Karen Wynkoop v. Gerard Stratthaus

NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal
revision before publication in the Vermont Reports. Readers are requested to notify the Reporter
of Decisions by email at: JUD.Reporter@state.vt.us or by mail at: Vermont Supreme Court, 109
State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be
made before this opinion goes to press.
2016 VT 5
No. 2015-021
Karen Wynkoop Supreme Court
On Appeal from
v. Superior Court, Caledonia Unit,
Civil Division
Gerard Stratthaus June Term, 2015
Robert R. Bent, J.
Karen Wynkoop, Pro Se, Rochester, Plaintiff-Appellee.
Zarina Suárez O’Hagin, Hardwick, for Defendant-Appellant.
PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.
¶ 1. DOOLEY, J. The parties to this appeal are co-lessees in a thirty-year ground
lease for a ten-acre parcel of land owned by Star Meadows Farm, Inc. and located in Walden,
Vermont. The parties constructed improvements on the land and shared the parcel as unmarried
cohabitants prior to the events that gave rise to this action. Upon termination of their
relationship, plaintiff Karen Wynkoop sought a declaratory judgment in Caledonia Superior
Court to partition the property under 12 V.S.A. § 5161 and compensation for ouster under 12
V.S.A. § 4765. Defendant Gerard Stratthaus appeals the trial court’s property division and
compensation to plaintiff. We reverse in part and affirm in part.
¶ 2. The following facts generally are not in dispute, unless otherwise noted. The
parties met in 2006, and defendant moved into plaintiff’s apartment in 2008. At that time,
plaintiff was employed as a caretaker for the elderly and owned and operated her own eggroll
business, and defendant worked as a dentist for a healthcare provider, where he still is employed.
¶ 3. In 2008, the parties signed a thirty-year ground lease for a ten-acre parcel with
Star Meadow Farm, Inc., a Vermont-certified nonprofit corporation, in Walden, Vermont.1 Star
Meadow Farm owns 128 acres of land in fee simple and leases parcels to its tenants rent-free.
Tenants are responsible for property taxes, liability insurance, utilities, and other expenses,
including costs of surveys, land or forest conservation plans, and accounting and legal fees, and
must pay to the corporation a $120 land improvement fee. All tenants become members of the
Star Meadow Farm Board of Directors. Tenants have rights to use and improve the land and the
right to sever the improvements upon termination of the lease, but the ground lease specifies
restrictions on assigning the lease and selling and assigning the improvements. Specifically, the
lease allows transfer of the leasehold interest or the buildings or improvements to a person
approved by the corporation who will enter into a lease on the same terms and will be a director
of the corporation. However, the corporation must be notified of a pending transfer and has the
option to buy the buildings and improvements at 80% of fair market value as determined by the
town for property taxation purposes.
¶ 4. After signing the lease, the parties purchased a thirty-two-foot yurt to be
constructed on the property. Before beginning construction, the parties’ relationship
deteriorated. Plaintiff subsequently purchased a smaller, twenty-four-foot yurt to provide
additional living space. When the relationship improved, the two moved forward with
construction of the larger yurt, but the smaller yurt remained unassembled. The parties
eventually completed the thirty-two-foot yurt and also erected a secondary building they called
1
The by-laws of Star Meadow Farm, Inc., indicate that the purposes of the corporation
are to create and preserve access to land, to form a cooperative community, to refrain from
contributing to the escalation of land prices due to speculation and to provide affordable housing
to low- and moderate-income people.
2
the “carriage house.” Because of plaintiff’s prior construction experience, the parties agreed that
she would quit her two jobs and work full time as the general contractor for the construction of
the two buildings. Plaintiff planned and coordinated the project and hired additional contractors,
plumbers, electricians, and builders for assistance. Although defendant disputes the extent of
plaintiff’s contribution, the trial court found it substantial.
¶ 5. During this time, defendant supported the parties with his income as a dentist, and
plaintiff contributed money from her sale of a previous home. The construction of the two
buildings primarily was funded through the parties’ joint bank account, plaintiff’s checking
account, and cash from defendant’s safe deposit box. Plaintiff repeatedly requested from
defendant a written agreement as to their respective interests in the property, but no official
agreement ever was made.
¶ 6. By 2011, the parties’ relationship again deteriorated, and plaintiff moved into the
carriage house, while defendant remained in the yurt. Plaintiff and other witnesses presented
testimony at trial that, during this time, defendant became openly angry and hostile to plaintiff,
her guests, and the contractors, such that plaintiff began to fear for her own safety and eventually
moved off the property.2 In August 2012, plaintiff sent defendant a notice to vacate the property.
Defendant responded with a notice of trespass preventing plaintiff from reentering the property,
asserting that she had abandoned the property and that he had become the sole occupant. He also
changed the locks on the yurt to prevent plaintiff’s entry.
¶ 7. Plaintiff brought an action in Caledonia Superior Court seeking partition of the
property and compensation for her ouster.3 The trial took three days. Defendant failed to appear
2
Although the evidence demonstrated that plaintiff feared for her safety, the trial court
found that defendant never overtly threatened or physically harmed plaintiff or others.
3
Plaintiff’s complaint states several other causes of action, some of which were not
raised on appeal to this Court and others that were raised as alternative claims in the event the
trial court concluded that judicial partition was not possible.
3
at the third day of trial although his lawyer was present. In its decision, the trial court applied 12
V.S.A. § 5161 in partitioning the leasehold and appointing commissioners to determine a buy-out
price or, if necessary, to sell the property and distribute the proceeds. Despite appointing
commissioners, the court made many decisions about how to determine the value of each party’s
interest and decided that plaintiff would have the first opportunity to obtain the property and pay
off defendant. The court determined the parties’ relative contributions to the project, including
plaintiff’s “sweat equity”—i.e., her labor as general contractor. The court further found that
defendant ousted plaintiff from the property and compensated her for the duration of the ouster.
