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Donald Welton Loomis v. Claudia Clara Loomis
Date: 12-14-2011
Case Number: A142038
Judge: Wollheim
Court: Oregon Court of Appeals on appeal from the Circuit Court, Douglas County
Plaintiff's Attorney: Daniel W Seitz argued the cause for petitioner. With him on the briefs was Daniel W.
Seitz, P.C.
Defendant's Attorney: Jeffrey Mornarich argued the cause for respondent. With him on the brief were Dole,
Coalwell, Clark, Mountainspring & Mornarich, P.C., and Stephen Mountainspring.
Description:
2 Husband appeals a dissolution judgment, challenging the trial court's
3 division of marital property. Husband argues that the trial court erred when it failed to
4 award him 50 percent of the marital property and, further, that the division of the marital
5 property was not just and proper. The disputed marital property includes real property
and annuities. On de novo review, ORS 19.415(2),1 6 we modify the judgment.
7 The parties were married in 1983 and had been married for 24 years when
8 they separated in November 2007. Both had been previously married, husband four
9 times and wife once. Wife has two sons from her previous marriage, and husband has
10 one son. At the time of trial in January 2009, husband was 72 years of age and wife was
11 68.
12 When the parties married, they were both employed full time, wife as a
13 lighting specialist and husband in flooring sales and installation. Both parties contributed
14 their incomes to the marriage. Over the course of the marriage, husband earned more
15 than wife, but wife was the primary homemaker and was also solely responsible for
16 managing the parties' finances. She also helped husband with the bookkeeping for his
17 business.
18 Husband suffered a stroke in 2000 but was able to return to work. He is
19 receiving long-term chemotherapy for liver cancer. He testified that his health has
1 ORS 19.415, which governs our standard of review in this case, was amended in
2009. Or Laws 2009, ch 231, §§ 2-3. The amendments apply to appeals in which the
notice of appeal was filed on or after June 4, 2009. Because the notice of appeal in this
case was filed before that date, the amendments do not apply.
2
slowed him down 1 a bit, and that between his health and the economy, he is "pretty much
2 retired." Wife, who has had health problems of her own, including cancer, has been
3 working part time since 1993. Neither party requested an award of spousal support. The
4 only dispute at trial and on appeal concerns the division of the marital property.
5 I. BACKGROUND
6 A. Premarital assets
7 At the time of the marriage, husband had few assets and liabilities. His
8 estimated net worth was $7,000. Wife owned an interest in real property she had been
9 awarded in a dissolution judgment from her first husband, Hunter. The property, known
10 as the Cal Henry property, was part of a 103.5 acre parcel that wife and Hunter purchased
11 in 1971. During their marriage, wife and Hunter sold approximately 32 acres to Shapiro
12 by a land sale contract. The remaining 71.56 acres that wife and Hunter retained
13 included a mobile home, a garage, a pole barn, and a pump house.
14 Wife and Hunter took out a mortgage to finance the purchase of the mobile
15 home on the Cal Henry property. The terms of the judgment dissolving wife's marriage
16 to Hunter required that the property be sold, and that wife receive 60 percent of the
17 proceeds and Hunter receive 40 percent. Until the property was sold, wife could live
18 there if she continued to make the mortgage payments, and she was also entitled to
19 receive the Shapiro contract payments. Efforts to sell the property were unsuccessful,
20 and the parties lived there during their entire marriage.
21 B. The prenuptial agreement
22 Before their marriage, the parties executed a prenuptial agreement that
3
1 recited that "each of the parties desire to preserve his or her present estate for the
2 respective children of each" and "each party desires to accept the provisions of this
3 agreement in lieu of all rights each would otherwise acquire by reason of the
4 contemplated marriage." The agreement further recited:
5 "(1) Release of Marital Rights: All property now owned by either
6 party shall be held in his or her separate name, free from any claim of the
7 other, except for property held jointly as hereinafter provided. The
8 provisions of this agreement shall act as a release and full satisfaction of all
9 rights each party may acquire by reason of the marriage to previously held
10 property of the other party. Each party waives and relinquishes all rights
11 which, as the other's survivor, he or she would acquire under the law now
12 or hereafter in effect in any jurisdiction. Neither party shall have the right
13 to any assets in the estate of the other as may be provided to a surviving
14 spouse by law.
15 "(2) Jointly-Owned Property: In the event that [the parties] shall
16 own property jointly with right of survivorship, the survivor shall retain
17 such property upon the death of the other.
18 "(3) Dissolution of Marriage: In the event the marriage of [the
19 parties] occurs, but is subsequently subject to a proceeding for dissolution
20 of marriage:
21 "(a) Each of the parties shall recover the specific assets brought into
22 the marriage by him or her, as listed in the applicable attached and
23 incorporated Exhibits 'A' and 'B', as well as any property then separately
24 owned.
25 "(b) Each of the parties shall receive one-half (1/2) of all jointly26
held property.
27 "(c) All banking accounts shall be divided equally between the
28 parties.
29 "(4) * * *
30 "(5) Children of the Parties: [The parties] each [have] children from
31 a prior marriage and each acknowledges that this agreement is intended to
32 protect the respective estates of the parties for the benefit of said children."
4
1 On Exhibit A to the prenuptial agreement, wife listed among her assets the 60 percent
2 interest in the Cal Henry property and her interest in the Shapiro contract.
3 C. Assets acquired during the marriage
4 1. The Cal Henry property. During the marriage, the parties lived in the
5 mobile home on the Cal Henry property and improved and added to the property. The
6 parties raised cattle on the acreage. They built corrals and repaired and replaced fences.
7 The parties enlarged the pond on the property and built a shop to store husband's floor
8 coverings. Husband testified that he believed that the costs for the improvements came
9 from joint funds. Wife, who managed the parties' finances, testified that only her funds
10 were used.
11 In 1987, the parties decided to purchase Hunter's 40 percent interest in the
12 Cal Henry property for $11,460. The purchase required monthly payments of $100,
13 followed by a balloon payment of the balance when the Shapiro contract was paid off.
14 Husband contributed monthly payments of $100, for a total of approximately $2,100, but
15 the balloon payment came exclusively from wife's separate funds. As additional
16 consideration for the parties' purchase of Hunter's interest, Hunter also received a portion
17 of the Shapiro contract payments. In January 1990, when Shapiro made his final
18 payment, wife used those funds to pay the balance owed to Hunter. Hunter deeded his
19 interest in the Cal Henry property to both husband and wife.
20 During the marriage, wife received gifts of money from her mother.
21 Initially, wife deposited those funds into the parties' joint account, but shortly thereafter
22 she used those funds to pay off the loan on the Cal Henry property.
5
1 2. Annuities. In addition to the gifts mentioned above wife received a gift
2 of $25,000 from her mother that wife initially kept separate, until husband learned of this
3 gift and became upset. To placate him, wife transferred the funds to a joint account, but
4 shortly thereafter she placed the funds in a separate investment account. The account,
5 now known as the Lafayette annuity, has appreciated in value. When wife's mother died
6 in 1990, wife inherited $62,016. Wife kept $30,000 of the funds in a separate account in
7 her name only and placed the rest of the funds in a joint account. That separate account,
8 now known as the Transamerica annuity, has grown significantly. The parties did not
9 make further contributions to or withdrawals from either the Lafayette or Transamerica
10 annuity account.
11 3. The Loomis Loving Trust. In 1995, after more than 20 years of
12 marriage, the parties created the "Loomis Loving Trust," a revocable living trust. Wife
13 testified that she wanted to create the trust because there were difficulties in the marriage
14 and she wanted to protect her separate assets--specifically the Cal Henry property and the
15 annuity accounts--for her sons. Husband testified that he believed that the trust was a
16 means to avoid probate and to provide for the parties' joint financial future.
17 The trust provided, in Article I, Section 3:
18 "Any separate property, including any individual interests in property, and
19 the proceeds from such property, which is or becomes trust property, shall
20 remain the separate property of a Trustmaker. A separate schedule of such
21 property shall be maintained to facilitate the payment of income or transfer
22 of all or part of the principal [to] the Trustmaker who is entitled to such
23 distributions. Either of us shall have the unrestricted right to remove all or
24 part of our respective separate property at any time. However, to simplify
25 trust administration, each of us agree that unless an asset is specifically
26 identified as being the separate property of only one of us on such a
27 schedule, that regardless of which of us contributed an asset to the trust,
6
1 and regardless of the form of the prior tenancy of the asset contributed, that
2 each of us is the owner of an undivided one-half (1/2) interest as a tenant in
3 common in each of the assets contributed to the trust during our joint
4 lifetimes. Any joint tenancy rights or interests which may have existed at
5 any time are hereby extinguished and are deemed to be properties held as
6 equal tenants in common with no rights of survivorship."
