### IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE May 9, 2001 Session
KAREN GARRETT HUMPHRIES v. DAVID ALISON HUMPHRIES
Appeal from the Chancery Court for Washington County

No. 32330 Jean A. Stanley, Judge FILED JULY 23, 2001

No. E2000-02912-COA-R3-CV

In this divorce case, the trial c ourt classified the parties’ property, following which it divided the marital property, but declined to order spousal support. The husba

nd appeals, arguing (1) that the trial court erred in classifying the increase in value of his separate pro

pertyas marital property; (2) that the di vision of the marital prope rty was not equitab

le; and (3) that the

trial court erre

d in assigning, without classifying, the wife’s credit card debt to the husband. By way of a separate issue, the wife argues

that she is entitled

to an award of al

imony. We affirm. Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court

Affirmed; Case Remanded

C HARLES D. S USANO , J R ., J., delivered the opinion of the court, in which H ERSCHEL P. F RANKS and D. M ICHAEL S WINEY , JJ., joined. David S. Haynes, Br

istol, Tennessee,

for the appellan

t, David Alison Hump

hries.
Robert D. Arnold, J

ohnson City, Tennes see, for the app ellee, Karen Ga

rrett Humphries.
OPINION

I. Overview

Karen Garrett

Humphries (“Wife”) and

David Alison Humphries (“Husband”) were married
on October 22, 1994. It was Wife’s second marriage and Husband’s third. No children were born to their union; both parties had children from their prior marriages. At the

time of trial,

Wife’s two children were 15 and

13 years old, respectively; Husband’s children were adults. Wife was then 46 years old, and Husband was 45.

At the time of the parties’ mar riage, Wif

e was self-employed, working part-time as an interior designer and earning approximately $9,00 0 to $ 10,000 a year. She also received c

hild support from her

former hu sband. Husband ow ned a one-half in

terest in Smoky Mount

ain1 Eventu ally this prope rty becam e the prim ary asset of a third bus iness, Sm oky M ountain Propert ies,LLC, in which H usband owned a one-h alf interest.
-2- Freightliner, LLC, and Smoky Mounta in Leasing, LLC, businesses engaged in the sale and leasing of tractor trailer rigs. Husband also owned a one-hal f interest in a tra

ct of commercial

property locatedat the intersecti

on of Interstate

Highways 81 and 18 1 near Bristol. 1 In addit io n to his businesses, Husband owned a four-unit apartment building from which he received regular income. The trial court found that at the time of the marriage, Wife had a net worth of $161,248, an d Husband had a net worth of $237,500.

After their marriage, Husband moved into Wife’s home with her and her two minor children. Eight months later, Wife sold her home for $126,000. She used $32,000 of these proceeds to pay the outstanding mortgage on Husband’s apartment building; $30,000 to purchase land for, and $48,000 to begin the construction of, a new home for the part ies ; and $16,000, the balance of the proceeds, to purchase stock. All of the assets acq uired with these proceeds were placed in the parties’ joint names. Following the marriage, W ife continued to w

ork part- time as an in terior designer. In addition to her part-time employment, she managed Husband’s apartments. Wife testified th at for the first 15 months of the mar

riage, she paid a

ll of the household e

xpenses out of her

funds.

Jack A. Bonner, Jr., a ce

rtified public ac

countant who had w

orked for Husban

d’s businesses, testified that, at the time of the marriage, the businesses were “barely making it...they had a lot of debt...[a]nd

at that point it was really a guesstimation as to – as to [whether] t

he entity was going

to survive or not.” In 1996, Husband’s businesses relocated to his commercial property located at the intersection of Interstate

Highways 81 and 181, and a new facility was constructed. Wife worked
on the interior design of most of the facility, including the sales office, reception room, conference room, personal offices, kitchen, floorings and walls of the parts department, and the truckers’ lounge. She received no monetary compensation for this work. Following the relocation to the new site, Smoky Mountain Freightliner, LLC, experienced
a meteoric increase in sales. By 1998, the company had gross receipts of $26,193,202 and a net income of $1,163,265. Husband’s other ventures also enjoyed i ncreased s uccess. Husband ’s taxable income increased significantly as a r esult of the succe ss of his businesses . While Wife’s inc ome remained substantially the same during the marriage, Hus band ’s increased income caused the parties’ adjuste

d gross income to ri

se as follows:-3- Adjusted Gross Year Income
1994 $ 64,616 1995 160,036 1996 28,235 1997 515,380 1998 755,637

