Thomas W. Dupree v. Roberta Dupree

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

SAM BIRD, JUDGE

DIVISION I

THOMAS W. DUPREE,

APPELLANT

V.

ROBERTA DUPREE,

APPELLEE,

CA01-956

JUNE 19, 2002

APPEAL FROM THE PULASKI COUNTY CIRCUIT COURT,

NO. CV98-5316,

HON. VANN SMITH, JUDGE

AFFIRMED IN PART and REVERSED and REMANDED IN PART ON DIRECT APPEAL; AFFIRMED IN PART and REVERSED and REMANDED IN PART ON CROSS-APPEAL

Both parties in this divorce case appeal various issues relating to the property division and the alimony awarded to the wife. We affirm in part and reverse and remand in part on the direct appeal and on the cross-appeal.

Appellant Thomas Dupree (Thomas) and appellee Roberta Dupree (Roberta) were married in 1982, separated in 1995, and divorced in 2001. From the time the parties separated in 1995, Thomas has paid alimony of $400 per month, paid Roberta's utilities ($200-$250 per month), and provided her a vehicle.

The case was tried on July 21, 2000, with additional testimony taken on September 28, 2000. The trial court took the case under submission and asked for post-trial briefs. On December 19, 2000, the trial judge issued his letter opinion. The trial judge awarded the divorce to Thomas; awarded Roberta $112,881 as her one-half marital interest in Dupree

Company, a corporation in which Thomas owns fifty percent of the stock and was formedbefore the marriage;1 awarded Roberta $120,702 as her one-half interest in Thomas's one-third interest in the PTLJ Limited Partnership; awarded Roberta $38,000 for her interest in the "marital home," which was built by the Dupree Company and transferred to Thomas in 1979 and transferred by Thomas to one of the partnerships in 1994 for tax purposes; awarded Roberta alimony of $1,000 per month and made her responsible for her outstanding medical bills; and denied on the basis of laches Roberta's claim for specific enforcement of a contract dated April 10, 1996, in which Thomas promised to provide Roberta with ten acres of land, clear the land, pay for construction of a 1,500-square-foot house, pay for a horse fence around eight acres, purchase a horse trailer, pay Roberta's outstanding legal fees from the first divorce suit, and purchase a new truck for her by the year 2000. The decree was entered on January 30, 2001. Thomas filed a motion to amend or make additional findings of fact and for a new trial on February 12, 2001. By order entered on March 8, 2001, the trial court made certain amendments to the decree and denied the remainder of his motion. This appeal followed.

Thomas raises four points on appeal: (1) Dupree Company, the corporation, was not marital property, and the chancellor erred in awarding Roberta any interest in the entity; (2) the chancellor erred in awarding Roberta $38,000 as her interest in the marital home; (3) the chancellor erred in awarding Roberta alimony considering that she had been receiving support from Thomas since the parties' separation and that she has a male friend spendingfive nights per week in Roberta's home; (4) the PTLJ entity, now a limited partnership, was established prior to the marriage, and Thomas's interest in the entity increased only 8.333% during the marriage.

Roberta raises three issues on cross-appeal: (1) the chancellor erred in failing to enforce the April 10, 1996, contract between the parties; (2) the chancellor erred in making her responsible for her outstanding medical bills; (3) the chancellor erred in awarding her only $1,000 per month in alimony.

I. Property-division issues

This court reviews equity cases de novo on the record, and we will not reverse a finding of fact by the chancery court unless it is clearly against the preponderance of the evidence. Myrick v. Myrick, 339 Ark. 1, 2 S.W.3d 60 (1999). In reviewing a chancery court's findings, we give due deference to that court's superior position to determine the credibility of the witnesses and the weight to be accorded to their testimony. Id. With respect to the division of property in a divorce case, this court reviews the trial court's findings of fact and affirms them unless they are clearly erroneous. Jablonski v. Jablonski, 71 Ark. App. 33, 25 S.W.3d 433 (2000).

