UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
April 22, 1986
BERNADETTE CHARLES, APPELLEE
ALBERT MANSFIELD CHARLES, APPELLANT
On Appeal from the District Court of the Virgin Islands (D.C. Civil No. 84-0064)
Before: HUNTER, GARTH and BECKER, Circuit Judges
BECKER, Circuit Judge.
This case presents the question whether the Territorial Court of the Virgin Islands erred in considering a spouse's responsibility for the failure of a marriage in the distribution of the marital homestead pursuant to V.I. Code Ann. tit. 33 § 2305(d) (1967 & Supp. 1985). For the reasons that follow, we conclude that § 2305(d)'s broad grant of equitable discretion permits consideration of marital fault in the homestead distribution, and hence that the court's ruling was proper.
On August 31, 1982, Bernadette Charles ("Bernadette") instituted divorce proceedings against her husband, Albert Charles ("Albert") in the Territorial Court of the Virgin Islands, Division of St. Thomas and St. John. In addition to seeking a divorce decree, Bernadette's complaint also requested disposition of all property acquired by the parties during the marriage, including the marital homestead*fn1 located at 37-29 Estate Pearl, St. Thomas, Virgin Islands, with equity valued at $93,000; real estate located at 22-10 Estate Mandahl, St. Thomas, with equity valued at $6,000; a Wellcraft Suncruiser boat, with equity valued at $4,000; a $13,000 certificate of deposit and a $675 savings account, both in Albert's name; a $4,198.20 savings account in Bernadette's name; and other personal property of the parties worth $5,000.
On July 7, 1983, Judge Feuerzeig of the Territorial Court filed Findings of Fact and Conclusions of Law granting the divorce and distributing the marital property. Judge Feuerzeig found that during their years of marriage, Albert repeatedly abused Bernadette verbally and physically, was continuously involved in extra-marital affairs, and failed to contribute to household expenses.*fn2 He also found that during the marriage, Bernadette earned two dollars for every dollar earned by Albert. Judge Feuerzeig concluded that the "equities of the parties" necessitated a 66 2/3% share to Bernadette, and a 33 1/3% share to Albert. Accordingly, Judge Feuerzeig issued a second decree on September 1, 1983, awarding Bernadette the marital homestead at Estate Pearl and awarding Albert all the remaining property.*fn3 Judge Feuerzeig directed Albert to vacate the marital homestead on August 31, 1983, and deliver the keys to Bernadette or her attorney. Edith Bornn.*fn4
Albert appealed from the second decree. He noted that Judge Feuerzeig had said that, regardless of their relative economic contributions to the marriage, he would ordinarily have given Albert one-half of Estate Pearl because the house had been bought primarily with proceeds of the sale of property owned by Albert prior to the marriage. Judge Feuerzeig refused to apportion Estate Pearl in this way, however, because he found that the breakdown of the marriage was due solely to Albert's misconduct. In effect, to punish Albert's misconduct, Judge Feuerzeig awarded the entire marital homestead to Bernadette.*fn5 Albert contended that consideration of marital fault in the distribution of the homestead was proscribed both by the Virgin Islands divorce code and the marital homestead distribution statute, V.I. Code Ann. § 2305(d).
The District Court of the Virgin Islands affirmed Judge Feuerzeig's decision. Chief Judge Christian stated that, contrary to Albert's contention, neither the divorce code nor V.I. Code Ann. tit. 33 § 2305(d) proscribe consideration of marital fault in the distribution of the marital homestead in an appropriate case, and indeed that § 2305(d) explicitly permitted such consideration. The district court further held that Judge Feuerzeig had not abused his discretion in his evaluation of marital fault. The district court therefore affirmed Judge Feuerzeig's decree. This appeal followed.
Two issues are raised on appeal. First, we must consider whether the direction in V.I. Code Ann. tit. 33 § 2305(d) to divide the marital homestead in accordance with the "equity of the case" is no longer effective since the 1973 amendment of the Virgin Islands divorce statute, V.I. Code Ann. tit. 16 §§ 104, 109, to exclude fault as a ground for divorce and as a factor in influencing decisions pertaining to alimony, support and certain other related matters. Assuming that §§ 104 and 109 do not override § 2305(d), the second issue is whether § 2305(d)'s "equity of the case" criterion permits consideration of marital fault in appropriate cases.