7 (Emphasis added.) Upon the death of both parties, the trust provided that 90 percent of
8 the estate would be distributed to wife's sons and the remaining ten percent would be
9 distributed to husband's son. The trust explicitly gave wife's sons the option of receiving
10 the Cal Henry property as part of their shares of the trust. In the event of divorce, the
11 trust provided:
12 "It is our intent that our respective property held in trust shall not be used
13 for the benefit of the other spouse upon the dissolution of our marriage."
14 Among other assets conveyed to the trust, the parties conveyed the Cal
15 Henry property and the two annuities to "Donald W. Loomis and Claudia C. Loomis,
16 Trustees." The "Loving Trust Funding Checklist" listed the Cal Henry property and the
17 Transamerica account as joint assets and the Lafayette account as wife's separate asset.
18 In June 2002, wife became concerned that the trust did not adequately
19 protect the Cal Henry property for her sons, and she informed husband that she wanted to
20 amend it. The trust was amended to provide that, upon the disability or death of either
21 party, the trust provisions relating to the Cal Henry property would become irrevocable
22 and the trustee would set aside and hold the Cal Henry property in trust. The expenses of
23 the Cal Henry property, including taxes, insurance, utilities and maintenance, were to be
24 paid from other trust assets.
25 In November 2007, before husband filed for dissolution, wife transferred
7
the Laf 1 ayette annuity from the trust to an account in her name. The Transamerica
2 account, which had been listed in the trust as a joint asset, remained in the trust.
3 4. Other assets. The parties have a number of retirement accounts,
4 certificates of deposit, checking, savings and money market accounts that the trial court
5 distributed and that are not in dispute on appeal. Husband had business assets, including
6 inventory and accounts receivables, also not at issue on appeal.
7 D. Trial court's division of assets.
8 At trial, husband asked that the trust be viewed as having created joint
9 interests in the properties conveyed to it, and that husband receive an equal share of all
10 the assets, including the Cal Henry property and the annuities. The trial court concluded
11 that the prenuptial agreement "provides direction for all the marital property events of the
12 marriage." The court essentially gave no effect to the trust and rejected husband's
13 argument that the conveyance of the Cal Henry property and the annuities to the trust
14 required that those properties be treated as joint assets. The court further found that wife
15 had rebutted any presumption of equal contribution with respect to the acquisition of
16 Hunter's 40 percent interest in the Cal Henry property, the appreciation in the Cal Henry
17 property, and the acquisition and appreciation of the annuities. The court thus awarded
18 wife the entire Cal Henry property and the annuities, free and clear of any interest by
19 husband.
20 On appeal, husband contends that the trial court should have awarded him a
21 half interest in all of the Cal Henry property, as well as half of the value of the two
22 annuities. In husband's view, the parties, through their conduct, rescinded the prenuptial
8
1 agreement. Husband contends that, despite having begun as a separate asset, wife's 60
2 percent interest in the Cal Henry property was commingled through its use as a marital
3 residence, through husband's contributions toward payment of the mortgage, and by
4 virtue of improvements to and uses made of the property by the parties during the
5 marriage. As for improvements, husband notes that during the marriage, the parties
6 improved the ponds and fencing and added a shop that served as husband's office and
7 from which he ran his business. Additionally, for several years, the parties kept a small
8 cattle operation on the property that was primarily managed by husband. All of those
9 circumstances, husband contends, effectively rescinded the prenuptial agreement and
10 caused wife's 60 percent interest in the Cal Henry property to become integrated into the
11 marital estate so as to require that it be treated as marital property and divided equally in
12 a just and proper division of assets. Kunze and Kunze, 337 Or 122, 133, 92 P3d 100
13 (2004). Husband asserts, further, that the remaining 40 percent interest in the Cal Henry
14 property that he and wife acquired in the property during the marriage, as well as the
15 appreciation on the entire Cal Henry property, are marital assets. Olinger and Olinger,
16 75 Or App 351,354, 707 P2d 64, rev den, 300 Or 367 (1985). In any event, husband
17 contends that when the Cal Henry property was conveyed to the trust, the entire property
18 became a joint asset because it was not listed as a separate asset of wife, as was the
19 Lafayette account. The same rationale applies, he contends, with respect to the annuities,
20 which were acquired during the marriage and have appreciated. Finally, irrespective of
21 whether the property or annuities or any part of them are marital assets, husband contends
22 that it is just and proper that he be awarded a half interest.
9
1 In wife's view, the prenuptial agreement requires that wife's 60 percent
2 interest in the Cal Henry property be held out of the marital estate. She asserts, further,
3 that she has rebutted any presumption of equal contribution with respect to the
4 acquisition of Hunter's 40 percent interest in the Cal Henry property, as well as to the
5 appreciation in the Cal Henry property, because any improvements made to the property
6 were made with her own funds, and, finally, that conveying the property to the trust did
7 not alter--and in fact reinforced--the separate nature of the ownership. She makes the
8 same contentions with respect to the two disputed annuities.
9 II. ANALYSIS
10 ORS 107.105(1)(f) provides that a judgment in a marital dissolution action
11 may provide
12 "[f]or the division or other disposition between the parties of the real or
13 personal property, or both, of either or both of the parties as may be just
14 and proper in all the circumstances."
15 As we explained in Cook and Cook, 240 Or App 1, 248 P3d 420 (2010),
16 under ORS 107.105(1)(f), property subject to division in a dissolution consists of two
17 classes. The first category consists of "the real or personal property, or both, of either or
18 both of the parties," ORS 107.105(1)(f), consisting of any property that the parties
19 possess at the time of the dissolution, regardless of when the property was first acquired.
20 Pierson and Pierson, 294 Or 117, 121-22, 653 P2d 1258 (1982). That property is
21 referred to as "marital property." Massee and Massee, 328 Or 195, 201 n 2, 970 P2d
22 1203 (1999). The distribution of marital property is governed by a statutory standard of
23 what is "just and proper in all the circumstances." ORS 107.105(1)(f); see also Kunze,
10
1 337 Or at 134.
2 The second category, "marital assets," are a subset of marital property and
3 refer to property acquired during the marriage. Pierson, 294 Or at 121. There is a
4 rebuttable presumption that property acquired during the marriage was acquired as a
5 result of the equal contribution of the parties. A party seeking to overcome the
6 presumption of equal contribution has the burden of proving by a preponderance of the
7 evidence that the other spouse did not contribute equally to the acquisition of the disputed
8 property. Id. at 134.
9 If the presumption of equal contribution is rebutted, or if the property is not
10 a marital asset because it was separately acquired, then the party holding the separate
11 asset is entitled to receive the property in the division of marital assets, Kunze, 337 Or at
12 133-34, unless other considerations make it "just and proper in all the circumstances" to
13 distribute the property otherwise. It may be just and proper to divide a separately
14 acquired asset between both spouses when a spouse has so integrated the separately
15 acquired asset into the joint finances of the marital partnership that it would be
16 inequitable to award the asset to that spouse as separate property. To determine whether
17 a spouse has so integrated a separately acquired asset, courts focus on whether the spouse
18 demonstrated an intent to retain that spouse's separately acquired asset as separate
19 property or whether, instead, that spouse intended for that property to become joint
20 property of the marital estate. "[T]he court must evaluate the extent to which a spouse
21 has integrated a separately acquired asset into the joint finances of the marital partnership
22 and also evaluate whether any inequity would result from the award of that asset to that
11
spouse as separate property." 1 Id. at 142. In this case, the prenuptial agreement and the
2 trust are additional considerations in determining how the property of the parties should
3 be divided. We address the relevant considerations with respect to each disputed asset.
4 A. The Cal Henry property--wife's prenuptial portion
5 At the time of the marriage, wife's equity in her 60 percent share of the Cal
6 Henry property was approximately $72,000; at the time of dissolution, the parties agree
7 that the equity in the entire property--including the Hunter portion acquired during the
8 marriage--was $480,000. Because it was acquired by wife before the marriage, wife's
9 premarital equity in her 60 percent interest in the Cal Henry property is not a marital
10 asset. Kunze, 337 Or at 134. Additionally, the parties' prenuptial agreement provides
11 that, upon dissolution, the parties are entitled to the "specific assets brought into the
12 marriage." Wife asserts for that reason that her original equity in the Cal Henry property
13 is simply not subject to division, either as a marital asset or as marital property.
