McGoldrick, J. v. Murphy, M. ( 2020 )

J. A21039/19
2020 PA Super 24JOSEPH McGOLDRICK : IN THE SUPERIOR COURT OF
: PENNSYLVANIA
v. :
:
MEGAN MURPHY, : No. 632 EDA 2019
:
Appellant :
Appeal from the Judgment Entered April 2, 2019,
in the Court of Common Pleas of Montgomery
County Civil Division at No. 2018-05803
BEFORE: BOWES, J., OLSON, J., AND FORD ELLIOTT, P.J.E.
OPINION BY FORD ELLIOTT, P.J.E.: FILED FEBRUARY 06, 2020
Megan Murphy (“Megan”) appeals from the April 2, 2019 judgment
entered in the Court of Common Pleas of Montgomery County on the trial
court’s order entered January 17, 2019, that divided the settlement proceeds
of the home formerly owned by Megan and appellee Joseph McGoldrick
(“Joseph”). We affirm.
The record reflects that Megan and Joseph began dating in July 2010.
A romantic relationship quickly ensued, and in the fall of the same year, Megan
moved in with Joseph. The two lived together in Joseph’s residence for
six and one-half years. In approximately December of 2015, Megan and
Joseph decided to marry. At this time, they also decided to look for a home
to purchase together. Due to budget constraints, the couple’s plans to buy a
home put Joseph’s purchase of an engagement ring for Megan on hold.
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In late 2016, Megan and Joseph decided to purchase a home on
Chestnut Street in Royersford, Pennsylvania (the “Home”), for $205,000.
Because Joseph had the financial means necessary to close on the Home and
Megan was more creditworthy than Joseph, the two agreed that Joseph would
withdraw the needed money from his retirement fund and Megan would solely
execute the mortgage note.1
The record reflects that on November 9, 2016, Joseph withdrew $5,000
from an Ameriprise Financial account that he owned, which sum represented
payment of the hand money that he and Megan needed to bind the sale
contract. As part of the mortgage loan application, the bank required Megan
and Joseph to execute a gift letter to document the source of the $5,000 and
to verify that Megan’s receipt of the $5,000 constituted a gift to be applied
toward the purchase of the Home and not a loan. The $5,000 gift letter2
reflects that Joseph certified to the bank that he withdrew $5,000 from his
Ameriprise Financial account, gifted that $5,000 to Megan whose relationship
to him is set forth on the gift letter as “fiancé,” and that the $5,000 “gift is to
be applied toward the purchase of the [Home].” (Megan’s answer, new
matter, and counterclaim, 4/16/18 at Exhibit “C.”) The $5,000 gift letter
further states that “[n]o repayment of the gift is expected or implied in the
form of cash or by future services of the recipient.” (Id.)
1 The record reflects that both Megan and Joseph executed the mortgage.
2 We note that the $5,000 gift letter is executed by both parties, but not dated.
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The record further reflects that on November 23, 2016, Joseph withdrew
$47,000 from his Ameriprise Financial account, which sum represented a
20 percent down payment on the Home, together with closing costs. As part
of the mortgage loan application, the bank required Megan and Joseph to
execute a gift letter to document the source of the $47,000 and to verify that
Megan’s receipt of the $47,000 was a gift and not a loan. The $47,000 gift
letter3 reflects that Joseph certified to the bank that he withdrew $47,000
from his Ameriprise Financial account, gifted that $47,000 to Megan whose
relationship to him is set forth in the gift letter as “fiancé,” and that the
$47,000 “gift is to be applied toward the purchase of the [Home].” (Id. at
Exhibit “D.”) The gift letter further states that “[n]o repayment of the gift is
expected or implied in the form of cash or by future services of the recipient.”
(Id.)
On December 29, 2016, Megan and Joseph closed on the Home, taking
it as joint tenants with the right of survivorship. At this time, the two began
to share all Home-related expenses. After making some renovations, Megan
and Joseph moved into the Home in March 2017. In June 2017, Joseph gave
Megan an engagement ring.
