Georgeanne M. Hofer v. James Patrick Hofer

IN THE COURT OF APPEALS OF TENNESSEE
WESTERN SECTION AT JACKSON
______________________________________________________________________________
GEORGEANNE M. HOFER Shelby Chancery No. 23216-1
C.A. No. 02A01-9510-CH-00210
Plaintiff,
v.
Hon. Neal Small
FILED
Feb. 3, 1997
JAMES PATRICK HOFER
Cecil Crowson, Jr.
Defendant. Appellate Court Clerk
DAVID E. CAYWOOD and DARRELL D. BLANTON, Memphis, Attorneys for Plaintiff.
ROSCOE A. FEILD, JR., Memphis, Attorney for Defendant.
AFFIRMED
Opinion filed:
______________________________________________________________________________
TOMLIN, Sr. J.
Georgeanne M. Hofer (“Wife”) filed suit for divorce in the Chancery Court of
Shelby County against James P. Hofer (“Husband”) seeking a divorce, division of
marital property and alimony. Following a bench trial the chancellor awarded Wife a
divorce on the ground of inappropriate marital conduct. In addition, he awarded W ife
rehabilitative alimony for three years, ordered Husband to pay a portion of Wife’s fees
and expenses as alimony in solido and divided the m arital property between the parties.
Both Husband and Wife have appealed. Husband has set forth some seven
issues for our consideration. They are as follows:
I. Whether the trial court erred in finding two investment accounts owned
by the Husband prior to the marriage, were marital property when the
Husband exclusively controlled the accounts and the only deposits to the
accounts were proceeds from his other separately owned properties also
held by the Husband prior to the marriage.
II. In the alternative, even if the trial court correctly determined the
accounts to be m arital property, w hether the trial court erred in failing to
subtract the original values in the accounts and the deposit from the
Huckleberry sale before dividing the remainder as marital property.
III. In the alternative, whether the trial court’s division of the investment
accounts was erroneous even if the court correctly determined the
accounts to be marital property.
IV. The trial court erred in holding that proceeds from the sale of
property ow ned by Husband prior to m arriage became marital property
when the proceeds were placed in an investment account titled to and
controlled only by the husband.
V. W hether the trial court erred in failing to apply the law of contracts to
a reconciliation agreement and determined that the property owned by
Husband prior to the marriage was marital property when both parties
testified that an reconciliation agreement had been entered into by the
parties in which Wife agreed to stop smoking marijuana in exchange for
Husband adding Wife’s name to his house and both parties testified that
Wife did not stop smoking marijuana after H usband added W ife’s name to
his property.
VI. W hether trial court erred in aw arding rehabilitative alimony to Wife
when m arriage had been of relatively short duration; W ife had previously
removed more than $10,000.00 in cash from joint accounts and removed
most of the family furniture when the parties separated; and at the time of
the divorce, Wife was gainfully employed in same profession as she had
been at the time of the marriages and was living on her lover’s property.
VII. W hether an award of attorney fees was appropriate when Wife
received substantial pendente lite support during the separation and was
gainfully employed in her profession and living on her lover’s property at
the time of the divorce.
Wife has presented two issues for our consideration: W hether the trial court
erred by finding that (1)Husband’s business was entirely the separate property of
Husband and by not finding that the increase in value during marriage was marital
property; and (2)the automobiles of Husband were his sole and separate property not
withstanding his admission that the majority of same were marital property. For the
reasons hereinafter stated, we find no error and affirm.
The basic facts are undisputed. The parties were married in 1987 and separated
in September 1993. No children were born of the marriage. At the time of the
marriage Wife was 29 and H usband was 41. Husband worked at Piling and Repair
Corporation (“P and R”), which was a family-owned business that Husband had
purchased from his parents prior to the marriage. Wife held several jobs during the
marriage, including working for Husband at P & R.
Prior to the marriage Husband had purchased a house in Memphis located at
1705 Autumn A venue, (hereafter the “Autumn” property). Husband took title to the
house in his own name. In 1989, subsequent to the marriage, Husband transferred
ownership of the house to the parties jointly. At about this time the parties had
2
experienced marital difficulties, to the extent that W ife had filed for divorce. While
there is a dispute as to the exact nature of what transpired, Husband agreed to and did
transfer title of the house into both their names. As we shall see, the circumstances
surrounding this transaction make up one of the issues on appeal.
