COUCH, J., delivered the opinion of the Court.
This case began in the Circuit Court for Baltimore County where the appellee, Robert John Crawford, filed a Bill of Complaint seeking a divorce a vinculo matrimonii founded on three years separation. The appellee also sought one-half of a jointly held savings account which consisted of the proceeds from a sale of the parties' marital home after they had separated. Alice Alla Crawford, the appellant, by her answer to the Bill sought contribution from her husband for payments she made on the house mortgage, real estate taxes, and insurance. We observe that the appellant lived in the house until it was sold. The chancellor, relying on the "presumption of gift" principle, which he found applicable and not rebutted by Mrs. Crawford, divided the savings account equally between the parties.
This appeal ensued and we issued certiorari prior to consideration by the Court of Special Appeals in order to consider important questions pertaining to the presumption of gift doctrine as applied to the husband-wife relationship.
The facts giving rise to this controversy are uncomplicated and to an extent uncontradicted. After some ten years of marriage, during which they acquired a home and held it as tenants by the entireties, the parties separated in 1977 with
In his written opinion the chancellor made no finding with respect to whether there was an agreement between the parties as Mr. Crawford testified. Rather he based his conclusion on holding (1) "that when one spouse uses funds for the purchase of property a presumption of gift arises in favor of the other spouse," and (2) that Mrs. Crawford failed to rebut this presumption by clear and convincing evidence. Thus the precise question for our consideration is whether the presumption of gift doctrine is applicable under the facts of this case. We shall hold that it is not.
We begin our analysis by stating the general law of contribution that applies to co-tenants in the factual circumstances of this case. Generally, one co-tenant who pays the mortgage, taxes, and other carrying charges of jointly owned property is entitled to contribution from the other. Aiello v. Aiello, 268 Md. 513, 518-19, 302 A.2d 189, 192 (1973); Pino v. Clay, 251 Md. 454, 456-57, 248 A.2d 101, 102-03 (1968); Hogan v. McMahon, 115 Md. 195, 201-02, 80 A. 695, 698 (1911). This rule of contenancy applies equally to a tenancy by the entireties. We stated in Colburn v. Colburn, 265 Md. 468, 474-75, 290 A.2d 480, 483-84 (1972), that
Schilbach stated that
When the co-tenants are married to each other, however, a presumption of gift usually arises as to any payment made to purchase the property, Anderson v. Anderson, 215 Md. 483, 488-89, 138 A.2d 880, 883 (1958); Reed v. Reed, 109 Md. 690, 692-93, 72 A. 414, 415 (1909); to improve the property, Klavens v. Klavens, 275 Md. 423, 431, 341 A.2d 411, 416 (1975); or to preserve the property, Lingo v. Lingo, 267 Md. 707, 299 A.2d 11 (1973); Colburn v. Colburn, 265 Md. 468, 475-76, 290 A.2d 480, 484 (1972).
In Klavens, a husband, after divorce, sought reimbursement from the proceeds of sale of the parties' home, which was held as tenants by the entireties, for a loan to which he had individually obligated himself while the parties were living together as husband and wife. Although the loan was not secured by a lien on the property, the proceeds were used in the construction of a dwelling on it. We stated that "the general rule [is] that advancements and payments by one spouse toward the purchase — or, as here, the improvement — of property owned as tenants by the entireties are presumed to be a gift to the other spouse to the extent of the latter's interest in the property." 275 Md. at 431, 341 A.2d at 416. "[T]he question of whether a purported gift by one spouse to another is made with donative intent turns on the facts and circumstances prevailing at that particular time." 275 Md. at 432, 341 A.2d at 416. We also held that the presumption, when it applies, must be overcome by clear and convincing evidence. Id.