On March 10, 2018, however, Megan ended the engagement and
returned the ring to Joseph. At this point, Joseph continued to live in the
3 We note that the $47,000 gift letter is executed by both parties but not
dated.
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Home and Megan stayed there occasionally. It was also at this point that
Joseph stopped paying his share of the Home-related expenses and Megan
assumed payment of all of those expenses. In August 2018, Megan
permanently moved out of the Home but continued to pay all Home-related
expenses.
On March 23, 2018, Joseph initiated the underlying action by filing a
complaint in equity – partition. On September 21, 2018, the trial court
entered the following order:
AND NOW, this 21st day of September, 2018, during a
conference call with counsel, the parties expressed
their agreement to list the [Home] for sale and further
agree that the proceeds of the sale shall be placed in
escrow with the title company. Absent an agreement
between the parties, the [trial c]ourt shall be notified
upon the sale of the [Home] at which time chambers
shall promptly schedule this matter for a one hour
hearing to address division of assets.
Trial court order, 9/21/18.
In November 2018, the Home sold at a loss, yielding $41,884.86 in
settlement proceeds. We note that the record reflects that the parties also
received a homeowners’ insurance payment credit in the amount of $101.
Therefore, the total amount escrowed was $41,985.86, which we will refer to
as the “settlement proceeds.”
As the parties could not agree on the division of the settlement
proceeds, the trial court held the agreed-upon hearing, at which only Megan
and Joseph testified. On January 17, 2019, the trial court entered its order
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dividing the settlement proceeds, awarding $5,688.43 to Megan, which sum
equaled 50 percent of the money she expended on Home-related expenses
from April through October 2018, and awarding $36,297.424 to Joseph, which
sum represented the remaining balance in escrow. (Trial court order,
1/17/19.)
On January 28, 2019, Megan filed a post-trial motion. The trial court
denied the motion on February 14, 2019. On February 25, 2019, which was
prior to entry of judgment, Megan filed a notice of appeal. On March 5, 2019,
the trial court ordered Megan to file a concise statement of errors complained
of on appeal pursuant to Pa.R.A.P. 1925(b). Megan filed her Rule 1925(b)
statement on March 12, 2019. Because judgment had not been entered, this
court entered an order on March 28, 2019, directing Megan to praecipe the
trial court prothonotary to enter judgment on the trial court’s January 17,
2019 order.5 The order further directed that within ten days of entry of
judgment, Megan was to file with the prothonotary of this court a certified
4 We note that there is a one-cent discrepancy in the amount escrowed and
the amounts awarded in the trial court’s January 17, 2019 order.
5 Pennsylvania Rule of Appellate Procedure 301 requires that an appeal be
taken from a final order. Pa.R.A.P. 301(a), (c) & (d); see also Fanning v.
Davne, 795 A.2d 388, 391-392 (Pa.Super. 2002), appeal denied, 825 A.2d
1261 (Pa. 2003) (reiterating that appeal properly lies from judgment entered
following trial court’s disposition of post-trial motions, not from order denying
post-trial motions).
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copy of the trial court docket reflecting entry of judgment. Megan timely
complied.6 This appeal is now ripe for our review.7
Megan raises the following issues:
I. With all parties and the [t]rial [c]ourt in
[a]greement, have the requirements of a Part 1
Partition Order been met?
II. Does a signed writing, “Gift Letter”, which
expressly identifies the donee as “Fiancé” and
states that “[n]o repayment of the gift is
expected or implied in the form of cash or by
future services of the recipient” trump prior
court holdings of gifts in contemplation of
marriage which did not involve express, written
waivers[?]
Megan’s brief at 7.
When reviewing an equitable decree, our standard of
review is limited. We will reverse only where the trial
court was palpably erroneous, misapplied the law or
committed a manifest abuse of discretion. Where
there are any apparently reasonable grounds for the
trial court’s decision, we must affirm it. Moreover,
[t]he function of this Court on an appeal
from an adjudication in equity is not to
substitute [our] view for that of the lower
tribunal; our task is rather to determine
whether a judicial mind, on due
consideration of all the evidence, as a
whole, could reasonably have reached the
conclusion of that tribunal.
