IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

September 7, 2000 Session

LOLA ANN NEUGEBAUER TAYLOR v. JAMES RUSSELL TAYLOR

 Appeal from the Circuit Court for Rutherford County

Nos. 40639 & 40939 Royce Taylor, Judge

No. M1999-02398-COA-R3-CV - Filed June 6, 2003

This appeal arises from the dissolution of a four-year marriage. The wife sought a divorce in the

Circuit Court for Rutherford County because of the husband’s chronic drunkenness, non-support,

and threats of violence. Following a bench trial, the court granted the wife a divorce on the ground

of inappropriate marital conduct. The trial court also divided the martial estate, gave the wife

custody of the parties’ four-year-old daughter, and directed the husband to pay child support. On this

appeal, the husband asserts that the trial court erred in its classification and division of the marital

property, that the trial court awarded an excessive amount of child support, and that the trial court

erred by denying his request to place a portion of his child support in an educational trust fund. For

her part, the wife requests an additional award to defray her legal expenses for this appeal. We

conclude that the trial court (1) correctly classified and divided the marital estate, (2) properly

sequestered a portion of the husband’s assets to assure the timely and regular payment of his child

support, and (3) properly declined to establish an educational trust fund for the child. We also

conclude that the trial court erred by failing to direct the trial court clerk to return the remainder of

the sequestered funds to the husband when his child support obligation ceased. In addition, we

decline to award the wife her legal expenses for this appeal or to find that this appeal was frivolous.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Modified in Part and

Affirmed in Part

WILLIAM C.KOCH,JR., J., delivered the opinion of the court, in which BEN H.CANTRELL,P.J.,M.S.,

and WILLIAM B. CAIN, J., joined.

Jim Wiseman, Murfreesboro, Tennessee, for the appellant, James Russell Taylor.

Charles Patrick Flynn, Brentwood, Tennessee, for the appellee, Lola Ann Neugebauer Taylor.

OPINION

I.

Lola Ann Neugebauer met James Russell Taylor in 1993 when he responded to her call for

a taxi. Ms. Neugebauer was a thirty-year-old, recently transplanted Texan who had never been

married. Mr. Taylor was forty-two years old and had been married once. They began dating

immediately and soon thereafter purchased a house in Christiana together. They were married on

June 11, 1994, and their only child was born on May 9, 1995.
1

The record is ambiguous with regard to when the parties signed this agreement. Ms. Taylor states in her

interrogatory responses that she signed the agreement on the day before the wedding and that Mr. Taylor signed it twenty

days later. Mr. Taylor insists that he signed it when Ms. Taylor did. The notary public who authenticated the parties’

signatures admitted that she was not present when Ms. Taylor signed the agreement, that she did not observe Mr. Taylor

sign it, and that she notarized the agreement as of the date provided by Mr. Taylor. Notwithstanding these irregularities,

the trial court determined that the agreement had been properly executed, and the parties have not contested the point

on this appeal. 

-2-

Ms. Taylor did not bring any substantial assets to the marriage. However, even though he

was driving a taxi, Mr. Taylor had inherited several assets, including an antique collection valued

at approximately $50,000 and a twelve-acre tract of commercially valuable real property on the

Shelbyville Highway in Murfreesboro. At Mr. Taylor’s insistence, the parties signed an antenuptial

agreement to ensure that the real property remained with Mr. Taylor’s family.1

Ms. Taylor had completed one year of community college in Texas before she moved to

Tennessee. She obtained a job preparing title policies for a law firm in Murfreesboro, and by 1996,

she had become the general manager for a title agency in Rutherford County. By 1998, she earned

more than $45,000 per year. Mr. Taylor earned approximately $300 per week driving a taxi until

he lost his driver’s license. Ms. Taylor knew that Mr. Taylor used “a little bit of pot” when they

were married but did not believe that he had a substance abuse problem. All this changed following

the birth of the parties’ daughter in May 1995.

Mr. Taylor quit his job as a taxi driver approximately one month after the birth of the parties’

daughter because he had lost his driver’s license. He worked only sporadically during the remaining

years of the marriage and used the money he earned to buy himself alcohol, cigarettes, and drugs.

He ceased contributing to the household expenses and spent very little time at home – preferring to

spend his time in local bars instead. He often came home in the middle of the night and awakened

Ms. Taylor and their daughter by yelling at them in a drunken stupor.

During 1996, the parties engaged in three transactions that are significant to the issues raised

on this appeal. On January 25, 1996, they executed a deed conveying the Christiana property to

themselves as tenants by the entirety with a right of survivorship. On the same day, Mr. Taylor

executed a quitclaim deed conveying the twelve-acre tract on the Shelbyville Highway to himself

and Ms. Taylor as tenants by the entirety. On September 16, 1997, the parties sold 7.56 acres of the

property on the Shelbyville Highway for $131,999.03. They used approximately $30,000 of the

proceeds to pay marital debts, especially credit card bills, and they put the remaining funds in a joint

savings account. They also listed the remaining four acres of the Shelbyville Highway property for

sale at an asking price of $600,000.

