Lewis v. Lewis

• Decision Date: 21 May 1987
• Docket Number: No. 8466,8466
• Parties: Mildred Jordan LEWIS, Petitioner-Appellee, and Cross-Appellant, v. Clayton LEWIS, Respondent-Appellant, and Cross-Appellee.
• Court: Court of Appeals of New Mexico

Page 974

739 P.2d 974

106 N.M. 105

Mildred Jordan LEWIS, Petitioner-Appellee, and Cross-Appellant, v. Clayton LEWIS, Respondent-Appellant, and Cross-Appellee.

No. 8466.

Court of Appeals of New Mexico.

May 21, 1987.

[106 N.M. 108] Paul D. Gerber, Gerber, Gramer & Ahern, Santa Fe, for petitioner-appellee and cross-appellant.

Michael J. Golden, Moore & Golden, P.A., Santa Fe, for respondent-appellant and cross-appellee.

OPINION

SUSAN M. CONWAY, District Judge.

The parties in this case were divorced in a bifurcated decree May 18, 1983, after 38 years of marriage. Property division, debt division and an alimony award were made by a judgment entered October 30, 1984. An amended judgment was entered March 18, 1985. Husband appealed and wife cross-appealed.

Husband contends on appeal that the trial court erred in its: 1) failure to consider the impact of income taxes in the awarding of husband's pension and profit sharing plans; 2) failure to consider the impact of income taxes and overhead in valuing husband's accounts receivable; 3) valuation of goodwill in husband's medical practice (a corporation wholly owned by husband); 4) valuation of the stock of the medical corporation; 5) awarding to wife a vehicle which was part of the medical corporation's assets while awarding all the stock to husband; 6) awarding wife post-divorce interim support; 7) failure to change the value of the "Jordan River Note" for a post-trial but prejudgment payoff which was higher than the stipulated value of the note; 8) unequal award of household goods; 9) abuse of discretion in awarding wife attorneys' fees and costs.

Wife challenges the trial court's: 1) award of all post-divorce income and appreciation of the pension and profit-sharing plans to husband; 2) characterization of the residence as community property; 3) termination of interim support; 4) denial of future alimony; and 5) valuation of husband's accounts receivable. Wife also requests attorneys' fees on appeal.

FACTS

The parties were married in 1945. Husband is a surgeon with his own medical practice. Wife is not employed. There are no minor children. The property of the parties consists of four pension and profit sharing plans maintained by husband's medical corporation for husband's benefit, with a stipulated value on May 13, 1983 of $395,794.29; a residence with a stipulated value of $212,500, owned free and clear by the parties; husband's medical corporation; a $79,000 money market account which was divided during the parties' separation; miscellaneous investment assets, vehicles, household goods, furniture, art objects, jewelry and the like. The parties had no major debts other than attorneys' fees. The net community estate, as found by the trial court, was in excess of $800,000.

DISCUSSION

I. Residence

Wife appeals the decision of the trial court that the parties' residence was community property at the time of divorce. The trial court found that husband had deeded his community interest in the parties' residence to wife in 1976, because of fear of possible future malpractice judgments against him. The trial court further found that the transfer was not in defraud of creditors and did not constitute a fraudulent conveyance. The trial court also found that husband lacked donative intent and the deed was insufficient to transfer his community interest in the residence. Wife challenges this finding. After reviewing the record, we find substantial evidence to support the trial court's finding of no donative intent. When supported by substantial evidence, the trial court's findings will not be overturned on appeal. Boone v. Boone, 90 N.M. 466, 565 P.2d 337 (1977).

It is undisputed that the residence was initially community property. The issue before the court was whether the community property was transmuted into separate property. The standard of proof is clear and convincing evidence. Nichols v. Nichols, 98 N.M. 322, 648 P.2d 780 (1982); Estate of Fletcher v. Jackson, 94 N.M. 572, 613 P.2d 714 (Ct.App.1980). A mere deed does not constitute complete transfer; there must also be delivery. Martinez v. Archuleta, 64 N.M. 196, 326 P.2d 1082 (1958). Moreover, the "grantor's present intent must be to pass his complete title to the grantee and divest himself of all title; otherwise the purported deed is not valid or effective." Den-Gar Enterprises v. Romero, 94 N.M. 425, 428, 611 P.2d 1119, 1122 (Ct.App.1980), citing Williams v. Pacific Royalty Co., 247 F.2d 672 (10th Cir.1957). Whether the requisite intent was present was a question of fact. The court's determination that there was no intent to give the property to wife was supported by substantial evidence.