Prior to Husband marrying Wife in the case before us, Husband and his former
wife had purchased a hom e in M emphis on Huckleberry Street (“Huckleberry”).
Pursuant to the terms of the divorce decree entered in this former marriage, the
Huckleberry property was sold. This took place during the m arriage of Husband to
Wife. The funds from the sale of the Huckleberry property were paid over to Husband
in February 1994, shortly after separation of Husband and Wife. The ramifications of
this transaction will be examined further in this opinion.
On appeal our scope of review is de novo upon the record in the trial court. All
findings of fact made by that court come to this court accompanied by the presumption
of correctness, and, absent an error of law, unless we find that the evidence
preponderates against these findings, we must affirm. T.R.A.P. 13(d).
I. The Classification and Distribution of the Marital Property.
For the sake of convenience and judicial economy, inasmuch as the first four
issues on appeal presented by Husband and the two issues presented on appeal by W ife
deal w ith the classification and division of the parties’ marital property, w e will
consolidate them into one major issue and treat each part separately.
This state is a dual property state, distinguishing betw een m arital and separate
property. Barnhill v. Barnhill, 826 S.W.2d 443, 456 (Tenn. App. 1991). T.C.A. § 36-4-
121(a) provides only for the division of marital property, thus it is incumbent upon the
trial court to first classify the property of the parties. McClellan v. McClellan, 873 S.W.2d
350 (Tenn. App. 1993)(Citing Batson v. Batson, 769 S.W.2d 849, 856 (Tenn. App.
1988)).
In the context of this case the parties’ property is either “marital” or “separate.”
3
“Separate property” is defined in T.C.A. § 36-4-121(b)(2)(A-D) as follows:
(2) “Separate property” means:
(A) All real and personal property ow ned by a spouse before
the marriage;
(B) Property acquired in exchange for property acquired
before the marriage;
(C) Income from and appreciation of property owned by
spouse before marriage except when characterized as marital property under subd
(D) Property acquired by a spouse at any time by gift,
bequest, devise or descent.
We begin our consideration of this issue by addressing the first two sub-issues,
dealing with the classification by the court of two investment accounts owned by
Husband as marital property rather than as separate property. Husband contends that as
he owned these accounts prior to marrying Wife, they constitute separate property.
One we shall identify as the A.G. Edw ards account and the other as the Hilliard
Lyons account. At the time of the marriage the A.G. Edwards account had a balance of
$56,801.52. By the same token, the Hilliard Lyons account had a balance of
$39,800.00.
During the course of the marriage, Husband deposited in excess of $209,000.00
into the Edw ards’ account. These deposits cam e from his income earned in his
employment at P and R. During the same period, he withdrew $183,000.00 from the
A.G. Edwards account. This income earned by Husband as a direct result of his own
efforts constituted m arital property as it was acquired during the m arriage, pursuant to
T.C.A. § 36-4-121(b)(1)(A). Once Husband commingled these m arital assets with his
separate assets, the entire account became a marital asset in our opinion. Furthermore,
during the marriage Husband withdrew funds previously deposited from these accounts,
with these w ithdraw als being used for the benefit of both parties. There is nothing in
the record to show that Husband treated any of the funds in these accounts as though he
considered them to be separate.
In Pope v. Pope, 1988 WL 74615 (Tenn. App. 1988), the middle section of this
court dealt with issues similar to those before us. In affirming the trial court’s
4
judgment that certain property owned by Husband prior to the marriage had become
marital property as a result of comm ingling and/or transmutation, the court stated:
[t]wo related doctrines of community property have made their
appearance in the marital property cases. The first of these is
comm ingling, according to which separate property becomes marital
property if inextricably mingled with marital property or with the separate
property of the other spouse. If the separate property continues to be
segregated or can be traced into its product, com mingling does not occur.
