Nace v. Nace

• Citation: 448 P.2d 76,104 Ariz. 20
• Decision Date: 13 December 1968
• Docket Number: No. 9187--PR,9187--PR
• Parties: Marion E. NACE, Appellant, v. Harry L. NACE, Jr., Appellee.
• Court: Arizona Supreme Court

Page 76

448 P.2d 76

104 Ariz. 20

Marion E. NACE, Appellant, v. Harry L. NACE, Jr., Appellee.

No. 9187--PR.

Supreme Court of Arizona, In Banc.

Dec. 13, 1968.

Rehearing Denied Jan. 8, 1969.

Lewis, Roca, Beauchamp & Linton, by John J. Flynn, Robert A. Jensen, Roger W. Kaufman, Phoenix, for appellant.

Cavness, DeRose, Senner & Foster, by Jack C. Cavness and John W. Rood, Phoenix, for appellee.

McFARLAND, Chief Justice.

The plaintiff Marion E. Nace, hereinafter referred to as the wife, sued the defendant Harry L. Nace, Jr., hereinafter referred to as the husband, for divorce and custody of a child, alimony and child support, and a division of the community property.

After nine days of hearings, and voluminous testimony which resulted in hundreds of pages of text, the trial court granted the divorce to the wife, and custody of the child, with visitorial rights to the husband; the wife was also awarded $1,500 a month alimony and $400 a month for child support, the husband being further ordered to pay all medical expenses incurred by the child in excess of $500 per year, and maintain insurance to cover such expenses; the family home and improvements thereon (called 'the Orangewood Property'), worth approximately $112,000, was given to the wife as her sole and separate property, with the husband ordered to pay the real estate taxes so long as the wife maintains her residence there. In addition, the wife was awarded $60,000 as and for her share of the community property.

The wife appealed from the judgment, and the husband cross appealed. The Court of Appeals reversed the trial court, awarding the wife $500,000 as her share of the community property, less $111,950, the value of the marital home, leaving a balance of $388,050, with interest, in lieu of alimony and the payment of real estate taxes. Nace v. Nace, 6 Ariz.App. 348, 432 P.2d 896. The husband petitioned this Court for review of the decision of the Court of Appeals, which was granted.

The parties were married on June 1, 1956, and the marriage was more tumultuous than happy. No issue was born thereof, and evidently in an attempt to salvage their marriage from its dysphoric state, they adopted a minor son, Harry L. Nace, III. However, even this failed to bring harmony to the parties, and a complaint for divorce was filed by the wife on November 1, 1963.

For some twenty years prior to the marriage of the parties, the husband had managed the family chain of motion picture theaters, known as the 'Nace Circuit,' comprised of various corporations and partnerships. The husband's properties were found by the court to have had a value of $470,207 at the time of the marriage. Two years after the marriage, the husband received from his father's estate property valued at $1,135,959.

Substantial evidence of the husband's financial affairs was produced during the trial. All of the financial transactions were evidenced by checks and entered upon the various books of the husband's financial enterprises, which he collectively referred to as his 'regular' account, or upon the books called his 'special' account, and which he contended represented all community property transactions. Into the special account the husband deposited all of his salaries received from his business enterprises. The evidence also showed that the husband transferred $230,000 from his regular to his special account.

The issue before this Court is whether the trial court made a proper division of the community property. In deciding this question, the trial court first had to determine what was separate property and what was community property, and then make an equitable distribution of the community property.

The statutes of this State governing this matter have been interpreted by this Court on several occasions. A.R.S. § 25--213, subsecs. A and B defines separate property as:

' § 25--213. Separate property defined

A. All property, real and personal, of the husband, owned or claimed by him before marriage, and that acquired afterward by gift, devise or descent, and also the increase, rents, issues and profits thereof, is his separate property.

B. All property, both real and personal, of the wife, owned or claimed by her before marriage, and that acquired afterward by gift, devise or descent, and also the increase, rents, issues and profits thereof, is her separate property.'

A.R.S. § 25--211 A defines community property as:

' § 25--211. Property acquired during marriage as community property; exceptions; disposition of personal property

A. All property acquired by either husband or wife during the marriage, except that which is acquired by gift, devise or descent, or earned by the wife and her minor children while she lives separate and apart from her husband, is the community property of the husband and wife.'

The well settled law in this State is that the separate or community character of property is determined by its status at the time of the marriage. Kingsbery v. Kingsbery, 93 Ariz. 217, 379 P.2d 893; Flynn v. Allender, 75 Ariz. 322, 256 P.2d 560; Porter v. Porter, 67 Ariz. 273, 195 P.2d 132; In Re Estate of Torrey, 54 Ariz. 369, 95 P.2d 990; Horton v. Horton, 35 Ariz. 378, 278 P. 370.

Once property has been identified as separate or community, it remains such as long as it can continue to be segregated. Porter v. Porter, supra; Kingsbery v. Kingsbery, supra; In Re Estate of Torrey, supra.

This Court has held that there is a legal assumption that all property acquired during marriage takes on a community nature unless clear and convincing proof is made that the property is inherently separate. Porter v. Porter, supra; Kennedy v. Kennedy, 93 Ariz. 252, 379 P.2d 966; Evans v. Evans, 79 Ariz. 284, 288 P.2d 775. However, the mere commingling of funds does not have the effect of destroying the identity of the husband's separate property as long as it can be identified. Porter v. Porter, supra. Property purchased during marriage with separate property remains such. Blaine v. Blaine, 63 Ariz. 100, 159 P.2d 786.

A.R.S. § 25--318, subsec. A states:

'On entering a judgment of divorce the court shall order such division of the property of the parties as to the court seems just and right, * * * without compelling either party to divest himself or herself of title to separate property, * * *.'

The trial court found that the husband's separate property had increased in value partially because of his business judgment and management, and partially due to the inherent nature of the business or property. However, the trial court went on to say that it was unable to determine what portion was attributable to each factor and found all the increase to be community property.

The finding of facts and conclusions of law evidences that the trial court considered both the law and the facts in arriving at its finding. There is nothing in the record to indicate any abuse of judicial discretion by the trial court, and unless the evidence is of such a clear and convincing nature as to the abuse of its judicial functions, this Court will view the evidence and all reasonable conclusions drawn therefrom in a light most favorable to upholding the decree of the trial court. Todaro v. Gardner, 72 Ariz. 87, 231 P.2d 435; Spector v. Spector, 94 Ariz. 175, 382 P.2d 659.

Under our statute, A.R.S. § 25--318, subsec. A, supra, the trial court is not required to divide the property evenly, only equitably. Only where this discretion has been abused will this Court interfere. Matlow v. Matlow, 89 Ariz. 293, 361 P.2d 648; Reed v. Reed, 82 Ariz. 168, 309 P.2d 790; Honig v. Honig, 77 Ariz. 247, 269 P.2d 737.

The court, in its findings of fact, stated that the property held by the husband at the time of the marriage was valued at $470,207, which, added to the $1,135,959 received from the estate of his father, made a total of $1,606,166. These assets having been acquired prior to the marriage and from his father's estate, became the husband's sole and separate property. A.R.S. § 25--213, subsecs. A. & B., supra. However, the Court found that:

'* * * during the parties' marriage, from 1956 until 1963, under the defendant's prudent efforts, the theatre syndicate prospered, to the extent that his personal net worth, based on his interests therein, had increased to $2,703,834 as of December 31, 1962, including the undistributed corporate dividends.'

And that:

'* * * the net worth or value of defendant's separate property that he owned prior to this marriage or received from his father's estate, has increased, partly due to the continued exercise of defendant's unusual experience, business judgment and management, and partly due to the...