Schwartz v. Seldin-Schwartz

Schwartz v. Seldin-Schwartz  (96-048); 165 Vt 499; 685 A.2d 665

[Opinion Filed 11-Oct-1996]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.


                                 No. 96-048


Samuel Owen Schwartz                              Supreme Court

                                                  On Appeal from
    v.                                            Bennington Family Court

Ethel Seldin-Schwartz                             June Term, 1996


Ellen H. Maloney, J.

       Katherine A. Hayes of Barr, Sternberg & Moss, P.C., Bennington, for
  plaintiff-appellee

       Deborah S. Banse and Peter H. Banse of Banse & Banse, P.C.,
  Manchester, for defendant-appellant


PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.



       ALLEN, C.J.  Defendant wife appeals from a final divorce order of the
  Bennington Family Court, challenging the court's findings and its property
  and maintenance awards. Plaintiff husband cross-appeals also challenging
  the court's property award.  We affirm in part, vacate the property
  settlement and maintenance awards, and remand for further proceedings
  consistent with the views expressed herein.

       Husband and wife married in March 1967.  It was the second marriage
  for each, and both have adult children from their prior marriages.  Since
  spring of 1992, husband has resided at Equinox Terrace, an assisted living
  facility in Manchester, Vermont.  Wife currently resides on Long Island in
  the marital home.

       Husband is seventy-five years old and in poor health.  He suffered
  permanent brain damage in a work-related accident in 1983.  Because of his
  head injury, he is rated as totally disabled and is currently neither
  employed nor employable.  Prior to the accident he was employed as an
  electrical engineer for thirty-five years.

       Wife is age sixty-nine.  Although she is able to function, her health
  is poor.  She has

 

  heart trouble and takes medication for cholesterol, hypothyroidism, and
  hypertension.  After husband's accident, wife spent seven and a half years
  at home caring for husband, who, as the trial court found, "required
  supervision and extensive assistance with his care."  Because wife became
  overworked and in need of respite, she brought husband to a facility in
  Florida for the winter of 1991-92.  Wife then asked husband not to return
  home.  He left Florida and subsequently moved to Equinox Terrace.

       In March 1992, husband's daughters met with counsel.  Wife's power of
  attorney was revoked.  She was removed from husband's will and from his
  life insurance policy.  Her name was also eliminated as the designated
  payee for husband's benefits.  The court found "that it was not without
  justification that the daughters became concerned."  It found that wife had
  "spent down substantial marital assets."  Merrill Lynch funds that were
  producing income of approximately $8,000 per year disappeared "without
  adequate explanation." Although two notices were sent to wife in June and
  September 1992 that her power of attorney had been revoked, she later
  removed half of a $34,000 Merrill Lynch account that had been established
  from the proceeds of husband's personal injury settlement.  In 1994, wife
  removed husband's name from title to the marital home and took title in her
  name alone.  She then refinanced an existing mortgage, receiving proceeds
  in the amount of $112,000 and leaving equity in the home of $100,000.  The
  court described the use of the power of attorney as "fraudulent." Although
  the court found an expenditure by wife of $41,000 for repairs to the
  residence justifiable, it found wife's explanations regarding the Merrill
  Lynch accounts and the use of the mortgage proceeds "unsatisfactory."

       In determining property settlement and maintenance awards, the court
  observed that prior to the accident, the couple lived on approximately
  $60,000 to $70,000 income and "lived well within their means."  After the
  accident, husband's income dropped.  Wife spent substantial amounts of time
  and energy at home caring for husband.  Because of this commitment, her
  ability to pursue a counseling career was limited, as she was required to
  practice within the home.  The court noted that because of the income
  reduction since 1983, "neither party is really

 

  able to live in the lifestyle to which he or she was accustomed and their
  standard of living established up until 1983 simply cannot be replicated."

       The court found that husband has monthly income of approximately
  $3,600, consisting of workers' compensation, social security, and pension. 
  He has monthly expenses of approximately $1,000.  The court found that wife
  earns $800 per month as a family counselor and receives $364 per month in
  social security.  It further found that she could receive $750 per month in
  rental income for apartments in the house.  Although wife reported expenses
  of $5,770 per month, the court found this estimate incredible as it was
  "well over the annual expenses of the parties[,] even the annual income of
  the parties in their best years" and "beyond anything that this marriage
  can afford."

       In light of the parties' income and expenses, the court awarded wife
  $1,600 per month in maintenance.  It awarded the marital home, which has a
  fair market value of $260,000 and equity of $100,000, to wife.  She also
  received a car valued at $12,000, furniture valued at $5,000, a checking
  account with a balance of $1,000, and jewelry.  The court awarded husband a
  money judgment against wife of $50,000, furniture valued at $1,000, his
  social security and workers' compensation income, and bank accounts
  totaling approximately $20,000.

       Wife argues that several of the findings of the trial court are not
  supported by the evidence.  We will not disturb the court's findings unless
  they are clearly erroneous.  V.R.C.P. 52(a)(2).  A review of the record
  reveals that the questioned findings are amply supported by testimony and
  therefore are not clearly erroneous.

