1 John T. Boyd, Chi ef Ju stice (Ret.), Sevent h Court of Appeals, s itting by

assignment

. NO. 07-02-0051 -CV IN THE COU RT OF APP EALS FOR THE SEVENT H DISTRICT OF TEXAS

AT AMA RILLO PANE L E SEPTE MBE R 4, 2002

______________________________ IN THE M ATTER OF THE MARR IAGE OF KATHRY N KOEN IG TAYLOR AND DON EUGEN E TAYLOR

_________________________________ FROM THE 47 TH DISTRICT COURT OF RANDALL COUNT Y; NO. 47,595-A; H ONORAB LE DAV ID L. GLEASON, JUD GE

_______________________________ Before REAVIS and JOHNSON, JJ, and BOYD, SJ. 1 Kathryn Koenig Taylor (Kath ryn) br ings this appeal from a dec ree granting her petition for

divo rce fro m app elleeDon Eu gen e Ta ylor (Do n) a nd d ividi ng t he coup le ’ s com munity

estate. Kat hryn does notseek reversal of the portion of the decree term inating the marriage. In two issues, she chall enges the tri al court’s ch ar ac te ri za ti on of two i te ms ofpr op er ty as co mmun i ty . W e a ff i rm.2

Don and Kathryn w

ere ma rried in 1985. It is undisputed that at the tim e of th e marriage, Don was in a long sta ndin g fa rm ing p art ner shipwith his brother. K athryn owne d
a house w hich was aw arded to he r in a prior divorce. There were no children of the marriage. In August 1999, the coupl e separated and Kathryn fil ed for divor ce in October 1999. After a bench trial conducted in April 2001, the court rendered a decree dissolving the m arr iage and making the foll owing characteri zation and d isposi tion of the pa rties’ property: it confirmed asDon’s separate p roperty the r esidence a t 7201 West 36 th in Am arillo, real proper ty locat ed in Deaf Sm ith Count

y, his inte rest in th e Taylor B rothers Partnership, the New Y ork Life Insurance policy on his life, a 1998 pickup and a j eep. The decree confirmed as Kathryn’s separate property the re side nceat 1 613 Roo sev elt in Am arillo.
In dividing the comm unity estate, each party was awarded household fur nishi ngs, clothing, personal effects and cas h in their possession. Each w as also awarded half of a n individual retirement account (IRA). Don was also aw arded an insurance policy on his life issued by New York Life Insurance, the cou ple’s d og, G izm o, t w o ho rse s, a nd a ll
com munity

inte res t in the Taylor Brot hers Partnershi p. In additi on to the divi sion of the IRA and per son al ef fec ts i n her pos session, the co urtawarded K athryn any insurance policies
on her life, a 1986 Buick, 1991 Chevrolet pickup, cam per, freez er, and oth er s pec ific hou seh old items. The decree ordered Don to pay a d ebt dueto P rod uct ion C red it2 The record is n ot c lear on t he a m oun t of

this deb t. An ex hibit

showsan outstanding loan to PCA of a bout $100,000, w hile Don testified that he owed over $600,000. 3 Association (PCA ). 2 Itgranted Kathryn a j udgme nt of $10,000 agai nst Don for the purp ose of equalizing the division. On Kathryn’s request, the trial court madefindings of fa ct an d co nc lu si on s ofla w. Ag ain ather request, it m ade am ended findings of fact and conclusions of law , assigning spe cifi cvalues to ea ch item of property. The court f ound that Don’s separate property (and values) i ncluded: a 19 98 pickup acqu ired by i nherita nce ($20,000) , the house a t 7201 W . 36 th in Am arillo ($119,000), a one-half interest in t he Taylor B rothersPa rtn ers hip ($334,06 4), re al es ta te i n D ea f S mi th a nd Oldham Counties

own ed by Tay lor Broth ers Pa rtn ers hip ($454,5 50), a N ew Y ork Life Insurance policy ($32,000 cash value), and a j eep ($4,500)

