Richard Pallmer Jahn, Jr. v. Sheryl June Jahn

IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE
FILED
February 4, 2000
E1999-01098-COA-R3-CV
RICH ARD PAL LME R JAH N, JR., Cecil Crowson, Jr.
) C/A NO. 03A01-9903-CH-00097Court Clerk
Appellate
)
Plaintiff-A ppellant, ) HAMILTON CHANCERY
)
vs. ) HON. DOUGLAS A. MEYER,
) SITTING BY INTERCHANGE
SHERYL JUNE JAHN, )
) AFFIRMED AND
Defendant-Appellee. ) REMANDED
J. W. DIE TZEN , DIETZ EN & ATC HLEY , Chattano oga, for P laintiff-Ap pellant.
E. BLAKE M OORE, SPEAR S, MOORE, REB MAN & WILLIAMS, Chattanooga,
for Defendant-Appellee.
O P I N IO N
Franks, J.
This is a third appeal in this divorce action which was filed more than
six years a go betw een pla intiff (“h usban d”) and defen dant (“w ife”).
The pertinent facts from the previous appeals are that from the first
appeal, this Court mandated that the Trial Court identify the marital assets of the
parties, establish the value of those assets, and equitably divide the same. The Trial
Court w as further d irected to valu e the husb and’s law practice at $1 80,065.00 , and to
catego rize the la w prac tice as a m arital asse t. Jahn v. Jahn, 932 S.W.2d 939 (Tenn.
Ct. App. 1996).
An Order was subsequently entered by the Trial Court on July 29, 1997,
which did identify and value the parties’ marital assets, and divided the same. The
Order expressly recites that the Court’s intent was to divide the marital property 55%
to the husband and 45% to the wife. However, if the stated values are added and
percentag es figured based up on wha t each party w as award ed, husban d actually
receive d 62% of the m arital esta te and th e wife receive d 38% .
The wife’s attorney attempted to file an appeal from the July 1997
Order, but the Notice of Appeal was not timely filed, and the appeal was dismissed.
On August 27, 1998, the wife’s attorney filed a Motion for Relief from
Judgment of Order in the trial court, pursuant to Tenn. R. Civ. P. 60.02 due to the
“mistake, inadvertence, and/or excusable neglect by the trial court in the calculation of
assets which the Court awarded to the Defendant in this action.” Subsequently, the
Trial Court hearing the matter, acknowledged that he had made an error in his addition
of the asse ts awarde d to husba nd, such th at an addition al payment fro m the hus band to
the wife was necessary in order to effectuate the court’s intended 55/45 split. The
Trial Judge thus vacated the prior Order, and entered an Order on March 1, 1999,
which corrected the mathematical error contained in the previous order by awarding
an additional $31,646 .19 to the wife. This app eal resulted from the Trial C ourt’s
action.
The wife’s motion sought correction of the July 29, 1997 Order pursuant
to Tenn. R. Civ. P. 60.02. The Trial Court, however, stated at the motion hearing that
pursuant to Tenn. R. Civ. P. 60.01, he could, at any time and on his own initiative
correct a mathematical error such as the one under consideration. The Order entered
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to vacate the July Order does not specifically cite Rule 60.01 as the basis for relief, but
it is clear from the transcript of the hearing that this subsection of the rule was relied
upon b y the judg e to justif y changi ng his p revious order.
The hus band con tends that the wife’s R ule 60 mo tion was im properly
granted, but Rule 60.01 plainly provides that “clerical mistakes in judgments” or
“errors therein arising from ov ersight” can be corrected a t any time and on the court’s
own initiative. The July Order showed on its face that it contained a mathematical
error, and as such, the Trial Court did not err in correcting the same.
The husband further argues that the Trial Court’s error was not clerical
error, but it is apparent from the transcript that the Court was referring to clerical error
as in an error m ade by th e clerk, a s oppo sed to a n error m ade by th e Judg e himse lf.
The C ourt qu oted fro m Ru le 60.01 and ass erted tha t this wa s the ba sis for h is ruling .
The cases interpreting Tenn. R. Civ. P. 60.01 instruct that the term “clerical mistake”
does not just apply to the actions of a court clerk. In the case of Zeitlin v. Zeitlin, 544
S.W.2d 103, 108 (Tenn. Ct. App. 1976), this Court interpreted the term “clerical
mistake” contained in Rule 60.01 as “mechanical errors of computation or copying by
any person, Clerk or otherwise.” The Trial Court’s correction falls within the stated
definitio n. Accord, Pennington v. Pennington, 592 S.W.2d 576 (Tenn. Ct. App.
1979).
The wife argues that it was improper for the Trial Court to allow the
parties to appea l the July O rder “as modif ied by the Order entered Marc h 1, 199 9".
