IN RE: MARRIAGE OF Adrienne M. McDOLE and Dave Lynn McDole. (1985)

OPINION

Adrienne M. McDole appeals from that portion of the interlocutory judgment of dissolution of marriage in which the trial court characterized and divided the family residence as community property.   She contends that newly enacted Civil Code section 4800.2 ¹ is to be applied retroactively to this case and that she is therefore entitled to be reimbursed for her separate property contributions to the family residence.

Facts

Adrienne M. McDole (wife) and Dave Lynn McDole (husband) were married on May 16, 1981, and separated on July 6, 1982.

On or about June 29, 1977, prior to their marriage, wife acquired a residence on Arden Avenue as her separate property pursuant to a quitclaim deed executed by her previous husband.   Husband also owned a home.   Sometime in April 1981, still before the marriage, the parties discussed purchasing a new home and selling their respective residences.   In contemplation of this purchase, husband sold his home but soon realized the parties would not be able to afford the new home.   The parties therefore decided to take out a second deed of trust on wife's house in order to renovate and improve it so the parties could use it as their residence.   Wife could not make the loan without husband's name appearing on the title, however, because at that time wife earned only approximately $1,500 a month while husband's monthly income averaged $6,000.

Accordingly, on or about April 9, 1981, still before the marriage, wife deeded the Arden Avenue residence to herself and husband as unmarried joint tenants.   Both parties testified at trial that this grant deed was executed to enable them to receive a second deed of trust on the property for renovations.

There was a substantial amount of testimony at trial about a discussion on or about April 11, 1981, concerning the character of the family residence.   During a dinner engagement with two friends, the parties discussed the anticipated second deed of trust on the Arden Avenue residence.   The conversation became more intense when wife voiced her concern for her children's welfare and indicated her desire for a written agreement which would specify that she retained her separate equity in the home but would share with husband any increase in value during the marriage.   Wife then wrote out something to that effect on a napkin.   Husband signed it and then strode out of the restaurant without waiting for dinner.   There was conflicting testimony concerning the intentions of the parties regarding this napkin agreement.

The parties took out the second deed of trust for approximately $22,000 on May 14, 1981, and were married on May 16, 1981.   The lender, however, required that husband and wife appear on the property title as married persons and, therefore, a second grant deed was executed, transferring the property from husband and wife as unmarried persons in joint tenancy to themselves as married persons in joint tenancy.   This second grant deed was acknowledged on July 14 and recorded on July 16, 1981.

Most of the money received from the second deed of trust was used for improvements on the house.   Approximately 75 percent of the improvements were completed at the time husband deposited the funds from the sale of his own home into the joint checking account.   Although no finding was made on the point, it was asserted at oral argument that only about $4,000 from the sale of husband's home was used for community purposes.

Following their marriage, husband and wife lived in the Arden Avenue home as their family residence until they separated in July 1982.

The trial court found the Arden Avenue residence to be community property based on all the circumstances and ordered it sold, the proceeds to be equally divided.   Wife's subsequent motions for reconsideration, for new trial and to vacate judgment were all denied.   Husband's motion requesting that the judgment be entered nunc pro tunc as of December 22, 1983, was granted.   Wife then filed this timely appeal.

Discussion

At the time the trial court rendered its judgment, the law in California permitted married parties to change the character of their marital property and overcome presumptions of community property created by the form of title through expressions of mutual consent whether written or oral.  (See In re Marriage of Lucas (1980) 27 Cal.3d 808, 813, 166 Cal.Rptr. 853, 614 P.2d 285;  see also In re Marriage of Miller (1982) 133 Cal.App.3d 988, 992, 184 Cal.Rptr. 408;  In re Marriage of Hayden (1981) 124 Cal.App.3d 72, 76, 177 Cal.Rptr. 183.)   Wife attempted at trial to prove through the “napkin agreement” that the family residence was actually her separate property.   The trial court, however, characterized the property as community apparently on the premise that the parties agreed to “pool” their assets.

We are unable to say the court's determination is without evidentiary support, so the issue on appeal becomes whether recently enacted Civil Code section 4800.2, which became effective on January 1, 1984, should be retroactively applied to this case.   That section provides:  “In the division of community property under this part unless a party has made a written waiver of the right to reimbursement or signed a writing that has the effect of a waiver, the party shall be reimbursed for his or her contributions to the acquisition of the property to the extent the party traces the contributions to a separate property source.   The amount reimbursed shall be without interest or adjustment for change in monetary values and shall not exceed the net value of the property at the time of the division.   As used in this section, ‘contributions to the acquisition of the property’ include downpayments, payments for improvements, and payments that reduce the principal of a loan used to finance the purchase or improvement of the property but do not include payments of interest on the loan or payments made for maintenance, insurance, or taxation of the property.”

