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SANDS v. SANDS
SANDS v. SANDS, Supreme Court of Michigan (Decided March 23, 1993) — Docket Nos. 93860-93864
Factual and Procedural Background
The parties were married in 1961. The plaintiff (wife) filed for divorce in 1984. The litigation concerned distribution of the parties' real and personal property. The proceedings were highly contentious: the record was described as "immense," the defendant (husband) was held in contempt at least five times and jailed several times for noncompliance with court orders. After a lengthy trial, the circuit court entered a judgment of divorce providing an equal division of property and awarding the plaintiff $200 per week in alimony for fifteen years (or until remarriage). The circuit court also directed the defendant to pay seventy percent of the plaintiff's attorney fees, citing the defendant's "devious and deceptive conduct."
The defendant appealed the divorce judgment and several contempt citations; the plaintiff cross-appealed the divorce judgment. The Court of Appeals modified the distribution of marital assets, concluding that the defendant must forfeit his interest in assets he attempted to conceal, and remanded for the circuit court to award to the plaintiff all marital assets that the defendant attempted to hide. The defendant sought leave to appeal to the Michigan Supreme Court.
Legal Issues Presented
- Whether the circuit court abused its discretion by dividing marital assets equally despite the defendant's attempts to conceal assets during the divorce proceedings.
- Whether the Court of Appeals' remedy — awarding all marital assets that the defendant attempted to conceal to the plaintiff (i.e., effectively forfeiting the defendant's interest in those assets) — was appropriate in this case.
- Whether an automatic rule of forfeiture (100% award of concealed assets to the injured spouse) should be adopted for future divorce cases involving concealment of assets.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Beason v. Beason, 435 Mich. 791, 460 N.W.2d 207 (1990) | Standard of appellate review for factual findings: factual findings are to be upheld unless clearly erroneous. | The Supreme Court cited Beason to state the appropriate standard for review of the circuit court's factual findings in divorce proceedings. |
| Sparks v. Sparks, 440 Mich. 141, 485 N.W.2d 893 (1992) | Standards for review of dispositional rulings (affirm unless appellate court has firm conviction the ruling was inequitable); guidance that property division is to be equitable, without rigid formula, and enumerates factors to consider. | The Court relied on Sparks to explain that dispositional rulings are reviewed for inequity and to caution that asset division must be equitable in each case — thus rejecting an automatic forfeiture rule for concealed assets and emphasizing individualized factual analysis and equitable discretion. |
| Stachnik v. Winkel, 394 Mich. 375, 230 N.W.2d 529 (1975) | Maxim of "clean hands": a party seeking equitable relief must come with clean hands; the court will not be the abettor of inequity. | The Court of Appeals invoked Stachnik to support the view that a spouse who intentionally misleads the court about assets should be estopped from receiving part of those assets; the Supreme Court noted this doctrine as part of the Court of Appeals' analysis supporting punitive allocation of concealed assets. |
| Hallett v. Hallett, 279 Mich. 246, 271 N.W. 748 (1937) | Recognition that trial courts have broad discretion in property division and that there are no strict mathematical formulations governing such divisions. | Quoted in Sparks and referenced by the Supreme Court to show existing precedents supporting trial court discretion in property division and the absence of rigid rules. |
| Cartwright v. Cartwright, 341 Mich. 68, 67 N.W.2d 183 (1954) | Support for broad trial court discretion in property division and avoidance of strict formulas. | Quoted in Sparks and relied upon to emphasize discretion and flexibility in considering relevant factors in property division. |
| Christofferson v. Christofferson, 363 Mich. 421, 109 N.W.2d 848 (1961) | Although division of property need not be equal, it must be equitable. | Quoted in Sparks and cited by the Supreme Court to reinforce that equity, not strict equality, governs property division. |
| Johnson v. Johnson, 346 Mich. 418, 78 N.W.2d 216 (1956) | List of equitable factors to consider in property division (source of property, contribution toward acquisition, years of married life, needs, earning ability, cause for divorce). | Quoted in Sparks and cited by the Supreme Court as a foundational articulation of factors relevant to equitable division of marital property. |
| Perrin v. Perrin, 169 Mich. App. 18, 425 N.W.2d 494 (1988) | Enumeration/confirmation of factors to be considered in property division (used in Sparks' expansion of applicable factors). | Quoted in Sparks and cited by the Supreme Court as part of the set of factors that courts should consider where relevant. |
| Gray area: Court of Appeals opinion in this case, 192 Mich. App. 698, 482 N.W.2d 203 (1992) | Applied the "clean hands" concept and held that the defendant should forfeit interest in assets he attempted to conceal; remanded for circuit court to award full ownership of concealed assets to plaintiff before dividing remaining assets. | The Supreme Court affirmed the Court of Appeals' disposition in this specific case (that the circuit court abused its discretion by making an equal division despite concealment) while rejecting an automatic forfeiture rule for future cases. |
Court's Reasoning and Analysis
The Supreme Court's analysis followed these principal steps, based strictly on the opinion:
- Recitation of relevant facts and procedural posture: The circuit court ordered an equal property division but found repeated "devious and deceptive conduct" by the defendant and required him to pay seventy percent of the wife's attorney fees. The Court of Appeals modified the property distribution, concluding concealment warranted forfeiture of concealed assets to the plaintiff, and remanded for implementation.
