Case Title: Michelson v. Michelson

Citation: 551 P.2d 638

Docket Number: 

State: new-mexico

Court: New Mexico Supreme Court

Date: 1976-06-22T00:00:00Z

Document:
551 P.2d 638 (1976) Judith M. MICHELSON, Plaintiff-Appellee and Cross-Appellant, v. Jack T. MICHELSON, Defendant-Appellant and Cross-Appellee. No. 10144. Supreme Court of New Mexico. June 22, 1976. *639 Sutin, Thayer & Browne, Irwin S. Moise, Norman S. Thayer, Albuquerque, for appellant. Botts & Cole, Gerald R. Cole, Albuquerque, for appellee. MONTOYA, Justice. This is the second appeal involving this case. In disposing of the first appeal, Michelson v. Michelson, 86 N.M. 107, 520 *640 P.2d 263 (1974), we reversed and remanded for the entry of proper findings of fact and conclusions of law relative to the distribution of the community property between the parties, the award of alimony, the award of attorney's fees, and the accrual of interest on the sums awarded. Upon remand, the trial court entered amended findings and conclusions determining the exact amount of the community interest of the plaintiff (wife) in the sum of $148,172.30, then subtracting it from $200,000 to arrive at a figure of $51,827.70, which it decreed to be lump sum alimony. It also awarded $26,000 to the wife for her attorney's fees in the trial court. The defendant (husband) appeals from this second decision after remand, contending the trial court erred in failing to conclude that the husband's interest in Sunbell Corporation (Sunbell) was separate property, and that the compensation paid to the husband by Sunbell was equal to the reasonable value of services of the husband. The husband also alleges error by the trial court in finding and concluding, without supporting evidence, that 7% of the increase of the value of the husband's interest in Sunbell was attributable to the husband's labor, industry and skill, that the wife was entitled to a community share therein, and that the amount of growth and total profits of Sunbell between certain dates was $3,246,092. The husband further alleges that the trial court committed error as to its determination, without supporting evidence, that the wife had a community interest in the residence of the parties, in concluding that it had no jurisdiction to alter the $200,000 amount awarded at the first trial to the wife as her share of the community, or as lump sum alimony. The husband, in addition, alleges error in the conclusion that the lump sum alimony award should be the difference between the trial court's determination of the value of the community property awarded to the wife and the sum of $200,000. The husband also alleges that the trial court abused its discretion in awarding lump sum alimony under the uncontradicted facts. The wife takes issue with the husband's contentions, claiming no error was committed by the trial court and cross-appeals, contending the court erred in failing to provide interest on the award from June 1, 1973. The wife also asks for review under Rule 3(b), Rules of Appellate Procedure [§ 21-12-3(b), N.M.S.A., 1953 (Repl.Vol. 4, 1975 Supp.)], in the event the court finds error in the trial court's decision and seeks additional attorney's fees for services in connection with the appeals. We will first consider the effect of the decision and amended mandate of this court made after the first appeal. This court reversed the judgment and, in its opinion, clearly stated it could not adequately review the trial court's decision because it did not allocate which portion of the $200,000 judgment awarded to the wife was community property and which portion was alimony. We did not intend to affirm the award of $200,000. We remanded the cause for the entry of appropriate findings and conclusions so that an adequate review could be made. Again, we reiterate what we stated in our previous opinion, involving the issues between the parties (86 N.M. at 111, 520 P.2d at 267): What were the basic issues of fact in dispute? Clearly they were the extent and division of the community property, the *641 award of alimony and attorney's fees. As to the award of alimony, we made it clear that an important factor in determining the amount of the award would be the amount of property distributed to the wife as her share of the community interest. We did not rule on the correctness or incorrectness of the total award of $200,000 which the trial court labeled as alimony, but which undoubtedly was intended by its decision to include the wife's interest or share of community property. Accordingly, we hold that the trial court committed error in ruling that it was bound to make the award in the same amount and apportion that figure into what it found to be community property, and what it found to be proper award of alimony. If we could not make a determination of the correctness of the trial court's decision as to the amount of alimony, or the amount of community property, it follows that the $200,000 figure was not affirmed. We now consider the other rulings as made by the trial court after remand. The parties agreed, both before the trial court and at oral argument on the second appeal, that the