Martin v. Martin, CV-87-0032-PR

CourtSupreme Court of Arizona
Citation156 Ariz. 452,752 P.2d 1038
Docket NumberNo. CV-87-0032-PR,CV-87-0032-PR
PartiesIn re the Marriage of Mary Maxine MARTIN, Petitioner-Appellee, v. Richard George MARTIN, Respondent-Appellant, Union Oil Company of California, Additional Defendant.
Decision Date08 March 1988

Favour, Weaver, Moore & Schuyler, P.A., Prescott by Janis A. Sterling, John M. Favour, for petitioner-appellee.

Lewis and Roca, Phoenix by Jeremy E. Butler, Susan M. Freeman, for respondent-appellant.

HOLOHAN, Justice.

The appellant, Richard Martin, filed an appeal in the Court of Appeals challenging the asset distribution and financial provisions of the decree of dissolution entered in this case. The Court of Appeals rejected the challenge on all claims of error except that concerning the authority of the superior court to make a separate award of money in addition to the distribution of community assets. The Court of Appeals held that the superior court lacked jurisdiction to make such an award. Martin v. Martin/Union Oil Company of California, 156 Ariz. 440, 752 P.2d 1026 (1986).

Appellant and appellee, Mary Martin, each filed petitions for review of the appellate court's decision. We denied appellant's petition, but granted appellee's petition to resolve the conflict between the opinion of the Court of Appeals and the decisions in Neely v. Neely, 115 Ariz. 47, 563 P.2d 302 (App.1977) and Lindsay v. Lindsay, 115 Ariz. 322, 565 P.2d 199 (App.1977). The issue presented for determination is:

Whether the superior court may, in addition to dividing the assets of the community, also grant a money judgment to one spouse to compensate that spouse for his or her interest in community assets dissipated or concealed by the other spouse.

FACTS

At trial the evidence showed that the parties were married in 1950, and over the next 29 years Mr. Martin's work assignments took them to five different states and two foreign countries. Finally, in August, 1979, Mr. Martin was assigned to California by his employer, Union Oil of California. Shortly thereafter, the Martins bought a townhouse in Prescott, Arizona as a planned retirement home. Mrs. Martin moved into the Prescott townhouse in December, 1979. Mr. Martin, however, remained in California, and he has never resided in Arizona. While they were living separate and apart, Mr. Martin gave his wife money for living expenses and payments on the townhouse mortgage, but he continued to reside and work in California during the parties' three year separation prior to the action for dissolution. Throughout the years of separation Mr. Martin maintained almost total control over the parties' assets.

Mrs. Martin filed this action for dissolution of the marriage in 1982. Although he was residing in California, Mr. Martin submitted to personal jurisdiction in Arizona by responding to appellee's petition for dissolution. 1 In April 1983, the parties stipulated that Mr. Martin would pay Mrs. Martin temporary monthly maintenance payments of $1,725. Pursuant to the stipulation, Mr. Martin was authorized to withdraw amounts above $1,000 from their joint savings accounts to meet his maintenance obligation. In the decree of dissolution, the trial court divided the parties' community property, awarding assets totalling $184,843 to Mrs. Martin and assets totalling $215,211 to Mr. Martin. The trial court also ordered Mr. Martin to pay Mrs. Martin $2,000 per month for spousal maintenance. In addition, the trial court ordered Mr. Martin to pay Mrs. Martin the sum of $46,688, representing her share of the net community income earned during their three years of separation. This award was based on evidence showing the parties' gross income for the three year period less deduction for certain expenses, including state and federal income tax payments, mortgage payments on the parties' residences, payments made to acquire certain parcels of real estate, and taxes paid to the Republic of Singapore. The balance was found by the trial court to be "net community income," and Mrs. Martin was awarded one-half of the net, or $46,688. Mr. Martin presented evidence of other expenditures which he contends were reasonable community expenditures, such as: bar association dues, insurance premiums, retirement contributions, social security tax payments, acquisition of IRA accounts, automobiles and securities, and his ordinary living expenses. The court refused to give appellant credit for any of these additional expenditures. 2

The trial court also ordered Mr. Martin to pay Mrs. Martin the additional sum of $9,473 which the trial court found to be due her because Mr. Martin had made withdrawals from the community savings accounts in excess of those allowed under the stipulation and court order.