In total, the court estimated the expenses for the project at $145,000 and credited plaintiff with
$24,000 in sweat equity, bringing the total to $169,000. Out of this figure, the court credited
plaintiff with a 39% share, and defendant with 61%. The court valued much of the personal
property and distributed it between the parties.4 Defendant appealed.
¶ 8. On appeal, defendant raises four claims of error: (1) the leasehold is not real
property subject to partition under 12 V.S.A. § 5161; (2) the trial court could not credit plaintiff’s
sweat equity; (3) the court erred in calculating the parties’ contributions to the project; and (4)
the court improperly found that defendant ousted plaintiff from the property. We affirm the trial
court’s judgment with respect to the applicability of the partition statute to the leasehold, the
credit for plaintiff’s sweat equity, and the ouster. We reverse and remand for the court to correct
errors in its calculation of the parties’ respective contributions and to value the property and
determine the partition remedy.
4
The parties stipulated to the ownership of many of these items, and the court distributed
the remaining items equitably. Although defendant argues in his brief to this Court that the trial
court had no authority to distribute property not held jointly by the parties, he did not object to
the court’s distribution below and therefore has not preserved this issue for appeal.
4
¶ 9. The threshold issue presented in this case is whether 12 V.S.A. § 5161 applies to
allow partition of the property interests of plaintiff and defendant. As we hold infra ¶ 19, we
view the consequence of the answer to this question somewhat differently from the trial court
and the parties but agree that the question should be answered. We answer the question in the
affirmative. 12 V.S.A. § 5161 provides: “A person having or holding real estate with others, as
joint tenants, tenants in common or coparceners, may have partition thereof.” The trial court
held that the real estate interest present here, a tenancy under a thirty-year lease, comes within
the statute, drawing upon an Ohio decision5 and a decision from this Court.6 We agree with
defendant that neither of these decisions support the trial court’s conclusion and that the wording
of the statute requiring “having or holding real estate” and “joint tenants, tenants in common or
coparceners”7 does not appear on the surface to be consistent with the trial court holding. The
interpretation of § 5161 is an issue of law, which we review de novo. In re T.S.S., 2015 VT 55,
¶ 15, ___ Vt. ___, 121 A.3d 1184.
¶ 10. Partition is defined as “[t]he act of dividing; esp., the division of real property
held jointly or in common by two or more persons into individually owned interests.” Black’s
Law Dictionary 1151 (8th ed. 2004) (emphasis added). Section 5161 provides for partition
among holders of concurrent interests in “real estate.” 12 V.S.A. § 5161. Broadly, property falls
within two classifications: real and personal (chattel). Real property pertains to “[l]and and
5
Brown v. Rawson, 31 Ohio Dec. 447, 1920 WL 593 (C. P. 1920), concerns the ability
of a fee owner to partition real property subject to a leasehold and in possession of the lessee. As
the court stated, “[t]he existence of an ordinary lease for years, under which the tenant is in
possession, paying rent to the owners of the fee, is no obstacle to partition among such owners.”
Id. at *3.
6
Stanley v. Stanley, 2007 VT 44, 181 Vt. 527, 928 A.2d 1194, concerns the partition of
a wooded parcel subject to a perpetual lease. The trial court never reached the merits of the
partition action, and it was not raised on appeal to this Court. Id. ¶¶ 6, 15.
7
Black’s Law Dictionary 359 (8th ed. 2004) defines a “coparcener” as a “person to
whom an estate descends jointly, and who holds it as an entire estate” or a “person who has
become a current owner as a result of descent.” The parties are not coparceners.
5
anything growing on, attached to, or erected on it, excluding anything that may be severed
without injury to the land,” Black’s Law Dictionary, supra at 1254, while personal property
encompasses “[a]ny movable or intangible thing that is subject to ownership not classified as real
property,” id. A leasehold, however, “has historically been classified as a chattel real,” id. at
909-10, which is a “real-property interest that is less than a freehold or fee,” id. at 251. A
leasehold estate that is for a term of years is considered a chattel “because it lacks the
indefiniteness of time essential to real property.” Id. Commentators have noted that an estate for
years “never fully attained the historical dignity of being ‘real property.’ ” 1 R. Powell, Powell
on Real Property § 5.04 (1998).
¶ 11. Other courts have recognized this hybrid nature of a leasehold—falling
somewhere between real and personal property—and have concluded that it is subject to the
rules governing personal property. See, e.g., In re Marino, 813 F.2d 1562, 1566 (9th Cir. 1987)
(noting that leasehold is “personal property under California law”); D.C. v. 17M Assocs., LLC,
98 A.3d 954, 961 (D.C. 2014) (“There can be no question under the common law in force in this
District that a leasehold interest in lands is personal property.” (quotation and internal alteration
omitted)). Consistent with this view, courts have allowed the partition of leaseholds under
statutes that expressly provide for partition of personal property, see, e.g., Wilson v. Prentiss,
140 P.3d 288, 290-91 (Colo. App. 2006) (noting statute allows partition of real and personal
property), or, in the absence of express statutory language, under the broad equitable powers of
the court, see, e.g., Sims v. Sims, 1996-NMSC-078, ¶ 38, 930 P.2d 153 (stating plain language of
“Partition Act” does not abrogate court’s equitable powers).
¶ 12. Our statutory scheme is entitled “Partition of Real Estate.” 12 V.S.A. Ch. 179.
Real estate is defined in the definition section of Vermont’s statutes as “lands, tenements, and
hereditaments and all rights thereto and interests therein.” 1 V.S.A. § 132; see In re Burlington
Airport Permit, 2014 VT 72, ¶ 21, 197 Vt. 203, 103 A.3d 153 (“[A] word used throughout an act
6
or statutes in pari materia bears the same meaning throughout, unless it is obvious that another
meaning was intended.” (internal alteration and quotation omitted)). This terminology can be
traced back to the 1797 partition act, entitled “An act, for the partition of real estate, in certain
cases,” which provided a partition action for “any person or persons, having or holding, or who
may hereafter have or hold any lands, tenements or hereditaments, with others, as joint tenants,
tenants in common, or coparceners.” Laws of the State of Vermont, 1808, ch. XI § 1. Another
section of that law suggests a broad meaning of “lands, tenements or hereditaments.” Section 11
provides: “all gifts, grants, feoffments, devises and other conveyances of any lands, tenements
and hereditaments, which . . . shall be made, to two or more persons, whether for years, for life,
in tail, or in fee, shall be taken, deemed and adjudged to be estates in common, and not in joint
tenancy.” Id. § 11 (emphasis added). The language of that section is now contained in 27
V.S.A. § 2(a). As this language suggests, the phrase “lands, tenements and hereditaments” is not
restricted merely to freehold estates. It is reasonable to conclude that the phrase bears the same
meaning in § 1 of the 1808 act as in § 11. See In re Burlington Airport Permit, 2014 VT 72,
¶ 21.
