Tarr v. Zalaznik , 264 N.C. App. 597 ( 2019 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA18-649
Filed: 19 March 2019
Cumberland County, No. 16 SP 700
STEPHEN TARR, Petitioner,
v.
MELISSA ZALAZNIK, Respondent.
Appeal by Respondent from judgment entered 10 January 2018 by Judge
James G. Bell in Superior Court, Cumberland County. Heard in the Court of Appeals
14 January 2019.
No brief submitted by Petitioner-Appellee.
McCoy Wiggins PLLC, by Richard M. Wiggins, for Respondent-Appellant.
McGEE, Chief Judge.
I. Facts
Stephen Tarr (“Petitioner”) and Melissa Zalaznik (“Respondent”) made a
$245,000.00 cash purchase of a lot with a house ((the “House”) and, together with the
lot, (the “Property”)) in Fayetteville on 28 October 2013. Petitioner provided
$145,000.00 of the purchase price, and Respondent contributed $100,000.00. The
deed conveying the Property to Petitioner and Respondent noted that each was
unmarried, and that the Property was being conveyed to them “as joint tenants with
the right of survivorship[.]” Petitioner and Respondent lived together in the House
as an unmarried couple for a few years. The relationship between Petitioner and
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Respondent deteriorated, and the record indicates that Petitioner moved out of the
House in 2016. Respondent continued to reside in the House for more than a year
after Petitioner’s departure.
Petitioner filed a “Petition to Partition” (the “petition”) with the Clerk of
Superior Court, Cumberland County (the “Clerk”), on 10 May 2016. See N.C. Gen.
Stat. § 46-3 (2017) (“One or more persons claiming real estate as joint tenants or
tenants in common . . . may have partition by petition to the superior court.”).
Petitioner stated that, although he “desire[d] to hold fifty percent . . . interest in [the
Property] in severalty,” he was requesting a partition by sale, pursuant to N.C. Gen.
Stat. § 46-22(a)—arguing that actual partition of the Property could not “be made
without injury to the parties . . . and it [wa]s necessary that the court order a sale for
partition among the tenants in common.” See N.C. Gen. Stat. § 46-22(a) (2017).
Respondent answered the petition on 10 June 2016 and, though she did not
specifically argue against a partition by sale, Respondent stated:
[A]lthough the parties to this action are tenants in common
to the real estate described in the [p]etition [the Property],
it is doubtful that at a public sale of the [Property it] could
be sold at its fair market value and Respondent, pursuant
to N.C.G.S. § 46-22.1, requests that the [trial court] order
the parties mediate before an order is entered requiring a
public sale of the [Property].
See N.C. Gen. Stat. § 46-22.1(b) (2017) (“When a partition sale is requested, the court
or the clerk may order mediation before considering whether to order a sale.”).
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Respondent further asked “[f]or such equitable relief as the [trial court] might deem
proper to protect the interest of Respondent.” The record does not include any
evidence that mediation was ordered, and the petition was heard by the Clerk, who
thereafter entered an order on 17 October 2016. The Clerk found as fact that both
Petitioner and Respondent “believe[d] that an actual partition of the [P]roperty [could
not] be made without substantial injury to the parties”; and that the Property “should
be sold for partition as provided in N.C.G.S. § 46-28 and that a commissioner should
be appointed by the [trial court] for that purpose.” See N.C. Gen. Stat. § 46-28(a)
(2017) (“The procedure for a partition sale shall be the same as is provided in Article
29A of Chapter 1 of the General Statutes, except as provided herein.”). The Clerk
appointed a commissioner (the “Commissioner”) to conduct a sale of the Property, and
ordered that “the proceeds, after payment of all costs, be distributed [to Petitioner
and Respondent] as by law provided[.]” See N.C. Gen. Stat. §§ 46-7, 46-28, and 46-33
(2017)1
The Commissioner filed a motion on 10 November 2016 to sell the Property,
and the Clerk entered an order granting the motion to sell the Property on the same
day. Neither the Commissioner’s motion nor the Clerk’s order specifically addressed
how the proceeds of the sale would be divided. The Commissioner conducted a sale
1 The statutes indicate that three commissioners should be appointed, see N.C.G.S. §§ 46-7 and
46-28; however, as there is no record objection by either Petitioner or Respondent, it is presumed they
were in agreement with the procedure used, and any objection thereto has been waived.
