Court Opinion

ID: 1081517
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:49:57.332984+00
Date Added: 2024-06-11T12:05:35.130312
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                                                                   FILED
                           WESTERN SECTION AT JACKSON      Nov. 25, 1996

                                                                   Cecil Crowson, Jr.
                                                                    Appellate Court Clerk

BRENDA BAILEY LOYD,                  )
                                     )
       Plaintiff/Appellant,          )      Madison County Chancery No. 41548
                                     )
vs.                                  )
                                     )
WENDELL RAY LOYD,                    )      Appeal No. 02A01-9504-CH-00084
                                     )
       Defendant/Appellee.           )

              APPEAL FROM THE MADISON COUNTY CHANCERY COURT
                          AT JACKSON, TENNESSEE

                    THE HONORABLE JOE C. MORRIS, CHANCELLOR

For the Plaintiff/Appellant:         For the Defendant/Appellee:

Mary Jo Middlebrooks                 Wendell Ray Loyd, Pro Se
Jackson, Tennessee                   Jackson, Tennessee

                                     REVERSED AND REMANDED

                                     HOLLY KIRBY LILLARD, JUDGE

CONCUR:

W. FRANK CRAWFORD, P.J., W.S.

ALAN E. HIGHERS, J.
                                            OPINION

       This case involves contempt proceedings brought against Wendell Ray Loyd (“Husband”)

by Brenda Bailey Loyd (“Ex-Wife”) for failure to pay alimony. The trial court found that Husband

did not have the present ability to pay and therefore could not be incarcerated for contempt. We

reverse and remand for further proceedings.

       Husband and Ex-Wife were divorced in 1991. In its Final Decree, the trial court did not

award alimony to Ex-Wife. Instead, the court awarded her Loyd’s Telephone, Inc., the telephone

sales and installation business that she and Husband had run, which the court valued at the time at

$287,884. It awarded Husband the marital residence, a car, some shop equipment, and two IRA’s

worth $11,301.96 each. The court also ordered the parties to equally divide their furniture and

appliances and to each pay his own attorney’s fees.

       Ex-Wife appealed to this Court the division of property and the failure to award her alimony

and attorney’s fees. Loyd v. Loyd, 860 S.W.2d 409, 410 (Tenn. App. 1993). She maintained that

she lacked the technical experience to successfully run the business. Id. at 412. Ex-Wife also

alleged that Husband had drained the business of its value, formed a new telephone sales and

installation business, gone into direct competition with her, stolen customers, and not cooperated in

transferring to her the assets of Loyd’s Telephone, Inc. Id. at 410-11.

       This Court found in favor of Ex-Wife. Id. at 412-13. The business was awarded to Husband,

as well as the shop equipment and the car. Ex-Wife was awarded the marital residence, both of the

IRA’s (or their cash equivalent in the eventuality that Husband had liquidated them), and $99,000,

as an equitable distribution of the marital estate. Husband was ordered to pay the $99,000 awarded

to Ex-Wife in monthly installments of $412.50 per month. The payments were to begin on May 1,

1993, and continue for either twenty years or until Ex-Wife’s death, whichever occurred first. Id.

at 412. In addition, Ex-Wife was awarded $1,000 per month in alimony, the payments to begin May

1, 1993, and continue until her death or remarriage. Id. at 413.

       Subsequently, Husband filed a motion asking the trial court to suspend or reduce alimony.

One of the supporting reasons for the motion was that Husband’s physical problems had resulted in

a reduced income, adversely affecting his ability to pay alimony. In response, Ex-Wife filed a

motion for contempt, alleging that Husband had failed to make any of the ordered monthly payments,

had failed to surrender the IRA in his possession (Ex-Wife already had possession of the other IRA),
had failed to surrender the marital residence, had stripped the marital residence of fixtures and

otherwise vandalized it, had failed to pay real estate taxes on the marital residence during the time

in which he inhabited it, and had failed to pay a note owed by Loyd’s Telephone, Inc., to First

American Bank. Ex-Wife also filed a motion to dismiss Husband’s petition to reduce or suspend

alimony, arguing that Husband was in contempt and that his motion should not be heard until he had

purged himself of contempt.

