I N THE COURT OF APPEALS OF TENNESSEE

EASTERN SECTI ON

PAULA RUTH SHEFFI ELD HARTMAN ) HAMI LTON COUNTY

) 03A01- 9608- CV- 00249

Pl a i ntif f - Appe lle e )

)

)

v. ) HON. SAMUEL H. PAYNE,

 ) J UDGE

) 

MELVI N THOMAS HARTMAN, J R. )

) VACATED I N PART

De f e nda nt - Appe l l a nt ) a nd REMANDED 

BARRY L. GOLD OF CHATTANOOGA FOR APPELLANT

CHARLES D. PATY OF CHATTANOOGA FOR APPELLEE

 O P I N I O N

 Godda r d, P. J .

Me l vi n Thoma s Ha r t ma n, J r . , a ppe a l s a di vor c e j udgme nt

r e nde r e d by t he Ci r c ui t Cour t f or Ha mi l t on Count y. On a ppe a l he

i ns i s t s tha t the Tr i a l Cour t e r r e d in its a wa r d of c e r t a i n

j e we l r y t o hi s wi f e , Pa ul a Rut h She f f i e l d Ha r t ma n, as s e pa r a t e

pr ope r t y whi c h wa s i n f a c t ma r i t a l pr ope r t y. Mr . Ha r t ma n a l s o

i ns i s t s tha t the Tr i a l Cour t ma de a n ine quita bl e di vi s i on of the

ma r i t a l es t a t e s i nce t he Tr i a l Cour t r e f us e d t o cons i de r t he t a x
1 Mr . Ha r t ma n f i l e d a mo t i on f o r r e f e r e n c e t o a Spec i a l Ma s t e r due

t o t h e “comp 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 ons e que nces of awa r di ng Mr . Ha r t ma n cer t a i n r e t i r e me nt f unds i n

e xc ha nge f or Ms . Ha r t ma n r e c e i vi ng t he e qui t y i n t he i r home a nd

ot he r r e a l pr ope r t y.

The pa r t i e s we r e ma r r i e d on Ma r c h 9, 1979. Bot h ha d

be e n pr e vi ous l y ma r r i e d. The y ha d one c hi l d, who wa s a mi nor a t

t he ti me of the he a r i ng. At t he ti me of the ma r r i a ge , Ms .

Ha r t ma n owne d a Si gna l Mount a i n hous e wi t h $5, 000 i n e qui t y. At

t he t i me 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 ma 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 ma t e l y $19, 750. Ms . Ha r t ma 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 ma 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 . Mr . Ha r t ma n count e r c l a i me d f or di vor ce, al l e gi ng

t ha t Ms . Ha r t ma n c ommitte d a dulte r y. The Tr i a l Cour t r e nde r e d a

j udgme nt on Oc t obe r 24, 1995, a wa r di ng Mr . Ha r t ma n t he di vor c e

ba s e d on Ms . Ha r t ma n’ s s t i pul a t i on of he r i na ppr opr i a t e ma r i t a l

c onduc t . The Tr i a l Cour t or de r e d t ha t t he t wo pa r t i e s woul 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 mi nor da ught e r

a nd or de r e d a pa yme nt s c he dul e f or he r e xpe ns e s a nd i ns ur a nc e .

Howe ve r , t he Tr i a l Cour 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 Oc t obe r 1995 j udgme 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 on of the ma r ita l a s s e t s to a Spe c i a l Ma s t e r .

1

Af t e r a he a r i ng with the two pa r tie s , the Spe c i a l

Ma s t e r i s s ue d a l e ngt hy r e por t whi c h r e s ol ve d t he di vi s i on of t he

ma r ita l a s s e t s . Mr . Ha r t ma n f ile d a numbe r of obj e c tions to the
2 Mr . Ha r t ma 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 we l r y wa s i n hi s

pos s e s s i on wh i l e $25, 000 wa s i n Ms . Ha r t ma n ’ s pos s e s s i on.