In his first point, Thomas argues that the trial court erred in awarding Roberta an interest in Dupree Company, a corporation, because the company was formed prior to the marriage. The major asset of the corporation was 480 acres of land deeded to the company by Thomas's father and uncle in 1974. The corporation developed the Northlake Subdivision in northern Pulaski County in phases on this land. The trial judge awarded Roberta$112,881 as her portion of Thomas's interest in the corporation based on the reduction in the corporate debt during the term of the marriage. In the decree, the trial judge stated that there was evidence that the corporate debt decreased during the marriage, but no direct evidence of the increase of value in the corporation.

In divorce cases, Arkansas recognizes two distinct types or classes of property, i.e., "marital property" as defined at Ark. Code Ann. § 9-12-315(b) (Repl. 2002) and "separate property," listed as exceptions in Ark. Code Ann. §§ 9-12-315(b)(1)--(7). Implicit in the statute's mandate is the concept that assets properly classified as "separate property" are not divided between the parties but are set aside to the spouse to whom the property is "separate" in nature, unless the trial court states his reasons on the record. See Ark. Code Ann. § 9-12-315(a)(2). Also implicit in the statutory scheme for the division of marital and separate property is the concept that the property upon which the trial court acts is, generally speaking, the property owned by ··²SDU_24²····²SDU_24²··the parties, individually or jointly, at the time of the divorce. See, e.g., Ark. Code Ann. § 9-12-315(a)(1)(A), which states that, "[a]t the time the divorce decree is entered, all marital property shall be distributed one-half (½) to each party ...." and Ark. Code Ann. § 9-12-315(b), which defines "marital property" in terms of "all property acquired by either spouse subsequent to the marriage ...."

Roberta appears to be asking this court to ignore the corporate form in order to award her an interest in the Dupree Company. Just because the corporation's debt was reduced does not necessarily mean that marital funds were expended to reduce that debt or that Thomas's stock in the corporation increased in value. Roberta relied on a 1995 financialstatement to establish that the amount the corporate debt decreased. However, Thomas testified that there were some sales of houses that allowed some of the debt to be paid and that the corporation had assumed additional debt since the 1995 financial statement was created. A corporation and its stockholders are separate and distinct entities, even though a stockholder may own the majority of the stock. First Commercial Bank v. Walker, 333 Ark. 100, 969 S.W.2d 146 (1998), cert. denied, 525 U.S. 965 (1998); Thomsen Family Trust v. Peterson Family Enters., Inc., 66 Ark. App. 294, 989 S.W.2d 934 (1999). Further, a stockholder does not acquire any estate in the property of a corporation by virtue of his stock ownership; the full legal and equitable title thereto is in the corporation. Arkansas Iron & Metal Co. v. First Nat'l Bank, 16 Ark. App. 245, 701 S.W.2d 380 (1985). As noted by the trial judge in the decree, Roberta offered no direct evidence that marital funds were used to reduce the corporate debt or evidence of the increase in value of Thomas's stock in the corporation. The burden is on Roberta to provide sufficient evidence indicating that contributions of marital funds, by clearing existing debt or by tangible improvements to the property, did actually and proximately increase the value of Thomas's interest in the corporation during the marriage. Therefore, it was error to award Roberta a monetary interest in the corporation.

In his second point, Thomas argues that the trial court erred in awarding Roberta $38,000 as her interest in the home the parties occupied prior to separation. This home, which Roberta still occupies, was built by the Dupree Company and transferred to Thomasin 1979. Thomas later transferred the house to the Dupree Brothers Limited Partnership2 in December 1994. Thomas testified that the partnership purchased the property for tax purposes. The purchase price was between $121,000 and $122,000, with the partnership giving Thomas a note for $50,000 for the equity in the property. The house was appraised at $140,000 in 1998. Thomas testified that he made the mortgage payments during the marriage.

As a corollary to the principle stated under the first point, property once owned by a spouse, either as separate property or marital property, but not owned by either spouse at the time of divorce, is not subject to classification and division when the divorce is pronounced. This is because, generally speaking, a court cannot divide what is "not there," i.e., property no longer owned by the parties, individually or jointly, at the time of the divorce. See Ark. Code Ann. § 9-12-315(a)(1).