How much of this income Husband actually

“brought home” is

unclear. Husband’s CPA testified that the income reported by Husband was “pass-through” income from the companies, and that the bulk of the income r

eported by Husba

nd was in fact “r

ecycled” and pu

t back into the busin

esses.
The parties separated

on February 1, 1998. Wife filed for divorce on July 20, 1998. At the bench trial that followe

d, it was sti

pulated that th

e valuation date for the parties’ assets would be April15, 1999. One of the major issues at the first trial of this case was the validity of the parties’ antenuptial agreement. Also in contention was the increase in value of Husband’s businesses during the marriage. Each

party submitted ap

praisals of the va

lue of Husband’s b

usinesses, both

at the time of the marriage and as of the agreed valuation date of April 15, 1999. The trial court, upon finding that the parties’ antenuptial agreement was valid, did not award Wife a portion of the increase in value of Husband’s businessesduring the marriage. The trial court did award Wife the

marital residence and ordered Husband to pay the outstanding mortgage on that property. Wife was further awarded rehabilitative alimony of $800 per month for four year s.
The trial court’s judg

ment following the f

irst trial was appe

aled to this Court.

We found that the antenuptial agreement was not valid, and, consequently, remanded this matter back to the trial court for further conside ration of the division of marital property and the award of alimony. See Humphries v. Humphries, C/A No. E1999-02694-R3-CV, 2000 WL 979984 (Tenn. Ct. App. E.S., filed July 18, 2000).
On remand, the tr

ial court valued H

usband’s 50% inter

est in the following

businesses:

Asset Value at Marriage Current Value Smoky Mountain Freightliner, LLC $75,000 $1,398,000 Smoky Mountain Properties, LLC 5,000 333,100 Smoky Mountain Leasing, LLC 15,000 25,100 Citing Wife’s contr

ibutions to the marriage as a wife and homemaker, her management of Husband’s apartm ent building, and her work in connection with the interior design of the new Freightliner facility, the trial court fo und the increase

in value of Husban

d’s b usiness inte

rests to be marital property. However, noting that Wife’s contributions to Husband’s businesses were “not a s direct2 In her brief, Wife indicates t hat since the origina l divorce ju dgme nt, Husb and had paid a total o f $12,00 0 in alimony an d $24,000 in mortgage paymen ts. -4- or as great as [Hus

band’s] who is emp

loyed there and w

ho owned them befo

re th e marria

ge,” the trial cour t found that Wife was entitled to only 25% of the increase in value of Husband’s 50 % interest in the subject businesses. The trial court awarded Wife the marital residence, subject to the mortgage, and furnishings, an Acura automobile, one-half of the parties’ stocks and 401K, a $2,000 bank account, and a c

ashpayment of

$357,800. Husband

was awarded his

interest in the busi

nesses, one-half of the parties’ s t ocks and 401K, a $10,000 bank account, a Lexus automobile, and the apartment building. Husband was ordered to pay “all credit card indebtedness arising d uring the marriage and

all debt on his separate property.” Given the large monetary award to Wife, the trial court found that

an award of alimony would not be appropriate. The court also decreed that Husband would be allowed a credit against his lump sum obligation for alimony and mortgage payments made to Wife between

the dates of the tw

o divorce hearin

gs. 2 This appeal followed.

II. Standard of Review

In this non-jury case, our review is de novo ; however, the record comes to us accompanied by a presumption of correctness as to the trial court’s factual findings, a presumption that we must honor unless the evidenc

e preponderate

s against those

findings. Tenn. R. App. P. 13(d). We review the trial court’s conclusions of law de novo with no presumption of correctness. Jahn v. Jahn, 932 S.W.2d 939, 941 (Tenn. Ct. App. 1996).

