Smith v. Smith

• Decision Date: 01 August 2008
• Docket Number: 2070335.
• Citation: 6 So.3d 534
• Parties: Constance J. SMITH v. Gregory L. SMITH, Jr., and Flowerwood Nursery, Inc.
• Court: Alabama Court of Civil Appeals

6 So.3d 534

Constance J. SMITH v. Gregory L. SMITH, Jr., and Flowerwood Nursery, Inc.

2070335.

Court of Civil Appeals of Alabama.

August 1, 2008.

Certiorari Denied October 10, 2008 Alabama Supreme Court 1071574.

David A. Simon of Wills & Simon, Bay Minette, for appellant.

Daniel G. Blackburn and Mark H. Taupeka of Blackburn & Conner, P.C., Bay Minette, for appellees.

THOMAS, Judge.

Constance J. Smith ("the former wife") appeals from a judgment imposing a resulting trust in favor of Flowerwood Nursery, Inc. ("Flowerwood"), on property in which she claims an interest. We affirm.

The former wife and Gregory L. Smith ("the former husband") were divorced in 2001. This is the second time they have been before this court. For an understanding of the facts and procedural history underlying this appeal, we quote from this court's decision in Smith v. Smith, 892 So.2d 384 (Ala.Civ.App.2003) (hereinafter referred to as "Smith I"):

"The trial court incorporated into the divorce judgment an agreement the parties had reached as the result of mediation. After providing for the division of the parties' retirement accounts, the division of certain real property, the allocation of various items of personal property, and the husband's payments to the wife of alimony in gross, the agreement recites, in paragraph 9:

"`Each party shall keep any other account and any other property presently in their individual names with Wife disclaiming any and all interest she may have in any interest in which Husband owns in any business or other property including, but not limited to, Flowerwood Nursery of Alabama, Flowerwood Nursery of Georgia, Flowerwood Liners, PDSI, Summit Landscaping, Inc. and Flowerwood Management.'

"The agreement requires the parties to `execute all necessary documents to carry out the provisions of their agreement.'

"After the divorce, the husband sought to have the wife execute a quitclaim deed transferring to him her interest in a 19-acre parcel of real property located in Baldwin County and used in connection with the operation of the husband's business, Flowerwood Nursery. The wife refused to execute a quitclaim deed; instead, she filed suit in Baldwin Circuit Court seeking a sale for division of the 19-acre parcel.

"In July 2003, the husband filed an action seeking a judgment declaring that he had been awarded the 19-acre parcel by virtue of paragraph 9 of the agreement incorporated into the divorce judgment; he also filed a motion to enforce the divorce judgment, seeking to compel the wife to execute a quitclaim deed to the property. The wife answered, alleging that she still had an interest in the 19-acre parcel that she had not relinquished by agreeing to paragraph 9 of the agreement. Following a hearing, the trial court held that, pursuant to paragraph 9 of the agreement, the husband had been awarded the disputed property; the court ordered the wife to execute, within 30 days of the entry of its judgment, the necessary deed to convey title to the husband. The wife appeals.

". . . .

"Apparently, the trial court concluded that paragraph 9 of the agreement incorporated into the divorce judgment was ambiguous because it held a hearing and received parol or extrinsic evidence concerning the parties' intent with regard to the ownership of the 19-acre parcel. The record contains a deed, dated August 17, 1988, and recorded on August 22, 1988, conveying the disputed property from Charles W. Barnhill and Virginia P. Barnhill, husband and wife, to the husband and the wife, as joint tenants with the right of survivorship. The record also contains an unrecorded instrument dated August 18, 1988, and signed by the husband and wife, which reads as follows:

"`Deed Correction

"`WHEREAS the Flowerwood Nursery paid a sum of $69,000 to Barnhill for a parcel of land . . ., and said land was incorrectly titled in the name of Gregory L. Smith, Jr., and Connie J. Smith, and

"`WHEREAS it is intended that the land be used by Flowerwood Nursery in its growing operations, and

"`WHEREAS it is not intended that the Smiths benefit from or dispose of said property without proper compensation to Flowerwood,

"`NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS that Gregory L. Smith, Jr., and Connie J. Smith, for and in consideration of the sum of Ten Dollars ($10.00), agree that for a period of Ninety-Nine years they shall sell said parcel to NONE OTHER THAN Flowerwood Nursery, Inc., a corporation of Alabama, and shall sell said parcel at a price of Ten Dollars ($10.00). In the event of their deaths, said property will automatically be transferred as if sold as described above.