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of the Property, and the highest offer was for a purchase price of $220,000.00. The
Clerk approved and confirmed the sale of the Property on 7 June 2017, and ordered
the Commissioner to deliver title to the purchasers upon receipt of the purchase price.
Neither party appealed the order of confirmation of sale and, therefore, it became a
final order. N.C. Gen. Stat. § 46-28.1(f) (2017). After all costs had been deducted
from the sales proceeds, $192,323.87 remained in the Commissioner’s account for
distribution to Petitioner and Respondent.
For reasons not made clear by the record, the net proceeds of the sale were not
disbursed at the time the order of confirmation became final. N.C.G.S. § 46-33 (“At
the time that the order of confirmation becomes final, the court shall secure to each
tenant in common, or joint tenant, his ratable share in severalty of the proceeds of
sale.”). Approximately four months after the sale of the Property, Petitioner filed a
“Supplemental Petition,” on 5 October 2017, wherein he noted that “the proceeds
received from the sale of the property did not equate for [Petitioner and Respondent]
to recover their initial portion of the purchase price[.]” Therefore, Petitioner
requested “that [the] net proceeds be divided and apportioned pursuant to [the] initial
contribution” amounts provided by Petitioner and Respondent. Specifically,
Petitioner requested that he receive fifty-nine percent of the net proceeds and that
Respondent receive forty-one percent—in order to correspond with Petitioner’s
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contribution of $145,000.00 to the purchase of the Property compared with
Respondent’s $100,000.00 contribution.
The Clerk agreed with Petitioner that the net proceeds from the sale of the
Property should be divided in proportion to the contributions made by Petitioner and
Respondent toward the purchase of the Property. Therefore, the Clerk ordered a fifty-
nine percent to forty-one percent distribution in favor or Petitioner. Respondent
appealed, and the matter was heard in superior court. By judgment entered 10
January 2018, the trial court conducted a de novo review, agreed with the decision of
the Clerk, and ordered the same fifty-nine percent to forty-one percent division of the
net proceeds in Petitioner’s favor. Respondent appeals.
II. Standard of Review
“An action for partition under [Chapter 46] is a special proceeding. When such
action is appealed from the clerk to the superior court ‘for any ground whatever . . .,’
the trial court has the authority to consider the matter de novo.” Jenkins v. Fox, 98
N.C. App. 224, 226, 390 S.E.2d 683, 685 (1990) (citations omitted); see also N.C. Gen.
Stat. § 46-1 (2017). When the trial court acts as the trier of fact:
[T]he standard of review on appeal is whether there was
competent evidence to support the trial court’s findings
of fact and whether its conclusions of law were proper
in light of such facts. Findings of fact by the trial court
in a non-jury trial have the force and effect of a jury
verdict and are conclusive on appeal if there is evidence
to support those findings. A trial court’s conclusions of
law, however, are reviewable de novo.
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“[W]hether a partition order and sale should issue is within
the sole province and discretion of the trial judge and such
determination will not be disturbed absent some error of
law.”
Solesbee v. Brown, __ N.C. App. __, __, 805 S.E.2d 183, 186–87 (2017) (citations
omitted).
III. Analysis
Respondent argues the trial court erred in ordering an unequal distribution of
the net proceeds from the partition by sale of the Property. We disagree.
A. Chapter 46. Partition
Chapter 46 of the North Carolina General Statutes governs the partition of
real property held by cotenants—tenants in common and joint tenants—including the
partition in the present case. Both Petitioner and Respondent agreed to partition of
the Property by sale pursuant to N.C.G.S. § 46-22(a). Respondent does not challenge
any part of the sale of the Property. Respondent’s argument is that the trial court
was without the authority to order that Petitioner receive a greater share of the net
proceeds from the sale of the Property.
