McNabney v. McNabney

• Decision Date: 27 November 1989
• Docket Number: No. 17755,17755
• Citation: 782 P.2d 1291,105 Nev. 652
• Parties: Gail McNABNEY, Appellant and Cross-Respondent, v. Laurence McNABNEY, Respondent and Cross-Appellant.
• Court: Nevada Supreme Court

Page 1291

782 P.2d 1291

105 Nev. 652

Gail McNABNEY, Appellant and Cross-Respondent, v. Laurence McNABNEY, Respondent and Cross-Appellant.

No. 17755.

Supreme Court of Nevada.

Nov. 27, 1989.

John Olson and Frederick H. Leeds, Reno, for appellant and cross-respondent.

Pinkerton & Polaha, Reno, for respondent and cross-appellant.

OPINION

SPRINGER, Justice:

The outcome of this appeal rests on the meaning of the words "just and equitable" as used in NRS 125.150(1). This statute relates to court distribution of community property between spouses in divorce cases.

In granting a divorce, the court ... shall make such disposition of ... the community property of the parties ... as appears just and equitable, having regard to the respective merits of the parties and to the condition in which they will be left by the divorce, and to the party through whom the property was acquired, and the burdens, if any, imposed upon it, for the benefit of the children.

NRS 125.150(1) (our emphasis).

The controversy here centers on the trial court's unequal but "just and equitable" division of one item of the parties' community property, a contingent legal fee received by the husband during the brief marriage of the parties.

The fee in question is to be received in the form of an annuity, payable in gradually increasing installments (presently $3,700.00 per month) until the year 2004. The fee is community property. ¹

The trial court divided the other community property in an equal manner but determined that it would be just and equitable to award eighty percent of the legal fee to the husband. The trial court's determination was based on these facts:

1. The marriage was of short duration. Although the divorce was not granted until after three years of marriage, the couple parted after only two years of marriage.

2. The wife entered into the marriage, according to trial court findings, with "considerable separate estate" which included "income from rentals of her several separate properties and an investment account in excess of $100,000.00."

3. The wife "had been a well-paid federal government employee," was self supporting and neither "expected or depended upon" the husband for "economic or financial support before or during the marriage."

4. The trial court expressly found that after the divorce the wife will not require any financial assistance and will be able on her own to "maintain the same standard of living and lifestyle" that she had had.

5. With regard to the husband's income, the trial court found that "the monthly payments [of the annuity] constitute a substantial portion of [the husband's] law practice income."

The trial court could certainly have viewed this fee to have been a rare or once-in-a-lifetime emolument, which comprised, as expressly found by the court, a "substantial portion" of the husband's income. Of course, had there been children, had the wife been sick or disabled, or had the wife not have been financially independent, the equities would have been much different and not have justified this kind of distribution.

Persons of fair mind and disposition may reasonably conclude that the trial court's not wanting to deprive the husband of a substantial portion of his income and the court's wanting to give the husband a larger proportion of his earned fee were motivated by a sense of fairness and not by any thought of favoring one party or disfavoring the other. Most certainly the trial court's exercise of discretion in this regard was not "clearly erroneous" so as to require reversal. See Ellett v. Ellett, 94 Nev. 34, 573 P.2d 1179 (1978); Johnson v. Steele, Inc., 94 Nev. 483, 581 P.2d 860 (1978).

The real question presented by this appeal is not whether the trial court's disposition was in fact "just and equitable," but, rather, whether the court had the power to divide this asset in a manner other than equally. If this were not the case, this appeal could be easily disposed of in summary fashion for it is fairly easy to conclude that the trial court's division of the husband's fee was not clearly erroneous. The wife centers her appeal not so much on the division itself but rather on the proposition that Nevada case law "mandates" that the division of all community property, and therefore the property in question, must be "essentially equal."

How the wife can maintain that the Nevada statute which requires a division of community property that is "just and equitable," really means a division that is "essentially equal" would be incomprehensible were it not for some possibly misleading language in Nevada case law. We will undertake to clarify any misunderstanding relative to this point.

