Decker v. Decker, 1524-92-3

• Citation: 17 Va.App. 12,435 S.E.2d 407
• Decision Date: 07 September 1993
• Docket Number: No. 1524-92-3,1524-92-3
• Parties: John G. DECKER v. Joy Frances McFadin DECKER. Record
• Court: Court of Appeals of Virginia

Page 407

435 S.E.2d 407

17 Va.App. 12

John G. DECKER v. Joy Frances McFadin DECKER.

Record No. 1524-92-3.

Court of Appeals of Virginia.

Sept. 7, 1993.

James F. Stutts, Gregg A. Scoggins, Richmond, James H. Ford, Martinsville (McGuire, Woods, Battle & Boothe, Richmond, on briefs), for appellant.

Harry F. Bosen, Jr., Charles B. Phillips, Salem (Harry F. Bosen, Jr., P.C., Phillips, Doherty & Swanson, on brief), for appellee.

Present: MOON, C.J., and DUFF and COLE, Senior Judges.

OPINION

DUFF, Senior Judge.

John G. Decker, husband, and Joy Frances McFadin Decker, wife, appeal the trial court's final decree, which adopted the commissioner's findings on various issues involved in the equitable distribution of the parties' marital estate. In this opinion, although we at times will refer to the commissioner's report, we are fully cognizant that it is the final decree of divorce, which approved the report, from which this appeal is taken. We affirm and hold that (1) Code § 20-107.3, as amended in 1991, was properly considered by the commissioner; (2) attributing twenty percent of the post-marital increase in the Pannill Knitting Company stock to the marital efforts of husband is supported by evidence in the record; (3) refusing to award husband credit for purchasing wife's automobile was not improper; (4) refusing to permit certain testimony offered by wife's witnesses was not an abuse of discretion; (5) husband did not dissipate the marital estate when maintaining his usual gift giving scheme to family members; (6) no error was committed in allocating the 1990 tax refund to the husband; and (7) non-economic fault is not a factor in determining an equitable distribution of the marital estate.

John Decker, appellant, and Joy McFadin Decker, appellee, were married in Martinsville on December 27, 1978. No children were born of the marriage.

At the time of the marriage, the husband was serving as chief operations officer at Pannill Knitting Company (PKC), then a publicly held apparel company in Martinsville, Virginia. In 1975, he became a member of Pannill Knitting's Board of Directors. In 1977, husband was appointed executive vice president and chief operating officer, and in March 1985 he was named president of PKC.

Although wife was not employed during the marriage, she had served as husband's secretary from July 1972 until January 1978.

In early 1984, approximately fifty percent of Pannill Knitting's common stock was owned by William Pannill and his six sisters. The remainder of the stock was publicly owned. Husband owned approximately 1.1 percent of the company's common stock in 1984. At that time the stock underwent a 15-for-1 split; existing stockholders received fifteen shares of stock in exchange for each of their previously held shares, after the leveraged buyout of the company.

Husband had accumulated over 4,383 shares of Pannill Knitting stock prior to their marriage. He bought an additional 510 shares in early 1979. During the course of the marriage, the value of the husband's stock appreciated to over $10 million due to the 1984 leveraged buyout and the subsequent 15-for-1 stock split.

On August 28, 1989, the parties separated. On that date, wife filed her bill of complaint for divorce against husband, and later amended her complaint for a divorce on the grounds of cruelty or living separate and apart for more than one year. Wife also asked for an equitable distribution of marital property pursuant to Code § 20-107.3. Husband filed an answer and cross-bill requesting a divorce on the ground of desertion.

On January 24, 1991, the matter was referred to a commissioner in chancery, who received testimony on issues relating to the grounds of divorce, spousal support and the classification, valuation, and distribution of the marital estate.

The commissioner received evidence during an ore tenus hearing. On December 12, 1991, the commissioner issued his report in which he recommended granting the wife a divorce on the ground of cruelty, and a total award, including a cash payment and division of property valued at $4,826,522.14, out of the marital estate valued at $21,185,434.73.

Both parties filed exceptions to the report of the commissioner, which were heard before the Circuit Court of Henry County. The trial court entered its final decree on June 30, 1992, adopting the conclusions and recommendations of the commissioner.

I.

Both parties agree that property formerly classified as separate which has been commingled with marital property is thereby transmuted into marital assets. See Smoot v. Smoot, 233 Va. 435, 441, 357 S.E.2d 728, 731 (1987). The question here concerning the PKC stock, which is now concededly marital property due to transmutation during marriage, is whether the trial court, by affirming the commissioner's report, properly assigned the respective burdens of proof as to the appreciation in value of the stock.

