### IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE Assigned on

Briefs N ovembe

r 13, 2002

CARROL PRESTON FLANNARY v. JOYCE ANN FLANNARY

Appeal from the Circuit Court for Hawkins County No. 10161 Ben K. Wexler, Judge

FILED JANUARY 16, 2003

No. E2002-00869-COA-R3-CV

Carrol Preston Flannary

(“Husband”) and Joy ce Ann Flannary (“Wife”) were divorced in 2001. As part of the divorce, theTrial Court entered an order awarding Wife, inter alia, a judgment for onehalf of $48,000 determined to be missing from the marital estate; holding Wife’s interest in re al propert y deeded to Wife and her siblings by their moth

er const ituted sep arate p

roperty of Wife; and dividing the parties’ interest in their residential property with one-half the va lu e g oi ng to ea ch pa rt y. Husband appeals. We vacate the award to Wife of $24,000, a ffirm as modified, and remand.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court

Affirme d as Modified; Case Rem anded.

D. M ICHAEL S WINEY , J., delivered the opinion of the court, in which H ERSCHEL P. F RANKS , J., joined. C HARLES D. S USANO , J R ., J., filed a separat e conc urring in part and dissenting in part opinion.

Ja me s H . B ee le r, Ki ng sp or t, Te nn es se e, fo r t he Ap pe ll an t, Ca rr ol Pr es to n F la nn ar y.

Jo hn D. Pa rk er , K in gs po rt , T en ne ss ee , f or th e A pp el le e, Jo yce An n F la nn ar y.1 W ife’s moth er resid es in a nu rsing ho me.
2 Husband produce d wit hdrawa l s li ps as proof

the money exi sted. The withdr awal sl ips admit tedly did not t otal $48,000. How ev er , Hu sb an d t es ti fi ed h e br oug ht $48 ,0 00 h ome to pr ot ec t i t f ro m Y2K, and the Trial Court found the amount of the missi ng money to be $48 ,000. Neither party questi ons this f inding.
-2- OPINION
Background

Husbandand Wife were divorced in 2001, after approximately 20 years of

marriage. Prior to the marriage, Husband and Wife each owned residential

property. Af

ter they mar

ried, the parties sold

their individually owned residential pr operties and each contributed money toward the purchas e of

a house. During the marriag e, the parties sold the first house they pur chased together and purchased and subsequently sold several other houses, each time residing in the newly purcha sed house. Husbandtestified he contributed additional pre-marital savings when the par ties purchased their second and third houses together. However , Husban d testi fied although he contributed a
s ubstantial amount of money towar d the purchase of the parties’ fourth house, this money did not come from pre-marital assets.

At some point during

the marr iage, s ome real property

was deeded to Wife and her sibl ings by t

heir mothe

r. Wife’s m other retained a life estate in this property . Wife testified the propert y included two houses. Wife’s sister l ives in on e of the houses. The other house contains Wi fe’s mot her’s be

longing s. 1 Husband and Wife never lived at this property . Wife testified the propert y was a g ift from h

er mothe r “[t]hat wa s to be our inheritance.” Wife also testified the houses were dilapidated and had heat and wate r problems and the property had depreciated in value.

Late in the marriage, Husband became concerned about potential Y2K problems. At
somepoint in

1999, Husb and beg an draw ing mone y ou t of his savings account and taking it home. Husb and took small amounts out on many occasions over the c ourse of several months totaling approxima

tely $48,000. 2 Husband testified he didn’t take all of the money out

of the account at once because he figured i t was “too

much to ta

ke out.” H

usband a lso admitte d it didn’t make sens e to withdraw the money

early instead o f lettin g it stay in the bank and draw interest, but he wasn’t thin king. When questioned on cross examination, Husband admitted putting the money in asafety deposit bo x would have

been an excellen t idea, bu t he neve r though t to do that.

Husbandtook the mo ney

homeand placed it in his bedroom. Husband and Wife had separa te bedrooms. Husband testified he did not hide the money. Husband testified the money w as missing when he l ater we nt to get i t to put it b ack in the bank. Husband claimed Wife took the money and had a

dmitted to

him on several occasions she had the money . Wife vehemently denied these allegations and

testified she did not know the cash was in the house until Husband accused her of stealing it. Husband testified he attempted to file a formal police report accusing Wife of stealing the money , but was a

dvised by a police detectiv e “ther

e wasn’ t no use in d

oing it” because

it was his-3-

wordagains thers. On cross examination, Husband admitted four people lived in the house, all of whom had access to the money . He also admitted the house was empty on occasion.

In its Memorandum Opinion, the Trial Court found there was no evidenc e that could “convictanybo dy for taking this money. . . .” The Tria l Court stated “[a]nything could hav e happened to [the money]. He could have g otten i t and taken it out. She could have gotten it and taken it out. Somebody else could have g otten it and taken it out . . . . neither one of them knows what happened to it.” The Trial Court also found Husband had full control of the money from the time it left the bank until he took it home and put it into a drawer.

