Franks v. Franks

• Decision Date: 09 December 1999
• Docket Number: No. 98-CA-00701-SCT.,98-CA-00701-SCT.
• Citation: 759 So.2d 1164
• Parties: Beverly Maxey FRANKS v. Larry M. FRANKS.
• Court: Mississippi Supreme Court

759 So.2d 1164

Beverly Maxey FRANKS v. Larry M. FRANKS.

No. 98-CA-00701-SCT.

Supreme Court of Mississippi.

December 9, 1999.

Michael B. Gratz, Sr., Tupelo, Deborah H. Bell, University, Attorneys for Appellant.

John D. Smallwood, Tupelo, Attorney for Appellee.

BEFORE SULLIVAN, P.J., SMITH AND MILLS, JJ.

MILLS, Justice, for the Court:

STATEMENT OF THE CASE

¶ 1. Larry M. Franks filed for divorce from his wife, Beverly Maxey Franks, after fourteen years of marriage. The parties agreed to a divorce on the grounds of irreconcilable differences and submitted to the chancellor issues of property division and spousal support. After two days of testimony, the chancellor awarded Beverly the marital residence valued at $60,000, a vehicle valued at $15,500, jewelry valued at $23,000, retirement accounts valued at $45,044.18 and other personal property. The total property award was valued at $144,044.18. The court also awarded her lump sum alimony of $35,000 and ordered Larry to pay certain debts equaling $40,233. The chancellor awarded Larry a vehicle valued at $1,000, personal property, and retirement accounts, investment accounts, stocks and bonds together valued at $1,100,000. The court found Larry's retirement and investment accounts to be non-marital property and, therefore, not subject to equitable distribution. Beverly appeals from that decision assigning as error two issues:

I. WHETHER THE CHANCELLOR ERRED AS A MATTER OF LAW IN FINDING THAT INVESTMENT ACCOUNTS IN LARRY FRANKS' NAME ARE NON-MARITAL PROPERTY NOT SUBJECT TO EQUITABLE DISTRIBUTION?

II. WHETHER LARRY FRANKS' SEPARATE PROPERTY OF $370,000 LOST ITS SEPARATE CHARACTER WHEN IT WAS COMMINGLED WITH MARITAL PROPERTY?

¶ 2. Larry, on cross-appeal, offers one assignment of error:

I. WHETHER THE CHANCELLOR ERRED IN AWARDING THE MARITAL HOME TO BEVERLY AND WHETHER THE AWARD OF ALIMONY WAS EXCESSIVE?

STATEMENT OF FACTS

¶ 3. Larry and Beverly Franks were married on April 17, 1982. After fourteen years of marriage Larry filed for divorce in the Lee County Chancery Court. The couple subsequently agreed to a divorce on the ground of irreconcilable differences, and the court granted them a divorce on March 25, 1998. At the time of trial both Larry and Beverly were forty-one years of age and in good health. No children were born of the marriage.

¶ 4. Throughout the marriage Beverly was employed by Hancock Fabrics in Tupelo, Mississippi, at an annual salary of $23,000 at the time of the divorce. Prior to 1991 Larry worked at various jobs with a low annual salary. After 1991 Larry was employed by his father as a farmer at an annual salary of $12,000. The couple lived solely on the income earned from their respective jobs. During the marriage the couple resided at the marital residence located in Tupelo. This residence was purchased by Larry Franks in 1978, and he had paid all but $6,000 of outstanding debt on the mortgage at the time the parties were married. The fair market value of the residence at the time of trial was $60,000. In addition to Beverly's yearly income the trial court determined that she had a separate estate of $45,044.18 consisting of her IRA's and her 401k Plan. Larry had a separate estate of approximately $1,100,000 consisting of his IRA's, investment accounts, stocks and bonds.

¶ 5. During the course of the marriage, the parties put their employment income into a joint checking account from which everyday bills were paid. At the time of trial Larry had no personal debts. Beverly had credit card debt in excess of $46,000 as of September 1997.

¶ 6. The most significant properties in dispute are Larry's investment accounts. Larry's parents, Dr. Cecil Franks and Estelle Franks, established investment accounts for Larry and his two siblings when they were small children. The accounts were created as gifts given to Larry and his siblings by Dr. Franks and his wife. Dr. Franks has always and continues to manage all of the accounts. Each account is listed in the name of Larry Franks with one of his other siblings, either David or Carol, named as a joint tenant with rights of survivorship. Dr. and Mrs. Franks have continued to fund the investment accounts with annual gifts of approximately $20,000 deposited directly into the investment accounts. Neither Larry nor Beverly has ever made any monetary contribution to these accounts. Although the income generated by these investment accounts is Larry's property and at his immediate disposal, Larry chose never to receive any dividend or other income from the investment accounts, allowing any such income to be reinvested by Dr. Franks. The taxes on that income were paid directly from the income generated from those investments.

