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McCoy v. McCoy (11/15/96), 926 P 2d 460
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Notice: This opinion is subject to correction before publication in
the Pacific Reporter. Readers are requested to bring errors to the
attention of the Clerk of the Appellate Courts, 303 K Street,
Anchorage, Alaska, 99501, telephone (907) 264-0607, fax (907) 264-
0878.
THE SUPREME COURT OF THE STATE OF ALASKA
EDWARD AARON McCOY, )
) Supreme Court No. S-6545
Appellant, )
) Superior Court No.
v. ) 3KN-93-331 DR
)
BETTY COLE McCOY, ) O P I N I O N
)
Appellee. ) [No. 4429 - November 15, 1996]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Kenai,
Jonathan H. Link, Judge.
Appearances: Edward A. McCoy, pro se,
Kasilof. Peter F. Mysing, Kenai, for
Appellee.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, and Fabe, Justices.
EASTAUGH, Justice
I. INTRODUCTION
Edward McCoy appeals from the superior court's property
division in the divorce proceedings between himself and Betty
McCoy. He argues that the superior court should have applied the
rescission remedy of Rose v. Rose, 755 P.2d 1121 (Alaska 1988), and
that the court erred in dividing the property inequitably and in
refusing to invade Betty's premarital property. We affirm.
II. FACTS AND PROCEEDINGS
Edward and Betty McCoy were married on May 9, 1992. The
superior court found that the coverture of the marriage ended on
March 19, 1993, when Edward and Betty separated their finances.
Edward entered the marriage owning four parcels of land
in Sterling ("Sterling property"). He also owned a nonfunctioning
school bus, several other vehicles, and miscellaneous household
effects.
Betty entered the marriage owning a house on five acres
of land in Kasilof ("Kasilof property"). Although there was no
debt associated with the house, Betty owed about $10,000 on a
mortgage on the underlying land. She also had approximately
$15,000 in savings, and owned a truck.
The case went to trial in October 1993. Edward was then
fifty-six years of age. He was unemployed, and received a total
monthly income of $690, including $528 in Social Security
disability benefits and $162 in Veteran's benefits.
Betty was fifty-five years of age. Throughout the
marriage she worked as a dietary aide at the Soldotna hospital.
Her annual salary was $15,000, with a net monthly pay of
approximately $960.
Shortly after Betty and Edward married, Edward received
a check for retroactive Social Security disability benefits in the
amount of $19,800, about $12,000 of which Betty deposited in her
checking account. Though apparently reluctant to do so, Betty then
wrote a check for about $10,800 to pay off the mortgage on the
Kasilof property. Although Betty agreed to put Edward's name on
the title to the house and Edward agreed to put Betty's name on the
title to the Sterling property, they never did so because,
according to Betty, "summer rolled around . . . and it's just one
of those things we never got to do."
The superior court found that the parties had each
contributed about $30,000 to the marital relationship, all of which
was spent during the course of the marriage. The court treated
only wedding gifts and a pop-up camper purchased during the
marriage as the remaining marital assets. Although the court found
that "some equity increase in [Betty's] house"was a marital asset,
it declined to include this increase as property available for
distribution. The court found that it was irrelevant that the
mortgage was actually paid out of Edward's Social Security
disability check, because that same amount would have been spent on
marital expenses if the mortgage had been paid out of Betty's
$15,000 in savings.
After determining the marital assets available for
division, the superior court applied the factors set out in Merrill
v. Merrill, 368 P.2d 546 (Alaska 1962), in arriving at an equitable
division of property. The superior court found that the parties
were "of approximately equal age and similar earning capacities";
that they were "in approximately equal stations in life and that
their health and physical condition is approximately equal"; and
that "the parties' circumstances and needs [were] about the same."
The court also found that neither party's conduct was particularly
egregious with respect to the assets. The court concluded that an
equal property division of the remaining marital assets was
equitable. Edward appeals.
III. DISCUSSION
A. Should the Superior Court Have Applied the Rose
Rescission Remedy?
"The trial court has broad discretion in fashioning a
property division in a divorce action." Cox v. Cox, 882 P.2d 909,
913 (Alaska 1994). We have held that "in marriages of short
duration, where there has been no significant commingling of assets
between the parties, the trial court may, without abusing its
discretion, treat the property division as an action in the nature
of rescission." Rose v. Rose, 755 P.2d 1121, 1125 (Alaska 1988).
