Judy M. Underwood v. Stephen L. Angle ( 1999 )

  •                      COURT OF APPEALS OF VIRGINIA
    Present: Judges Coleman, Elder and Bumgardner
    Argued at Salem, Virginia
                                               MEMORANDUM OPINION * BY
    v.   Record No. 2591-98-3              JUDGE RUDOLPH BUMGARDNER, III
                                                   AUGUST 31, 1999
                           Ray W. Grubbs, Judge
              J. Emmette Pilgreen, IV (Harvey S. Lutins;
              Harvey S. Lutins & Associates, on briefs),
              for appellant.
              Deborah Caldwell-Bono for appellee.
         Judy M. Underwood and Stephen L. Angle filed cross-appeals
    to the circuit court's equitable distribution award.     The trial
    court referred all issues to a commissioner in chancery, and
    both parties excepted to the report.    The trial court affirmed
    much of the report but reversed findings that the wife was
    entitled to a credit for her premarital contribution to the
    marital home and that the husband's stock in Christianburg Cash
    Register Company was marital property.    Because it found the
    stock was separate property, the trial court did not rule on the
    commissioner's valuation of the stock.    The trial court also
    increased spousal support awarded the wife to $1,200.
         * Pursuant to Code § 17.1-413, recodifying Code
    § 17-116.010, this opinion is not designated for publication.
         The wife appeals the court's (1) disallowing her a credit
    for her premarital interest in the parties' home, and (2)
    finding that the husband's stock was separate property.    The
    husband appeals (3) the commissioner's valuation of the stock in
    Christianburg Cash Register Company and (4) the order to pay
    $1,200 per month spousal support.   We affirm the trial court's
    disallowing the wife a credit for her equity in the house,
    reverse the classification of the husband's stock as separate
    property, and remand the case for reconsideration of the value
    of the stock and spousal support.
         Equitable distribution awards will be upheld "unless it
    appears from the record that the trial judge has abused his
    discretion, that he has not considered or has misapplied one of
    the statutory mandates, or that the evidence fails to support
    the findings of fact underlying his resolution of the conflict
    in equities . . . ."   Blank v. Blank, 
    10 Va. App. 1
    , 9, 
    389 S.E.2d 723
    , 727 (1990).
         We view the evidence in the light most favorable to the
    prevailing party below.   See Cook v. Cook, 
    18 Va. App. 726
    , 731,
    446 S.E.2d 894
    , 896 (1994).   So viewed, the evidence established
    that the parties married in 1975, separated in 1994, and
    divorced in 1997.   One child was born of the marriage.   During
    the marriage, the husband was the main income provider and,
    though the wife occasionally worked part-time, she was
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    responsible for taking care of their son and for maintaining the
    marital home.
         Before the marriage, the wife owned a house that later
    became the marital residence.   The equity in the house at the
    date of marriage was $4,180.    The parties used marital funds to
    reduce the indebtedness on the house.   In 1986, the wife
    executed a deed of gift to the husband, titling the property
    jointly as tenants by the entirety with right of survivorship.
    In 1989, the parties created a $10,000 credit line against the
    marital home and in 1995, after their separation, the parties
    increased the credit line by $7,000, which the wife spent.
         The commissioner ruled the premarital value of the house
    was the wife's separate property and gave her credit for $4,180.
    The trial court found that she gave the husband a half interest
    in the house and disallowed the credit.   The wife does not
    dispute that she transferred an undivided interest in the house
    to the husband because she wanted him to have a part of it.     She
    responded affirmatively to the question, "Was that kind of like
    a, just a gift from the heart kind of feeling?"   She argues,
    however, that these are words of "limitation and equivocation."
         "When separate property is retitled in the joint names of
    the parties, the retitled property shall be deemed transmuted to
    marital property.   However, to the extent the contributed
    property is retraceable . . . and was not a gift, the retitled
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    property shall retain its original classification."   Code
    § 20-107.3(A)(3)(f) (emphasis added).
         In order to claim an interest in the marital home by virtue
    of a gift, the husband must prove the wife's donative intent as
    well as the nature and extent of her intent.   See Lightburn v.