A Final Judgment of

Absolute Divorce was entered

on October 22, 2001, in which the Trial Court reserved

judgment on several issues including the division of real proper ty. The final divorce decree also allowed one week for

the parties to attempt to come to an agreement conc erning the division of

both real and personal property . On March 12, 2002, the Trial Court entered an Orde r awardi ng, as part of the property division , Wif

e a judgment against Husband for $24,000, representing one-half of the missing money ; holding Wife’ s inte rest in the property deeded to her and her siblings by their

mother constituted separate property ; and ordering the parties’ residential property sold and the pr

oceeds split equally.

Discussion

Alth ough not exactly

stated as such, Hus band rai ses the f ollowing issues on a

ppeal: 1) did the Trial Cour

t err in holding Wife’s interest in the real property deeded to Wife and her sibl ings by their mother to be Wife’s se parate non-marital property ; 2) did the Trial Courterr in not treating Husband’ s interes tin the par ties’ residential property

as a separate pre-marital intere st; and 3) did the Trial Court err in awarding Wife $24,000, representing one-half of the mone y determined to be missing. Although Husband’s argument links issues one and two, these

are two s eparat

e issues, and we will deal with each in turn.

Our review i s de novo up on th e r ec or d, ac co mp an ie d b y a presumption of corr

ectness of the findings of

fact of the trial court, unless the preponderance of the evidence is otherwise. Tenn. R. App. P. 13(d); Bogan v. Bogan , 60 S.W.3d 721, 727 (Tenn. 2001). A trial court's conclusions of law are subject to a de novo review with no presumption of correctness. S. Constructors, Inc. v. Loudon County Bd. of Educ. , 58 S.W.3d 706, 710 (Tenn. 2001).

We first address whether

the Trial Court erred in determiningWife’s interest in the real property deeded to Wife and her sibli ngs by their

mother to be Wife’s separate non-marital pr op er ty. When cl assi fying pr operty, cour

ts must look to Tenn. Code Ann. § 36-4-121, which provides definitio ns for ‘marital property ’ and ‘separate property ’. Davis v. Davis , No. W2001- 01748-COA-R3-CV, 2002 Tenn . App. L EXIS 732, *6 (Tenn. Ct. Ap p. Oct. 16, 2002 ), no appl. perm. appeal filed ; Tenn. Code Ann. § 36-4-121(b) (2002). Specific ally , the statu te states : “Proper

ty acquired by a spouse at

any time by gift, bequest, de

vise or de scent;” co ns ti tu te s s ep ar at e p ro pe rt y. Tenn. Code Ann. § 36-4-121(b)(2)(D) (200 2). Ho wever, separate property can become marital-4-

propert y if it is co-mingled with either marital property or the separate property

of the other spouse,
or if transm utation oc curs such that the propert y istreated in a manner indicating an intent for it to become marital property

. Langschmidt v. Langschmidt , 81 S.W.3d 741, 747 (Tenn. 2002).

Marital propert

y a lso includes “any inc

rease in value during the marriage” of separ ate propert y if “eac h party substantia

lly c ontribute d to its preservation and appreciation . . . .” Tenn. Code Ann. § 36- 4-121(b) (1)(B)(2002). S ubstantia l contribu tio n is defin ed to include, but not be limited to, “the direct or indirect contribution of a spouse as homemaker, w age ear n er, parent or family financia

l manager, . . .” Tenn. Code Ann. § 36-4-121( b)(1)(D) (2002).

The property in question was deeded to Wife a nd her sib lings by their moth

er as a gift. Wife’s mot

her ret ained a l ife esta te in this property. The

evidence in the record is undisputed that this prope

rty was neith er co-m ingled with marital property or H usband’s separate property , nor ever treated in any

manner indicating an

intent for it to become marital property . The property was a g if t t o W ife a nd re ma in ed he r s ep ar at e p ro pe rt y.

Alth ough the parties never resided at the property deeded to Wife and her s iblings, Husbandappear s to argue the re al prope rty in questio n should be

class ified as marita

l proper ty because Husband worked outside the home and provide d mo nies toward the parties’ support and housi ng. Husband argues he made a substantial contr ibution to the preservation and ap preciation of the property in que stion. The Trial Court, however, did not find any increase in the value of the subject property. We there

fore, must examine the record to determine if the evidence pre ponderates in favor of a finding there w as an y increase in value in the subject prope rty , which in

crease could have been classified as marital property

.

A thorough review indicates the recor d is devoid of any evide

n ce o f an incr

ease in value of th is pr op er ty. Rather, Wife testified the property has declined in value. Husband testified he understood the current appraised value of the property

to be $80,000. However, no evidence was presented as to the v alue of t

he prope rty when it or

iginally was deeded to Wife and her siblings. As such, we hold the evidencedoes not preponderate in favor of a finding there was an increase in value of this property. We, theref ore, affirm the Trial Court’s holding that Wife’s entire i nte rest in the propert y deeded to Wife and her siblings by her mother

was Wi fe ’s se pa ra te no n- ma ri ta l p ro pe rt y.

