Carr v. Carr

• Decision Date: 31 August 1989
• Docket Number: No. 17370,17370
• Citation: 779 P.2d 422,116 Idaho 747
• Parties: Mary Elizabeth CARR, Plaintiff-Respondent, v. Terry Arthur CARR, Defendant-Appellant.
• Court: Idaho Court of Appeals

Page 422

779 P.2d 422

116 Idaho 747

Mary Elizabeth CARR, Plaintiff-Respondent, v. Terry Arthur CARR, Defendant-Appellant.

No. 17370.

Court of Appeals of Idaho.

Aug. 31, 1989.

C.J. Hamilton, Hamilton & Hamilton, Coeur d'Alene, for defendant-appellant.

Sue S. Flammia, Flammia & Solomon, Coeur d'Alene, for plaintiff-respondent.

WALTERS, Chief Judge.

This case involves a controversy over distribution of community property pursuant to a divorce decree. Terry Carr challenges a decision of the district court upholding a magistrate's order of final accounting of business property jointly owned by Terry and his ex-wife, Elizabeth Carr. Specifically, Terry argues that the magistrate presiding at the final accounting should not have awarded Elizabeth compensation for Terry's use of the couple's community property prior to its sale. Terry also contends that the magistrate erred in awarding Elizabeth an interest in property allegedly diverted from the community by Terry. Finally, Terry submits that the magistrate should not have ordered him to pay all of the taxes on the couple's business property during the time he operated the business as a sole proprietor. For the reasons explained below, we affirm that portion of the district court's order upholding the magistrate's judgment awarding Elizabeth compensation for Terry's use of the couple's jointly owned business property, and the magistrate's order requiring Terry to pay the taxes associated with the couple's business. However, we reverse that portion of the district court's order dealing with Terry's alleged diversion of community assets. We remand this case to the magistrate division for a factual determination consistent with our opinion regarding the diversion of assets.

This case involves yet another dispute arising from the divorce of Terry and Elizabeth Carr in 1981. See Carr v. Magistrate Court of the First Judicial District, 108 Idaho 546, 700 P.2d 949 (1985); Carr v. Carr, 116 Idaho 754, 779 P.2d 429 (Ct.App.1989); Carr v. Carr, 108 Idaho 684, 701 P.2d 304 (Ct.App.1985). The essential facts of this case are as follows. The Carrs' divorce decree, entered on December 22, 1981, provided for unequal distribution of the couple's community property, including their business, the Husky Port Truck Stop located near Post Falls. Distribution of the truck stop property, valued at $761,000, was deferred beyond the date of the decree so that the business could be sold. Elizabeth was ordered to receive the first $4,846 from the proceeds of the sale of the business, after which the balance was to be divided equally. Terry was given a sixty-day period from the date of the decree to purchase Elizabeth's interest. During this time, the couple was to remain in joint control of the business.

Problems quickly arose between the parties after entry of the divorce decree and pending sale of the business. Elizabeth alleged that Terry physically and verbally threatened her at work; she eventually hired a bodyguard to protect her while on the job. In addition, the business began experiencing financial difficulties. In December, 1981, a check written by Terry for $82,000 to Husky Oil Company, the business' main fuel supplier, was not paid due to insufficient funds. The Husky Oil Company subsequently refused to sell fuel to the Carrs except on a cash basis. As a result, Terry closed the fuel section of the business for twenty-eight days, beginning on January 13, 1982.

Due to the deteriorating conditions of the business, the parties entered into a stipulation on February 4, 1982, whereby Elizabeth agreed to no longer work at the truck stop and Terry assumed full control of the operation until a sale could be arranged. The couple also stipulated that Elizabeth would be relieved of "any indebtedness" of the business, but would not be entitled to share in any earnings or sales after the date of the stipulation. Elizabeth did, however, reserve the right to assert a claim for "rental value of her share of the community property" after February 1, 1982. The parties also agreed to extend the time in which Terry had to purchase Elizabeth's share of the business until June 17, 1982.

In June, 1982, Terry informed Elizabeth that he would not be purchasing her share of the business. However, the business remained unsold. ¹ On July 9, 1982, Elizabeth filed a motion for payment of rent or profit with the magistrate division, asking that, beginning after February 1, 1982, Terry be required to pay her rent for his use of her share of the business, or in the alternative, that Terry be required to pay her one-half of the business' monthly profits. On October 6, 1982, Elizabeth filed a second motion with the magistrate division, stating that she elected to receive "interest," or rental compensation, as the value of her share of the truck stop property, rather than to receive a share of the profits from operation of the truck stop. She asserted that such rental compensation, calculated at fourteen percent per annum, would be approximately $4,600 per month, or $36,000, for the period from February 1 to September 30, 1982.