. It found the residence at 1603 Roosevelt was Kathryn’s s eparate property, but “wa s impressed w ith a com munity equity in the am ount of $15,106 for paym ents m ade during the m arriage which reduced the m ortgage on the property.” The conclusions of law also listed numerous f

urnishings and household items w hich were her separateproperty. Kathryn now cha llenges the court’s charac terization of

the life insurance policy on Don as his s epa rat e pr ope rty and “a p ort io n of the val ue of . . . 1613 Roosevelt” as
com munity property . She presents three argum ents in support of each issue.
Under the Fam ily Code, a court m ust p res ume that all property on hand at the dissolution of marriage is community property. Te x. Fa m. Code Ann. § 3. 003(a) (Vernon4

1998). A spouse m ay overcom e this presum ption by presenting clear and convincing evidence est ab li sh in g t he sep ar at e n at ur e o f th e p ro pe rt y. Te x. Fam. Code Ann. §§ 3. 001, 3.003(b) (Vernon 1998). Clear and conv incing evidence is that m easure or degree of proof which will produce in the m ind of the trier of fact a firmbelief or conviction as to the truth of allegations sought to be established. Faram v. Gervi tz -Faram , 895 S.W.2d 839, 842 (Tex. App.-- Fort

Worth 1 995 , now rit) . While the proof m ust weigh heavier than m erely the greater weight of the c redible evidence, there is no req uire ment that the evidence be unequivocal or undisputed. Id. Kathryn’s first issue assigns error to the trial court’s finding that a life in surance poli cyon Don, issued by N ew York Life Insurance, w as his separate property. S he argues thatthe evidence is legally and factually insufficient to overcom e the presum ption of
com munity

property. In review ing the legal sufficiency challeng e, we cons ider only the evidence and infere nces tending to support the cour t's findi ngs of fact and disreg ard all evidence and inferences to the contrary. Responsi ve Terminal S

ys. Inc. v. Boy Scout

s of Am. , 774 S.W.2d 666, 668 (Tex. 1989). If som e evidence of probati ve force su pports each element, t hen we entertain the factually insufficient evidence contention by weighing all the evidence. W e will set aside the finding of any element only when it i s so contra ry to the overw helming weight of the evidence as to be c learly wrong and unj ust. Cain v. Bain , 709 S.W.2d 175, 176 (Tex. 1986).3 Kathryn points to Don’s 1986 financial statement w hich sho ws a ca sh value of

$27,000. The record show s annual premium s were abou t $4,600, and if not paid, w ould be withdraw n from the cash value to keep the policy in effect. 5 Itis undisputed thatat dissolution of the m arriage the policy was in effect and had
a cash value of $32,927. In addition to the presum ption of com munity property created by the Fam ilyCode, Kathryn relies on premium notices that show t he policy was established Decem ber

26, 1988, three years after their m arriage. In response, Don citeshis testimony thatthe policy was the consolidation of “two or three” policies he established when he was 21 years old. He also testified that at the time of his marriage to K

athryn in 1985, the policies had a cash value of $32,000

. Theonly docum entary evidence of prior policies he cites is a January 1985 financial statem ent subm itted to PCA, which listed the cash value of life insurance as $32,000. This docum ent did n ot identi fy the issuer of the policy or account num ber. 3 Although not cited by Don, the record al so contains the couple’s 1985 tax return, which shows interest incom e of $1,468.63 fromthe New York Life Insurance Co.
The trial court found the pol icy had a cash val ue of $32,927 at di vorce and that Don traced $32,000 of the cash value to his separa te property, the refore, $927 of the cash value was com munity property . It awarded this am ount to Don.
Don’s testim ony, 1985 financial statem ent, an d tax return are som e evidence that he had a lif

e in surance pol icy with New York Life before m arriage with a cash value of $32,000. The only evi dence controver ting thi s f indin g is the prem ium notice show ing a poli cydate of 1988 and the om ission of the policy from so me financial statements du ring6