A brief historical survey of the relevant Virgin Islands law relating to divorce and marital property distribution is instructive. In 1973, the Virgin Islands legislature amended § 104 of the divorce statute to eliminate fault as a ground for divorce.*fn6 At the same time, the legislature amended § 109 of the divorce statute specifically to exclude consideration of marital fault in decisions pertaining to child custody and support, alimony, the possession or control of personal property of the other party, and the wife's decision to change her name. Section 109 now directs the divorce court to consider the "needs and welfare" of the children with regard to custody and child support, and the "need" of a party for support ad maintenance with regard to alimony, irrespective of marital fault.*fn7
Quite significantly for present purposes, the legislature did not enact, as have most other jurisdictions, see infra at Part IV, a comprehensive legislative scheme covering all of the spouses' marital property, real and personal. Instead, the legislature left intact its Homestead Distribution Statute (contained, not in the Divorce Code, but in Chapter 81 of the Virgin Islands Code, dealing with taxation and finance. V.I. Code Ann. tit. 33, §§ 1-4001 (1967 & Supp. 1985)) which provides in relevant part:
The homestead protection and exemption provided in this section shall continue to attach to the property after the death of the owner thereof, and shall inure to the favor of surviving spouse while the latter continues to occupy the said homestead, and after the death of both spouses, to the favor of their children until the youngest surviving of these shall have attained majority. In case either spouse shall abandon the home, the homestead protection and exemption shall continue in favor of the spouse who occupies the property as a dwelling; and in the case of a divorce, the court which grants it shall make disposition of the homestead in accordance with the equity of the case.
V.I. Code Ann. tit. 33 § 2305(d) (emphasis supplied).*fn8
Albert argues that the legislature's 1973 decision to amend the Virgin Islands divorce statute to exclude fault as a ground for divorce and as a factor influencing decisions pertaining to alimony and support, see discussion supra at 7-8, implies a legislative intent to exclude consideration of marital fault from all divorce-related proceedings, including those involving the disposition of the marital homestead. He thus argues that the new Virgin Islands divorce laws have in effect overridden that portion of V.I. Code Ann. tit. 33, § 2305(d), that permits a divorce court to consider the "equity of the case" in the disposition of the marital homestead. In the alternative, Albert argues that even if a court can consider "equity of the case," that phrase, as used in § 2305(d), refers to equities in a pure property sense, i.e., the value of the property the spouses contributed to the marriage, rather than to equities in the common-law sense. Once again, Albert's conclusion is that Judge Feuerzeig erred by considering Albert's role in the breakup of the marriage in the disposition of the marital estate.
Bernadette counters both of Albert's arguments. As to the first, she argues that there is no ground for reading the divorce law amendment as a de facto repeal of § 2305(d). It is well within the power of the Virgin Island's legislature to repeal § 2305(d), she argues, and as it has not done so, this court should not. In response to Albert's second argument, Bernadette argues that the most natural reading of the phrase "equity of the case" as § 2305(d) suggests that the Territorial Court may, in its discretion, consider marital misconduct in an appropriate case. Had the legislature intended a narrower compass for decision, she argues, it would have provided for distribution in accordance with the "equities of the parties" or "the parties' respective equities in the homestead." As Albert has offered no evidence of legislative intent to the contrary, Bernadette concludes the most natural reading should prevail.
Our review of Virgin Islands case law reveals no prior cases where marital fault was expressly cited as a factor influencing the disposition of a marital homestead under § 2305(d). Neither, apparently, has the question whether marital fault could be considered in such dispositions heretofore been either raised or addressed, at least not in any published opinion. See e.g., Dyndul v. Dyndul, 541 F.2d 132 (3d Cir. 1976). We are, therefore, faced with two questions of first impression.