III. General Principles

Before add ressing t he issues raised by the parties, we will review the general principles regarding the classification and divi sion of property in a divorce case. Tennessee recognizes two distinct classes of property: (1) “marital propert y,” a s defined in T.C.A. § 36-4-121(b)(1) (Supp. 2000); and (2) “separ

ate property,” a

s defined in T.C. A. § 36-4- 121(b)(2) (Supp. 2000). The distinction is important because, in an action for divorce, only marital property is divided between the parties. See T.C.A. § 36-4-121(a)(1 ) (Supp. 2000). Imp licit in the statute i

s the understanding that a party’s separate property is not to be divided. Brock v. Brock, 941 S.W.2d 896, 900 (Tenn. Ct. App. 1996). Generally speaking, property that is acquired during a marriage by either or both spouses and still owned by either or both spouses when the divorce is granted is classified as marital property and is thus subject to equitable division. T.C.A. § 36-4-121(b)(1). However, property acquired by a spouse by gift, bequest, devise or descent, even if acquired during the marriage, is sep arate property and not subject to division. T.C.A. § 36-4-121(b)(2)(D). Property may be equitably di

vided and distribut

ed between the pa

rties once it is pro

perly classified as marital. See T.C.A. § 36-4-121(a)(1). “Trial courts have wide latitude in fashioning3 The marital residence

is value d at $300,000. There is an out standing i

ndebtedness against i

t of $150,000.
-5- an equitable division of marital property.” Brown v. Brown, 913 S.W.2d 163, 168 (Tenn. Ct. App. 1994). This must be done with reference to the statutory factors found in T .C.A. § 36-4-121(c) (Supp. 2000). Marital fault cannot be considered. T.C.A. § 36-4-121(a)(1).
“[A]n equitable proper

ty division is not ne cessarily an equal one. It is not achieved by a mechanical application of the statutory factors, but rather by c onsidering and we

ighing the most relevant factors in light of

the unique facts o f the case.” Batson v. Batson, 769 S.W.2d 849, 859 (Tenn. Ct. App. 1988). It is not necessary that both parties receive a share of each piece

of property. Thompson v. Thompson, 797 S.W.2d 599, 604 (Tenn. Ct. App. 1990). It is the overall division that must be equitable. Id . We are to defer to a trial court’s division of marital property unless the trial court’s decision is inconsistent with the statutory factors or is unsupported by the preponderance of the evidence. See Brown, 913 S.W.2d at 168.

IV. Classification and Div ision of Marital Prope

rty
The trial court di

vided and distribut

ed the parties’ ma

rital property as

follows:

Net Value Awarded to Wife Awarded to Husband Smoky Mountain Freightliner – (Increase in value o f 50% in terest) $1,323,000 $1,323,000 Smoky Mountain Properties – (Increase in value o f 50% in terest) 328,100 328,100 Smoky Mountain Leasing – (Increase in value of 50% interest) 10,100 10,100 Marital Residence 150,000 3 $150,000 Apartment Building 32,000 32,000 Furniture & Furnishings 10,000 10,000 Lexus Automobile 10,000 10,000 Acura Automobile 5,000 5,000 Duke Ingram Stock 11,250 5,625 5,625 Wheat First Stock 15,000 7,500 7,500 Bank Accounts 12,000 2,000 10,000 401K 23,000 11,500 11,500 Cash Payment to Wife 357,800 <357,800 > Total $1,929,450 $549,425 $1,380,025-6--7- A.

Husband first argues that the trial court erred in classifying the inc reas e in value of his business interests as mari tal property. Wif

e counters that th

e inc rease was properly classified as marital, but contends that she should have received more than 25% of that increase.

T.C.A. § 36-4-121(b) provides that marital property includes “any increase in value during the marriage of, property determined to be separate property...if each party substantially contributed to its preservation and appreciation....” T.C.A. § 36-4-121(b)(1)(B). To be considered su

bstantial,
a spouse’s contr

ibutio n to the preservation and appreciation of the property must be “real and significant.” Brown v. Brown, 913 S.W.2d 163, 167 (Tenn. Ct. App. 1 994). Such contributions “need not be monetarily commensurate with the appreciation in the property’s value during the marriage.” Mahaffey v. Mahaffey, 775 S.W.2d 618, 623 (Tenn. Ct. App. 1989).

Husband contends that

Wife’s contribu

tions, if any, to the preservation and appreciation of his separate prop erty ceased at the time the parties separated in February, 1998; therefore, so the argument goes, the increa

se in value following t

he parties’ separation cannot be considered marital property. Alternatively, H usband argues tha

t the sole cause of

the increase in v

alue of his busines s interests was the decision to relocate them adjacent to the interstate.