¶ 13. The construction of the statute that “real estate” includes a tenancy for years is
also consistent with the evolution of the English statute on which the Vermont partition statute is
based. Other courts have recognized this history and concluded that their own partition statutes,
having been modeled on the English antecedents, should be read broadly so as to extend to
leaseholds. See, e.g., Pierce v. Pierce, 123 N.E.2d 511, 512-13 (Ill. 1954); Sims, 1996 -NMSC-
078, ¶¶ 15, 20.
¶ 14. Our early case law also supports this broad reading. In Munroe v. Walbridge, 2
Aik. 410, 1827 WL 1403, we considered the right of mortgagees to partition their undivided
interests. In disclaiming the cases restricting the scope of a partition action, we held that it is “no
improper construction of our statute, to consider it broad enough to comprise all the cases in
7
which a partition is allowed at common law, and by virtue of the English statutes.” Id. at 412,
1827 WL 1403 at *2.
¶ 15. The reliance on the history forms the rationale for Pierce, the leading case in the
area. The wording of the Illinois statute is similar to that of the Vermont statute when the
statutory definition of real estate is included. Id. at 512. As in this case, the opponent to
partition argued that the statute allowed partition only of real estate held in fee. The Court noted
that prior to 1539, partition in England was available only for coparceners, that is, persons who
had become concurrent owners through inheritance and held a fee interest. In 1539, by virtue of
statute, partition was extended to all joint tenants and tenants in common having “any estate or
estates of inheritance in their own right, or in the right of their wives, or any manors, lands,
tenements, or hereditaments.” Id. (quoting 31 Henry VIII, c.1). The following year, the statute
was amended extend the remedy to
all joint-tenants and tenants in common, and every of them, which
now hold or hereafter shall hold jointly or in common for term of
life, year or years, or joint-tenants or tenants in common, where
some of them shall have estate or estates for term of life or years,
with other that have or shall have estate or estates of inheritance of
freehold in any manors, lands, tenements, or hereditaments.
Id. at 513 (emphasis added) (quoting 32 Henry VIII, c.32). All, or virtually all, decisions that
have considered the question before us have held that partition is available for leasehold
interests. See Baldwin v. Baldwin, 516 So. 2d 560, 561-62 (Ala. 1987); Chiang v. Chang, 529
N.Y.S.2d 294, 295 (App. Div. 1988); Sims, 1996—NMSC—078, ¶ 51; Black v. Sylvania Prod.
Co., 137 N.E. 904, 904 (Ohio 1922); Amerada Pet. Co. v. Cheesman, 223 S.W.2d 74, 76 (Tex.
Civ. App. 1949). Based on our own analysis, as well as the precedents from other jurisdictions,
we hold that plaintiff could seek partition under 12 V.S.A. § 5161.
¶ 16. As we stated at the outset of this discussion, we have a different view from the
parties and the trial court of the significance of this holding. Defendant has raised this issue on
8
the apparent belief that if the statutory partition scheme did not apply to leasehold estates
plaintiff would be left without a remedy for dividing the joint assets of the parties leaving their
distribution where they currently lie. This would be a manifestly unfair and unjust result and
would reward possession alone however that possession was accomplished. It would leave
defendant unjustly enriched without a remedy. Moreover, it would leave plaintiff, who has a
recognized interest in the property involved by virtue of the lease, in a worse position than if she
had no interest in the property at law.
¶ 17. There is, however, an alternative remedy applicable to the situation in which
plaintiff is left. Partition is both an action at law, pursuant to the statute, and a remedy in equity
that came to us as part of the English legal system.8 The effect of the dual coverage of the
subject was explained in Geis v. Vallazza, 124 Vt. 457, 460-61, 207 A.2d 248, 251-52 (1965):
In this State, as in England, the statutory remedy of partition by
courts of law is cumulative and concurrent with the original
jurisdiction of courts of equity in partition proceedings. . . . The
statutory remedy of partition is generally held to be cumulative and
not to supercede original jurisdiction in equity. . . . Where equity
has concurrent jurisdiction, it has been held that it will exercise the
same in its own established principles, and with the use of its own
better-adopted and more flexible modes of procedure.
(citations omitted). In the earlier case of Fiske v. Probst, 121 Vt. 93, 147 A.2d 680 (1959), the
appellant alleged that the commissioners in a partition action failed to comply with the statutory
mandate that the shares of the property be set out by metes and bounds. We noted that the case
had been transferred to equity where the court “exercises its jurisdiction on its own established
principles, and by its more flexible modes of procedure.” Id. at 97, 147 A.2d at 682. Since the
8
Our decisions have occasionally referred to partition as an equitable remedy and then
cited the statute. See, e.g., Begin v. Benoit, 2006 VT 130, ¶ 6, 181 Vt. 553, 915 A.2d 786. As
the text notes, this description is in error. The equitable action of partition is different from the
action of partition at law, reflected in the statute. The confusion is understandable because the
statute provides a procedural structure for the action at law but little regulation of the scope and
detail of the partition remedy, and the trial courts have frequently followed the statute, even in
equitable partition actions, a practice we authorized in Geis as creating no error. 124 Vt. at 461-
62, 207 A.2d at 252.
