THREE ACTS THAT DO NOT CONVERT SEPARATE PROPERTY TO MARITAL

August 28, 2012 § 1 Comment

Any asset value accumulated through the work efforts of one or both parties to a marriage during the marriage is a marital asset subject to equitable distribution in a divorce case. See, Hemsley v. Hemsley, 639 So. 2d 909, 915 (Miss. 1994).

Marital assets are subject to equitable distribution and may be divided between the parties in a divorce, applying the factors in Ferguson vs. Ferguson, 639 So.2d 921, 928-9 (Miss. 1994).

Any assets attributable to a party’s separate estate prior to the marriage, or acquired separately during the marriage, as by gift or inheritance, by one party, are the separate property of that party, and is not subject to being divided in equitable distribution. Hankins v. Hankins, 866 So. 2d 508, 511 (¶13) (Miss. Ct. App. 2004).

In  Ory v. Ory, 936 So. 2d 405, 411 (¶13) (Miss. Ct. App. 2006), the court recognized the general rule that assets may lose their separate status as such if the party commingles the asset with marital property or uses [it] for familial benefit” (citing Johnson v. Johnson, 650 So. 2d 1281, 1286 (Miss. 1994).

So what are the actions that can make property lose its separate character? That was the question before the COA in the case of Marter v. Marter, decided by the COA August 7, 2012. In Marter the court considered and rejected the appellant-husband’s three arguments that the wife’s separate property had been converted from separate to joint property.

  • Plantation and maintenance. The proof was uncontradicted that the husband had maintained the property and participated in planting trees on it. The opinion stated: “At some point during the marriage, the Marters planted 49 acres of pine trees and 32 acres of hardwood trees on the property. The Marters enrolled in a Conservation Resource Program (CRP) with the federal government whereby they receive rental payments for the trees. However, the rental payments have always been directly deposited into [the wife’s] separate checking account.” The husband also did bush-hogging and maintenance. The COA cited Hankins, at 1286-87 (¶¶14-15) (Miss. 1999), and Ory, at 411, which held that the fact that husband cleared a portion of the land, hauled dirt onto the property, and had a large number of seedlings planted on the property did not operate to convert the property to marital property. The court also held that the husband’s contributions to maintenance were de minimis.
  • Joint titling. The Marters had conveyed the property to themselves in joint ownership, and the husband argued that the joint title made the property lose its separate character and converted from separate property to marital. Citing Pearson v. Pearson, 761 So. 2d 157, 163 (¶16) (Miss. 2000), the court rejected his argument, pointing out  that the MSSC has rejected the “title theory”, and has stated that “[t]he issue in divorce is which property is ‘marital property,’ subject to equitable distribution, and that determination proceeds absent any presumption based on title.”
  • Payment of Taxes. The parties paid the taxes on the property from their joint account, and the husband argued that that converted the property to marital. Not so, answered the COA. The court said: ” … this Court has previously held that property-tax payments are traceable and do not transmute separate property into marital. Brock v. Brock, 906 So. 2d 879, 888 (¶50) (Miss. Ct. App. 2005).

So there are three lines of argument for transmutation that have been found wanting by the appellate courts. What it takes to convert separate property is beyond the narrow scope of this post.

I encourage you, if you have a case either attempting to establish commingling or transmutation, or defending against it, that you carefully research the case law. There are many cases on this issue, and you will find authority all over the ballpark. If you show up in court without some authority, and the other side has its cases in hand … well, don’t expect to come out too spiffy.

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