Hall v. Hall , 426 P.3d 1006 ( 2018 )

Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
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THE SUPREME COURT OF THE STATE OF ALASKA
BERTHA DELORES HALL, )
) Supreme Court No. S-16083
Appellant, )
) Superior Court No. 3PA-14-01357 CI
v. )
) OPINION
ADOLPH HALL, )
) No. 7296 – September 14, 2018
Appellee. )
_______________________________ )
Appeal from the Superior Court of the State of Alaska,
Third Judicial District, Palmer, Eric Smith, Judge.
Appearances: Lynda A. Limón, Limón Law Firm,
Anchorage, for Appellant. David A. Golter, Golter Law
Office, LLC, Palmer, for Appellee.
Before: Stowers, Chief Justice, Winfree, Maassen, Bolger,
and Carney, Justices.
STOWERS, Chief Justice.
I. INTRODUCTION
A couple divorced in 2015 and disputed whether certain pieces of real
property in Louisiana and Mississippi were separate or marital. The superior court relied
on provisions in a document titled a last will and testament for its finding that the parties
intended that the Louisiana properties be the husband’s separate property and that the
Mississippi properties be the wife’s separate property. We conclude that the court erred
in its transmutation analysis. The court also erred in not providing support for its finding
regarding the ownership of one of the Louisiana properties and in not addressing the
question of the purported conveyance of properties by the husband to his children before
the parties’ separation. We reverse the superior court’s property distribution decision
and remand for further proceedings.
II. FACTS AND PROCEEDINGS
Adolph and Bertha Hall1 married in June 1975, separated in November
2014, and divorced in August 2015. No children were born of the marriage. Both
Adolph and Bertha had been married previously and have children from their first
marriages.
Before they married, Adolph owned 137 acres in Louisiana. He defaulted
on that property when he and his first wife divorced. Adolph’s father purchased the
property to avoid foreclosure, with the understanding that Adolph would pay him back
for it. Adolph’s father executed a counterletter2 in March 1973, documenting that the
property was purchased on behalf of Adolph. At some point after the initial document
was prepared, the following language was added to the counterletter: “$40,000.00 paid
to John Hall by Adolph Hall May 1975, Adolph Hall being Divorced = and being a
Single man.” Someone initialed the change with the date May 15, 1975; Adolph did not
know who initialed it and testified that the initials were neither his nor his father’s.
Adolph testified that he finished repaying the $40,000 in May 1975, shortly before his
marriage to Bertha on June 9, 1975, but the superior court “did not find credible
1
Bertha’s name has been restored to Bertha Rouser Scott.
2
A counterletter is “[a] document in which the parties to a simulated contract
record their true intentions.” Counterletter, BLACK’S LAW DICTIONARY (10th ed. 2014)
(citing La. Civ. Code Ann. art. 2025 (2016)). “For example, the record owner of real
property may acknowledge in a counterletter that another person actually owns the
property.” Id.
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Adolph’s testimony that he was able to pay his father $40,000 in a little under two years”
and pointed out that “the provenance of the annotation on the Counter Letter is unclear.”
Instead, “[t]he court found credible Bertha’s testimony that the parties made payments
on the 137 acres during the marriage.” The 137 acres were deeded to Adolph by his
father in January 1983. The Louisiana Department of Transportation and Development
later purchased a portion of that land, with both Adolph and Bertha signing the document
of sale. Adolph also sold timber from the 137 acres and sometimes placed the sale
proceeds into joint marital accounts. He conveyed the 137 acres to his children in
January 2014, allegedly without Bertha’s knowledge.