Husband contends that the trial court erred because it applied the burden of proof provisions of Code § 20-107.3(A)(3)(a), which provisions did not become effective until 1991. ¹ Phrased differently, husband argues that the trial court erred in requiring him to prove that his marital efforts did not contribute to the appreciation of his pre-marital shares of PKC stock.

The wife denies that the commissioner made any ruling as to the burden of proof on active appreciation questions by applying the 1991 amendment to Code § 20-107.3(A)(3)(a). She asserts that a fair reading of the entire commissioner's report shows that he used the 1991 law, by analogy, as one relevant factor in arriving at a fair and equitable apportionment of the marital estate. Citing Smoot, wife argues that such analogous consideration of the 1991 amendment was proper. She contends that Smoot used a "source of funds" doctrine, despite the fact that Virginia did not follow the doctrine until 1990. She further contends that the commissioner's use of the source of funds rule merely by analogy does not constitute a ruling of law on the burden of proof question under pre-1990 Virginia law.

We agree with the wife's analysis of this initial issue. The trial court approved the commissioner's findings and recommendations which consisted of 117 pages. The report must be considered in its entirety without individual sentences being taken out of context. It is apparent to us that the commissioner and the court drew the source of funds principles in distributing the marital estate from two areas: the laws of other states and the version of the source of funds rule adopted in Virginia under the 1990 and 1991 amendments to Code § 20-107.3. The court was obliged to arrive at a fair and equitable distribution of the marital estate based upon the equities of the parties as revealed by the evidence. We do not find it inappropriate for the commissioner to consider, only by analogy, the 1990 and 1991 amendments to the statute. The source of funds rule was simply one factor used by the commissioner in arriving at the ultimate conclusion. The commissioner considered in detail all of the other evidence in the case.

However, even if the final decree approving the report be viewed as applying the 1991 amendment to this proceeding, which was filed in 1989, we find no error as the provision pertaining to the burden of proof of the owning spouse is procedural in nature and not substantive.

The distinction between substantive provisions of law, which cannot be applied retroactively, and procedural or remedial statutes, which may be applied retroactively where a retroactive legislative intent is demonstrated, was explained in Shiflet v. Eller, 228 Va. 115, 120, 319 S.E.2d 750, 753 (1984). In Shiflet, the Supreme Court stated that substantive rights are addressed in statutes which create duties, rights, or obligations. In contrast, the Court explained that procedural or remedial statutes merely set forth the methods of obtaining redress or enforcement of rights.

Cohen v. Fairfax Hosp. Ass'n, 12 Va.App. 702, 705, 407 S.E.2d 329, 331 (1991).

Accordingly, we hold Code § 20-107.3, as amended in 1991, pertaining to the burden of proof of the owning spouse, which is procedural by nature and does not affect any substantive rights, could be applied retroactively in this case.

II.

We turn now to the issue of allocating the appreciation in value of the Pannill Knitting stock owned by the husband. The commissioner concluded that twenty percent of such appreciation flowed directly from Mr. Decker's marital efforts and, therefore, was marital property. The husband, in urging us to reverse the trial court's approval of this finding, asserts that the record contains no factual basis in support thereof. The wife, on the other hand, argues that the trial court erred in holding too small a portion of the stock's appreciation to be a part of the marital estate. After a proper consideration of the applicable standard of review, we find no reversible error in the trial court's determination.

"[E]ach partner should receive a fair proportion of the property accumulated during marriage, including property titled in the other party's name but which has appreciated in value due to the non-monetary efforts of the non-owner spouse." Roane v. Roane, 12 Va.App. 989, 994, 407 S.E.2d 698, 701 (1991) (citation omitted). As was noted in Brown v. Brown, 5 Va.App. 238, 244-45, 361 S.E.2d 364, 368 (1987),

[T]he chancellor is necessarily vested with broad discretion in the discharge of the duties the statute [Code § 20-107.3] imposes upon him. Unless it appears from the record that the chancellor has abused his discretion, that he has not considered or has misapplied one of the statutory mandates, or that the evidence fails to support the findings of fact underlying his resolution of the conflict in the equities, the chancellor's equitable distribution award will not be reversed on appeal.

Apart from the non-monetary efforts of Mrs. Decker, as found by the...