Roe v. Roe

• Decision Date: 16 February 1993
• Docket Number: No. 1990,1990
• Citation: 311 S.C. 471,429 S.E.2d 830
• Court: South Carolina Court of Appeals
• Parties: Dorothy R. ROE, Appellant, v. Woodford V. ROE, Respondent. . Heard

Page 830

429 S.E.2d 830

311 S.C. 471

Dorothy R. ROE, Appellant, v. Woodford V. ROE, Respondent.

No. 1990.

Court of Appeals of South Carolina.

Heard Feb. 16, 1993.

Decided April 12, 1993.

John L. Creson, Augusta, GA, for appellant.

Vicki J. Snelgrove, Aiken, for respondent.

CURETON, Judge:

The court granted the wife a divorce on the statutory ground of adultery. The wife appeals, inter alia, the trial court's division of marital property and its valuation of various items of marital property. We affirm in part, reverse in part, and remand.

The parties married in December 1953 and separated in December 1988. The wife filed for divorce on August 31, 1989. She was 56 years old at the time of the hearing; the husband was 58.

The wife operated a bookkeeping service for a number of years. In 1978, the wife began to do accounting work for several Little Caesar pizza franchises. By the late 1980's, she had 16 accounts. Prior to his retirement in 1988, the husband worked as a construction and maintenance supervisor at a bank in Michigan.

In 1987, the parties entered a partnership with Ernest Rouse to develop a Little Caesar franchise in Sumter. In May 1987, the wife incorporated "Roe and Roe Pizza Treats" (R & R Pizza) to operate the franchise; she became the sole shareholder.

In February 1988, Rouse borrowed $15,000 from the wife. The parties dispute whether this debt is owed to the wife or to R & R Pizza. By December 1988, R & R Pizza had acquired and was operating franchises in Sumter, Aiken, and Orangeburg. The parties funded the franchise fees, leasehold improvements, and other business expenses with money the wife had inherited, their savings, and a credit-line secured by the parties' home in Michigan. Following the parties' separation in December 1988, the husband was not involved in the operation of R & R Pizza or its franchises.

Subsequent to the parties' separation but prior to their divorce, the husband received a distribution of retirement benefits from his former employer of $170,000, which he divided equally with his wife. The wife used $35,000 of her share of the distribution as well as an additional $15,000 which she borrowed from the husband to purchase a house in Orangeburg; she used the remainder to operate R & R Pizza. The wife removed an additional $5,500 in funds from the husband's account to pay attorney and investigator fees; the parties dispute whether the wife had permission to remove these funds. The husband used $14,000 of his share of the retirement funds to buy a new vehicle and placed the remainder ($49,000) in a savings account.

The trial judge awarded to the wife as marital property: 1) a note for $160,353 given by R & R Pizza to the wife; 2) R & R Pizza, with a negative value of $173,000; 3) R & R Pizza's stock; 4) Rouse's debt of $15,000; 5) a credit line used to finance R & R Pizza, with a balance owing of $94,000; 6) a home in Michigan valued at $60,000; 7) her life insurance policy valued at $14,000; 8) R & R Pizza's furniture and office equipment valued at $10,000; 9) jewelry valued at $15,000; 10) a home in Orangeburg valued at $48,500; 11) her car valued at $2,000; and 12) her checking account of $744.

He awarded the husband as marital property: 1) a lot in Michigan valued at $5,000; 2) his IRA of $15,000; 3) tools valued at $10,000; 4) his vehicle valued at $12,000; 5) his life insurance policy valued at $14,000; 6) $5,000 in stock; 7) a collection of toy trains valued at $7,000; and 8) his savings account of $49,000.

Of the $190,597 identified by the trial judge as marital property, he awarded $117,000, or 61%, to the husband and $73,597, or 39%, to the wife. He found that the wife was primarily responsible for the parties' involvement in R & R Pizza, that the parties had been in a comfortable financial situation prior to this involvement, and that she had "continued to sink money in that hole" both before and after the separation. He stated he had considered the misconduct of the wife as it affected the economic circumstances of the parties in accordance with S.C.Code Ann. § 20-7-472(2), and that the wife was guilty of economic misconduct both before and after the separation. He also observed that the wife had both misrepresented and failed to disclose to the court which marital assets she had invested in R & R Pizza subsequent to the parties' separation.

The trial judge observed that although the equitable division did not restore the husband to his financial condition prior to the parties' involvement in R & R Pizza, he was not entirely without fault in regards to this venture.