Other properties discussed during Adolph and Bertha’s divorce proceedings
include three smaller lots in Louisiana and some land in Mississippi. Adolph and Bertha
dispute the ownership of one of the smaller Louisiana lots, lot 9, which was purchased
during the marriage. According to Adolph, his son owned half of lot 9, having made
monthly payments on it. He testified that the other half was marital and that he “felt like
[Bertha] had an interest in the property” and therefore offered to pay her “[h]alf of what
the appraiser’s office has got it assessed for” when he conveyed the entire lot to his son
in January 2014. According to Bertha, the payments from the son were not for the loan
on lot 9 but rather for other loans between him and his father. She testified that she and
Adolph still owned lot 9 and that she was not aware of the conveyance to Adolph’s son
until her attorney received that information from Adolph. As to the land in Mississippi,
the superior court found that it was owned by Bertha prior to the marriage; according to
Bertha’s testimony, however, she received three acres as an inheritance, and she and
Adolph later purchased additional property together in Mississippi.
In September 2007 Adolph and Bertha executed a document entitled “Last
Will & Testament of Adolph Hall.” The document was drafted without the aid of an
attorney. Bertha testified that Adolph drafted the document and that she disagreed with
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“the way he had it programmed” but eventually signed after making a change to one of
the paragraphs. Despite her reluctance to sign the document and her testimony that she
had just had heart surgery, the superior court found “there was no evidence that she was
compelled to sign the document or that she did not understand what she was signing.”
The document includes the following provision, signed by Adolph: “I, Adolph Hall
give up all rights to the Property in the State of Mississippi, which is in the name of
Adolph & Bertha Hall.” The following provision in the document was signed by Bertha:
“I, Bertha Hall give up all rights to the property in the State of Louisiana, with the
exception of the cattle & Certificate of Deposit (CD), which is also in the state of
Louisiana.”
Adolph testified that the document “was done to confirm if anything did
happen to [him], that the land in Louisiana would be conveyed to [his] children,” and
Bertha testified that it was for when Adolph died. Both Adolph and Bertha testified that
the agreement between them was that the property in Louisiana would be Adolph’s and
would be given to Adolph’s children and that the property in Mississippi would be
Bertha’s, but the context suggests Bertha meant that this would be the arrangement upon
Adolph’s death.
In January 2014 Bertha talked with Adolph about getting a legal separation.
Adolph testified that the conversation took place around Bertha’s birthday, which he
indicated is January 6 or 7. On January 22 Adolph transferred the 137 acres to his
children. But he testified that the conversation about legal separation did not take place
before he conveyed the property. In March 2014 Bertha filed for divorce, and in
November 2014 Adolph and Bertha separated.
Trial was held in May 2015 and the superior court issued a written order
in August 2015. The superior court granted the divorce and made determinations
regarding property distribution. The ownership of the 137 acres and lot 9 in Louisiana
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was “substantially disputed.” Adolph claimed that the Louisiana property was his
separate property and Bertha claimed that it was marital. The court noted Bertha’s
arguments that both Adolph and Bertha signed the document of sale for the portion of
that property that was sold to the State of Louisiana and that proceeds from timber sales
from the 137 acres were placed into joint marital accounts, and it “found credible
Bertha’s testimony that the parties made payments on the 137 acres during the marriage.”
“These facts,” the court found, “would support Bertha’s claim that the 137 acres were
transmuted into marital property.” “But,” the court explained, “there is more persuasive
evidence that the parties did not intend to treat either the 137 acres or the Mississippi
property as marital property.” The court cited provisions from the “Last Will &
Testament of Adolph Hall” document, concluding that they were “a fully credible
indication of the parties’ intent regarding the 137 acres and the Mississippi property” and
“that even if both properties had been treated as marital property . . . , both parties clearly
stated their intent that the properties henceforth were to be treated as their separate, non-
marital property, to be given to their children.” The court therefore found that the 137
acres were not marital property. The court also found that Adolph and his son owned lot
9.
Bertha appeals. She challenges the superior court’s reliance on the “Last
Will & Testament of Adolph Hall” document in determining that Adolph and Bertha
intended for the 137 acres to be Adolph’s separate property. She also challenges the
finding that lot 9 was non-marital property owned by Adolph and his son.
