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July 2003
Choice of Law in Property Division
Laura W. Morgan
Divorce cases can present many choice of law questions.
The validity of an antenuptial agreement is determined by
the lex loci contractus. Under UIFSA, the law of
the forum applies, except to the termination date of the order,
which is determined under the law of original issuing state.
When parties own property in a state other than the forum,
should the court apply the law of the state where the property
is located to value and divide it? No. The law of the forum
applies its own law to the question of classification, valuation,
and distribution. The only exception is where property is
acquired by the parties in a community property state while
they are domiciled in that community property state. This
exception is basically a rule of title and ownership, which
does not apply in equitable distribution proceedings.
The traditional rule is that title to real property is determined
under the law of the jurisdiction in which it is located,
and title to personal property is determined by the law of
the owner’s domicile at the time of acquisition. This
rule has been applied in a number of cases where the parties
acquired property in community property states, since
community property law governed ownership. For example, in
In re Marriage of Zahm, 138 Wash.2d 213, 978 P.2d
498 (1999), while domiciled in Idaho, the parties opened a
joint bank account. The court held that the bank account’s
characterization would be determined under Idaho community
property law. See also Restatement (Second) of
Conflict of Laws §§ 258-259 (1971) (adopting
choice of law rule of “most significant relationship
test” in divorce cases for property acquired in community
property states). The traditional rule makes sense with regard
to community property, in that the ownership of property should
remain constant and not change merely because the property
move from state to state. See Annotation, Change
of Domicile as Affecting Character of Property Previously
Acquired as Separate or Community Property, 14 A.L.R.3d
404, 414 (1967); J. Thomas Oldham, Conflict of Laws and
Marital Property Rights, 39 Baylor L. Rev. 1255, 1273
(1987) (at common law interests in personal property acquired
during marriage were determined by the law of the marital
domicile at the time of acquisition).
Since the advent of equitable distribution in the 1980’s
however, the rule developed that when parties acquire property
in other non-community property states, the law of the forum
is used to characterize, value, and distribute the property.
The public policy reason for this rule was stated as follows:
Equitable distribution law is by any standard complex
and difficult to apply. Judges in many states have had substantial
difficulties construing their own law correctly, let alone
understanding the law of other jurisdictions. Under the
traditional rules, however, the courts of each state must
learn the equitable distribution law of 49 other jurisdictions.
This learning process would result in wrong decisions, and
it would pose an immediate administrative burden which would
greatly increase the cost of trying equitable distribution
cases.
Brett R. Turner, Equitable Distribution of Property
§ 3.08 at 71 (2d ed. 1994), citing Homer C. Clark, The
Law of Domestic Relations in the United States §
16.7 at 214. More recently, the rule has been expanded to
state that the law of the forum governs the classification,
valuation, and distribution in divorce cases, regardless of
where the property is located. J. Thomas Oldham, Divorce,
Separation, and the Distribution of Property § 13.01[5]
at p. 13-8.2 (2001) (“A divorce court normally applies
its law to govern the division of spouses’ property,
regardless of whether the spouses were married in another
jurisdiction or lived elsewhere during the marriage.”)
Most equitable distribution states now follow the rule of
applying the law of the forum to classification, valuation,
and division in divorce. The rule of applying the law of the
forum was applied in New York in Karp v. Karp, N.Y.L.J.,
June 16, 1987, p. 12, col. 2, 13 Fam. L. Rep. (BNA) 1448 (Sup.
Ct., N.Y. Co., Stecher, J.). In that case, the court held
that property acquired in California, a community property
state, would be classified and valued under New York law.
The rule was also applied in Merrick v. Merrick,
180 A.D.2d 546, 579 N.Y.S.2d 411 (1st Dept. 1992).
In that case, the court held that under New York conflicts
of law rules, New York and not Connecticut law determined
whether a woman who married a man under the supervision or
control of a conservator without first obtaining the conservator’s
consent acquired any rights in the conservatee’s property
and was entitled to equitable distribution upon her divorce.
“Admittedly, in this case, the parties did not obtain
the consent of plaintiff’s conservator, and thus plaintiff’s
proposed cause of action for a declaratory judgment that the
remarriage is void under Connecticut law was properly allowed.