       Wife first questions the finding that husband will benefit, and his
  condition is more likely to improve, in a setting in which more stimulation
  and companionship are available than in his present setting at Equinox
  Terrace.  Husband's daughter testified that her father had expressed an
  interest in moving to a larger facility that offered a greater opportunity
  to socialize. Socialization and recreational opportunities are limited at
  his current facility because of the small number of residents and the low
  range of cognitive functioning of those residents.  She further testified
  that he is one of the most high-functioning people at his current facility. 
  Husband's

 

  physician recommended a facility with more recreational activities for
  retired professionals who continue to be mentally and physically active. 
  Husband's other daughter, a physician, testified that because of husband's
  current financial situation, such a facility was not an option.  She also
  stated that he belongs in a facility where he will be with
  higher-functioning people and that he is neither "optimally stimulated" by
  the residents in his current setting, nor does he have adequate
  recreational options.  The sum of the evidence is sufficient to support the
  finding that a facility offering more stimulation and companionship will
  benefit husband.

       Second, wife argues that the court erred in finding that wife may rent
  portions of the marital home for a minimum of $750 per month.  Wife herself
  testified that in the past she had rented one area of the house for $300
  per month and the basement for $550.  Both of husband's daughters also
  testified that wife previously had received rents totaling more than $750
  per month.  The court therefore was within its discretion in making its
  finding as to wife's rental opportunities.

       The third finding questioned by wife involves the court's statement
  that husband's daughters were justified in becoming concerned about
  husband's financial situation because wife "had spent down substantial
  marital assets . . . without adequate explanation."  Wife admitted that
  after husband's accident she was the only person who had access to the
  Merrill Lynch funds in question.  Although wife failed to produce complete
  1992 and 1993 income tax returns, the returns that she did produce show a
  substantial decrease in the amount of declared income.  Wife testified that
  the funds no longer exist and that she "probably used" them.  Given this
  evidence, the trial court's conclusion that wife depleted a large portion
  of the marital assets without sufficient justification is well-founded.

       The last finding challenged by wife states that wife "wrongfully
  diverted" from husband $50,000 of the mortgage proceeds that were received
  when wife refinanced the marital home. Wife testified that she and husband
  owned the residence as tenants in common.  Despite the fact that two
  letters were sent to wife notifying her that husband had revoked her power
  of attorney, wife testified that she was not aware of the revocation when
  she transfered the residence into her

 

  name alone and refinanced the existing mortgage.  Wife admitted that she
  relied on the revoked power of attorney so that she could obtain all of the
  mortgage proceeds.  Wife did not notify husband of the transfer or the
  refinancing until required to do so in interrogatories.  Wife further
  stated that she spent all of the proceeds received from the refinancing. 
  The court's finding that wife "wrongfully diverted" husband's share of the
  mortgage proceeds is sufficiently supported by the evidence and, like the
  other findings challenged by wife, not clearly erroneous.

       Wife next argues that the trial court lacked authority to award a
  money judgment for fraud in lieu of a property settlement.  In its final
  order, the court awarded to husband "by way of property a judgment for cash
  in the amount of $50,000."  The court characterized the award as "the
  proceeds of the mortgage loan which [were] wrongfully diverted from
  [husband]." Under 15 V.S.A. § 751(a), the court is required to "equitably
  divide" the property of the parties. Because the statute describes the
  court's authority to distribute property in terms of dividing it between
  the parties, it is a prerequisite to the exercise of that power that the
  property to be divided actually exists.  See Street v. Street, 575 So. 2d 1142, 1144 (Ala. Civ. App. 1991) (affirming trial court's refusal to
  distribute proceeds from sale of house where testimony indicated that
  proceeds had been spent and "were no longer before the court"); St. Laurent
  v. St. Laurent, 583 A.2d 211, 212 (Me. 1990) (affirming property settlement
  that did not distribute sum of cash where there was absence of evidence of
  what became of cash); Watson v. Watson, 748 S.W.2d 890, 891-92 (Mo. Ct.
  App. 1988) (reversing property award of profit from sale of cattle where
  there was no evidence demonstrating that "gain remained in some form of
  tangible property available for division").  Although the court found
  wife's explanation for the use of the mortgage proceeds "unsatisfactory,"
  there is no evidence to rebut the testimony of wife that the proceeds no
  longer exist.

       Under 15 V.S.A. § 751(b)(11) the court may consider the contribution
  of a spouse to the depreciation in value of property.  Thus the court in
  the present case could take into account wife's use of a revoked power of
  attorney to refinance the marital home in making its property disposition. 
  Yet the court's "power does not extend beyond the existent estate.  In
  other words

 

  the . . . [c]ourt may never award more than 100 percent of the marital
  estate."  In re Marriage of Lippert, 627 P.2d 1206, 1209 (Mont. 1981).  We
  hold that the trial court does not have authority to award a money judgment
  as part of a property settlement where the evidence fails to demonstrate
  that the amount awarded exists.

       Wife also argues that the trial court, in making its maintenance
  award, improperly considered fault and the desire of husband's children
  that he save a portion of his income. Modification of a property settlement
  necessitates a re-examination of the maintenance award. Osborn v. Osborn,
  147 Vt. 432, 435, 519 A.2d 1161, 1163 (1986).  Because we vacate and remand
  the property settlement in this case, we are required to vacate and remand
  the maintenance award.  Id.  Thus wife's arguments regarding maintenance
  need not be addressed. In light of our remand of the property disposition,
  we likewise need not address husband's cross-appeal that the trial court
  erred in failing to award husband any interest in the marital residence.

       The maintenance and property settlement awards are vacated, and the
  matter is remanded for further proceedings consistent with this opinion;
  otherwise affirmed.


                              FOR THE COURT:



                              _______________________________________
                              Chief Justice