Day Report

Work-Related Writing Sample
June 30, 1997

SPECIAL MASTER’S REPORT

This case deals with the division of real property held by Tom Smith (“Smith”)

and Jane Doe (“Doe”) as tenants in common. The parties began living together in an

intimate relationship in late 1989 or early 1990. They purchased the subject property in

June 1994. The down payment and closing costs were paid partially by a loan from

Doe’s parents and partially from Smith’s income and savings. Smith moved out of the

house in March 1995, as the relationship between the parties had deteriorated

severely. He made contributions toward the house expenses through May 1995.

After Smith moved out, the relationship continued to deteriorate, to the point that

police and the courts were involved. At one point, Doe accused Smith of a crime of

violence, but the allegation went no further. In July 1995, Smith sought and received

an emergency domestic violence restraining order against Doe. He sought and

received another emergency domestic violence restraining order in June 1996. Smith

and Doe did appear for the ninety-day hearing, and the order was granted over Doe’s

opposition. Doe was accused of violating that order in July 1996, and eventually pled

“no contest” in the criminal case. One of the terms of her probation was that she not

allowed to have no contact with Smith for one year. On April 18, 1997, the parties

attended the same function. The City has charged Doe with assaulting Smith; the

State has also petitioned to have her probation revoked as a result of that contact.

Since Smith vacated the property, Doe has rented out rooms and has operated a

bed and breakfast (”B&B”). She testified that three of the four bedrooms were rented

out. When testifying about total income, Doe said that she received an average of

about $1,100 per month. However, when she talked about the rents received from the

individual rooms, it became clear that the actual income was between $1,310 and

$1,490 per month. There is no record of receipts, as Doe testified that she did not

maintain records. She did not report the rental income on her federal tax returns. She

may have bartered for some of the rooms. Doe evicted the renters during the summer

months so she could operate the B&B1. She showed a loss, for income tax purposes,

from the B&B operation2.

I. Legal Framework.

The Court’s power to grant a partition of the subject real property is based on AS

09.45.260, which provides:

When several persons own real property as tenants in common, in which
one or more of them have an estate of inheritance or for life or years, or when
real property is subject to a life estate with remainder over, an action may be
brought by one or more of those persons or by the life tenant for a portion of it
according to the respective rights of the interested persons, and for a sale of the
property or a part of it if it appears that a partition cannot be had without great
prejudice to the parties.

The statute creates a presumption of a partition in kind (i.e., a physical division

of the property). The Court is authorized to order the sale of the property only if a

partition in kind would result in “great prejudice” to the parties. The Alaska Supreme

Court has determined that prejudice is to be determined in a financial context; that

1Smith supported the idea of roommates to help defray the mortgage expense, and
assisted in locating roommates. He was not consulted about the B&B, and learned
about it only when a friend saw Doe apply for a business license. Doe has filed an
application with CBJ for a permit (or variance) to operate the B&B this year. Smith was
again not consulted, learning of the application when one of the neighbors called him
and the City contacted him. I required production of documents concerning the need
for, and the process to obtain the CBJ permit. Doe did not produce any documents,
creating the impression that the B&B would not be operating this year. The permit or
variance application has never been received.

2It is not possible to determine actual income from the B&B operation. The tax returns
are little help as Doe apparently included personal items like a couch and coffee table
in her deduction for supplies.

great prejudice means that the value of the interest held by a party after a physical

partition would be materially less than the party’s share of the property if sold as a

whole parcel. Ashley v. Baker, 867 P.2d 792, 796 (Alaska 1994).

If the property is to be sold, either to one of the parties or to a third party, the

Court must determine the respective shares held by each tenant in common. The rules

for making that determination change as the relationship between the parties changes.

During the period of cohabitation, the division is controlled by the intent of the parties.

Wood v. Collins, 812 P.2d 951, 956-57 (Alaska 1991). Any excess contributions made

by one party during that period may be deemed a gift, unless the evidence establishes

a contrary intent. Id. at 956. The party must have actually intended to make a gift of

the excess contribution before the court can find a gift. D.M. v. D.A., 885 P.2d 94, 98

n.7 (Alaska 1994). If there is no clear evidence of the parties’ intent, and they

contribute unequal shares to the purchase price, the presumption is that they intended

to share the property in proportion to their respective contributions. Id. at 97. If,

however, the parties intended to share equally but contributed unequally without

intending to make a gift, then the party making the excess contributions is entitled to a

credit for the amount of the excess contributions. Id. at 97 n.6.

