I N THECOUR TOFAPPEALSOFTENNES SEE EA STER N SEC TI O N

PAULA R

UTH SHEFFI ELD HAR TM AN ) HAM

I LTON C

OUNTY ) 03A 01- 9608- C

V - 00249 Pl a i ntif f

- A

pp e lle e )

) ) v. ) HON. SAM UELH. PAYNE, ) J UDGE ) M ELVI N THOM

ASHAR TM AN, J R. )

) VAC ATED I N PAR

T D e f e nda nt - A

ppe l l a nt ) a nd R EM A N D ED

BAR R Y L. GOLD OFC

HATTANOOGA FOR

APPELLANT C HAR LESD. PATY OFC

HATTANOOGA FOR

APPELLEE

O PI N I O N

G odda r d, P. J .

M e l vi n Thom

a s H a r t m a n, J r . , a ppe a l s a di vor c e j udgm e nt r e nde r e d by t he C i r c ui t C

our t f or H

a m i l t on C

ount y. O

n a ppe a l he i n s i s t s th a t the Tr i a l C our t e r r e dinits a w a r do f c e r t a i n j e w e l r yt ohi s w

i f e , Pa ul a R

ut hShe f f i e l dH

a r t m a n , as s e p a r a t e pr ope r t y w

hi c h w a s i n f a c t m

a r i t a l pr ope r t y. M r . H a r t m a n a l s o i n s i s t s th a t the Tr i a l C our t m a de a nine quita b l e di vi s i o no f the m a r i t a l es t a t e s i n ce t he Tr i a l C our t r e f u s e dt oco n s i de r t he t a x1 M r . H a r t m a n f i l e d a m

o t i on f o r r e f e r e n c e t o a Spec i a l M a s t e r due t o t h e “co m

p l e x v a l u a t i o n an d cat e g o r i zat i o n i s s u es. ” 2 c o n s e qu e nces o f aw a r di n gM

r . H a r t m a ncer t a i nr e t i r e m e nt f un d s i n e xc ha nge f or M

s . H a r t m a n r e c e i vi ng t he e qui t y i n t he i r hom e a nd ot he r r e a l pr ope r t y.

The pa r t i e s w

e r e m a r r i e d on M

a r c h 9, 1979. Bot h ha d be e n pr e vi ous l y m a r r i e d. The y ha d one c hi l d, w ho w a s a m i nor a t t he ti m

e o f the he a r i ng . A t t he ti m

e o f the m

a r r i a g e , M

s . H a r t m a n ow ne d a Si gna l M

ount a i n hous e w

i t h $5, 000 i n e qui t y. A t t he t i m

e of t he di vor c e , t he i r e qui t y ha d i nc r e a s e d t o a ppr oxi m

a t e l y $48, 500, i nc l udi ng t he e qui t y i n a n a dj a c e nt l ot of a ppr oxi m

a t e l y $19, 750. M s . H a r t m a n f i l e d f or di vor c e i n J ul y of 1994 a l l e gi ng i na ppr opr i a t e m a r i t a l c onduc t a nd i r r e c onc i l a bl e di f f e r e nces . M

r . H a r t m a ncount e r c l a i m

e df or di v or ce, al l e g i n g t h a t M s . H a r t m a nc o m m itte da du lte r y . The Tr i a l C our t r e n de r e da j udgm e nt on O

c t obe r 24, 1995, a w a r di ng M

r . H a r t m a n t he di vor c e ba s e d on M

s . H a r t m a n’ s s t i pul a t i on of he r i na ppr opr i a t e m a r i t a l c onduc t . The Tr i a l C our t or de r e d t ha t t he t w o pa r t i e s w

oul d be gr a nt e d j oi nt l e ga l a nd phys i c a l c us t ody of t he i r m i nor da ught e r a nd or de r e d a pa ym e nt s c he dul e f or he r e xpe ns e s a nd i ns ur a nc e . H ow e ve r , t he Tr i a l C our t di d not e nt i r e l y r e s ol ve t hi s c a s e i n t he O c t obe r 1995 j udgm e nt ; i t i ns t e a d r e f e r r e d t he i s s ue of t he di vi s i o no f the m a r ita l a s s e t s toa Sp e c i a l M a s t e r . 1