3

Spe c i a l Ma 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 tions with the Tr i a l Cour t. Af t e r a he a r i ng in the Tr i a l

Cour t on Fe br ua r y 19, 1996, on t he Spe c i a l Ma s t e r ’ s r e por t , t he

Tr i a l Cour t a dopt e d t he Spe c i a l Ma 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 udgme nt , i nc l udi ng a n a wa r d of c e r t a i n

j e we l r y t o t he wi f e as s e pa r a t e pr ope r t y. The or de r al s o

i nc l ude d a n a wa 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

Ms . Ha r t ma n a nd a n a wa r d of a l mos t e qua l va l ue i n t he f or m of

r e t i r e me nt mone y t o Mr . Ha r t ma n t o a c c ount f or Ms . Ha r t ma n’ s

r e t a i ni ng t he e qui t y i n t he hous e . 

Mr . Ha r t ma n’ s f i r s t is s ue on a ppe a l is tha t the Tr i a l

Cour t i nc or r ect l y cha r act e r i zed cer t a i n i t e ms of t he j e we l r y as

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 wa r de d t he m

t o Ms . Ha r t ma n. Mr . Ha r t ma n ba s e s hi s i ns i s t e nce on t he f act

t ha t Ms . Ha r t ma n di d not c a r r y he r bur de n of pr ovi ng t ha t t he

items of je we l r y we r e gi f t s . Mr . Ha r t ma n r e lie s on the ma r ita l

a s s e t a nd lia bility lis t s tha t e a c h pa r t y s ubmitte d to the

Spe c i a l Ma s t e r . Mr . Ha r t ma n’ s lis t c l a s s i f i e d $33, 000 wor t h of

j e we l r y as ma r i t a l ,

2

 while Ms . Ha r t ma n’ s lis t of " St a t eme nt of

As s e t s and Li a bi l i t i e s " i t e mi zed each i t e m of j e we l r y and va l ue d

t he j e we l r y a t a ppr oxi ma t e l y $16, 000, wi t hout i ndi c a t i ng whe t he r

t he j e we l r y wa s ma r i t a l or s e pa r a t e pr ope r t y. Ms . Ha r t ma n al s o

f i l e d a n e xhi bi t whi c h wa s ti t l e d " Wi f e ’ s Se pa r a t e Pr ope r t y, "

whi c h di d not i nc l ude a ny of t he j e we l r y a t i s s ue on a ppe a l ,
4

whi l e i t di d i nc l ude ot he r j e we l r y whi c h wa 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 ma r r i a ge . Bot h pa r t i e s admi t t ha t t he r e

wa s no t e s t i mony a t t he Spe c i a l Ma s t e r he a r i ng or i n t he Tr i a l

Cour t on t he i s s ue of whe t he r t he i t e ms of j e we l r y we r e gi f t s . 

The Tr i a l J udge s umma r i l y af f i r me d t he Speci a l Ma s t e r ’ s f i ndi ng

t ha t t he j e we l r y wa s s e pa r a t e pr ope r t y.

The Tr i a l Cour t mus t e qui t a bl y di vi de a l l of t he

" ma r i t a l pr ope r t y. " T. C. A. 36- 4- 121. Ma 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 ma 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 me 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 ma 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 on, 769 S. W. 2d 849 ( Te nn. App. 1988) . Howe ve r , i t mus 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 Cour t s t a t e d i n

Ha nove r v. Ha nove r , 775 S. W. 2d 612, 617 ( Te nn. App. 1989) , t ha t :

The ma t t e r t o be de t e r mi ne d whe r e t he r e ar e

i nt e r s pous a l gi f t s i s whe t he r a gi f t a c t ua l l y oc c ur r e d.

Each cas e mus t s t a nd on i t s own f act s . A compl e t e d

gi f t r e qui r e s a n i nt e nt i on t o ma ke a gi f t , de l i ve r y,

a nd accept a nce.

The bur de n of pr ovi ng t he e l e me nt s of a gi f t l i e s wi t h t he done e .

