Smith v. Smith, 0678-85

• Citation: 3 Va.App. 510,351 S.E.2d 593
• Decision Date: 16 December 1986
• Docket Number: No. 0678-85,0678-85
• Parties: William C. SMITH v. Clare A. SMITH. Record
• Court: Virginia Court of Appeals

Page 593

351 S.E.2d 593

3 Va.App. 510

William C. SMITH v. Clare A. SMITH.

Record No. 0678-85.

Court of Appeals of Virginia.

Dec. 16, 1986.

Betty A. Thompson, Arlington, for appellant.

Mark P. Friedlander, Jr. (Friedlander, Friedlander & Brooks, P.C., Arlington, on brief), for appellee.

Present: BENTON, KEENAN and MOON, JJ.

BENTON, Judge.

William C. Smith appeals from an order requiring him to pay appellee, Clare A. Smith, the sum of $292,163.79 plus accrued interest in alimony arrearages. Mr. Smith contends that the trial court erroneously construed a Property Settlement Agreement and certain assignment instruments entered into by the parties and incorporated into the final decree of divorce. For the reasons set forth in this opinion, we affirm the decision of the trial court.

William and Clare Smith's final decree of divorce incorporated a Property Settlement Agreement (the "Agreement") executed by the parties on July 1, 1980. ¹ On the same day that the Agreement was entered into, Mr. Smith executed six separate documents, styled Assignment of Beneficial Interest and Declaration of Trust (the "Assignments"), pursuant to paragraph 6(a) of the Agreement. Although each Assignment pertained to a different partnership interest, they all contained the following operative language:

NOW, THEREFORE, The Declarant [Mr. Smith] does hereby declare that he shall hold ... [X] percent of the Declarant's Partnership Interest (hereinafter referred to as the "Beneficial Partnership Interest") as Trustee, for the sole beneficial use and enjoyment of Beneficiary [Ms. Smith], effective for all purposes and in all respects as of the date hereof. Beneficiary shall be entitled to receive all cash distributions earned or accrued in respect to the Beneficial Partnership Interest, at such time as such cash distributions are actually paid to Declarant by the ... Partnership ... (and in the event of a sale Declarant shall remit to Beneficiary [X] percent of the net cash proceeds realized by Declarant on such sale).

(emphasis added). The interest held in trust for Ms. Smith was a specified percentage, between 25% and 50%, of Mr. Smith's ownership interest in each of the six partnerships. His ownership interests in the six partnerships ranged from 1% to 6%.

Immediately following the execution of the Agreement and the Assignments, Mr. Smith commenced monthly payments to Ms. Smith in the amount of $800 as required by the Agreement. After approximately eleven months, Ms. Smith began to receive pursuant to the Assignments increased and varying monthly payments. In July, 1983, Mr. Smith ceased payments to Ms. Smith entirely. Subsequent negotiations resulted in amendments to the Assignments, which are not germane to this appeal. Mr. Smith thereafter unilaterally determined that certain types of cash distributions were not subject to the Assignments and began withholding payments to Ms. Smith even though he previously paid a percentage of similar cash distributions to her.

Ms. Smith obtained a Rule to Show Cause, alleging that Mr. Smith violated the Agreement and was in contempt of court. In response, Mr. Smith filed an answer in which he asserted that the Assignments operated to transfer only sums "earned" or "accrued" and not cash obtained from the refinancing of the properties held by the partnerships. He also filed a cross petition claiming that his monthly obligation under the Agreement was limited to a maximum of $800 and that, by mistake, he paid $90,269.29 in excess of that which he was required to pay under the Agreement.

After taking evidence, the trial court determined that the parties' intent, as manifested in the Agreement of July, 1980, was that Ms. Smith was to receive a portion of all cash disbursements made to Mr. Smith from the partnerships and that the cash distributed to Mr. Smith as a result of the refinancing of properties was to be included in determining the payments owed to Ms. Smith. Judgment was awarded to Ms. Smith in the amount of $292,163.79 plus interest.

In Virginia property settlement agreements are contracts and subject to the same rules of formation, validity and interpretation as other contracts. Tiffany v. Tiffany, 1 Va.App. 11, 15, 332 S.E.2d 796, 799 (1985). In construing the terms of a property settlement agreement, just as in construing the terms of any contract, we are not bound by the trial court's conclusions as to the construction of the disputed provisions. See Wilson v. Holyfield, 227 Va. 184, 187, 313 S.E.2d 396, 398 (1984); Hutchison v. King, 206 Va. 619, 625, 145 S.E.2d 216, 221 (1965); Tiffany v. Tiffany, 1 Va.App. at 15, 332 S.E.2d at 799.