A f t e r a he a r i n gw

iththe tw

op a r tie s , th e Sp e c i a l M a s t e r i s s ue d a l e ngt hy r e por t w hi c h r e s ol ve d t he di vi s i on of t he m a r ita l a s s e t s . M r . H a r t m a nf ile da num

b e r o f obj e c tio n s tothe2 M r . H a r t m a n ’ s l i s t i ndi c a t e d t h a t $8, 000 of t h e j e w e l r y wa s i n hi s pos s e s s i on w

h i l e $25, 000 wa s i n M s . H a r t m a n ’ s pos s e s s i on. 3 Spe c i a l M

a s t e r ’ s r e por t , a nd r e que s t e d a he a r i ng on t he s e obj e c tio n s w

iththe Tr i a l C

our t. A

f t e r a he a r i n ginthe Tr i a l C our t on Fe br ua r y 19, 1996, on t he Spe c i a l M a s t e r ’ s r e por t , t he Tr i a l C

our t a dopt e d t he Spe c i a l M a s t e r ’ s r e por t a nd or de r e d t ha t t he pr opos e d di vi s i on of a s s e t s a nd l i a bi l i t i e s be a dopt e d a s pa r t of t he pr e vi ous j udgm e nt , i nc l udi ng a n a w a r d of c e r t a i n j e w e l r yt ot he w

i f e as s e p a r a t e pr op e r t y . The or de r al s o i nc l ude d a n a w

a r d of t he e qui t y i n t he hous e a nd a dj a c e nt l ot t o M s . H a r t m a n a nd a n a w

a r d of a l m

os t e qua l va l ue i n t he f or m of r e t i r e m

e nt m one y t o M

r . H a r t m a n t o a c c ount f or M s . H a r t m a n’ s r e t a i ni ng t he e qui t y i n t he hous e .

M r . H a r t m a n ’ s f i r s t is s u e o na pp e a l is th a t the Tr i a l C our t i n c or r ect l ych a r act e r i zedcer t a i ni t e m s o f t he j e w

e l r yas gi f t s , a nd t hus a s s e pa r a t e pr ope r t y a nd i nc or r e c t l y a w a r de d t he m t oM s . H a r t m a n . M r . H a r t m a nb a s e s hi s i n s i s t e nce ont he f act t ha t M s . H a r t m a n di d not c a r r y he r bur de n of pr ovi ng t ha t t he ite m s o f je w

e l r yw e r e g i f t s . M

r . H a r t m a nr e lie s o nthe m a r ita l a s s e t a n dlia b ilitylis t s th a t e a c hp a r t ys ub m itte dtothe Sp e c i a l M

a s t e r . M

r . H a r t m a n ’ s lis t c l a s s i f i e d$ 3 3 , 0 0 0w or t ho f j e w e l r yas m

a r i t a l , 2w

hile M s . H a r t m a n ’ s lis t o f " St a t e m e nt o f A s s e t s andLi a b i l i t i e s " i t e m i zedeachi t e m

o f j e w

e l r yandv a l u e d t he j e w

e l r y a t a ppr oxi m

a t e l y $16, 000, w

i t hout i ndi c a t i ng w he t he r t he j e w

e l r yw a s m a r i t a l or s e p a r a t e pr op e r t y . M s . H a r t m a nal s o f i l e da ne xhi bi t w hi c hw a s ti t l e d" W

i f e ’ s Se p a r a t e Pr op e r t y , " w hi c h di d not i nc l ude a ny of t he j e w e l r y a t i s s ue on a ppe a l ,4

w hi l e i t di d i nc l ude ot he r j e w e l r y w hi c h w a s r e f e r r e d t o a s be i ng acqui r e d"bef or e" t he m a r r i a g e . Bo t hp a r t i e s adm i t t h a t t he r e w a s no t e s t i m

ony a t t he Spe c i a l M a s t e r he a r i ng or i n t he Tr i a l C our t on t he i s s ue of w he t he r t he i t e m

s of j e w

e l r y w e r e gi f t s . The Tr i a l J u dg e s um m a r i l yaf f i r m

e dt he Sp eci a l M

a s t e r ’ s f i n di n g t h a t t he j e w

e l r yw a s s e p a r a t e pr op e r t y . The Tr i a l C

our t m us t e qui t a bl y di vi de a l l of t he

" m a r i t a l pr ope r t y. " T. C. A . 36- 4- 121. M

a r i t a l pr ope r t y i s de f i ne d a s " a l l r e a l a nd pe r s ona l pr ope r t y, bot h t a ngi bl e a nd i nt a ngi bl e , a c qui r e d by e i t he r or bot h s pous e s dur i ng t he c our s e of t he m

a r r i a ge . " T. C. A

. 36- 4- 121. Se pa r a t e pr ope r t y, on t he ot he r ha nd, i s de f i ne d i n T. C. A . 36- 4- 121( b) ( 2) ( d) a s pr ope r t y

