Jacobs v. Jacobs, B14-83-026CV

• Decision Date: 09 February 1984
• Docket Number: No. B14-83-026CV,B14-83-026CV
• Citation: 669 S.W.2d 759
• Parties: Roy Livingston JACOBS, Appellant, v. Ellen English JACOBS, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 759

669 S.W.2d 759

Roy Livingston JACOBS, Appellant, v. Ellen English JACOBS, Appellee.

No. B14-83-026CV.

Court of Appeals of Texas,

Houston (14th Dist.).

Feb. 9, 1984.

Rehearing Denied March 15, 1984.

Douglas S. Johnston, Crady & Peden, J. Huey O'Toole, Houston, for appellant.

Martha Bourne, Burta Rhoads Raborn, Houston, for appellee.

Before PAUL PRESSLER, ROBERTSON and CANNON, JJ.

PAUL PRESSLER, Justice.

This is an appeal from a division of property by the Court in a divorce action.

The judgment of the trial court is affirmed in part, reversed and rendered in part, reversed and remanded in part.

Appellant presents fifty-one points of error. They fall into categories of alleged errors relating to (1) reimbursement to the community for appellant's work for the Roy Jacobs Company; (2) reimbursement to the community from separate property held by Mr. Jacobs; (3) the characterization of property held by Mrs. Jacobs; (4) reimbursement claims against Mrs. Jacobs' separate property; (5) the transfer of property to others; and (6) the trial court's alleged abuse of discretion.

The judgment of the trial court was signed October 18, 1982. On December 23, the trial court entered Findings of Fact and Conclusions of Law. The trial court found that the total net value of the community estate was between $1,300,000 and $1,500,000. The net value of the community estate, not including claims for reimbursement, was approximately $675,000. The claim for reimbursement was valued at between $625,000 and $800,000. All reimbursement items were for claims of the community against Mr. Jacobs' separate estate. Of the five items for which reimbursement was awarded, the value of only three was given by the court and these totalled $151,594. Therefore, between $470,000 and $675,000 of the value of the community must have been related to the two other items for which reimbursement was awarded but there was no specific amount awarded therefor. Appellant's first eleven points of error allege that there was error in the order directing reimbursement for these five items.

In his first six points of error, appellant contends the trial court erred in awarding the community estate reimbursement for the enhancement in the value of the Roy Jacobs Company. The stock in this Corporation was his separate property. The trial court found that its value had been enhanced through the efforts of appellant, that no quid pro quo was received by the community, and, therefore, the community is entitled to reimbursement for the time, talent, and labor expended by appellant. The trial court set no dollar value for this reimbursement.

In Jensen v. Jensen, 665 S.W.2d 107 (Tex.1984), the Supreme Court discussed a claim by the community because of labor performed by a spouse for a corporation when the stock was owned as separate property. It held that such a claim should give rise to a reimbursement for labor performed rather than transform the stock into a community ownership or equitable enhancement. The stock remains the separate property of the owner. Jensen, supra; Vallone v. Vallone, 644 S.W.2d 455 (Tex.1982); Norris v. Vaughan, 152 Tex. 491, 260 S.W.2d 676 (1953). The community should be reimbursed for the time and effort expended by each spouse on the separate estate of either, less that which was paid in salary, bonuses, dividends, and other fringe benefits. The burden of proving a right to reimbursement is on the claimant. Welder v. Lambert, 91 Tex. 510, 44 S.W.2d 281 (1898); Vallone, supra; Jensen, supra. Mrs. Jacobs had the burden of pleading and proving that Mr. Jacobs' time, talent, and labor enhanced the value of the stock of the Roy Jacobs Company, that such time, talent, and labor was beyond the attention necessary for proper maintenance of the Company, and that the community did not receive adequate compensation for such time, talent, and labor. Jensen, supra.

Mrs. Jacobs has failed to meet this burden. Mr. Jacobs' annual salary from the Company increased from $36,000 to $50,000 during the marriage. The Company contributed to his employee benefit plans and provided him with an automobile. There is no evidence that his work went beyond that necessary for the maintenance of the Company. Although there is some evidence that the value of the Company increased between 1974 and the selling date in 1980, there is no evidence that Mr. Jacobs' compensation was inadequate. Absent such evidence, the trial court erred in awarding reimbursement to the community. Appellant's first six points of error are sustained. This portion of the judgment is reversed and rendered.

