned by the
          2
husband before marriage, and that acquired by him afterwards by gift, bequest, devise or
descent, with the rents, issues, and profits thereof." REM. 1915 CODE § 5915.

                                              13 

No. 31523-1-111
In re Marriage ofKile

       The court in Andrews explained that the property the husband was to acquire

under his father's will might have been his separate property had the husband been able

to establish "that the contract was a personal one between his father and himself and was

to be performed, and was performed, by means of his separate property and his individual

endeavors." Andrews, 116 Wash. at 521. It nevertheless emphasized that "even in that

instance, it would be his separate property by purchase, and it would not have been his by

gift, devise or descent within the spirit of the statute." Id. at 521-22 (emphasis added).

       Ms. Kile implicitly takes the position that if her father's lease of farm land was not

a gift to her, then she acquired it by purchase within the meaning of Andrews because it

was a personal contract with her father and was to be performed, and was performed, by

means of her separate property and individual endeavors. It was presumably to this end,

in part, that she presented evidence that Mr. Kendall was paid a fair wage as her

employee and expert testimony that, looking back, her farm operation had been able to

pay its own way.

       In order to qualify as separate property under RCW 26.16.010, however, any

property acquired after marriage that is not acquired by gift, bequest, descent, or

inheritance must be "the rents, issues and profits" of separate property. Where a husband

or wife has separate property, the statute recognizes his or her authority to manage it "as

fully, and to the same extent or in the same manner as though he or she were unmarried."

RCW 26.16.010. Management includes putting separate property to use to generate

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No.3l523-l-III
In re Marriage ofKite

rents, issues, and profits, and would include the right to conduct a farming operation

using separate property.

       Here, however, Ms. Kile did not have a farming operation that pre-dated the

marriage, nor did she have other separate property that could be used to capitalize a

farming operation. Instead, she performed farming operations on the ground leased from

her father as an uncapitalized sole proprietorship. It was expected that Mr. Kendall

would be the farm operator. Lacking separate property with which to capitalize her

farming enterprise, Ms. Kile trusted Mr. Kendall to pay himself a wage based on "what

was good for the farm." RP at 318. She allowed him to cash in community retirement

assets as needed to finance farm expenses (even if those retirement assets were restored at

a later time). She allowed him to co-sign for loans when lenders required his signature.

       A spousal enterprise conducted on this basis does not qualifY as separate property

of a spouse under the exclusive criteria provided by RCW 26.16.010. Cj Us. Fidelity &

Guar. Co. v. Lee, 58 Wash. 16, 107 P. 870 (1910) (wife's endeavor was her separate

property where she had money sufficient to perform her obligations and intended to do so

without assistance from her husband). Rather, it falls well within what the late Professor

Cross has characterized as "[t]he fundamental premise of the community property system

that both spouses contribute to property acquisitions in a joint effort to promote the

welfare of the relationship." Harry M. Cross, The Community Property Law, 61 WASH.

L. REv. 13,27 (1986). Ms. Kile's evidence did not overcome the presumptively

                                             15 

No.31523-1-III
In re Marriage ofKite

community character of the farm lease. The trial court's remaining findings do not

support its conclusion that "[t]he fann leases ... are [Ms. Kile's] separate property." CP

at 540 (conclusion 1).

       Ms. Kile conceded at trial that the parties never executed any joint property

agreement that would change the legal character of the fann lease and its profits from

community to separate property. The trial court erred, then, in treating the profits from

fanning ground leased from Mr. Kile as Ms. Kile's separate property.

                                     A. Equipment lease

       Ms. Kile' s evidence that the equipment lease was a separate rather than a

community undertaking falls short for the same reason as her argument that fanning land

leased from her father was a separate undertaking: from the inception of the lease, she

had no separate property or rents, issues, and profits with which to independently perfonn

the lessee's obligations.

       Under the "inception oftitle" theory, property that is acquired through a

contractual obligation is deemed to be acquired when the obligation becomes binding.

Beam v. Beam, 18 Wn. App. 444, 452,569 P.2d 719 (1977); In re Estate ofBorghi, 167

Wn.2d 480,484,219 P.3d 932 (2009). The only evidence that Ms. Kile could offer as to

the separate character of the equipment lease at the time she entered into it with her father

was that she alone was the contracting party. That, without more, is insufficient. As our

Supreme Court observed in Borghi, a case involving title to real property:

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No.31523-1-III
In re Marriage ofKile

       '[T]he fact in itself [legal title] is not of controlling moment in determining
       which of the spouses is the actual owner ofthe property.

