Appeal from the Superior Court of the District of Columbia; (Hon. Cheryl M. Long, Trial Judge)
Before Rogers, Chief Judge, Schwelb, Associate Judge, and Belson, Senior Judge.
The opinion of the court was delivered by: Schwelb
SCHWELB, Associate Judge: This appeal presents the question whether the trial court's statutory authority to order the equitable distribution of the marital estate as part of a decree of divorce applies to real property in which the divorcing spouses have an equitable interest, but as to which one of the spouses holds legal title in joint tenancy with a third party (here the husband's mother), who has been joined in the suit and who has been accorded the opportunity to protect her interests. The trial Judge held that the third party's interest was inviolate. Because the evidence showed that the husband's mother's interest was held by her in constructive trust for the spouses, we reverse and remand for further proceedings.
Kathy Hancock Gore ("the wife") and Quentin R. Gore ("the husband") were married on June 24, 1984. Following the birth of their two children, the Gores purchased a three bedroom house at 315 Rittenhouse Street, N.W. in the District. Presently, the house has an appraised value of approximately $168,000. It is encumbered with a first deed of trust of approximately $100,000. *fn1
At the time the Gores purchased the marital home, the wife's unfavorable financial condition precluded her from qualifying as a borrower. In order to facilitate the purchase, Geraldine Gore, the husband's mother, co-signed the promissory note in favor of the lender. She and the husband took title to the house as joint tenants, with the right of survivorship as between mother and son.
The Gores lived together in the marital home until February 1989, at which time they separated voluntarily. In February, 1991, the husband filed for divorce, seeking, inter alia, permanent possession of the marital home and equitable distribution of marital property, including any part of the marital home which the court determined to be marital property. The wife counterclaimed, alleging that the entire home was marital property, and that she was therefore entitled to an equitable share of it.
Pursuant to Super. Ct. Dom. Rel. R. 19, and in light of the husband's mother's 50 percent legal interest in the home, the trial Judge joined the mother as a party to the divorce proceeding. Following a lengthy trial, the Judge issued comprehensive written findings of fact and Conclusions of law. Based upon these findings and Conclusions, the Judge entered a judgment of divorce and ordered the distribution of marital property pursuant to D.C. Code § 16-910 (b) (1989). The Judge found that the mother had co-signed the first deed of trust "purely to facilitate acquisition of the marital home" and that she did so "solely for the benefit of the [husband and wife]." *fn2 The Judge also found that the husband's mother had taken title without any genuine intent to retain an interest in the house, to live in it, or to use it for her own benefit in any other way. The Judge stated that the husband's mother had been compensated by the parties for her contribution to the purchase price of the house, but that it was unclear whether she had been reimbursed for certain costs which she had incurred at settlement, and for drapes and shrubs for the property. After the loan was obtained, the husband and wife made all of the payments on the note.
The trial Judge concluded as a matter of law that the parties' home was marital property, and that the wife was "entitled to an equitable lien upon the marital home and that the title holders, the and his mother, continue to hold title only with a constructive trust in favor of the ." The Judge explained that she would ordinarily have ordered the division of the entire marital home equally between the husband and wife, but that she felt constrained to award only a 25 percent equitable lien to the wife because the husband's mother was liable on the note and was part-owner of the home. The Judge reasoned that
the [husband's] mother, upon sale of the property could suddenly demand a one half share of the proceeds. There is no way to prevent her from doing so. There is no legal authority by which this Court can distribute anything other than the [husband's] personal financial interest in the marital home.
Overall, this Court finds that the parties in this action, under normal circumstances, would be entitled to share equally in the asset to be distributed. In the instant case, the asset itself can consist only of one-half of the fair market value of the house.
The Judge held that the wife had an equitable interest in 25 percent of the fair market value of the house (half of the husband's half), *fn3 noting that otherwise the husband would be unjustly enriched.
Following the entry of this initial decree, the husband filed a motion to alter or amend the judgment. He contended primarily that the award to the wife should be based on her fair share of the net value of the house (rather than on her share of its fair market value without regard to the encumbering first deed of trust). *fn4 The wife objected that she had an equitable claim against the interests both of the husband and of his mother. The Judge granted the husband's motion, awarded the wife a 25 percent interest in the net value, and reaffirmed her belief that the court "[could not] ignore [the mother's] fundamental liability as well as ...