The parties’ home life continued to decline. In September 1998, Ms. Taylor filed a petition

for a protective order in the Circuit Court for Rutherford County describing three years of domestic

violence in which Mr. Taylor customarily threatened and shoved her. She also alleged that on

September 1, 1998, Mr. Taylor threatened to kill her in the presence of their daughter. The trial court

issued an ex parte order of protection on September 8, 1998, and when Mr. Taylor failed to respond,

entered an order of default awarding temporary custody of the parties’ daughter to Ms. Taylor. The

order restrained Mr. Taylor from contact with Ms. Taylor except as needed for visitation with their

child and directed Mr. Taylor to pay $50.40 per week as child support to the clerk of the court.
2

The dividing line between marital and separate property frequently becomes blurred. Marital property can

become separate property when one spouse gives it to the other spouse. Kinard v. Kinard, 986 S.W.2d 220, 232 (Tenn.

Ct. App. 1998); Hanover v. Hanover, 775 S.W.2d 612, 617 (Tenn. Ct. App. 1989). On the other hand, separate property

(continued...)

-3-

Ms. Taylor filed suit for divorce on November 23, 1998 after the parties’ daughter found drug

paraphernalia in their home. She also filed a petition seeking to hold Mr. Taylor in contempt for

failing to pay the child support required by the order of protection. Because Mr. Taylor had no

known address at the time, the sheriff’s office served him with the contempt papers at a bar named

Carney’s. The trial court thereafter consolidated the divorce and contempt cases for trial.

At trial, the parties stipulated the grounds for divorce but contested the division of their

property. The trial court, sitting without a jury, granted Ms. Taylor a divorce on the ground of

inappropriate marital conduct. In its division of the marital estate, the trial court classified both the

Christiana property and the Shelbyville Highway property as marital property. The trial court

directed that the Shelbyville Highway property be sold and that each party receive one-half of the

net proceeds from the sale.

 The trial court also approved Ms. Taylor’s proposed parenting plan that gave her sole

custody of the parties’ daughter and that obligated Mr. Taylor to pay $90 per week in child support.

In light of Mr. Taylor’s track record for paying child support, the court directed 21% of his share of

the capital gains from the sale of the Shelbyville Road property be paid to Ms. Taylor as child

support. The trial court also directed that $50,000 of Mr. Taylor’s share of the proceeds from the

sale of the Shelbyville Road property be deposited with the trial court clerk for the benefit of the

parties’ child and authorized Ms. Taylor to withdraw $90 per week as child support. The trial court

finally directed that any funds being held by the trial court clerk should be paid over to the child on

her eighteenth birthday. Mr. Taylor has appealed.

II.

THE CLASSIFICATION AND DIVISION OF THE MARITAL PROPERTY

Mr. Taylor takes issue with the trial court’s decision to classify the Christiana property and

the Shelbyville Road property as marital property and the manner in which the court divided the

parties’ marital estate. Specifically, he asserts that the court’s classification decision runs afoul of

the prenuptial agreement and that the court awarded Ms. Taylor an inequitably large share of the

marital estate. We have determined that the manner in which the trial court classified and divided

the parties’ property was legally correct and equitable.

A.

Dividing a marital estate necessarily begins with the classification of the parties’ property as

either separate or marital property. Miller v. Miller, 81 S.W.3d 771, 775 (Tenn. Ct. App. 2001);

Anderton v. Anderton, 988 S.W.2d 675, 679 (Tenn. Ct. App. 1998). Tennessee is a “dual property”

state. Smith v. Smith, 93 S.W.3d 871, 875-76 (Tenn. Ct. App. 2002). Accordingly, property cannot

be included in the marital estate unless it fits within the definition of “marital property” in Tenn.

Code Ann. § 36-4-121(b)(1)(A) (Supp. 2002). By the same token, “separate property,” as defined

in Tenn. Code Ann. § 36-4-121(b)(2), should not be included in the marital estate.2 Because
2

(...continued)

can become marital property when its owner commingles it with marital property and no longer treats it as separate

property. Langschmidt v. Langschmidt, 81 S.W.3d 741, 747 (Tenn. 2002); Smith v. Smith, 93 S.W.3d at 878; Batson

v. Batson, 769 S.W.2d 849, 858 (Tenn. Ct. App. 1988). Even if property is clearly separate, the increase in the

property’s value during the marriage and the income from the property may be considered marital property if the

nonowner spouse contributed substantially to the separate property’s preservation and appreciation. Tenn. Code Ann.

§ 36-4-121(b)(1)(B); Cohen v. Cohen, 937 S.W.2d 823, 832-33 (Tenn. 1996).

-4-

property classification issues are questions of fact, Mitts v. Mitts, 39 S.W.3d 142, 144-45 (Tenn. Ct.

App. 2000); Brown v. Brown, 913 S.W.2d 163, 167 (Tenn. Ct. App. 1994), appellate courts will

review a trial court’s classification decisions using the familiar standard of review in Tenn. R. App.

P. 13(d).

Once a trial court has classified the property as either marital or separate, it should place a

reasonable value on each piece of property subject to division. Edmisten v. Edmisten, No. M2001-

00081-COA-R3-CV, 2003 WL 21077990, at *11 (Tenn. Ct. App. May 13, 2003); Robertson v.

