MILLS (BEULAH) VS. MILLS (JAMES H.)
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RENDERED: OCTOBER 17, 2008; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2007-CA-002281-MR
BEULAH MILLS
v.
APPELLANT
APPEAL FROM MEADE CIRCUIT COURT
HONORABLE SAM H. MONARCH, JUDGE
ACTION NO. 03-CI-00160
JAMES H. MILLS
APPELLEE
OPINION
AFFIRMING IN PART
REVERSING AND REMANDING IN PART
** ** ** ** **
BEFORE: ACREE AND CLAYTON, JUDGES; GUIDUGLI,1 SENIOR JUDGE.
ACREE, JUDGE: Beulah Mills appeals from an order of the Meade Circuit Court
which assigned nonmarital property, divided marital property, and awarded her
maintenance upon the dissolution of her marriage to James Mills (Jess). Beulah
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Senior Judge Daniel T. Guidugli sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes
(KRS) 21.580.
contests the method used by the circuit court to determine her marital interest in a
farm owned by her former husband prior to the marriage. She also contests the
factual finding relating to the amount of the mortgage against the farm. We affirm
in part, reverse in part and remand for further orders.
The parties were divorced in July 2003, after more than twenty years
of marriage. It was a second marriage for each. No children were born of this
marriage.
When they married, each individually held title to real property.
Beulah owned a home in Louisville encumbered by a $4,500 mortgage. Jess
owned a farm of approximately two hundred twenty acres. The farm, livestock,
and farming equipment were valued at $329,500, and secured by two mortgages
(one from First Federal Savings and Loan and one from Farmers home
Administration) totaling $318,355.17.
When they divorced, the parties owned other real estate, but only
these properties were held to be nonmarital.2 Beulah’s house was valued at
$95,000.00 with a $71,000.00 mortgage which she claimed was taken out to enable
the parties to purchase more real estate. The circuit court ordered all the marital
real estate sold, applied to pay off the mortgage on Beulah’s house, and divided the
remaining proceeds equally between the parties.
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Jess had deeded his farm jointly to himself and Beulah shortly before the divorce. However,
the circuit court found that the deed was executed for marital purposes and Beulah’s decision to
leave Jess after the deed was executed defeated his purpose in placing her name on the deed.
Thus, the farm was found to be nonmarital property, a decision which Beulah does not contest on
appeal.
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The circuit court ruled that the debt on Jess’s farm had been reduced
to $276.282.38 by use of marital funds. The reduction, calculated by the trial court
to be $42,072.79, was to be divided evenly between the parties.
Additionally, Jess was ordered to pay $750.00 per month in spousal
maintenance until Beulah’s death, remarriage, or cohabitation. This appeal
followed.
Beulah first argues that the circuit court erred when it found the
amount of the Farmers Home Administration mortgage against Jess’ farm to be
$152,282.38. According to her, the evidence presented before the circuit court
established that the mortgage was actually between $142,000.00 and $144,000.00.
This error reduced the total amount of marital equity in the farm. Beulah’s share
of the marital equity was proportionately reduced. Jess agrees that the circuit court
erred in this regard and states that the debt to Farmers Home Administration should
be adjusted in the interests of justice and each party awarded their proper share of
the marital equity in the farm. Consequently, this portion of the circuit court’s
order is reversed and remanded for entry of a new finding regarding the debt to
Farmers Home Administration at the time of the divorce and recalculation of the
parties’ marital equity in the farm.
Next, Beulah contends that the circuit court erred when it refused to
use the formula set forth in Brandenburg v. Brandenburg, 617 S.W.2d 871
(Ky.App. 1981), to determine the parties’ marital and nonmarital interests in Jess’
farm. She argues the circuit court’s decision was arbitrary, unreasonable, unfair, or
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legally unsound. See, Kuprion v. Fitzgerald, 888 S.W.2d 679, 684 (Ky. 1994).
The formula recognized by this Court in Brandenburg was summarized as follows:
there is to be established a relationship between the
nonmarital contribution and the total contribution, and
between the marital contribution and the total
contribution. These relationships, reduced to
percentages, shall be multiplied by the equity in the
property at the time of distribution to establish the value
of the nonmarital and marital properties.
Brandenburg, 617 S.W.2d at 872. However, we then went on to clarify that our
adoption of the formula did not imply that this Court would reject “other
procedures utilized by the lower courts in arriving at an equitable division of
property as long as the relationship between the contributions of the parties is
established.” Id. at 873.