6 We note that the trial court filed its Rule 1925(a) opinion on April 8, 2019.
7 Pursuant to Pa.R.A.P. 905(a)(5), this court treats a notice of appeal filed
after the announcement of a determination but before entry of an appealable
order as filed after entry of the appealable order and on the day thereof.
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Additionally, we note that when reviewing the results
of a non-jury trial, we are bound by the trial court’s
findings of fact, unless those findings are not based
on competent evidence.
Nebesho v. Brown, 846 A.2d 721, 725-726 (Pa.Super. 2004) (internal
citations, quotation marks, and original brackets omitted).
In her first issue, Megan contends that the trial court’s September 21,
2018 order that memorialized the parties’ agreement regarding the sale of the
Home and the distribution of the settlement proceeds followed by the actual
sale of the Home abrogated the need to record a Part 1 partition order, but
nevertheless served the purpose of a Part 1 partition order. (Megan’s brief at
13-16.) In Megan’s words, “the joint tenancy was terminated on sale and the
proceeds turned into a tenancy in common – the same result as a recorded
Part 1 order under Kapcsos v. Benshoff[, 194 A.3d 139 (Pa.Super. 2018)
(en banc)].” (Id. at 15.). According to Megan, “[w]hat actually happened
here was that the net proceeds of the [Home] sale were the pie to be divided
in a Part [2] Kapcsos proceeding. Part 1 being a transaction from a joint
tenancy, and Part [2] being division of proceeds.” (Id.) Megan contends that
the December 20, 2018 hearing constituted the Part 2 hearing where the
parties presented “evidence of monetary contributions as set offs toward
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owelty.”8 (Id. at 17.) Megan further contends that to the extent the trial
court’s September 21, 2018 order was not a “technically correct” Part 1 order,
this court should overlook any procedural defect because Pennsylvania Rule
of Civil Procedure 126 requires liberal construction of civil procedure rules.
(Id. at 15-16.) Megan requests a remand for entry of a final order that awards
her one-half of the settlement proceeds plus the $5,688.43 that she was
already awarded.9 (Id. at 21.)
Pennsylvania Rules of Civil Procedure 1551-1574 govern “the procedure
in an action for the partition of real estate.” Pa.R.Civ.P. 1551 (setting forth
form of partition action).
[Rules] 1551-1574 split a partition action into two,
distinct, chronological parts. Rules 1551-1557 govern
Part 1, and Rules 1558-1574 govern Part 2. Each
8 “Owelty” has been defined as: “1. Equality as achieved by a compensatory
sum of money given after an exchange of parcels of land having different
values or after an unequal partition of real property. 2. The sum of money so
paid.” Bernstein v. Sherman, 902 A.2d 1276, 1279 n.3 (Pa.Super. 2006),
citing Black’s Law Dictionary 1230 (7th ed. 1999). See also
Pa.R.Civ.P. 1562 (setting forth Part II partition action procedural rule
regarding real estate not capable of a proportionate division).
9 We note that the trial court opined that Megan waived this issue because
she participated in the proceedings below and never objected or claimed that
the law entitled her to an equal distribution of the settlement proceeds. (Trial
court opinion, 4/8/19 at 7.) See Pa.R.A.P. 302(a) (stating that “[i]ssues not
raised in the lower court are waived and cannot be raised for the first time on
appeal”). A reading of the hearing transcript, however, reveals that Megan’s
counsel argued that by “operation of law set forth in our memo, the property
is divided equally” in accordance with the civil procedure rules governing
partition actions. (Notes of testimony, 12/20/18 at 108.) A reading of
Megan’s trial memorandum and post-trial motion reveals that she arguably
raised the issue with the trial court. Therefore, we decline to find waiver.
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part, by rule, must produce its own, distinct,
appealable order.
The first order, under Pa.R.Civ.P. 1557, directs
partition of the parties’ legal interests into severalty.
See Johnson v. Gaul, 228 Pa. 75, 77 A. 399, 400
(Pa. 1910) (“partition is a possessory action; its
purpose and effect being to give to each of a number
of joint owners . . . his [or her] share in severalty”).
