Kathryn S. Newcomb v. Paul W. Newcomb ( 1995 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Coleman, Koontz and Senior Judge Hodges
KATHRYN S. NEWCOMB
v. Record No. 0636-94-3
PAUL W. NEWCOMB
MEMORANDUM OPINION *
AND BY JUDGE SAM W. COLEMAN III
JULY 25, 1995
PAUL W. NEWCOMB
v. Record No. 1195-94-3
KATHRYN S. NEWCOMB
FROM THE CIRCUIT COURT OF ROCKBRIDGE COUNTY
George E. Honts, III, Judge
Ellen M. Arthur (McClung & Arthur, on
briefs), for Kathryn S. Newcomb.
J. Lloyd Snook, III (Snook & Haughey, P.C.,
on briefs), for Paul W. Newcomb.
Paul Newcomb and Kathryn Newcomb appeal from an order in
which the circuit court determined that the amount Paul Newcomb
is to pay Kathryn Newcomb "in lieu of alimony" in accordance with
the terms of their court approved property settlement agreement
is $14,000. Both parties contend that the circuit court's
computation of the amount owed, which was computed from a
mathematical formula contained in the property settlement
agreement, was incorrect. We hold that because the trial court
correctly determined the "gross sale price" of Paul Newcomb's
*
Pursuant to Code § 17-116.010 this opinion is not
designated for publication.
interest in their bed and breakfast property, which amount is the
contested and controlling component of the formula, the court did
not err in computing the amount to which Kathryn Newcomb is
entitled. Therefore, we affirm the trial court's judgment order
awarding her $14,000 "in lieu of alimony."
FACTS
In 1991, the Circuit Court of Rockbridge County entered an
agreed divorce decree, incorporating the Newcombs' property
settlement agreement. The agreement and decree ordered that Paul
Newcomb pay Kathryn Newcomb $100,000 in consideration for certain
of her property interests and Kathryn Newcomb was ordered to
convey "all her right, title, and interest" in their real
property, which included a bed and breakfast inn, and listed
personal property. The decree also specifically provided that
Kathryn Newcomb would convey her interest in the inn "according
to Paul Newcomb's right to "assign . . . or convey [Kathryn's]
interest to a partner."
The provision of the agreement that creates the controversy
in this case states:
"In lieu of alimony, [Paul] will pay to
Kathryn according to the following schedule:
Should [Paul] sell, transfer or dispose of
the one-half interest he currently holds
. . . at any time within fifteen years of the
date of this order he shall pay to [Kathryn]
the amount determined as follows:
"If within five years hereof, 20 percent
of the difference between the gross sale
price of [Paul's] interest in the said
property and $250,000.00."
(Emphasis added).
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In order to obtain funds to pay Kathryn Newcomb $100,000 as
per the agreement, Paul Newcomb borrowed $150,000 from Philip
Clayton. Paul used the remaining $50,000 to pay debts. At Paul
Newcomb's direction, and in accordance with the terms of their
agreement, Kathryn conveyed her undivided one-half interest in
the bed and breakfast property to Philip Clayton, Paul Newcomb's
assignee, by deed dated December 20, 1991.
On July 6, 1993, Paul Newcomb and Philip Clayton entered
into a Lease Purchase Agreement in which Clayton agreed to
purchase the bed and breakfast property for $411,900, "payable in
cash upon closing," and the assumption of an outstanding $186,000
indebtedness. Clayton also agreed to pay Paul Newcomb an
additional $58,100 for the furnishings and personalty in the inn.
Thus, on the face of the Lease Purchase Agreement it appeared
that Clayton was paying Paul Newcomb $470,000 in cash
consideration for the entire property plus the assumption of
indebtedness, even though Clayton already owned a one-half
undivided interest in the property, which he had acquired by deed
from Kathryn Newcomb.
On November 22, 1993, Paul Newcomb and Philip Clayton
entered into an Amended Lease Purchase Agreement, because the
"June, 1993 [agreement] did not clearly set forth the terms of
the payments and the total purchase price for the property." In
the amended agreement Clayton agreed to purchase "Paul W.