The second doctrine is that of transm utation. This occurs when separate
property is treated in such a w ay as to give evidence of an intention that it
become marital property. O ne m ethod of causing transm utation 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 nam es of both
spouses. The rationale underlying both of these doctrines is that dealing
with property in these ways creates a rebuttable presum ption of a gift to
the m arital estate. This presum ption is based also upon the provision in
many m arital property statutes that property acquired during the marriage
is presumed m arital. The presumption can be rebutted by evidence of
circumstances or communications clearly indicating an intent that the
property remain separate.
Quoting H.Clark, The Law of Domestic Relations § 16.2 (2d ed. 1987). See also Sturgis v.
Sturgis, 663 S.W.2d 375, 379 (Mo.App.1983)
The chancellor found that the A.G. Edwards account was marital property and
divided it 50/50 between the parties. The court also found that the Hilliard Lyons
account was marital property, but divided it 60% to Husband and 40% to W ife. At the
time of the divorce, the balance of the A .G. Edwards account was approximately
$85,000.00 and the Hilliard Lyons account some $136,000.00. It is clear from the
record that there was extensive commingling of funds by Husband during the course of
the marriage and that funds were withdrawn from these accounts to be used for the
benefit of the parties. This issue is accordingly without merit.
Next, Husband contends that even if the trial court was correct in treating these
two investment accounts as marital property, nonetheless the court erred in treating the
proceeds from the sale of what is known as the Huckleberry property as a marital asset,
and not treating it as Husband’s sole and separate property. The facts surrounding
Huckleberry are these: Husband had been married and divorced prior to m arrying Wife.
The divorce decree in Husband’s former marriage had certain provisions pertaining to
the disposition of what was the marital residence in that marriage. After the marriage
5
of Husband and Wife, the parties lived in the Huckleberry property for a short time.
Circumstances developed relative to the prior divorce that called for a sale of the
Huckleberry property, with Husband and his former wife dividing the proceeds equally.
This was done. Half the proceeds were paid to Husband, who deposited these funds in
the H illiard-Lyons account.
At this time, although Husband and Wife were separated, they were still “man
and wife.” Husband’s contention here is that inasmuch as the parties were separated
pending a hearing and divorce, that marital rights had terminated as of the date of
separation. This is not the law as we know it. When Husband deposited these proceeds
in an investment account which had been utilized for all intent and purposes by the
parties during their marriage for the depositing of income earned by Husband and for
the funding of expenses and other activities of the parties, the Huckleberry proceeds
becom e marital property by virtue of this commingling, and the chancellor so found. In
our opinion the evidence does not preponderate against this finding and thus we hold
that this issue is without m erit.
Husband contends in the alternative that even if the trial court correctly
determined that the two investment accounts were marital property, nonetheless the
court erred in its manner of dividing these two accounts as part of the overall division
of the marital property to the parties. The record reflects that the A.G. Edwards
account was divided equally and the Hilliard Lyons account was awarded 60% to
Husband and 40% to W ife.
Our statutes provide that in divorce cases the court shall equitably divide the
marital property of the parties. T.C.A. § 36-4-121(a)(1991). An equitable division
how ever is not necessarily an equal one. Barnhill v. Barnhill, 826 S.W.2d 443, 456
(Tenn. App. 1991). In that regard this court in Barnhill stated:
Trial courts are afforded wide discretion in dividing the interests of parties
in jointly owned property. Accordingly, the trial court’s distribution will
be given great weight on appeal, and will be presumed to be correct unless
we find the preponderance of the evidence is otherwise.
6
Id. At 449.
The appellate courts are generally disinclined to disturb a trial court’s division of
marital property unless the distribution lacks proper evidentiary support or results from
an error of law or a misapplication of the statutory requirem ents and procedures.
Thompson v. Thompson, 797 S.W .2d 599, 604 (Tenn. App. 1990).
In stating his case, Husband relies in good measure on Batson v. Batson, 769
S.W.2d 849, 858 (Tenn. App. 1988), contending that inasmuch as this was a marriage
of short duration the marital property should not have been divided equally and the
parties should have been restored to their pre-marriage financial condition. In our
opinion, Batson is distinguishable for at least two reasons. First, the majority of the
marital estate in Batson consisted of an increase in the value of H usband’s separate
property during the course of the marriage. Secondly, Batson did not involve the issues
of transm utation or commingling.