9
description of the shares was sufficient to pass title under the decree, compliance with the statute
was unnecessary. Id. In Geis, the appellant claimed that the chancellor of the court of equity
had no power to order a sale of the property. We held that the chancellor had the inherent power
to order a sale where a physical division of the property was possible and neither of the co-
owners would take the entire property subject to paying the other co-owner for the co-owner’s
interest. Geis, 124 Vt. at 461, 207 A.2d at 252.
¶ 18. Both Fiske and Geis were decided before the merger of law and equity, and,
therefore, the procedure was governed by whether the case was filed in the county court or in the
court of equity in the same location but where the presiding judge acted as the chancellor. The
merger vested the chancellor’s powers in the presiding judge of the county court and the
jurisdiction of the equity court in the county court. See 4 V.S.A. § 219; Kelly v. Alpstetten, 130
Vt. 443, 444-45, 296 A.2d 232, 233 (1972). There is now just one form of action. V.R.C.P. 2.
The question of whether a partition action is an action at law governed by the statutes or an
action in equity must be answered based on the nature of the remedy sought and the
jurisdictional principal that equity cannot act if there is an adequate remedy at law. See In re
C.B., 147 Vt. 378, 380-81, 518 A.2d 366, 369 (1986); see also Chaney v. Upchurch, 603 S.E.2d
255, 256 (Ga. 2004) (equitable partition available where statutory remedy at law is inadequate).
To be adequate the legal remedy must be able to provide complete relief for the case before the
court and must be equally convenient, beneficial, and effective. In re C.B., 147 Vt. at 381, 518
A.2d at 369.
¶ 19. Recognizing the similar evolution in New Mexico, the Supreme Court of that
state addressed the issue of whether a court could partition a leasehold interest under the court’s
equitable powers, drawing on decisions from around the country:
Public policy supports our conclusion that leaseholds may be
equitably partitioned under New Mexico law. . . . Partition is a
remedy said to be much favored in the law.
10
Judicial intervention is sought because there has been a
breakdown in the relationships between those who share
possession of property. The parties can no longer cooperatively
and peacefully enjoy their rights in that property. The purpose of
partition is to create a way for the parties to avoid the
inconvenience and dissension caused by the inharmonious joint
possession of the property. Furthermore, partition “is based upon
the principle that no one can be compelled to hold property with
another, and it is available to anyone who does hold property in
common with another.” Partition secures peace, promotes the
enjoyment of property, and advances industry and enterprise.
Linked to the equitable powers of the court is the general
principle that at common law any type of property may be
partitioned. Because partition is looked upon with such favor, this
common-law equitable remedy can be applied to any property
capable of being held in cotenancy. At common law every class of
property, including personal property, may be subject to partition.
Leaseholds are no exception to the common-law rule that all
types of property may be partitioned. There are many cases from
many jurisdictions on this point.
Sims, 1996—NMSC—078, ¶¶ 45-48. Based on our own analysis of the law both within
Vermont and without, we agree with the analysis in Sims.
¶ 20. Recent history elucidates the need for the flexible remedies in equity to meet
modern and more complex circumstances. See Frame v. Frame, 740 P.2d 655, 658 (Mont. 1987)
(In equitable partition, the court “has great flexibility in fashioning appropriate relief for the
parties . . . [t]he fundamental objective in a partition action is to divide the property so as to be
fair and equitable and confer no unfair advantage on any of the cotenants” (citation omitted)).
We now have a substantial line of partition cases involving property owned by unmarried
partners in a marriage-like relationship. Indeed, in recent years all partition cases that have
reached this Court have involved such circumstances. See Begin v. Benoit, 2006 VT 130, 181
Vt. 553, 915 A.2d 786; Massey v. Hrostek, 2009 VT 70, 186 Vt. 211, 980 A.2d 768, overruled
on separate grounds by Whippie v. O’Connor [Whippie II], 2011 VT 97, 190 Vt. 600, 30 A.3d
1292; Whippie v. O’Connor [Whippie I], 2010 VT 32, 187 Vt. 523, 996 A.2d 1154; Nystrom v.
11
Hafford, 2012 VT 60, 192 Vt. 300, 59 A.3d 736; Currie v. Jane, 2014 VT 106, 197 Vt. 599, 109
A.3d 876. As the law has developed in this area, it is clear—although we have never stated it
explicitly—that we are deciding the cases based on equitable principles and endorsing the use of
flexible procedures derived from equity even though they may not fully comply with the statutes.
Thus, we said in Begin:
[P]artition actions are equitable in nature, and . . . in such actions,
“ ‘courts should consider all relevant circumstances to ensure that
complete justice is done.’ ” (quoting Wilk v. Wilk, 173 Vt. 343,
346, 795 A.2d 1191, 1194 (2002)). Thus, we find that while
plaintiff was entitled to partition under 12 V.S.A. § 5161 only upon
acquiring a joint tenancy in the property, once she brought the
partition action, the court was within its right to consider her prior
financial participation to the property in an effort to equitably
divide the parties’ interests.
2006 VT 130, ¶ 6. Similar statements appear in the other cases. See, e.g., Massey, 2009 VT 70,
¶¶ 22-23.
¶ 21. In applying partition then, we have relied on equitable partition and not the action
at law known as statutory partition. While there may be multiple reasons for proceeding this
way in particular cases, the overall rationale applicable to property division for unmarried
partners in marriage-like relationships is that we must consider all relevant circumstances to
ensure that complete justice is done as we stated in Begin. Thus, even if § 5161 did not apply
because the parties have a leasehold interest and not ownership in fee, we would hold that
partition in equity is the proper remedy.
¶ 22. This case is a good example of why we reach that conclusion based on the need
for flexibility and affordable adjudication. Because of the interests of the Star Meadow Farm,
and the lease provisions that come from that interest, it will be challenging in this case to achieve
a fair and workable result for the parties at law, therefore allowing us to apply the flexibility of
12
equitable remedies.9 Neither party seeks actual partition of the leased property under 12 V.S.A.