Pa mplin v. Sa 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 ms of j e we l r y we r e gi f t s f r om he r

hus ba nd, Ms . Ha r t ma n bor e t he bur de n of pr ovi ng t ha t t he e l e me nt s

of a gi f t we r e pr e s e nt . 
5

Our de novo r e vi e w pe r s ua de s us t ha 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 we 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. Ms . Ha r t ma 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 ms of j e we l r y we r e gi f t s . To t he c ont r a r y,

Ms . Ha r t ma n implie d in he r f ile d e xhi bits of " As s e t s a nd

Li a bilitie s " a nd " Wi f e ’ s Pr ope r t y" tha t the items of je we l r y in

que s t i on we r e ma r i t a l pr ope r t y, not s e pa r a t e pr ope r t y. 

Becaus e we f i nd t ha t t he r e i s i ns uf 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 Cour t ' s de t e r mi na t i on of t he

j e we l r y as s e pa r a t e pr ope r t y, we r e ma nd t hi s i s s ue t o t he Tr i a l

Cour 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 mi ne whe t he r Ms .

Ha r t ma n c a r r i e d he r bur de n of pr ovi ng t he e l e me nt s of a gi f t , a nd

whe t he r t he j e we l r y s houl d be c ons i de r e d ma 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 wi t h T. C. A. 36- 4- 121.

Mr . Ha r t ma 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 gume nt t ha t t he Tr i a l Cour 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 wa r d of pe ns i on

be ne f i t s t o Mr . Ha r t ma n, a nd t hus r e nde r i ng a n i ne qui t a bl e

di vi s i on of the ma r ita l a s s e t s . On Mr . Ha r t ma n’ s a ttempt to

of f e r a wi t ne s s , a Ce r t i f i e d Publ i c Account a nt pr e pa r e d t 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 wa r d t o Mr . Ha r t ma n of

t he pe ns i on f unds , t he Tr i a l J udge de ni e d Mr . Ha r t ma n’ s r e que s t : 

THE COURT: I don’ t wa nt t o he a r pr oof , you know,

t ha t ’ s wha t we ’ r e he r e - - i f you wa nt t o a r gue a bout

t he obj e c tions to thi s , tha t ’ s f i ne , b ut jus t te ll me

wha t you’ d l i ke - - t e l l me wha t you woul d l i ke .
6

MR. GOLD: We l l , we c e r t a i nl y do, Your Honor , 

but - -

THE COURT: 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 wi t h you.

MR. GOLD: We 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 ma y j us t s t a t e f or t he r e c or d, Your

Honor .

THE COURT: We l l , why di dn’ t you of f e r he r t o hi m

[ Spe c i a l Ma s t e r ] , now he ’ s t he one t o do t ha t . You s e e

t ha t wa s hi s j ob. Tha t ’ s why I s e nt i t ove r t he r e . I

woul d ha ve ke pt i t mys e l f i f I wa nt e d t o he a r a l l t he

pr oof . I di dn’ t ha ve t i me s o I s e nt i t t o hi m.

The Tr i a l Cour t ins i s t e d tha t it wa s not r e qui r e d to he 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

of f e r e d t o t he Speci a l Ma s t e r .

Mr . Ha r t ma n f i r s t a r gue d i n or a l a r gume nt t ha t dur i ng a

Tr i a l Cour t he a r i ng on t he Spe c i a l ma s t e r ’ s Re por t , t he Tr i a l

Cour t mus 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 Cour t a bus e d i t s

di s c r e t i on. The Tr i a l Cour 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 Ma s t e r ’ s r e por t , a c c or di ng t o Rul e 53. 04( 2) of t he

Te nne s s ee Rul e s of Ci vi l Pr ocedur e , whi c h s t a t e s :

I n a n a c t i on t o be t r i e d wi 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 ma s t e r . Wi t hi n t e n ( 10)

da ys a f t e r be i ng s e r ve d wi 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 ma y s e r ve wr 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 . Appl 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 mot i on a nd upon not i c e a s

pr e s c r i be d i n Rul e 6. 04. The c our t a f t e r he a r i ng ma y

a dopt t he r e por t or ma y modi f y i t or ma y r e j e c t i t i n

whol e or i n pa r t or ma y r e c e i ve f ur t he r e vi de nc e or ma y

r e c ommit it with ins t r uc tions .
7

The r e f or e , t he Te nne s s e e Rul e s of Ci 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 Ma s t e r ’ s

