Ex parte Agee

• Decision Date: 30 June 1995
• Citation: 669 So.2d 102
• Parties: Ex parte Alan D. AGEE. (In re Alan D. AGEE v. Margo L. MOORE). 1940548.
• Court: Alabama Supreme Court

Page 102

669 So.2d 102

Ex parte Alan D. AGEE (In re Alan D. AGEE v. Margo L. MOORE).

1940548.

Supreme Court of Alabama.

June 30, 1995.

Rehearing Denied Aug. 18, 1995.

Petition for writ of Certiorari to the Court of Civil Appeals (AV93000444). Appeal from the Monroe Circuit Court, No. DR-81-099.02; Robert E. Lee Key, Judge.

David F. Steele and Sherrie V. McKenzie, Monroeville, for Petitioner.

J. Milton Coxwell, Jr., Monroeville, for Respondent.

BUTTS, Justice.

This Court granted Alan Agee's petition for a writ of certiorari in order to review whether the Court of Civil Appeals erred in affirming the trial court's ruling in favor of Agee's ex-wife. The trial court ruled that, pursuant to the parties' divorce agreement, Agee was required to pay his former wife, Margo Moore, the sum of $8,368.29 from the proceeds of the sale of his residence. We reverse and remand.

I.

Agee and Moore were married in June 1977. In 1979, they purchased a house in Monroeville for $33,000, incurring a mortgage indebtedness of $22,000. They divorced in September 1981. Pursuant to their divorce agreement, Moore quitclaimed her interest in the house to Agee in return for an immediate payment of $4,000 and a future payment of one-half of the following sum--the net equity in the property upon its sale over the amount of $8,000 (the $4,000 payment representing her half of $8,000). After the divorce, Agee continued living in the house and made all the mortgage and tax payments. In July 1982, Agee took out a $4,000 second mortgage on the property. In May 1986, he paid off the first and second mortgages by refinancing the property with a new mortgage in the amount of $31,200. Agee eventually sold the house in August 1991 for $39,000.

In May 1992, Moore sued Agee, seeking to enforce the provision in their divorce agreement regarding the division of the net equity in the house. That provision states, in relevant part:

"1. Real Property Settlement. The wife does hereby agree to quitclaim to the husband all of her right, title and interest in and to that real estate, a description of which is attached hereto and marked Exhibit A and made as much a part hereof as if set out verbatim. The husband does agree to pay to the wife the sum of Four Thousand ($4,000.00) Dollars plus other equity as hereinafter described, for and in consideration of the wife's transfer of her right, title and interest in and to the property to the husband.

"....

"... Husband further agrees that upon the sale of the said property that he shall divide equally with the wife all of the net equity received from the sale of the house over and above the amount of Eight Thousand ($8,000.00) Dollars.

"The husband agrees to assume all indebtedness on the property described in Exhibit A and hold the wife harmless."

(Emphasis added.) Black's Law Dictionary (6th ed. 1990) describes "equity" in real estate as "[t]he difference between the fair market value and [the] debt in property." Thus, according to the divorce agreement, if the net equity in the property upon its sale was $10,000, Agee would be required to pay Moore the sum of $1,000 ($10,000 minus $8,000 is $2,000; one-half of $2,000 is $1,000). Although the formula set out above is rather simple to apply once the net equity in the property is determined, the parties greatly dispute the amount of the net equity.

In determining net equity, the trial court did not use the mortgage indebtedness reflected by Agee's 1986 refinancing, but instead used the mortgage indebtedness as it would have existed on the original 1979 mortgage. The trial court's order stated:

"The first question presented by the parties is the meaning of the term 'net equity.' This Court has determined that the term refers to the difference between the sales price of $39,000.00 on August 30, 1991, and the amount which would have been owed on the 1979 mortgage at the time of the sale of the home. The Court finds that the term net equity must have been intended by the parties to include as a factor the amount owed on the original mortgage of June 13, 1979. To hold otherwise would give the husband the continuing power to keep the value of the net equity low by simply borrowing as much money as possible whenever possible. This could not have been the intention of the parties.

"The value of the term net equity is derived by subtracting the amount of the balance due on August 30, 1991, on the original mortgage from the proceeds from the sale of the house.

                            "Sale price                     $39,000.00
                            Payoff (as of 8/30/91)           14,263.41
                                                            ----------
                            Net Equity                       24,736.59
                

"The amount owed by the husband to the wife is calculated by subtracting $8,000.00 from the value of the net equity and dividing it in half.

                            "Net equity                     $24,736.59
                                        minus                 8,000.00
                                                            ----------
                            Amount to be divided            $16,736.59
                            "division by 2                   16,736.59  /2
                                                             =8,368.29
                            "Amount owed by husband         $ 8,368.29
                

"The husband contended that he should receive credit for amounts spent to improve the residence. However, the agreement is silent as to the effect of any improvements. This Court is constrained to apply the principles of contract law to these facts and is not allowed to modify a plain agreement of the parties. This is not an action to modify a divorce decree, but rather is one to enforce an agreement made by the parties which was incorporated in the Judgment of Divorce. This Court is not allowed to remake the agreement of the parties but must try to give effect to what they intended."

On appeal to the Court of Civil Appeals, Agee argued that he had used the money obtained by the 1982 second mortgage and the 1986 refinancing to make substantial improvements to the property, which he says added to its value. He argued that the trial court had erred by allowing the improvements to increase the market value of the home, but not to increase the corresponding indebtedness on the home. The Court of Civil Appeals affirmed the ruling of the trial court. Agee v. Moore, 658 So.2d 513 (Ala.Civ.App.1994).

II.

The trial judge made his ruling following a hearing at which he heard testimony from the parties. Where evidence is presented to the trial court ore tenus in a nonjury case, a presumption of correctness exists as to the court's conclusions on issues of fact; its determination will not be disturbed unless clearly erroneous, without supporting evidence, manifestly unjust, or against the great weight of the evidence. Odom v. Hull, 658 So.2d 442 (Ala.1995). However, when the trial court improperly applies the law to the facts, no presumption of correctness exists as to the court's judgment. Ex parte Board of Zoning Adjustment of the City of Mobile, 636 So.2d 415 (Ala.1994). The trial court's order is based on the trial court's interpretation of the term "net equity" in the parties' divorce agreement; the proper interpretation is a question of law. Thus, we review de novo the trial court's ruling on that issue and the judgment of the Court of Civil Appeals. Justice v. Arab Lumber & Supply, Inc., 533 So.2d 538 (Ala.1988).

III.

Although the record before us does not contain a transcript of the trial court's hearing, the parties have stipulated that during that hearing Agee testified that he had spent approximately $15,000 on improvements to the property between 1983 and 1990. Agee argues that he received a total of $16,340 in new money through...