Respondent’s argument does not recognize that a partition proceeding is a
proceeding in equity, not law. Concerning the disbursement of the net proceeds
pursuant to partition by sale, N.C.G.S. § 46-33 states that, after completion and
confirmation of a sale of real property in a partition proceeding, “the court shall
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secure to each tenant in common, or joint tenant, his ratable share in severalty of the
proceeds of sale.” N.C.G.S. § 46-33. Equitable principles apply to the decision of the
trial court in this regard. “Prior to 1868 courts of equity had jurisdiction of partition
proceedings in North Carolina. Since that date partition has been by special
proceeding before the clerk of superior court, with right of review by the judge of
superior court. Procedure is outlined by statute. G.S., Ch. 46.” Allen v. Allen, 263
N.C. 496, 498, 139 S.E.2d 585, 587 (1965) (citation omitted). “The superior court still
possesses all the powers and functions of a court of equity which it possessed prior to
1868. The method of finding facts has been changed, but none of the powers of the
court have been abridged.” McLarty v. Urquhart, 153 N.C. 339, 340-41, 69 S.E. 245,
246 (1910). In general, the purpose of equitable remedies “is ‘the doing of complete,
essential, and perfect justice between all the parties without regard to form, and its
object is the prevention of injustice.’” Bank of N.Y. Mellon v. Withers, 240 N.C. App.
300, 302, 771 S.E.2d 762, 764 (2015) (citation omitted) (case concerning equitable
subrogation).
More specifically, even though partition of real property is governed by
Chapter 46,
in this state partition proceedings have been consistently
held to be equitable in nature. The statutes are not a strict
limitation upon the authority of the court. Since the
proceeding is equitable in nature, the court has jurisdiction
to adjust all equities in respect to the property. . . . . The
court has authority to give directions . . . to the end that
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justice be done between the parties.
Allen, 263 N.C. at 498–99, 139 S.E.2d at 587–88 (citation omitted); see also Gray v.
Crotts, 58 N.C. App. 365, 370, 293 S.E.2d 626, 629 (1982). In an opinion affirming
the trial court’s ruling that, in a partition proceeding, “one tenant in common may set
up claim for amounts expended to remove an encumbrance on the common
property[,]” Henson v. Henson, 236 N.C. 429, 429, 72 S.E.2d 873, 873 (1952), our
Supreme Court explained:
Petitions for partition are equitable in their nature, and
the court has jurisdiction to consider the rights of the
parties under the principles of equity and to do justice
between the parties.
The rule is that in a suit for partition a court of equity has
power to adjust all equities between the parties with
respect to the property to be partitioned. “A tenant in
common who has paid or assumed liens or encumbrances
on the property ordinarily is entitled on partition to a
proportionate reimbursement therefor from the other
tenants.”
In such case the sale may be ordered and the rights of the
parties adjusted from the proceeds of sale.
Id. at 430, 72 S.E.2d at 873–74 (citations omitted); see also Kayann Properties, Inc. v.
Cox, 268 N.C. 14, 19-20, 149 S.E.2d 553, 556–57 (1966); Ward v. Ward, __ N.C. App.
__, __, 797 S.E.2d 525, 529, disc. review denied, 369 N.C. 753, 800 S.E.2d 65 (2017).
In furtherance of its equitable powers, “[p]ending final determination of the
proceeding, on application of any of the parties in a proceeding to partition land, the
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court may make such orders as it considers to be in the best interest of the parties[.]”
N.C. Gen. Stat. § 46-3.1 (2017).
In the present case, the trial court, in its 10 January 2018 judgment, concluded
“that the net proceeds of sale of the Property should, in accordance with N.C.G.S. §
46-10[,] be in accordance [with] Petitioner[’s] and Respondent’s initial
contribution[s.]” N.C. Gen. Stat. § 46-10 concerns the duties of the commissioners in
an actual partition, not the distribution of net proceeds in a partition by sale. See
N.C. Gen. Stat. § 46-10 (2017). However, there is nothing to prevent the trial court
from applying the equitable principles found in N.C.G.S. § 46-10 to a partition by sale
because, “‘[i]n this State partition proceedings have been consistently held to be
equitable in nature, and the court has jurisdiction to adjust all equities in respect to
the property.’” Ward, __ N.C. App. at __, 797 S.E.2d at 529 (citation omitted)
(emphasis added). N.C.G.S. § 46-10 states in part:
The commissioners . . . must . . . partition the [real
property] among the tenants in common, or joint tenants,
according to their respective rights and interests therein, by
dividing the land into equal shares in point of value as
nearly as possible, and for this purpose they are
empowered to subdivide the more valuable tracts as they
may deem best, and to charge the more valuable dividends
with such sums of money as they may think necessary, to
be paid to the dividends of inferior value, in order to make
an equitable partition.
