Mitchell v. Mitchell

• Decision Date: 18 March 1986
• Docket Number: No. 8264,8264
• Parties: , 77 A.L.R.4th 585 Josephine MITCHELL, Petitioner-Appellee, Cross-Appellant, v. Robert L. MITCHELL, Respondent-Appellant, Cross-Appellee.
• Court: Court of Appeals of New Mexico

Page 432

719 P.2d 432

104 N.M. 205, 77 A.L.R.4th 585

Josephine MITCHELL, Petitioner-Appellee, Cross-Appellant, v. Robert L. MITCHELL, Respondent-Appellant, Cross-Appellee.

No. 8264.

Court of Appeals of New Mexico.

March 18, 1986.

Certiorari Denied 104 N.M. 84, April 23, 1986.

[104 NM 207] Edward L. Yudin, Michael E. Kushner, Michael E. Kushner, P.A., Albuquerque, for petitioner-appellee cross-appellant.

Roberta Beyer, Albuquerque, for respondent-appellant cross-appellee.

OPINION

ALARID, Judge.

In this cause, a motion for rehearing having been filed by appellant, and consideration having been had by all of the members of the original panel,

IT IS ORDERED that the motion for rehearing be DENIED.

Further, on the court's own motion, IT IS ORDERED that the original opinion issued in this cause is withdrawn and the following substituted therefor.

Mr. Robert K. Mitchell (husband) (respondent-appellant and cross-appellee) appeals the trial court's judgment dividing the property of the parties upon divorce. Mrs. Josephine Mitchell (wife) (petitioner-appellee and cross-appellant) filed a cross-appeal also alleging the trial court erred in the property division. The trial court entered a decree of dissolution of marriage on March 29, 1983, but retained jurisdiction to determine the issues of property division and debt allocation. On December 17, 1984, the trial court entered a final judgment incident to a final decree of divorce and filed findings of fact and conclusions of law.

On appeal, husband raises the following issues:

I. Whether the trial court erred in characterizing husband's C.P.A. practice as community property.

II. Whether the trial court erred in characterizing the intangible assets of husband's C.P.A. practice as goodwill which is community property divisible on divorce.

III. Whether the trial court erred in characterizing the A.G. Edwards stock account as community property.

IV. Whether the trial court erred in refusing to direct the community to reimburse husband for his pre-marriage monies spent during the marriage for the benefit of the community.

V. Whether the trial court erred in failing to hold that $30,000 of alimony paid to wife from the date of divorce to the date of final judgment was an advance against her share of the community property.

Wife raises the following issues on cross-appeal:

VI. Whether the trial court erred in holding that husband was entitled to reimbursement for certain post-divorce expenditures made from community assets.

VII. Whether the trial court erred in holding that the community was not entitled to any monies generated by husband's C.P.A. practice after the date of the divorce.

VIII. Whether the trial court erred in determining that there was no evidence that husband transmuted his interest in the Justin property from separate to community property.

IX. Whether the trial court erred in valuing the community residence at $195,000.

X. Whether this court has jurisdiction to consider husband's appeal on Issue I because it was not timely.

For the reasons discussed below, we affirm the trial court on all issues raised in the appeal and cross-appeal.

We initially address a jurisdictional issue raised by wife contending that husband's appeal was not timely. Husband filed a motion to bifurcate the trial to litigate the issue of whether the C.P.A. practice was community property or his sole and separate property. The issue was tried on July 11, 1983. The trial court, by letter dated September 14, 1983, informed the parties that the C.P.A. business would be characterized as a community asset.

Wife contends that the trial court's letter was a final and appealable order because it fully disposed of a matter which required adjudication. NMSA 1978, Civ.P. Rule 54(c)(1) (Cum.Supp.1985) provides that:

[W]hen more than one claim for relief is presented in an action ... the court may enter a final judgment as to one or more but fewer than all of the claims only upon an express determination that there is no just reason for delay. In the absence of such determination, any order or other form of decision, however designated, which adjudicates fewer than all the claims shall not terminate the action as to any of the claims and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims.

Civ.P. Rule 54(b) was renumbered effective October 1, 1984, to Civ.P. Rule 54(c). No other changes were made in part (c). The jurisdiction of the court of appeals is limited to appeals from final judgments, interlocutory orders which practically dispose of the merits of an action and final orders after entry of a judgment which affect substantial rights. Thornton v. Gamble, 101 N.M. 764, 688 P.2d 1268 (Ct.App.1984); N.M.Const. art. VI, Sec. 29; NMSA 1978, Sec. 39-3-2.