Because neither § 104 nor § 109 refers explicitly to § 2305(d), we look first to the legislative history of the 1973 amendments to the divorce statute to see if we can glean from that history a legislative intent to override § 2305(d). The legislative history of §§ 104 and 109*fn9 does not mention Section 2305(d) and lacks any indicia whatsoever of legislative disapproval of that statute. Rather, the expression of legislative intent reflects other concerns: that a divorce should not be available only at the instance of the injured party and that
the wife ought to be entitled to her personal property in the possession and control of the husband, whether or not she is a party at fault . . .[and] that the question of custody ought to be determined on the basis of what is best for the child and what the capability of the parties involved [is] to provide the necessary care and custody of those children regardless of who is at fault.*fn10
Amendments to the divorce statute addressed these concerns through adoption of a standard for awarding child custody and support that is based solely upon the "needs and welfare" of the children and, a standard for awarding alimony that is based solely upon the "need" of a party for support and maintenance, regardless of fault. No such limitations were placed upon the divorce court's separate grant of jurisdiction to distribute the "marital homestead," however. There is thus no evidence that the 1973 amendments to the divorce statute override the legislative mandate in § 2305(d), and we hold that they do not.
Our conclusion is supported by the fact that the Virgin Islands Legislature's decision to enact a type of "no-fault" divorce statute yet leave its homestead distribution statute separate and intact is not unusual. Indeed, the Virgin Islands' scheme is quite similar to those of several states. Despite the fact that early American jurisdiction except South Dakota has some form of "no-fault" divorce,*fn11 "it is not uncommon to find that it is permissible to utilize fault for purposes of awarding alimony or splitting property when the divorce itself is granted on 'no-fault' grounds."*fn12
Having determined that the 1973 amendments to the Virgin Islands divorce statute do not affect a divorce court's prerogative to consider the "equities of the case" in dividing the marital homestead, we turn to the second question: whether § 2305(d)'s "equity of the case" criterion permits consideration of marital fault in an appropriate case, or whether it permits the court to consider only the economic benefit that the spouses contributed to the marriage. We conclude that § 2305(d) permits the consideration of marital fault.
The plain meaning of "equity of the case" is that courts may consider marital fault.*fn13 "Equity of the case" is a familiar legal term that has been interpreted as a broad grant of jurisdiction to the courts, and any other interpretation of that phrase in § 2305(d) would be an unwarranted limitation of the term. This conclusion conforms to our prior observations that the jurisdiction of Virgin Islands divorce courts, while based in statute, is considered equitable in nature. Poe v. Poe, 409 F.2d 40, 44 (3d Cir. 1969), and that divorce courts may "use a variety of means to obtain an equitable result [under Section 2305(d)]," Stridiron v. Stridiron, 698 F.2d 204, 207 (3d Cir. 1983). Although a statute's plain meaning can be overridden by a showing of clear, contrary legislative intent, Paskel v. Heckler, 768 F.2d 540, 543 (3d Cir. 1985), there is no such evidence here. There is a legislative history of § 2305(d). The general legislative history of Chapter 81 (which contains § 2305(d)) does not mention § 2305(d) or the term "equity of the case." Nor does the definitional section, V.I. Code Ann. tit. 1 § 41 (1967 & Supp. 1985) provide guidance. Thus, the plain meaning must prevail.
Our conclusion is supported by the fact that other jurisdictions with statutes similar to § 2305(d) have interpreted them, as have we, to permit consideration of marital misconduct or fault in a distribution of property proceeding.*fn14 Even jurisdictions that lack specific statutory guidelines provide that consideration of marital misconduct in a property division is "a matter for the discretion of the trial court," Dowdy v. Dowdy, 473 So. 2d 1091, 1092-93 (Ala. Civ. App. 1985).*fn15 The rationale for allowing marital misconduct to be utilized as a factor in the property disposition calculus is that "a spouse whose conduct has contributed substantially to the breakdown of the marriage should not expect to receive a financial kudo for his or her misconduct." Robinson, 187 Conn. at 72, 444 A.2d at 236; see generally 24 Am. Jur.2d Divorce and Separation, § 927 (1983). We realize that many jurisdictions, following the same reasoning, refuse to award alimony to a guilty spouse.*fn16 However, the fact that the Virgin Islands Legislature elected to exclude consideration of marital fault from alimony determinations does not, standing alone, reflect an intent to exclude such a consideration in property distribution proceedings.*fn17 The Virgin Islands is not alone in adopting a statutory scheme that expressly excludes consideration of marital fault in one determination but not in the other.*fn18
We concede that "equity of the case" could also refer to the extent to which the spouses have brought income and property to the marriage. In two cases, Knowles v. Knowles, 354 F. Supp. 239 (D.V.I. 1973), and Smith v. Smith, 337 F. Supp. 475 (D.V.I. 1972) the court did precisely that. Neither case, however, addressed the issue we face here, for neither case involved marital fault. Thus, neither case has precedential value on this point.