Re por t. Mr . Ha r t ma n f ur t he r ins i s t s tha t in thi s pa r tic ul 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 ompl y wi t h T. C. A. 36- 4- 121( c ) , whi c h s t a t e s

t ha t " [ I ] n ma ki ng e qui t a bl e di vi s i on of ma 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 x cons e que nces t o each pa r t y. "

 

Mr . Ha r t ma n c ont e nds t ha t t he Tr i a l Cour 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 . Mr . Ha r t ma n a r gue s t ha t t he di vi s i on of t he

ma r i t a l as s e t s wa s not an equi t a bl e one s i nce Ms . Ha r t ma n

r e c e i ve d t he e qui t y of t he hous e a nd r e ma i ne d l i vi ng i n t he 3800

s qua r e f oot home , whi l e he wa s gi ve n a n i nt e r e s t i n a pe ns i on

f und whi c h woul d not be wor t h ne a r l y t he a mount of t he home

e quity if it we r e liqui da t e d. Mr . Ha r t ma n a r gue s tha t the

pe ns i on f und, i f l i qui da t e d, woul d be s ubj e c t t o a 10% pe na l t y

f or ear l y wi t hdr a wa l and s ubj ect t o f e de r a l i nc ome t a xe s .

The r e f or e , he a r gue s t ha t t he pe ns i on f und woul d onl y be wor t h 59

c e nt s on the dolla r if liqui da t e d. He ins i s t s tha t in or 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 home s o t ha t he ma y us e t ha t

a s s e t t o pur c ha s e a home a nd be i n a n e qua l pos i t i on t o Ms .

Ha r t ma n.
8

The Tr i a l J udge r e f us e d t o he a r Mr . Ha r t ma n’ s wi t ne s s ,

t he Ce r t i f i e d Publ i c Ac 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 wa r d of t he r e t i r e me nt be ne f i t s , on t he

ba s i s t ha t Mr . Ha r t ma n s houl d ha ve of f e r e d t he pr oof t o t he

Speci a l Ma s t e r . Howe ve r , t he i s s ue of t he t a x cons e que nces of

t he r e tir e me nt be ne f its di d not a r i s e until the Spe c i a l Ma 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 , whi c h i nc l ude d

a wa r di ng t he e qui t y of t he hous e t o Ms . Ha r t ma n a nd t he

r e tir e me nt be ne f its to Mr . Ha r t ma n. Thi s Cour 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 Na s hvi l l e Fe br ua r y 7,

1996, di s c us s e d t he i mpor t a nc e of t he Tr i a l Cour t c ons i de r i ng t he

t a x c ons e que nc e s of a ma 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 ve t a xa bl e i nc ome , s uc h as a r e t i r e me nt , i s not as va l ua bl e

a s t he r i ght t o c ol l e c t non- t a xa bl e i nc ome . " The Tr i a l Cour t i n

t hi s c a s e di d not a f f or d Mr . Ha r t ma 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 , we hol d, ba s e d on our de novo r e vi e w of t he r ecor d,

t ha t t he Tr i a l Cour t wa s i n e r r or i n r e f us i ng t o he a r Mr .

Ha r t ma 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 nce t he r e f us a l wa s a f a i l ur e on t he Tr i a l Cour t ’ s pa 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 udgme nt of t he Tr i a l

Cour t a s t o t he di s pos i t i on of t he j e we l r y a nd t he di vi s i on of

ot he r ma 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 ma nde d t o t he
9

Ci r c uit Cour t f or a de t e r mi na tion a s to whe t he r the je we l r y is

Ms . Ha r t ma n' s s e pa r a t e pr ope r t y or ma r i t a l pr ope r t y, wi 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 mi na t i on. We a l s o r e ma 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 wa r d t o Mr .

Ha r t ma n of t he r e t i r e me 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 ope r t y. The Tr i a l Cour t ma y, of c our s e , re -re f e r t he

que s t i ons t o a Spe c i a l Ma s t e r . Cos t s of a ppe a l a r e a dj udge d

a ga i ns t Ms . Ha r t ma n.

_______________________________

Hous t on M. Godda r d, P. J .

CONCUR:

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He r s c he l P. Fr a nks , J .

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Cha r l e s D. Sus a no, J r ., J .