    22 Va. App. 612
    , 617, 
    472 S.E.2d 281
    , 283 (1996)
    (citations omitted).   "We look to what the words express, not
    what the grantor may have intended to express."   Davis v.
    250 Va. 271
    , 275, 
    462 S.E.2d 106
    , 108 (1995) (citation
    omitted).   See Capozzella v. Capozzella, 
    213 Va. 820
    , 824, 
    196 S.E.2d 67
    , 70 (1973) (a deed intended for one purpose is
    intended "for all purposes apparent on its face"); Rowe v. Rowe,
    24 Va. App. 123
    , 137-38, 
    480 S.E.2d 760
    , 766-67 (1997).    The
    court may consider the circumstances in existence at the time a
    deed is executed, see Hill v. Brooks, 
    253 Va. 168
    , 177, 
    482 S.E.2d 816
    , 822 (1997); Davis, 250 Va. at 275, 462 S.E.2d at
    108, and any ambiguity is construed against the grantor.     See
    Phipps v. Leftwich, 
    216 Va. 706
    , 710, 
    222 S.E.2d 536
    , 539
         The court found that the wife intended to make an
    unconditional gift of the house to the husband because of the
    deed of gift.   The evidence supports this finding.   We conclude
    that the court did not err when it disallowed the wife a credit
    for her equity in the home before the marriage.
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         Next, we consider whether the court erred in classifying
    the stock in Christianburg Cash Register Company as the
    husband's separate property.   The commissioner classified the
    stock as marital property; the trial court reversed.    Where a
    commissioner's findings are disapproved, this Court "must review
    the evidence and ascertain whether, under a correct application
    of the law, the evidence supports the findings of the
    commissioner or the conclusions of the trial court."     Hill v.
    227 Va. 569
    , 577, 
    318 S.E.2d 292
    , 297 (1984).
         Property acquired during the marriage is presumed to be
    marital property absent evidence to the contrary.     See Code
    § 20-107.3(A)(2); Hart v. Hart, 
    27 Va. App. 46
    , 61, 
    497 S.E.2d 496
    , 503 (1998).   "A partner in the marriage [owes] his labor
    during the marriage to the marital partnership.   The fruits of
    that labor absent express agreement are marital property
    . . . ."   Stainback v. Stainback, 
    11 Va. App. 13
    , 24, 
    396 S.E.2d 686
    , 693 (1990).
         In order to rebut the marital presumption by proving a gift
    of separate property to him, the husband must prove the donative
    intent of his father at the time of the transfer by clear and
    convincing evidence.   See id. at 17-18, 396 S.E.2d at 689; Dean
    v. Dean, 
    8 Va. App. 143
    , 146, 
    379 S.E.2d 742
    , 744 (1989).
    "'Where the evidence for and against the presumption are equal
    the presumption will prevail.'"   Lambert v. Lambert, 
    6 Va. App. 94
    , 101, 
    367 S.E.2d 184
    , 188 (1988) (quoting Rowe v. Rowe, 144
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    Va. 816, 822, 
    130 S.E. 771
    , 772 (1925)).   Moreover, when a donor
    transfers property in exchange for the donee's past
    consideration, the transfer cannot be classified as a gift.       See
    id. at 100-01, 367 S.E.2d at 188.
         In 1980, the husband began working for his family business,
    Christianburg Cash Register Company, and devoted all of his time
    to its success.    He worked on average twelve hours a day "[a]
    lot of times seven days a week."    The husband acquired a 25%
    interest in the business in 1985 and in 1991 had increased his
    interest to 49%.    His brother had a 51% interest in the company.
         The wife testified that in 1991 the husband told her that
    his father said he would sell the business to the husband and
    his brother.   The husband testified that his father changed his
    mind and at a Christmas party told the husband and his brother,
    "I'll just give it to you because you've worked so hard and so
    long since 1980."   The husband did not recall whether he told
    the wife about his father's change of mind.
         In 1991 the father retired and made the last transfers of
    stock to the husband and his brother.   The brothers began to pay
    him $1,600 per month in rent, after the business had previously
    paid him $800 per month as rent, for the building the company
    occupied.   The wife testified that the husband told her that
    they were "paying their dad back for the business" and that at
    $1,600 per month, it would take "eight years to pay him off."