Wife argues that husband's purposes in making the deed were to commit tax fraud and to defraud creditors, and that the court should, as a matter of equity, refuse to relieve husband of the consequences of his improper actions. The trial court found that the purported transfer was not fraudulent. There were no creditors to defraud and husband's purpose to reduce future taxes on his estate is legitimate tax planning. Cf. Gregory v. Helvering, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935). We hold that the trial court's findings and conclusions that there was no fraud and that the community residence was not converted into wife's separate property were supported by substantial evidence. Such findings and conclusions will not be disturbed on appeal.

II. Changes in Value of the Parties' Property During Litigation

Several of the issues involved in this appeal result from the fact that the dates of divorce, trial, decision and judgment are each many months apart. On May 18, 1983, the trial court entered a partial decree of divorce dissolving the parties' marriage and reserving jurisdiction to rule on all remaining issues (property division, alimony and attorneys' fees). The trial was held December 27-29, 1983, and final argument on February 1, 1984. The trial court filed its findings and conclusions on June 29, 1984, and entered judgment on October 30, 1984. Hearings on post-judgment motions were heard November 20, 1984, and a hearing on wife's attorneys' fees was held January 15 and 21, 1985. On March 18, 1985, the trial court entered supplemental findings and conclusions and its amended judgment.

A. Changes in Pension and Profit Sharing Plans

The trial court, as part of the equalization of the community property disposition, awarded $284,931.24 of the four pension and profit sharing plans (Plans) to Husband and $100,863.05 to Wife.¹ In its original judgment, the trial court correctly awarded one-half of all post-divorce accumulations to each party. It found that "[t]he community interest of the parties in [the Plans] * * * became a tenancy in common interest with the entry of the Partial Decree." See Jones v. Tate, 68 N.M. 258, 360 P.2d 920 (1961), and In re Miller's Estate, 44 N.M. 214, 100 P.2d 908 (1940). See also Hickson v. Herrmann, 77 N.M. 683, 427 P.2d 36 (1967), and NMSA 1978, Sec. 40-4-20 (Repl.Pamp.1986).

In its amended judgment, however, the trial court reversed its decision and awarded husband all post-divorce earnings and increases in the Plans.

When two parties hold personal or real property as tenants in common, they each have a separate and distinct interest in the property that cannot legally be transferred or extinguished by the other co-tenant. See generally, 4 Thompson On Real Property Secs. 1793 to -99 (J. Grimes, Repl.1979). The trial court apparently found that the retirement benefit plan increases from the date of the partial decree were the result of passive earnings and appreciation. Any increases, therefore, should be shared equally.

Several New Mexico cases have stated that community property is to be divided according to its value on the date of divorce, e.g., Hurley v. Hurley, 94 N.M. 641, 615 P.2d 256 (1980), and Copeland v. Copeland, 91 N.M. 409, 575 P.2d 99 (1978). These cases involved property division judgments which were simultaneous with the divorce decree (unified divorce), and not cases where a partial decree of divorce is entered before the division of community property (bifurcated divorce). These cases, therefore, do not address the issue of disposition of the community's property where its value has changed during the period between entry of a partial divorce decree and entry of the final property division judgment. Similarly, Madrid v. Madrid, 101 N.M. 504, 684 P.2d 1169 (Ct.App.1984), involved increases in an employee spouse's retirement benefits which occurred after entry of the property division judgment awarding benefits to the husband. It did not involve increases earned after a partial divorce decree but before a property division judgment.²

Husband asserts that, even if he were not entitled to all post-divorce increases in the Plans as a matter of law, the trial court's amended judgment should be upheld for three additional reasons: 1) the parties stipulated to a value of $395,794.29 for the Plans; 2) the parties stipulated to the divorce date as the valuation date of all assets; and 3) other major assets were valued as of the divorce date and this asset must be valued as of that date because all assets must be valued as of the same date. We are not persuaded.

The record shows that the parties stipulated that the value of the accumulated community interest in the Plans was $395,794.29 "at the time of the dissolution of the marriage of the parties." There were no stipulations that the value of the Plans, for purposes of property division, was $395,794.29. At trial, wife requested a division of the then current balances in the Plans, while husband asked the trial court to discount the value of the Plans for tax consequences. Nor did the parties stipulate that the date of divorce would be the valuation date for all assets. They did stipulate that the residence was worth $212,000; and both parties, while disputing the value of Husband's medical practice,...