Everson v. Everson

• Decision Date: 01 July 1975
• Docket Number: No. 1,CA-CIV,1
• Citation: 24 Ariz.App. 239,537 P.2d 624
• Parties: Robert W. EVERSON, Appellant and Cross-Appellee, v. Rosanne P. EVERSON, Appellee and Cross-Appellant. 2624.
• Court: Arizona Court of Appeals

Page 624

537 P.2d 624

24 Ariz.App. 239

Robert W. EVERSON, Appellant and Cross-Appellee, v. Rosanne P. EVERSON, Appellee and Cross-Appellant.

No. 1 CA-CIV 2624.

Court of Appeals of Arizona, Division 1, Department B.

July 1, 1975.

Rehearing Denied Aug. 13, 1975.

[24 Ariz.App. 241] O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears, P.C. by James H. O'Connor and Jolyon Grant, Phoenix, for appellant and cross-appellee.

Wolfe & Harris, P.A. by Sidney B. Wolfe, Phoenix, for appellee and cross-appellant.

OPINION

JACOBSON, Presiding Judge.

The basic question in this case on appeal is whether the trial court correctly determined that all the assets of the parties were community property and in awarding 50% Of these assets to the wife upon dissolution of marriage.

The Eversons married on August 9, 1962. At that time the plaintiff-appellee, Rosanne P. Everson, was 38 and the defendant-appellant, Robert W. Everson, was 37. No children were born of this marriage. Prior to their marriage Robert was an insurance adjuster for State Farm Insurance. In 1955 he also became a licensed building contractor in Arizona, although he did not work full time as a contractor until the early 1960's. While working for State Farm, Robert conceived and planned a drive-in claims office concept for the expeditious handling of automobile insurance claims. This plan was presented to State Farm and in 1960, State Farm authorized the building of one such drive-in claims office. At this time Robert was doing business as Visioneering Construction and Development Co. Subsequently, Robert constructed and leased two additional drive-in claims offices to State Farm in the Chicago, Illinois area. In 1961, Robert incorporated under the name of Visioneering Construction & Development Co., an Arizona Corporation. The drive-in claims office concept proved highly successful and State Farm authorized the building of such offices on a nationwide basis. Corporations were also formed in Colorado and Illinois prior to marriage and in California, Delaware, Indiana and Nevada after marriage. In 1967 the subsidiary corporations in Colorado, California, Indiana and Nevada were consolidated under the Arizona parent corporation. All the stock in all the corporations formed was issued in Robert's name.

At the time of the marriage Rosanne was an elementary school teacher. In 1966 she became a securities saleswoman. The couple separated in December of 1971 and Rosanne filed for divorce in February of 1972. On October 10, 1973 a decree which dissolved their marriage was entered.

Robert filed his appeal on October 12, 1973 appealing the parts of the decree which ruled that he had not overcome the presumption that certain assets were community property, that these assets be divided equally with the appellee, and that he pay all the community debts. At that same time he filed an application for a supersedeas bond to suspend the execution of the judgment during the pendency of the appeal. On October 23, 1973 the judge signed an order awarding Rosanne $10,000 for attorney's fees to defend the appeal. Robert amended his notice of appeal on November 5, 1973 to include an appeal from this order.

Rosanne filed her notice of cross-appeal on December 10, 1973 appealing the parts of the decree which denied her an award of trial attorney's fees and costs as well as accountant's fees and costs, temporary support and maintenance pending the appeal, and the appointment of a receiver. An amended notice of appeal was filed by Rosanne on March 4, 1974, as the court ordered the supersedeas bond set at $150,000 rather than the $750,000 requested by her.

Pursuant to the decree dissolving the marriage, the judge also distributed the property ordering that 750 of the 1500 shares in Visioneering Construction and Development (hereinafter Visioneering) be transferred to the appellee. Robert contends that all of this stock is his separate property.

A.R.S. § 25--213(A) (1956), the law applicable in this case, defines the husband's separate property as:

'All property, real and personal . . . owned or claimed by him before marriage . . . and also the increase, rents, issues and profits thereof . . ..'

In this case, although there is a dispute as to the value of his investment, there is evidence that the appellant held all the stock in Visioneering of Arizona, Colorado, and Illinois at the time of the marriage. Before the marriage took place some seven drive-in claim centers had been completed or the projects awarded to Robert; by the time of the divorce, some 65 building projects had been completed for State Farm. The value of the Visioneering stock grew over this time from Robert's estimate of $30.000 at the time of marriage to a book value of $554,570 just prior to the divorce.

Robert contends that all of the 1500 shares of the stock in Visioneering is his sole and separate property as these shares represent the increase of his original investment in Visioneering prior to marriage. He argues that the stock was purchased or the corporations funded prior to the marriage or were purchased by him with his separate funds after the marriage. In support of this contention the appellant offered evidence of a separate life style of the parties and also of the use of his separate property to fund later projects.

The evidence as to the separate life styles of the spouses was introduced in an attempt to overcme the presumption that all property acquired by either spouse during marriage, whether taken in the husband's or the wife's name is community property. Armer v. Armer, 105 Ariz. 284, 287, 463 P.2d 818, 821 (1970). Robert testified that during the first week of the marriage, the couple orally agreed that each spouse would keep his own separate accounts. He would use his salary, which is considered to be community property as it is the result of personal efforts, Barr v. Petzhold, 77 Ariz. 399, 409, 273 P.2d 161, 167 (1954), to fund a joint household account to pay rent, utilities and general household expenses. Robert seems to reason that as long as he used his salary to meet household expenditures, any increase realized in the value of the Visioneering investment was his separate property. To substantiate his claim of agreed-upon separate life styles, he offered in evidence two agreements signed by his wife after their marriage. In one of these agreements she forfeited her share of the community property and in the other she acknowledged that the Visioneering stock was her husband's sole and separate property. Rosanne, on the other hand, rebutted the appellant's claim of separate life styles by testifying that she never orally agreed or intended to keep everything separate. She admitted signing the agreements but argued that she understood that she was signing them for tax purposes and was not giving up her share of the community property. In our opinion, the evidence supports the trial court in finding that Robert did not prove the separate character of the entire 1500 shares of stock with his proffered evidence on separate life styles and in this regard, did not meet his burden of overcoming the presumption of community property with clear, satisfactory and convincing evidence to the contrary. Bourne v. Lord, 19 Ariz.App. 228, 506 P.2d 268 (1973).

However, this does not mean that some of the stock should not have been found to be Robert's separate property. Property takes on its character as separate or community at the time of its acquisition. Lawson v. Ridgeway, 72 Ariz. 253, 261, 233 P.2d 459, 464 (1951). Such property retains this separate status, though exchanged during marriage for other property. Davis v. Davis, 9 Ariz.App. 49, 449 P.2d 66 (1969). Therefore, that portion of the stock owned by Robert prior to marriage remained his separate property. The trial court therefore improperly determined that the entire stock was community property. Having determined that the trial court must be reversed on this issue, the following comments are made for guidance of the court and counsel upon remand.

Whether the total value of these 1500 shares of stock is his separate property as an increase and profit of his separate investment depends on whether the increased value is the result of the appellant's individual toils or is from the inherent qualities of the asset itself. Rundle v. Winters, 38 Ariz. 239,...