Jackie McGregor v. Gregor Scott McGregor ( 2000 )

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
June 2000 Session
JACKIE MCGREGOR v. GREGOR SCOTT MCGREGOR
Appeal from the Circuit Court for Hamilton County
No. 97DR-0428 L. Marie Williams, Judge
FILED SEPTEMBER 26, 2000
No. E1999-00877-COA-R3-CV
This is a divorce case. Following a bench trial, the court below (1) granted the parties a divorce on
stipulated grounds; (2) divided the marital property; and (3) found that wife was not entitled to an
award of alimony, but that funds withdrawn by her from a joint account immediately prior to her
filing for divorce constituted necessary temporary support for her and the parties’ daughter. Wife
appeals the trial court’s characterization of certain real property as marital property and the trial
court’s division of the marital property. Both wife and husband take issue with the trial court’s
treatment of the funds withdrawn by wife from the joint account. We affirm the judgment of the trial
court, as modified.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court
Affirmed as Modified; Case Remanded
CHARLES D. SUSANO, JR., J., delivered the opinion of the court, in which HERSCHEL P. FRANKS and
D. MICHAEL SWINEY, JJ., joined.
Thomas Crutchfield, Chattanooga, Tennessee, for the appellant, Jackie McGregor.
Grace E. Daniell, Chattanooga, Tennessee, for the appellee, Gregor Scott McGregor.
OPINION
I.
In this divorce case, the trial court dissolved the marriage of Jackie McGregor (“Wife”) and
Gregor Scott McGregor (“Husband”). The parties had been married since 1975, and their marriage
produced one child, Keely (DOB: April 2, 1981).1
Wife has a bachelor of science degree and worked as a real estate agent from 1983 to 1989
and from 1992 to 1996. She allowed her real estate license to lapse in October, 1996, after an
unsuccessful lawsuit regarding real estate she had attempted to purchase. Wife subsequently worked
as a waitress and as a social worker. According to Wife’s income and expense statement, her
monthly income was $1,390 while her expenses were $1,515. She testified, however, that her
expenses were greater than represented on her income and expense statement.
Husband worked as a contractor remodeling homes until he allowed his contractor’s license
to lapse in 1997. At the time of trial, he was working full-time as a painter earning $13.00 per hour.
He testified that inclement weather sometimes affected his ability to work a full 40-hour week.
According to Husband’s income and expense statement, Husband’s monthly income was $1,125.80,
and his monthly expenses were $1,474.
In March, 1996, the parties formulated what is referred to in the record as “the plan.” The
purpose of “the plan” was to get the parties out of debt. “The plan” involved remodeling the marital
residence and selling it. The parties then proposed to utilize the proceeds, along with Wife’s
inheritance of $50,000 from her mother’s estate, to pay off debts and to purchase a lot (“the Brady
Point property”) on which they planned to build a new marital residence.
On March 20, 1996, the parties entered into a real estate sales agreement for the purchase of
the Brady Point property for $25,000. This agreement contains the following language:
Purchasers assign the amount of twenty-five thousand dollars and
00/100 cents from the estate of [Wife’s mother] to sellers as of todays
[sic] date verified by phone call with [their attorneys]. Purchasers
will sign necessary papers to effect this.
In the meantime, the parties applied for a loan to remodel the marital residence. On their loan
application, the parties listed Wife’s inheritance as a joint asset.
The parties closed on the Brady Point property in August, 1996. Many fees and expenses
relating to this property, including the down payment, an architect fee, an appraisal fee, a credit
report fee, and taxes were paid from a joint account of the parties.
The parties remodeled the marital residence and sold it in January, 1997. Most of the
proceeds from this sale were used to pay off debts; the remaining funds, being $18,000, were
deposited into the joint account. In late January, 1997, Husband withdrew $500 from this account
1
The complaint and answer indicate that Keely’s date of birth is February 4, 1981. The statement of the
evidence indicates that Keely’s date of birth is April 2, 1981.