the ma rriage. Don’s testim ony presented a facially credible explanation for the 1988 date shown on the policy renewal notice. The subseq uent finan cial statem ents ar e of limited probati ve value because they simply om it any reference to cash value of life insurance as contrasted with a show ing of a declining value, ora value of zero. Bas ed on this record,
we cannot say the controverting evidence is so overw helming as to make the trial court ’s finding contrary to the great weight and preponderance of the evidence. Kathryn also argues that Don seek s to use a m ethod of valuation of separate property, which hasbeen express ly rejected by our courts. In In re Marriage of Greer, 483 S.W.2d 490 (T ex .Ci v.A pp. --A m arillo197 2, w rit d ism ’d w .o.j .), w e no ted thehold ing in Tarver v. Tarver

, 394 S.W .2d 780 (Te x. 196 5), and held a s pou se d id no t m eet the ir burden to “trace and clearly ide ntify” s eparate property by presenting evidence of the value of their separate estate before m arriage and the total com bined estates at divorce. Greer is inapplicabl e her e b eca useDon is n ot s eek ing to es tab lish thevalu e of his separate estate by showing the aggr egate value of all hi s assets before m arr iage . H is evidence showsthe value of a single asset before m arriage to estab li sh his separate propertyinterest . T his is an appropri ate method of tracing. W e overrul e Kathryn’s first issue.
In her second issue, Kat hryn argues the trial court erred in characterizing a portion of the pr operty at 1603 Roose velt as community property. Kathryn’s bri ef does n o t address the nature of the com munity interest f ound by the trial court. She does not seek7

to explain why

the well established doctrines of equitable title or right of reimbursem ent
are inapplicable, but simply argues that, under the inception of title rule, the property w as separate and any finding of acom m unit y intere st i s “contrary to the overw helming weight of the evidence.” She concludes that this m ischaracterization resulted in a division of the
com munity property

which w as not j ust and right.
Itis well established that a court m aynot divest a spouse of their separate prop erty. Eggemeyer

v. Eggemeyer

, 554 S.W.2d 137, 142 (Tex. 1977). How ever, t he m ere mischaracterization of property w ill not requ ire re versal i f the divi sion is o therwise equitable. Magill

v. Magill , 816 S.W.2d 530, 533 (Tex.App. --Houston [1 stDis t.] 199 1, w rit denied). W e initial ly note that the final decree of divorce confirming 1603 Roosevelt as Kathryn’s separate prop erty made no m ention of a community interest and did not pu rport to aw ard a com munity

inte res t toeith er p art

y. Only in it s s ubs equ ent

find ingsof f

act did the court declare a com munity interest in that property and awarded that interest t o Kathryn.
W here a conflict exists between atrial court’s judgm ent and subsequently issued findings of

fact and conclusions of law , the find ingsof f act and con clus ionsof l aw con tro l. City of Laredo v. R. Vela Exx on, Inc. , 966 S.W.2d 673, 678 (Tex.App.--S an Antonio 1998, pet. denied). An appellate court presented w ith such conflicts m ay m odify the judgm ent to resolve the conflict, but should not do so if the findings of fact or conclusions of law a re unsupported by the record o r incorrect. Id.4 See In Re Marriage of Thurmond, 888 S.W.2d 269 (Te x. Ap p.- -Am arillo199 4, w rit

denied). 8 Itis undisputed thatKathryn had good title to the property bef ore marriage subject to a mo rtgage. It is also undisputed that m onthly mortg age paym ents of $180 w ere ma de during the marriage and the community estate had rental income from the property which
excee ded them ort gag e pa ym ents. The record doe s no t sh ow her equ ity in the property at the tim e of the m arriage.
The trial court’ s findings of fact charac teri zed the com m unity estate as having “a
com munity

equity” in the property. It is not clear from the court’s finding whether it found th e com m unit

y es tat e ha d eq uita ble t itle 4 to a portion of the property, or ha d a right o f
re i mbu rs eme nt, whic h has als o been called an “equita ble right of reim bursem ent.” See Vallone v. Vallo ne , 644 S.W.2d 455, 459 (Tex. 1983). In Thurmond , we held that p roperty purchased wi th se pa ra te as se ts , b ut ta ke n i n t he na me of both spo use s, c rea tesequ itab le title in the separate estate providing the funds. 888 S .W .2d at 269.
The facts of