In this case the record reflects that Husband has a much greater earning capacity
and ability to accumulate assets in the future. Furthermore, Wife was shown to have
made some contribution to the marriage, which included general homemaking duties
such as cooking, cleaning, and caring for two step-children as well as taking part in
various activities with Husband. Husband paid tribute to her, stating that she was “the
CEO of a major household.” In our opinion the evidence does not preponderate against
the trial court’s findings in this regard. This issue is accordingly without merit.
In regard to the distribution of marital property by the trial court, Wife contends,
that the trial court erred in finding that Husband’s business, P and R, was entirely his
separate property and, in failing to find that the increase in value of the business during
the marriage was marital property, thus subject to equitable division. The first aspect of
this issue is a non-issue inasm uch as W ife concedes in her brief and there is nothing to
the contrary that the business, P and R, was owned solely by Husband. The only issue
we have to consider is whether or not the increase in value of the business during the
marriage, determined to be $45,010.00, would be subject to a marital division if the
7
record would reflect that Wife had substantially contributed to the increase in value
pursuant to T.C.A. § 36-4-121(c)(5). After review ing the record in this regard, we are
of the opinion that the evidence does not preponderate against the trial court’s finding.
This issue is w ithout m erit.
Finally, Wife complains that the chancellor erred in finding that the collection of
Austin-Healey autom obiles was Husband’s separate property although in Husband’s
Local Rule 15 Affidavit or Proposal of Settlement, Husband stated that they were
marital property. We find this to be a non-issue, for the final decree of the chancellor
did not as W ife contends, find these automobiles to Husband’s separate property, but to
the contrary awarded them to Husband as a further division of marital property.
Furthermore, in the division of marital property, we note that the chancellor awarded
the 1988 Celica to Wife. This issue is resolved in favor of Husband.
II. The Alleged Reconciliation Agreement.
By way of background, the parties marital residence, known as the “Autumn
property” w as found by the chancellor to be marital property. H e awarded 50% to
Husband and 50% to W ife. Husband contends that under the circumstances then and
there existing at the tim e W ife’s name was put on the title, the entire interest in this
property should have been awarded to him .
The record reflects that the Autum n property w as purchased by Husband prior to
the marriage. Title was taken in his name alone. In 1989, Husband had Wife’s name
added to the title. Husband contends that his w illingness to convey one half interest in
this property to Wife was because of a “reconciliation agreement” entered into between
the parties during their marriage. He further contends that Wife subsequently breached
this agreement and that under contract law as a result of this breach he should be
awarded outright title to this property. The nature of the “breach” that Husband
contends took place was Wife promising, prior to the conveyance, to stop smoking
marijuana and her subsequent failure to stop. Here follows Husband’s testimony about
the circumstances surrounding the transfer of title to the Autumn property:
8
Q: (by opposing counsel) And the house stayed in your name until August
of 19 and 89?
A: (by defendant) That’s correct.
Q: And then what happened then?
A: Well, when Georgeanne wanted something, she would deny me, even
speaking to me, let alone sex, and she wanted that house in her name
badly, and she went six weeks without, here again, even speaking to me,
and she knew I was going to buy that W est Range [W est Raines] property.
So, here again, just to try to bring some peace back in that house, I finally
relented and put a quitclaim deed when I signed the paper on the W est
Range [West Raines] property.
On the other hand, W ife’s version of this real estate transaction is as follows:
Q: (by opposing counsel) Tell me what you told him or tell me what you
told him why he must transfer the title of that house to you in ‘89,
whenever it was transferred.
A: (by M rs. Hofer) I wasn’t treated as a wife and I would like this
marriage to work, and I wasn’t a joint at that point on any accounts except
for the marital joint account, and I didn’t think that was fair. I took care
of him. I took care of his children. I would drop the charges [of divorce]
if he would learn to m ake this a com plete marriage and control his temper,
watch his drinking, start counseling, we’d go together, and to make joint
on the house and to ease up on m e a little bit.
Q: Did you offer to stop smoking marijuana at this point?
A: Yes, I did.
Q: But you didn’t?
A: No, sir.
Q: Okay, now, he did not know, though, you had been to an attorney and
had not--you had filed for divorce, but you told him that you would drop
the charges, but he didn’t know it. How did that happen?