We find Husband’s arguments to be without merit. The evidence does not pr e ponderate against the trial court’s determination that Wife made substantial contributions to the preservation and appreciation of

Husband’s businesses. Wife made significant financial contributions during the first 15 month s of the ma

rriage; she paid the parties’ household expenses and contributed to the marriage the bulk of her sep arate estate, i.e., the proceeds from the sale of her home. In addition, during the course

of the marriage, she managed Husband’s apartments and decorated the interior of the new Freightliner facility. We find there is ample evidence to support the trial court’s finding that Wife made subs tantial c ontributions to the p reservation and

appreciation of

Husband’s busines s interests. Although the decision to relocate the businesses undoubtedly had a very positive impact upon their financial condition, we cannot agree with Husband that the sole cause of the increase in value of his businesses was the relocation, especially in light of the evidence of Wife’s direct and indirect contribu

tions.

Once it has been determined that a spouse has made a substantial contribution to the preservation and app reci ation of the other spouse’s separate property, all of the increase in value during the marriage is considered marital property, even though other factors may have contributed to the increase. See Ellis v. Ellis, 748 S.W.2d 424, 426 (Te nn. 1988); Denton v. Denton, 33 S.W.3d 229, 237 (Tenn. Ct. App. 2000), perm. app. denied Decemb e r 4, 2000. Thus, although Wife’s contributions may in fact have ceased after the parties’ separation, and other factors may have played
a significant role, the entire increase in the v alue of Husband’ s business interests during the marriage4 In the argument section of hi s brief rel ating to the i ssues just discus sed, Husband contends that the appraisal of Smoky Mountain Freight liner, LLC, submitted by Wife contai ns “serious

flaws” and i s not competent evidence of that company’s value. Suffice i t to say that

the evide nce doe s not prep ondera te against the trial court’s jud gmen t with respect to the subject bu siness.
-8- was properly classified by the trial court as marital property. 4 The arguments made by Husband are
more directly related to the divis ion issue r ather than the classification issue. The trial court recognized this in splitting the increase in value 75% to Husband and 25% to Wife.

B.

Husb and next argues that the division of the marital property was not equitable in light of this Court’s decision in Batson v. Batson, 769 S.W.2d 849 (Tenn. Ct. App. 1988).

Like the parties in

the instant case, the parties in Batson had a relatively brief marriage. In dividing the Batsons’ property, this Cour t stated as follows :
I n cases involving a marriage of relatively short duration, i t i s appropriate

to divide the property in a way that, as nearly as possible, places the part ies in the same position they would have been in had the marriage never taken place.

When relatively short m arriages are involved, each spouse’s contributions to the accumulation of assets during the marriage is an import ant fact or. When a marriage is short, the significance and
v alue of a spouse’s non-monetary contributions is diminished, an d clai ms by one spouse to another spouse’s separate property are minimal at best.
Id. at 859 (citations omitted). This Court noted several factors that militated in favor of an unequal property distribution between the Batsons, including the following:

At the time of the marriage

, Dr. Batson’s net w

orth was more than ten times larger than Mrs. Batson’s net worth, and his annual income was nine times larger.

The parties were ma

rried for only a l

i ttle m ore than five years prior to their separation in June, 1985.

The Batsons supported themselves during the marriage primarily on Dr. Ba tson’s income. Mrs. Batson’s financial contributions were comparatively small either because she was not working or because-9- s he was u sing her income to support and educate the children from her second marriage.

* * *

Mrs. Batson’s non-mone tary contribution

s to the marriage a

re best considered

as part of the award for

separate maintenance and support.
Id. at 859-60. The Court in Batson determined that th e marital proper

ty should not be divide d equally and that the Batsons “should, in large measure, be restored to their pre-marriage financial condition.” Id. at 859. Accordingly, Dr. Batson was awarded $397,404 in marital property, along withhis separate

property of $848,265, and Mrs. Batson was awarded $21,165 in marital property, along with her separate property of $133,000. The Court noted this division “leaves t

he parties with approximately

the same net worth they had prior to the marriag e and pr eserves, in large measure, the relationship between their respective net worths that existed [at the time of the marriage].” Id. at 861.