The trial court's letter of September 14, 1983, lacks the language required by Civ.P. Rule 54(c)(1) and adjudicates only one of the issues raised by the parties. If husband had tried to take an appeal from this letter, his appeal would have been dismissed for lack of a final order. See Thornton v. Gamble. The court's determination that the C.P.A. practice was community property became final when the final judgment was entered on December 17, 1984. Husband timely appealed from that judgment. This court has jurisdiction to consider Issue I.

DISCUSSION

I. WHETHER THE TRIAL COURT ERRED IN CHARACTERIZING HUSBAND'S C.P.A. PRACTICE AS COMMUNITY PROPERTY.

Husband assumes that his C.P.A. practice was established (and therefore acquired) prior to marriage. He then contends that the community has no interest or lien on the C.P.A. practice because the community was adequately compensated for the value of his labor. The trial court found that the "business as it existed on the date of marriage was negligible with an insignificant amount of capital investment and capital value." The court further stated that the business was closer to the beginnings of a professional association than to a capital-intensive business and that it has existed and grown since the marriage through the labor of husband, whose earning power was community property. The court held that the business was community property. The issue, therefore, is whether the trial court erred in so concluding.

Husband became a C.P.A. in Ohio. He moved to Albuquerque in September 1969. He held full-time jobs in Albuquerque, as follows:

                Elmer Fox & Co., Tax Manager   October
                Rio Rancho Estates, Assistant    1969-October 1970
                  Comptroller                  January 1971-April
                                                 1971
                Industrial Concepts Corp.,     April
                  Comptroller                    1971-September
                                                 1972
                Felco Jewelry Industries,      September
                  Comptroller and Treasurer      1972-April 1973
                

The parties were married on September 3, 1971. Husband testified that he had three clients in 1970. He had no records from 1970. He estimated that at the time the parties were married he had between fifteen and twenty clients but did not have a list of names. His business letterhead in January 1971 showed that he was operating out of his residence on Justin Drive. His gross receipts tax returns for March and April 1971 show receipts of $310 and $365. At the date of marriage, his C.P.A. practice owned a couch, a calculator and small office equipment. Husband ceased to be an employee, opened an office outside of his home, and engaged full-time in his C.P.A. practice in October 1973. In 1971, his C.P.A. activities generated gross income for federal income tax purposes of $985. His federal income tax returns for 1972 and 1973 show gross income from the C.P.A. practice of $1,650 and $7,568.85. By 1982, the business reported gross receipts of $153,968.

Husband contends that the evidence was uncontroverted that his interest in his accounting practice was acquired prior to marriage. The evidence supports the trial court's finding that the business, as it existed on the date of marriage, was negligible. The value of the C.P.A. business derived almost entirely from the efforts of husband during the marriage. It was, therefore, community property.

Husband's appellate argument mischaracterizes the issue on appeal. Although the individual right to practice a profession is a property right that cannot be classed as a community property, the value of the practice as a business at the time of dissolution of the community is community property. See Hurley v. Hurley, 94 N.M. 641, 615 P.2d 256 (1980), overruled on other grounds, 97 N.M. 133, 637 P.2d 564 (1981). On these facts, the question for the trial court was whether any portion of the professional practice assets were attributable to the husband's separate property investment. See In re Marriage of Lopez, 38 Cal.App.3d 93, 113 Cal.Rptr. 58 (1974). The trial court's findings and conclusions indicate that husband did not establish at trial a separate property interest to which it was error not to apportion any return. Cf. Gillespie v. Gillespie, 84 N.M. 618, 506 P.2d 775 (1973) (husband had been a partner in a title business prior to marriage, in which he had made a capital investment). Under these circumstances, the trial court did not err in ruling that the practice was community property. Because husband's investment prior to marriage was negligible, the trial court properly concluded that the community property was entitled to all of the profits and increase. See id.; cf. Hodges v. Hodges, 101 N.M. 67, 678 P.2d 695 (1984) (party asserting that property acquired during marriage is separate must rebut presumption of community property).

It is not possible to lay down hard and fast guidelines in apportioning assets of a separate business between that which belongs to one partner as separate property and that which belongs to the community. Gillespie v. Gillespie. A proper apportionment depends on the proof. Id. In this case, there was evidence...