The M arch Ord er recites, how ever, is that “[t]h e final orde r entered Ju ly 29, 1997 is
hereby vacated, and this order shall constitute a modification and re-entry of said final
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order. The parties are allowed thirty (30) days from the date of the entry of this order
to file an appropriate notice of appeal.” Accordingly, the March Order, as with any
other order , entitled the pa rties to appea l the substan ce of the M arch Ord er timely
perfec ted.
The issue thus becomes whether the division of marital property was
equitable. T.C.A. § 36-4-121(c) provides that certain factors must be considered when
distributing the marital estate, p ursuant to d ivorce, and the law is w ell settled that a
proper ty distributio n does not hav e to be m athem atically equ al to be e quitable . Ellis v.
Ellis, 748 S.W.2d 42 4 (Tenn. 1988.)
Our review of a trial court’s property valuation/distribution is de novo
with a pres umption o f correctne ss, unless the p reponde rance of th e evidenc e is
otherw ise. Tenn. R. App. P. 13(d); Mondelli v. Howard, 780 S.W .2d 769 (T enn. Ct.
App. 1 989).
This Court has already addressed certain property valuation and
distribution issues in Jahn v. Jahn, 932 S.W .2d 939 (T enn. Ct. A pp. 1996 ). This
Court specifically found in that appeal that the husband’s law practice is a marital
asset and was properly valued at $180,065.00, which holding is the law of the case on
this issue on this appeal. In that appeal, this Court also stated that the wife had made
substantial contributions as a wage-earner, wife and mother, and that the husband had
made a contribution o f separate property to the marital estate and tha t these factors
should be con sidered by the Tr ial Cou rt in equ itably divid ing the p roperty. Id. at 944-
945. This C ourt specific ally ruled, how ever, that the h usband w ould not b e able to
offset the value of his interest in the law firm assets at the time of the marriage against
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the valu e of the same a t the time of the d ivorce. Id. at 944.
The husband argues that wife should have an additional 5% deducted
from her share of th e marital estate due to her u nclean ha nds, becau se she attem pted to
hide marital funds by placing them into a bank account which she held jointly with her
boyfriend, and then tried to cover up this fact in court. We have been cited to no
reported cases where the unclean hands of a party affected the ultimate division of
marital property. The statute which deals with property division pursuant to divorce
expres sly provid es that f ault is no t to be co nsidere d whe n divid ing ma rital asset s. See
Tenn. Code Ann. §36-4-12 1(a)(1).
The Trial Court did consider the wife’s actions as far as weighing her
credibility, by assessing her with the value of that account as well as other cash which
she did not account for. The total attributed to this account and other monies not
accounted for was some $35,000.00 which was awarded to the wife as a part of her
equitable sh are of the m arital estate. Alth ough ther e was no proof that s he actually
had these funds at the time of the divorce, the Trial Court felt that she had control of
the funds and shou ld be assess ed with the ir value. W e hold that n o action by this
Court is warranted regarding these assets, and that the Trial Court made a proper
allocation.
Next, the husband argues that the Trial Court erred in not considering
the tax consequences applicable to the Court’s award to the husband of his law
practice. The husband asserts that, because $165,000.00 of the value of the practice
was for accounts receivable, and because the husband is in the 28% tax bracket for
incom e tax, a re duction of $46 ,000.00 in the va lue of th e law p ractice w as war ranted.
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He relies on Tenn. Code Ann. §36-4-121(c)(9) which mandates that tax consequences
must be considered in a property division.
Husband raised this issue before the Trial Judge, but the Trial Judge
held that he was constrained by this Court’s ruling in Jahn v. Jahn, 932 S.W.2d 939,
that he must consider the full value of the law practice at $180,065.00. The husband
also argued to the Trial Court that after tax values should be used not only for the law
practice , but also for hu sband ’s IRA , wife’s IRA, a nd the w ife’s bu siness in terest.
The Judge ruled that the tax issue was a wash, because both parties were in the same
tax bracket, and the Judge elected to use all pre-tax values in dividing the marital
assets.
While tax consequ ences are to be consid ered as a rele vant facto r in
making an equ itable division of marital property, we con clude that the Trial Court
took this into account. (By concluding that the taxes would equal out, he simply used
pre-tax values on all assets.) There is no proof that the parties were in different tax
brackets, or that either party was significantly disadvantag ed by the Trial Court’s
ruling. The evidence does not p reponde rate against th e Trial Judg e’s ruling on this
issue. T.R.A.P. Rule 1 3(d).