Prenuptial agreements are generally enforceable. ORS 108.140 (1981).2 14
2 We note that because the parties' prenuptial agreement was executed in 1983, the
Uniform Prenuptial Agreement Act, ORS 108,700 to ORS 108.740, which took effect on
January 1, 1988, does not apply. Purcell and Purcell, 99 Or App 668, 783 P3d 1038
(1989). At the relevant time, ORS 108.140 (1981), provided, in part:
"A man and a woman who are parties to an intended marriage may enter
into a prenuptial agreement in writing concerning their respective personal
property holdings, and the final disposition thereof, upon such terms and
conditions as may be mutually determined. If such intended marriage is
consummated, such prenuptial agreement shall be binding upon the parties
thereto, their heirs, legal representatives and assigns."
12
Moore v. Schermerhorn, 1 210 Or 23, 307 P2d 483 (1957). If the parties' prenuptial
2 agreement applies to wife's premarital equity in the Cal Henry property, then that
3 property is not subject to division in the dissolution. See Proctor and Proctor, 234 Or
4 App 722, 731-32, 229 P3d 635, on recons, 235 Or App 641, 234 P3d 133, rev den, 349
5 Or 56 (2010) (prenuptial agreement, enforced according to its terms, precludes division
6 of encompassed assets).
7 Husband concedes that the prenuptial agreement, as written, is an
8 enforceable agreement, but he contends that the parties' conduct throughout their long
9 marriage and wife's conveyance of her 60 percent interest to the trust, as a joint asset,
10 served to rescind the prenuptial agreement. See, e.g., Francis and Francis, 212 Or App
11 310, 157 P3d 1202 (2007) (husband's conveyance of separately acquired property shortly
12 after marriage supports inference of intention to revoke prenuptial agreement); Baxter
13 and Baxter, 139 Or App 32, 38, 911 P2d 343, rev den, 323 Or 483 (1996) ("[T]he parties'
14 conduct demonstrated mutual intent to rescind the antenuptial agreement * * *.").
15 We conclude that there is no evidence that the prenuptial agreement was
16 rescinded. First, there is no express indication by the parties of an intention to rescind the
17 prenuptial agreement. The trust made no mention of the prenuptial agreement and, as
18 explained further herein, was not inconsistent with it. In fact, at trial, wife testified that it
19 was her intention in establishing the trust to protect the Cal Henry property for her heirs,
20 a reinforcement of the goals set forth in the prenuptial agreement. The trust itself is
21 consistent with those goals, providing that, in the event of dissolution, "it is our intent
22 that our respective property held in trust shall not be used for the benefit of the other
13
1 spouse." We conclude that the act of conveying the property to the trust did not
2 implicitly revoke the prenuptial agreement.
3 Husband contends that an intention to rescind the prenuptial agreement is
4 evidenced by the parties' treatment of the property during the marriage. However, wife
5 was living on the Cal Henry property when the parties met and at the time they were
6 married. She planned to continue to live on the property as long as she could. The
7 parties lived on the property six months before they were married. Thus, the parties' use
8 of the property as their marital residence appears to have been contemplated at the time
9 of the execution of the prenuptial agreement, which was less than six months before their
10 marriage. We conclude for that additional reason that the use of the property as the
11 marital residence did not implicitly revoke the prenuptial agreement.
12 In the alternative, husband contends that the Cal Henry property is, in fact,
13 subject to division under the terms of the prenuptial agreement, because it was a jointly
14 held asset at the time of dissolution, as a result of wife having conveyed her interest in the
15 property to herself and husband, as trustees of the Loomis Loving Trust.
16 It is true, as husband contends, that, in establishing the trust, wife conveyed
17 the entire Cal Henry property, including wife's premarital portion, to husband and wife as
18 trustees of the trust. However, the trust instrument provided that "[a]ny separate
19 property, including any individual interests in property, and the proceeds from such
20 property, which becomes trust property, shall remain the separate property of the
21 Trustmaker." The trust further provided that each party "shall have the unrestricted right
22 to remove all or part of our respective property at any time." Thus, the conveyance of the
14
1 property to the trust in and of itself did not create a joint property.
2 Husband notes that the trust further provided for the maintenance of a
3 schedule of the properties "to facilitate the payment of income or transfer of all or part of
4 the principal." The trust stated:
5 "To simplify trust administration, each of us agree that unless an asset is
6 specifically identified as being the separate property of only one of us on
7 such a schedule, that regardless of which of us contributed an asset to the
8 trust, and regardless of the form of the prior tenancy of the asset
9 contributed, that each of us is the owner of an undivided one-half (1/2)
10 interest as a tenant in common in each of the assets contributed to the trust
11 during our joint lifetimes."
12 The Cal Henry property was listed on the trust schedule as a joint asset, and wife's
13 premarital share was not segregated. As husband notes, the prenuptial agreement
14 provided that, in the event of dissolution of marriage, each of the parties "shall receive
15 one-half (1/2) of all jointly held property." In husband's view, read together, the trust
16 instrument and prenuptial agreement require that all assets conveyed to the trust that were
17 not identified as separate assets became jointly held, subject to equal division at the time
18 of dissolution under the terms of the prenuptial agreement. We reject that interpretation.
19 In the first place, in placing the property in trust, wife did not convey her 60 percent
20 interest in the Cal Henry property to husband. Rather, wife conveyed her interest to
21 herself and husband as trustees. As noted, the trust itself provided that any separate
22 property conveyed to the trust was to remain the separate property of the trustmaker.
23 Wife's conveyance of her 60 percent interest in the Cal Henry property to herself and
24 husband as trustees was not a conveyance of an interest to husband. Further, the fact that
25 the trust instrument provided that, for purposes of trust administration, properties not
15
specifically 1 identified as separate assets were to be regarded as joint assets did not effect
2 a joint ownership of wife's 60 percent interest for all purposes. Our conclusion is
3 bolstered by the provision of the trust instrument stating that "our respective property
4 held in trust shall not be used for the benefits of the other spouse upon the dissolution of
5 our marriage." Thus, we conclude that the Cal Henry property was not held jointly for
6 purposes of the prenuptial agreement.
7 Further, the prenuptial agreement identified and described dispositions for
8 three categories of properties upon dissolution: (1) assets brought into the marriage or
9 separately owned at the time of dissolution, which are to be "recovered" by each party
10 separately; (2) assets jointly held, which are to be divided equally; and (3) bank accounts,
11 which are to be divided equally. The fact that the agreement provides for a spouse's
12 "recovery" of assets brought into the marriage suggests that upon dissolution, even assets
13 that have undergone interspousal conveyance are to be awarded to the party who brought
14 the asset into the marriage. Husband's interpretation of the prenuptial agreement to
15 require an equal division of assets that were brought into the marriage but that were held
16 jointly at the time of dissolution would defeat the stated purpose of the prenuptial
17 agreement--to preserve the parties' "present estate for the respective children of each." In
18 light of that stated purpose, we conclude that the only plausible reading of the prenuptial
19 agreement is that the first category applies to assets brought into the marriage and that the
20 second and third categories describe assets that are exclusive of the first, i.e., assets
21 acquired during the marriage. That is, the provisions requiring equal division of jointly
22 held assets and bank accounts apply to assets that were acquired during the marriage and
16
that 1 do not fall within the first category. As we interpret the prenuptial agreement, the
2 parties intended that upon dissolution, the parties would each recover the specific assets
3 each brought into the marriage, whether or not those assets were held jointly at the time
4 of dissolution. Thus, even if wife's conveyance of the property to the trust had conveyed
5 an interest to husband, we would conclude that wife's premarital equity in the Cal Henry
6 property is not subject to division as a joint asset under the prenuptial agreement because
7 it was an asset brought into the marriage.
8 Husband contends, however, that the appreciation in the value of separate
9 property brought into the marriage is nonetheless a marital asset subject to the
10 presumption of equal division, see Massee and Massee, 328 Or 195, 207, 970 P2d 1203
11 (1999) (appreciation of separately acquired property during the marriage is a marital asset
12 to which the rebuttable presumption of equal contribution applies), and that wife has not
13 overcome the presumption of equal contribution with respect to that appreciation. He
14 notes that the Cal Henry mortgage was paid off during the marriage, that improvements
15 were made during the marriage, and that, although wife could trace the financial
16 contributions to her own funds, the income that husband contributed in support of the
17 household helped wife to use her funds to pay off the mortgage and to improve the
18 property. Thus, he contends, he is entitled to an equal share of the marital appreciation.
