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Harriman v. Harriman, corrected 5-18-98
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	1998 ME 108
Docket:	Cum-97-569
Submitted
on Briefs:	February 20, 1998
Decided:	May 13, 1998

Panel:WATHEN, C.J., and ROBERTS, CLIFFORD, RUDMAN, DANA, and SAUFLEY, JJ.

EFTHIMIA S. HARRIMAN v. EVERETT J. HARRIMAN

ROBERTS, J.

	[¶1]  Everett J. Harriman appeals from the judgment of the Superior
Court (Cumberland County, Calkins, J.) affirming the judgment entered in
the District Court (Portland, Brodrick, J.) in a divorce action brought by his
wife, Efthimia S. Harriman.  On appeal he contends that the court erred in
finding that the increase in value of certain retirement funds and capital
stock were marital property pursuant to 19 M.R.S.A. § 722-A (1981)
(current version at 19-A M.R.S.A. § 953 (1998)).  He also asserts that the
court erred in its treatment of the parties' debts.  We affirm the judgment.  
	[¶2]  The parties were married in April 1984.  In 1993 Efthimia filed a
complaint for divorce on the ground of irreconcilable differences.  At the
trial in 1996, Everett testified about the retirement funds and capital stock
that are the subject of this appeal.  Those funds and the relevant values are
as follows:  
							Value at time
							of marriage				Value in 1996

	Paine Webber account	$ 5,400					$21,126
	First Trust account	$16,595					$66,682
	Dreyfus fund			$ 2,178					$82,985

	[¶3]  All three of the accounts were opened before Everett's marriage
to Efthimia, and the interest and dividends are reinvested into the accounts. 
During the marriage, Everett did not contribute any additional funds to the
Paine Webber or the First Trust accounts.  He did make contributions with
marital funds to the Dreyfus fund of $2,000 for each of the years 1985,
1986, and 1987.  In addition, in 1987 Everett purchased additional shares
in the Dreyfus fund with $28,000 he received from the Gorham
International profit-sharing plan.  He had been employed by Gorham
International, Inc., before and during the marriage.  His interest in the plan
was valued at $17,003 at the time of the marriage.  
	[¶4]  In 1987 Everett inherited capital stock from Madellene
Davenport, having a value of approximately $13,500.  He enrolled in the
stock reinvestment plans offered by some of the companies whose capital
stock he inherited.  At trial Everett was uncertain what percentage of the
increase in value of the inherited capital stock was attributable to capital
appreciation and what was attributable to reinvestment of dividends.  
	[¶5]  In its judgment, the court ordered an equal division of the marital
property.  The court included in the marital estate the increase in the value
of the retirement accounts and the increase in the value of the stock
inherited from Madellene Davenport.  The court noted that Everett failed to
delineate to its satisfaction what percentage of the increase in value of the
different accounts was attributable to stock splits or market growth and
what was attributable to reinvested dividends.  The court further ruled that
each party was responsible for their respective debts.  Everett filed a motion
for findings of fact pursuant to M.R. Civ. P.  52 and a motion to amend the
judgment pursuant to M.R. Civ. P. 59(e).  Both of the motions were denied by
the trial court.  Everett appealed to the Superior Court and that court
affirmed the judgment of the District Court.  This appeal followed.  
	[¶6]  Everett argues that the court erred as a matter of law by finding
that when dividends from mutual funds are reinvested without any active
involvement on the part of the owner during the marriage, the increase in
value is marital property.  To support his contentions he relies on our
decision in Nordberg v. Nordberg, 658 A.2d 217 (Me. 1995).  Efthimia
counters that Everett's reliance on Nordberg is misplaced and that our
decision in Macdonald v. Macdonald, 532 A.2d 1046 (Me. 1987), controls
the issues.  We agree with her contentions.  
	[¶7]  In Macdonald we decided that the income from nonmarital
property accrued during the marriage is marital property.  We quoted from
the Commissioner's Comments to the 1970 version of section 307 of the
Uniform Marriage and Divorce Act on which 19 M.R.S.A. § 722-A was
modeled, as follows:  
The phrase "increase in value" as used in subsection [(2)(E)] is
not intended to cover the income from property acquired prior
to the marriage.  Such income is marital property.  Similarly,
income from other nonmarital property acquired after the
marriage is marital property.  
Macdonald, 532 A.2d at 1049 (quoting Handbook of the National Conference
of Commissioners on Uniform State Laws § 307, at 204 (1970)).  
	[¶8]  We also stated in Macdonald that "whether the increase in value
or appreciation of separate property is marital or separate is governed by
[the "source of funds" rule]."  Id. (citing Hall v. Hall, 462 A.2d 1179 (Me.
1983), and Tibbetts v. Tibbetts, 406 A.2d 70 (Me. 1979)).  We also stated
that in applying the "source of funds" rule, any increase in value attributable
to marital effort (a spouse's activity that enhances the property) is marital
property.  Id. at 1050.  Everett contends that the court misapplied those
principles by relying on his supposed "marital effort" of deciding during the
marriage not to change his instructions to reinvest dividends.  Whether the
court erred by characterizing Everett's inaction as "marital effort" and
whether the concepts from Hall and Tibbetts retain their decisional vitality,
we need not decide.  See Long v. Long, 697 A.2d 1317 (Me. 1997)
(overruling Tibbetts).  The record is clear that some part of the appreciation
in value of Everett's accounts resulted from reinvestment of dividend
income.  Because that income was marital property, the appreciation of that
portion retains its status as marital property.  Moreover, Everett had the
burden of proving how much of the increase in the value of the accounts
remained nonmarital, Macdonald v. Macdonald, 532 A.2d at 1050, and the
court found he had not met that burden.     That finding is not clearly
erroneous; therefore, the court correctly ruled that all of the appreciation
was governed by the presumption of section 722-A that it was marital.  
	[¶9]  Finally, Everett contends that the trial court erred by its
allocation of what he calls "marital debts."  We have in the past used the
term "marital debt."  In at least one case we stated expressly that marital
debt is apportioned according to section 722-A.  See Arey v. Arey, 651 A.2d
351, 354 (Me. 1994).  We now recognize that the use of the term can be
misleading.  The debt of either or both spouses defines a relationship with
third parties.  It is not an asset to be divided pursuant to section 722-A. 
Although the trial court can and should allocate responsibility for payment of
debt between the spouses, it cannot affect the relationship between the
creditor and the spouse or spouses.  Of course, in deciding the economic
issues in a divorce case, the court must consider the amount and nature of
the debts of the parties and the purpose for which they were incurred.  See
section 722-A.  On the record before us, the trial court could rationally
conclude that an equal division of marital property was just, despite the
unequal burden of the debts retained by each spouse.  
	The entry is:
				Judgment affirmed. 
               
Attorney for plaintiff: Martin J. Foley, Esq. Wilson, Fernald & Foley P O Box 15337 Portland, ME 04112-5337 Attorney for defendant: Dana E. Prescott, Esq. Potter, Prescott, Jamieson & Nelson, P.A. P O Box 1190 Saco, ME 04072-1190