Court Opinion

ID: 9742812
Source: CourtListenerOpinion
Date Created: 2023-08-26 21:20:53.390848+00
Date Added: 2024-06-11T12:20:14.701232
License: Public Domain

ROBERTSON, Judge,
dissenting.
I respectfully dissent. The divorce court’s finding that the divorcing couple had acquired a vested, present, equitable interest in the martial real estate through their joint efforts, and perhaps also through completed gifts from Wife’s parents, is supported by sufficient evidence of probative value.8 Therefore, the trial court’s distribution of some property to Husband (representing 15% of the marital estate), rather than no property (as required by the majority) is not clearly erroneous.
The majority has erroneously merged two distinct concepts — that of a present, vested, equitable interest in property titled in third parties and that of a nonvested or contingent interest. The divorce court is required to include the former type of interest in the marital pot in order to effect a just and reasonable distribution and is prohibited from including the latter. The case of Sovern v. Sovern, 535 N.E.2d 563 (Ind.Ct.App.1989), recognizes this distinction in the nature of property ownership and should control the disposition of the present case. The case primarily relied upon by the majority, Hacker v. Hacker, 659 N.E.2d 1104 (Ind.Ct.App.1995), is easily distinguished from both Sovem and the case at bar because Hacker involved the nonvested, defeasible expectation of an inheritance whereas Sovem and the case at bar involved property acquired by the joint efforts of the parties or by gift.
Indiana’s “one pot” theory specifically prohibits the exclusion of any asset in which a party has a vested interest from the scope of the trial court’s power to divide and award. Hann v. Hann, 655 N.E.2d 566, 569 (Ind.Ct.App.1995), trans. denied. The term “property,” as used in the dissolution statute, “encompasses the complex group of jural relations between the owner of the physical object and all other individuals.” In re Marriage of Lay, 512 N.E.2d 1120, 1123 (Ind.Ct.App.1987) (Emphasis added). Non-vested property interests which are contingent and speculative in nature and in value, such as ehoses in action, are not marital property capable of division under Indiana’s dissolution statute. Mullins v. Matlock, 638 N.E.2d 854, 856 (Ind.Ct.App.1994), trans. denied. Other nonvested, contingent interests, such as the expectation of an inheritance of real estate, are also not includable in the marital pot. Hacker, 659 N.E.2d at 1112-13.
Although record or legal title to real estate is the highest evidence of ownership, equitable titles in real estate are recognized. Hughes v. Cook, 126 Ind.App. 103, 130 N.E.2d 330, 335 (1955). It is well-settled that legal title and equitable title to one parcel of real estate may be vested in different persons. See Hinds v. McNair, 413 N.E.2d 586, 598 (Ind.Ct.App.1980). It is equally well-settled that an equitable interest may be a fixed and vested property right. Id.
*725In the present ease, the evidence amply supports the trial court’s conclusion that, regardless of how the real estate was titled, Husband and Wife had acquired a vested, present interest in it through their joint efforts. The evidence unequivocally demonstrates that Wife’s parents offered to “give” Wife and Husband the marital residence in exchange for them moving their family nearby. Wife’s parents had not offered to provide a home for the family just anywhere. The arrangement was made to accomplish the parents’ objective of living near their daughter and her children. Thus, the trial court could reasonably have concluded that the arrangement was contractual in nature and not merely a promise to make a gift in the future. See Newman v. Huff, 632 N.E.2d 799, 806-07 (Ind.Ct.App.1994) (An arrangement to forgive debt and convey title in the future in exchange for consideration and performance is an enforceable contract, despite its characterization as a “gift.”), trans. denied.
The contract was fully performed. Wife and Husband performed their part of the bargain by moving close to Wife’s parents and contributing their financial resources and efforts in the construction of the house. Husband had invested some 2,400 hours of his own labor in the project. This amounts to well over a year of work at 40 hours per week with no holidays, sick days, or vacation. Thus, the divorcing couple had “sweat equity” in the real estate. The couple had also paid substantial sums toward taxes and insurance on the property and had ultimately paid for the appliances.
The contractual arrangement at issue here was not illegal, nor otherwise violative of public policy. See Pigman v. Ameritech Publishing, Inc., 641 N.E.2d 1026, 1030 (Ind.Ct.App.1994) (As Indiana law recognizes that it is in the best interest of the public that persons should not be unnecessarily restricted in their freedom to contract, persons are permitted to enter into any agreement they desire so long as it is not illegal or contrary to public policy). Wife’s parents got the benefit of the bargain and may now enjoy their daughter and grandchildren living close to them in a suitable home in their autumn years. On the other hand, the majority decision here strips Husband of his interests under the arrangement without compensation despite his full and substantial performance.9