A: I told him I had filed for divorce.
Q: Okay, that’s when you told him that if he would transfer the house to
you, you w ould drop the divorce. Is that right?
A: I told him after I had filed for divorce. I told him about filing for
divorce.
Neither Husband nor Wife testified about entering into any kind of “reconciliation
agreement,” as now claimed by Husband. Rather, Husband testified in essence that
this transaction took place in an attem pt by him to norm alize their strained relationship.
9
The evidence does not preponderate against the chancellor’s finding. W e hold that this
issue is w ithout m erit.
III. The Issue of Rehabilitative Alimony.
Husband contends that the chancellor erred in awarding Wife rehabilitative
alimony in the am ount of $800.00 per month for thirty-six months. Trial courts are
given w ide discretion in aw arding alim ony. Houghland v. Houghland, 844 S.W.2d 619(Tenn. App. 1992). The appellate courts should defer to a trial court’s award of
alim ony unless the evidence in that court preponderates against it. Luna v. Luna, 718
S.W.2d 673 (Tenn. App. 1986). Need of the innocent spouse and the ability to pay of
the obligor spouse are two of the most important factors in determ ining the appropriate
amount of alimony. Barnhill v. Barnhill, 826 S.W.2d 443, 455 (Tenn. App. 1991). Fault
is also another substantive factor in determining an alim ony award. Duncan v. Duncan,
668 S.W .2d 568 (Tenn. A pp. 1984).
The record reflects that Husband maintained a satisfactory income stream from
which he could afford to pay rehabilitative alimony in the sum awarded. In addition,
Wife’s expenses greatly exceed her average monthly net incom e. To counter this
Husband contends that the fact that Wife withdrew $10,000.00 from the parties’ joint
savings account and the relatively short nature of the marriage should preclude an
alim ony award.
Prior to making this award, the chancellor noted that there was plenty of fault on
both sides, observing that the record reflected that Husband had on occasion beaten his
wife and on another occasion forced her to find refuge with her mother while wearing
nothing but her night clothes. He also noted that Husband drank excessively. In
addition to the withdrawing of funds as hereinabove noted, Wife smoked marijuana on
a regular basis, and after separation from Husband and prior to the divorce she “had
been living almost openly with another m an.” Nonetheless, the court saw fit to award
the divorce to Wife on the grounds of inappropriate marital conduct. There has been no
appeal taken from the awarding of the divorce to Wife on these grounds. We note that
10
this finding by the court comes to us with a presumption of correctness and we cannot
say that the evidence preponderates against it. W e resolve this issue in favor of W ife.
IV. Alimony In Solido
The court below awarded W ife attorney fees in the amount of $15,000.00, plus
$1,196.00 in expenses. The award of attorney fees in a case such as this is considered
an alimony in solido award. Gilliam v. Gilliam, 776 S.W.2d 81 (Tenn. App. 1988). On
appeal the appellate courts will not interfere with the trial court’s decision to award
attorney fees except where there is a clear showing that the court reached the wrong
conclusion, with the result that manifest injustice would be done if the award was
allow ed to stand. Hanover v. Hanover, 775 S.W.2d 612, 618 (Tenn. App. 1989). The
affidavit filed in support of Wife’s claims for attorney fees demonstrates the substantial
effort that had to be expended on behalf of Wife because of the litigious conduct of
Husband. A contempt petition had to be filed because Husband failed to comply with a
court order relative to temporary support. A Motion to Compel was filed due to
Husband’s failure to properly respond to discovery requests. W ife found it necessary to
defend a Motion to Quash, which was denied. Wife’s discovery deposition lasted two,
full eight-hour days, nearly as long as the trial itself. Under these circumstances, we
are of the opinion that the trial court did not abuse its discretion in awarding the
attorney fees and costs com plained of.
The judgment of the trial court is affirmed in all respects. Costs in this cause on
appeal are taxed to Husband, for which execution m ay issue if necessary.
_________________________________________
TOMLIN, Sr. J.
_________________________________________
CRAWFORD, P. J. (CONCURS)
_________________________________________
11
FARMER, J. (CONCURS)
12