19 Once again, we must consider the effect of the prenuptial agreement. See
20 Yager and Yager, 155 Or App 407, 414, 963 P2d 137 (1998), rev den, 328 Or 365
21 (whether prenuptial agreement applies only to property owned before the marriage or to
22 increase in value as well depends on terms of agreement). Addressing only that portion
17
of 1 the appreciation attributable to wife's premarital 60 percent share of the Cal Henry
2 property, we conclude that, although it is a marital asset, that appreciation is
3 encompassed within the prenuptial agreement and is not subject to division. We held in
4 Proctor, 234 Or App at 732, that, under the terms of the prenuptial agreement involved in
5 that case, marital appreciation associated with separately held property, although a
6 marital asset, was not subject to division. The dispositive provision of the prenuptial
7 agreement in Proctor required that "any community efforts of either party contributed to
8 or directed toward separate property assets of either spouse shall not create community
9 interest in the separate assets." 234 Or App at 725. We stated that that provision
10 indicated an intention that, upon dissolution, the appreciation associated with each
11 separately held asset would be awarded to the spouse who separately held the asset. Id. at
12 132.
13 Here, the parties' prenuptial agreement did not expressly address the
14 disposition of appreciation in separately held property. It provided, however, that each of
15 the parties "desire to accept the provisions of this agreement in lieu of all rights each
16 would otherwise acquire by reason of the marriage," and that "the provisions of this
17 agreement shall act as a release and full satisfaction of all rights each party may acquire
18 by reason of the marriage to previously held property of the other party." An interest that
19 a spouse acquires in marital appreciation of separately held property is "by reason of the
20 marriage." We conclude, therefore, that the language of the prenuptial agreement
21 releases any interest that husband acquired, by virtue of the marriage, in the appreciation
22 of wife's separately held 60 percent interest in the Cal Henry property. Therefore, the
18
appreciation, like wife's 1 premarital equity in the Cal Henry property, is not subject to
2 division of the marital property.
3 B. The Cal Henry property--portion acquired during marriage
4 As described, during the marriage, the parties acquired Hunter's 40 percent
5 interest in the Cal Henry property. That share is a marital asset, because it was acquired
6 during the marriage. Wife asserts that she has overcome the presumption of equal
7 contribution as to that property, because she has been able to trace the parties' 1987
8 purchase to her own funds. Although the record shows that wife made the primary
9 financial contribution to the Hunter property acquisition, husband also contributed, and
10 there is no indication that the parties intended for the property to be held separately. As
11 noted, Hunter deeded the property to both parties, and the acquisition took place during a
12 time when husband was participating fully in the marital partnership through the
13 contribution of his income and labors. The parties used the property for their joint
14 marital endeavors. We conclude that the presumption of equal contribution has not been
15 overcome with respect to the Hunter portion of the property acquired during the marriage
16 and its appreciation. Under the terms of the parties' prenuptial agreement, as a jointly
17 held asset, the Hunter portion of the Cal Henry property must be divided equally between
18 the parties.
19 Wife contends, however, that the terms of the trust, which specifically
20 directed disposition of the entire Cal Henry property to wife's children upon the death of
21 both trustees, show that the parties intended that the Hunter portion of the property is
22 owned by wife separately. Therefore, wife contends, the property is not subject to the
19
provision 1 of the prenuptial agreement that requires that jointly held property be divided
2 equally upon dissolution. We disagree. As we have held with respect to wife's 60
3 percent interest in the Cal Henry property, upon dissolution, the prenuptial agreement
4 controls the disposition of property described therein. The prenuptial agreement provides
5 that jointly held property acquired during the marriage is to be divided equally. We
6 conclude that it is appropriate for husband to share in the value of the Hunter portion of
7 the Cal Henry property acquired during the marriage, which was held jointly by the
8 parties before the property was conveyed to the trust and was not listed as wife's separate
9 property when it was conveyed to the trust. As previously noted, the parties agreed that
10 the equity in the entire Cal Henry property was $480,000. The Hunter portion, including
11 appreciation, is approximately 40 percent of the total equity in the property, or $192,000.
12 Husband's share of that amount is $96,000.
13 C. Annuity accounts
14 Both of the disputed annuities, the Lafayette annuity and the Transamerica
15 annuity, originated with funds that wife received from her mother by gift or inheritance,
16 and both have grown through passive appreciation. Both annuities were purchased after
17 the parties were married. After the initial acquisition, the funds were held briefly in joint
18 accounts before wife placed them in accounts in her own name. The parties neither
19 added to nor drew from them. Wife transferred the account that preceded the
20 Transamerica annuity to the trust in 1995 and, as noted, the trust described that account
21 as a joint asset. Wife transferred the Lafayette annuity to the trust in 2002, and the trust
22 listed it as wife's separate asset. In 2007, wife withdrew the Lafayette annuity from the
20
1 trust.
2 We agree with the trial court that wife has overcome the presumption of
3 husband's equal contribution to the gifts and inheritance that wife received from her
4 mother and that were invested in the annuities. Olson and Olson, 218 Or App 1, 9, 178
5 P3d 272 (2008) ("In order to show that a spouse contributed to an acquisition of inherited
6 property, the contribution must have influenced the inheritance."). We also conclude that
7 wife has overcome the presumption of equal contribution with respect to the appreciation
8 of those annuities, which occurred without any action on the part of either party. Kunze,
9 337 Or at 143. For the reasons explained with respect to wife's 60 percent interest in the
10 Cal Henry property, we conclude that the transfer of the two annuities into the trust did
11 not create joint ownership for purposes of the prenuptial agreement.
12 The prenuptial agreement provides that "[e]ach of the parties shall recover
13 the specific assets brought into the marriage by him or her, * * * as well as any property
14 then separately owned." (Emphasis added.) Property "then separately owned" refers to
15 property separately owned at the time of dissolution. Thus, we conclude that the
16 annuities are wife's separate assets. Accordingly, under the prenuptial agreement, the two
17 annuities were properly awarded to wife.
18 Finally, we must consider whether a just and proper division of assets
19 requires that husband receive any further interest in the marital property subject to
20 division. Husband contends that, in light of his health, the length of the marriage, his
21 financial contributions, and the sharing of the marital home and responsibilities, it is just
22 and proper that he be awarded a greater share of the property. As previously noted, the
21
1 record shows that the parties indeed lived as partners, sharing their incomes, resources,
2 and enterprises, caring for each other, and supporting each other's businesses. Husband
3 contributed his income, as well as a substantial gift from his mother, to the marital
4 partnership. The extent to which wife was able to satisfy the mortgage on the Cal Henry
5 property from her own resources was at least partially attributable to the fact that the
6 parties relied on husband's income to support the family.
7 However, as we have concluded, the prenuptial agreement dictates much of
8 the distribution in this case. Further, as noted, under Kunze, the proper focus in
9 determining whether a separately held asset should be divided as a result of commingling
10 is on whether a spouse's treatment of the asset demonstrated an intention to treat the asset
11 as separate property, or whether, instead, the spouse intended for that property to become
12 the joint property of the marital estate. 337 Or at 142; see also Lind and Lind, 207 Or
13 App 56, 139 P3d 1032 (2006). Nothing in wife's conduct during the marriage indicated
14 an intention to change the provision of the prenuptial agreement that assets brought into
15 the marriage or owned separately at the time of dissolution were to be awarded to the
16 spouse who brought the asset into the marriage. If anything, wife's actions consistently
17 demonstrated an intention to reinforce that plan. Wife kept title to the original 60 percent
18 interest and placed it in trust only because she thought that the trust would secure the
19 property for her heirs, not because she wanted to share the asset with husband. Wife had
20 the trust amended to insure that the Cal Henry property passed to her children in the event
21 that she predeceased husband. Wife used the considerable financial gifts from her
22 mother, as well as a portion of the inheritance from her mother, to pay off the property.
22
1 Although the annuities were briefly held in joint accounts, wife quickly transferred them
2 to accounts in her name only and, at the time they were placed into the trust, both
3 accounts were in wife's name. The testimony at trial indicates that wife intended to keep
4 the funds separate.
5 We have also evaluated whether any other equitable considerations require
6 an additional award to husband, Kunze, 337 Or at 147, and we conclude that the equities
7 are satisfied by the award to husband of an equal interest in that portion of the Cal Henry
8 property that the parties acquired during the marriage.
9 In summary, the Hunter portion of the Cal Henry property, including its
10 appreciation, is properly considered a marital asset, and wife has not overcome the
11 presumption of equal contribution with respect to that portion of the property. For that
12 reason, the dissolution judgment is modified to increase husband's equalizing judgment to
13 reflect an equal share in the parties' equity in the Hunter portion of the property. In all
14 other respects, we affirm the trial court's division of marital property.
* * *
See: http://www.publications.ojd.state.or.us/A142038.pdf
3 division of marital property. Husband argues that the trial court erred when it failed to
4 award him 50 percent of the marital property and, further, that the division of the marital
5 property was not just and proper. The disputed marital property includes real property
and annuities. On de novo review, ORS 19.415(2),1 6 we modify the judgment.
7 The parties were married in 1983 and had been married for 24 years when
8 they separated in November 2007. Both had been previously married, husband four
9 times and wife once. Wife has two sons from her previous marriage, and husband has
10 one son. At the time of trial in January 2009, husband was 72 years of age and wife was
11 68.