Robertson, No. M1999-02103-COA-R3-CV, 2001 WL 459100, at *3 (Tenn. Ct. App. May 2, 2001)

(No Tenn. R. App. P. 11 application filed). The parties themselves must come forward with

competent valuation evidence. Kinard v. Kinard, 986 S.W.2d at 231; Wallace v. Wallace, 733

S.W.2d 102, 107 (Tenn. Ct. App. 1987). When valuation evidence is conflicting, the court may

place a value on the property that is within the range of the values presented by all the relevant

valuation evidence. Watters v. Watters, 959 S.W.2d 585, 589 (Tenn. Ct. App. 1997); Brock v. Brock,

941 S.W.2d 896, 902 (Tenn. Ct. App. 1996). Decisions regarding the value of marital property are

questions of fact. Kinard v. Kinard, 986 S.W.2d at 231. Accordingly, they are entitled to great

weight on appeal and will not be second-guessed unless they are not supported by a preponderance

of the evidence. Smith v. Smith, 93 S.W.3d at 875; Ray v. Ray, 916 S.W.2d 469, 470 (Tenn. Ct. App.

1995).

Once the parties’ marital property has been classified and valued, the trial court’s goal is to

divide the marital property in an essentially equitable manner. Tenn. Code Ann. § 36-4-121(a)(1);

Miller v. Miller, 81 S.W.3d at 775. A division of marital property is not rendered inequitable simply

because it is not precisely equal, Robertson v. Robertson, 76 S.W.3d 337, 341 (Tenn. 2002), Cohen

v. Cohen, 937 S.W.2d at 832, or because each party did not receive a share of every piece of marital

property. Manis v. Manis, 49 S.W.3d 295, 306 (Tenn. Ct. App. 2001); King v. King, 986 S.W.2d

216, 219 (Tenn. Ct. App. 1998). The fairness of the trial court’s approach is inevitably reflected in

its results. Bolin v. Bolin, 99 S.W.3d 102, 107 (Tenn. Ct. App. 2002); Watters v. Watters, 959

S.W.2d at 591. 

Dividing a marital estate is not a mechanical process but rather is guided by considering the

factors in Tenn. Code Ann. § 36-4-121(c). Kinard v. Kinard, 986 S.W.2d at 230. Trial courts have

wide latitude in fashioning an equitable division of marital property, Fisher v. Fisher, 648 S.W.2d

244, 246 (Tenn. 1983); Manis v. Manis, 49 S.W.3d at 306, and appellate courts accord great weight

to a trial court’s division of marital property. Wilson v. Moore, 929 S.W.2d 367, 372 (Tenn. Ct. App.

1996); Edwards v. Edwards, 501 S.W.2d 283, 288 (Tenn. Ct. App. 1973). Thus, we will ordinarily

defer to the trial court’s division of the parties’ marital estate unless it is inconsistent with the factors

in Tenn. Code Ann. § 36-4-121(c) or is not supported by a preponderance of the evidence. Brown
3

Paragraph 2 of the agreement contained an identical provision regarding Ms. Taylor’s one-half interest in the

house and lot in Christiana.

-5-

v. Brown, 913 S.W.2d at 168; Mahaffey v. Mahaffey, 775 S.W.2d 618, 622 (Tenn. Ct. App. 1989);

Hardin v. Hardin, 689 S.W.2d 152, 154 (Tenn. Ct. App. 1983).

B.

Mr. Taylor first takes issue with the trial court’s decision to classify his interest in the

Christiana property and the Shelbyville Highway property as marital property. He insists that

treating these interests as marital property is inconsistent with the parties’ antenuptial agreement,

which reflected their intent to maintain the property they owned at the time of the marriage as their

separate property. He also insists that the deeds the parties executed in 1996 and their joint use of

the property do not provide a basis for varying the terms of the antenuptial agreement. We disagree.

Antenuptial agreements are statutorily favored vehicles for defining the status of property

separately owned by a spouse prior to marriage. Tenn. Code Ann. § 36-3-501 (2001); Cary v. Cary,

937 S.W.2d 777, 781 (Tenn. 1996); Soloman v. Murrey, ___ S.W.3d ___, ___, 2002 WL 31319767,

at *3 (Tenn. Ct. App. 2002). Properly negotiated antenuptial agreements are enforceable contracts,

Wilson v. Moore, 929 S.W.2d at 373, and thus should be interpreted using the rules of construction

ordinarily applicable to other written contracts. Key v. Collins, 145 Tenn. 106, 109, 236 S.W. 3, 4

(1921); In re Estate of Wiseman, 889 S.W.2d 215, 217 (Tenn. Ct. App. 1994). The cardinal rule of

construction is that antenuptial agreements should be construed to give effect to the parties’

intentions as reflected in the agreements themselves. Sanders v. Sanders, 40 Tenn. App. 20, 30-31,

288 S.W.2d 473, 477-78 (1955). 

The parties’ antenuptial agreement reflected their “mutual desire . . . that the real property

now owned by each of the parties be and remain their respective, separate properties and under their

respective sole ownership and control.” To accomplish this purpose, paragraph 1 of the agreement

provides, in part:

Any real property, either now owned by the said JAMES

RUSSELL TAYLOR (specifically including a parcel containing

11.38 acres, more or less, on the Shelbyville Highway and an [sic]

one-half (1⁄2) interest in a house and lot in Christiana, Tennessee.) or

hereafter acquired by him, with the proceeds of now owned property,

shall be the separate property of the said JAMES RUSSELL

TAYLOR.3

Paragraph 3 provides:

All property acquired by either JAMES RUSSELL TAYLOR

or LOLA A. NEUGEBAUER, or by both of them, after solemnization

of the marriage, whether real or personal, shall be jointly owned

property of the parties as tenants by the entirety, including all rents,

issues, profits and proceeds of the property except, however, as above

set forth.
4

Courts must construe contracts consistently with the law in existence at the time the contract was signed. Kee

v. Shelter Ins., 852 S.W.2d 226, 228 (Tenn. 1993); Robbins v. Life Ins. Co., 169 Tenn. 507, 510, 89 S.W.2d 340, 341

(continued...)

