Court Opinion

ID: 1067478
Source: CourtListenerOpinion
Date Created: 2013-10-09 19:26:33.843124+00
Date Added: 2024-06-11T12:55:13.748522
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                                 AT NASHVILLE
                                           February 13, 2003 Session

                          STEPHEN MORGAN v. PAULA MORGAN

                        Appeal from the Chancery Court for Robertson County
                             No. 14647 Carol A. Catalano, Chancellor

                                           No. M2002-00793-COA-R3-CV

Husband and Wife were declared divorced on the basis of stipulated grounds. Wife appeals the
classification and division of the property. We affirm the decision of the trial court.

             Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
                                   Affirmed and Remanded

PATRICIA J. COTTRELL, J., delivered the opinion of the court, in which BEN H. CANTRELL , P.J., M.S.,
and MARIETTA M. SHIPLEY, SP . J., joined.

Thomas F. Bloom, Nashville, Tennessee, for the appellant, Paula L. Morgan.

Joe R. Johnson, II, Springfield, Tennessee, for the appellee, Stephen F. Morgan.

                                           MEMORANDUM OPINION1

        Stephen F. Morgan (“Husband”) and Paula L. Morgan (“Wife”) were married on August 8,
1997. It was the fourth marriage for Husband and the third for Wife. At the time of the marriage
Husband was 43 and Wife was 31. The marriage was rocky from the beginning, and the parties
separated twice before divorce proceedings were finally initiated. They separated for the first time
in April of 1998 and reconciled sometime at the end of that year. The separated for the second and
final time in March of 1999. They lived together as husband and wife for a total of seventeen
months.

       1
           Tenn. R. Ct. App . 10 states:

       This Court, with the concurrence of all judges participating in the case, may affirm, reverse o r modify
       the actions of the trial court by memorandum opinion when a formal opinion would have no
       precedential value. When a case is decided by memorandum opinion it shall be designated
       “MEMORANDUM OPIN ION,” shall not be published, and shall not be cited or relied on for any
       reason in any unrelated case.
        When the couple got married, Husband was a farmer; he owned and worked his own dairy
farm in Portland, Tennessee. Wife, on the other hand, entered the marriage with a Nissan Sentra and
separate property of $15,666.67.2 Wife also brought with her a daughter from a previous
relationship. Wife did not work during the marriage, but before her marriage to Husband, Wife
worked at various jobs that paid at or near minimum wage.

        Husband testified that his farming operation was financially sound at the time the couple was
married, but that he began to experience financial difficulty in 1997 or 1998. Husband stated that
his costs and expenses rose with the addition of Wife and her daughter to his household and that the
increased expenses offset any gains in gross profits. He also felt that his new marriage distracted
him somewhat from his farming. His financial difficulties culminated in 1999 when he filed for
Chapter 12 bankruptcy. Wife, however, alleges that Husband only declared bankruptcy after she
refused to renew their relationship and disagrees that his financial situation was anything but sound.
The trial court specifically found that Wife was aware at the time of the marriage that Husband was
$400,000 in debt and that even after the bankruptcy Husband would owe considerable money.3

        Husband filed for divorce in May of 1999 on the grounds of inappropriate marital conduct
and irreconcilable differences. Wife filed for temporary support and Husband was ordered to pay
support in the amount of $150 per week. The couple’s relationship had deteriorated so much at this
point that Husband was arrested for assault and Wife was arrested for vandalism; there were mutual
restraining orders to keep the two from being in contact with each other. Wife filed a counter-
complaint for divorce in August of 1999, seeking a divorce on the grounds of inappropriate marital
conduct, adultery, and irreconcilable differences. She also sought spousal support.

         The bankruptcy court entered an agreed order granting relief from the automatic stay to
permit Wife to proceed in the divorce proceedings and also ordered the trustee to disburse $10,000
of the funds to the Chancery Court. The $10,000 represents a portion of the money received after
an auction of farm equipment. The bankruptcy court order specified that it did “not reflect any
agreement by the parties that the Debtor’s wife has an interest in farm equipment sold at auction in
this Chapter 12, and further does not limit the wife to a maximum of $10,000 for her marital interest
in this farm equipment.”