The "marital" home was owned by Thomas at the time of the parties' marriage, but marital funds were used to pay the mortgage on the home during the marriage. As a result, Roberta acquired an interest in the home during the marriage. See Box v. Box, 312 Ark. 550, 851 S.W.2d 437 (1991); Williford v. Williford, 280 Ark. 71, 655 S.W.2d 398 (1983). The property interests, in the form in which they existed during the parties' ··²SDU_25²····²SDU_25²··marriage, were not owned by the parties, individually or jointly, at the time of the divorce. While they are no longer available to be divided by the trial court, they may still be relevant as to the divisionof property that was in existence at the time of the parties' divorce. For example, if property in existence at the time of the divorce was "acquired in exchange for property acquired prior to the marriage," the former property is considered separate property. See Ark. Code Ann. § 9-12-315(b)(2).

··²HN;F4²····²HN;F4²·· Property owned by a spouse at the time of marriage, but not owned "in the marriage" at the time of the divorce, can also be significant in dividing marital property if that pre-marriage property is properly viewed as a contribution of a party to the "acquisition, preservation, or appreciation of marital property." See Ark. Code Ann. § 9-12-315(a)(1)(A)(viii). This does not mean that the property to be divided is "separate property" but, rather, that a spouse's contribution of his or her pre-marriage property is a factor to be considered in reaching an equitable division of the marital property. In other words, the property owned at the time of the marriage does not come into play as a "classification" matter but instead as a factor to be considered in dividing marital property. In a divorce action, a spouse may recover his or her marital interest in property that the other spouse has transferred if the latter made the transfer for the purpose of defrauding the former of his or her interest in the property. Skokos v. Skokos, 332 Ark. 520, 968 S.W.2d 26 (1998); Pierson v. Barkley, 253 Ark. 131, 484 S.W.2d 872 (1972); Dowell v. Dowell, 207 Ark. 578, 182 S.W.2d 344 (1944).

The trial court found that this home was a marital asset with an appraised value of $140,000 and a net equity of $76,000. The court ordered that Thomas pay Roberta the sumof $38,000 for her interest in the property. Because the trial judge stated his reasons for the distribution in the decree, see Williford, supra, we affirm on this point.

In Thomas's fourth point, he argues that the trial court erred in awarding Roberta an interest in the PTLJ Limited Partnership because that entity was established prior to the marriage and his interest in the entity increased only 8.333% during the marriage. The trial judge found that Roberta was entitled to one-half of Thomas's interest in the partnership because the partnership interest had no value at the time of the marriage. Thomas testified that the partnership began in 1977. The partnership tax returns for 1995, 1998, and 1999, list the date of beginning business as January 1, 1978. Thomas testified that there was no written partnership agreement at that time for the PTLJ partnership. There are deeds and mortgages dated December 1977 that refer to the partnership and list Thomas as a partner. The partnership was converted to a limited partnership in 1985 for the purpose of developing mini-storage units. Under Ark. Stat. Ann. § 65-508(b) (Repl. 1980) (now codified as Ark. Code Ann. § 4-43-201(b) (Repl. 2001)), a limited partnership is formed at the time specified in the certificate of limited partnership or when the certificate is filed with the secretary of state. In Plaintiff's [Appellant] Exhibit 24, the limited partnership agreement, the date specified for the beginning of the existence of the limited partnership was February 21, 1985, after the parties' marriage. Under the Uniform Partnership Act, Thomas's rights in specific assets are those of a tenant in partnership. Ark. Stat. Ann. § 65-125 (Repl.1980) (now codified as Ark. Code Ann. § 4-42-502 (Repl. 2001)). The partnership assets are items such as accounts receivable, cash, bank accounts, and good will. Richardson v. Richardson, 280 Ark. 498, 659 S.W.2d 510 (1983). A spouse's interest in a partnership's assets acquired during the marriage constitutes marital property. Id.

We affirm on this point.

II. Alimony issues

Both parties raise issues about the trial court's decision to award Roberta alimony of $1,000 per month. As his third point, Thomas argues that Roberta should not be awarded alimony, while Roberta argues as her third point on cross-appeal that the trial court erred in not awarding a greater sum. As a related point, Roberta argues that the trial court erred in making her responsible for her outstanding medical bills.