III. STANDARD OF REVIEW
This appeal concerns the first step for property division in divorce
proceedings, “deciding what specific property is available for distribution,” which often
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requires characterizing property as separate or marital.3 “Underlying factual findings as
to the parties’ intent, actions, and contributions to the marital estate are factual
questions,” which we review for clear error.4 A finding of “inten[t] to transmute separate
property into marital property is also reviewed for clear error.”5 The superior court’s
legal rulings are reviewed de novo.6
IV. DISCUSSION
Under Alaska law a spouse’s separate property may be transmuted into
marital property if “that is the intent of the owner and there is an act or acts which
demonstrate that intent.”7 As we explained in Kessler v. Kessler, separate property can
transmute into marital property through an implied interspousal gift “when one spouse
intends to donate separate property to the marital estate and engages in conduct
demonstrating that intent.”8 We emphasized that the relevant intent is that of “the
owning spouse, not the married couple.”9 And we explained that the inquiry was better
framed “as an intent to ‘donate’ or ‘convey’ separate property to the marital unit or
3
Beals v. Beals, 303 P.3d 453, 458-59 (Alaska 2013).
4
Id. at 459.
5
Hanson v. Hanson, 125 P.3d 299, 304 (Alaska 2005).
6
Turner v. Municipality of Anchorage, 171 P.3d 180, 185 (Alaska 2007).
7
Thomas v. Thomas, 171 P.3d 98, 107 (Alaska 2007) (quoting Chotiner v.
Chotiner, 829 P.2d 829, 832 (Alaska 1992)); see also Sparks v. Sparks, 233 P.3d 1091,
1094 (Alaska 2010), overruled on other grounds by Engstrom v. Engstrom, 350 P.3d
766, 771 (Alaska 2015).
8
411 P.3d 616, 618-19 (Alaska 2018).
9
Id. at 619 (emphasis in original).
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marital estate, rather than as an intent to ‘treat . . . separate property as marital
property.’ ”10
The superior court’s transmutation analysis was misdirected. The court’s
inquiry focused on whether the married couple intended to treat the property as marital
property, rather than on whether the owning spouse intended to donate the property to
the marital estate. The court found that marital funds were used to pay a mortgage on the
137 acres of Louisiana property titled in Adolph’s name, that both Adolph and Bertha
signed a document for the sale of a portion of that property, and that some income from
that property was used by the marital estate. However, these facts are not key to
transmutation’s donative intent analysis.
The finding that marital funds were used for mortgage payments on the 137
acres suggests that some, if not all, of the 137 acres were marital property.11 On remand
the superior court should identify whether the 137 acres were marital property in whole
or in part because it was paid for with marital funds; the court should then consider
whether Adolph had the necessary donative intent with respect to any separate portion
of the property. A similar analysis is needed regarding lot 9, which was purchased
during the marriage.12
10
Id. (first quoting Sparks, 233 P.3d at 1094; then quoting Schmitz v. Schmitz,
88 P.3d 1116, 1125 (Alaska 2004)) (footnote omitted).
11
Id. at 622 & n.33 (noting that “in most equitable distribution states the use
of marital funds to pay down the mortgage on separate property creates a marital interest
in that property,” without deciding whether to adopt that approach in Alaska (citing 1
BRETT R. TURNER, EQUITABLE DISTRIBUTION OF PROPERTY §§ 5:24, 5:26 (3d ed.
2005))).
12
The superior court’s decision appears to include no analysis to support the
finding that the lot 9 “property was owned by Adolph and his son.”
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The superior court’s analysis regarding the “Last Will & Testament of
Adolph Hall” document was also unclear. The court described the document as
providing “a fully credible indication of the parties’ intent regarding the 137 acres and
the Mississippi property” and found, based on that document, that Adolph and Bertha
intended the 137 acres to be separate property. This could suggest that the court
considered the document in the context of its transmutation analysis, as evidence that the
137 acres were not transmuted into marital property. But it appears that the court
actually had moved on from its misdirected transmutation analysis without completing
it and instead found that the document controlled the property disposition and enforced
its terms.