The decision to apply Rose when there is no significant
commingling of assets is a matter of discretion. Therefore, we
review this decision only for an abuse of discretion. Similarly,
with regard to the "source of funds"method of property
distribution, we have held that "[i]t is one thing to hold that use
of the source of funds rule in limited circumstances is not an
abuse of discretion; it would be quite a leap . . . to hold that it
must be applied in a given set of circumstances as a matter of
law." Cox, 882 P.2d at 915.
However, when the superior court does apply the Rose
method, "[t]here is a separate question to be asked by this court
on review, . . . and that is whether the trial court applied the
correct legal standard in the exercise of its broad discretion.
With respect to legal analysis employed at the trial court level,
review is based upon our independent judgment." Wanberg v.
Wanberg, 664 P.2d 568, 570 (Alaska 1983). Consequently, when the
Rose rescission remedy is applied, we will review that application
under our independent judgment. Bell v. Bell, 794 P.2d 97, 102
n.10 (Alaska 1990) (holding that "[s]ince the question whether the
trial court employed the correct legal analysis [in applying the
Rose rescission remedy] is a question of law, review of [the] claim
[that this application was incorrect] is based upon our independent
judgment.").
The superior court's finding that the parties commingled
their assets over the course of the marriage is a finding of fact
which will only be rev1992).
Edward argues that the superior court erred in declining
to treat the case as one calling for a remedy restoring the parties
to the positions they would have been in had the marriage not
occurred. In a marriage of short duration where there has been no
significant commingling of assets, Alaska law provides for
"treat[ing] the property division as an action in the nature of a
rescission, aimed at placing the parties in, as closely as
possible, the financial position they would have occupied had no
marriage taken place." Rose, 755 P.2d at 1125.
In this case, the superior court found the Rose remedy to
be inappropriate because it found that "the parties commingled all
their assets over the course of the marriage." Both parties
deposited money in Betty's checking and savings accounts, and it
appears that all marital expenses, as well as expenses relating to
premarital assets, were paid out of these commingled funds.
Because the court did not clearly err in finding that the parties
significantly commingled their assets during their marriage, the
superior court did not err in declining to apply the Rose
rescission remedy. See Zimin v. Zimin, 837 P.2d 118, 121 (Alaska
1992) (holding that it was not error for the superior court to
decline to apply the Rose approach when the parties did not
"maintain completely separate economic identities"during their
marriage).
B. Did the Superior Court Abuse Its Discretion in Declining
to Invade the Premarital Property?
The superior court has broad latitude in fashioning an
equitable distribution within the perimeters of AS 25.24.160(a).
The superior court's distribution will not be disturbed unless it
is so clearly unjust as to constitute an abuse of discretion.
E.g., Wanberg v. Wanberg, 664 P.2d 568, 570 (Alaska 1983). The
superior court's accompanying factual determinations will not be
reversed except upon a finding of clear error. McDaniel, 829 P.2d
at 305.
We have enumerated several factors, known as the Merrill
factors, which the superior court weighs in reaching an equitable
property division:
(1) the ages of the parties;
(2) their earning capacity;
(3) the duration of the marriage;
(4) the conduct of the parties during
marriage;
(5) the parties' "station in life";
(6) the circumstances and necessities of
each;
(7) their health;
(8) their financial condition;
(9) the time and manner of acquisition of the
property in question;
(10)the value of the property at the time of
division; and
(11)the income-producing capacity of the
property.
Laing v. Laing, 741 P.2d 649, 652 (Alaska 1987) (citing Merrill v.
Merrill, 368 P.2d 546, 547 n.4 (Alaska 1962); Brooks v. Brooks, 677
P.2d 1230, 1233 (Alaska 1984)). This list is not exhaustive; the
superior court may consider any other factors it deems relevant to
dividing the property. Laing, 741 P.2d at 652 (citing Brooks, 677
P.2d at 1233). Furthermore, while the court need not make findings
on all of the Merrill factors, its findings must provide a
sufficient basis for the conclusion reached. Id. (citing Burcell
v. Burcell, 713 P.2d 802, 805 (Alaska 1986); Brooks, 677 P.2d at
1233).
Edward argues that the superior court abused its
discretion in reaching an equitable property division because (1)
it based its property division on incorrect Merrill factor
findings, and (2) it declined to invade the Kasilof property.
1. The superior court's Merrill factor findings
The superior court made findings on a number of Merrill
factors in determining that an equal division of marital assets was
equitable and in refusing to invade the Kasilof property. It found
that the parties had similar earning capacities and were of
approximately equal health and physical condition. Edward argues
that these findings are clearly erroneous.
At the time of trial Edward was unemployed and received
a total monthly income of $690 from Social Security and Veteran's
disability benefits. Betty was then earning a net monthly income
of approximately $960 as a dietary aide. The superior court found
that there was no significant difference in the parties' incomes or
earning capacities.
