Little v. Little, 8420DC95

• Decision Date: 02 April 1985
• Docket Number: No. 8420DC95,8420DC95
• Citation: 327 S.E.2d 283,74 N.C.App. 12
• Parties: Bettie Broadway LITTLE v. Glenn K. LITTLE, II.
• Court: North Carolina Court of Appeals

Page 283

327 S.E.2d 283

74 N.C.App. 12

Bettie Broadway LITTLE v. Glenn K. LITTLE, II.

No. 8420DC95.

Court of Appeals of North Carolina.

April 2, 1985.

E.A. Hightower, Wadesboro, and Charles M. Welling, Charlotte, for plaintiff-appellant.

Larry E. Harrington, Monroe, for defendant-appellee.

BECTON, Judge.

I

This appeal deals with an unequal equitable distribution of marital property and an award of child support. Plaintiff wife filed her Complaint on 20 April 1983, seeking an absolute divorce, and custody of, and support for, the parties' minor child. On 11 May 1983, the wife filed an application and motion for an equitable distribution of the marital assets. Defendant husband filed an Answer and Counterclaim on 24 May 1983, praying that the wife be required to contribute to the support of the child from her own earnings.

A prior action had been filed by the husband in which he, as plaintiff, had sought a divorce from bed and board from his wife. An interlocutory order was entered in that action on 11 October 1982, which gave the wife custody of the child and also directed the father to pay $100 per month as child support. The record on appeal contains a judgment of absolute divorce dated 13 June 1983. This judgment was apparently entered in the present case, although this is not altogether clear.

In the present action, the trial court entered its order of equitable distribution on 7 October 1983. In the order, the court distributed the marital assets unequally, awarding the greater portion to the husband, and also reduced the amount of child support payable by the husband to $25.00 per month.

The wife contends on appeal that (1) the trial court failed to comply with various aspects of N.C.Gen.Stat. Sec. 50-20 (1984), and (2) that it erred in reducing the amount of child support. We agree with the wife that the trial court failed to comply with G.S. Sec. 50-20 (1984) in distributing the marital property, and also find that the trial court committed error in that portion of the order setting child support. We therefore vacate the order of the lower court, and remand for further proceedings.

II Factual Background

The parties to this action were married on 22 September 1973. With the exception of some unspecified personal belongings and two automobiles that were not paid for, neither party owned any property, real or personal, at the time of the marriage. One child, Glenn K. Little, III, was born of the marriage, on 21 January 1978. On 2 June 1979, the husband was injured in a motorcycle accident that left him partially paralyzed from the waist down. The parties separated on 19 April 1982, and were divorced on 13 June 1983.

The parties owned a marital dwelling as tenants by the entireties. This dwelling was built on a half-acre lot conveyed to the parties by the husband's parents. The parties do not dispute that this conveyance was a gift and that the lot became marital property. Subsequent to this conveyance, the parties executed a note, secured by a deed of trust, in the amount of $21,000 to finance the construction of the house.

Prior to the marriage, the husband was issued a life insurance policy with accident benefits, and after his injury, on 3 October 1980, he was paid proceeds in a lump sum of $100,000 as "Family Accident Benefits." In addition, the husband's insurance paid his medical and hospital bills. As an insurance policy of the wife's also paid these bills, the sum of $6,195.43 was refunded to the husband in February 1980.

The proceeds of both insurance policies were deposited in the parties' joint bank account. These proceeds were utilized to pay off the mortgage of $19,236.33 on the family home, to pay off the balance due on their two automobiles, a 1979 Oldsmobile and a 1981 Mazda, and to purchase a $50,000 certificate of deposit in the joint names of the parties. Upon maturity, the wife withdrew the certificate and purchased a second certificate with the principal and interest in the amount of $52,900, again in the parties' joint names. At some point thereafter, the husband closed the joint bank account, and also withdrew the second certificate before it had matured. It was apparently at this point that the husband purchased a Chevrolet van, specially equipped for a handicapped person, and a second house and lot (also described as a "store lot and building" and an "exercise building"); opened savings and/or checking accounts; and purchased a certificate or certificates of deposit, all in his name alone.

In making its order of equitable distribution, the trial court identified the following property as marital property: (1) the lot on which the marital dwelling was built, (2) the marital dwelling, (3) the 1979 Oldsmobile, (4) the 1981 Mazda, (5) the insurance policy proceeds, and (6) certain listed items of personalty, mostly furniture. The trial court concluded that although the insurance policy proceeds were marital property, an equal distribution of them would not be equitable because the wife was healthy and gainfully employed, and the husband disabled and in need of the proceeds. The court next concluded that an equal distribution of all property acquired during the marriage, other than the insurance policy proceeds, would be equitable.