-6-

Paragraph 4 provides:

This agreement shall become effective upon the solemnization

of the marriage between the parties and shall be null and void if the

proposed marriage fails to occur for any reason. This agreement shall

be modified by a subsequent written agreement at any time JAMES

RUSSELL TAYLOR commingles his separate property, or proceeds

therefrom, with community property in order that JAMES RUSSELL

TAYLOR’S separate interest in community property may be

determined and preserved. Said agreement may be modified,

amended, or rescinded at any time after the said marriage by a

subsequent written agreement between the parties.

Paragraphs 5 and 6 state that the agreement does not preclude either Mr. Taylor or Ms. Taylor from

making gifts of their real or personal property to each other. Finally, paragraph 9 provides, in part:

Under no circumstances shall the following events, either

individually or collectively, be considered evidence of an intention,

either expressly or by implication, or of an agreement, actual or

implied, to change the character of such separate property:

* * *

c. The commingling by either spouse of his or her separate funds

or separate property with community funds or community

property or with the separate funds or separate property of the

other spouse so long as a written agreement as provided in

Paragraph 4 hereinabove is entered into prior to said

commingling;

d. Any oral statements by either spouse;

e. Any written document by either spouse, other than an express

written agreement as provided for in Paragraph 4

hereinabove.

These four paragraphs contain three significant ambiguities that affect the outcome of this case.

The first ambiguity is found in paragraph 3, which states that the property acquired by either

or both spouses during the marriage and the income or proceeds from this property shall be

considered “jointly owned,” and, therefore, marital property. This paragraph, however, contains an

exception preceded by the following vague phrase: “except, however, as above set forth.” As best

as we can determine, consistent with the law in existence when this agreement was signed,4 this
4

(...continued)

(1936); Winter v. Smith, 914 S.W.2d 527, 537 (Tenn. Ct. App. 1995). 

5

There are two reasons for our conclusion. First, it is consistent with Tenn. Code Ann. § 36-4-121(b)(2)(C).

Second, the exception language in paragraph 3 follows and appears to limit the scope of the phrase “all rents, issues,

profits and proceeds of the property.”

6

Langschmidt v. Langschmidt, 81 S.W.3d at 747 (Tenn. 2002); Smith v. Smith, 93 S.W.3d at 878.

7

It is commonly accepted that the parties to a written contract may freely change the terms of their contract by

entering into a subsequent written contract. Similarly, the courts have noted that parties to a contract permitting only

written amendments or changes may, by their conduct, waive their right to insist on only written modifications. Realty

Shop, Inc. v. RR Westminster Holding, Inc., 7 S.W.3d 581, 600-01 (Tenn. Ct. App. 1999). In addition, the courts may

infer a subsequent modification to a written contract when the parties’ conduct is sufficiently inconsistent with the written

contract to warrant concluding that the parties intended to modify the terms of their agreement. Southern Colo. MRI,

Ltd. v. Med-Alliance, Inc., 166 F.3d 1094, 1099 (10th Cir. 1999); Lauderdale County Sch. Dist. v. Enterprise Consol.

Sch. Dist., 24 F.3d 671, 687 (5th Cir. 1994); Danforth Orthopedic Brace & Limb, Inc. v. Florida Health Care Plan, Inc.,

750 So. 2d 774, 776 (Fla. Dist. Ct. App. 2000). 

-7-

exception refers to the provision in paragraph 1 stating that the “proceeds of now owned property”

belonging to Mr. Taylor prior to the marriage remained his separate property.5

The second ambiguity is found in the second sentence of paragraph 4 requiring the parties

to execute a “subsequent written agreement” whenever Mr. Taylor “commingles his separate

property, or proceeds therefrom, with community property.” It is unclear whether the purpose of this

agreement is to preserve the continuing separate character of commingled property or to confirm that

the parties intended the commingled property to become marital property. The most logical and

consistent interpretation of this provision is that it requires the parties to execute a subsequent

written agreement to preserve the separate character of commingled property. We arrive at this

conclusion for two reasons. First, the legal effect of commingling separate property with marital

property is to change separate property into marital property.6 Second, paragraph 9(c) specifically

recognizes the legal effect of commingling and states that commingling will not have the effect of

changing separate property into marital property “so long as a written agreement as provided in

Paragraph 4 hereinabove is entered into prior to said commingling.” Thus, commingling of separate

property or the proceeds from separate property has the effect of transforming either the property or

the proceeds into marital property unless the parties have entered into a “subsequent written

agreement” to the contrary.

The third ambiguity stems from the vague antecedent reference of “said agreement” in the

third sentence of paragraph 4. It is difficult to determine whether “said agreement” refers to the

antenuptial agreement itself or to the “subsequent written agreement” required by paragraph 4 if the

parties intend for commingled separate property to remain separate. Both the antenuptial agreement

and the “subsequent written agreement” are mentioned in the preceding sentence. In light of

Paragraph 9(e), the most logical conclusion is that the term “said agreement” refers to the

“subsequent written agreement” described in the second sentence of paragraph 4. All other

references to the antenuptial agreement are couched in terms of “[t]his agreement,” and paragraph

9(e)’s reference to “an express written agreement” most logically appears to refer to the “subsequent

written agreement” rather than the antenuptial agreement.7
-8-

Based on our understanding of these provisions of the antenuptial agreement, we construe

the agreement to provide, expressly or by implication, that

(1) The interests in real property owned by each spouse when they were married, and any

proceeds from this property, remained their separate property.