Although there was a disparity in their actual incomes,
the superior court did not clearly err in finding that the parties'
incomes and earning capacities were similar. The superior court
permissibly found that Edward could work and earn income. Although
Edward claims to be totally disabled for purposes of Social
Security benefits, and to be disabled by a hemorrhoid condition,
twenty percent of which was deemed service-related by the Veteran's
Administration, Edward himself admitted that he was capable of
"building a deck at the rear of the house, putting in and
harvesting a garden, subsistence fishing [and] canning, cutting
down, limbing and stacking 8-10 cords or more of logs . . . ."
Furthermore, Edward claimed to be operating a "strategic materials"
business. Based on these facts, we hold that the superior court's
finding that the parties have similar earning capacities is well-
supported by the record, and is therefore not clearly erroneous.
Similarly, the superior court's findings regarding the
relative health of the parties are not clearly erroneous. A Social
Security disability rating is not dispositive of a superior court's
determination of either a party's earning capacity or health.
Because the superior court's findings regarding the relative health
of the parties are supported by the record, we hold that they are
not clearly erroneous.
Because the record supported the superior court's Merrill
factor findings, and because these findings provide a sufficient
basis for the conclusion reached, we affirm the court's property
division.
2. Refusal to invade the Kasilof property
Edward further argues that the superior court abused its
discretion by refusing to invade Betty's separate premarital
property in light of Edward's monetary and nonpecuniary
contributions to that property. (EN1)
When a spouse's contributions to the marital community
benefit the other spouse's premarital property, even if the parties
did not intend joint ownership of the premarital property, the
court may invade the separate property when equitably necessary to
compensate the contributing party. Burgess v. Burgess, 710 P.2d
417, 420 n.3 (Alaska 1985). The superior court should consider a
spouse's pecuniary as well as nonpecuniary contributions which
benefit premarital property in determining whether separate
property should be divided. Vanover v. Vanover, 496 P.2d 644, 648
(Alaska 1972) (holding that when the contributions of a pecuniary
or "more intangible nature"have benefited "in any manner"the
premarital property of the other spouse, the superior court may
distribute the premarital property); Bussell v. Bussell, 623 P.2d
1221, 1223-24 (Alaska 1981) (holding that a "primarily domestic"
role should be recognized as a valuable contribution to the marital
enterprise).
In addition to contributing to the marital community his
$19,800 retroactive disability benefits check, $10,800 of which was
used to pay off the mortgage on the Kasilof property, Edward claims
to have cooked, cleaned, laundered, and performed other domestic
chores an average of four hours each day. He also claims that he
caught and canned fish for the household, and cut down, limbed, and
stacked over ten cords of logs. Finally, Edward claims that he
improved the Kasilof property by putting in a flower box and a deck
in the back of the house with materials he provided. He estimates
that it would have taken a normal person eight hours to put in
these two items, and claims that the deck increased the value of
the property by $500.
The superior court treated the money from Edward's check
for retroactive Social Security disability benefits as a
contribution to the marital community. The court explained that
this money was no more classifiable as Edward's "separate"money
than the $15,000 in savings that Betty contributed to the marital
community.
The court also implicitly found that Edward and Betty
shared domestic responsibilities, and that Edward was not entitled
to compensation for his share of the domestic work. The court
stated that the domestic responsibilities were "not things that
under the circumstances of this particular divorce . . . are items
properly claimed as damages." Therefore, there was no need to
invade the premarital property in order to equitably compensate
Edward for any nonpecuniary services which benefited that property.
The court did not make any findings with regard to the improvements
Edward claimed to have made to the Kasilof property. (EN2)
Based on these findings, we hold that the superior court
did not abuse its discretion in refusing to invade the Kasilof
property.
IV. CONCLUSION
We AFFIRM the superior court's decision not to apply the
Rose rescission remedy and the superior court's property division
in all other respects.
ENDNOTES:
1. The superior court classified the Kasilof property as
premarital property. Although Edward does not address this
characterization in his argument, Betty asserts that Edward "takes
issue with Judge Link's classification of [her] home as her
separate pre-marital property,"and develops counter arguments in
her brief. However, since Edward does not argue that the Kasilof
property should be treated as marital property, we assume for
purposes of this opinion that it is premarital property.
2. It appears that the court treated this as part of Edward's
domestic services claim. We find this approach reasonable under
the circumstances of this case. However, we note that even if the
superior court should have treated Edward's alleged improvements as
a distinct contribution to the Kasilof property, it would not have
to invade that property to achieve an equitable property division.
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