12 When the parties married, they were both employed full time, wife as a
13 lighting specialist and husband in flooring sales and installation. Both parties contributed
14 their incomes to the marriage. Over the course of the marriage, husband earned more
15 than wife, but wife was the primary homemaker and was also solely responsible for
16 managing the parties' finances. She also helped husband with the bookkeeping for his
17 business.
18 Husband suffered a stroke in 2000 but was able to return to work. He is
19 receiving long-term chemotherapy for liver cancer. He testified that his health has
1 ORS 19.415, which governs our standard of review in this case, was amended in
2009. Or Laws 2009, ch 231, §§ 2-3. The amendments apply to appeals in which the
notice of appeal was filed on or after June 4, 2009. Because the notice of appeal in this
case was filed before that date, the amendments do not apply.
2
slowed him down 1 a bit, and that between his health and the economy, he is "pretty much
2 retired." Wife, who has had health problems of her own, including cancer, has been
3 working part time since 1993. Neither party requested an award of spousal support. The
4 only dispute at trial and on appeal concerns the division of the marital property.
5 I. BACKGROUND
6 A. Premarital assets
7 At the time of the marriage, husband had few assets and liabilities. His
8 estimated net worth was $7,000. Wife owned an interest in real property she had been
9 awarded in a dissolution judgment from her first husband, Hunter. The property, known
10 as the Cal Henry property, was part of a 103.5 acre parcel that wife and Hunter purchased
11 in 1971. During their marriage, wife and Hunter sold approximately 32 acres to Shapiro
12 by a land sale contract. The remaining 71.56 acres that wife and Hunter retained
13 included a mobile home, a garage, a pole barn, and a pump house.
14 Wife and Hunter took out a mortgage to finance the purchase of the mobile
15 home on the Cal Henry property. The terms of the judgment dissolving wife's marriage
16 to Hunter required that the property be sold, and that wife receive 60 percent of the
17 proceeds and Hunter receive 40 percent. Until the property was sold, wife could live
18 there if she continued to make the mortgage payments, and she was also entitled to
19 receive the Shapiro contract payments. Efforts to sell the property were unsuccessful,
20 and the parties lived there during their entire marriage.
21 B. The prenuptial agreement
22 Before their marriage, the parties executed a prenuptial agreement that
3
1 recited that "each of the parties desire to preserve his or her present estate for the
2 respective children of each" and "each party desires to accept the provisions of this
3 agreement in lieu of all rights each would otherwise acquire by reason of the
4 contemplated marriage." The agreement further recited:
5 "(1) Release of Marital Rights: All property now owned by either
6 party shall be held in his or her separate name, free from any claim of the
7 other, except for property held jointly as hereinafter provided. The
8 provisions of this agreement shall act as a release and full satisfaction of all
9 rights each party may acquire by reason of the marriage to previously held
10 property of the other party. Each party waives and relinquishes all rights
11 which, as the other's survivor, he or she would acquire under the law now
12 or hereafter in effect in any jurisdiction. Neither party shall have the right
13 to any assets in the estate of the other as may be provided to a surviving
14 spouse by law.
15 "(2) Jointly-Owned Property: In the event that [the parties] shall
16 own property jointly with right of survivorship, the survivor shall retain
17 such property upon the death of the other.
18 "(3) Dissolution of Marriage: In the event the marriage of [the
19 parties] occurs, but is subsequently subject to a proceeding for dissolution
20 of marriage:
21 "(a) Each of the parties shall recover the specific assets brought into
22 the marriage by him or her, as listed in the applicable attached and
23 incorporated Exhibits 'A' and 'B', as well as any property then separately
24 owned.
25 "(b) Each of the parties shall receive one-half (1/2) of all jointly26
held property.
27 "(c) All banking accounts shall be divided equally between the
28 parties.
29 "(4) * * *
30 "(5) Children of the Parties: [The parties] each [have] children from
31 a prior marriage and each acknowledges that this agreement is intended to
32 protect the respective estates of the parties for the benefit of said children."
4
1 On Exhibit A to the prenuptial agreement, wife listed among her assets the 60 percent
2 interest in the Cal Henry property and her interest in the Shapiro contract.
3 C. Assets acquired during the marriage
4 1. The Cal Henry property. During the marriage, the parties lived in the
5 mobile home on the Cal Henry property and improved and added to the property. The
6 parties raised cattle on the acreage. They built corrals and repaired and replaced fences.
7 The parties enlarged the pond on the property and built a shop to store husband's floor
8 coverings. Husband testified that he believed that the costs for the improvements came
9 from joint funds. Wife, who managed the parties' finances, testified that only her funds
10 were used.
11 In 1987, the parties decided to purchase Hunter's 40 percent interest in the
12 Cal Henry property for $11,460. The purchase required monthly payments of $100,
13 followed by a balloon payment of the balance when the Shapiro contract was paid off.
14 Husband contributed monthly payments of $100, for a total of approximately $2,100, but
15 the balloon payment came exclusively from wife's separate funds. As additional
16 consideration for the parties' purchase of Hunter's interest, Hunter also received a portion
17 of the Shapiro contract payments. In January 1990, when Shapiro made his final
18 payment, wife used those funds to pay the balance owed to Hunter. Hunter deeded his
19 interest in the Cal Henry property to both husband and wife.
20 During the marriage, wife received gifts of money from her mother.
21 Initially, wife deposited those funds into the parties' joint account, but shortly thereafter
22 she used those funds to pay off the loan on the Cal Henry property.
5
1 2. Annuities. In addition to the gifts mentioned above wife received a gift
2 of $25,000 from her mother that wife initially kept separate, until husband learned of this
3 gift and became upset. To placate him, wife transferred the funds to a joint account, but
4 shortly thereafter she placed the funds in a separate investment account. The account,
5 now known as the Lafayette annuity, has appreciated in value. When wife's mother died
6 in 1990, wife inherited $62,016. Wife kept $30,000 of the funds in a separate account in
7 her name only and placed the rest of the funds in a joint account. That separate account,
8 now known as the Transamerica annuity, has grown significantly. The parties did not
9 make further contributions to or withdrawals from either the Lafayette or Transamerica
10 annuity account.
11 3. The Loomis Loving Trust. In 1995, after more than 20 years of
12 marriage, the parties created the "Loomis Loving Trust," a revocable living trust. Wife
13 testified that she wanted to create the trust because there were difficulties in the marriage
14 and she wanted to protect her separate assets--specifically the Cal Henry property and the
15 annuity accounts--for her sons. Husband testified that he believed that the trust was a
16 means to avoid probate and to provide for the parties' joint financial future.
17 The trust provided, in Article I, Section 3:
18 "Any separate property, including any individual interests in property, and
19 the proceeds from such property, which is or becomes trust property, shall
20 remain the separate property of a Trustmaker. A separate schedule of such
21 property shall be maintained to facilitate the payment of income or transfer
22 of all or part of the principal [to] the Trustmaker who is entitled to such
23 distributions. Either of us shall have the unrestricted right to remove all or
24 part of our respective separate property at any time. However, to simplify
25 trust administration, each of us agree that unless an asset is specifically
26 identified as being the separate property of only one of us on such a
27 schedule, that regardless of which of us contributed an asset to the trust,
6
1 and regardless of the form of the prior tenancy of the asset contributed, that
2 each of us is the owner of an undivided one-half (1/2) interest as a tenant in
3 common in each of the assets contributed to the trust during our joint
4 lifetimes. Any joint tenancy rights or interests which may have existed at
5 any time are hereby extinguished and are deemed to be properties held as
6 equal tenants in common with no rights of survivorship."
7 (Emphasis added.) Upon the death of both parties, the trust provided that 90 percent of
8 the estate would be distributed to wife's sons and the remaining ten percent would be
9 distributed to husband's son. The trust explicitly gave wife's sons the option of receiving
10 the Cal Henry property as part of their shares of the trust. In the event of divorce, the
11 trust provided:
12 "It is our intent that our respective property held in trust shall not be used
13 for the benefit of the other spouse upon the dissolution of our marriage."
14 Among other assets conveyed to the trust, the parties conveyed the Cal
15 Henry property and the two annuities to "Donald W. Loomis and Claudia C. Loomis,
16 Trustees." The "Loving Trust Funding Checklist" listed the Cal Henry property and the
17 Transamerica account as joint assets and the Lafayette account as wife's separate asset.
18 In June 2002, wife became concerned that the trust did not adequately
19 protect the Cal Henry property for her sons, and she informed husband that she wanted to
20 amend it. The trust was amended to provide that, upon the disability or death of either
21 party, the trust provisions relating to the Cal Henry property would become irrevocable
22 and the trustee would set aside and hold the Cal Henry property in trust. The expenses of
23 the Cal Henry property, including taxes, insurance, utilities and maintenance, were to be
24 paid from other trust assets.