However, the Connecticut statute does not control distribution
of the parties’ marital assets.” 180 A.D.2d
at 547, 579 N.Y.S.2d at 411 (emphasis added).
A few states have declined to follow this rule. The exceptions
to this rule are Iowa, In re Marriage of Whelchel,
476 N.W.2d 104 (Iowa App. 1991) (adoption Restatement
rule to apply law of Texas, not Iowa, to classification of
parties’ bank account located in Texas), and the District
of Columbia, Anderson v. Anderson, 449 A.2d 334 (D.C.
1982) (it was error for the court to apply District of Columbia
rather than Maryland law on the disposition of the marital
home in located in Maryland).
Other cases support the application of the general rule.
In In re Marriage of Day, 137 Or. App. 264, 904 P.2d
171 (1995), the court engaged in a rather lengthy discussion
of choice of law rules in equitable distribution cases. The
court considered the husband’s argument that California
law should apply to the classification, valuation, and division
of the parties’ California house. The court disagreed,
holding that community property law is one of ownership, not
equitable distribution, and equitable distribution must be
determined by the law of the forum:
In this case, because the Scotts Valley house was acquired
during the marriage, it is a marital asset, subject to the
presumption of equal contribution. Husband argues, however,
that the trial court correctly applied California law to
distribute the equity in the Scotts Valley house, because
the property at issue is real property, and the law of the
situs of such property should apply to resolve any issue
about it.
That argument might have force if the California law at
issue dealt with the ownership of the property, because,
in appropriate cases, the law of the situs can be used to
determine the ownership of such property. See, e.g.,
Jacobs v. Jacobs, 82 Or. App. 333, 336, 728 P.2d 89
(1986). However, the California law at issue does not address
the ownership of the Scotts Valley house. Rather, it determines
how the equity in the house should be distributed on dissolution.
See Cal. Fam. Code § 2640 (1994). In an Oregon dissolution
case, that issue is governed by Oregon law, specifically
ORS 107.105(1)(f), and not by California law. Hence, the
trial court erred in applying California law and carving
out a portion of the equity in the house from the marital
estate. Having determined that Oregon’s statutory presumption
of equal contribution applies to the Scotts Valley house,
we turn to whether husband rebutted that presumption.
137 Or. App. at 268-69, 264, 904 P.2d at 174.
In In re Marriage of Scott, 254 Mont. 81, 835 P.2d
710 (1992), Montana the court held that the law of Montana
would apply to property located in Washington. The wife argued
that property owned by the parties located in the state of
Washington should be divided according to community property
standards under Washington law. “This Court is not bound
by Washington law. The dissolution proceeding was initiated
by Aileen in Montana and the proceeding is now subject to
adjudication accordingly.” 254 Mont. at 86, 835 P.2d
at 714. Accord Chirekos v. Chirekos, 33
Ill. App.3d 606, 338 N.E.2d 140 (3d Dist. 1975) (because the
Illinois court had proper in personam jurisdiction of both
parties and of the marriage relationship they sought to dissolve,
the court could equitably divide their joint tenancy property
pursuant to Illinois law even though a portion of this property
division concerned Arizona real property); Meissner v.
Meissner, 759 So. 2d 225 (La. Ct. App. 2000) (law of
Louisiana applied to distribution of parties’ property,
some of which was located in Brazil); Savelle v. Savelle,
650 So. 2d 476 (Miss. 1995) (Mississippi law applied to valuation
and division of husband’s pension, though it was acquired
in Louisiana where the parties lived when the pension accrued);
Ismail v. Ismail, 702 S.W.2d 216 (Tex. App. - Houston
(1 Dist.) 1985) (court did not err in refusing to apply Egyptian
law to property acquired in Egypt); Dority v. Dority,
645 P.2d 56, 58 (Utah 1982) (“it is equally clear that
Utah law governs such equitable division where the Utah courts
properly have jurisdiction over the parties”). See
also Grappo v. Coventry Financial Corporation,
235 Cal. App.3d 496, 286 Cal. Rptr. 714 (1st Dist.
1991) (where husband sued to obtain declaration that his interest
in certain property owned by his wife was prior and superior
to that of mortgagee, court held that law of California applied,
although property was located in Nevada).
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