ANALYSIS

I. Whether the Chancellor erred as a matter of law in finding that investment accounts in Larry Franks' name are non-marital property not subject to equitable distribution?

¶ 7. In a domestic case, this Court "will not disturb a chancellor's findings unless manifestly wrong, clearly erroneous, or if the chancellor applied an erroneous legal standard." Johnson v. Johnson, 650 So.2d 1281, 1285 (Miss.1994).

¶ 8. We have provided the following basic rules on equitable distribution:

The division of marital assets is governed by the guidelines delineated in Johnson, Ferguson, and Hemsley. The first step is to identify the character of the parties' assets, both marital and nonmarital, pursuant to Hemsley. Johnson, 650 So.2d at 1287

. The chancellor should then, in light of each party's nonmarital property, employ the Ferguson factors as guidelines and equitably divide the property. Id. The Court instructed the chancellor to do no more "[i]f there are sufficient marital assets which, when equitably divided and considered with each spouse's nonmarital assets, will adequately provide for both parties...." Id. However, "[i]f the situation is such that an equitable division of marital property, considered with each party's nonmarital assets, leaves a deficit for one party, then alimony based on the value of nonmarital assets should be considered." Id.

Knutson v. Knutson, 704 So.2d 1331, 1333 (Miss.1997)

.

¶ 9. One decision that we find particularly applicable and closely related to the case sub judice is Carrow v. Carrow, 642 So.2d 901 (Miss.1994). In Carrow, this Court considered whether the appreciated value of the husband's separate property Corvette collection was marital property subject to equitable distribution. Id. Both parties had worked and made good salaries during the marriage. Id. It was established that throughout the marriage Jean Carrow paid most of the marital household expenses and performed many of the domestic tasks, allowing Jimmie to use his income for investments. Id. This Court, in considering the matter, first reiterated Mississippi's definition of marital property:

We define marital property for the purpose of divorce as being any and all property acquired or accumulated during the marriage. Assets so acquired or accumulated during the course of the marriage are marital assets and are subject to an equitable distribution by the chancellor. We assume for divorce purposes that the contributions and efforts of the marital partners whether economic, domestic or otherwise are of equal value.

Carrow, 642 So.2d at 906 (quoting Hemsley v. Hemsley, 639 So.2d 909, 915 (Miss. 1994)).

¶ 10. We further stated in Carrow, 642 So.2d at 907:

Evidence was also presented that some of the Corvettes may have been purchased by Jimmie with money from his father's estate and with inherited money borrowed from his mother. Property originally acquired by inheritance, devise, or descent is usually treated as separate property. Fields v. Fields, 643 S.W.2d 611, 614 (Mo.App. 1982). While Jean did do some of the work on these cars, it appears that Jimmie did the vast majority of the work on them. Also, it appears that much of the value of these Corvettes came not solely from the purchase of these cars, but from the work and improvements made upon them after they were purchased. Appreciation of the value of any nonmarital asset may be taken into account to arrive at a fair division to the extent that the non-titled spouse had made a contribution toward that appreciation of value. See, e.g., Smith v. Smith, 111 N.C.App. 460, 433 S.E.2d 196, 204 (1993). Therefore, Jean should not be automatically entitled to a one-half share, but it does appear that she should be entitled to some portion of the couple's appreciated value of the separate property where the appreciation resulted from the joined efforts, skills or funds of both spouses.

(emphasis added).

¶ 11. On remand Jean was awarded a substantial part of the Corvette collection. We affirmed this award in a second Carrow decision. Carrow v. Carrow, 741 So.2d 200 (Miss.1999).

¶ 12. More recently this Court applied the holding in Carrow to Waring v. Waring, 747 So.2d 252 (Miss.1999). In Waring, we upheld a chancellor's decision to decline "to award Shirley an equitable distribution of Richard's assets in the family businesses based on appreciation of the value of the assets during the marriage because Shirley had not shown that her efforts had directly contributed to the appreciation." Waring, 747 So.2d at 254 (Miss.1999).

¶ 13. In Waring, Shirley Waring argued that she contributed to the appreciation of her husband's businesses in two ways: by her actions on behalf of the businesses and by agreeing to the reinvestment of the couple's income into the husband's businesses. Among the actions that Shirley took on behalf of the businesses included taking phone calls, calling attention to problems, renovating office space, developing a marketing theme for one of the stores, and accompanying her husband on business trips. While this Court agreed with the chancellor's assertion that "while these contributions are not large, they should not be totally discounted," it also agreed with the chancellor's ultimate finding which stated in...