Matter of Marriage of Morris

• Decision Date: 23 February 2000
• Docket Number: No. 06-98-00136-CV,06-98-00136-CV
• Citation: 12 S.W.3d 877
• Parties: (Tex.App.-Texarkana 2000) IN THE MATTER OF THE MARRIAGE OF MARYHELEN MORRIS AND DONALD MORRIS.
• Court: Texas Court of Appeals

Page 877

12 S.W.3d 877 (Tex.App.-Texarkana 2000)

IN THE MATTER OF THE MARRIAGE OF MARYHELEN MORRIS AND DONALD MORRIS.

No. 06-98-00136-CV

Court of Appeals of Texas Texarkana.

Argued Nov. 16, 1999.

Decided Feb. 23, 2000.

On Appeal from the 62nd Judicial District Court

Lamar County, Texas

Trial Court No. 63875

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Before Cornelius, C.J., Grant and Ross, JJ.

O P I N I O N

Opinion by Justice Ross

Donald Morris and Maryhelen Morris were divorced in a trial before the court. Donald appeals from the final decree, complaining of the trial court's division of certain real and personal property. He contends the court erred by not following the parties' premarital agreement and contends the court abused its discretion by making a property division that was not just or right based on the evidence. Donald further complains that the trial court erred by ordering him to pay $5,000.00 to Maryhelen to satisfy a debt owed by a third party. He also claims that the court prejudiced his rights on appeal by refusing to make specific findings as to the $180,000.00 awarded to Maryhelen as part of the division of the community estate. We affirm the judgment to the extent it grants the divorce. However, we reverse the division of property and remand that part of the case for a new division consistent with the evidence presented at trial, and in accordance with the parties' antenuptial agreement and the opinion ofthis Court.

Donald and Maryhelen were married in July 1984. Before getting married, they signed an antenuptial agreement. This agreement provided that separate property owned at the time of marriage would remain separate property, that any other items bought with separate property would remain separate property, that income from separate property and increases of separate property would be treated as separate property, and that in the event of divorce the parties would only seek their separate property estate and one half of the community estate, and that any right of reimbursement to a separate estate or the community estate would be a valid claim.

Maryhelen filed for divorce in December 1996. No children were born of this marriage, and the only dispute deals with the division of various pieces of property and the cash awards made to Maryhelen. There are four main pieces of property in dispute: the Graham, Texas, property; Morris Industries; the Highway 82 East property; and the Sesame Street property.¹ The court awarded the Graham, Texas, property, Morris Industries, Inc., and the Highway 82 East property to Donald as his separate property.² Maryhelen was awarded the Sesame Street property, as her separate property, and a cash payment of $180,000.00.

When a court mischaracterizes separate property as community property, the error requires reversal because a spouse is divested of separate property. See Eggemeyer v. Eggemeyer, 554 S.W.2d 137 140 (Tex. 1977). If the mischaracterized property would have affected the trial court's just and right division, then the mischaracterization requires the appellate court to remand the entire community estate to the trial court for a just and right division of the properly characterized community property. McElwee v. McElwee, 911 S.W.2d 182, 189 (Tex. App.-Houston [1st Dist.] 1995, writ denied).

The Sesame Street Property

The Sesame Street property was purchased in 1985, during the marriage, but was paid for entirely with Donald's separate funds. The deed to this land was placed in both parties' names. After this land was paid for, Donald and Maryhelen contributed to the construction of a home on it. The court found that this property was presumptively community property and that Donald had not rebutted this community property presumption. The entire property was then awarded to Maryhelen as her separate property. This was error that requires reversal. See Eggemeyer, 554 S.W.2d at 140.

It is true that property possessed by either spouse during or on dissolution of marriage is presumed to be community property, and that a party attempting to overcome this presumption must establish by clear and convincing evidence that the disputed property is separate. TEX. FAM. CODE ANN. 3.003 (Vernon 1998). To overcome the presumption of community property, the spouse claiming certain property as separate property must trace and clearly identify the property claimed to be separate. Cockerham v. Cockerham, 527 S.W.2d 162, 167 (Tex. 1975).

Donald testified that he bought this land with his separate funds, and presented evidence which purported to trace this property and prove this fact. Maryhelen also admitted that this land was purchased solely with Donald's separate funds. Therefore, the undisputed evidence clearly shows that Donald rebutted the community property presumption.

