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Wynkoop v. Stratthaus

Supreme Court of Vermont

January 15, 2016

Karen Wynkoop
v.
Gerard Stratthaus

On Appeal from Superior Court, Caledonia Unit, Civil Division Robert R. Bent, J.

Karen Wynkoop, Pro Se, Rochester, Plaintiff-Appellee.

Zarina Suárez O'Hagin, Hardwick, for Defendant-Appellant.

PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.

DOOLEY, J.

¶ 1. The parties to this appeal are co-lessees in a thirty-year ground lease for a ten-acre parcel of land owned by Star Meadows Farm, Inc. and located in Walden, Vermont. The parties constructed improvements on the land and shared the parcel as unmarried cohabitants prior to the events that gave rise to this action. Upon termination of their relationship, plaintiff Karen Wynkoop sought a declaratory judgment in Caledonia Superior Court to partition the property under 12 V.S.A. § 5161 and compensation for ouster under 12 V.S.A. § 4765. Defendant Gerard Stratthaus appeals the trial court's property division and compensation to plaintiff. We reverse in part and affirm in part.

¶ 2. The following facts generally are not in dispute, unless otherwise noted. The parties met in 2006, and defendant moved into plaintiff's apartment in 2008. At that time, plaintiff was employed as a caretaker for the elderly and owned and operated her own eggroll business, and defendant worked as a dentist for a healthcare provider, where he still is employed.

¶ 3. In 2008, the parties signed a thirty-year ground lease for a ten-acre parcel with Star Meadow Farm, Inc., a Vermont-certified nonprofit corporation, in Walden, Vermont.[1] Star Meadow Farm owns 128 acres of land in fee simple and leases parcels to its tenants rent-free. Tenants are responsible for property taxes, liability insurance, utilities, and other expenses, including costs of surveys, land or forest conservation plans, and accounting and legal fees, and must pay to the corporation a $120 land improvement fee. All tenants become members of the Star Meadow Farm Board of Directors. Tenants have rights to use and improve the land and the right to sever the improvements upon termination of the lease, but the ground lease specifies restrictions on assigning the lease and selling and assigning the improvements. Specifically, the lease allows transfer of the leasehold interest or the buildings or improvements to a person approved by the corporation who will enter into a lease on the same terms and will be a director of the corporation. However, the corporation must be notified of a pending transfer and has the option to buy the buildings and improvements at 80% of fair market value as determined by the town for property taxation purposes.

¶ 4. After signing the lease, the parties purchased a thirty-two-foot yurt to be constructed on the property. Before beginning construction, the parties' relationship deteriorated. Plaintiff subsequently purchased a smaller, twenty-four-foot yurt to provide additional living space. When the relationship improved, the two moved forward with construction of the larger yurt, but the smaller yurt remained unassembled. The parties eventually completed the thirty-two-foot yurt and also erected a secondary building they called the "carriage house." Because of plaintiff's prior construction experience, the parties agreed that she would quit her two jobs and work full time as the general contractor for the construction of the two buildings. Plaintiff planned and coordinated the project and hired additional contractors, plumbers, electricians, and builders for assistance. Although defendant disputes the extent of plaintiff's contribution, the trial court found it substantial.

¶ 5. During this time, defendant supported the parties with his income as a dentist, and plaintiff contributed money from her sale of a previous home. The construction of the two buildings primarily was funded through the parties' joint bank account, plaintiff's checking account, and cash from defendant's safe deposit box. Plaintiff repeatedly requested from defendant a written agreement as to their respective interests in the property, but no official agreement ever was made.

¶ 6. By 2011, the parties' relationship again deteriorated, and plaintiff moved into the carriage house, while defendant remained in the yurt. Plaintiff and other witnesses presented testimony at trial that, during this time, defendant became openly angry and hostile to plaintiff, her guests, and the contractors, such that plaintiff began to fear for her own safety and eventually moved off the property.[2] In August 2012, plaintiff sent defendant a notice to vacate the property. Defendant responded with a notice of trespass preventing plaintiff from reentering the property, asserting that she had abandoned the property and that he had become the sole occupant. He also changed the locks on the yurt to prevent plaintiff's entry.

