Rusk v. Rusk

• Decision Date: 30 September 1999
• Citation: 5 S.W.3d 299
• Parties: <!--5 S.W.3d 299 (Tex.App.-Houston 1999) BYRON WALTER RUSK, Appellant v. SHEILA ANNE SPENCER RUSK, Appellee NO. 14-97-00983-CV In The Fourteenth Court of Appeals
• Court: Texas Court of Appeals

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5 S.W.3d 299 (Tex.App.-Houston[14th Dist.] 1999) BYRON WALTER RUSK, Appellant
v.
SHEILA ANNE SPENCER RUSK, Appellee NO. 14-97-00983-CV In The Fourteenth Court of Appeals September 30, 1999.
Rehearing Overruled October 21, 1999

On Appeal from the 308th District Court Harris County, Texas Trial Court Cause No. 96-018979

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Panel consists of Justices Amidei, Fowler, and Wittig.

MAJORITY OPINION

DON WITTIG, Justice.

This is an appeal from a final decree of divorce and judgment. Byron Walter Rusk contends that the trial court erred in: (1) finding that stock held in a corporation was community property; (2) appointing a receiver over property because there was no showing that any property was in jeopardy of being lost, removed, or materially injured, and without proper notice or pleadings; (3) divesting him of his separate property by placing it in receivership; (4) placing certain exempt properties in receivership for the purpose of satisfying the judgment; (5) finding sufficient evidence to support a community reimbursement claim; and (6) disproportionately dividing the marital estate. We reverse, remand and vacate.

I. BACKGROUND

In 1989, Byron Walter Rusk and Sheila Anne Spencer Rusk married.¹ Their union produced one child. In August 1997, following a non-jury trial, the trial court dissolved the parties' marriage. Pursuant to the agreement of the parties, the trial court placed their minor child in a joint managing conservatorship, with each respective party having equal periods of possession. While the parties agreed to the matters affecting the custody, support and welfare of the child, aspects of the property issues were hotly contested. The trial court divided the parties' marital estate, confirmed certain separate property status, and awarded a disproportionate community share to Sheila. The trial court appointed a receiver to take charge of certain real and personal, separate and community property awarded to Byron until the trial court's equitable owelty, recoupment, and reimbursement award of $ 150,000 to Sheila was satisfied.

II. DISCUSSION

Corporate Stock

In his first issue, Byron contends that the trial court erred in finding that 1,000 shares of corporate stock were community property. Byron claims that the stock was his separate property.

Byron owned and operated "RMS," an automotive sales and service business, incorporated in 1984.² The corporation was formed by Byron's father, Giles Rusk ("Mr. Rusk"), a licensed attorney. When the closely-held corporation was formed, the entire 1,000 shares of its stock were issued in the name of Byron's father, Mr. Rusk. Byron operated the business from its inception, repairing, buying, and selling cars. Mr. Rusk not only did not participate or have anything to do with the business but, in fact, moved from Houston to

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Nacodoches during the relevant time. The widower Mr. Rusk, to his regret, did not actually deliver the stock certificate to Byron until 39 days after the marriage. Mr. Rusk indicated he did not issue or deliver the stock to his son sooner, because of credit concerns for Byron. Byron asserts that the evidence was insufficient to support the trial court's finding of fact, characterizing the stock as community property. We agree.

In reviewing a "no evidence" point, the court of appeals must reject all evidence contrary to the fact-finder's findings and consider only the facts and circumstances which tend to support those findings. Ellebracht v. Ellebracht, 735 S.W.2d 658, 662 (Tex.App.-Austin 1987, no writ). In reviewing factual sufficiency issues, the reviewing court considers all of the evidence to determine whether the findings are so against the great weight and preponderance of the evidence as to be manifestly unjust. Id.; see also In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (Tex. 1951).