" a c qui r e d by a s pous e a t a ny t i m e by gi f t , be que s t , de vi s e or de s c e nt . " The r e f or e , a gi f t gi ve n by one s pous e t o t he ot he r dur i ng m

a r r i a ge i s c ons i de r e d s e pa r a t e pr ope r t y. Ba t s on v. Ba t s o n , 769 S . W

. 2d 849 ( Te nn. A

pp. 1988) . H

ow e ve r , i t m

us t be pr ove n t ha t a gi f t a c t ua l l y oc c ur r e d. Thi s C our t s t a t e d i n H a nove r v. H

a nove r , 775 S . W

. 2d 612, 617 ( Te nn. A pp. 1989) , t ha t :

The m a t t e r t ob e de t e r m i n e dw he r e t he r e ar e i nt e r s pous a l gi f t s i s w he t he r a gi f t a c t ua l l y oc c ur r e d. Eachcas e m

u s t s t a ndo ni t s o w nf act s . A

co m p l e t e d gi f t r e qui r e s a n i nt e nt i on t o m a ke a gi f t , de l i ve r y, a ndaccept a nce. The bur de n of pr ovi ng t he e l e m e nt s of a gi f t l i e s w i t h t he done e . Pa m p linv . S a tte r f i e l d , 196 Te nn. 297, 265 S . W . 2d 886 ( 1954) . I n or de r t o pr ove t ha t t he i t e m s of j e w

e l r y w e r e gi f t s f r om

he r hus ba nd, M

s . H a r t m a n bor e t he bur de n of pr ovi ng t ha t t he e l e m e nt s o f a g i f t w

e r e pr e s e nt .5 Our de novor e vi e w p e r s u a de s u s t h a t t he r e i s i ns uf f i c i e nt e vi de nc e t o f i nd t he j e w e l r y i n que s t i on t o be s e pa r a t e pr ope r t y. M s . H a r t m a n di d not put on a ny pr oof t ha t s ugge s t e d t ha t t he i t e m s of j e w

e l r y w e r e gi f t s . To t he c ont r a r y, M s . H a r t m a nim p lie dinhe r f ile de xhi b its o f " A s s e t s a n d Li a b ilitie s " a n d" W i f e ’ s Pr op e r t y " th a t the ite m s o f je w

e l r yin que s t i on w

e r e m a r i t a l pr ope r t y, not s e pa r a t e pr ope r t y.

Becau s e w

e f i n dt h a t t he r e i s i n s u f f i c i e nt evi de nce i n t he r e c or d t o s uppor t t he Tr i a l C our t ' s de t e r m

i na t i on of t he j e w e l r yas s e p a r a t e pr op e r t y , w e r e m a ndt hi s i s s u e t ot he Tr i a l C our t t o c ons i de r a ddi t i ona l e vi de nc e t o de t e r m i ne w he t he r M

s . H a r t m a n c a r r i e d he r bur de n of pr ovi ng t he e l e m e nt s of a gi f t , a nd w he t he r t he j e w

e l r y s houl d be c ons i de r e d m a r i t a l pr ope r t y a nd be e qui t a bl y di vi de d i n a c c or da nc e w i t h T. C. A

. 36- 4- 121.

M r . H a r t m a n’ s s e c ond i s s ue on a ppe a l i s pr e di c a t e d on t he a r gum

e nt t ha t t he Tr i a l C our t a bus e d i t s di s c r e t i on by f a i l i ng t o c ons i de r t he t a x e f f e c t s of a n a w a r d of pe ns i on be ne f i t s t o M

r . H a r t m a n, a nd t hus r e nde r i ng a n i ne qui t a bl e di vi s i o no f the m a r ita l a s s e t s . O nM r . H a r t m a n ’ s a tte m

p t to o f f e r a w

i t n e s s , a C

e r t i f i e dPub l i c A ccount a nt pr e p a r e dt o t e s t i f y a s t o t he t a x c ons e que nc e s of t he a w a r d t o M

r . H a r t m a n of t he pe ns i on f unds , t he Tr i a l J udge de ni e d M r . H a r t m a n’ s r e que s t :

