NO. 11 WESTERN DISTRICT APPEAL DOCKET, 1983, Appeal from the Order of the Superior Court of Pennsylvania of December 10, 1982, at No. 1042 Pittsburgh 1981, Reversing the Order Dated October 7, 1981 of the Court of Common Pleas of Washington County, Pennsylvania, Civil Division, No. 7810, In Equity, Book 45, Page 123, Pa. Superior Ct. ,
Roberts, C.j., and Nix, Larsen, Flaherty, McDermott, Hutchinson and Zappala, JJ. Nix, J., files a concurring opinion. Flaherty, J., files a concurring opinion in which Larsen, J., joins.
Appellants, Chester Krenzelak and Stanley Krenzelak, appeal by allowance an order of the Superior Court which reversed an order entered by the Court of Common Pleas of Washington County. Common Pleas had sustained appellants' preliminary objections to a complaint in equity filed by appellee, Wilma Krenzelak. In her complaint, appellee sought nullification of a real estate conveyance from her estranged husband, Chester Krenzelak, to his son, Stanley, on the ground that the property transfer was effected solely to deprive appellee of her right to equitable distribution of marital property in a divorce action pending under the Divorce Code of 1980, P.L. 63, No. 26, § 101 et seq., 23 P.S. § 101 et seq. (Supp. 1983-84).*fn1
The sole question presented for our decision is whether the equitable distribution provisions of the 1980 Divorce Code may be applied to real estate transferred by one spouse prior to enactment of the Code, where the other spouse, who never had an interest therein, now seeks its inclusion as marital property. The Superior Court, on the authority of our decision in Bacchetta v. Bacchetta, 498 Pa. 227,
A.2d 1194 (1982), determined that the provisions of the Code defining marital property and governing its disposition apply to the property at issue. We hold that Bacchetta does not control the instant case and, accordingly, reverse the Superior Court.
The property in question is a seventy-four acre tract located in Morris Township, Washington County which Chester Krenzelak purchased, in his name only, on January 29, 1968. Chester and Wilma were married at that time. Wilma, however, did not contribute to the purchase price of the land nor was the land ever titled in her name.
Chester filed an action for divorce against Wilma in April, 1978 and she filed a countersuit in April, 1979. On March 25, 1980 Chester conveyed the property for no monetary consideration to Stanley, his son by a prior marriage. The General Assembly enacted the Divorce Code of 1980 in April, 1980 and it became effective on July 1, 1980. The statute includes, inter alia, provisions for equitable distribution of property. 23 P.S. §§ 402-04. In January, 1981, Wilma petitioned Common Pleas Court to have her existing divorce action governed by provisions of the 1980 Code pursuant to Section 103 of the that Code.*fn2 Chester did not oppose the petition and Common Pleas granted permission to proceed under the Code. Thereafter, Wilma amended her original complaint in divorce to include a request for equitable distribution and other relief available under the new Code.
In March, 1981, Wilma filed this suit in equity to set aside the deed conveying the Morris Township property from Chester to his son contending that Chester transferred the property for a wholly inadequate consideration and for the
sole purpose of depriving her of her right to equitable distribution of marital property under the 1980 Code. Wilma further contends that the transfer is fraudulent under Section 403(d) of the new Code. Chester and Stanley filed preliminary objections to the complaint in equity in the nature of a demurrer and motion to strike maintaining that the complaint fails to state an actionable claim. Appellants argue that at all times prior to the transfer, the property in question was in Chester's sole ownership, that Wilma made no contribution to the purchase price and that, therefore, Chester had the right and authority to make the conveyance. Appellants further maintain that the conveyance is in no way affected by the Divorce Code of 1980 since it was not in effect at the time of transfer.