The decision whether to award alimony is a matter that lies within the chancellor's sound discretion, and on appeal this court will not reverse a chancellor's decision to award alimony absent an abuse of that discretion. Ellis v. Ellis, 75 Ark. App. 173, 57 S.W.3d 220 (2001). The purpose of alimony is to rectify economic imbalance in the earning power and the standard of living of the parties to a divorce in light of the particular facts of each case; the primary factors that a court should consider in determining whether to award alimony are the financial need of one spouse and the other spouse's ability to pay. Id. In fixing the amount of alimony, the courts consider many factors, including: (1) the financial circumstances of both parties; (2) the couple's past standard of living; (3) the value of jointly owned property; (4) the amount and nature of the parties' income, both current and anticipated; (5) the extent and nature of the resources and assets of each of the parties; (6) the amount of income of each that is spendable; (7) the earning ability and capacity of eachparty; (8) the property awarded or given to one of the parties, either by the court or the other party; (9) the disposition made of the homestead or jointly owned property; (10) the condition of health and medical needs of both husband and wife; (11) the duration of the marriage; (12) the amount of child support. Boyles v. Boyles, 268 Ark. 120, 594 S.W.2d 17 (1980). Neither this court nor the supreme court has ever attempted to reduce the amount of alimony to a mathematical formula. Mitchell v. Mitchell, 61 Ark. App. 88, 964 S.W.2d 411 (1998). Presumably, it has been thought that the need for flexibility outweighs the corresponding need for relative certainty. Id. The court should also consider the family support chart in determining the amount of spousal support to be paid. Schumacher v. Schumacher, 66 Ark. App. 9, 986 S.W.2d 883 (1999). Moreover, in the absence of a settlement agreement to the contrary, an award of alimony is always subject to modification, upon application of either party. Bracken v. Bracken, 302 Ark. 103, 787 S.W.2d 678 (1990); Holaway v. Holaway, 70 Ark. App. 240, 16 S.W.3d 302 (2000). See also Ark. Code Ann. § 9-12-314 (Repl. 2002).

At the time of trial, Roberta was fifty-five years old. She had worked in retail sales during the marriage and was last employed in 1994. She had a $12,000 Dillard's retirement account acquired during the marriage, which the court awarded to her in its entirety. Roberta was involved in a horseback riding accident in 1999, which she claims prevents her from returning to work due to an inability to concentrate or stand on her feet for prolonged periods of time. Roberta stated that she is still under the care of two physicians. There was no other medical evidence concerning Roberta's ability to return to work. Thomas has been payingRoberta's house and utility payments, paying her $400 per month, paying her medical insurance, and providing her with a vehicle since the separation. One of Roberta's neighbor's, Edward Allen, testified that he sees her working in her yard on a regular basis and that she also works her horses. He also testified that he has seen a man in a white pick-up truck who spends several nights a week at Roberta's house. Roberta admitted that David Clark was a friend and that he spent an average of five nights per week at her home; she denied that Clark contributed to her support. Roberta's affidavit of financial means showed her income to be $399.65 per month in support from Thomas. The affidavit listed monthly expenses of $2,707.31. Roberta also introduced an exhibit which listed medical bills totaling $15,724.363. Thomas's affidavit of financial means showed his weekly income to be $546.56, or $28,421.12 annually. His monthly expenses were listed totaling $1,676.27.

In his letter opinion, using the factors set out in Boyles, supra, the trial judge considered the financial awards to Roberta as part of the property division, the fact that Thomas had been supporting Roberta since the separation, and the greater resources of Thomas in setting alimony at $1,000 per month. Thomas argues that Roberta should not have been awarded any alimony because there was evidence that she had a male friend, David Clark, who spent an average of five nights per week in her home; Roberta, on the other hand, argues that the alimony award should have been greater and that she should not be solely responsible for her outstanding medical bills. The trial judge did not directlyaddress the issue of whether Mr. Clark was living with or supporting Roberta. However, his decision to award Roberta alimony is an implicit rejection of the fact that Mr. Clark was supporting Roberta.