       At the hearing on the parties’ motions, Ex-Wife testified in support of the allegations in her

contempt motion. Husband testified that he had not yet received from Ex-Wife all of the assets of

Loyd’s Telephone, Inc., and that the marital furniture had not yet been equitably divided. He also

testified that he had remarried. His new wife, Kitty Loyd (“Wife”), had bought a house for the two

of them, making the down payment out of her own money. The house had been placed solely in

Wife’s name, and Husband testified that this was done “[b]ecause I didn’t want Brenda [Ex-Wife]

to get it.” Husband also testified that he had previously cashed the IRA in his possession in order

to pay accountant’s and attorney’s fees. Since the divorce, Husband’s new business, Modern

Telephone Systems, had purchased two vehicles, a van and a new Ford Taurus. He and Wife both

drove the Ford Taurus. Husband claimed that his income had declined because he had been having

trouble with his back and knees, that he had been unable to pay alimony as a result, and that he was

willing to work out a payment plan if the court would allow it.

       After the hearing, the trial court wrote a letter to the parties’ attorneys. In the letter, the trial

judge informed the parties that Husband would have to be brought current on the obligations ordered

by the Court of Appeals before his motion to reduce alimony would be considered.

       Several months later, Ex-Wife filed another motion asking the trial court to find Husband in

contempt. The motion stated that Husband had still failed to make any of the required payments.

Ex-Wife alleged that Husband had still not paid anything towards the amount of the IRA that he had

cashed, that he had not paid any of the delinquent taxes, and that the note on Loyd’s Telephone had

not been satisfied. Although Husband had given Ex-Wife possession of the marital residence, Ex-

Wife stated that drapes and window shutters had been removed; built-in appliances, light fixtures,

and built-in cabinets were removed; the central heat and air unit had been removed and replaced with

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an inoperable unit that could not be repaired; there was interior damage to the house; and various

personal items belonging to Ex-Wife were missing.

       At the hearing on the motion for contempt, Husband testified that in September of 1993 he

had had surgery on his knees and had been at home recovering for approximately eight weeks, during

which time he had been able to do very little work. Husband claimed that he suffered from arthritis

in both his knees and hands. There was no medical documentation or other support of Husband’s

alleged medical problems admitted as evidence at the hearing. Husband also testified that he was

the only salesperson for his company and that the pain in his knees, which had continued despite the

surgery, made it difficult for him to make service calls. Consequently, his personal income had

decreased dramatically, as had the earnings of his business, Modern Telephone Systems. However,

when asked on cross-examination why he had made no attempts to pay alimony prior to the onset

of his medical problems, Husband said only, “I can’t explain it.”

       Husband testified that he had two employees, besides Wife, to install telephone equipment

and handle related work. He also testified that he could drive around town, that he could make sales

calls, and that the surgery on his knees had been an arthroscopic procedure. Husband stated that

Wife owned half of Modern Telephone Systems and that she earned $250 a week from the company

for bookkeeping, driving Husband on out-of-town assignments, and otherwise being of general

assistance, all while additionally employed elsewhere.

       Ex-Wife testified that she had seen Husband driving around town in the company van. She

also testified that, though Husband had been limping in the courtroom, she had seen him walking

into the post office the previous day without a limp.

       The trial court found Husband in contempt. The court found him in arrears for a period of

ten months for the total sum of $14,125 ($1,000 per month in alimony plus $412.50 per month in

payments representing the division of marital property). The court ordered Husband to pay the

arrearage by a date certain or work out an acceptable payment plan with Ex-Wife. If he failed to do

so he would be placed in the county workhouse until he had purged himself of contempt. Husband

failed to pay the arrearage or offer any payment plan and was subsequently incarcerated.

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       After having served a little over two months in the county workhouse, Husband moved for

a stay of the court’s judgment. The trial court released him on his own recognizance on April 15,

1994, pending further proceedings. A hearing ensued on October 4, 1994.