Rushfair property in Texas was no longer an issue in the case, and that the community under the laws of Texas was entitled to the rents, issues and profits from the separate property of the husband. It was agreed at oral argument that the community property interest was $42,977.73 received from rentals. Although it is true that the said rentals were never distributed, each of the parties herein would be entitled to an equal share of the rentals. Another contention involved in this appeal is the decision of the trial court regarding the interest of the parties in Sunbell. The findings made by the trial court pursuant to remand, which are challenged by the husband, are as follows: "8. As of January 1, 1973, the net value of the assets of the husband was approximately $496,030.00, plus the value of the parties' interest in Sunbell Corporation of approximately $1,297,796.00, plus the value of interest in Rushfair Shopping Center of approximately $99,000.00, for a total net value of $1,892,826.00. "10. Seven (7%) percent of the growth and profits of Sunbell Corporation is attributed to the labor, industry and skill of defendant. Seven (7%) percent of such growth and profits is $227,226.44. "12. The total net increase in the value of this interest in Sunbell Corporation from date of defendant's return in June, 1964, to September 30, 1972, was $1,181,296.00." The husband also contends that the trial court erred in failing to conclude on the basis of uncontradicted facts the following: "1. That all the interest of the defendant in Sunbell was separate property; and "2. That the compensation paid defendant by Sunbell was at all times equal to the reasonable value of those services to the community." The husband further contends that the trial court erred in deciding without evidence to support it that: "10. Seven (7%) percent of the growth and profits of Sunbell Corporation is attributed to the labor, industry and skill of defendant. Seven (7%) percent of such growth and profits is $227,226.44. "13. Total value of Sunbell on July 1, 1964, was $349,500.00 Total value of Sunbell on September 1, [1972], was $2,595,592. Sunbell paid no dividends during the period 1960 to 1972, but $1,000,000 was withdrawn to retire the stock of Douglas Michelson. Total growth and profits of Sunbell for the period July 1, 1964, to September 20, 1972, was $3,246,092.00." From the foregoing findings, the court then mathematically ascertained that seven percent of the growth and profits was $227,226.44 and divided it equally to arrive at the wife's community interest, which it ascertained to be $113,613.44. The husband asserts that the trial court's figures are erroneous, particularly finding No. 13 where the value of Sunbell was found to have increased from a value of $349,500 on *642 July 1, 1964, to $2,595,592 on September 20, 1972. Then, to the difference between the figures representing the growth and profits, the trial court added $1,000,000 which was "withdrawn" to retire the stock of Douglas Michelson (who was a one-third owner of the business), to arrive at a total of growth and profits for the period mentioned calculated at $3,246,092. The record reveals that $1,000,000 was borrowed by the corporation to purchase the Douglas Michelson stock. It further shows that the husband is now the owner of one-half interest in Sunbell. The husband contends that the total growth and profits have been overvalued by $1,000,000 and we are inclined to agree. But the error of the trial court's calculation is compounded by the use of the seven percent figure as the percentage of growth attributable as the husband's contribution to the total growth of Sunbell. Both parties at oral argument agreed that the seven percent figure was picked out of the blue or out of the air and, accordingly, we hold that there is no substantial evidence to support the application of such a percentage to arrive at the trial court's conclusion. The foregoing contentions, as to growth and profits of Sunbell, become academic if the court erred in holding that the interest of the husband in Sunbell was not separate property. The husband argues that the principles enunciated in Katson v. Katson, 43 N.M. 214, 89 P.2d 524 (1939), and Gillespie v. Gillespie, 84 N.M. 618, 506 P.2d 775 (1973), require a conclusion that the community had no interest in the growth and profits of Sunbell. The facts in Katson, supra, are somewhat analogous. There, the husband owned a one-half interest in a restaurant business prior to the marriage, and the husband was paid a salary. The business had two partners and a small number of employees. In the Katson case, supra, the partnership was later dissolved and a corporation formed, each of the former partners owning one-half of the stock. In reversing the trial court which awarded the divorced wife one-half of the property in the husband's name, this court stated as follows (43 N.M. at 216-217, 89 P.2d at 525-526): In Gillespie v. Gillespie, supra, we said (84 N.M. at 622-623, 506 P.2d at 779-780): "We approve the statement by de Funiak in his Principles of Community Property, Section 72, quoted with approval in Laughlin