(2) All property acquired by either or both spouses during the marriage, except for the

proceeds attributable to their separate property, became marital property.

(3) Both spouses were permitted to make gifts of their separate property to the other

spouse.

(4) Both spouses could commingle their separate property with marital property or the

other spouse’s separate property, and commingled property became marital property

unless the parties first executed a written agreement providing that the commingled

property would remain separate property.

(5) The spouses could amend the antenuptial agreement with another written agreement

reflecting their intent to alter the status of their property.

We will examine the parties’ interest in the disputed properties in light of our construction of their

antenuptial agreement. 

First, with regard to the Christiana property, the evidence shows that the parties conveyed

their separate interests in the property to each other as tenants by the entirety without signing a

separate agreement reflecting their intention for their interests to remain their separate property.

These deeds provide written evidence of their agreement to commingle their interests in the property

and to treat these interests as marital, as opposed to separate, property. In fact, they lived together

in the house for the remainder of their marriage, and none of their conduct with regard to the

property reflects an intention on either party’s part to treat their former individual interests in the

property as separate.

Similarly, Mr. Taylor conveyed the Shelbyville Road property to himself and Ms. Taylor as

tenants by the entirety without first obtaining an agreement that the property would remain his

separate property. The deed provides definitive written evidence of his intent to make an inter vivos

gift of an undivided one-half interest in the property to Ms. Taylor. The parties’ conduct following

the conveyance is entirely consistent with this intent. Following the conveyance, the parties jointly

sold 7.56 acres of the property and treated the proceeds of the sale as marital property by

commingling them with other marital funds and by using them for marital purposes.

After considering the evidence in light of our construction of the antenuptial agreement, we

are unpersuaded by Mr. Taylor’s claims that his interest in the Christiana property or the Shelbyville

Road property remained a separate property interest. Based on our construction of the antenuptial

agreement, we have concluded that the evidence supports the trial court’s conclusion that both the

marital home in Christiana and the Shelbyville Road property should be classified as marital

property.
8

The trial court awarded several marital assets to Ms. Taylor, but gave Mr. Taylor an offsetting cash award for

one-half their value to be paid out of her share of the proceeds of the sale of the Shelbyville Highway property. The total

amount of Mr. Taylor’s equity interest in these assets, not including his interest in the Putnam Investment Account which

was otherwise accounted for, was $14,469. The trial court deducted the three debts totaling $5,785 allocated to Mr.

Taylor and directed Ms. Taylor to pay Mr. Taylor $8,684 [$14,469 - $5,785 = $8,684].

-9-

C.

Mr. Taylor also takes issue with the trial court’s decision to award Ms. Taylor approximately

one-half of the marital estate that included the remaining Shelbyville Road property. He asserts that

the award to Ms. Taylor is inordinately large in light of the relative brevity of the marriage. We find

no error in the manner in which the trial court divided the marital property and allocated the marital

debts.

Unfortunately, Mr. Taylor overlooked Tenn. Ct. App. R. 7 (then designated as Tenn. Ct. App.

R. 15) requiring appellants in divorce cases raising issues involving the amount or disposition of

marital property to provide a table depicting the manner in which the trial court divided the marital

estate. We have prepared this table ourselves based on the trial court’s order and its valuation of the

marital property:

Marital Property8

Wife

Marital home $ 68,000.00

1/2 Shelbyville Highway property 300,000.00

100 shares Murfreesboro Bancorp 1,250.00

Household furnishings 15,000.00

Nissan Maxima 16,000.00

Putnam Investment Account 8,633.33

SunTrust savings 274.63

SunTrust checking 1,469.19

Kemper account 1,979.88

Total Property $412,607.03

Husband

1/2 Marital home equity8$ 3,500.00

1/2 Shelbyville Highway property 300,000.00

100 shares Murfreesboro Bancorp 1,250.00

1/2 Household furnishings equity87,500.00

1/2 Nissan Maxima equity8

1,500.00

1/2 Putnam Investment Account equity8

4,316.66

SunTrust savings equity8245.00

1/2 SunTrust checking equity8734.00

1/2 Kemper account equity8990.00

$320,035.66

Marital Debt

Wife

Home mortgage $ 61,000.00

Loan on Maxima 13,000.00

Unsecured marital liabilities 9,570.00

Judgment for Mr. Taylor 8,684.00

Mr. Taylor’s share of Putnam Account 4,316.66

Debt $ 96,570.66

Wife’s Net Property $316,036.37

Husband

IRS8$ 500.00

Credit card84,785.00

Hospital8500.00

$ 5,785.00

Husband’s Net Property $314,250.66
-10-

The factors to be considered in dividing a marital estate are delineated in Tenn. Code Ann.

§ 36-4-121(c). Among these factors is the duration of the marriage, and this court has recognized

that the duration of a marriage is an important consideration when the marriage has been relatively

short. We have stated that parties to a marriage of relatively short duration should, when practicable,

be restored to their pre-divorce condition, not only with regard to their property, McClellan v.

McClellan, 873 S.W.2d 350, 352 (Tenn. Ct. App. 1993); Batson v. Batson, 769 S.W.2d at 859, but

also with regard to their need for spousal support. Crain v. Crain, 925 S.W.2d 232, 234 (Tenn. Ct.