       At this hearing, Husband presented the expert testimony of his accountant, Rex Baker

(“Baker”). Baker had prepared a compiled financial statement for the first eight months of 1994 for

Wendell Loyd Enterprises, Inc., d/b/a Modern Telephone Systems. According to Baker, the business

showed a profit of $1,113 for the first eight months, but due to prior years’ losses, the stockholder

equity was at a deficit of over $7,000. Baker also presented the corporation’s tax returns for 1993

and testified that they revealed that Husband and Wife had been paid a total of $33,024 in salaries

during 1993.

       Husband testified that he still suffered pain in his knees and his back and was unable to do

the physical work demanded by service calls at his business. He claimed that he had undergone a

heart catheterization and had tried to slow down since then to keep his stress levels low. He testified

further that he injured his left hand in a table saw accident. Husband offered no medical records or

other evidence to substantiate these claims.

       Husband testified that he valued his business at $55,000 to $60,000. He stated that he had

given Wife 50% of the company stock in exchange for a used car worth approximately $2,000. He

admitted that Wife drew a salary while employed at two other jobs but explained that both of her

other jobs were part-time. Husband stated that, as of the date of the hearing, Wife was working

solely for Modern Telephone Systems. He testified that he had recently brought a competitor, Aaron

Gilbertson (“Gilbertson”), into the business. In exchange for a work van which Husband valued at

about $2,850 and some tools and equipment, Husband gave Gilbertson 33% of the corporation’s

stock. Gilbertson’s 33% share of the stock came out of Husband’s share of stock--Wife retained

her 50% share. In addition, the company bought Gilbertson a new automobile, but Husband claimed

that Gilbertson had agreed to a reduction in salary as a means of paying for the vehicle.

       Husband testified that the house he and Wife lived in had been purchased after the Court of

Appeals’ decision had been filed but that Wife had purchased it with her own money. He admitted

                                                  4
that he had paid about $900 or $1,000 in cash for a new fence for the house. Husband also paid

approximately $200 in cash for paint and bought $5,000 worth of carpet on credit.

       Husband submitted several exhibits indicating his salary and Wife’s salary during 1993 and

the first eight months of 1994. In addition, he submitted a self-compiled breakdown of his monthly

living expenses and his total debts as of October 1, 1994. He submitted an exhibit showing that his

monthly expenses, joint with Wife, were $2,868.40 per month and that the total debts for Husband

and Wife together were $18,896.79. This list did not include the mortgage on Husband’s house,

titled in Wife’s name, but the house payment was included among Husband’s monthly living

expenses. Husband testified that after paying their bills each month, he and Wife were left with

about $280 surplus from which to pay alimony.

       The record in this cause includes the history of Husband’s salary and Wife’s salary from

Modern Telephone. Prior to this Court’s previous decision in this case, Husband consistently paid

himself $615.05 per week. In July, 1993, approximately three months after this Court entered its

previous decision, in which Husband was ordered to begin paying alimony to Ex-Wife, Husband

decreased his income from the new business from $615.05 per week to $615.05 per month, with the

exception of September 1993, the month of Husband’s arthroscopic procedure, in which he paid

himself $1,230.10. Husband attributed the decrease in his salary to his physical problems. He

continued receiving $615.05 per month through February, 1994, until the trial court ordered him

committed to the workhouse for failure to make the payments ordered by this Court. The trial court

released Husband on April 14, 1994. In June, 1994, he received a total of $913.91. Thereafter, he

began receiving $298.86 per week from his business, nearly twice the salary he made before his

incarceration.

       Prior to March, 1993, the new business paid Wife $171.42 per week for bookkeeping and

assisting Husband, while she also was holding at least one other part-time job. In March 1993, her

salary increased to $250 per week. She was not paid for Christmas week in 1993, during which she

apparently held seasonal retail employment, but she received a Christmas bonus of $292.37. In

August 1994, Wife’s salary increased to $430 per week.