Pursuant to Elizabeth's first motion, on October 7, 1982, the magistrate ordered Terry to pay Elizabeth one-half of the business' profits beginning on August 1, 1982, and for each month thereafter until the property was sold (first order). In his order, the magistrate also concluded that Elizabeth was not entitled to rental compensation for the period from February 1 to July 31, 1982. On December 23, 1982, the magistrate ruled on Elizabeth's second motion. Finding that, to date, Terry had paid Elizabeth nothing for his use of her share of the truck stop property, the magistrate ordered Terry to pay Elizabeth monthly rental compensation of $1,200 beginning in January, 1983, and continuing until the property was sold (second order).

Terry made timely payments of rent to Elizabeth for his use of the truck stop property from January, 1983, until the property was sold in December, 1983. By a separate order dated February 28, 1984, the magistrate presiding over the distribution of the truck stop property ordered Terry to pay all of the real and personal property taxes on the business which had accrued from the date of the parties' stipulation, February 4, 1982, through the date of sale. The court's order was based, in large part, on the parties' stipulation which required Terry to assume the indebtedness of the business.

A final accounting trial was conducted before a different magistrate from June 10 through June 14, 1985. Based upon the evidence adduced at this trial, the magistrate reached the following conclusions. First, the magistrate concluded that, in addition to her share of the sale proceeds of the truck stop property, Elizabeth was entitled to an additional $106,500 in compensation from Terry. The magistrate's conclusion Both parties appealed to the district court from the magistrate's judgment of final accounting. Terry challenged the magistrate's decisions regarding Terry's alleged diversion of funds from the business, his alleged ownership of the Millview Lane property, and the magistrate's award of rental compensation to Elizabeth for Terry's use of the truck stop property. Terry also contested the magistrate's decision of February 28, 1984, requiring him to pay all of the business' taxes. In a memorandum opinion and order, the district court affirmed the magistrate's decision regarding Terry's diversion of funds from the business, and the magistrate's decision awarding Elizabeth one-half equity ownership in the Millview Lane property. The district court also affirmed the magistrate's independent order requiring Terry to pay the taxes on the business. However, the district court concluded that Elizabeth was only entitled to receive rental compensation for Terry's use of the truck stop property during the period from August 1, 1982 to January 3, 1983. The district judge based his conclusion on the fact that the prior magistrate had already concluded that Elizabeth was not entitled to compensation from February 1 to July 31, 1982. The district court affirmed that portion of the magistrate's order awarding Elizabeth rental compensation in the amount of $12,000.

[116 Idaho 750] was based upon circumstantial evidence indicating that Terry had diverted at least $213,000 in assets from the business, without the knowledge or consent of Elizabeth, and without applying this amount to an identical debt owed to Husky Oil Company. Second, the magistrate decided that Elizabeth was entitled to receive rental compensation in the amount of $24,000 for Terry's use of the business property between February 1, 1982 and January 3, 1983. The magistrate's decision was in contravention to the prior magistrate's first order concluding that Elizabeth was entitled to receive profits from the business pending its sale. Finally, the magistrate held that Elizabeth was entitled to one-half of the equity value of real property allegedly owned by Terry and located on Millview Lane in Coeur d'Alene. The magistrate based his conclusion on evidence which suggested that Terry was the purchaser of the property, even though the property was ostensibly acquired by Terry's sister and brother-in-law.

In 1986, Terry was convicted of tax evasion and fraud and was sentenced to serve nine years in a federal penitentiary. A federal tax lien in the amount of $690,000 was later filed against his real and personal property. As a result of his change in circumstance, Terry filed two motions to reduce or to eliminate his child support obligation to the couple's minor child. During one of these proceedings, Terry admitted being owner of the Millview Lane property. See Carr v. Carr, 116 Idaho 754, 779 P.2d 429, (Ct.App.1989). This appeal by Terry followed.

I STANDARD OF REVIEW

We first note our standard of review. On appeal from an order of the district court reviewing a magistrate's findings and conclusions, we...