§ 5169. As an alternative, the statutes allow assignment of the lease to one of the parties
“provided he pays to the other party such sum of money, at such times and in such manner as the
commissioners judge equitable.” Id. § 5174. This is the remedy the trial court proposed,
choosing plaintiff as the recipient of the property with a pay-off to defendant, but the trial judge
did much of the work of the commissioners referenced in the statute.
¶ 23. The commissioners are “three disinterested residents of the county,” Id. § 5169,
who must be paid by the parties for their services. Id. § 5181. In this case, as well as in most of
our partition cases involving unmarried couples, the parties have limited financial means strained
by the separation of their households. In addition, the property interest being partitioned is a
form of affordable housing. Even if recourse to commissioners was a desirable option for
adjudication, it represents an expensive addition to the already burdensome cost of litigation.
¶ 24. The cost of commissioners is exacerbated by the nature of the adjudication in a
case like this. Unlike the paradigm partition action that underlies the partition statute, the form
of which goes back to the eighteenth century, this adjudication must consider equitable principles
in crafting a fair remedy between the parties, while avoiding unjustly enriching either party. In
doing so, the trial court should apply the principles set forth in Restatement (Third) of Restitution
and Unjust Enrichment § 28(1) (2011), which specifically addresses the application of unjust
enrichment principles in the context of property distribution of unmarried cohabitants. It
provides:
If two persons have formerly lived together in a relationship
resembling marriage, and if one of them owns a specific asset to
which the other has made substantial, uncompensated contributions
9
It goes without saying that the passage of time complicates the ability to achieve a just
result. The parties separated in 2011. The trial commenced in February of 2014, but the final
day of trial did not occur until September of 2014. The trial court decision was issued in January
of 2015.
13
in the form of property or services, the person making such
contributions has a claim in restitution against the owner as
necessary to prevent unjust enrichment upon the dissolution of the
relationship.
Consistent with this principle, some of the considerations that underlie our statutes governing
equitable division in divorce apply here, even though the cohabitants are unmarried. The
coverage of the Restatement as applying to services as well as property is important to the next
issue raised by defendant. We have referred to it in the past and adopt it here. See Shattuck v.
Peck, 2013 VT 1, ¶¶ 13 (majority), 33-34 (dissent), 193 Vt. 123, 70 A.3d 922.
¶ 25. Under these circumstances, if the basic adjudication is to be done by
commissioners, they must have the skill and experience of a chancellor in equity adding to the
cost and moving far from the expectation that a commissioner is simply a disinterested citizen.
Under the circumstances, it is understandable why in almost all our prior partition cases
involving unmarried persons who lived together in a marriage-like relationship the court
dispensed with the use of commissioners. 10
¶ 26. In summary, we hold that this case is appropriately an equitable partition case to
be adjudicated under the equitable principles and procedures of a normal civil case. The superior
court has jurisdiction over this case based on the common leasehold interest of the parties. As
explained infra the superior court should proceed to fashion a remedy without use of
commissioners except, if necessary, for purposes of sale of the property.
¶ 27. Because we agree that the leasehold interests are subject to partition, we next
address defendant’s other argument that plaintiff should not get credit, in determining the
property value she should receive, for her “sweat equity” as ordered by the trial court. The trial
court valued the costs of the improvements to the land as including $24,000 in “sweat equity”
10
We note that in only one of our recent partition cases involving unmarried cohabitants
were commissioners appointed. See Massey, 2009 VT 70, ¶ 5.
14
expended by plaintiff in serving as general contractor for the property after she gave up her
eggroll business.
¶ 28. We recognize that the facts in this case are unusual because the leasehold interest
in the land was acquired at no cost and are difficult to value, particularly because the corporation
has a right of first refusal under the lease contract to purchase at 80% of fair market value as
determined by the town for property tax purposes. Further, any transfer of the leasehold or
improvements to a third party must be approved by the corporation. The trial court found that
the value was in the improvements—primarily the two buildings, the yurt, and the carriage
house—and there was no objection to that finding. Thus, the valuation is governed by the rule
announced in Massey v. Hrostek, 2009 VT 70, ¶¶ 23-24 that a cotenant may be compensated for
improvements made to the property. The general rule is that cotenants who pay for discretionary
improvements are entitled to a credit for the resultant increase in fair market value, not for the
actual costs. Id. ¶ 24. The rationale behind this principle is that improvements may not enhance
the value of the property in proportion to the amount of the contribution, if at all. See id. ¶ 23.
We have recognized an exception, however, for contributions to improvements that were made
under an agreement between cotenants or by the consent of the other cotenants, and we therefore
have allowed credit for the cost of those improvements. Id. ¶ 23. Here, the parties endeavored to
construct the yurt and carriage house as a couple—they agreed to the construction of the
improvements and are therefore entitled to a credit for the cost of their respective contributions.
The question then is whether “sweat equity” in the form of service as a general contractor may
be considered a contribution.
¶ 29. We conclude that the trial court acted within its discretion in crediting plaintiff for
sweat equity. While we have never directly addressed the question, other courts have and have
reached this result. See, e.g., Sanborn v. Johns, 477 N.E.2d 196, 199 (Mass. App. Ct. 1985)
(affirming judgment of trial court in crediting defendant’s labor in improvement property
15
because doing so “was just”); Indra v. Wiggins, 28 N.W.2d 485, 486-87, 489 (Iowa 1947)
(affirming judgment of trial court in crediting defendant’s labor in improving property); Byrne v.
Byrne, 233 S.W. 461, 463, 465 (Mo. 1921) (affirming judgment of trial court in crediting
defendant’s labor in reconstructing, enlarging, and remodeling buildings). We can find no case
in which a court has rejected sweat equity contributions. These decisions are consistent with our
holdings that the trial court has broad discretion in fashioning an equitable remedy. See Massey,
2009 VT 70, ¶ 21. Moreover, we have allowed a party to recover the costs of physical labor in
construction of the family home in a divorce. See Mizzi v. Mizzi, 2005 VT 120, ¶ 7, 179 Vt.
555, 889 A.2d 753. The Restatement specifically allows recovery of “services” that are not
purely domestic. Restatement (Third) of Restitution and Unjust Enrichment § 28(1), comment d.
