Bayer v. Bayer

• Decision Date: 14 September 1990
• Docket Number: No. 10689,10689
• Citation: 1990 NMCA 106,800 P.2d 216,110 N.M. 782
• Parties: Michael BAYER, Petitioner-Appellant, v. Mary B. BAYER, Respondent-Appellee.
• Court: Court of Appeals of New Mexico

Page 216

800 P.2d 216

110 N.M. 782

Michael BAYER, Petitioner-Appellant, v. Mary B. BAYER, Respondent-Appellee.

No. 10689.

Court of Appeals of New Mexico.

Sept. 14, 1990.

Certiorari Denied Oct. 24, 1990.

[110 N.M. 783] Ralph E. Ellinwood, John F. Schaber, P.A., Deming, for petitioner-appellant.

E.H. Williams, Las Cruces, for respondent-appellee.

OPINION

MINZNER, Judge.

On the court's own motion, the prior opinion filed in this case is withdrawn and the following is substituted.

Husband appeals from that portion of the final divorce decree apportioning the proceeds from the sale of a farm (the McNary Farm) between him and wife. On appeal, husband claims the trial court erred in awarding wife any portion of the proceeds. This case presents issues of first impression in New Mexico concerning the burden of proof in establishing a community property interest in the enhanced value of separate property created by improvements and renovations attributable to community labor and the trial court's discretion in apportioning such enhanced value. For the reasons that follow, we vacate the division of property and remand for further proceedings.

Husband acquired the McNary Farm, which is located in Texas, in 1972 for $29,132.70, five months before he married wife, and it was sold during the marriage in 1985. He made a down payment of $8,707.50 and took out a loan of $20,425.20. The trial court found that the loan was paid in full by November 1984; that the total sum paid on the loan was approximately $33,000; and that husband made all payments on the loan from a separate account into which he had deposited his retirement disability compensation. The court also found that husband's right to the compensation accrued prior to marriage. The trial court additionally adopted a finding of fact that "[n]o evidence was presented as to amounts spent to improve the [McNary Farm] property."

The McNary Farm consists of 152 acres plus improvements. At the time of purchase, the improvements consisted of an unpainted cinderblock residence with a tar paper roof, an adobe building with a fallen-in roof, and two hay sheds. Wife described the farm as not habitable at the time of purchase and testified that she and her children helped improve the farm in the months prior to and after the marriage. The renovations included painting, installation of a new roof and addition of a room and patio to the residence, road improvement and leveling, repair of fences, wells, and ditches, and clearing land. The only evidence concerning the value of the improvements was contained in a 1984 tax assessment of the farm, which indicated that the land had a market value of $82,892 and the improvements had a market value of $24,120, or a total market value of $107,012. Husband sold the McNary Farm in February 1985 for $155,000, less a sales commission of $10,000 and fees of $1,012, or approximately $144,000. Husband received $10,000 earnest money, a $10,000 promissory note, and a Deed of Trust for the balance due. Subsequently, husband purchased property in Columbus, New Mexico, secured by a loan for which the promissory note was collateral. It is unclear what disposition was made of the earnest money. The trial court's order apportioning the proceeds of the sale of the McNary Farm is directed at the balance due on the Deed of Trust.

During the marriage, only wife was employed. Her earnings were deposited in a separate account and used for household expenses. The trial court found that from the date of the marriage until the sale of the McNary Farm, husband "devoted his personal time, labors and efforts to the impovement [sic] of the McNary property" on a full-time basis.

Wife asked the court to apportion 73 percent of the proceeds of the sale of the McNary Farm to community property on the theory that 73 percent of the initial purchase price was paid during the time husband and wife were married. The trial court found that, to do substantial justice based on the facts, the proceeds of the sale of the farm should be apportioned between husband and wife. The trial court's findings and conclusions indicate that the court relied on Portillo v. Shappie, 97 N.M. 59, 636 P.2d 878 (1981), in reaching its decision that the community was entitled to a portion of the proceeds from the sale of the McNary Farm. In considering motions for reconsideration, the trial court reviewed various methods of apportionment approved in New Mexico cases. See Hughes v. Hughes, 101 N.M. 74, 678 P.2d 702 (1984); Portillo v. Shappie; Michelson v. Michelson, 89 N.M. 282, 551 P.2d 638 (1976); Dorbin v. Dorbin, 105 N.M. 263, 731 P.2d 959 (Ct.App.1986). The court concluded that no one method of apportionment is required, Portillo v. Shappie, and that, for lack of evidence of inherent unfairness, none of the methods previously approved was appropriate. Thus, the court made its own calculation.