        The trial court heard testimony on January 3, 2002. The parties stipulated that grounds for
divorce existed. As a result, the trial court declared the parties divorced, classified and divided the
marital and separate property, and handled all other matters then pending. The trial court made
extensive factual findings and specifically held:

         2
           W ife’s $15,667.67 represented her share of the proceeds of a class action lawsuit against Circle K Stores, Inc.
The trial court found that Wife had provided $15,000 of this money to Husband and that neither party knew where the
mon ey went. There was none left at the time of trial.

         3
        The bankruptcy plan provided for full payment of creditors through the sale of assets a nd with $100,00 0 M r.
Morgan borrowed from his fam ily trust.

                                                           -2-
         That Ms. Morgan be awarded a judgment in the amount of $3,662.44 from Mr.
         Morgan for which execution may issue for unpaid medical bills incurred by Ms.
         Morgan. This amount shall be paid out of funds withheld by the bankruptcy trustee.

         That Ms. Morgan be awarded a judgment from Mr. Morgan in the amount of $923
         for past due spousal support. Further, that this amount shall be paid out of monies
         set aside by the bankruptcy trustee. That the following items of marital property be
         awarded to Ms. Morgan: the bedroom suite, computer, computer chair, dining room
         set, and household goods purchased by the parties during their marriage.

         That the 1998 Isuzu be awarded to Ms. Morgan.

         That the John Deere Tractor, and any proceeds from the sale of said tractor, be
         awarded to Mr. Morgan.
                                             ....

         That the following items be awarded to Ms. Morgan as her separate property: the
         gifts of Mr. Morgan, the sofa, the washer, the dryer, and the refrigerator; her pre-
         marital dinette set; and the settlement she received from Robertson County in her
         lawsuit against Robertson County.4 That the Court awards Ms. Morgan the sum of
         $2,500 from the $10,000 set side by the bankruptcy court. That all of the real estate
         be awarded to Mr. Morgan. That Ms. Morgan’s request that Mr. Morgan provide
         health insurance be denied.

      A subsequent agreed order was entered clarifying the distribution of the $10,000 sent by the
bankruptcy trustee and held by the clerk: Wife was to received a total of $7,085.44, representing the
judgments for unpaid medical bills and past due pendente lite spousal support as well as the $2,500
awarded Wife as her share of the marital property. Husband was to receive the balance of $2,914.56.

        Wife appeals, arguing that the trial court: (1) did not award her an equitable share of the
marital property; (2) erred in finding that the John Deere Tractor did not increase in value during the
marriage; and (3) erred in determining that she did not substantially contribute to the preservation
and appreciation of the farming operation based solely on the short duration of the marriage.

                             I. Classification of Marital and Separate Property

      Upon the dissolution of a marriage, courts are called upon to divide the assets the parties
accumulated during the marriage. Such decisions are very fact-specific, and many circumstances

         4
          This is a differen t settlement from that W ife received in the Circ le K lawsuit. The record is devoid of
testimony regarding the amount of this settlement. Wife was questioned about her recent involvemen t in a lawsuit against
Robertson County in which she sought $550,000 in damages. She was prohibited by the settlement agreement from
discussing the terms of the settlement.

                                                          -3-
surrounding the property, the parties, and the marriage itself play a role. The task involves several
steps, the first being to determine whether an asset is subject to division at all.

       Tennessee, being a “dual property” state, recognizes two distinct classes of property:
“marital property”and “separate property.” Batson v. Batson, 769 S.W.2d 849, 856 (Tenn. Ct. App.
1988). Separate property is not part of the marital estate subject to division. Cutsinger v. Cutsinger,
917 S.W.2d 238, 241 (Tenn. Ct. App. 1995). Accordingly, when it comes to dividing a divorcing
couple’s property, the court should initially identify the separate property, if any, belonging to each
party. Anderton v. Anderton, 988 S.W.2d 675, 679 (Tenn. Ct. App. 1998).