¶ 30. Defendant has also challenged the dollar amount of the expense credited to
plaintiff for her services. In assessing this challenge, we will “uphold the trial court’s findings as
long as they are supported by any credible evidence on the record.” Currie, 2014 VT 106, ¶ 19
(quotation omitted). “[W]e review the trial court’s exercise of discretion in applying the
equitable remedy of partition for abuse of discretion,” id., but this discretion “does not excuse the
court from making the concrete mathematical calculations that are possible under these facts.”
Massey, 2009 VT 70, ¶ 26. We find that the trial court’s “sweat equity” calculation is supported
by the record evidence. To reach its award of $24,000, the court first looked to plaintiff’s log
accounting her hours spent on the project, finding that she worked a total of 1300 hours on the
project. The court then considered plaintiff’s valuation of $30 per hour for her labor as general
contractor. The court looked to the amount billed by two other contractors on the project to
determine that plaintiff is entitled to $30 for 550 hours and $10 an hour for 750 hours. We find
no error.
¶ 31. We turn to the trial court’s calculation of each party’s contributions beyond the
issue of the sweat equity. Defendant claims that the court erred in excluding certain amounts in
16
its final calculation of the parties’ contributions, omitting the cost of the larger yurt from its
calculation, calculating the relative contributions from plaintiff’s bank account, finding that
defendant never repaid plaintiff for a loan, and crediting plaintiff for improvements to the
carriage house. We conclude that the court erred in excluding certain amounts from its final
calculation and omitting the cost of the large yurt from its calculation. We find no error on the
other points.
¶ 32. First, defendant claims the court erred in tabulating the monetary contributions
made by each party toward purchasing and constructing the yurt and carriage house. While we
find no error in the initial accounting figures and the determination of the parties’ respective
contributions, we conclude that the court made arithmetic errors in its final calculations and also
failed to account for the purchase of the thirty-two-foot yurt kit.
¶ 33. The court started by determining that the cost of the improvements was $145,000,
rounded up from $144, 890. Of that figure, $83,800 came from plaintiff’s bank account but was
funded by defendant, $34,354 from the parties’ joint bank account, $4736 from defendant’s bank
account for payment to one of the contractors, and $22,000 from defendant’s safe deposit box for
the cost of the twenty-two-foot yurt kit.11 Based upon her contribution to the above
expenditures, including a $3900 payment to a contractor and an $11,362 deposit on the yurt, the
court credited plaintiff with $34,000. The court identified the value of defendant’s contribution
as $95,270. That figure represents $22,000 for the yurt balance, $4736 for contractors, and
$83,800 for construction expenses—which came from plaintiff’s bank account, less the $3,900
and $11,362 payments made by plaintiff.
¶ 34. However, in calculating these contributions, the court made two errors. First, the
court’s calculation of defendant’s contribution did not include the $34,354 taken from the joint
11
The court assumed the $22,000 came from the safe deposit box because there was no
record of the payment from any of the bank accounts and there was a record of a withdrawal
from the safe deposit box a few days after the parties received the invoice for the yurt kits.
17
bank account. Although the account is described as joint, the money in it was provided by
defendant. This error, in turn, led to individual expenditure calculations of $95,270 for
defendant and $34,000 for plaintiff that combined are lower than the total expenditure
calculation of $145,000. The court tried to fix this error, in part by finding a $16,000 “shortfall.”
To account for this discrepancy, the court split the $16,000 and credited each party with an
additional $8,000. Because of these errors, the court ultimately concluded that the parties’
contributions were $103,000 for defendant and $42,000 for plaintiff, rather than $111,000 and
$34,000. Second, despite accounting for the twenty-two-foot yurt, the court made no findings as
to the source of funds for the thirty-two-foot yurt—the one actually constructed—and
consequently did not factor its construction and material costs into the parties’ final expenditures.
¶ 35. Defendant next claims that the trial court erred in calculating the relative
contributions from plaintiff’s bank account. Specifically, defendant argues that the court should
not have credited all the money attributed to plaintiff in this account as going toward the project.
We note that the exact account here was hard to pin down: the parties had multiple bank
accounts and the safe deposit box, and both parties had money going in and out of the accounts.
To determine the relative contributions, the court relied on two charts admitted into evidence and
stipulated to by both parties. The court inferred from this evidence that all the money going into
the accounts from plaintiff, who was no longer employed and was working full time on the
construction project, was going straight to the project. The court also inferred that because
defendant was employed full time, and his income was the parties’ main financial support, that
not all of his money was going into the project.
¶ 36. The disputes over the sources and uses of the money first came to a head in the
court’s exclusion from evidence of an exhibit prepared by defendant’s attorney that summarized
all contributions from the parties’ checking accounts. Defendant argues here that the court’s
findings and calculations conflict with those presented in this summary and the summary should
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have been admitted into evidence. He relies on Vermont Rule of Evidence 1006, which states
that the “contents of voluminous writings, recordings, or photographs which cannot conveniently
be examined in court may be presented in the form of a chart, summary, or calculation.” The
court did not rule that defendant’s exhibit was of a type of document inadmissible under Rule
1006; instead, it refused to admit the exhibit because it was prepared by defendant’s attorney and
no foundation for the document was provided by defendant.
¶ 37. We find no error in that ruling. The rule contemplates that a foundation for
introduction summaries be laid by a witness who prepared or supervised preparation of the
exhibit. U.S. v. Behrens, 689 F.2d 154, 161 (10th Cir. 1982) (admitting summary evidence
under Federal Rule of Evidence 1006 where authenticity of summary was adequately
established); see also State v. Scott, 2013 VT 103, ¶ 9, 195 Vt. 330, 88 A.3d 1173 (observing
that Vermont Rules of Evidence are nearly identical to their federal counterpart). Defendant did
not supervise the preparation of the exhibit; it was prepared by his attorney. Defendant could not
provide a foundation for the exhibit because he failed to appear at the trial. Defendant’s counsel
attempted to lay a foundation by questioning plaintiff on each entry in the summary, but much of
plaintiff’s testimony was vague. To the extent that the document did nothing more than
summarize evidence that had been admitted by the court, nothing prevented counsel from
submitting the chart to the court as argument, in the context of, for example, a trial
memorandum. However, that is different from admitting the document as substantive evidence.
