MacDonald v. MacDonald, 94-CA-01022-SCT

• Citation: 698 So.2d 1079
• Decision Date: 24 July 1997
• Docket Number: No. 94-CA-01022-SCT,94-CA-01022-SCT
• Parties: Kevin Weston MacDONALD v. Diane MacDONALD.
• Court: United States State Supreme Court of Mississippi

Page 1079

698 So.2d 1079

Kevin Weston MacDONALD v. Diane MacDONALD.

No. 94-CA-01022-SCT.

Supreme Court of Mississippi.

July 24, 1997.

Stephen L. Beach, III, Beach Luckett & Ross, Jackson, for Appellant.

Thomas T. Buchanan, Laurel, for Appellee.

Before DAN LEE, C.J., and BANKS and MILLS, JJ.

MILLS, Justice, for the Court:

¶1 On September 14, 1994 Kevin Weston MacDonald and Diane MacDonald filed in the Chancery Court of Rankin County a Consent Motion for divorce on the ground of irreconcilable differences. The parties agreed that Diane MacDonald would have physical custody of the couple's two minor children, but left all other matters to be determined by the chancellor. The main issue at trial was what equitable interest, if any, Diane MacDonald had in her husband's business, the Terry Road Pawn Shop in Jackson. After hearing the evidence, the chancellor granted the parties a divorce and, among other things, found that Diane MacDonald had an equitable interest in the pawn shop. The chancellor ordered Kevin MacDonald to pay to Diane MacDonald, for her interest in the business, lump sum alimony in the amount of $12,000 per year for a ten year period. Aggrieved by the judgment, Kevin MacDonald appeals to this Court, assigning as error the following issue.

WHETHER THE CHANCELLOR ERRED IN ORDERING KEVIN MACDONALD TO PAY TO DIANE MACDONALD, FOR HER EQUITABLE INTEREST IN THE TERRY ROAD PAWN SHOP, LUMP SUM ALIMONY

IN THE AMOUNT OF $12,000 PER YEAR FOR A TEN YEAR PERIOD.

FACTS

¶2 Kevin Weston MacDonald and Diane MacDonald were married on June 18, 1983. The couple lived in Laurel, Mississippi, and had two children, Christian, age ten at the time of trial, and Weston, age seven. From the time of the marriage until 1990, Kevin, who had a high school diploma and two years of junior college, moved among approximately five different jobs involving sales. His employers included Southern Beverage Company, Jones County Building Supply, B-95 radio station and Headrick Sign Company. He also did odd jobs on the weekends such as selling bar stools and fireworks to supplement his income of about $12,000 to $15,000 per year.

¶3 Diane, who had a high school education, moved among various jobs involving secretarial work, sales, customer service, accounts payable and receivable, permits, and dispatch. Her employers included the Jones County Youth Court, Kemlube Corporation, Laurel Brick and Tile, Howard Industries and Howard Transportation. Diane took time off from work when she had her children, and she also performed the domestic duties of cooking, cleaning and caring for the children.

¶4 In late 1989, Kevin was presented with the opportunity to purchase the Terry Road Pawn Shop in Jackson. The purchase price was $15,000, which the MacDonalds did not have. Kevin made arrangements to borrow $10,000 from the First National Bank of Picayune, but the bank insisted on a co-signor. Kevin's father, Fred MacDonald, co-signed the note to borrow the money, and Kevin purchased the pawn shop in January of 1990. According to Kevin, his father wanted to obtain a vested interest in the pawn shop until such time as the note was paid off, so on January 15, 1990 Kevin and his father entered into a partnership agreement assigning 75% interest in the pawn shop to Kevin and 25% interest to his father. Although Kevin testified that under the partnership agreement his father was a "silent partner," the agreement provided that each partner would have an equal voice in the management of the business and that each partner would devote time to the conduct of the business.

¶5 The evidence showed that virtually none of the terms of the partnership agreement were ever adhered to. For example, the agreement provided for separate capital accounts for each partner, for the division of profits and losses, and for separate income accounts for each partner, none of which provisions were ever observed. Furthermore, the agreement provided for the termination of the partnership upon the death of either partner, at which time the surviving partner could either purchase the deceased partner's interest or liquidate the business. Kevin's father died in 1992, but Kevin never paid his father's estate for his father's partnership interest nor did he liquidate the pawn shop.

¶6 Paul Shelton, Kevin's Certified Public Accountant, testified that Kevin never told him of the existence of a partnership agreement regarding the Terry Road Pawn Shop, and that Kevin, on his and Diane's joint tax returns, indicated that the pawn shop was a sole proprietorship. Diane testified that she was led to believe that the partnership agreement was necessary only for the purchase of the pawn shop, and that Kevin told her that she and Kevin would be partners in the store--that it was their store and they would run it together.