The hus band fur ther argues that his incom e tax debt f or 1994 sh ould
have been divide d between the p arties instead of being assessed solely to him. It
appears the parties filed separately for that year, and each party made estimated
payments throughout the year. The wife ultimately overpaid her taxes by $5000.00,
and the overpa yment w as awa rded to her as p art of he r divisio n of the marital e state.
The husband had not paid enough in estimated taxes for 1994, so that he still owed
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$13,14 4.00 at th e time o f the ori ginal div orce he aring.
Our case law instructs that trial courts should divide marital debts, and
defines marital debts as those incurred during the marriage for the joint benefit of the
parties, o r those d irectly trace able to th e acqu isition of marital p roperty. Mondelli v.
Howard, 780 S.W .2d 769 (T enn. Ct. A pp. 1989 ). Further, trial cou rts should
apportion debt equitably as they would marital assets, and when practicable, debt
should follow the asse t it is related to. Id.The Mond elli court further explained that courts should consider the
following factors when dividing marital debt: (1) which party incurred the debt and
the debt’s purpose, (2) which party benefitted from incurring the debt, and (3) which
party is be st able to assum e and re pay the d ebt. Id.In this case, the tax debt was a marital debt, just as the wife’ tax
overpayme nt was a m arital asset, beca use it related to f unds that w ere earned and paid
during the m arriage. Bo th parties ben efitted from the husba nd’s salary just as b oth
parties benefitted from the wife’s salary. Thus, the issue becomes which party is best
able to assume and repay the debt. In this case, as the Trial Court found, the husband
is, since he received a larger share of the marital estate than the wife. Since the parties
were paying their incom e taxes sepa rately, the Court’s ruling on this issue is
appropriate under the circumstances.
Finally, the husband argues that the Trial Court erred in not weighing
the husband’s monetary contributions to the marriage more heavily, because, at the
time of the parties’ marriage, husband owned a law practice which he testified was
worth $218,000.00, and he had a house with an equity valued at $24,500.00. In Jahn
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932 S.W.2d 945, f.n.4, it was observed:
To the extent Husband contributed the proceeds from the
liquidation of these assets to the marriage, his interest at the time
of the ma rriage can b e considere d as a “con tribution” by him
when the court makes an equitable division of the now-existing
marital e state. See T.C.A. § 36-4-1 21(c)(5).
Clearly, this Court held that the husband was not entitled to a dollar-for-dollar offset
of the v alue of those a ssets ag ainst the marital e state. Id. at 944. Rather, it was
appropriate under the statute to consider the husband’s monetary contribution of these
assets as one of the many contributions a party can make, along with contributions as a
wage earner, h omem aker, pa rent, etc. See Tenn . Code Ann. § 36-4-1 21(c)(5 ).
In this case, the Trial Court considered the contribution that the husband
had brought into the marriage, and awarded him 10% more of the marital assets than
he awarded wife, which amounted to approximately $58,000.00. The Court followed
the reasoning of Brock v. Brock, 941 S.W .2d 896 (T enn. Ct. A pp. 1996 ), where this
Court held that an unequal division was appropriate because the husband had
accumulated a substantial amount of property prior to the marriage which he
contributed to the marital estate, and which was “seed” wealth for the large marital
estate w hich ha d to be d ivided.
Hus band ins ists th at a d iffe rent resu lt is m andated by Batson v. Batson,
769 S .W.2d 849 (T enn. C t. App. 1 988). Batson does not m andate a d ifferent resu lt,
contrar y to the hu sband ’s conte ntion. Batson dealt with a marriage of only five years
where the husband came into the marriage with more than ten times the property that
his wife had, and the wife did not w ork at all during the marriage, at hu sband’s
request. In Batson, this Court he ld:
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When relatively short marriages a re involved, each spou se’s
contribution s to the accu mulation o f assets durin g the marria ge is
an important factor. When a marriage is short, the significance
and value of a spou se’s non-m onetary contrib utions is
diminished, and claims b y one spouse to another sp ouse’s
separate pro perty are minim al at best.
Batson at 859.
In this case, the marriage lasted for ten years, which is a relatively short
period, so it was proper for the court to consider each spouse’s contributions to the
accumulation of assets, as Batson instructs. Both parties made contributions as wage
earners, earning substantial wages during the marriage, as well as contributions as
homem aker and p arent. Hus band ma de a signific ant initial contrib ution of pro perty to
the marriage, and the Trial Court properly considered the same in awarding husband a
larger share of the marital estate. The evidence does not preponderate against the
Trial Court’s division of property, and we affirm.
The judgment of the Trial Court is affirmed and the cause remanded
with the co st of the app eal assessed to the appe llant.
__________________________
Herschel P. Franks, J.
CONCUR:
___________________________
Houston M. Godd ard, P.J.
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___________________________
D. Michael Swiney, J.
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