App. 1996). However, the duration of the marriage does not trump all the other factors that may be

relevant in a particular case. As we have already noted, the process of dividing a marital estate in

an equitable manner is not mechanical.

We have determined that the following factors are relevant and should influence the trial

court’s division of the marital estate in this case. First, the court allocated almost 95% of the marital

debt – $96,570.66 – to Ms. Taylor. Second, the trial court placed the parties’ child in Ms. Taylor’s

custody and, consistent with Tenn. Code Ann. § 36-4-121(d), awarded her the marital home to

enhance the stability in the child’s life. Third, Ms. Taylor became the primary breadwinner during

the marriage, while Mr. Taylor did not contribute significantly to the financial health of the marriage

and, if anything, dissipated assets. Fourth, Mr. Taylor received a valuable antique collection valued

at $50,000 as his separate property. Based on these factors, and our consideration of the entire

record, we have determined that the manner in which the trial court divided the parties’ marital estate

is essentially equitable.

III.

MR. TAYLOR’S CHILD SUPPORT OBLIGATION

Mr. Taylor raises four issues regarding his child support obligation. First, he asserts that the

trial court should not have considered his capital gains from the sale of the Shelbyville Highway

property as income for the purpose of calculating his child support obligation. Second, he takes issue

with the amount of funds that the court sequestered to assure the payment of his child support

obligation. Third, he insists that the court should have placed the sequestered capital gains in an

educational trust fund. Finally, he asserts that the trial court should have directed the clerk to return

to him any of the proceeds from the sale of the Shelbyville Highway property remaining in the

clerk’s possession when his child support obligation ends.

A.

Providing an overview of the trial court’s decision regarding Mr. Taylor’s child support

obligation will provide a context for addressing his specific points. Following the trial, it would

have been evident to even the most casual observer that it was unlikely that Mr. Taylor would pay

his child support in a timely and consistent manner. He had not done so prior to the trial and had

accumulated a $1,130.40 arrearage. By the time of the divorce hearing, he could no longer drive a

taxi because he had lost his driver’s license, and he was working in a car wash. His poor work ethic

and substance abuse made it likely that he would dissipate any valuable assets that might come into

his hands rather than using them to assure that his child received the financial support she deserved.

Accordingly, the trial court was faced with two challenges with regard to Mr. Taylor’s child support

– first, to arrive at the proper amount of the support; and second, to take appropriate steps to assure

that this support would be paid over time.
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Turning first to the amount of Mr. Taylor’s child support obligation, the trial court

determined that Mr. Taylor should pay $90 per week in child support. Then, to assure that this

support would be paid over time, the trial court directed Mr. Taylor to pay into court a portion of his

share of the marital estate and authorized Ms. Taylor to withdraw $90 per week from these funds.

Under this arrangement, Mr. Taylor was not required to pay child support directly to Ms. Taylor

unless the funds paid into court were depleted before his child support obligation ended. To create

this fund, the trial court ordered Mr. Taylor to pay into court $50,000 of his share of the proceeds

from the sale of the Shelbyville Highway property along with 21% of his share of the capital gains

realized on the sale of the property. The trial court also determined that the parties’ daughter would

be entitled to receive the balance of the funds remaining in the trial court clerk’s hands on her

eighteenth birthday.

B.

Mr. Taylor first argues that the trial court erred by treating his share of the capital gains from

the sale of the Shelbyville Highway property as income for the purpose of determining the amount

of his child support obligation. The short answer to this argument is that the trial court did not base

its assessment of Mr. Taylor’s income on these capital gains.

As a general matter, all capital gains – even those realized from an isolated transaction – must

be considered as gross income for the purpose of determining an obligor parent’s child support

obligation. Tenn. Comp. R. & Regs. r. 1240-2-4-.03(3)(a) (1994); Brooks v. Brooks, 992 S.W.2d

403, 407 (Tenn. 1999). The only judicially created exception to this rule involves capital gains

resulting from the sale of an asset to fund the division of property in a divorce case. Alexander v.

Alexander, 34 S.W.3d 456, 464 (Tenn. Ct. App. 2000). The purpose of this exception is to prevent

the “double-dipping” that would result if capital gains were considered both as a marital asset and

as income.

Without question, Mr. Taylor’s capital gains realized from the sale of the Shelbyville

Highway property could not have been treated as part of his gross income for child support purposes

because the trial court had ordered this property sold as part of the division of the marital estate.

However, the trial court did not calculate Mr. Taylor’s income based on these capital gains but rather

on imputed income from these funds. The trial court explained its calculation of Mr. Taylor’s

income clearly and succinctly as follows:

It appears to me that he [Mr. Taylor] is capable of earning up to $300

a week, according to his own statement in his interrogatories and his

testimony here today, when he is driving a cab. He’s earning

minimum wage now. He is also capable of earning money from the

value of this property [the Shelbyville Highway property] when it is

sold in some amount. And he could pay, clearly could pay, the

amount that is suggested by the plaintiff of $360 a month, based upon

those earnings and earnings that would be available to him from the

sale of this property. 
9While Mr. Taylor has taken issue with the trial court’s consideration of his share of the capital gains from the

sale of the Shelbyville Highway property, he does not take direct issue with the amount of his child support obligation

if we determine that the trial court’s treatment of his capital gains was proper. Therefore, the question of the amount of

Mr. Taylor’s child support obligation is not directly before us. However, we have concerns about the amount of the $90

per week child support award in light of our practical assessment of the income Mr. Taylor may actually be realizing

from his share of the proceeds from the sale of the property.