It was well within the discretion of the trial court to exclude this document for lack of proper
foundation, Griffis v. Cedar Hill Health Care Corp., 2008 VT 125, ¶ 18, 185 Vt. 74, 967 A.2d
1141 (stating that trial court’s decision to exclude evidence is “highly discretionary”), and we
therefore find no error.
¶ 38. Defendant also claims the court erred by not crediting him for paying plaintiff
back the $9000 she paid for the services of a well driller. While the court found that there was
19
an issue as to whether defendant repaid plaintiff, it found no evidence to conclude that he
actually did. Counsel for defendant cross-examined plaintiff on a series of checks that may have
been the repayment. Plaintiff testified that these checks were for “services rendered” but could
not be more specific about such services. Again, defendant could have provided the necessary
testimony but failed to appear at the trial. On this record, the court could find it unlikely that
defendant repaid the loan. We therefore find no error.
¶ 39. Defendant’s final claim regarding the trial court’s accounting is that the court
erred in crediting plaintiff with $3900 for improvements to the carriage house because those
improvements were not complete at the time of trial. Defendant’s emphasizes that these
improvements did not increase the value of the property and therefore cannot be credited in the
partition action. This argument fails because the court credited the parties based upon the costs
of improvements and not upon the increase in fair market value as a result of those
improvements. As discussed above, supra, ¶ 22, it was proper for the court to consider the cost
of improvements because both parties consented to the improvements See Nystrom, 2012 VT
60, ¶ 16 (court can consider the expense of siding purchased to go on the house where it was “on
site”). This was not in error.
¶ 40. Finally, defendant claims the court erred in finding that he ousted plaintiff from
the property. “The general presumption against ouster of a co-tenant can be overcome only by
some overt and notorious act or acts or an unequivocal character, indicating an assertion of
ownership of the entire premises to the exclusion of the right of the co-tenant.” Whippie I, 2010
VT 32, ¶ 19 (quotation omitted). We have held that such actions constitute ouster as changing
locks and security codes, Massey, 2009 VT 70, ¶ 24, and sending a no-trespass letter, Whippie II,
2011 VT 97, ¶ 10. Here, defendant locked plaintiff out of the yurt and sent her a notice of
trespass upon her reentry on the property. Either action would have constituted an ouster under
our precedent.
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¶ 41. Defendant does not contest these facts but argues that plaintiff should be estopped
from asserting ouster because she ordered defendant to vacate the property prior to his no-
trespass order and the ouster here was not wrongful because he was trying to protect his personal
belongings. Defendant is correct that the court must determine that the ouster was wrongful
before compensating plaintiff for the period of her exclusion. Whippie I, 2010 VT 32, ¶ 1. We
disagree, however, that the court failed to make findings to this point. The court found that
defendant’s behavior had become volatile; that he acted overtly hostile toward plaintiff, her
guests, and the contractors working on the property; and that plaintiff legitimately feared for her
safety. These findings are supported by evidence on the record in the form of testimony from
plaintiff and the contractors. Specifically, plaintiff testified that she left the property because she
felt threatened by defendant. We therefore conclude that the trial court did not err in finding that
defendant ousted plaintiff from the property and crediting her with an offset for half the rental
value while she was ousted.
¶ 42. Because of the failure to account for the cost of the yurt that was constructed on
the property as well as the calculation error, we must remand this case to redetermine the share
of the property to be attributed to each party. We take this opportunity to describe the options
for the trial court in conducting the remand. We stress at the outset that any partition remedy
extends only for the duration of the lease and does not bind either the corporation or any
subsequent tenants. Although an equitable partition action is not constrained by the statutory
remedies, the statute does lay out three remedies that may also apply in equitable partition: (1)
physical division of the land—i.e., partition in-kind; (2) the assignment of the interest of one
cotenant to the other for a predetermined pay-off; or (3) partition by sale, with the cotenants
sharing the proceeds according to a predetermined formula. 12 V.S.A. §§ 5174-5175. Partition
in-kind is favored, but where the property “cannot be divided without great inconvenience to the
parties,” assignment may be ordered. Id. § 5174. Partition by sale generally is available only
21
where the first two methods are impractical. Id. § 5175; Geis v. Vallazza, 124 Vt. 457, 461, 207
A.2d 248, 252 (1965). The trial court concluded that the property here could not be divided
physically. As a result, the court ordered assignment of defendant’s interest to plaintiff, a
determination “based on her age, devotion to the project, and greater apparent economic need for
housing.” See Nystrom, 2012 VT 60, ¶ 8 (noting that trial court found “equities tipped in favor
of [plaintiff’s] request for occupancy” because of, among other things, her “sweat equity in the
construction project”, devotion of her family to project, and proximity of property to her family).
Defendant has not appealed the assignment. The court further ordered that if neither party
wishes to remain on the property, it will be sold, and the sale amount distributed according to the
parties’ percentage ownership interests.
¶ 43. In order to determine a buy-out price for plaintiff, the court ordered that
commissioners be appointed to determine the value of the property as specified in the partition
statute. As we have held above, equitable partition can follow its own flexible procedures, and
the court is not bound by those in the statute, including the use of commissioners. We conclude
that appointment of commissioners is particularly inappropriate and unnecessary in a case like
this because they add cost to the process, the value of the property is relatively small, and the
role of the commissioners is very limited. Thus, we conclude that in this case the trial court
should value the property and not refer valuation to commissioners. Once the court has valued
the property, it should determine and order the partition remedy, either by assigning the property
to plaintiff with a pay-off to defendant or sale of the property with distribution of the proceeds
according to the percentage shares of the parties. If a sale is ordered, the court may appoint
commissioners to sell the property.
¶ 44. In order to value the property, the trial court may have to admit further evidence.