He also found that the wife owed the husband $20,500 because the parties had agreed to equally divide the husband's retirement benefits, and that the wife would pay the husband 1/2 of the husband's tax liability on these retirement benefits once its exact amount was determined. ¹

On appeal, the wife asserts that the trial court erred in 1) "double counting" certain marital assets which she was awarded because these assets were also considered in the valuation of R & R Pizza; 2) valuing and distributing as marital property jewelry inherited by the wife; 3) valuing the furniture and office equipment awarded to the wife; 4) requiring the wife to repay $20,500 to the husband; 5) valuing and awarding to the husband as marital property the collection of toy trains; 6) requiring the wife to be responsible for 1/2 of the tax liability on the husband's retirement funds; and 7) awarding the majority of the marital assets of the parties to the husband in its equitable division.

I.

As pertains to the "double counting" claim, the wife asserts that because she was awarded R & R Pizza, the trial court erred by awarding her the $15,000 debt owed by Rouse as a separate item of marital property, where the amount of this debt had been used by her appraiser as an account receivable in calculating the negative value of R & R Pizza. We agree. There is no dispute that both the debt and R & R Pizza were marital property. Although the evidence and testimony conflict as to whether this debt was payable to R & R Pizza, and accordingly was a corporate asset, or was payable to the wife personally, it is unnecessary for us to resolve this conflict because we are convinced the appraiser relied upon this debt in his calculation of R & R Pizza's net value. Accordingly, the trial court erred in awarding the debt as a marital asset when the net value of R & R Pizza had been increased by its value. Brandi v. Brandi, 302 S.C. 353, 359 n. 2, 396 S.E.2d 124, 126 n. 2 (Ct.App.1990) (it was error for the trial court to include as marital assets both the value of land owned by the husband's corporation and the value of his stock in the same corporation).

The wife also asserts that the trial court erred by awarding her the Orangeburg home and valuing it at $48,500 without either reducing its equity by the $15,000 which she had borrowed from the husband for its downpayment, or absolving her of the requirement to repay the husband. We agree. Although we affirm the trial court's finding that the wife must honor her agreement to repay the money which she borrowed from the husband, it was error to order repayment without reducing the value of the Orangeburg home by $15,000. Id. We find that the home's proper value was $33,500.

Next, the wife asserts that the trial court erred in valuing the R & R Pizza's stock at $15,000, because the stock has no value considering the negative value of R & R Pizza. We disagree. There is no dispute that both R & R Pizza and its stock were marital property. Regardless of the value of this stock, ² our review of the record establishes that the wife's appraiser determined it was a corporate liability in valuing R & R Pizza, and decreased the net value of R & R Pizza by the $15,000 book value assigned to it. ³ We see no prejudice in the award. See Cumbie v. Cumbie, 245 S.C. 107, 117, 139 S.E.2d 477, 482 (1964) (appellant must show both error and prejudice).

The wife also asserts the trial court erred by awarding her the note given by R & R Pizza to her in the sum of $160,353. She reasons that although she might forgive this note, the corporation would still have a negative value of approximately $12,000. Again, we find no error where this note was considered by her appraiser in arriving at the net value of the corporation. Id.

II.

The wife asserts the trial court erred in valuing jewelry at $15,000 and distributing it to her as marital property, as well as in valuing furniture and office equipment used by her bookkeeping service at $10,000.

Although the wife does not dispute that she acquired the jewelry during the marriage, she asserts that the jewelry was her separate property and not subject to equitable distribution. S.C.Code Ann. § 20-7-473(1) (1976) as amended. Our review of the record establishes that despite her testimony that she had inherited most of her jewelry from her mother in 1982, she only identified one item, an emerald ring appraised at $3,795, as inherited. The husband testified that he was uncertain which jewelry the wife had inherited. It is undisputed that the parties purchased some of the jewelry during the marriage. The party who claims that property is not marital has the burden to establish an exemption under S.C.Code Ann. § 20-7-473. Roberts v. Roberts, 296 S.C. 93, 95, 370 S.E.2d 881, 882 (Ct.App.1988), aff'd as modified, 299 S.C. 315, 319, 384 S.E.2d 719, 722 (1989). We conclude that except for the emerald ring, the wife did not establish that the jewelry was her separate property. However, because her testimony that she inherited the ring was uncontradicted, the trial court erred in distributing it as marital property.

During the marriage, the parties insured the jewelry for $15,299. Although the wife's financial declaration neither valued nor identified the jewelry as marital property or as the property of either party, the husband's declaration valued...