# FILED
July 29, 1999 Cecil Crowson, Jr. Appellate Cou rt Clerk 

### IN THE COURT OF APPEALS OF TENN ESSEE

AT NASHVILLE

SHARON ANN SMITH, ) ) Plaintiff/Appellee, ) ) Appeal No. ) 01-A-01-9809-CH-00515 VS. ) ) Williamson Chancery ) No. 22128 ALAN WAYNE SMITH, ) ) Defendant/Appellant. )
APPEALED FROM THE CHAN CERY COUR T OF WILLIAMSON CO UNTY AT FRANKLIN, TENNESSEE THE HONORABLE HENRY D ENMARK BELL, JUDGE

R. E. Lee Davies HARTZOG, SILVA & DAVIES 123 Fifth Avenue North P. O. Box 664 Franklin, Tennessee 37065-0664 Attorney for Plaintiff/Appellee GREGORY D . SMITH FARRIS, WARFIELD & KANADAY, PLC 424 Church Street, Suite 1900 Nashville, Tennessee 37219 Attorney for Defendant/Appellant

AFFIRMED AND REMAN DED

BEN H. CANTRELL, PRESIDING JUDGE, M.S.
CONCUR: KOCH, J. CAIN, J.1 Mr. Smith calcul ated the gross amount he reali zed upon the exer cise of his stock o ptions to be $217,142. However, for the purposes of thi s appeal, he has accepted the f igure of $22 1,180, whi ch was ca lculated by M s. Sm ith and us ed by the trial co urt. - 2 - 

## O P I N I O N

When the parties divorced, the trial court calcul ated the husband’s net incomefor child support purposes by averaging his sa lary over a three y ear period. The wife appealed, arguing that the child support gui deline s required that a capital gain of over $200,000 realized by the husband d uring the same period also be included in the calculation. We agreed, but suggested the trial c ourt could prorate the capital g ain over the longer time-frame during which the capital g ain income was apparently earned. Upon remand, the trial court took ev idence as to the length of that period, and made a fresh calculation, w hich the husband objects to in th is ap pe al . We affirm the trial court.
I. Prior Proceedings

Sharon Smith and Alan Smith divorc ed in 1994. The trial court di vided the marital property and gave the wife custody of the two children of the marr iage. Mr. Smit h was order

ed to pay chi ld support a nd alimony.Two years later, Ms.Smi t h petitioned the trial court for an increase in child su pport, claiming that her former husband’s net income had greatl y increased.

The trial court heard proof that the husband earned an annual salary that averaged $113,000 as a Vice President

of Comdata Corporation during the years 1994-1996. He also earn ed substantial bonuses and commissions during those years. In 1995, Mr. Smith exerc ised stock options he had acq uired incident to hi s employment, resulting in a capital gain of $221,180 1 . The court calculated a fixed amount of monthly chi ld support ( $2,086) based

upon Mr. Smith’s salar y income and- 3 -

ordered that he also pay as child support 32% of any future bonuses or commissions he received. The court d id not take the 1995 cap ital gain i nto acco unt in an y way. The wife appealed.

Followingoral argument, we filed an opinion in this case ( Smith v. Smith , Appeal No. 01-A-01-9705-CH -00216, filed Nashville,October 29, 1997). We found that the trial court had exc eeded its authority

in ordering an automatic adjustment in child support based upon the husband’s future bonuses and commissions, because the child support guidelines promulgated by the Legisla ture requ ire the courts to fix
some definite amount for the obligor to pay, based upon his earning capacity. Tenn. Code Ann. § 36-5-101(a)(2)(A) . We also not ed that t he definition of gross in come found in the Rules an d Regulati ons of the Stat e of Tennessee de

fined gross

income broadly as “all income from any sou rce” and that it specifically included capital gains.

We accordingly remanded this case to t he trial court for a fresh calculation of net income upon which to base Mr. Smith’s child support obligation, w ith the following instructions:

We therefore hold that in calculating a defin ite monthly amount of child support, the tr ial court must consider Mr. Smith’s 1995 capital gains as well as his commissions, bonuses and salary. Since Mr. Smith appare ntly accumulated his stockoptions during the entire period of his employment

at Comdata, and not just dur ing the year in which he exercised them, it mig ht be equitable to a verage his capital gains over that entire period, or to prorate them in some way, rather than ju st averaging them ov er the three year period that was

used for calcul ating his average salary, commission and bonus. The trial court may take proof on the process by which the options were acquired, in order to make this determination.