to the effect that [49 N.M. at 30, 155 P.2d at 1016]: In examining the record, we note that the husband was paid for his services to the corporation. There is no question that the husband contributed his share to the success and growth of the business for which he was paid a reasonable salary, which salary of course belonged to the community. The wife claims that the husband was not receiving the salary that his work *644 and contributions to the business demanded, but there is no proof in the record that the salary was not adequate or reasonable under the circumstances. The husband's annual salary, when he returned from college, started at $7,500 in 1964 and had been increased to $35,000 in 1972. Under the Katson decision, supra, which we have consistently followed, we have no choice but to hold that the trial court erred in concluding that the community had acquired an interest in Sunbell. The next issue before us is the husband's claims of error on the part of the trial court in concluding that there was a community lien on the home of the parties due to the use of community credit and expenditure of time and money by the parties on the said home. The pertinent findings of the trial court are as follows: Based on the above quoted findings, the trial court concluded: There is no question but that the home or residence was the separate property of the husband. In McElyea v. McElyea, 49 N.M. 322, 325, 163 P.2d 635, 637 (1945), it was held: In the instant case, there is evidence that the parties expended some $35,500 on the home after its completion. The evidence is not clear as to whether community or separate funds were used for that purpose. There is evidence that a few mortgage payments were made from community funds. The refinancing of the mortgage on the home was accomplished by a note and mortgage signed by both the husband and wife. It would appear that the community credit was pledged thereby. The parties expended considerable time and effort in making improvements. There was no attempt to trace the separate funds of the husband into the expenditure of $35,500 for the home after completion, and the trial court's conclusion that the community has a lien of $16,220 against the home will not be disturbed. See Laughlin v. Laughlin, 49 N.M. 20, 155 P.2d 1010 (1945); McElyea v. McElyea, supra. The parties agreed that if a community lien was found to exist against the home, the wife's interest would be $8,110. The findings and conclusions of the trial court, with respect to the wife's lien against the home, are supported by substantial evidence and are, therefore, affirmed. The husband also claims the trial court abused its discretion in awarding *645 lump sum alimony under the uncontradicted facts. In the previous appeal, we said adequate review of the lump sum award of $200,000 as alimony was not possible, because obviously it was intended to include the wife's share of the community property. Upon remand, the trial court allocated $148,172.30 as the wife's share of the community property and $51,827.70 as a single sum alimony award and in lieu of support. Since, in this opinion, we have reduced the amount of the wife's share in the community property and have stated that we did not affirm the $200,000 award previously made, we feel that we cannot properly decide the question of what would be a proper award. That is a matter which the trial court, in its discretion, can determine. In our previous opinion in the instant case, we listed some of the important factors to be considered in fixing the amount. Some consideration should be given to the impending remarriage of the wife, bearing in mind that alimony is intended as a method of fulfilling the husband's obligation to provide the support needed by the wife in accordance with the husband's ability to pay. We can only leave the matter to the trial court's wise discretion. The last contention raised concerns the trial court's award of attorney's fees. The original award, after the first trial, was $25,000. Upon remand the trial court awarded an additional $1,000 for a total of $26,000, which the husband was ordered to pay. The pertinent finding covering this issue made by the trial court is as follows: The trial court also made the following conclusions of law: The proper rule or standard to be applied in reviewing awards for attorney's fees was stated in Elsea v. Broome Furniture Co., 47 N.M. 356, 376, 143 P.2d 572, 584 (1943), as follows: Accordingly, in view of the findings and our inclination not to interfere with the exercise of discretion, absent a clear showing of abuse thereof, we affirm the ruling of the trial court on its award of attorney's fees. The wife seeks an award of attorney's fees for services of her attorneys on this and the previous appeal, and some award should be allowed. Attorney's fees in the amount of $3,000 are hereby fixed and allowed for and on account of this and the previous appeal. Accordingly, the cause is reversed in part and remanded to the trial court for entry of its decision and judgment in conformity with the views herein expressed. IT IS SO ORDERED. McMANUS and STEPHENSON, JJ., concur.