We leave that to the trial court’s discretion to determine whether additional evidence is
necessary. We stress, however, that any additional evidence should be related only to the value
22
of the property. The lack of evidence in this case resulted from, in significant part, the failure of
defendant to attend the last day of trial and provide evidence that he was in the best position to
provide. It would be inappropriate to allow him a second opportunity to provide that evidence.
The judgment of the Caledonia Superior Court is affirmed with respect to the
determination that partition of the leasehold is authorized by law, that plaintiff should receive
credit in determining her share of the value of the property for her services as general contractor
of the joint construction project, and that plaintiff was ousted by defendant from the property.
The judgment is reversed and remanded for the court to correct errors in its final calculation of
the percentage share of the value of the property held by each party consistent with this opinion
and is remanded for the court to determine the value of the property and the appropriate partition
remedy.
FOR THE COURT:
Associate Justice
¶ 45. EATON, J., concurring. I concur with the outcome reached by the majority,
and agree with its analysis of the issues, except as to the applicability of 12 V.S.A. § 5161.
Despite its lengthy analysis of statutory partition, the majority appears to rely upon equitable, not
statutory, partition to support the trial court’s decision to partition the leasehold interest of the
parties. I agree that equitable partition is available and appropriate under the circumstances of
this case. Because the majority relies upon equitable partition, the historical overview of
statutory partition is largely unnecessary to the result. I am also not convinced that statutory
partition is available in this case, and to the extent the majority holds that statutory partition
provided any authority for the court to partition the leasehold interest, I disagree.
¶ 46. Our partition statute provides: “A person having or holding real estate with others,
as joint tenants, tenants in common or coparceners, may have partition thereof.” 12 V.S.A.
§ 5161. I do not necessarily agree that a thirty year ground lease is an interest which constitutes
“having or holding real estate.”
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¶ 47. Because the statute provides for partition only for those having or holding an
interest in real estate, other interests do not fall under the statute. That some courts have decided
partition is available for leasehold interests begs the question of whether a leasehold interest is an
interest in real estate, a personal property interest, or a hybrid interest of some kind, the
classification of which impacts the applicability of the statute. Our partition statute does not
apply to personal property or hybrid interests, nor does it expressly apply to leaseholds. Some
state statutes make partition expressly available to interests in real or personal property. See,
e.g., Colo. Rev. Stat. Ann. § 38-28-101. Although certainly the Legislature could have
specifically included leaseholds, or, more generally, personal property, within the property
interests for which statutory partition is available, it has not done so. Thus, cases holding that a
leasehold is either a personal property interest or a hybrid interest between personal and real
property, even if those decisions allow for partition, lend no support to an action for partition
based upon our partition statute, which is confined to those persons having or holding interests in
real property.
¶ 48. Several courts have held that a lease is a species of personal property. See In re
Marino, 813 F.2d 1562, 1566 (9th Cir. 1987) (finding a fifty-year lease on lands where
apartments were built to be personal property under California law); Fleet Nat. Bank v. Raleigh
Oaks Joint Venture, 451 S.E.2d 325, 328 (N.C. 1994) (“[A] lease is a species of personal
property” (citation and alteration omitted)); Swayze v. Bartlett, 273 P.2d 367, 372 (N.M. 1954)
(“So far as the state lease in question is concerned, it is a chattel and not real property.”); Mulloy
v. Kyle, 41 N.W. 1117, 1118 (Neb. 1889) (“[A] lease for a term of years is chattel or personal
property.”). Others, as the majority notes, have recognized a lease as a hybrid, falling in between
real and personal property interests. See 17M Assocs, LLC, 98 A.3d at 961 (“[A] lessee’s
possessory interest, although an interest in real property, is ultimately a species of personal
property.” (emphasis in original)); Wilson v. Prentiss, 140 P.3d 288, 290-91 (Colo. 2006)
24
(finding partition of leasehold interest in divorce proceeding appropriate where statute allowed
for partition or real and personal property).
¶ 49. The majority delves into 500 years of history to conclude that leasehold interests
under Vermont law are an interest in real property, or sufficiently akin to one, to enable partition
under 12 V.S.A. § 5161, et seq. In support of this conclusion, the majority relies on several
decisions which have allowed for partition of leasehold interests, a broader question than
whether partition is authorized under 12 V.S.A. § 5161. In my view, these parties, through this
leasehold arrangement, did not have or hold an interest in real property, and therefore were not
entitled to partition under the statute.
¶ 50. Simply because statutory partition was not available does not mean that partition
was inappropriate here. Equitable remedies are available when there is not an adequate remedy
at law on the very subject in question. Poulin v. Town of Danville, 128 Vt. 161, 166, 260 A.2d
208, 211 (1969) (“Equity will afford relief unless there is a plain, adequate and complete remedy
at law”).
¶ 51. I agree with the majority’s conclusion that equitable partition, in addition to
statutory partition, is part of the law of Vermont and that in reaching an equitable division of the
parties’ property, the court could employ equitable partition under the facts of this case. In my
view, 12 V.S.A. § 5161 does not apply in this instance, making equitable partition available and
appropriate. The arrangements concerning this leasehold were such that employing equitable
partition was an appropriate method to arrive at an equitable division of the parties’ property.
That is not to say that resorting to partition was the only possible means to arrive at an equitable
division, or that it is required to be used in similar circumstances. Partition, whether employed
under the statutory framework, or as a part of the court’s equitable powers, is cumbersome,
potentially expensive, and time-consuming. Using it with every division of a leasehold interest
that comes before the court in a divorce or civil proceeding among unmarried cohabitants, would
25
be unwise and unworkable. In long-term lease situations, however, or those where valuation of
the leasehold is particularly difficult, it should be one of the tools available to the trial court, in
its discretion, in discharging its obligation to divide the parties’ property in an equitable manner.
See Begin v. Benoit, 2006 VT 130, ¶ 8, 181 Vt. 553, 915 A.2d 786 (equitable division of
personal property along with a statutory partition of joint tenancy in real property). Accordingly,
I concur.
Associate Justice
26