After the parties separate, their intent becomes much less important and the

regular rules of cotenancy apply. Wood, 812 P.2d at 958. The first impact of the

different rules is that if one cotenant has made contributions for the mortgage and tax

bills that are in excess of his or her proportionate share, he or she is entitled to

reimbursement from the other party for the excess contributions. Id. If only one of the

tenants occupies the property, there is no basis for a claim by the tenant-not-in-

possession for the rental value of the property, unless the tenant-in-possession has

agreed to pay rent or has ousted or excluded the cotenant. Id.

Ouster is essentially a factual issue. In Wood v. Collins, supra, the evidence

established that the tenant-in-possession would allow the other tenant to visit if she was

home, but would not allow the other tenant to use or occupy the property and refused

him access when he was trying to work on the property. The Court held that the

evidence supported a finding of ouster: “Given a finding of exclusive use and enjoyment

by [the tenant-in-possession], the trial court correctly applied the law of cotenancy and

awarded [the other tenant] one-half of the rental value for the post-separation period.”

812 P.2d at 958.

The Alaska Supreme Court has not addressed the question of whether the

tenant-not-in-possession must make a demand for possession before ouster can be

found3. Other courts have required such a demand4, but not in the context of a

formerly-intimate relationship. A persuasive line of cases from other jurisdictions does

not require an explicit ouster when the intimate relationship between cotenants ends.

In Johnston v. Martin, 583 N.Y.S.2d 615, 617 (A.D. 1992), the court found ouster

based on the evidence that the plaintiff “moved out in response to her troubled

relationship with defendant and his violence toward her and that defendant thereafter

changed the locks.” Based on that finding, the court held that the defendant was liable

for “the reasonable value of his exclusive use and occupancy.”

3There is a suggestion in early Alaska case law that there need not be an explicit
demand for possession. In Overgaard v. Westerberg, 3 Alaska 168, 179 (Alaska
1906), the court recognized that ouster could be either actual or constructive. Although
the court did not give examples of each, constructive ouster necessarily must involve
something other than an explicit demand for possession and a rejection of the demand.

4E.g., Gillmor v. Gillmor, 695 P.2d 1037, 1040-41 (Utah 1984).

In Adkins v. Edwards, 317 So.2d 770, 771 (Fla. App. 1975), neither party had

claimed an ouster, but the court found one anyway:

In cases like this there frequently exists an aura of hostility and
awkwardness not necessarily common to cotenancy of lands or other properties
held for commercial purposes. While neither of the parties contended that he or
she was ousted from possession, it is unrealistic to believe that parties who
could not get along living together while they were married would be expected to
enjoy common usage of the former marital home after their divorce.

The Washington Supreme Court recognized this rule in Cummings v. Anderson,

614 P.2d 1283 (WA. 1980), where the Court said: “An appealing argument is made

that, in situations such as this, where the property is not adaptable to double

occupancy, the mere occupancy of the property by one cotenant may operate to

exclude the other.”5 This argument was subsequently applied in In re Marriage of

Maxfield, 737 P.2d 671, 676 (WA App. 1987).

With respect to improvements made to the property, the standard rule is that the

expense of improvements will not be credited unless the work was necessary or

actually enhanced the value of the property. Cummings, 614 P.2d at 1289; Wood, 812

P.2d at 959.

5The Court appeared to find it significant that the woman did not contend that anything
the man did or did not do caused her to leave.

II. Application of Law to This Case.

A. The Property Must Be Sold.

The first issue presented is what is to be done with the property. The parties

agreed that a partition by sale was necessary, that it was not possible to have a

partition in kind. The evidence fully supported that agreement in that the house is on a

very small lot, which cannot be divided, and that the parties will not be able to act as

neighbors, without police intervention, in the foreseeable future. A partition in kind, if

possible, would be ruinously expensive. The property must be sold. The only question

with respect to disposition of the property is whether one of the parties will want to and

be able to purchase the property from the other, or whether a sale to a third party is

necessary.