Even if the arrangement to transfer the property to Husband and Wife would more appropriately be characterized as donative, rather than contractual, substantial evidence supports the trial court’s judgment that the equity in the real estate had been transferred to the divorcing couple by completed gift. Considering the evidence of Wife’s parents’ long-standing practice of making substantial gifts to the couple and their desire that their daughter and their grandchildren live in a suitable home close to them, the trial court could reasonably have concluded that Wife’s parents’ contributions to the marital real estate had been completed gifts. That Wife’s mother ultimately refused to execute a deed is not dispositive of the question of whether an equitable interest in the marital real estate had been transferred to the marital estate by completed gift. See Walter v. Balogh, 619 N.E.2d 566, 568 (Ind.1993) (The refusal of the donor to execute the necessary documents does not defeat the efficacy of a completed gift of real estate because equity looks to substance over form and will require that to be done which should have been done).
Finally, the evidence of the “mortgage payment” transaction between Wife’s father and Wife is “smoking gun” evidence that, at the very least, a substantial portion of the equity in the marital real estate had been transferred to the divorcing couple by completed gift. It is common practice to structure gifts over time. See McGinley-Ellis v. Ellis, 622 N.E.2d 213, 216 (Ind.Ct.App.1993) (Parents transferred shares of stock over time to lessen their federal gift and estate tax liability), property distribution portion summarily affirmed, 638 N.E.2d 1249, 1253 *726(Ind.1994); Walter, 619 N.E.2d at 569 (Adopting the recitation of facts from our opinion reported at 604 N.E.2d 1226, 1229, which described a gifting arrangement whereby donor would forgive indebtedness on a real estate mortgage in the amount of $10,000.00 per person per year matching the annual gift tax donee exclusion under federal gift and estate tax provisions).
In the present case, according to Wife’s testimony and as discussed by the majority, Wife’s father would give her a check in the amount of $833.33 each month (which adds up to $10,0000.00 per year) and Wife would then issue Father a check in the same amount. Regardless of the precise tax or accounting purposes the “mortgage payment” practice had been intended to accomplish, it evidences, at the very least, that Wife’s father had been transferring, by completed gift, an interest in the marital real estate to Wife (marital estate) at the rate of $10,000.00 per year.10
The Sovem court noted that the divorce court’s judgment was not binding upon the nonparty parents, noting that, had the spouse whose parents held title to the marital real estate wished the court to adjudicate the respective ownership rights as between his parents and him, he could have joined them in the action. 535 N.E.2d at 567.11 This comports with well-settled authority that any error arising from the failure to join an indispensable party may be waived. See Arnold v. Dirrim, 398 N.E.2d 442, 448 (1979); Ligon Specialized Hauler, Inc. v. Hott, 179 Ind.App. 134, 384 N.E.2d 1071, 1076 (1979) (We will not allow a party to sit idly by until appellate review before presenting appropriate motions for the joinder of additional parties.); Warner v. Young America Volunteer Fire Department, 164 Ind.App. 140, 326 N.E.2d 831, 838 (1975); Burford v. Burford, 182 Ind.App. 640, 396 N.E.2d 394, 397 (1979) (All persons having an interest in real estate are necessary parties to a partition action). Moreover, Ind.Trial Rule 19(C) expressly provides that the failure to join a party needed for a just adjudication may be raised by a T.R. 12(B)(7) motion. (T.R. 12(B)(7) expressly references T.R. 19). The failure to raise one’s defenses available under T.R. 12 constitutes a waiver of these defenses. T.R. 12(B), (G); Middelkamp v. Hanewich, 173 Ind.App. 571, 364 N.E.2d 1024, 1028 (1976) (Rule 12(B)(7) defense of failure to join a party needed for just adjudication must be determined before trial or, if necessary, during trial), trans. denied; Burger Man, Inc. v. Jordan Paper Products, Inc., 170 Ind.App. 295, 352 N.E.2d 821, 835 (1976), trans. denied.
The majority opinion contravenes this well-settled authority and places the divorce court in an untenable Catch 22. The majority correctly notes that the trial court is mandated by statute to divide all the marital property. Nevertheless, the majority goes on to hold that the divorce court is “powerless” to determine whether a divorcing couple has a vested interest in property titled in third persons unless those persons have been joined in the action. Thus, the majority decision may very well require divorce courts to join, sua sponte, any person who may own an interest in property jointly with either spouse as a party to the dissolution proceedings in order to fulfill its statutory duty of dividing all the marital property.
As stated in Stetler, 657 N.E.2d 395:
*727We presume the divorce court correctly followed the law and made all the proper considerations in crafting its property distribution. The presumption in favor of the correct action by the trial court is one of the strongest presumptions applicable to our consideration on appeal.
Id. at 398 (Citations omitted). In the present case, the trial court’s finding that the divorcing couple had acquired an equitable interest in the marital real estate is amply supported by evidence, and thus, is not clearly erroneous. Under the circumstances, I cannot conclude that the divorce court’s distribution of 15% of the marital property to Husband was not just and reasonable. Therefore, I would affirm.