TH ECO U R T: I don’ t w

a nt t o he a r pr oof , you know , t ha t ’ s w

ha t w e ’ r e he r e - - i f you w a nt t o a r gue a bout t he obj e c tio n s tothi s , th a t ’ s f i ne , b ut ju s t te ll m e w ha t you’ d l i ke - - t e l l m e w ha t you w

oul d l i ke .6 M R. G O LD : W e l l , w e c e r t a i nl ydo , Y our H o n or , but - - TH ECO U R T: I don’ t c a r e t o he a r a ny pr oof on i t . I n f a c t , I ’ ve ne ve r he a r d pr oof on t hi s one be f or e , ne ve r ha d a ny of f e r e d be f or e t o be hone s t w i t h you. M R. G O LD : W e c e r t a i nl y do of f e r he r f or t he pur pos e s of - - i f I m a y j us t s t a t e f or t he r e c or d, Y our H onor . TH ECO U R T: W e l l , w hy di dn’ t you of f e r he r t o hi m [ Spe c i a l M

a s t e r ] , now

he ’ s t he one t o do t ha t . Y ou s e e t ha t w a s hi s j ob. Tha t ’ s w hy I s e nt i t ove r t he r e . I w oul d ha ve ke pt i t m ys e l f i f I w

a nt e d t o he a r a l l t he pr oof . I di dn’ t ha ve t i m e s o I s e nt i t t o hi m . The Tr i a l C

our t in s i s t e dth a t it w a s n o t r e qui r e dtohe a r a ddi t i ona l pr oof on t he i s s ue , s i nc e t he pr oof s houl d ha ve be e n o f f e r e dt ot he Sp eci a l M a s t e r . M r . H a r t m a n f i r s t a r gue d i n or a l a r gum e nt t ha t dur i ng a Tr i a l C

our t he a r i ng on t he Spe c i a l m a s t e r ’ s R

e por t , t he Tr i a l C our t m us t c ons i de r a ny ne w e vi de nc e t ha t a pa r t y of f e r s , a nd t ha t by de nyi ng hi s of f e r of pr oof , t he Tr i a l C our t a bus e d i t s di s c r e t i on. The Tr i a l C our t i s not r e qui r e d t o he a r ne w e vi de nc e t o a Spe c i a l M

a s t e r ’ s r e por t , a c c or di ng t o R ul e 53. 04( 2) of t he Te nn e s s ee R

u l e s o f C

i vi l Pr o cedur e , w hi c hs t a t e s :

I n a n a c t i on t o be t r i e d w i t hout a j ur y t he c our t s ha l l a c t upon t he r e por t of t he m a s t e r . W

i t hi n t e n ( 10) da ys a f t e r be i ng s e r ve d w i t h not i c e of t he f i l i ng of t he r e por t , a ny pa r t y m a y s e r ve w

r i t t e n obj e c t i ons t he r e t o upon t he ot he r pa r t i e s . A ppl i c a t i on t o t he c our t f or a c t i on upon t he r e por t a nd upon obj e c t i ons t he r e t o s ha l l be by m ot i on a nd upon not i c e a s pr e s c r i be d i n R

ul e 6. 04. The c our t a f t e r he a r i ng m a y a dopt t he r e por t or m a y m odi f y i t or m

a y r ej e c t i t i n w hol e or i n pa r t or m a y r e c e i ve f ur t he r e vi de nc e or m a y r e c o m m it it w

ithin s t r u c tio n s .7

The r e f or e , t he Te nne s s e e R ul e s of C

i vi l Pr oc e dur e do not r e qui r e t he Tr i a l J udge t o he a r a ddi t i ona l pr oof t o t he Spe c i a l M a s t e r ’ s R e p or t. M

r . H a r t m a nf ur t he r in s i s t s th a t inthi s p a r tic u l a r s i t ua t i on, t he Tr i a l J udge s houl d be r e qui r e d t o he a r hi s of f e r e d pr oof i n or de r t o c om pl y w i t h T. C. A

. 36- 4- 121( c ) , w

hi c h s t a t e s t ha t " [ I ] n m

a ki ng e qui t a bl e di vi s i on of m a r i t a l pr ope r t y, t he c our t s ha l l c ons i de r a l l r e l e va nt f a c t or s i nc l udi ng . . . ( 9) The t a xco n s e qu e nces t oeachp a r t y . "

M r . H a r t m a n c ont e nds t ha t t he Tr i a l C our t a bus e d i t s di s c r e t i on by f a i l i ng t o c ons i de r t he t a x c ons e que nc e s of hi s r e c e i pt of t he pe ns i on f und t o a c c ount f or hi s i nt e r e s t i n t he e qui t y of t he hous e . M r . H a r t m a n a r gue s t ha t t he di vi s i on of t he m a r i t a l as s e t s w

a s n o t anequi t a b l e o n e s i n ce M s . H a r t m a n r e c e i ve d t he e qui t y of t he hous e a nd r e m a i ne d l i vi ng i n t he 3800 s qua r e f oot hom