        The general rules for determining whether property is separate or marital are found in statute.
Tenn. Code Ann. §§ 36-4-121(b)(1) & -121(b)(2). Property owned by one spouse before marriage
is separate property. Tenn. Code Ann. § 36-4-121(b)(2)(A). Additionally, pursuant to Tenn. Code
Ann. § 36-4-121(b)(2)(C) appreciation of property acquired before marriage is separate property,
unless it is properly classified as marital property pursuant to Tenn. Code Ann. § 36-4-121(b)(1),
which provides in relevant part:

       (B) Marital property includes income from, and any increase in value during the
       marriage of, property determined to be separate property in accordance with
       subdivision (b)(2) if each party substantially contributed to its preservation and
       appreciation . . . .

       (C) As used in this subsection “substantial contribution” may include, but not be
       limited to, the direct or indirect contributions of a spouse as a homemaker, wage
       earner, parent, or family financial manager, together with such factors as the court
       having jurisdiction thereof may determine.

        Every increase in value during the marriage does not constitute marital property. It is only
where the spouse has made substantial contributions toward the preservation or appreciation of the
property that the statute operates. Harrison v. Harrison, 912 S.W.2d 124, 127 (Tenn. 1995). Courts
require some link between the spouse’s marital efforts and the appreciation of the separate property
before that appreciation is considered marital property. Langschmidt v. Langschmidt, 81 S.W.3d
741, 746 (Tenn. 2002). Where, for example, the appreciation is due solely to market factors and not
to efforts of either spouse, the increase in value will not be considered marital property. Id. Indirect
contributions by one party that allow the other party to pay for the property or asset constitute a
substantial contribution to the preservation and appreciation of the property. Brown v. Brown, 913
S.W.2d 163, 167 (Tenn. Ct. App. 1994). Where the non-owner spouse proves that he or she has
contributed substantially to the appreciation or preservation of the other spouse’s separate property,
the entire amount of the appreciation in the separate property will be treated as marital property.
Harrison, 912 S.W.2d at 127.

                                                  -4-
                            A. One-Half Interest in the 118 Acre Farm

         Prior to the marriage, Husband owned several pieces of real estate, including a one-half
interest in the 118 acre tract where Husband carried on a dairy farming operation and where the
parties lived. During the bankruptcy proceedings, the trustee sold at least one piece of property other
than the 118 acre tract. Husband was allowed to keep the 118 acre tract at the conclusion of the
bankruptcy. Additionally, in order to be discharged from bankruptcy, Husband was required to
borrow from his family’s limited partnership $103,000 against his real property. The record does
not indicate how much of that was attributable to the 118 acre tract.

       Husband’s interest in the 118 acre tract had a value of $88,500 in 1997, with a mortgage of
approximately $49,355. Its value at the time of trial was $103,250, with a mortgage encumbrance
of $46,000. On appeal, Wife asserts the farm increased in value during the marriage in the amount
of $18,605 and that this increase is marital property. However, at the end of the trial, the following
exchange took place regarding Husband’s real estate and specifically the 118 acre tract of farmland:

       Court: There is no evidence of what the increase in value is.

       Counsel for Wife: There’s no - - we are taking no position. If there’s any increase
       in value on the property, it would only be because of the increase in real estate. And
       Ms. Morgan could not say that she substantially contributed to that, so that’s not been
       our position. It’s simply an indication of what the separate property of the husband
       is.

       Court: Well, and the Court acknowledges Ms. Morgan’s acknowledgment that all
       of that is separate property and awards it to him.

       This stated position is consistent with Wife’s Pretrial Statement listing the parties’ assets
wherein she did not claim any increase in the value of the real property as marital property.

        Contrary to the position taken in the trial court, on appeal, Wife interprets the trial court’s
ruling as holding that the increase in value of the farm was not marital property because Wife did
not substantially contribute to the preservation and appreciation of the farm. Wife disputes that
factual holding. In its final order, the trial court found:

       That the parties lived together as husband and wife a total of about a year and a half.
       Further, that Ms. Morgan did little of the farm work, and that Mr. Morgan performed
       a majority of the work on the farm land. Furthermore, that Ms. Morgan has
       continuously resided in the home of the parties with her daughter by a previous
       relationship since August 1997 to present. And, during some period of that time, she
       had her brother living with her. Ms. Morgan has therefore lived on this property 4
       years and 4 months, the result of a husband and wife living together less than 1 year

                                                 -5-
        and a half. All of the real estate is deemed by the Court to be Mr. Morgan’s separate
        property, and is awarded to him as such.