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Newcomb's interest" in the inn for $411,900 "less the sum of
. . . $150,000 . . . which amount has previously been paid when
the purchaser herein purchased the undivided one-half (1/2)
interest of Kathryn S. Newcomb." The amended agreement further
provided that Clayton was to pay Paul Newcomb $58,100 for the
furnishings, personalty, bank deposits in the business account,
and the assumption of certain debt. In addition to the Lease
Purchase and Amended Lease Purchase Agreements setting forth the
terms of the sale, a statement submitted in support of Philip
Clayton's application for a federal Housing and Urban Development
(HUD) loan showed the total purchase price for the realty to be
$411,900, and the purchase price for the personalty to be
$58,100. The HUD draft closing statement showed $150,000 as a
"credit" to Clayton against the total purchase price "for the
previous purchase of one-half interest in mill."
TRIAL COURT RULING
The dispositive question before the trial court, and before
this Court, is the amount of the "gross sale price" paid by
Philip Clayton for "Paul W. Newcomb's interest in the property."
Kathryn Newcomb argues that according to the July, 1993 Lease
Purchase Agreement, the gross sale price of Paul Newcomb's
interest in the property was $461,900, and, thus, after deducting
$250,000 according to the terms of the agreement, she was
entitled to 20 percent of the difference, or $42,380. 1 Paul
1
In footnote 8 on p.5 of Appellant Kathryn Newcomb's brief
she computes the amount she claims to be due at $43,820, but it
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Newcomb argues, on the other hand, that Kathryn Newcomb is
entitled to nothing "in lieu of alimony" because, according to
his computation, in which he deducts the amounts owing against
the property for deeds of trusts and other liens, the gross sale
price of Paul Newcomb's interest in the property is $125,900.
Therefore, after deducting $250,000, nothing remains from which
Kathryn is to be paid 20 percent.
The trial judge determined, based upon the terms of the
Amended Lease Purchase Agreement, that $470,000 was the stated
total gross purchase price that Clayton would be paying for both
Paul's and Kathryn's interests in the realty and the furnishings
and personalty associated with the inn. The trial court found,
relying upon the terms of the Amended Lease Purchase Agreement,
that the "gross sale price" which Philip Clayton paid for "Paul
W. Newcomb's interest in the property" was the total gross sale
price of $470,000, less the amount of $150,000 that Clayton had
loaned to Paul Newcomb, and which indebtedness was forgiven as
consideration for Paul's assigning Kathryn's interest in the
property to Clayton. Thus, by applying the formula from the
property settlement agreement for determining the amount to be
paid Kathryn Newcomb "in lieu of alimony" to the "gross sale
price" for "Paul W. Newcomb's interest in the property," as
determined from the Amended Lease Purchase Agreement, the trial
appears that she based this computation on "a gross total sales
price for the Inn" by transposing figures and using the figure
$469,100, rather than $461,900.
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court determined that the gross sale price for Paul Newcomb's
one-half undivided interest in the inn, including furnishings and
personalty, was $320,000, of which, after deducting $250,000,
Kathryn Newcomb was entitled to 20 percent of the balance, or
$14,000. 2
ANALYSIS
PROPERTY SETTLEMENT AGREEMENTS
Property settlement agreements are subject to the same rules
of interpretation as are other contracts. Smith v. Smith, 15 Va.
App. 371, 374, 423 S.E.2d 851, 853 (1992); Tiffany v. Tiffany, 1
Va. App. 11, 15, 332 S.E.2d 796, 799 (1985). In construing the
terms of a property settlement agreement, just as in construing
the terms of any contract, we are not bound by the trial court's
conclusions as to the construction of the disputed provisions.
Smith v. Smith, 3 Va. App. 452, 455, 350 S.E.2d 526, 528 (1986)
(citations omitted). "If all the evidence necessary to construe
a contract was presented to the trial court . . . the meaning and
effect of the contract is a question of law which can be readily
ascertained by this Court." Fay v. Schwarting, 4 Va. App. 173,
180, 355 S.E.2d 342, 346 (1987) (citing Wilson v. Holyfield, 227
Va. 184, 187, 313 S.E.2d 396, 398 (1984)). When examining the
instrument, we discern the intent of the parties and the meaning
of the language from the examination of the entire document,
giving full effect to the words actually used. Layne v.
2
20% x (470,000 - 150,000 - 250,000) = 14,000
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Henderson, 232 Va. 332, 337-38, 351 S.E.2d 18, 22 (1986).