       Under our somewhat perplexing statutes relating to the acquisition of
       property, title to real property taken in the name of one of the spouses may
       be the separate property ofthe spouse taking the title, the separate property
       ofthe other spouse, or the community property of both of the spouses,
       owing to the source from which the fund is derived which is used in paying
       the purchase price ofthe property.'

Id. at 488 (quoting Merritt v. Newkirk, 155 Wash. 517, 520-21,285 P. 442 (1930)). The

court in Merritt characterized the instances in which the court had held that property

purchased with community funds was property of the community despite title having

been taken in the name of one spouse as "too numerous to admit of citation here."

Merritt, 155 Wash. at 52l.

       More important than title was the trial court's finding, supported by the evidence,

that all payments made on the equipment lease "were made from the farm account." CP

at 538 (finding 6). Given our holding that the profits from operating the leased farm

ground were community profits, all payments on the equipment lease were therefore

made by the community.

       The trial court's finding that "[n]o community funds were utilized to pay on [the

equipment lease r   was based on its erroneous treatment of the farm revenues as Ms.

Kile's separate property; it is not supported by the evidence. CP at 538 (finding 6).

Given the community's payment of amounts required by the equipment lease from its

inception, Ms. Kile's evidence was insufficient to rebut the presumptively community

                                             17 

No. 31523-1-II1
In re Marriage 0/ Kite

character of the equipment lease. The trial court's remaining findings do not support its

conclusion that "[t]he equipment leases ... as well as the equipment purchased pursuant

to this contract, are Ms. Kile's separate property." CP at 540 (conclusion 2).

       Nonetheless, the trial court found, based on sufficient evidence, that "[t]he

ultimate balances due under the [equipment lease] were forgiven by Mr. Lester Kile, as a

gift to his daughter." CP at 538 (finding 6). Both Mr. Kile and his daughter testified that

he forgave payments owed under the lease; he testified that the amount forgiven was

$50,000. The donor's intent at the time he gives a gift controls whether the gift is

community or separate. Borghi, 167 Wn.2d at 487; In re Estate a/Deschamps, 77 Wash.

514, 518, 137 P. 1009 (1914). Mr. Kile testified that the equipment lease was only

between himself and his daughter and that Mr. Kendall "was never involved." CP at 380.

He testified that he treated the forgone $50,000 as a "forgiveness to Jeannie Kile." Id. at

379. Because Mr. Kile entered into the equipment lease solely with his daughter and

testified that in forgiving payments he intended and believed that he was making a gift to

her, the trial court had a sufficient basis for its finding that balances due were forgiven as

a gift to Ms. Kile.

       Mr. Kendall nonetheless argues that there is a rebuttable presumption that property

acquired with separate funds during the marriage is a gift to the community. In re

Marriage a/Chumbley, 150 Wn.2d 1,5 n.1, 74 P.3d 129 (2003). But both Ms. Kile and

her father testified that when he forgave $50,000 of the amount owed on the equipment

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No. 31523-1-111
In re Marriage ofKile

lease, they believed he was making a gift to her alone. That evidence is sufficient to

rebut any presumption of a gift to the community.

       The court erred in treating the equipment acquired through the equipment lease as

Ms. Kile's separate property. But its findings support Ms. Kile's right to be reimbursed

$50,000 for her separate contribution to the purchase price. In re Marriage ofSedlock,

69 Wn. App. 484, 508, 849 P.2d 1243 (1993).3

                                 B.     The Flood property

       Turning to the two parcels of farm land purchased from Mr. and Mrs. Flood, we

again begin with the presumption that property acquired by Ms. Kile during marriage was

a community interest. In this case, however, Ms. Kile's evidence satisfies her burden of

demonstrating that at the time of acquisition, the Flood ground was her separate property.

       We again apply the "inception of title" theory. Undisputed evidence supports the

trial court's findings that "[t]he conveyancing Deeds reflect that Ms. Jeannie Kile

purchased the ground in her name alone as her separate property." CP at 538 (finding

10). While that alone would not be enough, substantial evidence also supports its finding

that "[t]he down payments on each acquisition of the Flood ground were made from

funds gifted by Mr. Lester Kile to Ms. Jeannie Kile." ld. The down payments were

       3Sedlock deferred the issue of entitlement to interest to the trial court, as do we.
ld. 69 Wn. App. at 508 n.19. Cf Cross, supra, at 71 (recognizing that an interest factor
may be appropriate, depending upon circumstances).