During the parties’ marriage, Jess farmed the property while Beulah
worked outside the home, contributing financially to the marital estate. The circuit
court made a finding that the farm’s appreciation was not due to any efforts of the
parties, but rather was a result of the appreciation of land values in the area.
Consequently, only the equity which resulted from debt reduction was marital
property. See, Overstreet v. Overstreet, 144 S.W.3d 834, 837 (Ky.App.
2003)(“When the value of non-marital property is enhanced through the use of
marital funds, only the increase in value of the property and the funds contributed
in pursuit of that increase are subject to division as marital property.”). The circuit
court ordered that amount to be evenly divided between the parties. Beulah has
failed to demonstrate that this decision was arbitrary, unreasonable, unfair, or
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legally unsound. Thus the circuit court’s failure to use the Brandenburg formula
was not clearly erroneous.
Beulah’s third argument is that the circuit court erred when it found
that the value of Jess’s farm increased due to passive appreciation, rather than due
to the parties’ efforts. The circuit court addressed this contention in its order as
follows:
Even though Ms. Mills argues that she contributed to the
improvement of the farm by tiling, painting, wallpapering
and general decorating, these things are more in line with
typical upkeep and maintenance than property
improvement. She also argues that farming the fields and
maintaining the livestock led to the appreciation in the
farm’s value. However, again, this is typical farm use.
Simply planting and harvesting crops is not enough to
cause more than a passive appreciation in the land’s
value.
(Order dated February 22, 2006)(footnote omitted). In its order, the circuit court
also noted that the only evidence supporting Beulah’s claimed efforts to improve
the property was her own testimony. Her testimony was contradicted by Jess, two
farm employees, and a neighbor.
On appeal, Beulah contends that the remodeling efforts were more
substantial than recognized by the circuit court. According to her, the parties
sanded the kitchen cabinets, screened in the back porch, took out decorative beams,
knocked out a bathroom wall, added a whirlpool tub, and replaced the windows
and heating system. Kentucky Civil Rule 52.01 states that a trial court’s findings
of fact “shall not be set aside unless clearly erroneous, and due regard shall be
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given to the opportunity of the trial court to judge the credibility of the witnesses.”
We are bound by the findings of the circuit court unless they are not supported by
substantial evidence in the record. V.S. v. Commonwealth, Cabinet for Human
Resources, 706 S.W.2d 420, 424 (Ky.App. 1986). Further, the evidence
supporting the circuit court’s findings need not be
uncontradicted. M.P.S. v. Cabinet for Human Resources, 979 S.W.2d 114,
117 (Ky.App. 1998)(citing, Rowland v. Holt, 253 Ky. 718, 726, 70 S.W.2d 5, 9
(1934)). Since Beulah presented no evidence but her own testimony that her
remodeling efforts contributed to the farm’s appreciation, the circuit court found
that it would be speculative to assign a monetary value to them. We do not find
this to be clearly erroneous.
Finally, Beulah argues that the circuit court erred in considering the
debt owed to First Federal Savings and Loan in calculating the amount of reduction
in the mortgages against the farm during the marriage. The circuit court found that
this mortgage decreased the marital equity in the farm by $124,000.00. Beulah
argues that, since the First Federal loan was taken out a few months before the
parties separated and the farm was found to be Jess’s nonmarital property, she did
not receive a marital benefit from these funds. Consequently, she contends that the
circuit court’s decision unfairly deprived her of a portion of her marital interest in
the farm’s equity.
Jess testified that the First Federal mortgage was taken out to
refinance a previous marital line of credit with PNC Bank. Further, Beulah does
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not contest that her Cadillac Escalade was purchased with the proceeds of the First
Federal mortgage. Therefore, the evidence before the circuit court did not support
her contention that the First Federal mortgage was used primarily for the farm and
for rental property. Beulah has failed to prove that the circuit court’s decision to
include the First Federal mortgage when calculating the increase in the farm’s
marital equity during the parties’ marriage was unfair or unreasonable.
For the foregoing reasons, the order of the Meade Circuit Court is
affirmed in part and reversed and remanded in part for further proceedings
consistent with this opinion.
ALL CONCUR.
BRIEFS FOR APPELLANT:
BRIEF FOR APPELLEE:
Briana Geissler Abbott
Louisville, Kentucky
Michael A. Pike
Radcliff, Kentucky
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