In points of error seven through eleven, appellant contends the trial court erred in ordering reimbursement to the community for certain expenditures on his separate estate. Divorce courts are given wide discretion in dividing property. It is presumed that the trial court properly exercised its discretion. It will not be disturbed unless it is clear that it was abused. TEX.FAM.CODE ANN. § 3.63 (Vernon 1975); Bell v. Bell, 513 S.W.2d 20 (Tex.1974). As to the following three items of reimbursement, there is no evidence of abuse of discretion: (1) $30,351.06 for professional fees paid relating to the acquisition of Grow Group stock; (2) $53,660.00 for payments made by appellant to reduce his separate debts during the marriage; and (3) $21,000.00 for contributions to appellant's land partnerships. Points of error seven, ten, and eleven are overruled.

In his eighth and ninth points of error, appellant contends the trial court erred in granting the community reimbursement for diverted commissions of $67,583.00 payable to appellant. There are no pleadings for this item. The moving party must properly plead its claim. Vallone, supra. Appellee's pleadings seek reimbursement only for enhancement of appellant's separate estate and not for the transferring of community assets to others. Appellant's eighth and ninth points of error are sustained. This portion of the judgment is reversed and rendered.

In points of error twelve through fifteen, appellant contends the trial court erred in characterizing certain assets as community when appellant owned a portion of each as his separate property. When funds for the purchase of an asset come from both community and separate sources, the community and separate estates own the asset as tenants in common in the same proportion as each contributed to the purchase price. Gleich v. Bongio, 128 Tex. 606, 99 S.W.2d 881, (1937); Bell v. Bell, 593 S.W.2d 424 (Tex.Civ.App.--Houston [14th Dist.] 1980, no writ). To establish a separate property claim, a party must clearly trace the investment of his separate property to the specific asset. McKinley v. McKinley, 496 S.W.2d 540 (Tex.1973). Appellant traced a portion of the purchase price for both the Horseshoe Bay Condominium and the Meyerwood Townhouse to his separate funds. Therefore, appellant's separate estates had an interest in these properties which it held as tenant in common with the community.

The Rotan Mosle IRA account came from the final settlement of appellant's Pension Plan and Profit Sharing Plan with the Roy Jacobs Company. These plans had been accumulated both before and during his marriage. Retirement benefits accrued during marriage are clearly community property while benefits accrued prior to marriage are separate. Cearley v. Cearley, 544 S.W.2d 661 (Tex.1976); Taggart v. Taggart, 552 S.W.2d 422 (Tex.1977). The respective interests should be determined by using the ratio of the number of months during marriage to the total number of months for which contributions were made. Disbrow v. Thibodeaux, 596 S.W.2d 174 (Tex.Civ.App.--Houston [14th Dist.] 1980, no writ).

The court erred in characterizing these three assets as entirely community property. We reverse and remand for the trial court to assertain the proportionate separate and community interests in the Horseshoe Bay Condominium, the Meyerwood Townhouse, and the Rotan Mosle IRA account. Points of error twelve through fifteen are sustained.

In points of error sixteen through twenty-seven, appellant contends that the trial court erred in characterizing certain assets as Mrs. Jacobs' separate property. An asset acquired during marriage is presumed to be community. TEX.FAM.CODE ANN. § 5.02 (Vernon 1975). A party wishing to overcome this presumption must "clearly trace the original separate property into the particular assets on hand during the marriage." Cockerham v. Cockerham, 527 S.W.2d 162 (Tex.1975). There is sufficient evidence to support the Finding that these properties were either owned by Mrs. Jacobs prior to the marriage or purchased with her separate funds during the marriage. Any error in allocation is reversible only if the division is manifestly unfair and consequently an abuse of discretion. Smith v. Smith, 620 S.W.2d 619 (Tex.Civ.App.--Dallas 1981, no writ). There is no showing of an abuse of discretion. TEX.FAM.CODE ANN. § 3.63 (Vernon 1975). Appellant's points of error sixteen through twenty-seven are overruled.

In point of error twenty-eight, appellant contends that the trial court erred in failing to reimburse the community estate for the payments of Mrs. Jacobs' separate debts. Such a reimbursement is made in equity and rests on the sound discretion of the trial court. Burton v. Bell, 380 S.W.2d 561 (Tex.1964). To establish a claim for reimbursement upon separate property, the burden is on the claimant. Reimbursement should be only for the value of the time and effort expended to enhance the separate estate for which the community did not receive adequate compensation. Vallone, supra. The payments made on Mrs. Jacobs' separate property were for upkeep and improvements. These and other properties owned by Mrs. Jacobs prior to the marriage benefitted the community. Woodstone and Flintdale were the residences of the parties during the marriage. The numerous repairs made on Flintdale at appellant's expense...