Manes v. Harrison-Manes

338 S.E.2d 815 (1986)

Harry Franklin MANES v. Hilda HARRISON-MANES.

No. 8530DC574.

Court of Appeals of North Carolina.

February 4, 1986.

*816 Smith, Bonfoey & Queen by Frank G. Queen, Waynesville, and Richlyn D. Holt, Maggie Valley, for defendant-appellant.

Brown & Brown by Gavin A. Brown, Waynesville, for plaintiff-appellee.

MARTIN, Judge.

The sole issue raised by this appeal is whether the trial court erred in concluding that the property acquired in exchange for plaintiff's separate property remained separate property. We agree with the trial court that the annuity and bank account remained separate property of the plaintiff. However, for the reasons hereinafter stated, we must vacate that portion of the judgment relating to the real property and remand this case for further proceedings.

Under the Equitable Distribution Act, separate property includes all real and personal property acquired by a spouse by bequest, devise, descent, or gift during marriage and this separate property remains separate property when exchanged for other property "regardless of whether the title is in the name of the husband or wife or both unless a contrary intention is expressly stated in the conveyance." G.S. 50-20(b)(2). In addition, property acquired by gift from the other spouse is considered separate only if stated in the conveyance. Id.

In McLeod v. McLeod, 74 N.C.App. 144, 156, 327 S.E.2d 910, 918, cert. denied, 314 N.C. 331, 333 S.E.2d 488 (1985), another panel of this Court construed G.S. 50-20(b)(2) and held that "[w]hen property titled by the entireties is acquired in exchange for separate property the conveyance itself indicates the `contrary intention' to preserving separate property required by the statute." Furthermore, when separate property is used as consideration to acquire entireties property a gift of separate property to the marital estate is presumed which is rebuttable by clear, cogent, and convincing evidence. Id.

The trial court, in the present case, concluded that the real property held by the parties as tenants by the entirety remained the separate property of plaintiff because no contrary intention had been expressly stated in the conveyances. In so doing, the court failed to consider the presumption created by McLeod. Thus, we must vacate that portion of the judgment adjudging plaintiff to be the sole owner of the real property and remand this case to the trial court for further proceedings. Upon remand, the real property will be considered marital property, subject to equitable distribution, unless plaintiff can rebut the presumption of gift by clear, cogent, and convincing evidence.

The presumption of gift created by the holding in McLeod was limited in its application to real property acquired by both spouses, as tenants by the entirety, in exchange for the separate property of one of them. We decline to extend that presumption to jointly held personal property which is acquired in exchange for the separate property of one spouse, as to do so would seem to defeat the legislative intent of G.S. 50-20(b)(2).

Therefore, as to the annuity and First Union Bank account, we find no error in the trial court's conclusion that the property remained the separate property of plaintiff. Although the plaintiff added defendant's *817 name to the bank account and annuity, the record discloses no evidence of any intention that the funds would not remain plaintiff's separate property. The deposit of funds into a joint account, standing alone, is not sufficient evidence to show a gift or an intent to convert the funds from separate property to marital property. See Brown v. Brown, 72 N.C.App. 332, 324 S.E.2d 287 (1985), Loeb v. Loeb, 72 N.C. App. 205, 324 S.E.2d 33 (1985).

Affirmed in part, vacated in part, and remanded.

HEDRICK, C.J., and EAGLES, J., concur.