- Identification of standards of review: The Court explained that factual findings are reviewed under the "clearly erroneous" standard (Beason), while dispositional rulings are to be affirmed unless the appellate court is left with a firm conviction that the dispositional ruling was inequitable (Sparks).
- Agreement with Court of Appeals on the result in this case: Given the extensive record of concealment and the circuit court's findings of devious and deceptive conduct, the Supreme Court agreed that an equal division here was not equitable and that the Court of Appeals correctly concluded the circuit court abused its discretion.
- Rejection of a categorical rule for future cases: The Supreme Court scrutinized the Court of Appeals' language suggesting an automatic rule of forfeiture (i.e., that a spouse who conceals assets should automatically be estopped from receiving any part of those assets). Relying on Sparks, the Court emphasized that property division must remain based on equitable consideration of the facts of each case and that courts should not apply rigid formulas or treat concealment as automatically giving rise to forfeiture.
- Balance of remedies and equity: While the Court accepted that concealment is a relevant and potentially punitive factor—citing the "clean hands" principle and the Court of Appeals' concerns about underreported marital assets—the Court held that concealment is one factor among many that must be weighed. The Supreme Court thus affirmed the Court of Appeals' disposition in this particular case but cautioned against an across-the-board forfeiture rule.
Holding and Implications
Holding: The Michigan Supreme Court, in lieu of granting leave to appeal, affirmed the judgment of the Court of Appeals modifying the distribution of marital assets in this case.
Implications:
- Direct effect in this case: The Court affirmed the Court of Appeals' determination that the circuit court abused its discretion in making an equal division of marital assets given the defendant's repeated attempts to conceal assets; the Court of Appeals' remedy—directing the circuit court to award to the plaintiff the marital assets the defendant attempted to conceal—was affirmed as to its disposition here.
- Limitation on broader application: The Supreme Court expressly cautioned that concealment of assets does not give rise to an automatic rule of forfeiture applicable in all divorce cases. Instead, the circuit court must make an equitable division on the basis of the facts of each individual case, considering concealment as one factor among others. No rigid or automatic forfeiture rule was adopted.
- Precedential note: The opinion reinforces that trial courts retain broad discretion to weigh relevant equitable factors (as articulated in Sparks and prior cases) and that appellate courts review dispositional rulings for inequity. The decision does not establish a new blanket sanction for asset concealment across all cases, but it affirms that severe concealment can justify significant remedial departures from equal division when equity so requires.
- Other claims: The Supreme Court considered the defendant's other claims and found them unpersuasive.
Disposition: Affirmed (per curiam). Chief Justice Cavanagh and Justices Brickley, Boyle, Riley, Griffin, and Mallett concurred. Justice Levin would have denied leave to appeal and concurred in the result.
PER CURIAM.
This is a divorce case in which the defendant husband attempted to conceal assets of the marital estate. The circuit court divided the marital assets equally between the parties, but directed the defendant to pay seventy percent of the plaintiff wife's attorney fees, in light of the defendant's "devious and deceptive conduct" during the circuit court proceedings.
The Court of Appeals found that the circuit court erred in dividing the assets equally. It said that the defendant must forfeit his interest in assets that he attempted to hide. We affirm that judgment in the present case, but caution that in each individual divorce case the circuit court must equitably divide assets on the basis of the facts. There is no automatic rule of forfeiture.