II. Current Proceedings- 4 - Followingthe remand, Ms. Smith filed a motion to set chil d support. The chancellor

conducted a hearing in his chambers on May 19, 1998. No court reporter was present, so there is no transcript of that hearing. The court heard arguments of counsel and reviewed unsworn documents presented by the parties.

Ms. Smith presented a letter by Sar a Groeh ler, Stock Option Administrator

at Ceri di an Corporation (Ceridian bought Comdata in 1995), accompanied by an emp loy ee stock option summary in the form of a table, which listed the grant date for Mr. Smith’s stock options as Augu st 3, 19 93. Mr. Smith presented an offer of employment, in the form of a letter to him dated April 17, 1983 from Louis Molettier

e, a Senior Vice President of C omdata. The letter outlined the sal ary and benefits that were to accompany the offered job, including a g rant of “25,000 shares ofthe Company’s common stock under the 1987 Non-Statutory Stock Option Plan.”

Followingthe hearing , the trial court issued an order pro-rating Mr. Smith’s stock opt ions f rom August 1993. The chancellor ’s order referenced the documents described above, but did not state the reasons for appare ntlypreferring the evidence presented by Ms. Smith over that of Mr. Smith. The recalculation of Mr. Smith ’s a nnual income from 1994-1996 resulted in a f inding that his average gross annual incomewas $206,881, or $17,240 a month. Based upon th is amount (or more precisel y, based upon the net income deriv ed from this amoun t), Mr. Smith’s child support obligation came to $3,860 per month. The arr ea rage from the date of the court’s earlier order came to $28,069 after considera tion of the amount of child support actually paid s ince that time.

Mr. Smith’s attorney

subsequently filed a motion under Rule 59, Tenn. R. Civ. P., to

Alter or Amend the Judgment, or for New Trial. Attached as an exhibit to the motion was a ledger containing a listing

of stock options that were granted- 5 -

between January 1, 1987 and January 27, 1995. The ledg er indicated that Mr. Smith had been granted options for 25,000 s hares of Comdata Corporation on Oc tober 1, 1991. At the he aring on the motion, Mr. S mith also produced the swor n affidavit of Michael W. Sheridan , acting Secretary of C omdata, testifying to the regularity and correctness of both the above-mentioned ledger, and of anothe r doc ument, the minutes of a regular

meeting of the Board of Directors of Comdata Corporation held
on October 1, 1991, which i ncluded aresolution approving the aforementioned grant to Mr. Smith.

In her response to the Rule 59motion, Ms. Smith argued tha t Mr. Smith
was not entitled to

have his new evidence considered by the court because he failed to file an affidavit to meet his burden of proving that the evidence he wi shed to present could not have been discovered prior tothe original proceeding through the exercise of due diligence

. See Seay v. City of Knoxville , 654 S.W.2d 397, 399 (Tenn. App. 1983).

At the end of the hearing, t he c hancellor took the matter under advisement. On August 26, 1998, he filed an order denying the Rule 59 motion. This appeal followed.

III

. A Necessarily Limited Review

We must note at the outset the irr egular nature of the hearing of May 19, 1998. A proceeding in chambers may be useful for some limited purposes, but when the rights of the p art ies are to be conclusiv ely determined, it is no t an adequate substitute for a hearing in open court, in accordance with the Rules of Civil Procedure and the Rules of Evidence.- 6 - The absence of a transcript of the evidence is particularly damagi ng to an appe llant’s prospects, for without such a transcript (or in the alternativ e, a statementof the evidence filed in accordance with Rule 24(c), Tenn. R. App. Proc.), the presumption of correctness that normally accompanies findings of fact by the trial court becomes conclusive. See Rule 13(d), Tenn. R. App. Proc.; Word v. Word , 937 S.W.2d 931 (Tenn. App. 19 96); Sh errod v. Wix, 849 S.W.2d 780, 783 (Tenn. App. 1992).

It appears to us that both parties submitt ed without objection to the procedureswhose results ar e nowat issue. Neither party alleges that he or she objected to the admission of documents submitted by the other that could have been excluded as inadmissible hearsay by a timely objecti on. If we are mistaken and objections were indeed taken, the failure of the parties t o preserve those objecti ons byarranging

for the prese nce of a court reporter pr

events us fr

om revie wing the court’s a ctions in any meani ngful way.