N.C.G.S. § 46-10 (emphasis added). The equitable principle underlying N.C.G.S. §
46-10 is that partition of real property should be conducted in a manner that best
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achieves an equitable distribution of the real property between the tenants in
common or joint tenants. Id. This principle is not incompatible with N.C.G.S. § 46-
33, which states that, after confirmation of a partition by sale, “the court shall secure
to each tenant in common, or joint tenant, his ratable share in severalty of the
proceeds of sale.” Id. N.C.G.S. § 46-10—by its plain language—does not apply to the
present case and, therefore, the trial court’s citation to N.C.G.S. § 46-10 in its
judgment was unnecessary, and potentially confusing. However, because the trial
court “‘has power to adjust all equities between the parties with respect to the
property to be partitioned[,]’” Roberts, 260 N.C. at 240, 132 S.E.2d at 484 (citation
omitted), it committed no error by distributing the net proceeds of the Property
“according to [Petitioner’s and Respondent’s] respective rights and interests
therein[.]” N.C.G.S. § 46-10.
In the present case, both the Clerk and the trial judge determined that the
equities favored an unequal distribution of the net proceeds of the sale of the Property
in order to partially compensate Petitioner for the additional $45,000.00 he had
contributed towards the purchase of the Property. We find nothing in Chapter 46 or
the associated case law that would prevent the trial court from exercising its
equitable powers in this manner.
B. Chapter 41. Estates
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However, Respondent argues that a statute from Chapter 41 of the North
Carolina General Statutes, “Estates,” prohibited the trial court from utilizing its
equitable powers to order an unequal division of the net proceeds of the sale of the
Property. In 1784, the right of survivorship in North Carolina was abolished by
statute “where the joint tenancy would otherwise have been created by the law[.]”
Taylor v. Smith, 116 N.C. 531, 535, 21 S.E. 202, 204 (1895). However, the statute
“does not operate to prohibit persons from entering into written contracts as to land
. . . such as to make the future rights of the parties depend upon the fact of
survivorship.” Id. The current version of that statute is N.C. Gen. Stat. § 41-2
(“Survivorship in joint tenancy defined; proviso as to partnership; unequal ownership
interests”), which states in part: “Nothing in this section prevents the creation of a
joint tenancy with right of survivorship in real . . . property if the instrument creating
the joint tenancy expressly provides for a right of survivorship[.]” N.C. Gen. Stat. §
41-2(a) (2017). The statute further states:
The interests of the grantees holding property in joint
tenancy with right of survivorship shall be deemed to be
equal unless otherwise specified in the conveyance. Any
joint tenancy interest held by a husband and wife, unless
otherwise specified, shall be deemed to be held as a single
tenancy by the entirety, which shall be treated as a single
party when determining interests in the joint tenancy with
right of survivorship. Joint tenancy interests among two
or more joint tenants holding property in joint tenancy with
right of survivorship are subject to the provisions of G.S.
28A-24-3 upon the death of one or more of the joint tenants.
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N.C.G.S. § 41-2(b).
1. Purpose of Chapter 41—Law
The articles in Chapter 41 serve to clarify definitions, rights, and obligations
associated with the contractual or testamentary transfer of estates. N.C.G.S. § 41-
2(b) is found in Article 1 of Chapter 41, entitled: “Survivorship Rights and Future
Interests.” Much of Article 1 is devoted to the abolition of common law rules related
to the transfer of real property, and the promulgation of new rules. See, e.g., N.C.
Gen. Stat. § 41–6.2 (2017) (“Doctrine of worthier title abolished”); N.C. Gen. Stat. §
41–6.3 (2017) (“Rule in Shelley’s case abolished”); N.C. Gen. Stat. § 41–2.1 (2017)
(“Right of survivorship in bank deposits created by written agreement”); N.C. Gen.