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to reimburse him for certain remodeling expenses paid by him out of his business account. When
Wife learned of Husband’s withdrawal, she became upset, and on February 3, 1997, she withdrew
the remaining $17,500 from the account. According to Husband’s testimony, Wife attacked a co-
worker of Husband’s on the same day, 2 and Husband spent the night away from the marital
residence. He returned to stay the nights of February 4 and February 5, 1997, and was “driven out”
on the night of February 6, 1997. When he returned the next morning, Wife called the police. Wife
filed this divorce action on February 11, 1997.
On May 15, 1997, the trial court (1) ordered Wife to pay into court the balance of any funds
held by Wife that were withdrawn from the parties’ joint account; and (2) ordered Husband to pay
$81 per week in child support. Wife subsequently paid approximately $3,700 into court, the balance
of approximately $13,800 having been spent on, among other things, $2,200 in attorney’s fees,
$6,000 for a year’s worth of rent, and $5,600 for moving and living expenses for her and Keely. On
June 4, 1997, the trial court ordered that the $3,700 paid into court “be paid for the minor child’s
education and for temporary alimony pendente lite.”
The trial court awarded the parties a divorce on stipulated grounds on October 17, 1997, but
referred to mediation issues relating to the division of the property, child custody, child support, and
alimony. Mediation failed, and the court heard testimony on the reserved issues in 1999.
On June 2, 1999, the trial court, among other things:
(1) found that the Brady Point property was marital property, “its
character having been transmuted from separate to marital property
by the treatment of the property”;
(2) ordered that the Brady Point property be sold for a minimum
purchase price of $50,000, the proceeds to “be utilized first to pay any
unpaid portion of the guardian ad litem’s fee, second to pay any
unpaid therapy fees for the benefit of the child, third to pay any tax
indebtedness which arose during the marriage or which is related to
the Brady Point lot, fourth to pay any unsecured debt of the parties,
and next to pay any secured debt of the parties. Any proceeds
remaining will be divided equally between the parties.”;
(3) divided several items of personal property; and
(4) found that no alimony should be awarded.
2
Wife denies attacking the co-worker, a female, but admits that she referred to the co-worker as “trailer trash”
and told her that she should have her teeth fixed. Wife admits biting Husband and hitting his truck with a two-by-four
in 1993. W ife alleges that H usband ha d at one time hit her in the head with a frying pan and had pulled her by her hair.
Husband d enies these allegations.
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Upon Husband’s motion to alter or amend asserting that he is entitled to half of the $17,500
sum that Wife withdrew from the joint account prior to separation, the court denied the motion,
finding that those funds were necessary support for Wife and Keely.
Wife now appeals, raising as issues the trial court’s characterization of the Brady Point
property as marital property and the trial court’s division of the marital property. Wife and Husband
both take issue with the trial court’s treatment of the $17,500 Wife withdrew from the joint account.
II.
Since this is a non-jury case, our review is de novo upon the record of the proceedings below.
That record comes to us with a presumption of correctness as to the trial court’s factual findings, a
presumption that we must honor unless the evidence preponderates against those findings. Tenn.
R. App. P. 13(d). We review the trial court’s conclusions of law de novo with no presumption of
correctness. Adams v. Dean Roofing Co., 715 S.W.2d 341, 343 (Tenn. Ct. App. 1986).
III.
A.
In divorce cases, Tennessee recognizes two distinct classes of property: (1) “marital
property”, as defined in T.C.A. § 36-4-121(b)(1) (1996); and (2) “separate property”, as defined in
T.C.A. § 36-4-121(b)(2) (1996). The distinction is important because, in an action for divorce, only
marital property is divided, distributed, or assigned between the parties. See T.C.A. § 36-4-121(a)(1)
(1996). Implicit in the statute is the understanding that separate property is not divided between the
parties. Brock v. Brock, 941 S.W.2d 896, 900 (Tenn. Ct. App. 1996).
Generally, property that is acquired during the marriage by either or both spouses and still
owned by either or both spouses when the divorce complaint is filed is classified as marital property
and is thus subject to equitable division. T.C.A. § 36-4-121(b)(1). However, property acquired by
a spouse by gift, bequest, devise or descent, even if acquired during the marriage, is separate property
and not subject to division. T.C.A. § 36-4-121(b)(2)(D).
