Wilson v. Wilson

325 S.E.2d 668 (1985)

Jerry C. WILSON
v.
Shirley Denny WILSON.

No. 8418DC256.

Court of Appeals of North Carolina.

February 19, 1985.

Purser, Cheshire, Manning & Parker by Barbara A. Smith, Raleigh, for plaintiff-appellant.

Tuggle, Duggins, Meschan & Elrod by David F. Meschan and Henry B. Mangum, Jr., Greensboro, for defendant-appellee.

ARNOLD, Judge.

The plaintiff contends that the trial court erred in finding and concluding that plaintiff's stock in Jefferson Jazz, Inc., and his real property in Cabarrus County are marital property within the meaning of the Equitable Distribution Act. The plaintiff argues that such property was acquired after the separation of the parties, and that therefore under G.S. 50-20(b)(1), as amended in 1983, it is not "marital property."

We first deal with the legal question of the application of G.S. 50-20(b)(1) to this case. The Equitable Distribution Act went into effect on 1 October 1981. Sess.Laws 1981 c. 815 s. 7. In the original text of the statute, "marital property" was defined as:

[A]ll real and personal property acquired by either spouse during the course of the marriage and presently owned, except property determined to be separate property in accordance with subdivision (2) of this section.

G.S. 50-20(b)(1) (1981 Cum.Supp.).

Because the phrase "in the course of the marriage" was vague, see Sharp, Equitable Distribution of Property in North Carolina: A Preliminary Analysis, 61 N.C.L.R. 247, 251-52 (1983) (discussing problems in interpreting this section), the legislature amended the definition of "marital property" to read:

"Marital property" means all real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of the separation of the parties, and presently owned....

G.S. 50-20(b)(1) (1983 Cum.Supp.) (emphasis added).

The statute adding the language "and before the date of the separation of the parties" provided that the amendment should be effective 1 August 1983, and that it was applicable to actions pending in the District Court Division at that time. Sess. Laws 1983 c. 640 s. 3.

The present action commenced in July 1982 and did not reach trial until 27 September 1983. The judgment of equitable distribution was entered 4 October 1983. This case was pending on 1 August 1983, and under the terms of the 1983 legislation the amended version of the definition of "marital property" should apply to it.

Defendant argues, however, that the August 1983 amendment is unconstitutional to the extent it retrospectively excludes certain property from being marital property in actions filed before the effective date of the amendment. Defendant argues that G.S. 50-20(k), which says that "[t]he rights of the parties to an equitable distribution of marital property are a species of common ownership, the rights of the respective parties vesting at the time of the filing of the divorce action," vests in her rights to particular marital property acquired after the date of separation, which cannot be removed by subsequent statutes with retroactive effect.

We cannot agree that G.S. 50-20(k) created substantive rights in any party to particular marital property which that party argues comes within the meaning of "acquired ... during the course of the marriage." The legislature's intent in subsection k was to create a right to equitable distribution of the marital property, which had not existed up to that time, and to make that right vest at the time of filing for divorce. Subsection k did not create any vested rights in particular marital property; it created a right to the equitable distribution of that property, whatever a court should determine that property is.

Given the ambiguity in the phrase "in the course of the marriage" in the 1981 statute, the defendant had no reason to rely on the statute as establishing any particular point as the cut-off date for valuation of the marital property. The legislature clarified the meaning of the statute on 1 August 1983, well before the trial of the present case, which occurred 27 September 1983. If the plaintiff purchased the Jefferson Jazz stock and the Cabarrus County property with money earned or acquired after the separation date, they are not marital property.

We now consider the evidence before the trial judge and his classification of the parties' property. We note, however, that the source of much difficulty in this case is plaintiff's refusal to cooperate in the effort at the trial level to determine what is the parties' marital property. He failed to respond to two court-ordered discovery requests, and he failed to participate at trial. The only evidence before the trial judge was supplied by defendant.

This evidence indicated, and the trial court so found, that the parties separated on or about 1 July 1975. The evidence indicated also, and the trial judge found, that the plaintiff acquired an interest in certain real property in Cabarrus County on 30 October 1981. The trial judge concluded that this property was acquired "during the marriage of plaintiff and defendant." In that it was acquired after the parties' separation, however, the property is not marital property. This assumes, of course, that the property was not acquired through the exchange of marital funds or property.

On the basis of financial statements submitted by the defendant, the trial judge also concluded that plaintiff acquired a 50% interest in a company called Jefferson Jazz, Inc. The trial judge concluded that this interest also was marital property. The defendant's testimony shows that she did not know when plaintiff started Jefferson Jazz, but that plaintiff had been talking about the company for four years prior to trial, and that he acquired the interest prior to the parties' divorce. The plaintiff has submitted no evidence whatsoever as to when he acquired the interest in Jefferson Jazz. Yet, he argues that defendant's testimony indicates that plaintiff acquired Jefferson Jazz stock no more than four years prior to trial, in 1979, which was approximately four years after the parties' separation. We find defendant's testimony, however, inconclusive on the question of exactly when plaintiff acquired Jefferson Jazz.

The record and the trial judge's findings indicate that the trial judge concluded that the Jefferson Jazz interest was marital property because the parties acquired it prior to their divorce. Under the statute as amended, this reasoning was clearly erroneous. The trial judge should have asked whether the property was acquired before or after the parties' separation. As noted above, the evidence in the record is inconclusive on this question. The lack of information in the record concerning the origins of Jefferson Jazz is largely the result of plaintiff's refusal to respond to defendant's discovery requests and failure to appear at trial.

Because the trial judge failed to apply the amended version of the statute to the facts before him and because the evidence is insufficient to support his judgment, we remand for retrial in accordance with this opinion. If the plaintiff continues to obstruct the resolution of this case, the trial judge should utilize statutory provisions for punishing such misconduct. See G.S. 1A-1, Rule 37(b) of the Rules of Civil Procedure; G.S. 5A-11 et seq. (1981); see also Wade v. Wade, ___ N.C.App. ___, ___-, ___, 325 S.E.2d 260, 266-267 (1985).

The trial court entered an order of preliminary injunction on 2 September 1982 to restrain plaintiff from dissipating the alleged marital property until an equitable distribution of the property could be made. The Equitable Distribution Act authorizes such an order. G.S. 50-20(i). Given plaintiff's conduct, continuance of this order during retrial would not be error.

Since we have ordered a retrial, we do not deem it necessary to address plaintiff's other contentions.

Vacated and remanded.

WELLS and BECTON, JJ., concur.