Stat. § 41–2.5 (2017) (“Tenancy by the entirety in mobile homes”). The remaining
articles in Chapter 41 have similar purposes: “Article 2. Uniform Statutory Rule
Against Perpetuities[;]” “Article 3. Time Limits on Options in Gross and Certain
Other Interests in Land[;]” “Article 4. The Uniform Transfer on Death (Tod) Security
Registration Act[.]”
As illustrated above, Chapter 41 is primarily concerned with two general
issues: (1) the transfer of property upon the death of an owner of that property and,
(2) establishing and clarifying limitations on the free use and transfer of property.
The enforcement of the provisions set forth in Chapter 41 is a matter of law, not
equity—though equitable issues may arise therefrom. See Clifton v. Owens, 170 N.C.
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607, 87 S.E. 502 (1916); Simmons v. Waddell, 241 N.C. App. 512, 526–27, 775 S.E.2d
661, 676 (2015) (citations omitted) (emphasis added) (“‘The interpretation of a will’s
language is a matter of law.” . . . . “[The] intent [of the testator] is to be gathered
from a consideration of the will from its four corners, and such intent should be given
effect unless contrary to some rule of law or at variance with public policy.’”).
2. Purpose of Chapter 46—Equity
Chapter 46, however, is specifically concerned with the partition of jointly
owned property among living persons.2 N.C.G.S. § 46-3 (stating in relevant part that
“persons claiming real estate as joint tenants . . . may have partition by petition to
the superior court”). Partition pursuant to Chapter 46 is accomplished in a special
proceeding, pursuant to the procedures set forth in Chapter 46 and, where not in
conflict with Chapter 46, pursuant to Article 33, “Special Proceedings,” of Chapter 1.
See N.C.G.S. § 46-1 (“the procedure shall be the same in all respects as prescribed by
law in special proceedings, except as modified herein”). Unfortunately, Chapter 46
does not specifically address the trial court’s equitable powers to order an unequal
division of the net proceeds of a partition by sale based upon unequal monetary
contributions toward the initial purchase of a property by joint tenants with the right
of survivorship.
3. Equitable Powers of the Trial Court—Equitable Distribution
2 With certain limited exceptions not relevant to this analysis.
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Because we can find no statute or precedent directly involving the equitable
powers of a trial court to order an unequal division of the net proceeds from a partition
by sale of real property held as joint tenants with the right of survivorship, we look
to other circumstances where the trial court, acting in equity, is tasked with the
division of real property. When married persons hold title to real property as tenants
by the entirety, “‘each is deemed to be seized of the whole, and not of a moiety or any
undivided portion thereof.’” Carter v. Insurance Co., 242 N.C. 578, 579, 89 S.E.2d
122, 123 (1955) (citation omitted). As such, when an estate held as tenants by the
entirety is severed by absolute divorce, each former spouse is entitled to a one-half
interest in the estate, held as tenants in common. Id. at 580, 89 S.E.2d at 124.
Prior to the enactment of the Equitable Distribution Act, “‘[t]he general rule
[wa]s that upon divorce the two former spouses bec[a]me equal cotenants even though
one of the former spouses paid the entire purchase price [for real property purchased
during the marriage]. Each spouse [wa]s entitled to an undivided one-half interest
in the property[.]’” Branstetter v. Branstetter, 36 N.C. App. 532, 536, 245 S.E.2d 87,
90 (1978) (citations omitted). Even upon separation, the expenditures of one spouse
to maintain the property prior to divorce could not be recovered by that spouse. Id.
However, “[i]n 1981, the General Assembly sought to alleviate the unfairness of the
common law rule by enacting our Equitable Distribution Act which is now codified as
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N.C.G.S. 50–20 and 21.” White v. White, 312 N.C. 770, 774–75, 324 S.E.2d 829, 831
(1985).3
When the trial court makes decisions concerning the distribution of marital
property pursuant to the equitable distribution provisions of Chapter 50, it is acting
as a court of equity. See N.C. Gen. Stat. § 50-20(c) (2017) (“If the court determines
that an equal division [of marital property] is not equitable, the court shall divide the
marital property and divisible property equitably.”); Stone v. Stone, 181 N.C. App.