Under certain circumstances, however, property generally deemed separate may be found to
have “transmuted” into marital property:
[Transmutation] occurs when separate property is treated in such a
way as to give evidence of an intention that it become marital
property. One method of causing transmutation is to purchase
property with separate funds but to take title in joint tenancy. This
may also be done by placing separate property in the names of both
spouses. The rationale underlying both these doctrines is that dealing
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with property in these ways creates a rebuttable presumption of a gift
to the marital estate….The presumption can be rebutted by evidence
of circumstances or communications clearly indicating an intent that
the property remain separate.
Batson v. Batson, 769 S.W.2d 849, 858 (Tenn. Ct. App. 1988) (emphasis added) (brackets in
original).
A court’s division of marital property must be accomplished upon consideration of the
statutory factors found in T.C.A. § 36-4-121(c) (1996). Marital fault cannot be considered. T.C.A.
§ 36-4-121(a)(1). Appellate courts are to defer to a trial court’s division of marital property unless
the trial court’s decision is inconsistent with the statutory factors or is unsupported by the
preponderance of the evidence. Brown v. Brown, 913 S.W.2d 163, 168 (Tenn. Ct. App. 1994).
In the instant case, the trial court characterized the Brady Point property as marital property,
“its character having been transmuted from separate to marital property by the treatment of the
property.” Wife argues that the finding of transmutation is erroneous. More specifically, she argues
that even though the property was titled jointly, any intent on her part for the property to be treated
as a marital asset was (1) thwarted by the breakup of the marriage; and (2) based upon Husband’s
fraud, i.e., Husband’s feigned compliance with “the plan” as a scheme to enable him to obtain a
greater allotment of property after he abandoned the marriage.
We find that the evidence does not preponderate against the trial court’s finding that the
Brady Point property had transmuted into marital property. Even though the property was purchased
with Wife’s inheritance, the property was titled jointly. There is insufficient proof in the record to
rebut the resulting presumption of a gift to the marital estate. On the contrary, the evidence indicates
that the parties treated the property as a marital asset. The inheritance was listed as a joint asset of
the parties on the parties’ loan application when they sought funding for the addition to the marital
residence. In accordance with “the plan,” the inheritance was used to pay the parties’ legal bills and
the down payment, tax bills, and construction loan on the Brady Point property, which closed in
August, 1996. The events leading to the filing of the divorce action did not occur until the first week
of February, 1997. We are concerned with the intent of the parties at the time they implemented “the
plan,” not at the time the divorce was imminent, and the evidence does not preponderate against the
trial court’s finding that the parties treated the Brady Point property as a marital asset.
Nor can we say that the evidence preponderates against the trial court’s finding that “there
was no fraudulent conveyance in anticipation of the filing of the petition for divorce by either party.”
The evidence instead suggests that Husband did not want to divorce Wife. He did not leave the
marriage voluntarily, but rather was “driven out” by Wife. Wife, on the other hand, had previously
spoken to a friend about divorcing Husband, had previously prepared divorce papers, and was the
party who filed for divorce. Therefore, we find and hold that the trial court did not err in
characterizing the Brady Point property as marital property.
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B.
Wife next argues that, even if the trial court was correct in characterizing the Brady Point
property as marital property, it erred in its disposition of the property. More specifically, Wife
argues that the trial court erred (1) in approving the sale of the Brady Point property for $50,000; (2)
in ordering that certain indebtedness be paid from the proceeds of the sale of the property before any
proceeds are divided and distributed between the parties; and (3) in ordering that any proceeds
remaining after certain debts are paid are to be divided equally between the parties. We will examine
each of these contentions in turn.