e , w hi l e he w

a s gi ve n a n i nt e r e s t i n a pe ns i on f und w hi c h w oul d not be w

or t h ne a r l y t he a m ount of t he hom

e e quityif it w

e r e liqui d a t e d . M r . H a r t m a na r gu e s th a t the pe ns i on f und, i f l i qui da t e d, w oul d be s ubj e c t t o a 10% pe na l t y f or ear l yw

i t h dr a w

a l ands ubj ect t of e de r a l i n c o m e t a x e s . The r e f or e , he a r gue s t ha t t he pe ns i on f und w oul d onl y be w

or t h 59 c e nt s o nthe do lla r if liqui d a t e d . H e in s i s t s th a t inor de r f or t he di vi s i on t o be e qui t a bl e , he s houl d be gi ve n a l i qui d a s s e t of e qua l va l ue t o t he e qui t y i n t he hom e s o t ha t he m

a y us e t ha t a s s e t t o pur c ha s e a hom e a nd be i n a n e qua l pos i t i on t o M s . H a r t m a n .8 The Tr i a l J udge r e f us e d t o he a r M r . H a r t m a n’ s w i t ne s s , t he C e r t i f i e d Publ i c A c c ount a nt , pr e pa r e d t o t e s t i f y a bout t he t a x c ons e que nc e s of t he a w a r d of t he r e t i r e m e nt be ne f i t s , on t he ba s i s t ha t M

r . H a r t m a n s houl d ha ve of f e r e d t he pr oof t o t he Sp eci a l M

a s t e r . H

o w e v e r , t he i s s u e o f t he t a xco n s e qu e nces o f t he r e tir e m

e nt b e n e f its di dn o t a r i s e until the Sp e c i a l M a s t e r f i na l i z e d hi s pr opos e d di vi s i on of a s s e t s , w hi c h i nc l ude d a w a r di ng t he e qui t y of t he hous e t o M s . H a r t m a n a nd t he r e tir e m

e nt b e n e f its toM r . H a r t m a n . Thi s C

our t, in St e phe ns on v. St e phe ns on , a n unpubl i s he d opi ni on f i l e d i n N a s hvi l l e Fe br ua r y 7, 1996, di s c us s e d t he i m por t a nc e of t he Tr i a l C our t c ons i de r i ng t he t a x c ons e que nc e s of a m a r i t a l di vi s i on, a nd s t a t e d, " The r i ght t o r ecei v e t a x a b l e i n c o m e , s u c has a r e t i r e m e nt , i s n o t as v a l u a b l e a s t he r i ght t o c ol l e c t non- t a xa bl e i nc om e . " The Tr i a l C

our t i n t hi s c a s e di d not a f f or d M r . H a r t m a n t he oppor t uni t y of c ons i de r i ng t he t a x c ons e que nc e s of t he di vi s i on of a s s e t s . The r e f or e , w

e hol d, ba s e d on our de novor e vi e w o f t he r ecor d , t ha t t he Tr i a l C

our t w a s i n e r r or i n r e f us i ng t o he a r M r . H a r t m a n’ s pr oof on t he t a x c ons e que nc e s of t he pr opos e d di vi s i on s i n ce t he r e f u s a l w a s a f a i l ur e o nt he Tr i a l C our t ’ s p a r t t o c ons i de r t he t a x c ons e que nc e s of t he di vi s i on a s r e qui r e d by T. C. A . 36- 4- 121( c ) . For t he f or e goi ng r e a s ons , t he j udgm e nt of t he Tr i a l C our t a s t o t he di s pos i t i on of t he j e w e l r y a nd t he di vi s i on of ot he r m

a r i t a l pr ope r t y i s va c a t e d a nd t he c a us e r e m a nde d t o t he9

C i r c uit C

our t f or a de t e r m i n a tio na s tow

he t he r the je w

e l r yis M s . H a r t m a n' s s e pa r a t e pr ope r t y or m a r i t a l pr ope r t y, w i t h a ppr opr i a t e di s pos i t i on a f t e r s uc h de t e r m i na t i on. W

e a l s o r e m

a nd f or c ons i de r a t i on of t he t a x c ons e que nc e s of t he a w a r d t o M

r . H a r t m a n of t he r e t i r e m e nt f unds i n e xc ha nge f or t he e qui t y i n t he r e a l pr op e r t y . The Tr i a l C our t m a y , o f c our s e , re -re f e r t he que s t i ons t o a Spe c i a l M a s t e r . C

os t s of a ppe a l a r e a dj udge d a g a i n s t M

s . H a r t m a n .

_______________________________

H ous t on M

. G odda r d, P. J . CONC UR:

________________________________ H e r s c he l P. Fr a nk s , J .

________________________________ C h a r l e s D

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