While we believe that this evidence is sufficient to show Roberta's financial need and Thomas's ability to pay and that the awarding of alimony to Roberta was not an ··²SDU_16²····²SDU_16²··abuse of the chancellor's discretion, we also believe that, because we reversed on the issue of the Roberta being awarded an interest in the corporation, we should also reverse the alimony ··²SDU_21²····²SDU_21²··award and remand because the chancellor's award is likely to be affected in light of this redivision of property. See Hoover v. Hoover, 70 Ark. App. 215, 16 S.W.3d 560 (2000); Tortorich v. Tortorich, 50 Ark. App. 114, 902, S.W.2d 247 (1995).

III. Remaining cross-appeal issue

As her first point on cross-appeal, Roberta argues that the trial court erred in finding that laches barred specific enforcement of a contract dated April 10, 1996, in which Thomas promised to provide her with ten acres of land, clear the land, pay for construction of a 1,500-square-foot house, pay for a horse fence around eight acres, purchase a horse trailer, pay her outstanding legal fees from the first divorce suit, and purchase a new truck for her by the year 2000.4

Thomas testified that Roberta's signature was needed to clear the title to a piece of property that formerly belonged to his father. He testified that he was trying to sell the property to Pepsico and that, when the abstract company was ready to close the transaction, Roberta would not sign the real estate documents until he agreed to these terms. Thomas estimated that these items would cost $154,900. He said he had no choice but to sign the agreement. He also stated that the only part of the agreement that he performed was the payment of Roberta's attorney's fees in the amount of $2,500. Thomas has continued to pay Roberta $400 per month. Roberta testified that the parties negotiated the terms of this agreement at the marital home. She also testified that Thomas wanted the divorce proceedings dismissed but that she would not agree. By her estimate, Thomas's performance of the agreement would cost $464,399.

The trial judge held that laches barred enforcement and agreed with Thomas that it would be inequitable to order specific enforcement because Thomas was in the process of closing the real estate transaction when Roberta demanded that he sign the agreement, the parties' first divorce case was pending, Thomas has continued to pay support to Roberta since the 1995 separation, and Roberta waited over four years to seek enforcement of the agreement.

Roberta argues that the trial court erred because there was no evidence in the record to show that Thomas suffered any prejudice as a result of her delay in seeking specific performance. On this issue, it was Roberta's burden to bring up both a record and abstract sufficient for appellate review. Jacobs v. Yates, 342 Ark. 243, 27 S.W.3d 734 (2000); Wattsv. State, 68 Ark. App. 477, 3 S.W.3d 703 (1999). Moreover, although the record is confined to that which is abstracted, Atchison v. State, 68 Ark. App. 231, 5 S.W.3d 491 (1999), we cannot consider evidence included in an appellant's brief that is not also in the record before us. ··²SDU_4²····²SDU_4²····²BestSection²····²BestSection²··Bob Cole Bonding v. State, 340 Ark. 641, 13 S.W.3d 147 (2000). There is no choice but to conclude that neither the record nor the abstract presented to this court will allow us to reach the merits of Roberta's appeal on this issue.

Affirmed in part; reversed and remanded in part.

Stroud, C.J., and Crabtree, J., agree.

1 This division was based on the corporate debt being reduced by approximately $451,527 between the parties' marriage in 1982 and their separation in 1995.

2 The parties agree that Thomas had no interest in this limited partnership until the death of Thomas's father on February 25, 2000.

3 One item, a charge from Baptist Rehabilitation Center in the sum of $6,678.35, was crossed through, and the sum of $300 was written. This change makes the total $9,346.01.

4 The record does not contain any pleading setting forth Roberta's claim for specific performance of this contract. Ordinarily, there must be pleadings in support of a request for relief. See Bradford v. Bradford, 52 Ark. App. 81, 915 S.W.2d 723 (1996). However, the issue could properly be before the court under Ark. R. Civ. P. 15 because both parties introduced testimony concerning the execution of this agreement, but this testimony is not abstracted. See In re Estate of Tucker, 46 Ark. App. 322, 881 S.W.2d 226 (1994). A copy of the handwritten agreement is in the record.