¶7 After the purchase of the pawn shop, neither Kevin nor Diane held other employment. The parties commuted from Laurel to the pawn shop during the period from January to April 1990, when they moved in with Diane's father in Brandon, Mississippi for a month, after which they moved into an apartment in Pearl, Mississippi. Diane testified that in addition to her domestic duties, she worked in the pawn shop three to four days per week, during which time she handled paperwork and police reports for loans, purchases and sales, handled the pawn shop's banking matters and the couple's joint checking account, and ran errands such as cashing in "scrap" gold. Also, for three weeks in July of 1990 and during the Christmas holidays, Diane managed the store alone while Kevin was out of town selling fireworks.

¶8 In September of 1992, the parties got into a dispute over the management and ownership of the Terry Road Pawn Shop. The couple separated, after which Diane, at Kevin's request, no longer worked at the pawn shop or contributed to its management. Although the record is unclear, the parties apparently initiated divorce proceedings for which a temporary hearing was held on December 11, 1992. At the hearing, the chancellor ordered Kevin to pay to Diane $880 per month in temporary child support and $700 per month in temporary alimony. From January 1993 until the time of trial, Diane received $2000 per month from Kevin.

¶9 On September 14, 1994 the parties withdrew their fault grounds for divorce and filed a Consent Motion for divorce on the ground of irreconcilable differences. The parties agreed Diane would have physical custody of the two minor children and left all other matters to the discretion of the chancellor. The main issue at trial was what equitable interest, if any, Diane had in the Terry Road Pawn Shop.

¶10 At trial it was shown that the profits of the Terry Road Pawn Shop had increased significantly since 1990. The pawn shop had adjusted gross incomes of $15,542 in 1990, $73,422 in 1991, $100,142 in 1992 and $112,098 in 1993. The store had a 1994 profit of $56,396 as of July 31, and the year was expected to finish well since the pawn shop did most of its business around the Christmas holidays. The accountant Paul Shelton calculated the net worth of the pawn shop as of December 31, 1993 to be $87,920. He testified that he arrived at this figure simply by subtracting the liabilities of the business from its assets, and that the figure did not represent the fair market value of the business. At the time of trial, Diane was working as an office manager at ADT Security Company, where she was earning $1,400 per month.

¶11 In his judgment, the chancellor granted the parties a divorce and set a schedule of child visitation rights for Kevin. The chancellor awarded to Diane child support in the amount of $1,400 per month and ordered Kevin to maintain major medical insurance for the benefit of the minor children and Diane. The chancellor ordered that Diane be allowed to claim the two minor children for purposes of state and federal income tax exemptions. He also provided for the division of personal property. The chancellor found that Diane was entitled to an equitable interest in the Terry Road Pawn Shop and ordered Kevin to pay her, for her interest in the store, lump sum alimony in the amount of $12,000 per year for a period of ten years, unless the parties could determine a current cash value and agree to a different method of payment. To secure payment, the chancellor ordered an equitable lien on all of Kevin's assets. The chancellor ordered that any claims which may be made by Kevin's family pursuant to the partnership agreement shall be the responsibility of Kevin. The chancellor found that Diane was not entitled to periodic alimony. Finally, the chancellor ruled that each party should pay his/her own attorney fees.

DISCUSSION

WHETHER THE CHANCELLOR ERRED IN ORDERING KEVIN MACDONALD TO PAY TO DIANE MACDONALD, FOR HER EQUITABLE INTEREST IN THE TERRY ROAD PAWN SHOP, LUMP SUM ALIMONY IN THE AMOUNT OF $12,000 PER YEAR FOR A TEN YEAR PERIOD.

¶12 Kevin MacDonald puts forth several arguments as to why the chancellor erred in ordering this award to Diane.

Applicable Law and Standard of Review

¶13 In Hemsley v. Hemsley, 639 So.2d 909, 915 (Miss.1994), this Court determined that marital assets subject to equitable distribution by the chancellor are any and all assets "acquired or accumulated during the marriage." A spouse who has made a material contribution toward the acquisition of an asset titled in the other spouse's name may claim an equitable interest in such jointly accumulated property. Hemsley, 639 So.2d at 913; Jones v. Jones, 532 So.2d 574, 580-81 (Miss.1988). Assets are not subject to distribution where it can be shown that such assets "are attributable to one of the parties' separate estates prior to the marriage ¶14 This Court has for several years recognized that in making equitable divisions of marital property upon divorce, chancellors are not limited to considering only the earning and cash contributions of each party to the accumulation of the...