Reliefis not general ly av ailable in the appellate cour ts to a party who fails to take whatev

er acti on is nec

essary to prev ent or nu llify

the harmful effect of an
error. See Rule 36(a), Tenn. R. App. P. T hus, we cannot consider the appellant’s argumentthat the trial court erred in accepting the unsworn,unexplained letter from Ms. G roehler and its attachments, an d in using those documents to d etermine the date of the grant of the stock options in question.

As for the hearing on the Motion to Alter or Amend or for New Trial, we believe the appellee is correct in stating that when the bas is of such a motion is the existence of newly discovered evidence, the appellant has a duty to furnish the court with an adequate explanation as to why such evidence could not have been produced at the trial of the case. The reason is that w ithout such a

rule, our courts wou ld have- 7 -

a m uch more di fficult time closing the books on many cases, and achiev ing that finality of judgment whi ch is one of the primary goals of our judicial sy stem.
Since the appellant did not even attempt to offer such an explanation, the trial court did not err in refusing to

reverse its earli er ruling, despite the appellant’s contention that he was in possession of evidence that was better than the evidence he produced at trial.

IV. The Educational Trust Fund

The Tennessee Child Support Guidel ines permits the court to order a non-custodial parent to pay that p ort ion of child support whic h is based upon net i ncome in excess of $6,250 per month i nto an educational trust fund for the bene

fi t of the children, rather than going directly to th e custodial parent. Tenn. Rules & Regs 1240-2-4-.04(3). The appellant argues that the t rial court erred in refusing to order the creation of such a fund. However the creation of an educational trust f und is no t mandat ory, but is within the sound discreti on of the trial court. Nash v. Mulle , 846 S.W.2d 803, 804 (T enn. 1993).

Since there is no evidence in the record that the ap pel lant asked the
court to create an educational trus t fund, we cannot find that the court abused its discretion in failing to do so. But because of the modifiable nature of child support orders, we see nothing to prev ent the appellant

from moving the court for the creation of such a fund, if he believes it w ould be to his advantage, or that of the children.

Ms. Smith has also asked to be awarded her attorney fees on appeal. We note, as we did in our earlier opinion in this case, supra , that a substantial portion of the attorney fees she incurr ed were for the purpose of vindicat ing her right to- 8 -

receive an appropriate amount of support for herchildren. We therefore direct the trial court to order the appellant to pay one-half of her attorne y fees on this appeal.

V.

The order of the trial cour t is aff irmed. Remand this cause to the Chancery Court of W illiamson Count y for further pro ceedings consi stent with this opinion. Tax the costs on appeal to the appellant.

_________________________________ BEN H. CANTRELL, PRESIDING JUDGE, M.S.

CONCUR:

_____________________________ WILLIAM C. KOCH, JR., JUDGE

_____________________________ WILLIAM B. CAIN, JUDGE

### IN THE COURT OF APPEALS OF TENN ESSEE AT NASHVILLE

SHARON ANN SMITH, ) ) Plaintiff/Appellee, ) Appeal No. ) 01-A-01-9809-CH-00515 ) VS. ) Williamson Chancery ) No. 22128 ) ALAN WAYNE SMITH, ) Affirmed and ) Remanded Defendant/Appellant. )



### J U D G M E N T This cause came on to be heard upon the rec ord on ap p eal from the Chancery Court of Williamson County, briefs an d argum ent of counsel; upon consideration whereof, this Court is of the opinion that in the decree o f the Chancellor there is no reversible error.

In accordance with the

opinion of the Court filed herein, it is , therefore, ordered and decreed by this Court that the decree is affirmed. The cause is remanded to the Chancery Cou rt of Will iamson County for the enforcement of the decree a nd for th e collect ion of th e costs ac crued be low.

Costs of this appeal are taxed aga inst Alan W. Smith, Principal, and Gregory D. S mith, Su rety, for which execu tion may is sue if ne cessary.

______________________________________ BEN H. CANTRELL, PRESIDIN G JUDGE, M.S.

______________________________________ WILLIAM C. KOCH, JR., JUDGE

______________________________________ WILLIAM B. CAIN, JUDGE