We conclude that a property distribution proceeding under § 2305(d) is neither dependent upon nor subject to the standards established by V.I. Code Ann. tit. 16, §§ 104, 109 (Supp. 1985), and that the plain meaning of § 2305(d) confers a broad grant of equitable discretion to divorce courts. See Stridiron, 698 F.2d at 207. The Territorial Court's distribution of the marital property was an intelligent and fair disposition. Therefore, the judgment of the District Court will be affirmed.*fn19
GARTH, J., dissenting :
The decision of the Virgin Islands legislature to amend its divorce statute evinces a clear and explicit intention to eliminate marital fault as a factor in the adjudication of divorce cases. See V.I. Code Ann. tit. 16, § 109 (Supp. 1985). The majority's opinion ignores the purpose and entire thrust of the post-1973 statutory scheme and reads fault back into the law. I therefore dissent from the holding of the majority and would hold instead that the amended legislation be given its full, complete, and clear meaning, and that the present case be remanded for a decision not based in any way on an evaluation of marital fault.
Until 1973, § 109 required that, "unless otherwise manifestly improper," the court five preference to the party not at fault in awarding custody of children and child support, and provided for "the recovery from the party in fault such an amount of money . . . as may be just and proper for such party to contribute to the maintenance of the other."
In 1973, § 109 was amended to delete any mention of fault. The Virgin Islands Assembly added the clause, "without regard to any determination that the breakdown of the marriage was the fault of one party or the other," to the general empowering clauses at the head of § 109, and provided that child custody should be determined "giving primary consideration to the needs and welfare of the children." These changes evince a general determination to eliminate any consideration of fault, not only in the granting of the divorce itself, see V.I. Code Ann. tit. 16, § 104 (Supp. 1985), but also in the ensuing disposition of property and in the awarding of child custody.
However, the language of V.I. Code Ann. tit. 33, § 2305(d) that referred to disposition of the homestead "in accordance with the equity of the case" was not amended. This section, which is found in the Taxation and Finance section of the Virgin Islands Code and not in the statute addressing domestic relations, does bear tangentially on the issue before use because, among other things, it contains the provision on which the majority has decided this case.
Section 2305 is the Homestead provision of the Virgin Islands Code. Among other things, it defines homestead property, it provides for exemption of homestead property from real estate tax, it provides for continuation of the homestead exemption after an unmarried person dies, it provides criminal penalties for anyone improperly seeking the benefits of the homestead exemption, and it incidentally provides that "in the case of a divorce, the court which grants it shall make disposition of the homestead in accordance with the equity of the case." § 2305(d).
The majority's decision of this appeal is based on two conclusions: 1) that the amendment of § 109 to eliminate fault in the granting of a divorce, the awarding of alimony and custody, and the disposition of personal property did not operate to overrule § 2305(d), and 2) that the provision in § 2305(d) for consideration of the "equity of the case" in the disposition of the marital homestead allows for full consideration of marital fault in an appropriate case.
I concede that amended § 109 does not make direct reference to the Homestead provision in the tax code. It would have been better had it done so. However, just because the legislature of the Virgin Islands did not comb though the entire Virgin Islands Code when it attempted to replace "fault" with "no fault" in divorce proceedings, is no reason to hold that a statute outside of the domestic relations context permits consideration of fault when the legislature has unequivocally rejected that factor. The majority admits that no decision has been reported in the Virgin Islands in which fault has been a consideration in the awarding of homestead rights upon divorce. Thus, it cannot be said that a prior practice of considering fault in the division of marital real property has been carried forward even after the 1973 amendments to § 109.
My answer to the question of whether the disposition of homestead property permits consideration of fault is that it does not. First, there has been no historic or traditional interpretation allowing for the consideration of fault in dividing homestead property prior to the amendment of the statute. Second, the amendment of § 109 forcefully expresses the legislature's view that fault has not place in the scheme of property division when a divorce takes place -- the primary considerations being the contributions of each party to the homestead and the maintenance or sustenance of spouse and children. Lastly, the very statute itself which speaks in terms of "dispos[ing] of the homestead in accordance with the equity of the case" does not connote that equity includes fault.