I
The parties were married in 1961. The plaintiff filed a complaint for divorce in 1984. This case concerns the distribution of the parties' real and personal property.
It would be difficult to exaggerate the contentiousness of these proceedings. The record is immense, and the circuit judge has entered countless orders since the complaint for divorce was filed. The defendant has been held in contempt at least five times, and has been jailed several times for refusing to comply with the court's orders.
Following a lengthy trial, the circuit court entered a judgment of divorce. The judgment provided that the property would be divided equally. The plaintiff was to receive $200 a week in alimony. Further, the court ordered the defendant to pay seventy percent of the plaintiff's attorney fees, saying that most of the litigation had been caused by the defendant's wrongdoing.
The alimony was to last fifteen years, or until she remarried.
The defendant appealed the divorce judgment and several of his contempt citations. The plaintiff cross appealed the divorce judgment.
He has also appealed two other postjudgment orders. Those appeals remain pending in the Court of Appeals.
The defendant persuaded the Court of Appeals to set aside one of his contempt citations, but the Court otherwise denied relief. In response to the plaintiff's cross appeal, the Court modified the distribution of marital assets. It remanded the case to circuit court, which is to award to the plaintiff all marital assets that the defendant attempted to conceal. 192 Mich. App. 698; 482 N.W.2d 203 (1992).
The Court of Appeals later denied rehearing.
The defendant applies to this Court for leave to appeal.
II
The Court of Appeals noted the recurring problem of unreported or underreported marital assets, and it characterized the present case as "a prime example of the burden one spouse's reprehensible behavior can impose upon not only the wronged spouse but also the court system." 192 Mich. App. 704.
The Court of Appeals quoted two passages of the December, 1989, Final Report of the Michigan Supreme Court Task Force on Gender Issues in the Courts. The task force reached this conclusion:
In many cases, a non-earning spouse has little knowledge of what property the parties own, or its value, and has a difficult burden in discovering the nature and extent of the marital estate. There are few meaningful adverse consequences to a party who hides or disposes of marital assets and thus avoids inclusion of such assets in the property award. [ Id., pp 67-68.]
Accordingly, the task force recommended:
Both parties should be required to disclose all assets in the early stages of a divorce action. Failure to disclose assets should result in the imposition of meaningful sanctions such as default, an award of actual attorney fees and costs or contempt. If undisclosed assets are later discovered, there should be a rebuttable presumption that they were deliberately concealed, resulting in the award of 100% of such assets to the injured party unless the presumption is overcome by the non-disclosing party. [ Id., pp 70-71.]
The Court of Appeals said that, "[u]nder the circumstances revealed by the extensive record," it was "an abuse of discretion for the trial court not to have taken some sort of punitive action in light of Mr. Sands' persistent attempts to conceal assets." Id. The Court explained:
This is in accord with the maxim that one who seeks the aid of equity must come in with clean hands. Stachnik v Winkel, 394 Mich. 375, 382-384; 230 N.W.2d 529 (1975). The doctrine of "clean hands" rests on the proposition that the court will not be the abettor of inequity. Id. at 382. Thus, we find it inappropriate for the court to award Mr. Sands any share of assets that he attempted to conceal. Once a spouse intentionally has misled the court or the opposing spouse regarding the existence of an asset, that spouse should be estopped from receiving any part of that property.
Accordingly, we remand for the court to make a determination of which assets Mr. Sands had attempted to conceal. We direct the court to award full ownership of these particular assets or their equivalent value to Mrs. Sands before making an equal split of the remaining assets. This course of action should have the salutary effect not only of adjusting the equities in this case but also of serving as a warning to all divorcing parties. [ 192 Mich. App. 704 -705.]III
In deciding a divorce action, the circuit court must make findings of fact and dispositional rulings. On appeal, the factual findings are to be upheld unless they are clearly erroneous. Beason v Beason, 435 Mich. 791; 460 N.W.2d 207 (1990). A dispositional ruling, however, "should be affirmed unless the appellate court is left with the firm conviction that [it] was inequitable." Sparks v Sparks, 440 Mich. 141, 152; 485 N.W.2d 893 (1992).
The Court of Appeals decided the present case several months before Sparks was decided. Understandably, it reviewed for an abuse of discretion, rather than under the standard of appellate review later adopted in Sparks. However, the defendant suffered no prejudice in this regard, since the standard adopted in Sparks allows an appellate court greater latitude to alter a dispositional ruling. Id., pp 150-152.