        We do not agree with Wife’s interpretation of this language in view of the earlier quoted
colloquy between the court and counsel for Wife. The trial court’s order did not address the increase
in value of the property as a separate issue it had to decide, presumably because Wife had taken the
position it was not. Thus, we cannot conclude that the trial court ruled that Wife’s contributions
were not substantial and, consequently, any increase did not qualify as marital property.

        Wife also argues that the trial court improperly considered the duration of the marriage in
determining the proper classification of the increase in value. Again, we do not interpret the trial
court’s statements regarding the time the couple spent together as relevant to any question of whether
the increase in value was marital or separate property. The court simply did not address the
classification of the increase in value because Wife had represented that it was not an issue and
conceded that the increase was Husband’s separate property.

        Generally, this court will not entertain an issue on appeal that was not raised in the court
below. Simpson v. Frontier Cmty. Credit Union, 810 S.W.2d 147, 153 (Tenn. 1991) (citing Lovell
v. Metro. Gov’t, 696 S.W.2d 2 (Tenn. 1985)); Davis v. Tennessean, 83 S.W.3d 125, 127 (Tenn. Ct.
App. 2001); Harlan v. Hardaway, 796 S.W.2d 953, 957 (Tenn. Ct. App. 1990). Numerous
Tennessee cases hold that an issue raised for the first time on appeal is waived. See, e.g., Norton v.
McCaskill, 12 S.W.3d 789, 795 (Tenn. 2000); Lawrence v. Stanford, 655 S.W.2d 927, 929 (Tenn.
1983) (noting, “It has long been the general rule that questions not raised in the trial court will not
be entertained on appeal . . .”). An issue not presented to, decided, or dealt with by the trial court
will not be considered by appellate courts. In re Adoption of a Female Child, 42 S.W.3d 26, 32
(Tenn. 2001); Reid v. State, 9 S.W.3d 788, 796 (Tenn. Ct. App. 1999).

         Wife did not present to the trial court the issue of whether the increase in value of the farm
was marital or separate property and did not give the trial court the opportunity to rule on that issue.
Consequently, we will not consider this issue. Additionally, Tenn. R. App. P. 36 provides “Nothing
in this rule shall be construed as requiring relief be granted to a party responsible for an error or who
failed to take whatever action was reasonably available to prevent or nullify the harmful effect of an
error.” To the extent the trial court’s grant of the land to Husband as his separate property could be
construed as based on an incorrect implicit classification of the increase in value, Wife caused that
error, and is not entitled to the relief she requests. Accordingly, we decline to grant Ms. Morgan the
relief she requests with regard to being awarded a portion of the increase in value of the farm.

                                                  -6-
                                           B. The John Deere Tractor

         Prior to the marriage, Husband also owned a number of pieces of farm equipment. The farm
equipment, or some of it, was sold by the bankruptcy trustee.5 Included in that machinery was a John
Deere tractor, which sold for $38,750. Wife does not dispute that the tractor and other equipment
were Husband’s separate property. Rather, she claims that the increase in the value of the tractor was
marital property. The trial court found there was no increase in the value during the marriage, and
in fact there was still existing a debt attributable to the tractor. Wife asserts that finding is in error.
Wife’s position is based upon the argument that if married parties reduce the debt on one spouse’s
separate property through their joint efforts so that the equity is increased, that equity is marital
property, relying on Cohen v. Cohen, 937 S.W.2d 823, 832 (Tenn. 1996).

         Husband bought the tractor in 1992 for $62,000, and paid $10,000 down at that time. He
testified he made semiannual payments of $7,000, although other factors would indicate that $7,000
might be a yearly total. He also made the final payment of approximately $10,000 from the proceeds
of loans he took out on his life insurance policies. Wife argues that, at the time of the marriage
Husband owed approximately $30,000 which was paid off during the marriage through use of marital
funds and the $10,000 loans, which are still outstanding. Thus, Wife argues, when the tractor was
sold at auction by the bankruptcy trustee for $38,750, $28,750 represented equity as marital property
and should have been divided between the parties.