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         The corporate stock transfer ledger showed the transfers to
    the husband and his brother occurred in June 1985 and June 1991.
    The husband claims that both transfers were gifts of separate
    property from his father and that the stock ledgers are
    presumptively accurate.   In the stock ledger, the column labeled
    "amount paid" contained an entry of a continuous line that ran
    through fourteen lines, although the ledger contained only
    thirteen transfers.   The entry purported to show that no
    consideration was paid for the various transfers of stock that
    were dated from 1977 to 1991.
         The wife claims that the stock was not a gift and that,
    having been acquired during the marriage, it is presumed marital
    property.    She does not dispute that the husband had title to
    the stock.   She contends, however, that the transfer ledgers
    were not clear and convincing evidence of the father's intent at
    the time of the transfer to give the stock to the husband as his
    separate property.    In addition, she questions the weight of the
    evidence because the entry in the "amount paid" column appears
    to have been made at one time.
         "The original share transfer books shall be prima facie
    evidence as to who are the shareholders . . . ."   Code
    § 13.1-661(B).    See Young v. Young, 
    240 Va. 57
    , 62, 
    393 S.E.2d 398
    , 400 (1990) (ownership as reflected in corporate records is
    prima facie correct, but not a verity).    The stock ledger shows
    ownership.   It does not show whether the stock was acquired as a
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    gift or for value, or whether it is marital or separate
           The marital presumption applies because the stock was
    acquired during the parties' marriage.     See Stainback, 11 Va.
    App. at 24, 396 S.E.2d at 693.    Aside from the stock ledger and
    his own testimony, the husband produced no evidence of his
    father's donative intent at the time of either the 1985 or 1991
           The commissioner relied on the increase in rent paid to the
    father beginning in 1991 and the wife's testimony that the
    husband and his brother were paying their father for the company
    as evidence that the stock was not a gift.    In addition, the
    husband's evidence supports a finding that the stock was given
    in exchange for his hard work with the company, which makes it
    marital property.    See Lambert, 6 Va. App. at 101, 367 S.E.2d at
    188.    See also Brett R. Turner, Equitable Distribution of
    Property § 5.16 (2d ed. 1994).
           "[D]ue regard must be given to the commissioner's ability,
    . . ., to see, hear and evaluate the witnesses at first hand."
    Hill, 227 Va. at 577, 318 S.E.2d at 297.     See also Bridgeman v.
    3 Va. App. 523
    , 528, 
    351 S.E.2d 598
    , 601 (1986).
    We conclude, therefore, that the court erred in reversing the
    commissioner's classification of the stock as marital property
    because the husband failed to prove by clear and convincing
    evidence that his father gave him the stock.
                                     - 8 -
         The commissioner valued the stock of the corporation at $40
    per share, which was the value assigned to it by the wife's
    expert.   The husband's witness, the corporation's accountant,
    testified the business had no value.     The trial court made no
    ruling on the commissioner's finding of value because it held
    the stock was separate property.
         The commissioner's findings come to the trial court with a
    presumption of correctness, but the trial court has discretion
    to determine the value of the husband's stock where conflicting
    expert testimony is offered.    See Rowe, 24 Va. App. at 140, 480
    S.E.2d at 768; McDavid v. McDavid, 
    19 Va. App. 406
    , 413, 
    451 S.E.2d 713
    , 718 (1994).   Accordingly, we remand this issue to
    the trial court in order for it to rule on the commissioner's
    valuation of the husband's stock.
         Finally, the husband argues that the trial court erred in
    awarding spousal support in the amount of $1,200 per month.
    Because we remand for reconsideration of the value of marital
    property, the trial court will have to reconsider its support
    award.    See Code § 20-107.1(E)(8).    Accordingly, we do not
    address this issue, but remand it for reconsideration.
         For the foregoing reasons, we affirm disallowing the wife a
    credit for her equity in the house, reverse the classification
    of the stock in Christianburg Cash Register Company as the
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    husband's separate property, and remand the case for
    reconsideration of the value of the stock and spousal support.
                                               Affirmed in part,
                                               reversed in part,
                                               and remanded.
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