Rather, in my view, "equity of the case" should be read to include only the various non-fault factors generally addressed under modern equitable distribution statutes. These factors include the age, background, and earning abilities of the parties, the duration of the marriage, contributions to the marital estate of each of the parties, present income, employment prospects, and mental physical health of the parties, the source of income and property acquired during the course of the marriage, gifts between the spouses during the marriage, and debts and liabilities of the parties. These and other factors may properly be addressed in order to effect an equitable distribution of the marital homestead without resort to consideration of marital fault. See Painter v. Painter, 65 N.J. 196, 320 A.2d 484 (1974).
This reading of "equity of the case" is consistent with the treatment given to similar language in other states. For example, the New Jersey Supreme court concluded, in interpreting a statute providing for an "equitable distribution of the property," that "fault of a marital nature is not an appropriate criterion for consideration in effecting an equitable distribution of marital assets." Painter v. Painter, 65 N.J. 196, 212, 320 A.2d 484, 492 (1974). In a companion case, Chalmers v. Chalmers, 65 N.J. 186, 320 A.2d 478 (1974), the New Jersey Supreme Court explained that "fault" may be merely the manifestation of a sick marriage," and that "the concept of fault is not relevant to [equitable] distribution since all that is being effected is the allocation to each party of what really belongs to him or her." Id. at 193, 320 A.2d at 482-83. The court concluded that "we are satisfied that the concept of equitable distribution requires that fault be excluded as a consideration." Id. at 193, 320 A.2d at 482.
The New Jersey Supreme Court reached this conclusion regarding the consideration of marital fault even though the New Jersey statute provided that fault could be taken into account in awarding alimony. See Painter, 65 N.J. at 205, 320 A.2d at 488. Indeed, if fault is to be considered only with regard to some aspects of the divorce proceeding and not others, it seems more reasonable to examine marital fault in connection with the awarding of alimony rather than in the division of property, where the respective contributions of the parties should perhaps be a central concern. That is New Jersey's approach. See also Pa. Stat. Ann. tit. 23, §§ 401(d), 501(b)(14) (Purdon Supp. 1985) (marital misconduct considered for alimony, but excluded for property distribution).
It is true, as the majority notes, that several states do permit consideration of fault in the division of marital property. However, the majority cites to not Virgin Islands authority supporting its position that "equity of the case" includes fault; it cites only to authority of other jurisdictions in different contexts. Indeed, most states permitting consideration of fault have statutes containing so-called "catch-all" provisions permitting a court to consider any other factor deemed "just and proper." See Hinton v. Hinton, 70 N.C. App. 665, 321 S.E.2d 161, 162 (N.C. App. 1984). Even among these "catch-all" states, there is a split of opinion on whether fault is a proper consideration in the distribution of marital property, and several such states have excluded it. See, e.g., Blickstein v. Blickstein, 99 A.D.2d 287, 472 N.Y.S.2d 110 (2d Dept. 1984); Hinton, 321 S.E.2d at 163. In the absence of specific statutory authorization for the consideration of marital fault in these other jurisdictions, and even where fault may be considered in the granting of the divorce and the awarding of alimony. I think the better rule is to exclude consideration of fault in the equitable distribution of marital real property.
In the Virgin Islands, however, we are faced with a much simpler situation. We are remitted to what the Virgin Islands legislature has effected by repealing the old § 109 and adopting the new § 109 with but one significant addition: the inclusion in the preamble of the statement that divorce decrees are to be rendered " without regard to any determination that the breakdown of the marriage was the fault of one party or the other." (emphasis added). The Territorial legislature thus has made crystal clear, through its 1973 amendment of § 109, that it desires to join the modern trend in barring any consideration of marital fault from divorce decisions. In this contest, I can see no justification for reading out-of-context clause of § 2305(d)--contained not in the Virgin Islands divorce statute but in the Homestead subsection of the tax law -- to permit such an inquiry.
I would therefore hold that the district court erred as a matter of law in affirming the judgment of the Territorial Court, and would remand the present case to the district court with instructions to vacate the judgment and remand for further proceedings.*fn1