25 In November 2007, before husband filed for dissolution, wife transferred
7
the Laf 1 ayette annuity from the trust to an account in her name. The Transamerica
2 account, which had been listed in the trust as a joint asset, remained in the trust.
3 4. Other assets. The parties have a number of retirement accounts,
4 certificates of deposit, checking, savings and money market accounts that the trial court
5 distributed and that are not in dispute on appeal. Husband had business assets, including
6 inventory and accounts receivables, also not at issue on appeal.
7 D. Trial court's division of assets.
8 At trial, husband asked that the trust be viewed as having created joint
9 interests in the properties conveyed to it, and that husband receive an equal share of all
10 the assets, including the Cal Henry property and the annuities. The trial court concluded
11 that the prenuptial agreement "provides direction for all the marital property events of the
12 marriage." The court essentially gave no effect to the trust and rejected husband's
13 argument that the conveyance of the Cal Henry property and the annuities to the trust
14 required that those properties be treated as joint assets. The court further found that wife
15 had rebutted any presumption of equal contribution with respect to the acquisition of
16 Hunter's 40 percent interest in the Cal Henry property, the appreciation in the Cal Henry
17 property, and the acquisition and appreciation of the annuities. The court thus awarded
18 wife the entire Cal Henry property and the annuities, free and clear of any interest by
19 husband.
20 On appeal, husband contends that the trial court should have awarded him a
21 half interest in all of the Cal Henry property, as well as half of the value of the two
22 annuities. In husband's view, the parties, through their conduct, rescinded the prenuptial
8
1 agreement. Husband contends that, despite having begun as a separate asset, wife's 60
2 percent interest in the Cal Henry property was commingled through its use as a marital
3 residence, through husband's contributions toward payment of the mortgage, and by
4 virtue of improvements to and uses made of the property by the parties during the
5 marriage. As for improvements, husband notes that during the marriage, the parties
6 improved the ponds and fencing and added a shop that served as husband's office and
7 from which he ran his business. Additionally, for several years, the parties kept a small
8 cattle operation on the property that was primarily managed by husband. All of those
9 circumstances, husband contends, effectively rescinded the prenuptial agreement and
10 caused wife's 60 percent interest in the Cal Henry property to become integrated into the
11 marital estate so as to require that it be treated as marital property and divided equally in
12 a just and proper division of assets. Kunze and Kunze, 337 Or 122, 133, 92 P3d 100
13 (2004). Husband asserts, further, that the remaining 40 percent interest in the Cal Henry
14 property that he and wife acquired in the property during the marriage, as well as the
15 appreciation on the entire Cal Henry property, are marital assets. Olinger and Olinger,
16 75 Or App 351,354, 707 P2d 64, rev den, 300 Or 367 (1985). In any event, husband
17 contends that when the Cal Henry property was conveyed to the trust, the entire property
18 became a joint asset because it was not listed as a separate asset of wife, as was the
19 Lafayette account. The same rationale applies, he contends, with respect to the annuities,
20 which were acquired during the marriage and have appreciated. Finally, irrespective of
21 whether the property or annuities or any part of them are marital assets, husband contends
22 that it is just and proper that he be awarded a half interest.
9
1 In wife's view, the prenuptial agreement requires that wife's 60 percent
2 interest in the Cal Henry property be held out of the marital estate. She asserts, further,
3 that she has rebutted any presumption of equal contribution with respect to the
4 acquisition of Hunter's 40 percent interest in the Cal Henry property, as well as to the
5 appreciation in the Cal Henry property, because any improvements made to the property
6 were made with her own funds, and, finally, that conveying the property to the trust did
7 not alter--and in fact reinforced--the separate nature of the ownership. She makes the
8 same contentions with respect to the two disputed annuities.
9 II. ANALYSIS
10 ORS 107.105(1)(f) provides that a judgment in a marital dissolution action
11 may provide
12 "[f]or the division or other disposition between the parties of the real or
13 personal property, or both, of either or both of the parties as may be just
14 and proper in all the circumstances."
15 As we explained in Cook and Cook, 240 Or App 1, 248 P3d 420 (2010),
16 under ORS 107.105(1)(f), property subject to division in a dissolution consists of two
17 classes. The first category consists of "the real or personal property, or both, of either or
18 both of the parties," ORS 107.105(1)(f), consisting of any property that the parties
19 possess at the time of the dissolution, regardless of when the property was first acquired.
20 Pierson and Pierson, 294 Or 117, 121-22, 653 P2d 1258 (1982). That property is
21 referred to as "marital property." Massee and Massee, 328 Or 195, 201 n 2, 970 P2d
22 1203 (1999). The distribution of marital property is governed by a statutory standard of
23 what is "just and proper in all the circumstances." ORS 107.105(1)(f); see also Kunze,
10
1 337 Or at 134.
2 The second category, "marital assets," are a subset of marital property and
3 refer to property acquired during the marriage. Pierson, 294 Or at 121. There is a
4 rebuttable presumption that property acquired during the marriage was acquired as a
5 result of the equal contribution of the parties. A party seeking to overcome the
6 presumption of equal contribution has the burden of proving by a preponderance of the
7 evidence that the other spouse did not contribute equally to the acquisition of the disputed
8 property. Id. at 134.
9 If the presumption of equal contribution is rebutted, or if the property is not
10 a marital asset because it was separately acquired, then the party holding the separate
11 asset is entitled to receive the property in the division of marital assets, Kunze, 337 Or at
12 133-34, unless other considerations make it "just and proper in all the circumstances" to
13 distribute the property otherwise. It may be just and proper to divide a separately
14 acquired asset between both spouses when a spouse has so integrated the separately
15 acquired asset into the joint finances of the marital partnership that it would be
16 inequitable to award the asset to that spouse as separate property. To determine whether
17 a spouse has so integrated a separately acquired asset, courts focus on whether the spouse
18 demonstrated an intent to retain that spouse's separately acquired asset as separate
19 property or whether, instead, that spouse intended for that property to become joint
20 property of the marital estate. "[T]he court must evaluate the extent to which a spouse
21 has integrated a separately acquired asset into the joint finances of the marital partnership
22 and also evaluate whether any inequity would result from the award of that asset to that
11
spouse as separate property." 1 Id. at 142. In this case, the prenuptial agreement and the
2 trust are additional considerations in determining how the property of the parties should
3 be divided. We address the relevant considerations with respect to each disputed asset.
4 A. The Cal Henry property--wife's prenuptial portion
5 At the time of the marriage, wife's equity in her 60 percent share of the Cal
6 Henry property was approximately $72,000; at the time of dissolution, the parties agree
7 that the equity in the entire property--including the Hunter portion acquired during the
8 marriage--was $480,000. Because it was acquired by wife before the marriage, wife's
9 premarital equity in her 60 percent interest in the Cal Henry property is not a marital
10 asset. Kunze, 337 Or at 134. Additionally, the parties' prenuptial agreement provides
11 that, upon dissolution, the parties are entitled to the "specific assets brought into the
12 marriage." Wife asserts for that reason that her original equity in the Cal Henry property
13 is simply not subject to division, either as a marital asset or as marital property.
Prenuptial agreements are generally enforceable. ORS 108.140 (1981).2 14
2 We note that because the parties' prenuptial agreement was executed in 1983, the
Uniform Prenuptial Agreement Act, ORS 108,700 to ORS 108.740, which took effect on
January 1, 1988, does not apply. Purcell and Purcell, 99 Or App 668, 783 P3d 1038
(1989). At the relevant time, ORS 108.140 (1981), provided, in part:
"A man and a woman who are parties to an intended marriage may enter
into a prenuptial agreement in writing concerning their respective personal
property holdings, and the final disposition thereof, upon such terms and
conditions as may be mutually determined. If such intended marriage is
consummated, such prenuptial agreement shall be binding upon the parties
thereto, their heirs, legal representatives and assigns."
12
Moore v. Schermerhorn, 1 210 Or 23, 307 P2d 483 (1957). If the parties' prenuptial
2 agreement applies to wife's premarital equity in the Cal Henry property, then that
3 property is not subject to division in the dissolution. See Proctor and Proctor, 234 Or
4 App 722, 731-32, 229 P3d 635, on recons, 235 Or App 641, 234 P3d 133, rev den, 349
5 Or 56 (2010) (prenuptial agreement, enforced according to its terms, precludes division
6 of encompassed assets).