We next discuss whether the Trial Court erred in not recognizing Husband’sinterest in the par ties’ residential property as a separate pre-marital intere st. Husband’ s brief a ppears t o argue since the Trial Cour

t recognized Wife’ s interes t in the re al prope rty deeded to Wife and her sibl ings as separate property , t he Trial Co urt also should have

recog nized as se

parate propert y Husband’s contrib utions of pre-marital funds to the parties’ residential property . This contention contains two diffe

rent and unrelat ed issues . We alre ady

have ad dressed the is sue regarding the propert y deeded to Wife from her mother and will now address whether Husband’s contributions of pre-ma rital funds to the partie s’ reside ntial prop erty

should hav e been charact erized a s separa

te property.-5- The Trial Court found the par ties co-m ingled p re-mar ital fundsto purcha se a house, which they later sold. The pr oceeds from thesale of the house were used to purchase a subsequent house and this scenar

io was re peated s uch that o ver the c ourse of the marriage the parties purc hased and sold several houses in which they had lived. The Trial Court found the pre-marital funds each party had contr ibuted ha d been c o-mingl ed to such an extent it was impossible to trace which monies went to which portion of each subsequent house purchase. Assuch, t he house the parties resided in at the time

of the div orce, w

hich waspurchas e d with co -mingled funds during the marriag e, constituted marital property. The evidence does not

prepond erate a gainst t he Trial Court’s f indings. We affirm on this issue.

We next consider whether the Trial Cour t erred in awarding Wife a

judgmen t again st Husbandfor $24,000, representing one-half of the mone y determined

to be missing. As discussed above, Tenn. Code Ann. § 36-4-121 governs the classifica tion and distribution of prope rty in a divorce. However, as this Court has stated:
[S]peaking in gene

ral te rms, prop erty

once owned by

a spouse, either a s separa te propert y or marital property , butnot owned by either spouse at the time of divorce, is not subject to classification and division or distrib

ution whe

n the divor

ce is pronounced. This is because, generally speaking, a co urt cannot divide and/or distribute what is “not there” – property

no longer owned by

the parties, individua

lly or jointly, at the time of the divorce.

Brock v. Brock , 941 S.W.2d 896, 900 (Ten n. Ct. App. 1996) (f

ootnote om

itted); see Tenn. Code Ann. § 36-4-121 (2002).

The Trial Court

found anything

could have happened to the $48,000. Husband, Wife
or a third party c ould have taken the money . The record indicated neither party knew what had happened to the money. The Tria

l Courtfound that the evidence was insufficient to determine who actually took the money. As found by the Trial Court, “[a]nything could have happened

to [the
money]

. He coul d have g otten it a nd taken i

t out. She c ould have

gotten it and take

n it out. Somebody

else could have gotten it and taken it out . . . neither one of them kn ows what h appen to it.” Husband testified that the money was not in his possession. So did the Wife. The Trial Court found, as to the mo ney , th at “ [i]t’s appa rently gone . . . .” The e

vidence does not pr

eponder ate agains tthe Trial Court’s findings. T he Trial Court concluded that neither Husband nor Wife satisfied the burden nece ssar y t o show that t he ot her h ad ta ken t his mo ney . Weagree with the Trial Court.

The Trial Court never found that Husband had the money . Rat her, the Trial Court stated “I don’t know what happe ned to [the money].” I

n short, the Trial Court found that while it could not tell where the

money went, it di d find tha

t it was “apparently

gone . . . .” Since the money disappeared

prior to th

e divorc e, th e Trial Court erred in dividing property which was “not there” as neither Husband nor Wife was able to show that the other had taken the money. The

refore, we vacate the portion of the judgment awarding Wife a

judgmen t again st Husband for $24,000. Neither-6-

party is ent itle d to j udgmen t aga i nst the other regarding the missing $48,000. We do not me an to sugge st one may avoid distribution of marital assets by dissipating them prior to the court’s award. “[O]ne party’s dissipation of assets ca n be considered in formulating a propert y di vision tha t is equitable.” Hulshof v. Hulshof , No. 01A01-9806-CH-00339, 1999 Ten n. A pp. LEXIS 653, at *15 (Tenn. Ct. App. Sept. 29, 1999), no appl. perm. appeal filed . Tenn. Code Ann. § 36-4-121 specific ally

require s the cour

t to consid

er “[ t]he contribution of each party to the acquisition, preservation, apprec ia tion , depreciation or d issipation of the ma

rital or s eparat

e proper ty, ...” in making an equitable distribution. Tenn. Code Ann. § 36-4-121(c)(5) (2002). I n the c ase at hand, the Trial Court made no finding that the $48,000 had been dissipated and this issue was not raised on appea l.

Conclusion

The portion of

the Tria l Court’s ju dgment awarding Wife a judgment against Husband for $24,000 is vacated. The judgment is affirmed as modified. This caus e is remanded to the Trial Courtfo r s uc h f

ur th er pr oc ee di ng s a s m ay b e r eq ui re d, if an y, consistent with this Opinion and for collection of the co sts below. The costson appea l are as sessed e qually

agains t the Appe

llant, Carrol Preston Flannary , and his surety, and the A ppellee, Joyce Ann F

lannary.

___________________________________ D. MICHAEL

SWINEY, JUDGE