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Supreme Court, Appellate Division, Fourth Department, New York.

Ronald E. BRUGGE, Appellant, v. Kendra L. BRUGGE, Respondent.

Decided: December 31, 1997

Before DENMAN, P.J., and GREEN, CALLAHAN, BALIO and FALLON, JJ. Converse, Morell and Hughes by Gary Morell, Palmyra, for Plaintiff-Appellant. Scollan and Moody by Simon Moody, Auburn, for Defendant-Respondent.

 Supreme Court erred in finding that an $80,000 interest in Marquardt's Mobile Manor, which was transferred by plaintiff to defendant during the marriage, constitutes the separate property of defendant.   Interspousal gifts made during the marriage constitute marital property subject to equitable distribution (see, Chase v. Chase, 208 A.D.2d 883, 884, 618 N.Y.S.2d 94;  Foppiano v. Foppiano, 166 A.D.2d 550, 551, 560 N.Y.S.2d 831;  Brown v. Brown, 148 A.D.2d 377, 381, 538 N.Y.S.2d 945;  Woertler v. Woertler, 110 A.D.2d 947, 488 N.Y.S.2d 265).

 The court did not err, however, in finding that money deposited by defendant in the parties' joint bank account constitutes her separate property.   Defendant established that the joint account was used only as a conduit for the transfer of her capital interest from one business owned by her family to another, thus rebutting the presumption that, by depositing the funds into a joint account, separate property was transmuted into marital property (see, McGarrity v. McGarrity, 211 A.D.2d 669, 671, 622 N.Y.S.2d 521;  Feldman v. Feldman, 194 A.D.2d 207, 215-216, 605 N.Y.S.2d 777).  Additionally, the court did not improvidently exercise its discretion in awarding sole custody of the parties' children to defendant.

Thus, we modify the judgment by deleting the third and fifth decretal paragraphs of the judgment.   Because the court did not consider the $80,000 interest in Marquardt's Mobile Manor as marital property subject to equitable distribution, we remit the matter to Supreme Court for further proceedings regarding equitable distribution of all of the marital assets.

Judgment unanimously modified on the law and as modified affirmed without costs and matter remitted to Supreme Court for further proceedings.


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