                                                5
       The trial court took the matter under advisement, made specific findings in a letter dated

December 1, 1994, and subsequently, on February 3, 1995, entered an order incorporating those

findings:

       “The Court cannot find that Mr. Loyd willfully depleted the business which was
       previously awarded to Ms. Loyd, since there were no restrictions on Mr. Loyd
       entering into a competitive business. At the present time, Mr. Loyd does not have
       sufficient funds to purge himself of contempt, which puts him in the position of
       owing the arrearage on the alimony payments, but being unable to pay them. The
       payments on the $99,000 indebtedness are upon a division of property which Ms.
       Loyd insists has no value.

       An IRA was converted during the pendency of this case for which Mr. Loyd is
       indebted to Ms. Loyd. The Court was not advised of any conversion of this account
       in a timely manner, by mistake or for whatever reason.

       Mr. Loyd is indebted to Ms. Loyd for the unpaid real estate taxes.

       There is a note outstanding at the First American Bank, but the evidence is not
       conclusive as to when the debt was incurred, or who is responsible. Mr. Loyd has
       been placed in willful contempt previously by this Court, and has been punished
       accordingly.

       Perhaps the parties could agree upon a payment schedule by Mr. Loyd for the IRA,
       taxes, and the alimony that had accrued before Mr. Loyd’s motion for modification
       was filed in September, 1993. Since Mr. Loyd is not capable of purging himself of
       contempt, the Court has reconsidered its decision that it would not consider Mr.
       Loyd’s motion for modification until he did so. Further, Mr. Loyd is in arrears as per
       Order of February 7, 1994, in the amount of $1,412.50 [sic], and this figure should
       be considered in any payment schedule.

       Future alimony from February 7, 1994, will be considered after any payment proposal
       is presented to the Court if such can be reached between the parties.”

(The February 7, 1994 order makes it clear that the arrearage referred to was $14,125, rather than

$1,412.50.) The February 3, 1995 order noted that, during the period after the December 1, 1994

findings of fact, Ex-Wife had renewed a previous settlement offer to Husband. Husband refused the

offer and did not make any counteroffer or proposal, in contravention of the trial court’s directions.

The trial court later made its order final pursuant to Tenn. R. Civ. P. 54.02. It is from this order Ex-

Wife now appeals.

       Our review of findings of fact by the trial court in this case is de novo upon the record, with

a presumption of correctness unless the evidence preponderates otherwise. No presumption of

correctness attaches to the trial court’s holdings of law. Tenn. R. App. P. 13(d); Abney v. Abney,

61 Tenn. App. 531, 541, 456 S.W.2d 364, 369 (1970).

                                                   6
        The law regarding contempt of court for failure to pay alimony is well settled in Tennessee.

Tenn. Code Ann. § 29-9-102(3) provides that Tennessee courts may find contempt of court for “[t]he

willful disobedience or resistance of any officer of the said courts, party, juror, witness, or any other

person, to any lawful writ, process, order, rule, decree, or command of said courts.” A spouse who

refuses to pay court-ordered alimony can be incarcerated for contempt until he purges the contempt

by paying the arrearage. Loy v. Loy, 32 Tenn. App. 470, 479, 222 S.W.2d 873, 877 (1949).

Generally, however, the spouse cannot be incarcerated for contempt if he does not have the present

ability to pay the alimony. Bradshaw v. Bradshaw, 23 Tenn. App. 359, 362, 133 S.W.2d 617, 619

(1939). If he is able to perform in part, the court may incarcerate him until he performs to that

extent. Mowery v. Mowery, 50 Tenn. App. 648, 654, 363 S.W.2d 405, 408 (1962).

        To avoid being held in contempt, the spouse claiming an inability to pay alimony bears the

burden of demonstrating that “acting in good faith, and with an honest purpose to comply with the

order of the court, he was unable to do so.” Bradshaw, 23 Tenn. App. at 363-64, 133 S.W.2d at 620.