B. The Property Must Be Sold to a Third Party

The second issue is whether the property will be sold to one of the parties or to a

third party. A party wishing to “buy out” the other party’s interest must demonstrate that

he or she is able to do so. The parties were reminded repeatedly that if they wanted to

purchase the property from the other tenant, they were required to present evidence to

establish the property’s fair market value, and evidence that they could secure

financing adequate to release the other party from the existing mortgage and to

purchase the other party’s interest6. Smith submitted valuation evidence in the form of

opinions by two real estate agents. Doe submitted evidence concerning the City and

6The Special Master’s Order was the result of some particular reasons for concern in
this case. In addition to the failure to actually prepare and submit an application,
concerns are raised by the fact that Doe did not take available steps to bolster her
income and thereby increase her chances for qualification. For example, Doe did not
include the rental income she received on her income tax returns, though those funds
clearly constitute income.

SPECIAL MASTER’S REPORT Page 1

Borough of Juneau (“CBJ”) real property assessment, and, reluctantly, her own opinion

that the property was worth $220,000 to 225,000.

Neither party presented any evidence of ability to qualify for adequate financing.

Doe presented evidence that her parents would cosign a loan for her, but did not

present any evidence that the combined applicants would qualify for the necessary

financing. Doe testified that she tried to refinance the property on her own with the

current mortgage holder, but did not qualify because she did not have adequate income

for the loan. She then tried to refinance through a secondary source (City Mortgage).

It was not clear whether or not she qualified, but in any case she did not go forward

because the interest rate was unacceptably high. She then came up with the idea of

having her parents cosign a loan application. There was no evidence that she has

gone beyond asking the banker if that approach might be acceptable.

Doe asked the Special Master for additional time to submit an application,

without any attempt to explain why more time was necessary. Given her failure to

submit an application before the hearing, her failure to explain why the additional time

was necessary, and the length of time this matter has waited for resolution, it would not

be equitable to further delay the sale of the house to a third party7. Doe did not present

any evidence that she and her parents were qualified to obtain the necessary financing.

Although she stated that the banker would be called as a witness, he was not. Under

the circumstances of this case, I am left with no reasonable option except to require the

immediate sale of this property on the open market.

C. Valuation of the House

7Significantly, one of the brokers, Tom Kohan, testified that most houses in Juneau sell
during the period of July through September, providing a reason to place the house on
the market as soon as possible.


I find that the value of the house is $258,000. The evidence concerning

valuation presented by Smith was persuasive. Two experienced brokers thought that

the property would sell for $250,000 if a quick sale was required, and that it would sell

for $265,000 to $269,500 if more time was available. Doe criticized the brokers’

opinions on the basis that they had used the incorrect square footage. Mr. Kohan did

believe that the house was 2,382 square feet plus 680 square feet in the basement,

which was the figure that the CBJ had used for many years. Doe recently got the CBJ

to assess the house on the basis of 1,654 square feet plus 720 square feet in the

basement. That discrepancy does not substantially undercut Mr. Kohan’s opinion, as

he seemed more concerned with location and comparable sales. Furthermore, Doe did

not present any evidence of how the alleged error would affect the sales price. More

importantly, the other agent, Honey Bee Anderson, did a detailed report based on

1,654 square feet (ignoring the basement) and came up with the same range of sales

prices as Mr. Kohan. The value I have chosen is exactly at the midpoint of Ms.

Anderson’s range, which is the price at which she said that most houses will sell.

The other evidence concerning valuation was not persuasive. The CBJ

assessment of $181,000 is nearly $20,000 less than the purchase price three years

ago, and is $40,000 less than Doe’s own opinion as to value. Doe’s opinion is not

entitled to much weight8.

D. Division of Proceeds.

8Doe was not asked for her opinion by counsel; the opinion came out only in response
to a question from me. Doe apparently did not offer her opinion because she was
attempting the have the value set at the level of the CBJ assessment. That attempt
was disingenuous at best, given Doe’s opinion and the assertion in her 1996 tax return
that the house was worth more than $202,416.