¶ 7. Plaintiff brought an action in Caledonia Superior Court seeking partition of the property and compensation for her ouster.[3] The trial took three days. Defendant failed to appear at the third day of trial although his lawyer was present. In its decision, the trial court applied 12 V.S.A. § 5161 in partitioning the leasehold and appointing commissioners to determine a buy-out price or, if necessary, to sell the property and distribute the proceeds. Despite appointing commissioners, the court made many decisions about how to determine the value of each party's interest and decided that plaintiff would have the first opportunity to obtain the property and pay off defendant. The court determined the parties' relative contributions to the project, including plaintiff's "sweat equity"-i.e., her labor as general contractor. The court further found that defendant ousted plaintiff from the property and compensated her for the duration of the ouster. In total, the court estimated the expenses for the project at $145, 000 and credited plaintiff with $24, 000 in sweat equity, bringing the total to $169, 000. Out of this figure, the court credited plaintiff with a 39% share, and defendant with 61%. The court valued much of the personal property and distributed it between the parties.[4] Defendant appealed.

¶ 8. On appeal, defendant raises four claims of error: (1) the leasehold is not real property subject to partition under 12 V.S.A. § 5161; (2) the trial court could not credit plaintiff's sweat equity; (3) the court erred in calculating the parties' contributions to the project; and (4) the court improperly found that defendant ousted plaintiff from the property. We affirm the trial court's judgment with respect to the applicability of the partition statute to the leasehold, the credit for plaintiff's sweat equity, and the ouster. We reverse and remand for the court to correct errors in its calculation of the parties' respective contributions and to value the property and determine the partition remedy.

¶ 9. The threshold issue presented in this case is whether 12 V.S.A. § 5161 applies to allow partition of the property interests of plaintiff and defendant. As we hold infra ¶ 19, we view the consequence of the answer to this question somewhat differently from the trial court and the parties but agree that the question should be answered. We answer the question in the affirmative. 12 V.S.A. § 5161 provides: "A person having or holding real estate with others, as joint tenants, tenants in common or coparceners, may have partition thereof." The trial court held that the real estate interest present here, a tenancy under a thirty-year lease, comes within the statute, drawing upon an Ohio decision[5] and a decision from this Court.[6] We agree with defendant that neither of these decisions support the trial court's conclusion and that the wording of the statute requiring "having or holding real estate" and "joint tenants, tenants in common or coparceners"[7] does not appear on the surface to be consistent with the trial court holding. The interpretation of § 5161 is an issue of law, which we review de novo. In re T.S.S., 2015 VT 55, ¶ 15, ___ Vt. ___, 121 A.3d 1184.

¶ 10. Partition is defined as "[t]he act of dividing; esp., the division of real property held jointly or in common by two or more persons into individually owned interests." Black's Law Dictionary 1151 (8th ed. 2004) (emphasis added). Section 5161 provides for partition among holders of concurrent interests in "real estate." 12 V.S.A. § 5161. Broadly, property falls within two classifications: real and personal (chattel). Real property pertains to "[l]and and anything growing on, attached to, or erected on it, excluding anything that may be severed without injury to the land, " Black's Law Dictionary, supra at 1254, while personal property encompasses "[a]ny movable or intangible thing that is subject to ownership not classified as real property, " id. A leasehold, however, "has historically been classified as a chattel real, " id. at 909-10, which is a "real-property interest that is less than a freehold or fee, " id. at 251. A leasehold estate that is for a term of years is considered a chattel "because it lacks the indefiniteness of time essential to real property." Id. Commentators have noted that an estate for years "never fully attained the historical dignity of being 'real property.' " 1 R. Powell, Powell on Real Property § 5.04 (1998).