Common Pleas determined that although appellee's motion to have her pending divorce action governed by Section 103 of the 1980 Code had been granted, that Code's provisions for equitable distribution of marital property could not be applied retroactively to the date of filing of the pre-Code divorce proceeding. The Court reasoned that such retroactive application of the Code's provisions could impermissibly infringe on appellants' vested property rights in violation of the due process clause of the Fourteenth Amendment to the United States Constitution. Consequently, the Court held that the concept of "marital property" as defined in the 1980 Code does not become operational until the date on which a divorce action is filed under the new statute. The Court further held that:
[B]ecause the Code which created the concept of "marital property" did not take effect until July 1, 1980, the concept of "marital property" as a restriction on the alienability of vested property rights did not exist on March 25, 1980, the day defendant-husband transferred the property to defendant-son. Consequently, defendant-husband was free to transfer all of his interest in the property to whomever he wished on that date.
Common Pleas slip op. at 4 (October 7, 1981). Accordingly, Common Pleas sustained appellants' preliminary objections.
That decision came down before our opinion in Bacchetta, supra.
The Superior Court reversed on the basis of what it believed was a logical extension of Bacchetta, wherein this Court held that property acquired during the marriage of the parties, but before the effective date of the 1980 Code, is "marital property" subject to equitable distribution on termination of the marriage within the meaning of Section 401(e). Bacchetta did not involve property transferred to another before the Code's effective date. See Id., 498 Pa. at 230-232, 445 A.2d at 1196. Since appellee was granted leave to proceed under the new Code pursuant to Section 103, the Superior Court concluded that all provisions of the new enactment must apply to her divorce action. 307 Pa. Superior Ct. 499, 502, 453 A.2d 998, 999 (1982). In reaching this conclusion, the court cited several provisions of the new Code. Specifically, it referred to Section 401(c) which confers full equity power and jurisdiction on the Court of Common Pleas in all matrimonial cases, including the power to grant relief "against any third person over whom the court has jurisdiction and who is involved in or concerned with the disposition of the cause." The Superior Court further noted that Section 401(e)(5) defines marital property subject to equitable distribution as "all property acquired by either party during the marriage" and that excluded from this definition is property which "a party has sold, granted, conveyed or otherwise disposed of in good faith and for value prior to the time proceedings for the divorce are commenced." 23 P.S. § 401(e)(5).
The court then held that, as the property at issue was conveyed gratuitously and after both appellant-husband and appellee had filed their pre-Code divorce actions, the property is "marital property" within the meaning of Section 401(e). 307 Pa. Superior Ct. at 503, 453 A.2d at 999-1000. Finally, the court observed that appellee seeks to have the conveyance set aside pursuant to Section 403(d) which deems fraudulent and void "[a]ny encumbrance or disposition of property to third persons who had notice of the
pendency of the matrimonial action or who paid wholly inadequate consideration for such property." 23 P.S. § 403(d). While recognizing that disposition of the case on the merits is within the province of the trial court, the Superior Court concluded that the fact that the lower court necessarily would be required to apply Section 403(d) retroactively, did not bar the action:
While this case proceeds a step forward from Bacchetta in that it involves a third party who now purports to own the property, this Court perceives no reason to withhold retroactive application of a provision in the Divorce Code from this situation which may involve the divesting of property rights of appellee-son.
307 Pa. Superior Ct. at 503, 453 A.2d at 1000 (1982).
Contrary to the view of the Superior Court, we find good reason not to apply the equitable distribution provisions of the 1980 Code to defeat the vested property rights of a transferee who is not a party to the divorce action where he acquired those rights prior to the enactment and effective date of the Code.
At the outset we note that, "[n]o statute shall [be] construed to be retroactive unless clearly and manifestly so intended by the General Assembly." 1 Pa.C.S. § 1926 (Supp.1982-83). See also Misitis v. Steel City Piping Co. et al., 441 Pa. 339, 342, 272 A.2d 883, 884 (1971); Commonwealth ex rel. v. Greenawalt, 347 Pa. 510, 512, 32 A.2d 757, 758 (1943); Commonwealth v. Griffin, 189 Pa. Superior Ct. 59, ...