In Sparks, the circuit court determined that one party's sexual infidelity had caused the failure of the marriage. Expressing the view that it is appropriate "`to punish some people in a divorce,'" the circuit court awarded twenty-five percent of the marital assets to the party who had caused the divorce, and seventy-five percent to the other party. Id., p 162.
This Court held in Sparks that the circuit court had "erred in assigning disproportionate weight" to the single factor of "fault." We explained that "the division of property is not governed by any set rules," and that "[t]he determination of relevant factors will vary depending on the facts and circumstances of the case":
It is not desirable, or feasible, for us to establish a rigid framework for applying the relevant factors. The trial court is given broad discretion in fashioning its rulings and there can be no strict mathematical formulations. See Hallett v Hallett, 279 Mich. 246; 271 N.W. 748 (1937); Cartwright v Cartwright, 341 Mich. 68; 67 N.W.2d 183 (1954). But, as we have recognized before, while the division need not be equal, it must be equitable. Christofferson v Christofferson, 363 Mich. 421; 109 N.W.2d 848 (1961). Just as the final division may not be equal, the factors to be considered will not always be equal. Indeed, there will be many cases where some, or even most, of the factors will be irrelevant. But where any of the factors delineated in this opinion are relevant to the value of the property or to the needs of the parties, the trial court shall make specific findings of fact regarding those factors. It is hoped that this requirement will result in greater consistency and provide for more effective and meaningful appellate review.
As acknowledged above, the division of property is not governed by any set rules. Nevertheless, this Court has established certain principles of general application. In Johnson v Johnson, 346 Mich. 418, 431; 78 N.W.2d 216 (1956), we said:
"The portion of property awarded to each party depends upon all the equitable factors involved, including the following: source of property, contribution towards its acquisition, the years of married life, the needs of the parties, their earning ability, and also the cause for divorce."
These general standards have been refined and expanded upon by the Court of Appeals, and we readily acknowledge that additional factors, beyond those listed in Johnson, may be relevant to the disposition of assets. We hold that the following factors are to be considered wherever they are relevant to the circumstances of the particular case: (1) duration of the marriage, (2) contributions of the parties to the marital estate, (3) age of the parties, (4) health of the parties, (5) life status of the parties, (6) necessities and circumstances of the parties, (7) earning abilities of the parties, (8) past relations and conduct of the parties, and (9) general principles of equity. Perrin v Perrin, 169 Mich. App. 18, 22; 425 N.W.2d 494 (1988). There may even be additional factors that are relevant to a particular case. For example, the court may choose to consider the interruption of the personal career or education of either party. The determination of relevant factors will vary depending on the facts and circumstances of the case. [ Sparks, 440 Mich. 158 -160.]IV
The opinion of the Court of Appeals recounts a portion of the unnecessary litigation that was prompted by the defendant's failure to disclose the full extent of the marital assets. 192 Mich. App. 699-702. The circuit court similarly found a pattern of "devious and deceptive conduct."
On the record before us, we see no error in the Court of Appeals determination that the circuit court abused its discretion in making an even division of marital assets. While the circuit court did require the defendant to pay a significant portion of the plaintiff's legal expenses, the defendant's conduct throughout these proceedings was such that an even division of marital assets could not be equitable. Thus the Court of Appeals correctly decided the present case.
However, we must also address the apparent decision of the Court of Appeals to adopt an automatic rule of forfeiture for future cases involving the concealment of marital assets.
As we explained in Sparks, marital assets are not to be divided in accordance with any rigid formula. Rather, the circuit court must make an equitable division on the basis of the facts proven in each individual case. A party's attempt to conceal assets is a relevant consideration, but it is only one of many facts that the court must weigh. Further, a judge's role is to achieve equity, not to "punish" one of the parties. An attempt to conceal assets does not give rise to an automatic forfeiture.
There being no error in disposition ordered by the Court of Appeals in this case, we affirm its judgment. MCR 7.302(F)(1).
We have considered the defendant's other claims of error, and we are not persuaded that relief should be granted.
CAVANAGH, C.J., and BRICKLEY, BOYLE, RILEY, GRIFFIN, and MALLETT, JJ., concurred.
LEVIN, J.
I would deny leave to appeal, and concur in the result of the per curiam opinion.
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