Husband advances a number of arguments against the retroactive application of section 4800.2.   In the first place, he contends the fact that the judgment was entered nunc pro tunc as of December 22, 1983, signifies the trial court's recognition of wife's stalling tactics and he urges wife should not benefit from legislation that became effective long after the trial should have terminated.   Notwithstanding the delay, however, wife's posttrial motions were timely.   Moreover, the new statute was expressly made applicable by the Legislature to all dissolution cases in which the division of property was not yet final.  (Stats.1983, ch. 342, No. 7 West's Cal.Legis.Service, pp. 2499–2501.)   The subsequent decisions have uniformly indicated section 4800.2 is applicable in cases in which, as here, the property division is still subject to review on appeal.  (See In re Marriage of McNeill (1984) 160 Cal.App.3d 548, 562, 206 Cal.Rptr. 641;  In re Marriage of Taylor (1984) 160 Cal.App.3d 471, 474, 206 Cal.Rptr. 557;  In re Marriage of Benart (1984) 160 Cal.App.3d 183, 188, 206 Cal.Rptr. 495;  In re Marriage of Huxley (1984) 159 Cal.App.3d 1253, 1258–1259, 206 Cal.Rptr. 291;  In re Marriage of Martinez (1984) 156 Cal.App.3d 20, 29, 202 Cal.Rptr. 646;  In re Marriage of Anderson (1984) 154 Cal.App.3d 572, 577, 201 Cal.Rptr. 498;  In re Marriage of Neal (1984) 153 Cal.App.3d 117, 121, 200 Cal.Rptr. 341;  see also Code Civ.Proc., § 1049.)

Husband next contends that application of section 4800.2 would deprive him of his property without due process of law.   He fails, however, to explain how he is deprived of his property.   Wife seeks only reimbursement of her separate property contributions to the Arden Avenue residence which has been characterized as community property.   We do not perceive how any due process rights of husband could be abridged by application of section 4800.2 to reimburse wife on dissolution of marriage for her separate property contributions to community property.

Husband next argues that section 4800.1 ² and section 4800.2 must be applied “as a package.”   In other words as we understand it, husband asserts that the only property to which section 4800.2 applies is that which was characterized as community property pursuant to section 4800.1.   In this instance, for example, he contends that no separate property contributions may be awarded to wife because the residence was held in joint tenancy before the marriage pursuant to the first grant deed executed on April 6, 1981.   We do not agree.

To start with, the property here was first acquired as community property by the deed executed after the marriage.   The deed executed before marriage purported to vest a one-half joint tenancy interest in each party as an unmarried person—a true joint tenancy.   Next, although sections 4800.1 and 4800.2 of the Civil Code were enacted at the same time, they do not require co-application.  Section 4800.1 deals with characterization of property acquired in a certain form during marriage, i.e., in joint tenancy, and the presumption and proof required to rebut the presumption pertaining thereto.  Section 4800.2 deals with the reimbursement of separate property contributions when the court is dividing the parties' community property.  Section 4800.2 pertains to all community property.   It contains not a single word limiting its application solely to property found to be community property under section 4800.1.

In re Marriage of Neal, supra, 153 Cal.App.3d 117, 126, 200 Cal.Rptr. 341, is a case in point.   There, the court held that section 4800.1 was not applicable to the parties' furniture which was not acquired during the marriage in joint tenancy form.   Nevertheless, the Neal court did find section 4800.2 applicable because the furniture was community property and as such the wife had “a right of reimbursement for traceable separate property contributions to the furniture without adjustment for any change in monetary values and not to exceed the net value of the property at the time of division.”  (In re Marriage of Neal, supra, 153 Cal.App.3d 117, 126, 200 Cal.Rptr. 341.)

The same is true here.   Wife seeks reimbursement under section 4800.2 for her traceable separate property contributions made to the acquisition of the residence as community property.   As in Neal, whether or not section 4800.1 is applicable, wife is entitled to such reimbursement.

At oral argument counsel for husband advanced yet another argument that reimbursement to wife would be inappropriate.   The argument, as we understand it, is that having impliedly agreed to transmute her separate property interest in the house to community property, wife really made no separate property contribution which is to be reimbursed under section 4800.2.   While this argument has some facile appeal, it does not withstand analysis.