7 Husband concedes that the prenuptial agreement, as written, is an
8 enforceable agreement, but he contends that the parties' conduct throughout their long
9 marriage and wife's conveyance of her 60 percent interest to the trust, as a joint asset,
10 served to rescind the prenuptial agreement. See, e.g., Francis and Francis, 212 Or App
11 310, 157 P3d 1202 (2007) (husband's conveyance of separately acquired property shortly
12 after marriage supports inference of intention to revoke prenuptial agreement); Baxter
13 and Baxter, 139 Or App 32, 38, 911 P2d 343, rev den, 323 Or 483 (1996) ("[T]he parties'
14 conduct demonstrated mutual intent to rescind the antenuptial agreement * * *.").
15 We conclude that there is no evidence that the prenuptial agreement was
16 rescinded. First, there is no express indication by the parties of an intention to rescind the
17 prenuptial agreement. The trust made no mention of the prenuptial agreement and, as
18 explained further herein, was not inconsistent with it. In fact, at trial, wife testified that it
19 was her intention in establishing the trust to protect the Cal Henry property for her heirs,
20 a reinforcement of the goals set forth in the prenuptial agreement. The trust itself is
21 consistent with those goals, providing that, in the event of dissolution, "it is our intent
22 that our respective property held in trust shall not be used for the benefit of the other
13
1 spouse." We conclude that the act of conveying the property to the trust did not
2 implicitly revoke the prenuptial agreement.
3 Husband contends that an intention to rescind the prenuptial agreement is
4 evidenced by the parties' treatment of the property during the marriage. However, wife
5 was living on the Cal Henry property when the parties met and at the time they were
6 married. She planned to continue to live on the property as long as she could. The
7 parties lived on the property six months before they were married. Thus, the parties' use
8 of the property as their marital residence appears to have been contemplated at the time
9 of the execution of the prenuptial agreement, which was less than six months before their
10 marriage. We conclude for that additional reason that the use of the property as the
11 marital residence did not implicitly revoke the prenuptial agreement.
12 In the alternative, husband contends that the Cal Henry property is, in fact,
13 subject to division under the terms of the prenuptial agreement, because it was a jointly
14 held asset at the time of dissolution, as a result of wife having conveyed her interest in the
15 property to herself and husband, as trustees of the Loomis Loving Trust.
16 It is true, as husband contends, that, in establishing the trust, wife conveyed
17 the entire Cal Henry property, including wife's premarital portion, to husband and wife as
18 trustees of the trust. However, the trust instrument provided that "[a]ny separate
19 property, including any individual interests in property, and the proceeds from such
20 property, which becomes trust property, shall remain the separate property of the
21 Trustmaker." The trust further provided that each party "shall have the unrestricted right
22 to remove all or part of our respective property at any time." Thus, the conveyance of the
14
1 property to the trust in and of itself did not create a joint property.
2 Husband notes that the trust further provided for the maintenance of a
3 schedule of the properties "to facilitate the payment of income or transfer of all or part of
4 the principal." The trust stated:
5 "To simplify trust administration, each of us agree that unless an asset is
6 specifically identified as being the separate property of only one of us on
7 such a schedule, that regardless of which of us contributed an asset to the
8 trust, and regardless of the form of the prior tenancy of the asset
9 contributed, that each of us is the owner of an undivided one-half (1/2)
10 interest as a tenant in common in each of the assets contributed to the trust
11 during our joint lifetimes."
12 The Cal Henry property was listed on the trust schedule as a joint asset, and wife's
13 premarital share was not segregated. As husband notes, the prenuptial agreement
14 provided that, in the event of dissolution of marriage, each of the parties "shall receive
15 one-half (1/2) of all jointly held property." In husband's view, read together, the trust
16 instrument and prenuptial agreement require that all assets conveyed to the trust that were
17 not identified as separate assets became jointly held, subject to equal division at the time
18 of dissolution under the terms of the prenuptial agreement. We reject that interpretation.
19 In the first place, in placing the property in trust, wife did not convey her 60 percent
20 interest in the Cal Henry property to husband. Rather, wife conveyed her interest to
21 herself and husband as trustees. As noted, the trust itself provided that any separate
22 property conveyed to the trust was to remain the separate property of the trustmaker.
23 Wife's conveyance of her 60 percent interest in the Cal Henry property to herself and
24 husband as trustees was not a conveyance of an interest to husband. Further, the fact that
25 the trust instrument provided that, for purposes of trust administration, properties not
15
specifically 1 identified as separate assets were to be regarded as joint assets did not effect
2 a joint ownership of wife's 60 percent interest for all purposes. Our conclusion is
3 bolstered by the provision of the trust instrument stating that "our respective property
4 held in trust shall not be used for the benefits of the other spouse upon the dissolution of
5 our marriage." Thus, we conclude that the Cal Henry property was not held jointly for
6 purposes of the prenuptial agreement.
7 Further, the prenuptial agreement identified and described dispositions for
8 three categories of properties upon dissolution: (1) assets brought into the marriage or
9 separately owned at the time of dissolution, which are to be "recovered" by each party
10 separately; (2) assets jointly held, which are to be divided equally; and (3) bank accounts,
11 which are to be divided equally. The fact that the agreement provides for a spouse's
12 "recovery" of assets brought into the marriage suggests that upon dissolution, even assets
13 that have undergone interspousal conveyance are to be awarded to the party who brought
14 the asset into the marriage. Husband's interpretation of the prenuptial agreement to
15 require an equal division of assets that were brought into the marriage but that were held
16 jointly at the time of dissolution would defeat the stated purpose of the prenuptial
17 agreement--to preserve the parties' "present estate for the respective children of each." In
18 light of that stated purpose, we conclude that the only plausible reading of the prenuptial
19 agreement is that the first category applies to assets brought into the marriage and that the
20 second and third categories describe assets that are exclusive of the first, i.e., assets
21 acquired during the marriage. That is, the provisions requiring equal division of jointly
22 held assets and bank accounts apply to assets that were acquired during the marriage and
16
that 1 do not fall within the first category. As we interpret the prenuptial agreement, the
2 parties intended that upon dissolution, the parties would each recover the specific assets
3 each brought into the marriage, whether or not those assets were held jointly at the time
4 of dissolution. Thus, even if wife's conveyance of the property to the trust had conveyed
5 an interest to husband, we would conclude that wife's premarital equity in the Cal Henry
6 property is not subject to division as a joint asset under the prenuptial agreement because
7 it was an asset brought into the marriage.
8 Husband contends, however, that the appreciation in the value of separate
9 property brought into the marriage is nonetheless a marital asset subject to the
10 presumption of equal division, see Massee and Massee, 328 Or 195, 207, 970 P2d 1203
11 (1999) (appreciation of separately acquired property during the marriage is a marital asset
12 to which the rebuttable presumption of equal contribution applies), and that wife has not
13 overcome the presumption of equal contribution with respect to that appreciation. He
14 notes that the Cal Henry mortgage was paid off during the marriage, that improvements
15 were made during the marriage, and that, although wife could trace the financial
16 contributions to her own funds, the income that husband contributed in support of the
17 household helped wife to use her funds to pay off the mortgage and to improve the
18 property. Thus, he contends, he is entitled to an equal share of the marital appreciation.
19 Once again, we must consider the effect of the prenuptial agreement. See
20 Yager and Yager, 155 Or App 407, 414, 963 P2d 137 (1998), rev den, 328 Or 365
21 (whether prenuptial agreement applies only to property owned before the marriage or to
22 increase in value as well depends on terms of agreement). Addressing only that portion
17
of 1 the appreciation attributable to wife's premarital 60 percent share of the Cal Henry
2 property, we conclude that, although it is a marital asset, that appreciation is
3 encompassed within the prenuptial agreement and is not subject to division. We held in
4 Proctor, 234 Or App at 732, that, under the terms of the prenuptial agreement involved in
5 that case, marital appreciation associated with separately held property, although a
6 marital asset, was not subject to division. The dispositive provision of the prenuptial
7 agreement in Proctor required that "any community efforts of either party contributed to
8 or directed toward separate property assets of either spouse shall not create community
9 interest in the separate assets." 234 Or App at 725. We stated that that provision
10 indicated an intention that, upon dissolution, the appreciation associated with each
11 separately held asset would be awarded to the spouse who separately held the asset. Id. at
12 132.
13 Here, the parties' prenuptial agreement did not expressly address the
14 disposition of appreciation in separately held property. It provided, however, that each of
15 the parties "desire to accept the provisions of this agreement in lieu of all rights each
16 would otherwise acquire by reason of the marriage," and that "the provisions of this
17 agreement shall act as a release and full satisfaction of all rights each party may acquire
18 by reason of the marriage to previously held property of the other party." An interest that
19 a spouse acquires in marital appreciation of separately held property is "by reason of the
20 marriage." We conclude, therefore, that the language of the prenuptial agreement
21 releases any interest that husband acquired, by virtue of the marriage, in the appreciation
22 of wife's separately held 60 percent interest in the Cal Henry property. Therefore, the
18
appreciation, like wife's 1 premarital equity in the Cal Henry property, is not subject to
2 division of the marital property.