                                             19
No. 31523-1-111
In re Marriage ofKile

material, amounting to almost 14 percent of the aggregate price of the properties.

Undisputed evidence supports the trial court's finding that Mr. Kendall executed

contemporaneous quit claim deeds, which are additional evidence of the properties'

separate character. In re Estate ofCarmack, 133 Wash. 374, 233 P. 942 (1925) (the use

of a quitclaim deed is important to change, or raise the presumption of change, to

separate ownership). Collectively, the evidence is enough to clearly and convincingly

demonstrate that the Flood property was purchased, at its inception, "by use of the

separate funds and/or the separate credit of the acquiring spouse." 19 KENNETH W.

WEBER, WASHINGTON PRACTICE: FAMILY AND COMMUNITY PROPERTY LAW § 10.2, at

134 (1997)).

       "Once the separate character of property is established, a presumption arises that it

remained separate property in the absence of sufficient evidence to show an intent to

transmute the property from separate to community property." Borghi, 167 Wn.2d at 484

(citing 19 WEBER, supra § 10.1, at 133 (1997)). Clear and convincing evidence must

show the intent of the spouse owning the separate property to change its character from

separate to community property. Id. at 484-85 & n.4 (citing Guye v. Guye, 63 Wash. 340,

115 P. 731 (1911)). Where real property is at issue, an acknowledged writing is generally

required. Id. at 485 (citing Cross, supra at 102 & n.485).

       Mr. Kendall demonstrated only that the payments on the Flood real estate contract

were made from the farm account. Community property contributions that retire a

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purchase obligation on separate property will give rise to a community right of

reimbursement protected by an equitable lien, but they do not result in a transmutation of

the property from separate to community property. Merkel v. Merkel, 39 Wn.2d 102,

114-15,234 P.2d 857 (1951); Borghi, 167 Wn.2d at 491 n.7. Mr. Kendall does not show

any intention on Ms. Kile's part to transmute the property.

       Substantial evidence does not support the trial court's finding that "[n]o

community funds were paid on the acquisition of the Flo()d ground" if we construe

"acquisition" to mean all of the payments required by the real estate contract-and that

meaning of "acquisition" is necessary to support the trial court's conclusions oflaw. CP

at 538 (finding 11). Given the use of community funds to make most of the payments on

the Flood contract, the trial court's remaining findings do not support its conclusion that

"[t]he Flood ground was purchased with Ms. Kile's separate property." CP at 540

(conclusion 6).4 They support its conclusions that the Flood ground "is [Ms. Kile's]

separate property" or that it "has been [her] separate property since it was purchased"

only if it is recognized at the same time that the community has a right of reimbursement

and equitable lien to the extent payments were made with community funds. CP at 540

(conclusions 6 and 7).

        4 Any separate character that proceeds from farming the Flood ground might have
had if its operations had been segregated and separately financed after the date it was
purchased was lost through its joint operation, and the commingling of its proceeds and
expenses with the pre-existing, larger, community-owned farm operation.

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       Substantial evidence does not support the trial court's fourth finding, that the farm

account was not used as a depository for any community income and that no community

income was commingled in that account. The trial court's remaining findings do not

support its third and fifth conclusions of law, characterizing the farm revenue in the farm

account and all farm equipment as Ms. Kile's separate property.

                                       3.     Remand

       Although the character of the property is not controlling, remand is required where

"it appears the trial court's division of the property was dictated by a mischaracterization

of the separate or community nature of the property." In re Marriage ofSkarbek, 100

Wn. App. 444, 450, 997 P.2d 447 (2000); In re Marriage ofKraft, 119 Wn.2d 438,449,

832 P.2d 871 (1992). In such cases, "[r]emand enables the trial court to exercise its

discretion in making a fair, just and equitable division on tenable grounds, that is, with

the correct character of the property in mind." Shannon, 55 Wn. App. at 142.

       It is not clear in this case that the court would have divided the property the same

way had the assets been properly characterized. Under these circumstances, remand is

required to enable the trial court to make ajust and equitable division of the property

considering its correct characterization.

                                B.     Spousal maintenance

       Mr. Kendall challenges the trial court's refusal to award him spousal maintenance,

which he had requested if he were not allowed two to three more years to farm and

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"prepare himself financially for retirement." CP at 115. In its written order, the court

entered the following finding of fact regarding Mr. Kendall's need for spousal

maintenance:

               Mr. Kendall is currently unemployed. The court makes no finding
       as to his abilities in terms of working. There is no evidence that he is
       particularly motivated or not motivated. He has requested spousal
       maintenance. He did not testifY as to how much or for how long, and he
       did not testifY for what purpose he wanted it.