688, 695, 640 S.E.2d 826, 830 (2007); Barlowe v. Barlowe, 113 N.C. App. 797, 799,
440 S.E.2d 279, 280 (1994) (citation omitted) (“in an equitable distribution
proceeding, the trial court has wide discretion to divide the property unequally”).
Pursuant to the Equitable Distribution Act, the trial court, acting in equity, can order
the unequal distribution of the net proceeds from the sale of real property purchased
by a married couple as tenants by the entirety. N.C.G.S. § 50-20(c) (“There shall be
an equal division by using net value of marital property and net value of divisible
property unless the court determines that an equal division is not equitable. If the
court determines that an equal division is not equitable, the court shall divide the
marital property and divisible property equitably.”); Mugno v. Mugno, 205 N.C. App.
273, 276, 278–79, 695 S.E.2d 495, 497–98, 499 (2010) (award of eighty-six percent of
the marital estate—including the marital home—to wife upheld in equitable
3 For a discussion concerning some of the inequities in the law prior to enactment of the
Equitable Distribution Act, see White, 312 N.C. at 773–74, 324 S.E.2d at 831.
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distribution action). Certainly real property owned by a married couple as joint
tenants with the right of survivorship is, pursuant to the equitable powers of the trial
court, also subject to unequal division in an equitable distribution action. “The
purpose of the Equitable Distribution Act is ‘to divide property equitably, based upon
the relative positions of the parties at the time of divorce, rather than on what they
may have intended when the property was acquired.’” Mims v. Mims, 305 N.C. 41,
54, 286 S.E.2d 779, 788 (1982). “The General Assembly has committed the
distribution of marital property to the discretion of the trial courts, and the exercise
of that discretion will not be disturbed in the absence of clear abuse.” Lawing v.
Lawing, 81 N.C. App. 159, 162, 344 S.E.2d 100, 104 (1986) (citation omitted).
4. Equitable Powers of the Trial Court—Chapter 46 Partition
The General Assembly has also committed the partition and distribution of
real property owned by one or more people as tenants in common, or as joint tenants,
to the discretion of the trial courts, acting as courts of equity, through the enactment
of Chapter 46. See, e.g., N.C.G.S. § 46-1; N.C.G.S. § 46-3.1; N.C.G.S. § 46-33; Solesbee,
__ N.C. App. at __, 805 S.E.2d at 186–87, Ward, __ N.C. App. at __, 797 S.E.2d at 529.
Proceedings for partition are equitable in nature, and in a
suit for partition a court of equity has power to adjust all
equities between the parties with respect to the property to
be partitioned. A sale for partition may be ordered and the
rights of the parties adjusted from the proceeds of the sale.
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Roberts v. Barlowe, 260 N.C. 239, 240, 132 S.E.2d 483, 484 (1963) (citations omitted)
(emphasis added). The trial court properly decided the petition “before an order of
distribution was made.” Id. at 240, 132 S.E.2d at 484 (citation omitted).
“The statutes are not a strict limitation upon the authority of the court. Since
the proceeding is equitable in nature, the court has jurisdiction to adjust all equities
in respect to the property.” Allen, 263 N.C. at 498, 139 S.E.2d at 587 (citation
omitted).4 We hold—similar to an equitable distribution action—that the provisions
of N.C.G.S. § 41-2(b) were “not a strict limitation upon the authority of the court”
acting pursuant to Chapter 46. Allen, 263 N.C. at 498, 139 S.E.2d at 587 (citation
omitted). The provisions of N.C.G.S. § 41-2(b) did not deprive the trial court in the
present case of its equitable powers to “adjust all equities in respect to the
[P]roperty[,]” by ordering that Petitioner be partially compensated for the additional
$45,000.00 he paid to purchase the property through an unequal division of the net
proceeds from the sale of the Property. Allen, 263 N.C. at 498, 139 S.E.2d at 587
(citation omitted). Finding no legal error or abuse of the trial court’s discretion in
determining the equities in the present case, we affirm.
AFFIRMED.
Judges HUNTER, JR. and HAMPSON concur.
4 We note that Respondent’s attorney, in his argument to the trial court, recognized the
equities involved, stating: “And it may be inequitable [for the trial court to order an equal division of
the net proceeds], it may be not what they intended, but unfortunately, that’s what the deed says, and
that’s what the law dictates to be done.”
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