The second order, under Pa.R.Civ.P. 1570, does one
of three things. A Rule 1570 order may (1) divide the
partitioned property among the parties, (2) force one
or more of the parties to sell their interest in the land
to one or more of the parties, or (3) sell the land to
the general public and distribute the proceeds among
the parties.
Kapcsos v. Benshoff, 194 A.3d at 141-142.
Here, Megan theorizes that when one joint tenant institutes a partition
action, but both joint tenants thereafter agree to sell the real estate and, if
need be, have a judge determine how the sale proceeds are divided, which
agreement is memorialized in a court order, the subsequent sale of the real
estate, together with the court order memorializing the co-tenants’
agreement, serve the purpose of a Part 1 partition order and an equal division
of the sale proceeds, as adjusted by owelty, is required because the former
joint tenants now own the sale proceeds as tenants in common. The law
provides no support for Megan’s theory. The law holds that
partition is a possessory action; its purpose and effect
being to give to each of a number of joint owners the
possession to which he is entitled of his share in
severalty. It is an adversary action and its
proceedings are compulsory. The purpose of the
action of partition is to divide property, not to sell
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it. A sale may become an incident, but is not the
objective point of it.
Russo v. Polidoro, 176 A.3d 326, 329-330 (Pa.Super. 2017) (quotation
marks, ellipses, brackets, and internal citations omitted; emphasis added).
Here, before the trial court ever considered the propriety of the entry of
a Part 1 order that would have directed partition of the parties’ legal interests
in the Home into severalty, Megan and Joseph agreed to sell the Home and,
if need be, allow the trial court to divide the sale proceeds, which agreement
was memorialized in the September 21, 2018 order. When the Home sold,
Megan and Joseph no longer had legal interests in the Home. Consequently,
and despite Megan’s insistence to the contrary, at the time of the sale, the
procedural rules, as well as the case law, that govern an action for the partition
of real estate ceased to apply simply because the sale of the Home
extinguished the parties’ legal interests and there was no longer any real
estate to partition.10
Megan next claims that the trial court erred when it concluded that the
$52,000 Joseph contributed to purchase the Home was a conditional gift in
contemplation of marriage because the plain language of the gift letters
executed by the parties constituted an “express waiver of repayment” which
“trumps case law on conditional gifting.” (Megan’s brief at 20.) According to
Megan, Joseph’s waiver of repayment as evidenced by the gift letters entitles
10We note that owelty has no application here because there was no unequal
partition of the Home. Indeed, there was no partition at all.
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her to 50 percent of the settlement proceeds, plus the $5,688.43 that she was
already awarded.
In Nicholson v. Johnston, 855 A.2d 97, 101-102 (Pa.Super. 2004),
this court reiterated the law of conditional gifts as previously discussed in
Lindh v. Surman, 702 A.2d 560 (Pa.Super. 1997), affirmed, 742 A.2d 643(Pa. 1999), and as set forth in the Restatement (First) of Restitution § 58
(1937), as follows:
Gifts Made in Reliance on a Relation.
A person who has conferred a benefit upon another,
manifesting that he does not expect compensation
therefor, is not entitled to restitution merely because
his expectation that an existing relation will continue
or that a future relation will come into existence is not
realized, unless the conferring of the benefit is
conditioned thereon.
....
(b) Conditional gifts. The gift may be
conditional upon the continuance or
creation of a relation, and if conditional
the donor is entitled to its return if the
relation terminates or is not entered into.
The condition may be stated in specific
words or it may be inferred from the
circumstances. Likewise, as in the case of
engagement and wedding gifts, justice
may require the creation of a condition
although the donor had no such condition
in mind.