CP at 539.

       Based on that and other findings, the court denied Mr. Kendall's request for

maintenance. It stated that it had considered the factors set forth in RCW 26.09.090, that

Mr. Kendall's request was "rather vague," that he had "failed to establish a need for

spousal maintenance," and that "given the fact that he is being awarded approximately

80% of the community assets," it would not order spousal maintenance. CP at 537.

       Spousal support is governed by RCW 26.09.090, which provides that a court

"may" grant a maintenance order for either spouse "in such amounts and for such periods

of time as the court deems just, without regard to misconduct, after considering all

relevant factors." The statute identifies a non-exclusive list of factors that includes "[t]he

financial resources of the party seeking maintenance, including separate or community

property apportioned to him or her," the time it would take to acquire education or

training to enable that party to find appropriate employment, the standard of living

established during the marriage, the duration of the marriage, the age, physical and

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No. 31523-I-II1
In re Marriage ofKile

emotional condition, and financial obligations of the spouse seeking maintenance, and the

ability of the other spouse to meet his or her needs while meeting those of the spouse

seeking maintenance. RCW 26.09.090(1) (emphasis added). The trial court has broad

discretionary powers in awarding maintenance, and its decision "will not be overturned

on appeal absent a showing of manifest abuse of discretion." In re Marriage of

Washburn, 101 Wn.2d 168, 179,677 P.2d 152 (1984).

       Mr. Kendall argues on appeal that he should have been awarded spousal

maintenance to place him in a financial position roughly equal to Ms. Kile's for the rest

of his life, citing In re Marriage ofRockwell, 141 Wn. App. 235, 170 P.3d 572 (2007).

But Rockwell concerned the just and equitable division and distribution of property under

RCW 26.09.080, not entitlement to spousal maintenance. And RCW 26.09.090 clearly

makes an award of maintenance discretionary, not mandatory. Here, the trial court

awarded Mr. Kendall almost $650,000, including 80 percent of the parties' community

property-an award in his favor that is even more disproportionate (had the property

been correctly characterized) than the shifting of property value that was at issue in

Rockwell. Mr. Kendall fails to demonstrate an abuse of discretion by the trial court.

       That being said, a trial court is not only permitted to consider the division of

property when deciding whether to award maintenance, it is required to do so. In re

Marriage ofRink, 18 Wn. App. 549, 552-53, 571 P.2d 210 (1977). Since we are

reversing the trial court's separate property characterization of certain assets and

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In re Marriage ofKite

remanding the property division, the trial court has the authority to revisit its decision on

maintenance in arriving at a revised and just distribution of property. See Marriage of

Marzetta, 129 Wn. App. 607, 625-26, 120 P.3d 75 (2005), overruled on other grounds by

In re Marriage ofMcCausland, 159 Wn.2d 607, 152 P.3d 1013 (2007) (remanding

maintenance in light of its remand of property division).

                                    C.     Attorney fees

       Mr. Kendall assigns error to the trial court's failure to award him attorney fees and

costs. The court refused to award attorney fees based on its finding that each party had

the capacity to pay its own fees and costs. As the party challenging the trial court's

refusal to award fees, Mr. Kendall bears the burden of showing that the trial court

"exercised its discretion in a way that was 'clearly untenable or manifestly

unreasonable.'" In re Marriage ofCrosetto, 82 Wn. App. 545, 563, 918 P.2d 954 (1996)

(quoting In re Marriage ofKnight, 75 Wn. App. 721,729,880 P.2d 71 (1994)). He was

awarded almost $650,000 in assets. He fails to show an abuse of discretion.

       Mr. Kendall also asks that we order Ms. Kile to pay his fees on appeal, claiming

he has a need and she has ability to pay under RCW 26.09.140. RAP 18.1 permits an

award of attorney fees on appeal if applicable law permits such award; under RCW

26.09.140, we may award attorney fees on appeal after considering the financial

resources of both parties. Mr. Kendall failed to submit a timely financial affidavit as

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No. 31523-1-111
In re Marriage ofKite

required by RAP IS.I(c) but has filed a motion asking that we extend time and accept

and consider his affidavit. We deny the motion.

       We reverse the trial court's division of the parties' property and remand for further

proceedings consistent with this opinion.

WE CONCUR:

      !t1d,S-­
      Lawrence-Berrey, .

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