"`IT IS FURTHER AGREED that Gregory L. Smith, Jr. and Connie J. Smith shall not use said property without paying Flowerwood Nursery a rate of thirty five hundred dollars per acre for the amount used by them, and agree further that at this time true and correct deeding shall be executed and recorded, reflecting a correct ownership of, and payment for, said parcel.

                      "`/s/ Gregory L. Smith Jr
                      "`/s/ Connie J. Smith'
                

"The husband testified that Flowerwood Nursery is a corporation owned by his family; that in 1988 he was the corporate secretary; and that he is now the president and general manager. He presented evidence that Flowerwood Nursery had paid for the 19-acre parcel in 1988; that it had listed the property as a capital asset on its books since that time; that it had made numerous improvements to the property; and that the property was essential to its business operations. The husband testified that the August 17, 1988, deed from the Barnhills was the result of a tax-free exchange. He explained that naming the wife and him as grantees in the deed was a `mistake' and that, therefore, he had typed a document that he called a `Deed Correction' the following day, August 18, 1988. The husband acknowledged that the `Deed Correction' did not purport to transfer title to the property to Flowerwood Nursery and that the parties never executed another deed conveying the property to Flowerwood Nursery. The husband conceded that his argument that the wife had no interest in the property was based solely on paragraph 9 of the agreement incorporated into the divorce judgment. The wife testified that she did not read the deed correction instrument before she signed it on August 18, 1988, but, she said, she signed it because the husband had asked her to do so. The wife stated that the husband had told her that the purpose of the deed correction document `was to protect the nursery from lawsuits, and that was good enough for [her].'"

Smith I, 892 So.2d at 385-87.

In Smith I, a majority of this court held that paragraph 9 of the divorce judgment was not ambiguous and that

"at the time of the divorce, the wife was a joint tenant with the husband in the 19-acre parcel; that paragraph 9 did not operate to disclaim her interest in that property; and that the wife retains her interest in the 19-acre parcel."

892 So.2d at 389. After this court issued its opinion in Smith I, the former husband filed a petition for a writ of certiorari with the Alabama Supreme Court. That court initially granted the petition, but, on May 28, 2004, it quashed the writ.

On September 7, 2004, Flowerwood filed a complaint in intervention in the former wife's 2002 Baldwin Circuit Court action in which she had requested an accounting and a sale for division of the 19-acre parcel. Flowerwood's complaint alleged that it had supplied the purchase money for the Smiths' 1988 purchase of the 19-acre parcel, that it had thereafter listed the property as a capital asset on its books, that it had made substantial capital improvements to the property, and that the property was essential to its nursery operations. Accordingly, Flowerwood requested the following alternative relief: that the court construe the parties' August 18, 1988, deed-correction instrument as a real-estate purchase contract and order the property to be sold to Flowerwood pursuant to the terms of that instrument, or that the court construe the deed-correction instrument as an equitable mortgage, or that the court impose a constructive trust on the 19-acre parcel in favor of Flowerwood. On January 24, 2006, Flowerwood amended its complaint to request that the court impose a resulting trust in its favor.

On March 30, 2005, the former wife answered Flowerwood's complaint in intervention, seeking reasonable rents and an accounting and alleging that Flowerwood was guilty of conversion and conspiracy. On June 6, 2007, the circuit court conducted a bench trial. The former husband testified that he and the former wife had obtained the disputed 19-acre parcel by deed from Charles W. Barnhill and Virginia P. Barnhill on August 17, 1988. He said that the transaction was a tax-free exchange, pursuant to 26 U.S.C. § 1031, whereby he and the former wife received the 19-acre parcel in exchange for convenience-store property on Dauphin Island Parkway plus $70,129.50. The former husband stated that he had put up $1,000 of that sum as earnest money and that the balance had come from a money-market account owned by Flowerwood. He introduced a personal check for $1,000 drawn on an account in his name only and a cashier's check for $69,129.50 from the Flowerwood account. He also introduced the Flowerwood general ledger containing a journal entry for August 17, 1988, showing a debt receivable from the former husband for $69,129.50. The former husband explained that he had intended the grantee named in the deed to the 19-acre parcel to be Flowerwood, but, he said, the title company had informed him that, because the transaction was a § 1031 exchange, the grantees had to be the former wife and him. Accordingly, he said, he had drafted the deed-correction instrument the day after the closing in order to protect Flowerwood. The former husband stated that, at the end of the 1988 tax year, the Flowerwood ledgers were changed to reflect that the...