3 B. The Cal Henry property--portion acquired during marriage
4 As described, during the marriage, the parties acquired Hunter's 40 percent
5 interest in the Cal Henry property. That share is a marital asset, because it was acquired
6 during the marriage. Wife asserts that she has overcome the presumption of equal
7 contribution as to that property, because she has been able to trace the parties' 1987
8 purchase to her own funds. Although the record shows that wife made the primary
9 financial contribution to the Hunter property acquisition, husband also contributed, and
10 there is no indication that the parties intended for the property to be held separately. As
11 noted, Hunter deeded the property to both parties, and the acquisition took place during a
12 time when husband was participating fully in the marital partnership through the
13 contribution of his income and labors. The parties used the property for their joint
14 marital endeavors. We conclude that the presumption of equal contribution has not been
15 overcome with respect to the Hunter portion of the property acquired during the marriage
16 and its appreciation. Under the terms of the parties' prenuptial agreement, as a jointly
17 held asset, the Hunter portion of the Cal Henry property must be divided equally between
18 the parties.
19 Wife contends, however, that the terms of the trust, which specifically
20 directed disposition of the entire Cal Henry property to wife's children upon the death of
21 both trustees, show that the parties intended that the Hunter portion of the property is
22 owned by wife separately. Therefore, wife contends, the property is not subject to the
19
provision 1 of the prenuptial agreement that requires that jointly held property be divided
2 equally upon dissolution. We disagree. As we have held with respect to wife's 60
3 percent interest in the Cal Henry property, upon dissolution, the prenuptial agreement
4 controls the disposition of property described therein. The prenuptial agreement provides
5 that jointly held property acquired during the marriage is to be divided equally. We
6 conclude that it is appropriate for husband to share in the value of the Hunter portion of
7 the Cal Henry property acquired during the marriage, which was held jointly by the
8 parties before the property was conveyed to the trust and was not listed as wife's separate
9 property when it was conveyed to the trust. As previously noted, the parties agreed that
10 the equity in the entire Cal Henry property was $480,000. The Hunter portion, including
11 appreciation, is approximately 40 percent of the total equity in the property, or $192,000.
12 Husband's share of that amount is $96,000.
13 C. Annuity accounts
14 Both of the disputed annuities, the Lafayette annuity and the Transamerica
15 annuity, originated with funds that wife received from her mother by gift or inheritance,
16 and both have grown through passive appreciation. Both annuities were purchased after
17 the parties were married. After the initial acquisition, the funds were held briefly in joint
18 accounts before wife placed them in accounts in her own name. The parties neither
19 added to nor drew from them. Wife transferred the account that preceded the
20 Transamerica annuity to the trust in 1995 and, as noted, the trust described that account
21 as a joint asset. Wife transferred the Lafayette annuity to the trust in 2002, and the trust
22 listed it as wife's separate asset. In 2007, wife withdrew the Lafayette annuity from the
20
1 trust.
2 We agree with the trial court that wife has overcome the presumption of
3 husband's equal contribution to the gifts and inheritance that wife received from her
4 mother and that were invested in the annuities. Olson and Olson, 218 Or App 1, 9, 178
5 P3d 272 (2008) ("In order to show that a spouse contributed to an acquisition of inherited
6 property, the contribution must have influenced the inheritance."). We also conclude that
7 wife has overcome the presumption of equal contribution with respect to the appreciation
8 of those annuities, which occurred without any action on the part of either party. Kunze,
9 337 Or at 143. For the reasons explained with respect to wife's 60 percent interest in the
10 Cal Henry property, we conclude that the transfer of the two annuities into the trust did
11 not create joint ownership for purposes of the prenuptial agreement.
12 The prenuptial agreement provides that "[e]ach of the parties shall recover
13 the specific assets brought into the marriage by him or her, * * * as well as any property
14 then separately owned." (Emphasis added.) Property "then separately owned" refers to
15 property separately owned at the time of dissolution. Thus, we conclude that the
16 annuities are wife's separate assets. Accordingly, under the prenuptial agreement, the two
17 annuities were properly awarded to wife.
18 Finally, we must consider whether a just and proper division of assets
19 requires that husband receive any further interest in the marital property subject to
20 division. Husband contends that, in light of his health, the length of the marriage, his
21 financial contributions, and the sharing of the marital home and responsibilities, it is just
22 and proper that he be awarded a greater share of the property. As previously noted, the
21
1 record shows that the parties indeed lived as partners, sharing their incomes, resources,
2 and enterprises, caring for each other, and supporting each other's businesses. Husband
3 contributed his income, as well as a substantial gift from his mother, to the marital
4 partnership. The extent to which wife was able to satisfy the mortgage on the Cal Henry
5 property from her own resources was at least partially attributable to the fact that the
6 parties relied on husband's income to support the family.
7 However, as we have concluded, the prenuptial agreement dictates much of
8 the distribution in this case. Further, as noted, under Kunze, the proper focus in
9 determining whether a separately held asset should be divided as a result of commingling
10 is on whether a spouse's treatment of the asset demonstrated an intention to treat the asset
11 as separate property, or whether, instead, the spouse intended for that property to become
12 the joint property of the marital estate. 337 Or at 142; see also Lind and Lind, 207 Or
13 App 56, 139 P3d 1032 (2006). Nothing in wife's conduct during the marriage indicated
14 an intention to change the provision of the prenuptial agreement that assets brought into
15 the marriage or owned separately at the time of dissolution were to be awarded to the
16 spouse who brought the asset into the marriage. If anything, wife's actions consistently
17 demonstrated an intention to reinforce that plan. Wife kept title to the original 60 percent
18 interest and placed it in trust only because she thought that the trust would secure the
19 property for her heirs, not because she wanted to share the asset with husband. Wife had
20 the trust amended to insure that the Cal Henry property passed to her children in the event
21 that she predeceased husband. Wife used the considerable financial gifts from her
22 mother, as well as a portion of the inheritance from her mother, to pay off the property.
22
1 Although the annuities were briefly held in joint accounts, wife quickly transferred them
2 to accounts in her name only and, at the time they were placed into the trust, both
3 accounts were in wife's name. The testimony at trial indicates that wife intended to keep
4 the funds separate.
5 We have also evaluated whether any other equitable considerations require
6 an additional award to husband, Kunze, 337 Or at 147, and we conclude that the equities
7 are satisfied by the award to husband of an equal interest in that portion of the Cal Henry
8 property that the parties acquired during the marriage.
9 In summary, the Hunter portion of the Cal Henry property, including its
10 appreciation, is properly considered a marital asset, and wife has not overcome the
11 presumption of equal contribution with respect to that portion of the property. For that
12 reason, the dissolution judgment is modified to increase husband's equalizing judgment to
13 reflect an equal share in the parties' equity in the Hunter portion of the property. In all
14 other respects, we affirm the trial court's division of marital property.
* * *
See: http://www.publications.ojd.state.or.us/A142038.pdf
Outcome:
15 Dissolution judgment modified to increase husband's equalizing judgment
16 to $96,000 to reflect an equal share in the parties' equity in the Hunter portion of the Cal
17 Henry property; otherwise affirmed.
16 to $96,000 to reflect an equal share in the parties' equity in the Hunter portion of the Cal
17 Henry property; otherwise affirmed.
Plaintiff's Experts:
Defendant's Experts:
Comments:
About This Case
What was the outcome of Donald Welton Loomis v. Claudia Clara Loomis?
The outcome was: 15 Dissolution judgment modified to increase husband's equalizing judgment 16 to $96,000 to reflect an equal share in the parties' equity in the Hunter portion of the Cal 17 Henry property; otherwise affirmed.
Which court heard Donald Welton Loomis v. Claudia Clara Loomis?
This case was heard in Oregon Court of Appeals on appeal from the Circuit Court, Douglas County, OR. The presiding judge was Wollheim.
Who were the attorneys in Donald Welton Loomis v. Claudia Clara Loomis?
Plaintiff's attorney: Daniel W Seitz argued the cause for petitioner. With him on the briefs was Daniel W. Seitz, P.C.. Defendant's attorney: Jeffrey Mornarich argued the cause for respondent. With him on the brief were Dole, Coalwell, Clark, Mountainspring & Mornarich, P.C., and Stephen Mountainspring..
When was Donald Welton Loomis v. Claudia Clara Loomis decided?
This case was decided on December 14, 2011.