COURT OF APPEALS' RULING

On appeal, Mr. Martin challenged the actions of the trial court in making what amounted to a "money judgment" for $46,688 and $9,473 against him and in favor of his former wife. He contended that the superior court acted without authority in granting a "money judgment" in addition to a division of the community property.

The Court of Appeals agreed that the trial court was without authority to grant the money awards. Specifically, the appellate court stated:

Moreover, even if we were to agree that husband improperly squandered community assets, such a finding would still not justify the trial court's award. Section 25-318(A) only authorizes consideration of excessive or abnormal expenditures in connection with reaching an equitable division of community property. It does not authorize imposition of a money judgment against the allegedly guilty spouse wholly distinct from the division of the existing community assets and liabilities. Under § 25-318(A), where the court finds improper expenditures or concealment, it may disproportionately divide the community property before it in order to compensate the injured spouse for the other's wrongdoing. See Kosidlo v. Kosidlo, 125 Ariz. 32, 607 P.2d 15 (App.1979); Neely v. Neely, 115 Ariz. 47, 563 P.2d 302 (App.1977). It may not, however, award a separate money judgment to the injured party against the mischievous spouse apart from any division of community assets and liabilities. Such a result is not contemplated by the statute and would thus be an abuse of discretion since the trial court only has such jurisdiction in a dissolution proceeding as the statute grants to it. Weaver v. Weaver, 131 Ariz. 586, 643 P.2d 499 (1982).

156 Ariz. at 447-48, 752 P.2d at 1033-34 (emphasis in original).

Accordingly, the Court of Appeals reversed the awards of $46,688 and $9,473, and remanded the case to the superior court for entry of a revised judgment.

I

Mrs. Martin, in her petition for review, contends that the trial court's decree amounts to an equitable distribution of the parties' community property within the meaning and the intent of A.R.S. § 25-318(A). She relies on two prior decisions of our courts of appeals dealing with the awarding of a sum of money for the dissipation 3 of community assets. In Neely v. Neely, 115 Ariz. 47, 563 P.2d 302 (App.1977), the Court of Appeals affirmed the trial court's decree which included an order directing the husband to execute and deliver to the wife a promissory note in an amount which reflected the wife's interest in certain community assets dissipated by the husband. In Lindsay v. Lindsay, 115 Ariz. 322, 565 P.2d 199 (App.1977), the husband, during the pendency of the dissolution proceedings, secretly sold the community's interest in an airplane and subsequently lost the proceeds in gambling. The trial court ruled that the husband need not account for the proceeds. The Court of Appeals reversed and directed the trial court to modify the decree to include a provision awarding the wife a sum of money representing her share of the community's interest in the aircraft.

It must be conceded that the decisions in both Neely and Lindsay support the action of the trial court in this case.

II

The controlling statute in this case is A.R.S. § 25-318(A), which provides:

§ 25-318. Disposition of property; retroactivity

A. In a proceeding for dissolution of marriage, or for legal separation, or in a proceeding for disposition of property following dissolution of the marriage by a court which previously lacked personal jurisdiction over the absent spouse or previously lacked jurisdiction to dispose of the property, the court shall assign each spouse's sole and separate property to such spouse. It shall also divide the community, joint tenancy and other property held in common equitably, though not necessarily in kind, without regard to marital misconduct. For purposes of this section only, property acquired by either spouse outside this state shall be deemed to be community property if the property would have been community property if acquired in this state. Nothing in this section shall prevent the court from considering excessive or abnormal expenditures, destruction, concealment or fraudulent disposition of community, joint tenancy and other property held in common.

The foregoing statute directs the superior court, first, to assign each spouse his or her sole and separate property; second, the court must equitably divide the community, joint tenancy and other property held in common. In making an equitable division of property the court is authorized to consider wrongful, unreasonable and improper uses or destruction of the common property. Kosidlo v. Kosidlo, 125 Ariz. 32, 607 P.2d 15 (App.1979), disapproved in part 125 Ariz. 18, 607 P.2d 1 (1979); see also Pangburn v. Pangburn, 152 Ariz. 227, 731 P.2d 122 (App.1986). As we read the statute the superior court may compensate one spouse for the misuse of the common property by the other spouse by awarding the innocent spouse a greater share of the community property to offset the value of the lost property. It is clear that the legislative intent expressed...

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