Although the document was titled as a will, it had a number of deficiencies
if intended to be a will. It could not be a valid joint will between Adolph and Bertha
because only Adolph is identified as the testator; the document provides only that
Adolph, not Bertha, declares it as his will; only Adolph signed as testator; and the
witnesses identified only Adolph as the testator and stated that Adolph declared the
document was his will.13 And no customary will provisions are included for Bertha.
Thus, the document was not Bertha’s will.14 And while Adolph appears to have honored
will execution formalities, it does not appear that he actually included any testamentary
property dispositions in the document.15 It instead appears that he and Bertha attempted
to create a present property agreement, so he would have separate property ultimately
13
See AS 13.12.502(a)(3) (requiring for witnessed wills two witness
signatures of the testator’s acknowledgments of or signature on will).
14
See AS 13.06.050(62).
15
See AS 13.12.602 (“A will may provide for the passage of all property the
testator owns at death and all property acquired by the estate after the testator’s death.”).
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passing to his children by intestate succession. Adolph testified at trial that the document
“was done to confirm if anything did happen to [him], that the land in Louisiana would
be conveyed to [his] children.” The “will” contains no “gifts” to Adolph’s children, so
this would not happen as a gift under the will but rather by intestate succession as a result
of the putative property agreement between Adolph and Bertha.16 Furthermore, the
superior court did not find that the document was a will and did not appear to treat it as
a will; if the document were a valid will, the property disposition provision would likely
have extinguished as a matter of law upon entry of the divorce.17
Instead, it appears that the superior court treated the document as something
other than a will, potentially as a post-nuptial agreement in which the parties conveyed
property interests to each other to place certain properties in sole and separate ownership.
The court expressed its very clear view that the parties had agreed to a property
arrangement “henceforth” controlling in their relationship. However, the court made no
finding regarding the nature of the document and whether it was a post-nuptial
agreement. If the document was a post-nuptial property division agreement, then its
validity should be determined, taking into account the considerations in Burgess v.
Burgess, which provides that “a transaction in which one spouse gains an advantage over
the other is presumptively fraudulent.”18
16
See AS 13.12.101(a) (“A part of a decedent’s estate not effectively disposed
of by will passes by intestate succession . . . .”).
17
See AS 13.12.804(a)(1)(A) (providing for divorce revocation of revocable
property dispositions between former spouses); see also AS 13.12.802(a) (“An
individual who is divorced from the decedent . . . is not a surviving spouse . . . .”).
18
710 P.2d 417, 421 (Alaska 1985); see also AS 13.12.213(b); Gabaig v.
Gabaig, 717 P.2d 835, 841 (Alaska 1986). The presumption of fraud may be overcome
if the spouse gaining the advantage shows “(a) payment of adequate consideration; (b)
(continued...)
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Thus, we reverse and remand for the superior court to consider whether
some or all of the 137 acres and lot 9 were marital property, to conduct a transmutation
analysis consistent with our opinion in Kessler, to make a determination as to the nature
and validity of the “Last Will & Testament of Adolph Hall” document, and to determine
an equitable distribution of the marital estate. Furthermore, we note that because the
court found that the properties were separate, it did not reach the question of the
purported conveyance of properties by Adolph to his children before the parties
separated. This issue and other questions of fraudulent conveyance may need to be
resolved on remand, and it is for the superior court to address any such questions in the
first instance.
V. CONCLUSION
The superior court’s property distribution decision is REVERSED and the
case is REMANDED for further proceedings.
18
(...continued)
full disclosure to the other spouse of his or her rights and the value of the property; and
(c) that the spouse conferring the benefits has competent and independent advice.”
Burgess, 710 P.2d at 421.
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