What husband is urging, in substance, is that whenever the community property character of property is based on an agreement of the parties, its former separate property character is not to be regarded as a separate property contribution eligible for reimbursement under section 4800.2.   We cannot ascribe to that proposition.   If husband were correct, section 4800.2 would be rendered meaningless in the great majority of cases because the underlying basis for characterizing property as community except where it was always community is almost invariably some sort of agreement, express or implied.   Moreover, the historical background and the statutory language of section 4800.2 indicate reimbursement is to be made where property was the separate property of one of the spouses before being acquired as community property during the marriage.  (See, e.g., In re Marriage of Neal, supra, 153 Cal.App.3d 117, 123–125, 200 Cal.Rptr. 341.)   The language in part reads:  “[T]he party shall be reimbursed for his or her contributions to the acquisition of the property to the extent the party traces the contributions to a separate property source.”  (Emphasis added.)   Here the property was acquired by the community as a result of a transmutation from wife's sole and separate property and her equity in the property was her separate property contribution to its acquisition.

Further, reimbursement is to be made under section 4800.2 unless the party to be reimbursed “has made a written waiver of the right to reimbursement or signed a writing that has the effect of waiver.”  (Emphasis added.)   Obviously, an oral or implied in fact agreement for transmutation would not satisfy the requirement of a written waiver.   Whether a deed which does not refer to the right of reimbursement might ever constitute “a writing that has the effect of a waiver” we need not decide because here the evidence was that the deeds were required to make a loan against the property and there is no evidence either deed was intended by wife to constitute a waiver of the right to reimbursement under section 4800.2.   Indeed, section 4800.2 had not been enacted at the time the deeds were executed by wife.

Thus, we conclude wife is entitled to reimbursement under section 4800.2.   The question is how that reimbursement shall be effected.  “ ‘The separate property contribution is measured by the value of the contribution at the time the contribution is made ․’ ”  (In re Marriage of McNeill, supra, 160 Cal.App.3d 548, 562–563, 206 Cal.Rptr. 641, quoting 17 Cal.Law Revision Com.Rep. 864–865 (1984);  83 Sen.J. 4866.)   No tracing is required here, but wife's equity in the property prior to the conveyances must be valued.   While no finding was made on this point, the record clearly indicates wife's equity was somewhere between $50,000 and $56,000 at the time of the property's transmutation.   The trial court found the equity at the time of trial was $39,000.   Thus, not only had the property failed to appreciate in value, it so substantially depreciated in value that wife's right to reimbursement exceeded the net value of the property at the time of the trial.   Since wife was willing to accept the property in kind and thereby save the community the costs of liquidating it, the only reasonable disposition that could be made was to order the property transferred to her in lieu of and in satisfaction of her right to reimbursement.  (See In re Marriage of Neal, supra, 153 Cal.App.3d 117, 126, 200 Cal.Rptr. 341.)

Disposition

The judgment is reversed as to the division of the Arden Avenue residence.   The second paragraph of the judgment which provides:  “The Court orders that said property shall be sold and the proceeds divided in such a manner to effect an equal division of the community property.   Petitioner may elect to purchase Respondent's interest in said residence within 90 days of the entry of the Interlocutory Judgment for a sum equal to Respondent's net share of community property, for cash or such terms as the parties may agree” is stricken.   In lieu thereof a new second paragraph is inserted as follows:  “Petitioner is awarded as her sole and separate property the real property and residence located at 1728 Arden, San Bernardino, California, in lieu of and in satisfaction of her right to reimbursement on account of her separate property contributions to the acquisition of that property.   Petitioner also is assigned the full unpaid obligations under both the first and second deeds of trust from which she shall hold respondent harmless.”

As so modified, the judgment is affirmed.

Wife shall recover costs on appeal.

FOOTNOTES

1.   Unless otherwise indicated, all section references in this opinion are to the Civil Code.

2.   Section 4800.1 provides:  “For the purpose of division of property upon dissolution of marriage or legal separation, property acquired by the parties during marriage in joint tenancy form is presumed to be community property.   This presumption is a presumption affecting the burden of proof and may be rebutted by either of the following:“(a) A clear statement in the deed or other documentary evidence of title by which the property is acquired that the property is separate property and not community property.“(b) Proof that the parties have made a written agreement that the property is separate property.”  (Emphasis added.)

KAUFMAN, Acting Presiding Justice.

McDANIEL and RICKLES, JJ., concur.