Award of Money in an Arizona Divorce
One Spouse Was Awarded Money in An Arizona Divorce
Under Arizona community property laws, all earnings by either spouse during marriage are presumed to belong to the community. If a spouse incurs a separate debt during marriage, a creditor cannot collect from the debt from community property. In the Martin v. Martin case, the parties signed a valid prenuptial agreement before marriage. That agreement provided there would be no community property during their marriage.
After their marriage, they entered into a new agreement opting to transfer all of their property to community property. They appear to have done so to prevent a credit from collecting on a separate debt. So, were they successful? Well, that was the question raised in the case of Martin v. Martin, 752 P.2d 1026, 156 Ariz. 440 (1986).
The Award of Money: Facts of the Case
Mary and Richard Martin were married in 1950 and remained married for over 30 years. Richard effectively managed the money on his own and did not involve Mary in the couple’s finances. In 1979, the couple moved to California for Richard’s job. They also bought a home in Arizona as a retirement property. Mary moved into the Prescott home. Richard stayed alone in California for three years, sending Mary money for the mortgage and living expenses.
In 1982, Mary filed for dissolution. The Court ordered Richard to pay Mary $1700 a month in temporary alimony during the case. The court also authorized him to remove that amount from the couple’s bank account every month.
After a trial, the family law judge divided the community property between the couple. The court awarded Mary property worth $184,843 to Mary and $215,211 to Richard. The judge also ordered Richard to pay Mary $2,000 per month for spousal maintenance.
The trial court also ordered Richard to pay Mary two sums, $46,688 and $9,473. The first represented 50% of the monies Richard earned during the three years of separation. The second sum represented amounts Richard withdrew from the community savings accounts. Those withdrawals were more than the amounts allowed under the court order.
Richard appealed the order. The Court of Appeals found that the trial court had no authority to give a spouse a money judgment. It sent the case back to the trial court to remove the $46,688 and $9,473 from the judgment.
Mary asked for the Arizona Supreme Court to review this ruling.
Award of Money: Discussion of A.R.S. § 25-318(A)
The Supreme Court first reviewed the Arizona statute that controls disposition of property in a dissolution of marriage case, A.R.S. § 25-318. The law first directs the trial court to assign each spouse his or her separate property. It also requires the court equitably divide the parties’ community property.
The law specifically authorizes the trial court, when dividing community property, to consider wrongful, unreasonable and improper uses of common property. That is, the statute authorizes the trial court to compensate one spouse for the misuse of the common property by the other spouse. It may do so by awarding the innocent spouse a greater share of the community property to offset the value of the lost property.
The Supreme Court noted that the trial court did not award Mary a greater share of the existing marital property to compensate her for any dissipation of that property. Nor is there evidence that the separate maintenance award was intended to compensate her for dissipation of community property.
Instead, the trial court simply arrived at the amounts found to have been improperly or excessively expended, and ordered Richard to pay these amounts to Mary.
Award of Money: A Look at Legislative Intent
The Supreme Court stated that unless the statute, A.R.S. § 25-318, authorizes the trial court to order the payment of money from one spouse to another in a dissolution action, the order in this case cannot be authorized. It looked at the history of the law and its various sections to determine what the legislature intended when it enacted the law.
The Court focused on the language of A.R.S. § 25-318 that allows the court to make the division of property equitably, “though not necessarily in kind.” After discussion, the Court determined that that section of the statute authorizes a court to make an award of money instead of merely dividing property.
This would make sense, since sometimes it is virtually impossible to divide property 50/50, like equipment of a business, inventory, or stock in closely held business. The statute allows the court to make an equitable division of this kind of property by awarding an amount of money to one spouse representing that spouse’s share of the value of the property, but the specific property would be set aside to the other spouse.
The Court found that its conclusion was also supported by A.R.S. § 25-318(C) which allows a court to put a lien on the property awarded to one spouse to secure payment of an amount awarded to the other.
It reviewed cases from other states holding that when the court finds that one spouse has improperly taken marital property, the value of the property is added to the other existing marital property, and the total divided equitably. Then it adopted that rule as well.
The Court found that a divorce judge may award a spouse a sum of money representing the value of her interest in community assets which are not available for division. The assets may be unavailable because of the other spouse’s excess expenditures or his concealing or destroying the property.
It upheld the trial court’s judgment ordering Richard to pay Mary the two sums of cash.