Following from its conclusions that an equitable distribution would entail awarding to the husband all marital property obtained with the insurance proceeds, and dividing all the other marital property equally between the parties, the trial court, in the distributive portion of the order, awarded the marital property as follows: The husband was awarded the marital dwelling and lot, the Chevrolet van, $21,183.77 in savings and checking accounts, and possession of the majority of the jointly-owned personalty. The wife was awarded the Oldsmobile, the Mazda, and the remainder of the personalty. The order also directed the husband to pay the wife the sum of $8,434.23, $6,381.23 of which represented her one-half interest in the marital dwelling, once the $19,236.33 mortgage payment (which payment was made with the insurance proceeds) was subtracted from the fair market value of $32,000, and the remaining $2,053.00 of which represented her one-half interest in the personalty retained by the husband.

III

We note at the outset a failing lamentably common to appeals from equitable distribution orders--neglect of the Rules of Appellate Procedure. See Wade v. Wade, 72 N.C.App. 372, 325 S.E.2d 260 (1985); Alexander v. Alexander, 68 N.C.App. 548, 315 S.E.2d 772 (1984). The wife lists eleven assignments of error, presenting several distinct questions of law, under a single broad argument that the trial court did not comply with G.S. Sec. 50-20 (1984). DESPITE THE RESULTANT VIOLAtions of rules oF appellate procedure, Rules 10 and 28, we exercise our discretion and treat this appeal on its merits.

This case is governed by North Carolina's Equitable Distribution Act (the Act), N.C.Gen.Stat. Secs. 50-20 and -21 (1984). The Act requires the trial court to first determine what constitutes marital property, to then determine the net market value of that property, and finally, to distribute it based on the equitable goals of the statute and the specific statutory factors. See, e.g., Alexander v. Alexander; Turner v. Turner, 64 N.C.App. 342, 307 S.E.2d 407 (1983). We conclude that at each stage of the procedure by which equitable distribution is accomplished the trial court committed reversible error. We address each stage separately.

A. The first task of the trial court in an action for equitable distribution is to ascertain, based upon appropriate findings of fact, what is marital property. G.S. Sec. 50-20(a) (1984); Loeb v. Loeb, 72 N.C.App. 205, 324 S.E.2d 33 (1985); Alexander v. Alexander. We note preliminarily that the trial court properly concluded that the insurance proceeds were marital property.

Marital property includes personal property acquired by a spouse during the marriage, with the specific exceptions of property acquired by "bequest, devise, descent, or gift." G.S. Sec. 50-20(b)(2) (1984). As the insurance proceeds were not acquired by bequest, devise, descent, or gift, the legislature did not exempt them from incorporation in the pool of assets denominated "marital property."

Furthermore, the majority rule from other jurisdictions appears to be that absent a statute to the contrary, "claims and awards for personal injuries resulting from occurrences during the marriage are generally treated as marital property." 1 Valuation and Distribution of Marital Property Sec. 18.05, at 18-75 (J. McCahey ed. 1984); see also id. at Sec. 20.03[d]; 2 Valuation and Distribution of Marital Property, supra, Sec. 23.07[c]; L. Golden,Equitable Distribution of Property Secs. 6.24 to -.26 (1983). This result has been reached on the grounds that the award or settlement does not fit the statutory definition of separate property, e.g., Platek v. Platek, 309 Pa.Super. 16, 454 A.2d 1059 (1982); Nixon v. Nixon, 525 S.W.2d 835 (Mo.Ct.App.1975), and justified on the grounds that the money represents wages, and enables the injured spouse to provide for his family as he presumably would have done had he not been injured. In re Gan, 83 Ill.App.3d 265, 38 Ill.Dec. 882, 404 N.E.2d 306 (1980). Although a court may, for equitable reasons, ultimately award the greater portion of the settlement or proceeds to the injured party, this does not change their essential character as marital property. See In re Mack, 108 Wis.2d 604, 323 N.W.2d 153 (1982).

We are aware that some courts distinguish between money realized as compensation for pain and suffering as the personal property of the injured spouse, and that portion of an award representing lost wages and medical expenses as marital property. Amato v. Amato, 180 N.J.Super. 210, 434 A.2d 639 (1981); In re Brown, 100 Wash.2d 729, 675 P.2d 1207 (1984); Rich v. Rich, 126 Misc.2d 536, 483 N.Y.S.2d 150 (1984) (noneconomic...