According to the statement of the evidence that was presented at the hearings in 1997, Wife
valued the Brady Point property at $25,000 while Husband testified that the property had been
appraised at $50,000. In its order of June 2, 1999, the trial court ordered that “[t]he Brady Point
property will be placed for sale at a minimum purchase price of $50,000.00.” Husband subsequently
filed two motions, the first seeking an order requiring Wife to list the property for sale at a price of
$50,000, and the second seeking an order allowing Husband to accept a third party’s offer to
purchase the property for $48,000 without incurring a realtor’s fee. Wife, in response to one or both
of these motions, apparently proffered a written appraisal of the property valuing it at $80,000. The
trial court granted Husband’s motions on August 3, 1999. Wife now argues that the trial court’s
order approving the sale of the Brady Point property for $50,000 is erroneous in light of the appraisal
indicating the value of the property to be $80,000.
The value to be given a marital asset is a question of fact. Kinard v. Kinard, 986 S.W.2d
220, 231 (Tenn. Ct. App. 1998). In making this determination, the trial court is to consider all
relevant evidence, and, if the evidence is conflicting, the court “may assign a value that is within the
range of values supported by the evidence.” Id. An appellate court is to presume a trial court’s
factual determinations are correct unless the evidence preponderates against them. Id.We find that the evidence does not preponderate against the trial court’s order approving the
sale of the Brady Point property for $50,000 or to a third party for $48,000 without a realtor’s fee.
The court had before it the oral testimony of Wife and Husband valuing the property at $25,000 and
$50,000 respectively and, in addition, Wife’s proffered appraisal valuing the property at $80,000.
The trial court’s order assigned a value to the property that is within the range of values supported
by the evidence, and, therefore, we cannot say that the evidence preponderates against this
determination. Thus, we find this issue adverse to Wife.
Wife next takes issue with the trial court’s determination that the monies realized from the
sale of the Brady Point property are to be applied to “any tax indebtedness which arose during the
marriage or which is related to the Brady Point lot” and to pay “any unsecured debt of the parties”
before any proceeds of the sale are divided between the parties. She asserts that she should not be
required to pay any portion of Husband’s “separate” debts.
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The evidence does not preponderate against the trial court’s determination in this regard.
Husband stated that he incurred a tax liability because Wife refused to file a joint return with him
and that they would have been entitled to a refund had they filed jointly. We find that the trial court
did not err in finding these debts to be marital debts, and therefore, we find no error in ordering that
they be paid out of martial property before any distribution to the parties.
Wife also argues that even if the Brady Point property is properly characterized as marital
property, the trial court’s decision to equally divide the proceeds remaining after payment of debts
is erroneous. On this point, we agree.
Once property is classified as marital property, courts must equitably divide the marital
property in accordance with the statutory factors found in T.C.A. § 36-4-121(c). One of these factors
is “[t]he contribution of each party to the acquisition…of the marital…property.” T.C.A. § 36-4-
121(c)(5). We are of the opinion that the trial court erred in failing to give sufficient consideration
to this factor in dividing the Brady Point property.
As previously indicated, the Brady Point sales agreement contains the following language:
Purchasers assign the amount of twenty-five thousand dollars and
00/100 cents from the estate of [Wife’s mother] to sellers as of todays
[sic] date verified by phone call with [their attorneys]. Purchasers
will sign necessary papers to effect this.
The agreement provides that the purchase price of the property is $25,000. The evidence indicates
to us that the full purchase price of the Brady Point property was paid with funds from Wife’s
inheritance. Thus, Wife contributed the full amount of the purchase price for property that closed
approximately six months before Wife filed for divorce. In light of this fact, and in light of T.C.A.
§ 36-4-121(c)(5), we find that the trial court erred in dividing equally between the parties any net
proceeds from the sale of the Brady Point property. We modify the trial court’s judgment so as to
order that the proceeds remaining, if any, after the property has been sold and the debts have been
paid, be awarded to Wife.
In addition to being dissatisfied with the trial court’s treatment of the Brady Point property,
Wife argues that the trial court erred with respect to several smaller items: (1) an antique cupboard;
(2) an antique armoire; and (3) Husband’s business assets.
Wife argues that the antiques are her separate property. We find that the evidence does not
preponderate against the trial court’s treatment of the antiques. The testimony of the parties
concerning these items conflicted, and thus, the trial court’s determination as to these items is
grounded in its assessment of the credibility of the parties. This being the case, the trial court’s
determination is entitled to great weight on appeal, see Massengale v. Massengale, 915 S.W.2d 818,
819 (Tenn. Ct. App. 1995), and we find and hold that the evidence does not preponderate against the
trial court’s decision.