¶ 11. Other courts have recognized this hybrid nature of a leasehold-falling somewhere between real and personal property-and have concluded that it is subject to the rules governing personal property. See, e.g., In re Marino, 813 F.2d 1562, 1566 (9th Cir. 1987) (noting that leasehold is "personal property under California law"); D.C. v. 17M Assocs., LLC, 98 A.3d 954, 961 (D.C. 2014) ("There can be no question under the common law in force in this District that a leasehold interest in lands is personal property." (quotation and internal alteration omitted)). Consistent with this view, courts have allowed the partition of leaseholds under statutes that expressly provide for partition of personal property, see, e.g., Wilson v. Prentiss, 140 P.3d 288, 290-91 (Colo.App. 2006) (noting statute allows partition of real and personal property), or, in the absence of express statutory language, under the broad equitable powers of the court, see, e.g., Sims v. Sims, 1996-NMSC-078, ¶ 38, 930 P.2d 153 (stating plain language of "Partition Act" does not abrogate court's equitable powers).

¶ 12. Our statutory scheme is entitled "Partition of Real Estate." 12 V.S.A. Ch. 179. Real estate is defined in the definition section of Vermont's statutes as "lands, tenements, and hereditaments and all rights thereto and interests therein." 1 V.S.A. § 132; see In re Burlington Airport Permit, 2014 VT 72, ¶ 21, 197 Vt. 203, 103 A.3d 153 ("[A] word used throughout an act or statutes in pari materia bears the same meaning throughout, unless it is obvious that another meaning was intended." (internal alteration and quotation omitted)). This terminology can be traced back to the 1797 partition act, entitled "An act, for the partition of real estate, in certain cases, " which provided a partition action for "any person or persons, having or holding, or who may hereafter have or hold any lands, tenements or hereditaments, with others, as joint tenants, tenants in common, or coparceners." Laws of the State of Vermont, 1808, ch. XI § 1. Another section of that law suggests a broad meaning of "lands, tenements or hereditaments." Section 11 provides: "all gifts, grants, feoffments, devises and other conveyances of any lands, tenements and hereditaments, which . . . shall be made, to two or more persons, whether for years, for life, in tail, or in fee, shall be taken, deemed and adjudged to be estates in common, and not in joint tenancy." Id. § 11 (emphasis added). The language of that section is now contained in 27 V.S.A. § 2(a). As this language suggests, the phrase "lands, tenements and hereditaments" is not restricted merely to freehold estates. It is reasonable to conclude that the phrase bears the same meaning in § 1 of the 1808 act as in § 11. See In re Burlington Airport Permit, 2014 VT 72, ¶ 21.

¶ 13. The construction of the statute that "real estate" includes a tenancy for years is also consistent with the evolution of the English statute on which the Vermont partition statute is based. Other courts have recognized this history and concluded that their own partition statutes, having been modeled on the English antecedents, should be read broadly so as to extend to leaseholds. See, e.g., Pierce v. Pierce, 123 N.E.2d 511, 512-13 (Ill. 1954); Sims, 1996 -NMSC-078, ¶¶ 15, 20.

¶ 14. Our early case law also supports this broad reading. In Munroe v. Walbridge, 2 Aik. 410, 1827 WL 1403, we considered the right of mortgagees to partition their undivided interests. In disclaiming the cases restricting the scope of a partition action, we held that it is "no improper construction of our statute, to consider it broad enough to comprise all the cases in which a partition is allowed at common law, and by virtue of the English statutes." Id. at 412, 1827 WL 1403 at *2.

¶ 15. The reliance on the history forms the rationale for Pierce, the leading case in the area. The wording of the Illinois statute is similar to that of the Vermont statute when the statutory definition of real estate is included. Id. at 512. As in this case, the opponent to partition argued that the statute allowed partition only of real estate held in fee. The Court noted that prior to 1539, partition in England was available only for coparceners, that is, persons who had become concurrent owners through inheritance and held a fee interest. In 1539, by virtue of statute, partition was extended to all joint tenants and tenants in common having "any estate or estates of inheritance in their own right, or in the right of their wives, or any manors, lands, tenements, or hereditaments." Id. (quoting 31 Henry VIII, c.1). The following year, the statute was amended extend the remedy to

all joint-tenants and tenants in common, and every of them, which now hold or hereafter shall hold jointly or in common for term of life, year or years, or joint-tenants or tenants in common, where some of them shall have estate or estates for term of life or years, with other that have or shall have estate or ...

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