The remaining issue is how to divide the sale proceeds. The disposition of

proceeds is set out in AS 09.45.380:

The proceeds of the sale of the encumbered property shall be applied under the
direction of the court as follows:
(1) to pay its just proportion of the general cost of the action;
(2) to pay the costs of the reference;
(3) to satisfy the several liens in their order of priority by payment of the
sums due and to become due;
(4) the residue among the owners of the property sold according to their
respective shares, as found by the court.

1. General Cost of the Action.

It is not clear whether “general cost of the action” means anything different from

“costs” as it is used in other statutes and court rules. If it simply means “costs”, then

Smith should submit a cost bill, which would be paid from the sale, and file a motion for

fees at a later time. If “general cost” is broader and includes attorney fees, then I find

that Smith is entitled to an award of fees pursuant to Civil Rule 82(b)(2). Smith is the

prevailing party. Doe denied all allegations and claims in Smith’s complaint, effectively

denying that he even had an interest in the house. At trial, Doe’s position was that

Smith take nothing. As will be seen below, Smith is to receive more than one-half of

the equity in the house, which is most of what he asked for.

2. Liens

The only formal lien on the property is the mortgage held by First Bank, in the

approximate amount of $175,000. That debt is entitled to priority over any other liens.

There is also a debt owed to Doe’s parents. Mr. and Mrs. Doe lent the parties $20,000

to use for their down payment on the subject property. Doe testified, without dispute,

that Smith verbally agreed that both parties would be responsible and that they would

pay interest on the unpaid balance in some undetermined amount. Before the parties

separated, they had repaid $4,500.00 to Mr. and Mrs. Doe. The final payment was on


April 6, 1995. In the absence of any evidence from which the promised interest rate

can be readily determined, I have applied the statutory rate of 10.5 percent per annum.

Erring in favor of the senior Does, who bear no responsibility for the lack of evidence, I

find that the balance owing as of July 1, 1997, is $17,455.00 principal and $4,101.34

accrued interest9. The unpaid principal balance accrues interest after July 1, 1997, at

the rate of $5.02 per Smith. Mr. and Mrs. Doe shall have a lien on the subject property

in the amounts set forth above, which shall be paid from the proceeds of the house

prior to payment to the parties.

3. Residue

Finally, the Court has to adjust the remaining proceeds between the parties. As

part of that adjustment, one must look at three separate periods -- acquisition,

cohabitation, and post-separation. With respect to acquisition costs, Smith testified

persuasively that the parties agreed that, if they later split up, he would have his

separate down payment returned to him; Doe did not directly disagree with that

testimony. That amount totals $9,945. The parties both testified that they intended to

share equally in all expenses during the period they lived together. They made no

attempt to keep anything more than a very rough balance of expenditures. To the

extent that one party paid more than his or her share during this period, the

presumption of gift has not been rebutted and neither party shall be entitled to any

credit for that period.

9The funds were deposited into Doe’s account on April 25, 1994. The figures above
assume that interest started to run on May 1, 1994. Because the parties did not
present any evidence concerning the earlier payments, the figures use the assumption
that the entire $4,500 was paid on April 6, 1995. Between May 1, 1994 and April 6,
1995, interest had accrued in the amount of $1,955, so the payment on April 6 reduced
the principal by $2,545 ($4,500 -- 1,955), to $17,455.


Doe asserted that Smith waived any interest in the house, and that he was

estopped from asserting any interest in the house. The estoppel assertion is readily

disposed of. There was no testimony that Smith made any particular statement, that

Doe reasonably relied on such a statement, or that she took any action she would not

have taken but for such a statement. Indeed, the estoppel claim was not even raised in

argument at the hearing.

The waiver argument is more difficult, but only because the assertions

supporting the argument were vague. Doe never specified how Smith waived his

interest, except to basically contend that the actions of moving out and not making the

mortgage payments constituted waiver. There is no support for that contention in

reported decisions. Moreover, it is not supported by the evidence. There was no

evidence that Smith’s actions evidenced any intention on his part to waive his share of

the equity in the house. Smith specifically disclaimed any such intention. Doe also

suggested that Smith told her that she could do whatever she wanted with the house so

long as he did not see a bill. Even if that statement was made, it does not show an

intention to give up all equity in the house, as Doe suggested. At most, the alleged

statement is consistent with Smith’s testimony that he thought that the renters were

paying for the mortgage -- he thought that having the renters pay Doe and having Doe

pay the mortgage was no more than a shortcut, instead of having them pay one-half to

him and Smith paying one-half of the mortgage.