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With respect to the assets of Husband’s business, Wife’s argument is that the trial court failed
to account for them. We find this assertion to be incorrect. In its June 2, 1999 order, the trial court
stated that “[t]he remaining property in dispute are those items highlighted in Exhibit 33 which have
not been marked through. The Court finds these items are marital property.” An examination of
Exhibit 33 reveals that there are several items of Husband’s business property that are marked
through. Thus, the trial court found these assets not to be in dispute, thereby accounting for them.
We cannot say that the evidence preponderates against the trial court’s treatment of them, and we
therefore find this issue adverse to Wife.
IV.
The second major disagreement between the parties concerns the proceeds from the sale of
the marital residence, i.e., the $17,500 that Wife withdrew from the parties’ joint account. Husband
asserts that he is entitled to half of these funds, and Wife seeks reimbursement from Husband of “the
portion of child support paid to her with her share of the joint savings account.”
Wife withdrew approximately $17,500 from the joint account on February 3, 1997. On May
15, 1997, the trial court ordered Wife to pay the balance of any funds held by Wife that were
withdrawn from the parties’ joint account into court. Wife subsequently paid approximately $3,700
into court, the balance of approximately $13,800 having been spent on, among other things, $2,200
in attorney’s fees, $6,000 for a year’s worth of rent, and $5,600 for moving and living expenses for
her and the parties’ daughter. On June 4, 1997, the trial court ordered that the $3,700 paid into court
“be paid for the minor child’s education and for temporary alimony pendente lite.” In its June 2,
1999 order, the trial court found the following:
The Court has reviewed the statutory factors for the setting of
alimony in light of the proof in this case and determines no alimony
should be awarded. Although it is a marriage of lengthy duration, the
relative earning capacities of the parties are comparable as is the
education and training of each which qualifies them for their
employment potential. The Court finds no other factor which would
be pertinent to an award of alimony to [Wife]. The Court does not
find any fault of [Husband] which, when compared with the fault of
[Wife], would result in this Court finding it appropriate to consider
relative fault.
Subsequent to this order, Husband filed a motion to alter or amend asserting that he is entitled to half
of the $17,500 that Wife withdrew from the joint account. In response to this motion, the trial court
stated the following:
The Court denies [Husband’s] claim for reimbursement….It was the
testimony of [Wife] payments were made on marital debt, on car
insurance six months in advance, and to pay off the line of credit on
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the car. Part of the money was used for money for a Notre Dame trip
for [the child] and to establish [Wife and child] in a new residence.
The Court finds the monies were used for necessary support of [Wife]
and the minor child prior to the entry of an order for alimony or child
support pendente lite. Accordingly, the motion to alter or amend…is
denied.
Husband now asserts that the award of temporary support is excessive. Wife seeks
reimbursement of “the portion of child support paid to her with her share of the joint savings
account,” arguing that the trial court’s order permits Husband to “satisfy half of his child support
obligation with [Wife’s] own money.”
The amount and duration of alimony, including alimony pendente lite, are issues with respect
to which the trial court exercises wide discretion. Garfinkel v. Garfinkel, 945 S.W.2d 744, 748
(Tenn. Ct. App. 1996). After careful review of the record in this case, we cannot say that the
evidence preponderates against the trial court’s treatment of the funds Wife withdrew from the joint
account. As stated previously, such an alimony determination is entitled to great weight on appeal,
and we find no abuse of discretion on the part of the trial court on this issue. Accordingly, we find
no error as to the trial court’s decrees with respect to the funds under discussion.
V.
The judgment of the trial court, as modified, is affirmed. The case is remanded to the trial
court for the entry of an appropriate order in accordance with this opinion and for such further
proceedings, if any, as may be required. Exercising our discretion, we tax each of the parties with
half of the costs on appeal.
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CHARLES D. SUSANO, JR., JUDGE
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