Such a spouse cannot willfully bring about his own inability to pay the alimony and then use that

inability to avoid being held in contempt. Id. at 362-363, 133 S.W.2d at 619-20. For example, a

spouse cannot refuse to pay alimony while he is employed and then, after he has lost his job and

spent all his money, use his poverty as an excuse for being unable to pay. Id. at 362, 133 S.W.2d

at 619. In Bradshaw, the Court noted:

        “If he [the husband] can establish that he is actually unable to comply with the decree
        and that such inability has not been brought about purposely as a result of his own
        intentional conduct, such facts will constitute a perfect defense to the application to
        have him punished for contempt. Furthermore, even after commitment he is entitled
        to be discharged if he can establish bona fide inability to pay. But when his ability
        to pay may be drawn from the evidence and reasonable deductions therefrom, it is not
        erroneous to decline to discharge him from confinement. Where it appears that he
        once possessed the means of complying, but wilfully impoverished himself with the
        idea of thus defeating the allowance, it is evident that his inability to pay cannot
        constitute a defense. . . . It seems to be the general practice, however, not to accept
        present lack of money as a defense for failure to pay past instalment of alimony if
        there has been any material income.”

Id. at 363, 133 S.W.2d at 619-20 (quoting with approval 17 Am. Jur. § 671, at 510-11). In addition,

“inability to pay by reason of obligations incurred as a result of remarriage is no defense to a

contempt proceeding for failure to pay alimony to a former wife.” Johnson v. Johnson, 499 S.W.2d
268, 271 (Tenn. App. 1973).

                                                   7
       Husband’s conduct in this case demonstrates a systematic determination not to pay any of

the alimony ordered. The record shows that Husband has never made a single payment to Ex-Wife,

even prior to any claim of inability to pay. The trial court noted that there were no restrictions on

Husband entering into a competitive business, and from that fact concluded that Husband had not

willfully depleted the original business awarded to Ex-Wife. While Husband’s conduct did not

violate specific prohibitions, it clearly evidenced his intent to keep Ex-Wife from acquiring any

assets of significant value. This is further confirmed by Husband’s conduct with regard to the house

awarded to Ex-Wife in this Court’s previous decision. Husband finally turned over the house to Ex-

Wife, but not before stripping it of items such as built-in appliances and cabinets and otherwise

vandalizing it, demonstrating an intent to diminish the value of the house before giving possession

to Ex-Wife.

       In addition, Husband has consistently put assets in the names of other persons or entities in

order to place them out of reach of Ex-Wife. Half of the stock of his new business was given to

Wife in exchange for a used vehicle of minimal value. Another 33% of the stock was given to a new

employee, leaving Husband with only 17% of the stock in his name. The home he shares with Wife

is titled in Wife’s name, although Husband includes the monthly house payment among the joint

debts listed to demonstrate his inability to pay. Meanwhile Husband purchased items such as

fencing, paint, and carpeting for his new home with Wife. Vehicles utilized by Husband for personal

as well as business use were purchased by his new competing business, thereby placing them beyond

Ex-Wife’s reach.

       This course of conduct must be considered as background to the evidence of Husband’s

alleged inability to pay. Central to Husband’s claim of inability to pay are his physical difficulties

and his decreased income from his new business. Husband claims that various physical problems,

such as an arthroscopic surgical procedure performed on his knees, pain in his back, and a heart

catheterization, have diminished his ability to do the physical work associated with his business. The

record includes no medical documentation or physician’s testimony to support his claim. However,

even if his claim of physical impediments is deemed credible, by his own testimony it does not

prevent him from contributing substantially to the business and earning a living, albeit with

assistance from other employees.

       Moreover, the history of income from the new business to Wife, as well as Husband, must

                                                  8
be considered. Since shortly after this Court’s previous decision ordering Husband to pay alimony

to Ex-Wife, the business has almost invariably paid Wife a greater monthly salary than Husband,

although her work is in a support role, doing bookkeeping and assisting Husband, and she was also

employed elsewhere during much of the time.           This is incongruous at best. Further, under

Husband’s direction, the salaries paid to him and to Wife from the business appear to fluctuate in

response to Husband’s needs. For example, Husband had the business double his salary during the

month he had the arthroscopic procedure on his knees. In addition, Husband directed the business

to significantly increase his salary within two months after the trial court released him from

incarceration, although he was released because he allegedly could not make payments on his

arrearage to purge himself of contempt. Shortly after that, Husband increased Wife’s salary from

$250 per week to $430 per week. Husband testified that this increase was “[t]o try to offset our

outgoing expenses and to keep from having to file bankruptcy.”

