In re Marriage of Holden

Decision Date31 May 2002
Docket NumberNo. 24016.,No. 24030.,24016.,24030.
Citation81 S.W.3d 217
PartiesIn re the MARRIAGE OF Stephen W. HOLDEN and Juanita Holden. Stephen W. Holden, Petitioner/Appellant/Cross-Respondent, v. Juanita Holden, Respondent/Respondent/Cross-Respondent/Respondent/Cross-Appellant.
CourtMissouri Court of Appeals

Samuel P. Spain, Spain, Merrell & Miller, L.L.P., Poplar Bluff, appellant's attorney.

Gerald A. Sims, Jr., W. Morris Taylor, P.C., Clayton, respondent's attorney.

NANCY STEFFEN RAHMEYER, Judge.

Stephen W. Holden ("Husband") and Juanita Holden ("Wife") each appeal from the judgment of dissolution of marriage. Husband and Wife were married for seven years; they were married in August 1992, separated in May 1999, and were divorced on December 14, 1999.1 No children were born of the marriage. The decree includes detailed findings of fact and conclusions of law. Husband's one point on appeal contends the overall property division is inequitable. Wife contends that there are specific errors in the classification and valuation of the property awarded to Husband, the overall division of property is inequitable, and she should have been awarded maintenance. We affirm in part, and reverse and modify in part.

In reviewing the judgment of the trial court this court must affirm unless there is no substantial evidence to support it, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). The judgment may be set aside as being against the weight of the evidence only with caution and a firm belief it is wrong. In re Marriage of Lewis, 808 S.W.2d 919, 922 (Mo.App. S.D.1991). We defer to the trial court's determination of witness credibility, as the judge is in the better position to view sincerity, character, and other intangibles not apparent in the record on appeal. Id. A trial court may disbelieve even uncontradicted testimony. Id. With this standard of review in mind, we turn to Wife's points on appeal.

Classification of Individual Items of Property

First, Wife claims that the trial court erred in finding certain items of property were Husband's nonmarital property: Holden Investments, Inc., a State Farm Life Insurance policy, and an interest in Mt View Properties III, L.P. Husband concedes that the State Farm Life Insurance policy, valued at $8,311, should have been classified as marital property. We will address the other two items.

Holden Investments, Inc.

Prior to marriage Husband owned 50% of the outstanding shares of stock in a corporation entitled Holden Investments, Inc. ("HII"). This corporation was formed by Husband and Dennis Meeks on May 15, 1985 for the purpose of leasing and subleasing seven nursing homes. In December 1995 Husband acquired the other 50% of the shares from his partner. At the same time, Husband acquired Meeks' shares in another corporation they had formed, HML of Troy, Inc. In one transaction, Husband received the shares of stock and did the following in exchange: 1) he cancelled a debt owed by Meeks to Husband, a few thousand dollars of which was incurred by Meeks after Husband's marriage; 2) he indemnified Meeks regarding a lawsuit; and 3) he paid Meeks $100,000. Wife claims the $100,000 payment to Meeks was marital property and, thus, 50% of the stock in HII should have been classified as marital property. The trial court found HII to be nonmarital property. We note that this transaction also resulted in Husband acquiring more stock of HML of Troy, Inc., which is another asset the trial court awarded to Husband as his nonmarital property. Thus, it would seem that the same argument Wife makes concerning HII stock would logically apply to HML of Troy, Inc. stock. Nevertheless, Wife does not claim error concerning the classification and division of the HML of Troy, Inc. stock, and so we do not address that item of property in this opinion.

At the time of trial, the only asset of HII was a building in which Husband now practices law ("the State Farm building"), with a net value of $205,000. The trial court assigned this as the value of HII.2 Husband testified that he acquired the State Farm building in a tax-free exchange for a building he owned prior to the marriage ("the Sonic building"). He paid $31,231 on the Sonic building after the marriage, paying off the note in 1995. In April 1999 Husband and Wife deeded the Sonic building, which had been in Husband's name alone, to HII. Husband testified that on the same date HII did a tax-free exchange of the Sonic Building for the State Farm building, with HII ending up with the State Farm building.