A $90 per week child support obligation for one child reflects that the obligor parent nets approximately $1,840

per month. Thus, in light of Mr. Taylor’s testimony that he nets approximately $1,118 per month at the car wash, the

trial court must have determined that Mr. Taylor could earn an additional $722 per month from his share of the proceeds

from the sale of the Shelbyville Highway property. Imputing this much additional income seems quite aggressive taking

into consideration: (1) the tax consequences to Mr. Taylor from the sale of the property, (2) the requirement that he must

deposit into court $50,000 plus 21% of his share of the capital gains with the trial court clerk, and (3) the prevailing rate

of return on funds in the present market. It may be unrealistic to assume that Mr. Taylor can earn approximately $8,700

per year from investing the funds that are actually at his disposal. However, we must leave this question to the trial court

because Mr. Taylor did not raise it on appeal. 

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This statement demonstrates that the trial court recognized that Mr. Taylor’s total gross income was

made up of two income streams. The first was his earned income from his employment. The second

was the income he could receive from the proceeds of the sale of the Shelbyville Highway property.

The distinction between the capital gains themselves and the imputed income from the

investment of these capital gains is not only substantive but also is also outcome-determinative. The

Child Support Guidelines permit the court to include in its calculation of the gross income of an

obligor parent income imputed from valuable assets and resources that the parent owns or controls.

Tenn. Comp. R. & Regs. r. 1240-2-4-.04(1)(f) (1989) states that “[v]aluable assets and resources

(expensive home or automobile which seem inappropriate for the income claimed by the obligor)

of the obligor should be considered for the purpose of imputing income and increasing the support

award in any case if the court finds that equity requires it.”

In one of our few decisions construing Tenn. Comp. R. & Regs. r. 1240-2-4-.04(1)(f), we

declined to impute additional income to the obligor spouse because he had not concealed his income

and resources and because “his lifestyle [had] absolutely nothing to do with the setting of child

support.” Alexander v. Alexander, 34 S.W.3d at 466. Our refusal to invoke Tenn. Comp. R. & Regs.

r. 1240-2-4-.04(1)(f) in that case was not intended to limit its application to cases in which the extent

of an obligor spouse’s holdings reflects that he or she is hiding income. In appropriate

circumstances, trial courts may impute additional income to a spouse when the spouse owns valuable

assets or resources that, for whatever reason, are not currently producing income. Accordingly, the

trial court did not abuse its discretion or act inequitably when it decided to base its calculation of Mr.

Taylor’s gross income, in part, upon the anticipated income stream from his share of the proceeds

of the sale of the property.9

C.

Mr. Taylor also complains that the trial court’s decision to sequester 21% of his share of the

capital gains from the sale of the Shelbyville Highway property was “inherently inequitable” because

the trial court had already sequestered $50,000 to assure the payment of his child support. We find

this argument unconvincing.
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Tennessee’s trial courts have at their disposal a broad range of statutory remedies to assure

the payment of child support in circumstances such as this. The obligor spouse’s income is not the

only source for child support payments. Tenn. Code Ann. § 36-5-102(a) (2001) permits the courts

to use the obligor spouse’s real and personal property to pay child support. Similarly, Tenn. Code

Ann. § 36-5-103(a)(1) permits trial courts to enforce their child support orders by requiring the

obligor parent to post a bond or to provide sufficient personal surety in accordance with Tenn. Code

Ann. § 36-5-101(b). In addition, Tenn. Code Ann. § 36-5-103(a)(2) empowers trial courts to

sequester income, rents, and profits from the obligor spouse’s real and personal property to be used

for the payment of child support.

The Tennessee Supreme Court has cautioned against ordering lump sum child support

payments unless required to address a child’s present and specific need. Hobbs v. Hobbs, 27 S.W.3d

900, 904 (Tenn. 2000). However, this holding involved a lump sum child support payment directly

to the custodial spouse. It does not apply to a trial court’s decision to sequester income or property

under Tenn. Code Ann. § 36-5-102(a), -103(a)(2) to assure that child support is paid.

In this case, the trial court did not order that 21% of Mr. Taylor’s share of the capital gains

be paid directly to Ms. Taylor. Rather, the court directed that these funds be paid into court so that

they would be available to meet Mr. Taylor’s future child support obligation, whatever it might be.

This remedy preserves the future flexibility required by the Tennessee Supreme Court in Hobbs v.

Hobbs. Ms. Taylor will only be able to draw against these funds consistent with Mr. Taylor’s child

support obligation. The fact that these funds are on deposit with the court will not interfere with the

trial court’s decision should it at some future time determine that Mr. Taylor’s child support

obligation should be modified.

If Mr. Taylor’s obligation to pay child support remains unchanged during the remainder of

his daughter’s minority, his child support payments will amount to approximately $64,000. These

payments will be spread out over thirteen years, and it is inevitable that the child’s needs will

increase as she grows older. Accordingly, we decline to find that the trial court erred by sequestering

21% of Mr. Taylor’s share of the capital gains from the sale of the Shelbyville Highway property

along with $50,000 of the proceeds from the sale. 

D.

Mr. Taylor also asserts that if sequestering 21% of his share of the capital gains from the sale

of the Shelbyville Highway property was justified, the trial court should have placed these funds in

an educational trust in accordance with Tenn. Comp. R. & Regs. r. 1240-2-4-.04(3) (1997).