(c) Wedding and engagement gifts. Gifts
made in the hope that a marriage or
contract of marriage will result are not
recoverable, in the absence of fraud. Gifts
made in anticipation of marriage are not
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ordinarily expressed to be conditional
and, although there is an engagement to
marry, if the marriage fails to occur
without the fault of the donee, normally
the gift cannot be recovered. If, however,
the donee obtained the gift fraudulently or
if the gift was made for a purpose which
could be achieved only by the marriage, a
donor who is not himself at fault is entitled
to restitution if the marriage does not take
place, even if the gift was of money. If
there is an engagement to marry and the
donee, having received the gift without
fraud, later wrongfully breaks the promise
of marriage, the donor is entitled to
restitution if the gift is an engagement
ring, a family heirloom or other similar
thing intimately connected with the
marriage, but not if the gift is one of
money intended to be used by the donee
before the marriage.
. . . . Additionally, the Reporter’s notes recognize:
As to gifts other than services or
engagement rings the decided cases have
generally allowed recovery upon the same
basis as in the case of the rings. It is to
be noted, however, that in all the cases in
which recovery was allowed the money or
other things were transferred in
contemplation of marriage in the sense
that they were to be used by the parties
after marriage.
Nicholson, 855 A.2d at 101-102 (internal citations omitted; emphasis in
original). The Reporter’s Notes to Section 58 also provide that “[i]t is
suggest[ed] that gifts of considerable size may be assumed to be conditional,
that other gifts not involving peculiar features, such as heirlooms, and not for
the primary purpose of being used after marriage by the parties, should be
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regarded as absolute and should be incapable of recovery.” Restatement
(First) of Restitution § 58, Reporter’s Notes. Additionally, in affirming this
court’s decision in Lindh, our supreme court adopted a no-fault approach to
gifts given in contemplation of marriage which requires such a gift to be
returned to the donor regardless of who was at fault for ending the
relationship. Lindh, 742 A.2d at 647.
The facts of this case are similar to those in Nicholson, supra. There,
Nicholson and Johnston, intending to marry, purchased a home as joint
tenants with the right of survivorship. Nicholson, 855 A.2d at 98. Johnston
supplied the down payment and closing costs and agreed to be financially
responsible for the mortgage. The marriage never occurred. Nicholson filed
a partition action and litigation ensued. This court ultimately affirmed the trial
court’s finding that Johnston’s down payment constituted a conditional gift
contingent upon the occurrence of the marriage, and because the marriage
did not occur, Johnston was entitled to recover the down payment. Id. at
101.
Here, Megan contends that the execution of the gift letters constituted
a waiver by Joseph that his gift of $52,000 toward the purchase of the Home
was conditioned on marriage because the gift letters that they signed state
that “no repayment is expected or implied.” (Megan’s brief at 16-17.)
By their very nature, however, gifts are given without the expectation
of repayment. See Black’s Law Dictionary, 709 (8th ed.) (defining a “gift”
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as “[t]he voluntary transfer of property to another without compensation”);
see also Restatement (First) of Restitution § 58, Reporter’s Notes (explaining
that donor of gift made in reliance on creation of a relation, manifesting no
expectation of repayment, is entitled to restitution if the relation is not entered
into even though donor had no such condition in mind). Indeed, Joseph
testified that at the time he transferred the funds, he did not expect to be
repaid because he “felt [he and Megan] were going to live in the [Home]
forever. Get married and have a great life.” (Notes of testimony, 12/20/18
at 18.) Megan echoed Joseph’s testimony and stated that when the parties
signed the gift letters, she was Joseph’s fiancé and that she and Joseph were
purchasing the Home because they intended to live together as a married
couple. (Id. at 97.) Megan and Joseph also consistently testified that the
sole purpose of the gift letters was to secure the mortgage loan to buy the
Home that they intended to live in together as a married couple. (Id. at 18,
33-35, 97, 112.)
The record clearly demonstrates that Joseph made the $52,000 gift for
the purpose of purchasing a marital residence for him and Megan to live in
as husband and wife. The gift letters were necessary to achieve that purpose
and did not extinguish the condition upon which the gift was given – the
occurrence of marriage. Therefore, when the relationship between Megan and
Joseph ended, the gift’s purpose could no longer be achieved. Consequently,
Joseph was entitled to recover the remaining escrow balance in the amount
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of $36,297.42 which represented partial reimbursement of his payment of the
hand money and down payment needed to purchase the Home.
Judgment affirmed.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/6/20
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