That there has been a misunderstanding of some kind cannot be doubted. The trial judge himself questioned counsel as to whether he in fact had the power to "divide it unequally" and wondered if he was permitted in this case to make "an exception to the fifty-fifty rule." There is, of course, in Nevada, no "fifty-fifty rule" when it comes to the disposition of community property under NRS 125.150(1). The Nevada divorce statute directs only that a division of community property be just and equitable and that, in making such a division, the court must give due regard to the respective merits of the parties, to the condition in which they are left by the divorce and to who acquired the property. Therefore, it was quite proper for the trial court to decide that it did not have to make an equal, "fifty-fifty" division of this item of property, and it was not unreasonable for the trial court to have concluded that the husband merited or deserved to receive a larger proportion of his earned fee so that he would, like his wife, leave the marriage with an adequate income. Both parties were left by the trial court's action in sound economic circumstances, and the trial judge simply and properly found in accordance with the statute that the unequal division of this asset was just and equitable.

There is much precedent for the kind of equitable disposition that took place in this case. In Herzog v. Herzog, 69 Nev. 286, 249 P.2d 533 (1952), for example, this court stated with approval that "the trial court exercised its discretion by, in effect, awarding all of the community personal property to the husband...." 69 Nev. at 290, 249 P.2d at 535. How, then, can the wife even think to urge upon this court, as she does, that "discretion has been consistently and clearly denied by the Supreme Court?" The answer may be, as observed by the trial court in this case, that "[t]he language of the statute has been ignored by the Supreme Court."

Certainly the bar has been beset by the uncertainties bearing on the question of equitable versus equal community property division. One Nevada Bar Journal article noted that "[i]n Nevada, the practitioner is unable to advise his or her client, with any certainty, as to what the law provides and how the trial court would review distribution under certain circumstances. The confusion lies in the contradiction between the distribution statute and the decisions of the Nevada Supreme Court." ² (Our emphasis). The author pinpoints the problem when he says

By statute, Nevada is an equitable division community property state. This seemingly clear pronouncement of legislative intent is now brought into question by conflicting decisions of the appellate court and its apparent judicially created presumption that equal is equitable in most cases.

It is certainly true, as stated by Mr. Logar, that Nevada is by statute an "equitable distribution" jurisdiction, rather than an "equal distribution" jurisdiction, when it comes to distribution of community property. ³ There is not, however, as suggested in the bar journal article, a real or "apparent judicially created presumption that equal is equitable in most cases." This court would not have taken it upon itself to make such a radical change in the law as to institute judicially a shift in the burden of proof in divorce cases in the manner done by statute in Idaho. (See footnote 3). The statute as it now reads requires the divorce court in making a division equitable to consider the merits of the parties, the condition in which they will be left by the divorce, the person who acquired the property and the needs of the children. NRS 125.150(1). ⁴ An infinity of facts and circumstances bear upon these statutory considerations, and each case must be decided individually and on its own merits, although courts may use equal division of community property as a "starting point." ⁵ There is nothing in the statute that states or suggests that property must be divided evenly or that one party or the other should have an added burden of proof in establishing what is just and equitable.

As there is in Nevada no judicially created presumption favoring equal distribution of community property, neither is there a judicial "mandate" that community property must be divided in an "essentially equal manner." The trial judge in this case made a comment about the "contradiction between the distribution statute and the decisions of the Supreme Court." Any such contradiction real or apparent is now eliminated.

A careful reading and review of our cases reveals that the confusion and contradiction between statute and decision probably find their origin in the case of Weeks v. Weeks, 75 Nev. 411, 415, 345 P.2d 228, 230 (1959). The unfortunate language in Weeks that has led to this apparent "contradiction" is this: "Equal distribution of the community property appears to be the rule in most cases." (Our emphasis). This sentence says that when courts have divided community property, it appears that they usually, i.e., in more than half the cases, distribute equally. ⁶ The stated statistical estimate is probably true. After all, community property is, by definition, property owned in common by a husband and wife, with each having an undivided one-half interest. As a...