We hold today that this presumption arises only when the parties are living together as husband and wife. When they are not, even though they may be legally married, the reason for the presumption, that married couples usually contribute their physical, emotional, and financial efforts for their
As noted above, in Klavens, the husband obligated himself individually to the loan while the parties were living together as husband and wife. He then used the proceeds of the loan to help construct a dwelling on the property held by them as tenants by the entireties. Thus, the presumption arose, and, because it was not rebutted, the proceeds of the loan were deemed a gift to the wife to the extent of her interest in the property.
In Colburn v. Colburn, 265 Md. 468, 290 A.2d 480 (1972), the wife sued for an accounting for rents and profits from jointly held properties. The husband sought to offset her recovery by claiming a reimbursement for one-half of the tax and insurance payments he had made on the marital home, held as a tenancy by the entireties, after the wife left the home. We held that the wife was entitled to one-half of such profits, but allowed the husband to deduct one-half of the taxes and insurance premiums he had paid on the former marital home after she moved out. Although the wife did not raise the issue of the presumption of gift, our holding that the husband was entitled to contribution for his payment of the carrying charges of property held by the entireties after the wife moved out is consistent with our holding in this case that no presumption arises when the parties discontinue living together as husband and wife.
In Lingo v. Lingo, 267 Md. 707, 299 A.2d 11 (1973), the wife claimed that she was entitled to one-half of the proceeds from the sale of property previously owned as tenants by the entireties. The husband claimed that he was entitled to reimbursement for his repayment, after the parties had separated, of a loan, which "increase[d] the equity available for distribution when the property was sold."
In Anderson v. Anderson, 215 Md. 483, 138 A.2d 880 (1958), the wife provided the majority of the funds used to purchase a business while the parties were living together as husband and wife. Sixteen months later, she left the marital home. Subsequently, the business failed and its property, held as a tenancy by the entireties, was sold at a foreclosure sale. In a suit appealing the division of the proceeds of the sale, the wife contended that the business was a partnership
In several of our sister jurisdictions the conclusion has been reached that, although the presumption of gift applies during marriage, after the separation of a husband and wife, the spouse who pays encumbrances, taxes, and insurance on property held by them as co-tenants is entitled to contribution from the other spouse. See Heinemann v. Heinemann, 314 So.2d 220, 221-222 (Fla. App. 1975), cert. denied, 336 So.2d 106 (Fla. 1976) (while presumption of gift applied to husband's funds used to purchase property during marriage and held as tenants by the entireties, it did not apply to mortgage payments made by husband after separation); Tucker v. Tucker, 121 N.J.Super. 539, 547-48, 298 A.2d 91, 95 (Ch. Div. 1972) (while presumption of gift applies to husband's funds used to purchase property during the "viable period of the marriage, ... [i]n the marital disenchantment of that period [after the parties separated] [the husband] would not have intended the [mortgage] payments as gifts; they were protective of his own investment and its possible loss by foreclosure."); Kratzer v. Kratzer, 130 Ill.App.2d 762, 266 N.E.2d 419 (1971) (while presumption of gift applied to husband's funds used to purchase property during marriage and held as joint tenants, it did not apply to husband's payment of taxes and insurance on the property after wife's release from mental hospital because he refused to live with her after that time).
Thus, it should be clear from the above discussion that the presumption of gift doctrine is alive in Maryland, if at the time of the transaction(s) in question, the parties are living together as husband and wife. When they are not, the reason for the presumption is not present and it does not arise; therefore, the chancellor erred in applying the presumption in this case. In addition, although we need not decide these issues today, there may be other instances in which the presumption does not arise. See Lingo v. Lingo, 267 Md. 707, 299 A.2d 11 (1973) (joint venture), and Anderson v. Anderson, 215 Md. 483, 138 A.2d 880 (1958) (partnership).
That part of the decree providing for an equal division of the Loyola Federal Savings & Loan Account vacated; otherwise the decree is affirmed; case remanded to the Circuit Court for Baltimore County for further proceedings consistent with this opinion.
Costs to be paid by appellee.
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