Pursuant to § 452.330.3,3 "All property acquired by either spouse subsequent to the marriage and prior to a decree of legal separation or dissolution of marriage is presumed to be marital property ...." This presumption may be rebutted by a showing that the property fell into one of five categories set forth in § 452.330.2:

(1) Property acquired by gift, bequest, devise, or descent;

(2) Property acquired in exchange for property acquired prior to the marriage or in exchange for property acquired by gift, bequest, devise, or descent;

(3) Property acquired by a spouse after a decree of legal separation;

(4) Property excluded by valid written agreement of the parties; and (5) The increase in value of property acquired prior to the marriage or pursuant to subdivisions (1) to (4) of this subsection, unless marital assets including labor, have contributed to such increases and then only to the extent of such contributions.

[6] Husband owned 50% of the HII stock prior to marriage and its status remained the same throughout the marriage; therefore, this 50% of the stock is nonmarital. The remaining portion is the stock Husband acquired from Meeks during the marriage. The 50% acquired during the marriage is presumed to be marital according to § 452.330.3, and Husband, as the party questioning the presumption, has the burden of proving otherwise. In re Marriage of Pahlow, 39 S.W.3d 87, 92 (Mo.App. S.D.2001). His only possible argument is that the stock was exchanged for nonmarital property under the exception to marital property found under § 452.330.2(2).

Wife contends that this exception does not apply because the consideration given for the stock was marital. Wife is correct in part of her argument. Husband admits that a portion of the debt cancelled for Meeks was incurred during the marriage. Thus, there was a marital interest in the debt cancellation portion of the deal. See Bold v. Bold, 912 S.W.2d 477, 483-84 (Mo. banc 1995). The exact amount of the marital debt cancelled is unclear, but the record reflects that a few thousand dollars of the forgiven debt was a marital asset.

Wife also argues that the $100,000 paid in cash was a marital asset. Even though this money was paid during the marriage, Husband offered evidence to rebut the presumption that it was marital funds. He testified that the $100,000 was "paid out of corporate monies." No evidence rebutted this testimony. Deferring to the trial court's determination of credibility, and without any evidence to rebut Husband's testimony, the standard of review requires us to find that the trial court could have believed the $100,000 paid to Meeks was non-marital funds.

As pointed out above, Wife is correct that some of the consideration given for the transaction was marital, meaning that the acquired stock was mixed property. The case of Moritz v. Moritz, 844 S.W.2d 109, 112 (Mo.App. W.D.1992) holds that in such circumstances a formula must be used to calculate the non-marital and marital portion of the value of the property based upon the source of funds paying for that property. That formula is as follows:

                      marital contribution × value
                      --------------------
                       total contribution
                

Marital contribution is the marital contribution toward the purchase of the property; total contribution is the sum of the marital and nonmarital contributions; and the value is the total value of the property at the time of its distribution. 844 S.W.2d at 112. Neither party used this formula in his or her case. The record is such that we cannot accurately calculate the marital portion flowing from the marital debt forgiven. While this may be reversible error that requires a remand for further evidence in other cases, it is not so here because the record does make it very apparent that whatever the marital portion may be, it is minimal, and the trial court's failure to find some of the HII stock marital property is harmless error. Even if the entire cancelled personal debt was marital property, the maximum amount of marital property, disregarding use of the Moritz formula, is several thousand dollars in a marital estate of approximately one million dollars. A less than one percent addition to Husband's property award is de minimus in our analysis of this property division. Because, as we discuss hereinafter Wife was awarded the majority of the marital assets, we shall include in Husband's marital assets a portion of HII. Thus, even though the trial court erred in categorizing all of HII as Husband's nonmarital property, that mischaracterization did not materially affect the overall distribution of the property in that the overall division is minimally affected, and there is no reversible error. See Gismegian v. Gismegian, 849 S.W.2d 201, 204 (Mo.App. E.D.1993).

Mt. View Properties III, L.P.

Wife next claims that the trial court misclassified Mt. View Properties III, L.P. as Husband's nonmarital property. This is an one-hundredth of one percent interest in a limited partnership given to Husband by one of his clients during the marriage. Husband receives Missouri tax credits each year as a result of this ownership and...

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