In making its calculation, the trial court hypothetically assigned half of the net proceeds to each party, added to husband's share his costs ($8,700 + $33,000) in acquiring the property, and deducted the same amount from wife's share. Thereafter, the court calculated the percentage of the proceeds represented by husband's share ($113,700 divided by $144,000 = 79 percent) and by wife's share ($30,300 divided by $144,000 = 21 percent). The court found that fifteen annual payments were due under the Deed of Trust and that the first had been used to pay community debts. The court awarded wife 21 percent of the second payment due, payable in installments, and 21 percent of the remaining payments, to be paid by the escrow agent.

Husband raises three issues: (1) the trial court erred because there was no evidence that the community acquired any interest in the farm; (2) there was no substantial evidence to support the trial court's findings that wife, her minor children, and husband worked to improve the farm after the marriage and that husband "on a full time basis, devoted his personal time, labors and efforts to the impovements [sic] of the [farm];" (emphasis in original) (3) the trial court erred in denying husband's motion to reconsider the decision apportioning the proceeds. Husband's three issues are closely related. Essentially, he contends that wife had the burden of proving that the community had acquired an interest in the farm, which she failed to satisfy. See Laughlin v. Laughlin, 49 N.M. 20, 155 P.2d 1010 (1944); Dorbin v. Dorbin. He explicitly contends that the findings on which the trial court reached its conclusion as to apportionment are not supported by substantial evidence and implicitly contends that the findings made are not sufficient to support the conclusion. We first address the argument concerning the findings made. We conclude that the trial court's findings concerning the wife's interest in the McNary Farm are not sufficient to support the trial court's conclusions for allocating wife a 21 percent interest in the sale proceeds.

Although the McNary Farm was located in Texas and the parties were residents of Texas prior to moving to New Mexico, neither party has asserted that Texas law governs wife's claim of a community interest in the property or the disposition of the sale proceeds. In the absence of pleading or proof, New Mexico courts will presume that the law of a sister state is the same as that of the forum. See Larson v. Occidental Fire & Casualty Co., 79 N.M. 562, 446 P.2d 210 (1968), overruled on other grounds, Estep v. State Farm Mut. Auto. Ins. Co., 103 N.M. 105, 703 P.2d 882 (1985); see also In re Mary L., 108 N.M. 702, 778 P.2d 449 (Ct.App.1989). No argument to the contrary was made at trial, and thus no issue as to the governing law was preserved on appeal. See SCRA 1986, 12-216(A). Therefore, as did the trial court, we apply New Mexico law to the characterization problem.

We believe that the trial court's findings that wife contributed labor toward the enhanced value of the McNary Farm and that husband devoted himself full-time to improving the farm are supported by the evidence. Substantial evidence is that which a reasonable mind might accept as adequate to support a conclusion. Register v. Roberson Constr. Co., 106 N.M. 243, 741 P.2d 1364 (1987). Here, wife testified that she and her children worked to make the farm habitable and that such efforts included work on the farm's structures, plumbing, and fields. Husband does not contest the fact that evidence was presented that during the course of the marriage he had no other job or employment. The evidence showed that he had retired prior to the date he and wife married.

The court's evidentiary findings lend some support to an ultimate finding that the community contributed to the enhanced value of the farm. See Newcum v. Lawson, 101 N.M. 448, 684 P.2d 534 (Ct.App.1984) (findings of fact adopted by the court are to be construed so as to uphold rather than defeat the judgment, and, if from the facts found, other necessary facts to support the judgment may reasonably be inferred, the trial court's judgment will not be disturbed on appeal). However, there are no findings as to the amount by which the community labor enhanced the value of the farm. Absent such a finding, the trial court's conclusion that wife is entitled to 21 percent of the remaining payments due under the Deed of Trust cannot stand. The trial court found that no evidence was presented as to the amounts spent to improve the farm, and wife's answer brief fails to point out any evidence specifically placing a value on community improvements or renovations to the farm.

Wife had the burden of proof in establishing the community's interest in the sale proceeds. The proceeds were received during the marriage, and the presumption is that they were community property. See NMSA 1978, Sec. 40-3-12(A) (Repl.Pamp.1989). Nevertheless, husband traced the proceeds to the sale of property which he had acquired prior to marriage. Property acquired...