Equitable Distribution

Separately Owned Gifted Property Does Not Becomes Marital Property By “Family-Use”

The “Family-Use” doctrine morphs separately-owned property into marital merely because it was used by the family.

The latest case, Renfro v. Renfro (http://courts.ms.gov/Images/Opinions/CO84915.pdf), decided by the COA on July 30, 2013, is yet another where the appellate court did not agree with the chancellor’s application of the concept.

Claudia and Johnny Renfro married in 1987, and had no children. In January, 2011, they separated after Claudia discovered that Johnny was involved in an adulterous affair, and Claudia sued for divorce.

At issue in the divorce was equitable distribution. The parties had accumulated the usual marital things, including cars, retirement accounts and other financial assets, a residence. In addition to all of the other assets, there was a 140-acre tract of unimproved land that Claudia’s mother had deeded to her in 2007.

Following a trial, the chancellor adjudicated all of the assets, including the 140-acre tract, to be marital property subject to division. She allocated one-half of the assets, which totaled in value nearly $600,000, to each party. In her opinion, the chancellor found as to the 140 acres as follows:

The testimony and evidence is substantial that the management of the property, including its enrollment in government programs, planting of trees, leasing for hunting purposes, construction of gates and roads, spraying and paying of taxes was solely at the control of Johnny. Further, and perhaps most importantly, Claudia indicated that the development and management of the property as a tree farm was for the purposes of providing income for the parties’ retirement. As such, the court finds that the normally non-marital character of the property was changed by the family, Algood [v] Algood , 63 So. 3d 443 (Miss.[Ct.] App. 2011), as well as by conversion by implied gift, Algood, supra, such that the property lost its non-marital nature and now must be considered marital property subject to equitable distribution.

Claudia appealed, complaining primarily that the 140 acres was not marital property subject to division, and that the chancellor had misinterpreted the evidence.

In its opinion, penned by Judge Carlton, the COA found that there was inadequate evidence to support the judge’s finding that the tree farm on the property had been developed as part of the parties’ retirement plan.

As for the other indicia of family use relied upon by the chancellor, the COA said:

We also find error in the chancellor’s determination that Johnny’s actions of enrolling the land in government programs, planting trees, leasing the land for hunting purposes, constructing gates and roads, spraying the land, and paying taxes on the property constituted sufficient evidence to convert the land into a marital asset. See Hankins v. Hankins, 729 So.2d [1283] at 1286-87 (¶50) (Miss. Ct. App. 2005) (quotation omitted) (“The key to determining when there has been transmutation from separate property to marital property by commingling is whether the martial interests can be identified, i.e., can be traced.”) We also find no evidence submitted by Johnny to show how the land increased in value during his marriage to Claudia, or that an agreement existed between Claudia and Johnny that Johnny’s actions of managing the land would give him an interest in the property.

As acknowledged, non-marital assets may lose their status as such if the party commingles the asset with marital property or uses the assets for the benefit of the family. Johnson, 650 So. 2d at 1286. However, Claudia testified that she and Johnny never used the land for any family purposes. Significant to our analysis, we recognize that in the recent and similar case of Marter v. Marter, 95 So. 3d 733, 737-38 (¶¶14-16) (Miss. Ct. App. 2012), this Court held that evidence that the husband maintained the property inherited by the wife, paid the property taxes, and planted some trees on the property did not convert the property to marital property by virtue of commingling.

Accordingly, we find the chancellor erred in classifying the 140 acres as marital property. The record fails to show that the real property at issue was converted to marital property through the family-use doctrine, since the property was not used for a family purpose. Additionally, Johnny’s testimony only showed a potential intended purpose for the property in the future. See Deborah H. Bell, Bell on Mississippi Family Law § 6.04(2005). The record also fails to contain evidence that Claudia commingled the property or used it as collateral for family purposes. See Bell, § 6.04[2]. Also, insufficient evidence exists in the record to show that Johnny contributed anything of significance to the improvement of the property. The record shows little, if any, contribution by Johnny, and shows that Claudia owned the property for only three years while she cohabited with Johnny. For the foregoing reasons we reverse the judgment of the chancery court on the matter of equitable division of the property-specifically, the classification of the 140 acres as marital property- and remand to that court for further proceedings consistent with this opinion.

That is a template you might be able to use in extricating your client’s property form the grasping tentacles of the family-use doctrine.

Reference: the Better Chancery Practice Blog (August 7, 2013)

Filed Under: Family Law: Equitable Distribution: Marital vs. Non-Marital Property

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