this case differ from those in Thurmond in t hat com m unit

y fu ndsm ere ly enhanced thevalu e of

an a sse t w hich w as c lear lyseparate. The com m unity intere st here can be no m ore than a right of reimbu rsem ent. Vallone , 644 S.W.2d at 459. In Vallone, the cou rt held a righ t of reim bursem ent arises whe n asset

s of on e estate are used t o benefit an other es tate “w ithout itse lf receiving s om e benefit. ” Id.9

Here, the record show

s that the incom e from the property exceeded the m ortgage paym entand the com munity es tate took tax deductions for m aintenance of the house. We find this undisputed evidence renders the trial court’s finding error.
Under Texas law

income f

rom separate property is com munity. Lipsey v. Lipsey , 983 S.W.2d 345, 35 0 (Tex .App. --Fort W orth 1998, no writ); Ridgell v. Ri dgell , 960 S.W.2d 144 (Tex.App. --Corpus Christi 1997, no w rit). W e fi nd no a uthority supporting the view that“income” und er this rul e m eans gross rather than net income. The undisputed evidence showsthat the incom e from rental of 1603 Roosevelt ex ceeded the ex penses during the ent ire m arr ia ge. The consequences of a contrary holding would not only be inequi table, but woul d make cha rac ter izat ion o f pr

ope rty und uly com plex. For example, if one spouse had an interest-bearing bank account, and a portion of the inte re st was deducted to pay bank fees, the com munity es tate would not have a right of reimbursem ent for fees for the am ount deducted to pay theban k fe es. Be cau se it is undisputed the rental i nc ome exceeded the mortgage payments a nd otherexpenses , Kathryn’s failure to
m aintain separate accounting does not alter the fact the property produced a net incom e. Moreo ver, this

evidence com pels the conclusion that granting of reimbursem ent would not be appropriate because the com munity es tate actually received a benefit. Cf. Vallone , 644 S.W.2d at 459. To that extent, Kathryn’s se cond issue m ight have som e m erit.
However, that do es not e nd our inqu iry. As we havenoted, a mischarac terization of property alone does not require reversal if the property division is otherwise equitable.10

Magill , 816 S.W.2d at 533. Kathryn argues t hat the imp roper finding of a $15,000 right of reimbursem entby thecom m unit y w as e rro r be cau se it

had a substantial effect on division of the com munity es tate. This is not the applicable test. In accordancewith Magill , supra , itis appel lant’s burd en to establi sh any disp arit y in division was the result of the mischaracterization “and was of such substantial proportions that it constituted an abuse of the trial co urt’s discretion. ” Id. (citing Mundy v. Mundy, 653 S.W.2d 954, 957 (Tex.A pp.- -Dallas 1983, no writ) (relying on predecessor to Tex . R. App. P . 44.1(a)).
The record supports Kat hryn’s contention that th e trial court’s decree awarded her app rox im ate ly55 percent of the com munity es tate. By excluding the erroneous $15,000 ri ght of re i mb ursem ent found by the trial court, the perce ntage of the com munity es tate awarded to h er isred uce d to50 p erc ent . S he c it e s no authority that the mischaracterization res ultin g in a n eq ual d ivis ion o f co m m unit y pr ope rty can be r eve rsib le
error. Ind eed , ou r co urts ha ve h eld thatan equal division is not an abuse of discretion,
even if the record would suppo rta disproportionate division. See S tafford v. St afford , 726 S.W.2d 14, 16 ( T ex . 1987) (equa l divi sion affi rmed w here wife contracte d venereal disease as a result of husband’s adultery). W e overrule Kathryn’s second issue.
In sum mary , both of Kathry n’s issues are overruled and the j udgme nt of the tri al court is affirmed.
John T. Boyd Senior Justi ce11

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