Decisions establishing an educational trust fund are discretionary. Bryan v. Leach, 85 S.W.3d 136,

153 (Tenn. Ct. App. 2001). We have determined that the trial court’s denial of Mr. Taylor’s request

for an educational trust fund is consistent with the facts and the applicable law.

The educational trust fund provisions in the Child Support Guidelines are triggered when the

obligor parent’s net income exceeds $10,000 per month. While Mr. Taylor’s monthly income may

exceed $10,000 in the month he receives the proceeds from the sale of the Shelbyville Highway

property, the record contains overwhelming evidence that over time, hisregular monthly income will

never exceed $1,500. Thus, even taking the proceeds from the sale of the property into

consideration, Mr. Taylor’s average monthly income is not high enough to trigger Tenn. Comp. R.
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& Regs. r. 1240-2-4-.04(3). In addition, Mr. Taylor never demonstrated that his $90-per-week child

support obligation was excessive in light of his daughter’s needs. Without such a showing, we

would be hard pressed to fault the trial court for declining to establish an educational trust fund. See

Huntley v. Huntley, 61 S.W.3d 329, 337 (Tenn. Ct. App. 2001).

E.

Finally, Mr. Taylor asserts that the trial court erred by failing to provide that the funds

remaining in the trial court clerk’s hands on his daughter’s eighteenth birthday should be returned

to him. We agree because the funds being held by the clerk are intended to assure the payment of

Mr. Taylor’s child support obligation. Once the obligation is discharged, the funds should be

returned to him. See Price v. Price, No. M1998-00840-COA-R3-CV, 2000 WL 192569, at * 9

(Tenn. Ct. App. Feb. 18, 2000) (No Tenn. R. App. P. 11 application filed); Lee v. Askew, No. 02A01-

9805-JV-00133, 1999 WL 142389, at *2 (Tenn. Ct. App. Mar. 17, 1999), perm. app. denied (Tenn.

Nov. 1, 1999); Klemetstrud v. Klemetstrud, No. 02A01-9306-CV-00150, 1994 WL 556365, at *5

(Tenn. Ct. App. Oct. 12, 1994), perm. app. denied (Tenn. June 5, 1995). Accordingly, on remand,

the trial court should modify its final order to provide that any funds remaining in the hands of the

trial court clerk when Mr. Taylor’s child support obligation ceases shall revert to him.

IV.

As a final matter, Ms. Taylor requests this court to award her the legal expenses she incurred

on this appeal and to assess damages against Mr. Taylor pursuant to Tenn. Code Ann. § 27-1-122

(2000). We agree with the trial court’s decision to require Ms. Taylor to pay her own legal expenses,

and we decline to find that this appeal is frivolous.

Spouses who are required to return to court to enforce their former spouse’s child support

obligations may recover their legal expenses. Tenn. Code Ann. § 36-5-103(c). The purpose of

permitting these awards is to protect and promote a child’s right to support. Accordingly, requiring

parents who frustrate child support orders to underwrite the expense of vindicating a child support

order is appropriate. Sherrod v. Wix, 849 S.W.2d 780, 785 (Tenn. Ct. App. 1992).

While decisions regarding requests for legal expenses are discretionary, Placencia v.

Placencia, 3 S.W.3d 497, 504 (Tenn. Ct. App. 1999), awards for these expenses incurred by a spouse

to vindicate child support rights are becoming familiar and almost commonplace. Deas v. Deas, 774

S.W.2d 167, 170 (Tenn. 1989); Sherrod v. Wix, 849 S.W.2d at 785. These awards are appropriate

when the parent seeking to defend or to enforce a child support obligation prevails or when requiring

the prevailing spouse to pay his or her legal expenses would inequitably reduce the amount of

support the child receives. Richardson v. Richardson, 969 S.W.2d 931, 936 (Tenn. Ct. App. 1997).

A spouse who is otherwise entitled to an award for legal expenses should not be prevented from

collecting them simply because he or she might be financially able to pay these fees. Gaddy v.

Gaddy, 861 S.W.2d 236, 241 (Tenn. Ct. App. 1992).

Ms. Taylor claims that Mr. Taylor filed this appeal only to delay and to cause her expense.

She seeks frivolous appeal damages pursuant to Tenn. Code Ann. 27-1-122 due to the perceived

“baseless[ness]” of Mr. Taylor’s appeal. In light of the changes we have made to the trial court’s

order, however, this appeal cannot be characterized as frivolous. Moreover, we will not award a
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party attorney’s fees as a punitive measure. Derryberry v. Derryberry, No. 03A01-9801-CV-00023,

1999 WL 486863, at * 6 (Tenn. Ct. App. July 13, 1999) (No Tenn. R. App. P. 11 application filed).

Even if Mr. Taylor is “just plain mean,” Ms. Taylor’s income, the assets she received from the

division of property, and the child support ordered to be paid to the clerk of the trial court indicates

that leaving Ms. Taylor to pay her own fees will not deprive the child of the support to which she

is entitled. Accordingly, we find no error in the trial court’s decision to leave the parties to pay their

own attorney’s fees.

V.

We affirm the trial court’s judgment as modified herein and remand the case to the trial court

for further proceedings consistent with this opinion. We also tax the costs of this appeal in equal

proportions to Mr. Taylor and his surety and to Ms. Taylor for which execution, if necessary, may

issue.

_____________________________ 

WILLIAM C. KOCH, JR., JUDGE