Roane v. Roane, 0756-90-2

• Decision Date: 23 July 1991
• Docket Number: No. 0756-90-2,0756-90-2
• Citation: 12 Va.App. 989,407 S.E.2d 698
• Parties: David James ROANE, Sr. v. Peggy Marek ROANE. Record
• Court: Virginia Court of Appeals

Page 698

407 S.E.2d 698

12 Va.App. 989

David James ROANE, Sr. v. Peggy Marek ROANE.

Record No. 0756-90-2.

Court of Appeals of Virginia.

July 23, 1991.

Lawrence D. Diehl (Marks & Harrison, on brief), Hopewell, for appellant.

No brief or argument, for appellee.

Present: JOSEPH E. BAKER, BENTON and COLE ^*, JJ.

JOSEPH E. BAKER, Judge.

In this appeal from a divorce decree entered on April 11, 1990, by the Circuit Court of the City of Colonial Heights (trial court), David James Roane, Sr. (husband) alleges that the trial court erred when it declared stock in Dave's Cabinet Shop, Inc. (the corporation), which was registered in husband's name only, to be marital property and awarded Peggy Marek Roane (wife) twenty percent of the value of the stock. Husband was the sole owner of the corporation and asserts that wife made no contribution to the appreciated value of the stock. He attributes the increase to the "growth of the housing industry" and a Small Business Administration (SBA) loan which infused capital into the corporate business permitting it to expand.

Pursuant to Smoot v. Smoot, 233 Va. 435, 357 S.E.2d 728 (1987) ¹ the trial court held that wife's non-monetary contributions to the appreciated value of the stock transmuted it from separate property to marital property.

Husband first invites the Court of Appeals to overrule Smoot. We are in accord with the findings of that case, but if we were not we are without authority to overrule the Supreme Court of Virginia. In addition, he asserts that even under Smoot, the evidence in this record is not sufficient to support the trial court's decision to classify the stock as marital property. Husband further presents several sub-issues arising out of the trial court's classification of the stock: (1) whether wife's contributions to the increased value were significant; (2) whether wife is foreclosed from asserting that transmutation occurred; (3) whether husband's intent not to give wife an interest precludes her from making the claim; and (4) whether her efforts contributed to the appreciated stock value.

As in many divorce cases, the Roanes' suit involved a great deal of testimony, exhibits, memoranda and various orders. Two of the orders pertinent to this appeal were entered on July 25, 1989 and October 24, 1989, respectively. The first order set deadlines for discovery, taking of depositions and submission of memoranda of fact and law, all to be completed by September 30, 1989. The second order extended the time for filing memoranda of fact and law to October 30, 1989. No provision was made for filing rebuttal letters.

Husband filed a memorandum on October 30, 1989. Wife responded with a memorandum filed on November 2, 1989, in which she stated, among other things, that "new evidence of vital importance had just been discovered which directly contradicts the testimony of both parties and supports one of the basic factors quoted by the appellate courts as proving transmutation." Her memorandum included two items which were labeled, respectively, Exhibit W-A (a SBA guaranty) and Exhibit W-B (a deed of trust on property titled only in husband's name). She requested the trial court to consider those exhibits or if, in the alternative, the trial court felt they were not in compliance with its deadline order, to permit her to take further depositions to enable the documents to be included in the record. The trial judge did not rule on wife's request. Instead, the trial judge wrote to the wife's counsel the following:

I have your letter under date of December 1, 1989, with reference to the above-styled matter and specifically concerning the letter from [husband's counsel] taking exceptions to some of the points made in your memorandum.

My plan is to review the matter in accordance with the provisions of my letter without regard to comments made by either side on the memorandums filed by each side. If I feel that I must consider a rebuttal letter of your memorandum, I will give you an opportunity to respond to [husband's counsel's] memorandum.

The clear import of the judge's letter is that the memoranda from both parties were accepted. However, the trial judge issued a letter opinion several months later without having ruled upon the request to allow additional evidence which would prove that both parties had incorrectly (and possibly inadvertently) testified concerning a central issue before the trial judge.

Apparently, the trial judge did not consider the exhibits because in his February 23, 1990 opinion letter to counsel he wrote: "As evidence of [the corporate stock being separate property] husband points to the fact that ... wife was never obligated on any loans to the corporation." In his brief filed with this Court, counsel for husband states as a fact that "Mrs. Roane [wife] never ... guaranteed any corporate loans, notes or obligations." Wife's memorandum was filed three days after the time limit set by the trial court; however, this three-day delinquency could not have been of any significance to the trial court because the final decree was not entered until later. Moreover, it appears that the trial judge may have accepted the memorandum even though it was filed three days late.

During his deposition, husband placed in evidence copies of the SBA Authorization and Loan Agreement (H-20) but failed to disclose the guaranty and deed of trust which, if the proffered evidence (W-A and W-B) is genuine, appear to have been required by the SBA and may have shown substantial participation by wife in the procurement of the $222,000 loan. The note, apparently secured by the guaranty and deed of trust, was not included with the authorization and loan agreement; however, it had little significance to the transmutation issue because it only evidenced the loan to the corporation. The same may not be said of the guaranty, which provides that it was executed "to induce Small Business Administration ... to make a loan ... to Dave's Cabinet Shop, Inc." and was an unconditional guarantee of payment of a "note" of even date in the sum of $222,000. ² The deed of trust conveyed to the trustee real property titled only in the name of husband; however, it transferred any interest wife may have had therein by dower, equitable distribution, or otherwise, and secured the $222,000 guaranty.

Husband introduced the issue as to whether wife made any significant contribution to the appreciated value of the stock. He asserted that wife did not participate in procurement of the SBA loan, and that...