        Wife’s position that approximately $30,000 was owed on the tractor at the time of the
marriage is based upon an entry in Husband’s 1997 financial statement for $30,000 to John Deere
Credit. Husband testified this entry was not related to the tractor, but was a note for feed, fertilizer,
and supplies purchased at Robertson County Co-op which was financed through John Deere Credit.

       Contrary to assertions made in his brief, Husband did not testify that he paid off the tractor
before the marriage. Rather, he testified he paid it off prior to the bankruptcy, but could not
remember exactly when the loan was paid in full. However, in identifying an insurance policy
statement showing the cash value and other information regarding the policy as of February, 1999,
Husband testified that the statement predated the loan he made to pay off the tractor. Thus, we can
conclude that the tractor was paid off after February 1999 and before he filed bankruptcy later in
1999.

        Thus, at most, Husband made three or four semiannual payments during the marriage using
farming operation money that Wife asserts were marital funds. Because no evidence was introduced
of the terms of the loan, such as the interest rate, and no more specific evidence of the actual
payments, it is impossible to calculate what percentage of the overall increase in equity may have

         5
          The equipment netted a total of $82,246.15, and the funds were distributed to creditors, with the exception of
the $10,000 that was sent to the trial court herein for distribution.

                                                          -7-
occurred during the marriage. Our best estimate is approximately 20%.6 Thus, even if we were to
agree that the $38,750 the tractor bought at auction was equity, the maximum portion of that amount
that could logically be characterized as an increase attributable to marital efforts is $7,750.7

       In any event, the proceeds from the tractor were combined with the proceeds from other farm
equipment to pay creditors. Thus, to the extent payments on the tractor were made, as Wife asserts,
from proceeds of the farming operation, the recovered equity in the tractor was used to repay
expenses of that operation. Consequently, viewing the entire operation as a whole, it is clear there
was no surplus and no value to the overall operation. Thus, the trial court’s conclusion there was
no value to the tractor, but instead an outstanding debt on it because of the insurance loan, is easily
understood.

        For purposes of our examination of the equity of the division of marital property, Wife’s final
issue, we will consider the $7,750 as includable in the marital estate.

                                  II. Equitable Division of the Marital Estate

        Finally, Wife argues that the trial court erred by failing to award her an equitable share of the
marital property. After classification of the parties’ property as either marital or separate, the trial
court is charged with equitably dividing, distributing, or assigning the marital property in
“proportions as the court deems just.” Tenn. Code Ann. § 36-4-121(a)(1). The court is to consider
several factors in its distribution. Tenn. Code Ann. § 36-4-121(c) (listing the factors to be
considered). The court may consider any other factors necessary in determining the equities between
the parties, Tenn. Code Ann. § 36-4-121(c)(11), except that division of the marital property is to be
made without regard to marital fault. Tenn. Code Ann. § 36-4-121(a)(1).

        A trial court’s division of marital property is not rendered inequitable simply because it is
not precisely equal. Cohen, 937 S.W.2d at 832; Kinard v. Kinard, 986 S.W.2d 220, 230 (Tenn. Ct.
App. 1998). Similarly, equity does not require that each party receive a share of every piece of
marital property. King v. King, 986 S.W.2d 216, 219 (Tenn. Ct. App. 1998); Brown, 913 S.W.2d
at 168. The overall equity in the division of marital property is dependent on the facts of each case.
The fairness of a particular division of property between two divorcing parties is judged upon its
final results, Watters v. Watters, 959 S.W.2d 585, 591 (Tenn. Ct. App. 1997), and the trial court has
a great deal of discretion concerning the manner in which it divides marital property. Smith v. Smith,
984 S.W.2d 606, 609 (Tenn. Ct. App. 1997); Wallace v. Wallace, 733 S.W.2d 102, 106 (Tenn. Ct.
App. 1987). Appellate courts ordinarily defer to the trial judge’s decision 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. Wilson v. Moore, 929 S.W.2d 367, 372 (Tenn. Ct. App. 1996); Brown, 913 S.W.2d at 168.