The trial court may not characterize separate property as community property. Eggemeyer, 554 S.W.2d at 140; see Leighton v. Leighton, 921 S.W.2d 365, 368 (Tex. App.-Houston [1st Dist.] 1996, no writ). When a court mischaracterizes separate property as community property, the error requires reversal because a spouse is divested of separate property. Eggemeyer, 554 S.W.2d at 140; Leighton, 921 S.W.2d at 368. Additionally, since separate property was mischaracterized by the court as community property, the court did not divide the property in accordance with the premarital agreement.

However, when this land was purchased, the deed was placed in the names of both Donald and Maryhelen. It is well established law that when a spouse uses separate property to acquire property during marriage and takes title to that property in the names of both spouses, a presumption arises that the purchasing spouse intended to make a gift of one half of the separate funds to the other spouse. Cockerham, 527 S.W.2d at 168; Graham v. Graham, 836 S.W.2d 308, 310 (Tex. App.-Texarkana 1992, no writ). In order to rebut this presumption, evidence of the absence of an intent to make a gift must be shown. See Cockerham, 527 S.W.2d at 168. Donald did not rebut this presumption. Therefore, one half of this land is properly characterized as Maryhelen's separate property.

After the land was purchased and the deed was placed in the names of both Donald and Maryhelen, both parties contributed separate and community funds to build a residence on the property. "Once separate property character attaches, that character does not change because community funds are spent to improve the property." Leighton, 921 S.W.2d at 367, citing Carter v. Carter, 736 S.W.2d 775, 780 (Tex. App.-Houston [14th Dist.] 1987, no writ). Any improvements made on separate property, including a residence, are considered the separate property of the land owner. See Leighton, 921 S.W.2d at 367. Therefore, since Donald and Maryhelen each own a one-half separate property interest in the real property, they also each own a one-half separate property interest in the home, with a right of reimbursement to the community for any funds that were expended to make the improvements.

A right to reimbursement arises when the time, toil, and labor of the community estate are expended to enhance and benefit one spouse's separate estate and the community is inadequately compensated for those contributions. Jensen v. Jensen, 665 S.W.2d 107, 109 (Tex. 1984); Vallone v. Vallone, 644 S.W.2d 455, 459 (Tex. 1982). A trial court's discretion in evaluating a claim for reimbursement is as broad as that discretion exercised by a trial court in making a just and proper division of the community estate. Penick v. Penick, 783 S.W.2d 194, 198 (Tex. 1988). A court's finding can support reimbursement to the community estate, as long as the spouse who is claiming the right to reimbursement establishes the fact and the amount of community funds expended to improve or benefit the other spouse's separate property. See Vallone, 644 S.W.2d at 459-60; Halamka v. Halamka, 799 S.W.2d 351, 355 (Tex. App.-Texarkana 1990, no writ).

Here, the court clearly erred by characterizing the Sesame Street property as community property and by awarding it in its entirety to Maryhelen as her separate property. Since this mischaracterization clearly affected the court's just and right division of the community estate, it alone requires reversal and remand, and there is no necessity to consider the remainder of the property division. However, for the trial court's consideration on remand, we will discuss the other properties and contentions involved in this appeal.

The Graham, Texas, Property

The Graham, Texas, property was purchased by Donald before marriage for approximately $7,000.00. After the parties were married, Donald used his separate funds to construct storage buildings on the land, which now houses the storage business of Graham Self Storage. Donald testified that the property is now worth $225,000.00 to $250,000.00. The court awarded the property to Donald as his separate property. Since the property was purchased before marriage, and since all improvements made on it were paid for with Donald's separate funds, the property was properly characterized as his separate property.

This characterization was also in accordance with the premarital agreement. However, the agreement also stated that all income and increases from separate property would remain separate, subject to a right of reimbursement to a separate estate or the community estate. The court found that Graham Self Storage had increased in value by $25,000.00 during the marriage, and that both Donald and Maryhelen had expended considerable time, toil, and effort in enhancing the business, and that neither was adequately compensated.

In the court's cash award to Maryhelen, it did not state whether it was awarding her a portion of the increased value of the business, which would be forbidden under the terms of the premarital agreement, or whether it was awarding a reimbursement to the community estate,...