. Incidentally, as noted by the majority. Wife has conceded that Husband and she had acquired an equitable interest in the marital real estate but valued this interest at only $3,631.49. (Maj Op. p. 720 n. 1). The issue at trial was not whelher the divorcing couple had a vested present interest in the marital real estate but was, instead, what value should be placed on that interest for inclusion in the marital pot. On appeal, Wife should be judicially estopped from asserting that, as a matter of law, the marital estate had no vested present interest in the real estate. See L.D.H. v. K.A.H., 665 N.E.2d 43, 46 (Ind.Ct.App.1996); Dell v. City of Tipton, 618 N.E.2d 1338, 1342 (Ind.Ct.App.1993) (Indiana appellate courts have long held that a party should be estopped from assuming successive positions in the same litigation with respect to the same fact or set of facts which are inconsistent and mutually contradictory), trans. denied. Thus, the majority has inappropriately transformed this case into one on the law defining marital property. Instead, this case merely involves the valuation of marital property, a question of fact within the broad discretion of the divorce court. See Stetler v. Stetler, 657 N.E.2d 395, 400 (Ind.Ct.App.1995), trans. denied.

. I will refrain from drawing an analogy in the present case to the biblical stoiy of Jacob's experience with his father-in-law. See Genesis 29:18-26 (Based upon a legal technicality and after full performance, father-in-law reneged on promise to give younger, more attractive daughter in marriage in exchange for seven years of labor).

. In the divorce court’s provisional order, Husband was required to make five $800.00 “mortgage" payments (totaling $4,000.00) to Wife during the separation period in addition to the $800.00 per month he was ordered to pay in child support. In effect, Husband purchased $4,000.00 of Wife's equity in the marital real estate during the separation period. As $4,000.00 represents nearly 3% of the net marital estate. Husband’s distribution could accurately be considered as only 12% of the pot vested at final separation. See Herron v. Herron, 457 N.E.2d 564, 567-68 (Ind.Ct.App.1983) (The trial court may properly credit a spouse for his payment of joint marital obligations during the separation period); Bartrom v. Adjustment Bureau, Inc., 618 N.E.2d 1, 9 n. 15 (Ind.1993) (Property acquired through the joint efforts of the parties which vests during the separation period may properly be included in the marital estate).

. As noted by Sovem and the majority, it is axiomatic that a divorce decree does not affect the rights of nonparties. 535 N.E.2d at 566. Thus, as in Sovem, any court order which purports to affect the rights of the nonparty parents should be considered mere surplusage and harmless. Id. at 567.