Separate property commands constitutional stature. "All property, both real and personal, of a spouse owned or claimed before marriage, and that acquired afterward by gift, devise or descent, shall be the separate property of that spouse . . . ." TEX. CONST. art. XVI, 15 (amended 1987). The Texas Family Code defines separate property as that property owned by a spouse before marriage, acquired during the marriage by gift, devise, or descent, or as a recovery for personal injuries sustained during the marriage. TEX. FAM. CODE ANN. 3.001 (Vernon 1998). Community property consists of the property, other than separate property, acquired by either spouse during marriage. TEX. FAM. CODE ANN. 3.002 (Vernon 1998). In Texas, property possessed by either spouse during the marriage is presumed to be community property absent clear and convincing evidence to the contrary. Scott v. Estate of Scott, 973 S.W.2d 694, 695 (Tex. App.--El Paso 1998, no. pet.); Robles v. Robles, 965 S.W.2d 605, 614 (Tex. App.--Houston [1st Dist.] 1998, pet. denied); see also TEX. FAM. CODE ANN. 3.003 (Vernon 1998). The characterization of property as either "community" or "separate" is determined by the inception of title to the property. Id; see also Jensen v. Jensen, 665 S.W.2d 107, 109 (Tex. 1984). The major consideration in determining the characterization of property as community or separate is the intention of spouses shown by the circumstances surrounding the inception of title. Scott, 973 S.W.2d at 695; see also Bahr v. Kohr, 980 S.W.2d 723, 728 (Tex.App.-San Antonio 1998, no pet.). Inception of title occurs when a party first has right of claim to the property by virtue of which title is finally vested. Id.

Byron states that the stock at issue was his separate property because he produced clear and convincing evidence that it was transferred to him by gift from Mr. Rusk. A gift is defined as a transfer of property made voluntarily and gratuitously, without consideration. Ellebracht, 735 S.W.2d at 659. The burden of proving a gift is on the party claiming the gift was made. Id. One controlling factor is the donative intent of the grantor at the time of the conveyance. Id. A conveyance from a parent to a child can give rise to a presumption of gift. Id.

Here, the RMS stock was undisputedly transferred to Byron from his father, Mr. Rust, giving rise to the presumption of gift. See id. Byron and Mr. Rusk, respectively, testified that no consideration was exchanged when Mr. Rusk delivered the 1,000 shares of stock to Byron after the marriage. This testimony was not disputed or controverted by Sheila.³ Mr. Rusk testified that he never took an active role in the operation of RMS, also undisputed. There was no evidence that Mr.

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Rusk received any income from RMS, undisputed. In fact, the only evidence in the record indicates that Byron began operating and received all income from RMS since its corporate inception in 1984, five years prior to Byron's marriage to Sheila. Further, there is no evidence in the record to suggest that the ownership of RMS was acquired by the work, efforts or labor of the spouses after their marriage See Norris v. Vaughan, 152 Tex. 491, 260 S.W.2d 676, 682 (Tex. 1953. Nor was there any evidence of any monetary consideration actually paid by Byron or Sheila for the RMS stock after their marriage. Similarly, neither Sheila nor Byron ever claimed that they intended community ownership of RMS. The only evidence in the record to support the trial court's finding is the share certificate's pre-printed recitation, stating "For value received I [Mr. Rusk] hereby seel, assign, and transfer unto Byron W. Rusk one thousand shares represented by the within certificate . . . ." No evidence of actual consideration is presented. In other words, other than this unsupported fictional recital⁴, there is no testimonial evidence or any other kind of documentary evidence, such as the corporate books, checks or receipts, that demonstrate in any fashion actual consideration. The stock certificate itself is adorned in fanciful Old English script, reminiscent of the 19th Century, and affords neither space for stating the instrument is a gift nor an appropriate blank for consideration. The flowery scripted certificate looks much like one would expect at the beginning of a Grimm's Fairy Tale: "ONCE UPON A TIME." The instrument is facially deficient and totally lacking any statement of actual consideration. The obvious purpose of this instrument is to assign and transfer the stock from one to another, not record the purposes or intent of the parties as argued by Sheila. From all appearances and under all the evidence, there was in fact no "value received." Undisputed evidence in the record is not subject to a trial judge's gratuitous finding on credibility.⁵ Contrary to the dissent, most of the evidence supporting our conclusion is undisputed and even comes from Sheila. She admitted knowing of no consideration paid by Byron and stipulated the very property and buildings where RMS was located, 1759 Westheimer, were the separate property of Byron, acquired before marriage. Further testimony by Sheila was excluded by the trial court's erroneous ruling stopping further cross-examination on the intent and further factors surrounding the stock transfer.⁶ It was further

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undisputed that Byron was previously married and had a child by that marriage. He had accumulated considerable separate property and was also a beneficiary of a trust set up by his father and deceased mother.⁷ The overwhelming evidence shows a gift was made and Byron's claim arose before marriage. Although the delivery of the stock certificate occurred a few weeks after the marriage in 1989, the record shows that all indicia of ownership followed the inception of the business in 1984, five years earlier. Indeed, Byron's "right or claim" originated well before coverture. The only possible inference of actual consideration under the evidence is Byron's own pre-marriage work, toil, and effort.

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