Gillespie v. Gillespie
| Decision Date | 23 February 1973 |
| Docket Number | No. 9479,9479 |
| Citation | 506 P.2d 775,1973 NMSC 19,84 N.M. 618 |
| Parties | Carl GILLESPIE, Jr., Plaintiff-Appellee, v. Patricia GILLESPIE, Defendant-Appellant. |
| Court | New Mexico Supreme Court |
Defendant-Appellant ('wife') appeals from the judgment of the Bernalillo County District Court in this divorce proceeding.
The parties were married on December 23, 1952 and the trial court's decision and judgment were entered in November, 1971. The trial court was confronted with the array of controverted issues normal to divorce actions. In this appeal we are asked to review only the decision in respect to a separately owned business of husband and its value.
Prior to the marriage husband, by purchase, became an equal partner in a business which sold tile at wholesale and retail and contracted tile jobs. Husband's initial investment was five thousand dollars, portions of which were borrowed.
As to the business, the trial court found that the purchase money used in husband's acquisition of an interest had been borrowed and repaid prior to marriage; that at the time of marriage, husband's investment was $13,768.52; and that no community property was invested in the business except in respect to a car. As to the car, the court found that husband had a car prior to marriage and that after successive trades its descendent was contributed to the capital of the tile company. The court found that the value of the contributed car was $1,359.40 'in which the community had a minimal interest, if any.'
Further as to the business, the court found that during the marriage husband's withdrawals from it equaled the value of his services and personal efforts in its conduct; that the value of the business was $52,470.75 of which $48,344.20 represented husband's separate interest and $4,126.55 was the community interest in undistributed profits.
The court then made disposition of the asset in a manner consistent with its findings.
The correctness of the trial court's decision must be gauged by § 57--3--5, N.M.S.A.1953 providing, inter alia, that property owned by a husband before marriage, with the rents, issues and profits thereof is his separate property; § 57--4--1, N.M.S.A.1953 providing that all other property acquired during marriage is community, and our root cases on the subject, notably Katson v. Katson, 43 N.M. 214, 89 P.2d 524 (1939) and Laughlin v. Laughlin, 49 N.M. 20, 155 P.2d 1010 (1944).
A good deal is said in the briefs of the need to see to it that in situations such as this the community and the wife be fairly and equitably treated. We are aware of this. We are however no less concerned with according the same sort of treatment to the husband's rights and his separate property which are just as sacred as is the right of the parties in their community property. Katson v. Katson, supra.
Wife first questions the trial court's finding to the effect that prior to marriage, husband had borrowed and repaid certain monies used to purchase his interest in the tile business. There is not the slightest question but that the business was acquired before marriage. Wife argues however that the borrowings with which it was acquired were not repaid prior to marriage but were rather, to some unspecified extent, repaid during coverture or in some cases, were not repaid at all. From this she claims that the community had 'an investment' in the business.
It would be a sufficient answer to this to say that the trial court's finding was richly sustained by the evidence and is not attacked in any case, were it not for the fact that in making this argument wife ignores a settled principle of law which has a direct bearing on the resolution of other issues. Since the husband's interest in the business was acquired prior to coverture, it was his separate property, regardless of whether payment was made for it before or after coverture. As we said in Laughlin v. Laughlin, supra:
See also, Hollingsworth v. Hicks, 57 N.M. 336, 258 P.2d 724 (1953).
The business was the separate property of husband and remains so unless it was in some fashion transmuted. McDonald v. Lambert, 43 N.M. 27, 85 P.2d 78, 120 A.L.R. 250 (1938). The transmutation feature is not present here.
Thus even if some portion of the purchase monies for the interest in the partnership had been paid during coverture, the community would have had no 'investment' in the business as contended by wife. The community would have merely had an equitable lien or charge against it.
Whether or not the pre-coverture borrowings were repaid is of no consequence absent some further transactions with the creditors, of which there is no evidence. Such borrowings would be the separate obligations of the husband.
We will accordingly proceed upon the basis that the interest in the tile company partnership was the separate property of the husband and we are not concerned with any equitable liens or charges of the community upon the business.
The trial court found that husband's investment in the tile company amounted to $13,768.52 at the time of the marriage. The parties were married on December 23, 1952 and the source of the figure mentioned was a financial statement kept in the ordinary course of business as of January 31, 1953. The nature of wife's quarrel with this figure is not entirely clear except that she points to the time interval between the marriage and the financial statement and argues that the finding was improper. There is no evidence of any material change in the financial affairs of the partnership during the interval. We are not prepared to hold as a matter of law that a bridegroom must pause in the tender turmoil of the nuptials to cast up his accounts. The time interval between the marriage and the statement is about the same as that which was approved in Katson. We find no legal objection to the court's finding and it is sustained by substantial evidence.
Wife next argues that husband's capital investment in the business at the time of the marriage, whatever it may have been, was of 'no active use,' of 'no impact whatsoever' and 'was absolutely insignificant' playing no part in the increased worth of the business, and that no increase of such worth attributable to that capital should be taken into account. Capital may find its way into inventories, material obtained with which to perform contracts, tools, equipment or the working capital necessary to carry out the performance of contracts. It is obvious that the business could not have existed or functioned without capital. Wife seems to argue that capital is not used or useful in the operation of a business in a capitalistic economic system.
The trial court found that the value of husband's investment had increased to $48,344.20 representing the rents, issues and profit of his separate estate together with his original investment. This figure was determined upon a computation predicated upon a rate of return equal to the prime rate prevailing during the marriage plus two percentage points. The theory of the testimony was that had the business capital been borrowed, such would have been the rate required to be paid. Use of the formula was based upon expert testimony. The 'prime rate' is the minimum interest rate charged by banks on business loans made to the most credit worthy entities.
Wife argues that the one issue is whether the community interest in husband's business was properly evaluated as a matter of law. She does not seem to claim an absence of substantial evidence.
Wife refers to the trial court's determination of the value of husband's separate estate as being 'an enormous award.' She states that during the marriage the average yield on government bonds was 4.07% whereas the average rate during that period applied by the court was 6.84%. Presumably this is intended to shock us. It doesn't. It only indicates that the government's credit is better than husband's, notwithstanding that the latter operated at a profit and the former seems to encounter...
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