       During this time Husband has not made a single alimony payment to Ex-Wife. When

directed by the trial court to submit a proposed payment schedule, he has refused to do so.

       As noted in Bradshaw, the burden of proof is on Husband “to show that, acting in good

faith, and with an honest purpose to comply with the order of the court, he was unable to do so.”

Bradshaw, 23 Tenn. App. at 363-64, 133 S.W.2d at 620. From our review of the record, Husband

has failed to carry this burden. Indeed, it is clear from the record that Husband has depleted the

value of any assets turned over to Ex-Wife, titled assets within his control in the name of his new

wife or his new business to keep them out of Ex-Wife’s reach, failed to attempt any alimony

payments prior to the onset of his alleged medical problems, exaggerated the impact of his physical

difficulties, and manipulated the stream of income from his new business.

       The record demonstrates that Husband has the ability to perform, at least in part, his court-

ordered obligation to make payments to Ex-Wife and to purge himself of contempt. Husband has

failed to carry his burden of proof that, in good faith, he is unable to comply. The evidence indicates

that any inability to pay is primarily a result of Husband’s willful conduct.            Under these

circumstances, Husband’s claimed inability to pay cannot be used as a defense to incarceration for

                                                  9
contempt. In the past, this Court, quoting Gibson’s Suits in Chancery, has noted the following:

       “The power to punish for contempt is one of the highest prerogatives of a Court of
       Justice; and, upon its bold and prudent exercise, depend the respect, the dignity, and
       efficiency of Courts as arbiters of human rights. The mandates of a Court of
       Chancery must in all cases be obeyed, according to the spirit of the decree, promptly,
       faithfully and without question or evasion. The party, upon whom the order or
       command of the Court operates, is not allowed to speculate upon the Equity of the
       bill, or the legality or regularity of the order, or decree, or of the writ issued thereon;
       but his simple duty is to obey; and when he disobeys it is a duty the Court owes, to
       itself and to the public, to punish him at once.”

Johnson v. Johnson, 499 S.W.2d 268, 271-72 (Tenn. App. 1973).

       The trial court shall order a payment plan for the reduction and eventual elimination of the

arrearage, which includes $14,125 in past-due alimony and division of property payments,

$11,301.96 for the liquidated IRA, and any back taxes on the marital residence for which Husband

is responsible. Based on the amount of salary Husband received prior to this Court’s previous

decision, $2,460.20 per month, the plan should require payments of at least $300 per month. This

payment shall be in addition to the $412.50 per month payment toward the division of property and

the $1,000 per month alimony previously ordered by this Court.1

       If Husband fails to abide by the payment schedule ordered by the trial court, he should be

immediately incarcerated for contempt, unless he presents very substantial new evidence to the

contrary.

       Wife has requested costs and attorney’s fees for this appeal. We find such an award

appropriate and remand the case to the trial court for determination of an amount.

       In sum, we find that the evidence preponderates against the trial court’s finding that Husband

is unable to purge himself of contempt, and this finding is reversed. The case is remanded to the trial

court to establish a payment schedule consistent with this Opinion and to enforce the payment

schedule by incarceration for contempt if necessary. The trial court is further directed to determine

the appropriate amount of costs and attorney’s fees to be awarded to Ex-Wife for this appeal.

       1
         In its Final Order on Motion for Contempt, the trial court indicated a willingness to
consider Husband’s motion for a reduction in alimony. Therefore, the trial court has not yet
issued an order on reduction of alimony and the only issue properly before this Court involves
Husband’s contempt for not paying the arrearage owed Ex-Wife. Accordingly, we do not address
the issue of reduction in alimony.

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       The decision of the trial court is reversed, and the case is remanded for further proceedings

consistent with this Opinion. Costs are taxed to Appellee, for which execution may issue if

necessary.

                                             HOLLY KIRBY LILLARD, J.

CONCUR:

W. FRANK CRAWFORD, P.J., W.S.

ALAN E. HIGHERS, J.

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