In construing the instruments our threshold inquiry is whether their terms are ambiguous. "An ambiguity exists when language admits of being understood in more than one way or refers to two or more things at the same time." Renner Plumbing v. Renner, 225 Va. 508, 515, 303 S.E.2d 894, 898 (1983); see also Amos v. Coffey, 228 Va. 88, 92, 320 S.E.2d 335, 337 (1984); Berry v. Klinger, 225 Va. 201, 207, 300 S.E.2d 792, 796 (1983). The fact that the parties attribute to the same terms variant meanings does not necessarily imply the existence of ambiguity where there otherwise is none. Wilson v. Holyfield, 227 Va. 184, 187, 313 S.E.2d 396, 398 (1984).

When the terms of a disputed provision are clear and definite, it is axiomatic that they are to be applied according to their ordinary meaning. See, e.g., Amos v Coffey, 228 Va. at 92-93, 320 S.E.2d at 337. Where there is no ambiguity in the terms of a contract, we must construe it as written, see, e.g., Quillen v. Titus, 172 Va. 523, 530, 2 S.E.2d 284, 287 (1939); Potts v. Mathieson Alkali Works, 165 Va. 196, 224, 181 S.E. 521, 532 (1935), and we are not at liberty to search for the meaning of the provisions beyond the pertinent instrument itself. See, e.g., Berry v. Klinger, 225 Va. at 208, 300 S.E.2d at 796; W.D. Nelson & Co. v. Taylor Heights Development Corp., 207 Va. 386, 389, 150 S.E.2d 142, 145 (1966); Walker & Laberge Co. v. First National Bank, 206 Va. 683, 690, 146 S.E.2d 239, 244 (1966); Globe Iron Construction Co. v. First Nat'l Bank of Boston, 205 Va. 841, 848, 140 S.E.2d 629, 633 (1965).

Mr. Smith asserts that "the language employed in the written agreement was plain and unambiguous." We are also of the opinion that the instruments involved are unambiguous in their terms. Both the Agreement and the Assignment documents contain language easily understood by reference to a dictionary or common usage. The terms of the Agreement and the Assignment documents do not possess multiple meanings nor do they refer to varied things simultaneously.

We begin by examining the terms of the Assignment documents. The sentence we are primarily concerned with reads as follows:

Beneficiary shall be entitled to receive all cash distributions earned or accrued in respect to the Beneficial Partnership Interest, at such time as such cash distributions are actually paid to Declarant by the Partnership. (emphasis added).

Mr. Smith asserts that cash distributions earned or accrued "must be distinguished from distributions made from the capital account." He argues that this distinction effectively precludes Ms. Smith from receiving a portion of cash distributions paid to him from the refinancing of the various properties held by the partnerships. We disagree.

Although the term "distribution" is modified by the word "cash," no other restriction, except the words "earned or accrued," is applied to the source of the cash which Ms. Smith is entitled to receive. The funds at issue here are cash distributions to the various partners generated by a refinancing of the accrued equity in the partnership assets. The Assignments make no distinction between cash distributions resulting from a refinancing of partnership properties and those which are otherwise "earned or accrued."

Mr. Smith argues that the words "earned" and "accrued," which immediately follow the term "cash distribution," indicate that the distributions in which Ms. Smith is entitled to share are only those which would be tantamount to "profits;" however, he points to no persuasive authority to support his assertion. We do not discern from the words of the Assignment instruments that the distributions embrace only the funds remaining after the payment of expenses and other deductions taken in computing "profits."

Mr. Smith further contends that "cash distributions earned or accrued" should not be construed to encompass distributions of capital generally. The argument is advanced that "[i]f a partner is not entitled to count the distribution of 'capital' as income ..., the assignee of a partner ... is clearly not so entitled." The fallacy in this argument is apparent: Mr. Smith's rights to the funds in question are not in issue here. He has already received the cash disbursements as a result of his relationship with the partnerships; thus, no issue is presented concerning his right to the funds vis-a-vis his other partners. It is only after the disbursements have been made to him that Ms. Smith is entitled to enforce her rights to a portion of them. Once the funds are distributed, her interest attaches by operation of the Assignment instruments without regard to the manner in which Mr. Smith is required to account to the taxing authorities.

Moreover, in the absence of limiting language in the Assignments or in the various partnership agreements, none of which were offered in evidence, there is no basis upon which to exclude the cash distributions from the refinancing proceeds. Whether the refinancing proceeds are...