Brandenburg v. Brandenburg , 617 S.W.2d 871 ( 1981 )

GANT, Judge.

This appeal involves the allocation of certain property as wholly nonmarital which appellant/wife contends was both marital and nonmarital. Three pieces of property were involved, viz., a duplex at 134-136 Ilhardt Avenue, Nicholasville; a duplex on Glen Cove in Nicholasville; and a residence which included a rental apartment at 403 Bellevue, Wilmore. All three properties were owned by the husband at the date of marriage, July 18, 1970, and payments on each of these properties were made from marital funds after the marriage. We agree with the appellant that the lower court erred in declaring these properties to be totally nonmarital.

FORMULA

The guidelines for apportionment between marital and nonmarital property were issued in Newman v. Newman, Ky., 597 S.W.2d 137 (1980). The court therein approved the formula utilized by the lower court, saying that the interests of the parties were “the same percentages as their respective contributions to the total equity in the property.” In other words, there is to be established a relationship between the nonmarital contribution and the total contribution, and between the marital contribution and the total contribution. These relationships, reduced to percentages, shall be multiplied by the equity in the property at the time of distribution to establish the value of the nonmarital and marital properties.

With this basis established, we provide the following definitions:

Nonmarital contribution (nmc) is defined as the equity in the property at the time of marriage, plus any amount expended after marriage by either spouse from traceable nonmarital funds in the reduction of mortgage principal, and/or the value of improvements made to the property from such nonmarital funds.

Marital contribution (me) is defined as the amount expended after marriage from other than nonmarital funds in the reduction of mortgage principal, plus the value of all improvements made to the property after marriage from other than nonmarital funds.

Total contribution (tc) is defined as the sum of nonmarital and marital contributions.

Equity (e) is defined as the equity in the property at the time of distribution. This may be either at the date of the decree of dissolution, or, if the property has been sold prior thereto and the proceeds may be properly traced, then the date of the sale shall be the time at which the equity is computed.

The formula to be utilized is:

We do not intend to imply by the adoption of this formula that this Court will not approve other procedures utilized by the lower courts in arriving at an equitable division of property as long as the relationship between the contributions of the parties is established.

The contribution of either spouse of other than marital or nonmarital funds shall not be considered in the increase of equity of the property, and any dicta or other language to the contrary in Robinson v. Robinson, Ky.App., 569 S.W.2d 178 (1978), is specifically overruled. For example, the contribution of one spouse as homemaker, etc., shall be considered only in affixing the percentage of the marital property to be assigned to that spouse.

ILHARDT PROPERTY

This property was purchased by the husband for $15,900 on December 16, 1968, $900 being the down payment and the husband executing a mortgage of $15,000. Pri- or to marriage, the husband reduced the mortgage principal by $352.80, the court below finding the value of the property at marriage to be $15,900 and the nonmarital equity to be $1,252.80. After marriage and before sale on July 18, 1975, the mortgage principal was further reduced by $1,176.00. This sum was realized from rents on this property, which rents are marital funds under Brunson v. Brunson, Ky.App., 569 S.W.2d 173 (1978). The sale price was $32,-500, which was applied in the following manner: $13,471.20 was applied to extinguish the mortgage on this property, leaving a balance of $19,028.80. Of this latter sum, $13,800 was applied on the husband’s mortgage on the Wilmore property, extinguishing that mortgage; $963.43 was applied on the husband’s mortgage on the Glen Cove property; $3,717 was paid on a joint mortgage on property with which we are not concerned; and the balance was put by the husband in his lock box.

Applying the formula, we find:

me = $1,175.00 (mortgage principal reduction during marriage)

tc = $2,428.80

e = $19,028.80

1.252.80 = 51.6% x 19,028.80 = 9,815.25 - Value of 2.428.80 nonmarital property

1,175.00 = 48.4% x 19,028.80 = 9,213.55 - Value of 2","428.80 marital property

GLEN COVE PROPERTY

This property was purchased by the husband on July 31, 1967, for $17,500, with a down payment of $2,500 and a mortgage executed by the husband in the amount of $15,000. Prior to marriage the husband made payments which reduced the mortgage balance by $807.30. The lower court fixed the equity at marriage at $3,307.30. After marriage, the principal balance of the mortgage was further reduced from marital funds by $3,229.27. In November, 1977, this property was sold for $37,500, $10,000 of which was paid in cash and which was applied to the mortgage on this property, and a note and mortgage were executed to the husband for $27,500. The mortgage balance of $963.43 was paid from the proceeds of the Ilhardt sale. The equity at the time of sale was $26,536.57, less the $963.43 which was applied from the Ilhardt sale and which sum has already been computed in that equity.

Again applying the formula, we find the following:

me = $3,229.29 (mortgage reduction from marital funds) plus $466.30 (48.4% of the $963.43 from the Ilhardt sale) or $3,695.59.

tc = $7,500.02

e = $26,536.57 minus $963.43, or $25,573.14.

3,804.43 = 50.7% x 25,573.14 = 12,965.58 - Value of 7,500.02 nonmarital property

3,695.59 = 49.3% x 25,573.14 = 12,607.56 - Value of 7,500.02 marital property

WILMORE PROPERTY

The husband purchased two lots prior to marriage for $3,750.00 and constructed a house thereon, executing a $15,000 mortgage just a few days before marriage. The equity at time of marriage was found to be $3,750.00. During the marriage, $1,200.00 was paid on the principal balance of the mortgage, and in July, 1975, the remaining balance of the mortgage was retired by application of $13,800 from the sale of the Ilhardt property. Additionally, a driveway was installed during the marriage, from marital funds, which was valued at $800.00. At the date of separation, this property was valued at $58,000, with no encumbrance. The equity at the time of distribution was $58,000, less $13,800 which has already been computed as equity on the Ilhardt sale.

Applying the formula, we find the following:

nmc = $3,750 (equity at marriage) plus $7,120.80 (the nonmarital 51.6% of the Ilhardt receipts of $13,800 applied to the mortgage, or $10,870.80

me = $1,200 (mortgage reduction from marital funds) plus $6,679.20 (marital 48.4% of the Ilhardt receipts applied to the mortgage) plus $800 (marital improvements) or $8,679.20

tc = $19,550.00

e = $58,000 minus $13,800 or $44,200

8,679.20 = 44.4% x 44,200 = 19,624.80 - Value of 19,500.00 marital property

The total value of the equities in all three properties, as computed above, is $88,801.94, of which $47,356.03 was nonmarital property, and $41,445.01 was marital property.

The other error assigned by the appellant was not preserved and will not be considered by this Court.

Accordingly, the judgment concerning the property herein is reversed and remanded to the lower court for further proceedings in accordance with this opinion and for division of the marital property pursuant to KRS 403.190.

REYNOLDS, J., concurs.

GUDGEL, J., concurs by separate opinion.