In the instant case, we find and hold that the trial court correctly divided and distributed the marital property. Unlike in Batson , where at the time of the marria ge the husband had

a net worth and income some ten time s greater than th

at of the wife, the

parties in the insta

nt case had rela

tively similarnet worths. And while Husband’s income was significantly greater than Wife’s at the time of the marriage, we note that early on in the marriage, Wife made significant financial contributions to the marriage out of her separate property. Thus, it is evident that the parties made substantially equal financial contr

ibutions, at least a

t the onset of the ma

rriage. Due to th

e efforts of both

parties,
as we have previously

discussed, the va

lue of Husband’s b

usiness interests i

ncreased signif

icantly during the marriage. These facts lead us to conclude that an extremely unequal division of marital property, as was decreed in the Batson case, is not warr anted in the case

now before us. Be

cause of the relatively short duration of the marriage, however, and the greater contributions by Husband to the bulk

of the marital estate, i.e. , the increase in value of his separate business interests, we find that the overall property division in this case is equitable.

C.

Husband argues that

the trial court erred in failing to classifying Wife’s credit card debt of $10,000 as her separate obligation. Although the trial court did not specifically

classify the $10,000 credit card deb t as marital, it w as implicitly classi

fied as such as Hu

sband was requir

ed to pay “all cre

dit card indebted

ness arising during the marriage.” We find no error in the tria

l court’s classif

ication of this

obligation as
a marital debt. “Ma

rital debts are th

ose debts incurred du

ring the marriage

for the joint bene

fit of the parties, or those

directly tracea

ble to the acquisition of marital property.” Mondelli v. Howard, 780 S.W.2d 769, 773 (Te nn. Ct. App. 1989) (c

itation omitted). In

dividing marital de

bts, courts should consider the following factor s: (1) the debt’s p

urpose; (2) whic

h party incurred the debt; (3)-10-

which party benefitted from incurring the debt; and (4) which party is best able to repay the debt

. Id.

Wife testified that, wh ile approximately

twenty percent o

f this credit card debt was related to her interior design business, the majority of the debt was related to expenses for her children, who residedwith the parties during the marriag e. Conside ring the fact that Wife used her income and separate property for the benefit of this marr iage , we do not find that the evidence preponderates against a finding that Husband should be burdened with Wife’s credit card debt incurred

during the marriage.

V. Alimony By way of a separate issue, Wife argues that the trial court erred in not awarding her alimony. We disagree.

A tria l court has broad discretion in determining whether and to what extent an award of alimony is appropriate. See T.C.A. § 36-5-1 01( a)(1) (Supp. 2000 ); see also Loyd v. Loyd, 860 S.W.2d 409, 412 (Tenn. Ct. App. 1993). In making an alimony determinat ion, a cou rt should be guided by T.C.A. § 36-5-101, particularly the provisions of T.C.A. § 36-5-101(d)(1)(A)-(L) (Supp. 2000). The “real need

” of the requesti

ng spouse “is the sin

gle most important factor.” Cranford v. Cranford, 772 S.W.2d 48, 50 (T enn. Ct. App. 1989). “In addition to the need of the disadvantaged spouse, the courts most often consider the ability of the obligor spouse to provide support.” Id.

The trial court did not

abuse its discreti

on in refusing to aw

ard Wife alimony . At the time of trial, Wife was 46 years old and in good health. She was employed part-time as an interior designer, w ith an average income of $9,000 to $10,000 per year. In addition, she was receiving $1,800 per month in child support from her former husband. Wife submitted an income

and expense statement to the trial court showing that her expenses are $4 ,132 per month, including a $1,600 house payment. We find that

the $357,800 cash

payment awarde

d to Wife can be u

tilized, at least in substantial part, to spin off income to supplement her income in order to satisfy her needs. We affirm the trial court’s judgment as to this issue.

VI. Conclusion

The judgment of the trial court is affirmed. This case i s remanded for enforcement of the tria l court’s judgment a

nd for collection

of costs assessed

below, all pursua

nt to applicable la

w
. Costs on appeal ar

e taxed to the app

ellant, David Aliso

n Humphries.

___________________________________ CHARLES D. SUSANO, JR., JUDGE