The Newcombs' property settlement agreement provides that
the amount to be paid to Kathryn Newcomb in lieu of alimony shall
be based upon the gross sale price of Paul Newcomb's "one-half
interest he currently holds" in the inn and furnishings when he
sells the property. Thus, at the time the property settlement
was executed, the determination of the amount to be paid in lieu
of alimony was contingent upon a future event, which was the sale
of the property.
While we are not bound by the trial court's construction of
the terms of a contract, the meaning and terms of the provision
for determining the amount in lieu of alimony are beyond dispute.
The meaning of the term gross sale price, despite the
contentions on brief of Paul Newcomb to the contrary, is clear
and unambiguous. Gross sale price means the total price paid for
an item without reduction for indebtedness, fees, expenses, or
costs associated with the sale.
The parties' dispute over the sale price of Paul Newcomb's
interest derives not from any ambiguity in the terms of the
contract or the meaning of the term gross sale price. Rather,
the problem arises from the fact that under the agreement the
determination of the amount due Kathryn Newcomb depends upon a
future sale where the sale amount is controlled by Paul Newcomb.
Moreover, the sale ultimately involved a complex financial
transaction between Paul Newcomb and Philip Clayton, where the
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terms were defined by two lease purchase agreements which
obscured the amount of the gross sale price that Paul Newcomb
received.
The amount of the gross sale price that Paul Newcomb
received is a fact that the trial court was required to determine
based upon the terms of the transaction between Paul Newcomb and
Philip Clayton. We are bound by the trial court's factual
determination of the amount of the gross sale price if it was
supported by credible evidence. See Ferguson v. Stafford County
Dep't of Social Servs., 14 Va. App. 333, 336, 417 S.E.2d 1, 2
(1992).
Kathryn Newcomb contends that the evidence on which the
trial court should have based its finding of gross sale price for
Paul Newcomb's interest was the amount of the purchase price
stated in the first Lease Purchase Agreement or $461,900, without
considering the terms of the Amended Lease Purchase Agreement or
the amounts stated in the HUD applications and closing
statements, which documents show that the amounts in the first
agreement were erroneous and the base amount pertained to the
total purchase price that Clayton was to pay, including the
amount for Kathryn's interest. On the other hand, Paul Newcomb
argues, in effect, that the trial court should have based its
finding of the amount of the gross sale price of his interest
upon one-half of the stated total amount that Clayton was paying
for the property, despite the fact that Paul Newcomb was, in
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fact, receiving considerably more than that amount from Clayton
for his one-half undivided interest.
The trial court, in making a factual determination of the
gross amount that Paul Newcomb was paid for his interest in the
property, was required to consider all relevant and material
evidence which showed the terms of the transaction. By accepting
the terms of the Amended Lease Purchase Agreement and the HUD
documents, the trial court necessarily found that the terms of
the Lease Purchase Agreement did not accurately define the terms
of the sale. The Amended Lease Purchase Agreement and the HUD
application and closing statements support the trial court's
finding that $470,000 was the total gross sale price that Philip
Clayton was paying for the entire property. Thus, in order to
determine the gross sale price of Paul Newcomb's undivided
interest, the trial court had to determine the value of the other
share. In doing so, it had before it evidence that Kathryn
Newcomb received $100,000 for conveying her interest in the
marital property to Paul Newcomb and evidence that Philip Clayton
had forgiven a $150,000 loan to Paul Newcomb in order to have
Paul assign to Clayton Kathryn Newcomb's interest in the inn.
Kathryn Newcomb knew at the time that she entered into the
property settlement agreement that she would be paid $100,000 for
her interest in the marital property and the balance of $50,000
that Paul Newcomb borrowed from Clayton would be used to defray
their joint indebtedness. Thus, because Kathryn Newcomb was a
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party to the transaction, and because she knew and understood
that $100,000 of the loan was to be paid her and the $50,000
balance was to be used partially for her benefit to pay joint
debts, the trial court did not err in finding that $150,000 was
the amount of the purchase price paid for the assignment of
Kathryn Newcomb's interest in the inn and furnishings and that
$320,000 was the gross sale price paid for Paul Newcomb's
interest.
Accordingly, the evidence supports the trial court's finding
that the gross sale price paid for Paul Newcomb's undivided one-
half interest in the property was $320,000. We, therefore,
affirm the judgment of the trial court.
Affirmed.
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