         6
          The $62,000 purchase price was reduced by two $1 0,000 payments from Husb and’s separate property; the
parties were m arried for 2 o f the 7 yea rs of the lo an; and 2/7 o f the $42,00 0 of p rincipa l paid other than by the two
$10,000 payments is $12,000. That amount is 19.4% of the total purchase price.

         7
             20% of $38,750 is $7,750.

                                                            -8-
         Among the factors to be considered in distributing marital property are the duration of the
marriage, the contribution of each party to marital and separate property, and the estate of each party
at the time of the marriage. These factors are considered in the rule often applied to marriages of
short duration that division of the property should be made in such a way that “as nearly as possible,
places the parties in the same position they would have been in had the marriage never taken place.”
Batson, 769 S.W.2d at 859. Relying on that principle, Wife asks that the court put her in the same
position as when she entered the marriage with an award of at least $20,000 in marital property.

        The “marriage of short duration” principle cannot be interpreted as entitling a party to leave
a marriage in the same economic position he or she entered it. Where financial difficulties arise
during the marriage, the marital estate may become so depleted that it simply is not possible to
restore a party’s finances to its premarital level through distribution of that marital estate. Neither
party in this marriage can be restored exactly to their premarital financial position.

        The parties submitted pretrial statements listing marital and separate property. They agreed
that the marital property included some of the contents of the home, specifically the bedroom set,
computer, computer chair and desk, and household goods. The trial court awarded all this property,
plus dining room furniture claimed by Wife to be marital, to Wife. This property was not assigned
a value by either party or the trial court, even though it represents the bulk of the marital assets
remaining by the time of the trial.

         Several other assets Wife claimed to be marital property were determined by the court to have
no value, and Wife has not appealed those rulings, with the exception of the increase in equity in the
John Deere tractor. Even when the $7,750 estimated increase in the equity in the tractor is included
in the marital estate, we find the trial court’s award to Husband of the proceeds of the sale of the
tractor to be equitable in view of the relative contributions of each party to the farming operation and
the fact Husband still owes money he used to pay off the tractor.

       The trial court divided the $10,000 fund from the bankruptcy by awarding $2,500 to Wife
and $7,500 to Husband. The $10,000 came from the proceeds from the sale of farm equipment
Husband had acquired over the years in his farming operation. It is here that the trial court’s
conclusions regarding the contributions of each to the marital estate is relevant.

        Another factor to be considered is the value of the separate property of each party. While
Wife asserts Husband was able to retain at least his one-half interest in the 118 acre tract, and also
claims a value of $300,000 for all Husband’s separate property, she overlooks the debt or
encumbrances associated with that property. In addition, Wife failed to prove or even estimate a
value for her separate property. That property included items that both parties agreed were gifts to
Wife from Husband: a sectional sofa, a washer and dryer, and a refrigerator. Her separate property
also included some furnishings and other items she owned before the marriage. In addition, she had
the proceeds from the recent settlement of a lawsuit, and the amount of that settlement was not
proved.

                                                  -9-
        The trial court made extensive findings of fact in this case and considered all of the statutory
factors in determining the distribution of marital property. The parties both entered the marriage of
short duration with financial shortcomings. The trial court found that Wife had the ability to seek
employment, yet she chose not to work and received pendente lite support from Husband. Husband
works and has a significant child support obligation. The parties both claimed to make contributions
toward the marriage, yet their testimony as to who was responsible for the most amount of work was
contradictory. The trial court also found that Wife had been allowed to live on and enjoy the marital
residence for over four years during the pendency of the divorce, while the couple only lived there
as husband and wife for approximately seventeen months.

        We do not find the distribution of marital property to be either inequitable or unsupported
by a preponderance of the evidence. Consequently, we affirm the decision of the trial court. We also
decline to award Wife’s attorney’s fees on appeal. We remand the cause for any further proceedings
which may be necessary. Costs of the appeal are taxed to the appellant, Paula L. Morgan.

                                                        ___________________________________
                                                        PATRICIA J. COTTRELL, JUDGE

                                                 -10-