There was a question about the burden of proof required of the party asserting a

waiver. Doe did not respond to requests for her position on that issue. Nevertheless, I

find that the issue is moot, as waiver was not proved by a preponderance of the

evidence. Given that finding, I will apply the ordinary rule of co-tenancy law to the post-


separation period. Smith is responsible for his share of the mortgage, tax, and

insurance costs incurred by Doe. That liability will be one-half of $42,02610. The next

question is whether that liability is offset, in part or entirely, by the profits derived from

the property and by the rental value of Doe’s possession of the property.

Smith is entitled to the rental value of Doe’s possession only if she ousted him

from the property. However, there is no requirement that an ouster be shown before a

cotenant is entitled to a share of the profits derived from the property11. In this case, I

find that the best evidence of the direct profits from the property is the rental value for

the three bedrooms that were rented out, in the amount of $1,440 per month12. Smith

is, accordingly, entitled to a credit of one-half of $36,000 (25 x $1,440).

Another aspect of the “profit” from the house is the tax benefits derived from it.

In 1995 and 1996, Doe took all of the deductions for mortgage interest and real estate

taxes. Doe had her tax bill reduced by $1,756 in 1995 and $1,082 in 1996 by using the

one-half of those deductions which otherwise would have been Smith’s to claim. If

Smith had received his share of those deductions, he would have saved $966 in 1995

and $896 in 1996. There is no reason why one party or the other should gain because

of differing tax treatments, so the equitable approach is to average the figures for each

year and credit Smith with that amount. For 1995, that amount would be $1,411; for

1996, the amount is $989; for a total credit to Smith of $2,400.

10The payment was $1,669 per month for June 1995 through November 1996. It then
increased to $1,712 per month for December 1996 through June 1997.

11See, Pilgrim v. Grant, 9 Alaska 17, 28 (Alaska 1936).

12This is the sum of the lowest rents received for the White and Blue Rooms, and $515
for the Yellow Room.


That leaves the question of whether Doe has to compensate Smith for her

possession of the house, which is the case only if Smith was “ousted” from the house.

There is substantial evidence to support the conclusion that he was ousted. There was

no question at the time that one of the parties had to go, and that whoever stayed was

excluding the other as a practical matter. Doe was unable or unwilling to find another

place to live because she limited herself to places that would allow an eighty-pound

dog. After Smith left, Doe made it clear that he was not welcome on the property13.

Doe had also changed the locks on the property. The present case is identical, for all

practical purposes, with Johnston v. Martin, supra. Doe’s unilateral decisions to change

homeowner’s insurance from Allstate to a much less well-known company, to claim the

entire tax benefits of ownership, to operate a B&B, and to apply to a variance for the

property, are all indications of exclusive acts of ownership which cumulatively constitute

an ouster.

Smith is entitled to a credit for the rental value of Doe’s occupancy. She testified

that the room she occupies is worth only $200 per month. That testimony is not

credible. First, there does not seem to be any reason why Doe should be living in the

basement. There are four bedrooms in the main house, and Doe has never rented out

more than three at a time. Even if she is staying in the basement, the “value” of that

room does not account for her use of the rest of the house, which must be substantial

(especially since she still has the large dog). Finally, the market in Juneau is such that

rooms are regularly rented at $400 to $500 per month. I find the rental value of Doe’s

13During the hearing on April 30, 1997, Smith requested access to the property so that
a realtor could reach an opinion on value. Doe was adamant that Smith was not to
enter the property in her absence. Smith had to wait for a key from Doe before the
realtor could inspect the property.


occupancy to be no less than $400 per month. Smith is entitled to a credit for one-half

of $10,000 (25 x $400).

In summary, Smith owes $21,013, which is offset by $18,000 (rental profits) plus

$2,400 (tax profits) plus $5,000 (Doe rental). Accordingly, Doe owes Smith $4,387.00.

Smith is to receive that sum, plus the $9,945 from the down payment, and the parties

will then split equally the remaining proceeds.


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