Wagner v. Wagner

• Decision Date: 07 July 1987
• Docket Number: Nos. 1157-85,1176-85,s. 1157-85
• Citation: 4 Va.App. 397,358 S.E.2d 407
• Parties: James Dennis WAGNER v. Mary Helen Tillman WAGNER. Mary Helen Tillman WAGNER v. James Dennis WAGNER. Record
• Court: Virginia Court of Appeals

Page 407

358 S.E.2d 407

4 Va.App. 397

James Dennis WAGNER v. Mary Helen Tillman WAGNER.

Mary Helen Tillman WAGNER v. James Dennis WAGNER.

Record Nos. 1157-85, 1176-85.

Court of Appeals of Virginia.

July 7, 1987.

Joseph L. Lyle, Jr. (Pickett, Lyle, Siegel, Drescher & Croshaw, Virginia Beach, P.C., on brief), for James Dennis Wagner.

Henry M. Schwan, Norfolk, for Mary H.T. Wagner.

Present: KOONTZ, C.J., and BAKER and KEENAN, JJ.

KEENAN, Judge.

Mary H.T. Wagner (wife) and James D. Wagner (husband) both appeal from a decree in which the trial court awarded the husband a divorce based on desertion, provided a monetary award to the wife pursuant to Code § 20-107.3, ordered partition and sale of the marital home, and set child support payments.

The husband raises five issues in his appeal: (1) whether the court erred in finding that an interest in a shopping center was the wife's separate property; (2) whether the court erred in ordering that the wife's interest in the husband's retirement benefits was payable immediately rather than when the husband begins to receive such benefits; (3) whether the court erred in valuing the husband's stock as of the date of the hearing instead of the date when the bill of complaint was filed; (4) whether the court erred in ordering partition and sale of the marital residence notwithstanding the husband's offer to pay the wife fifty percent of the fair market value; and (5) whether the court erred in failing to award the husband attorney's fees. ¹

In her appeal, the wife raises five issues: (1) whether the court erred in awarding the husband a divorce based on desertion; (2) whether the court abused its discretion in fixing the amount of child support; (3) whether the court erred in ordering partition and sale of the marital home notwithstanding the commissioner in chancery's recommendation that the wife be permitted to purchase the husband's interest in the home; (4) whether the trial court abused its discretion in setting the amount of the equitable distribution award at $41,000; and (5) whether the trial court erred in refusing to award the wife attorney's fees. Based on our review of the record, we find that the trial court erred both in the finding that the wife deserted the husband and in fashioning the marital award.

I.

The wife left the marital home on January 25, 1983. There had been marital discord for a period of years prior to this event. The wife filed her bill of complaint for divorce on February 4, 1983, alleging that, because of the husband's conduct, she had been forced to leave the home for the preservation of her physical and emotional well-being. The husband denied this charge and filed a cross-bill in which he alleged that the wife had deserted him.

After hearing extensive evidence presented on behalf of both parties, the commissioner in chancery concluded that neither party had established a fault ground for divorce. With regard to the husband's claim of desertion, the commissioner found that the husband agreed to the wife's departure and suggested she leave immediately prior to her departure. The court rejected the commissioner's finding, stating:

As far as the divorce is concerned, I'm going to simply believe--and the Court must uphold the sanctity of marriage-- and I don't believe there's sufficient reason, justification, for Mrs. Wagner to have left, at least none was shown in here, and I'm going to order that Mr. Wagner be awarded a divorce on the grounds of desertion.

The court awarded the wife custody of the parties' two minor children, aged thirteen and ten. The wife submitted a financial statement showing the needs of the children to be $836 per month.

The commissioner valued the marital home at $218,000, including a $60,000 deed of trust and a total equity of $158,000. He noted that the wife had offered to purchase the husband's share of $79,000 and recommended that this offer be accepted. The husband, however, had also offered to pay the wife fifty percent of the equity in the home based on the property's fair market value. The court did not accept the commissioner's recommendation that the wife be allowed to purchase the husband's interest. It concluded that because both parties had made offers and no agreement had been reached, the house should be partitioned and sold.

The court made a monetary award to the wife of $41,000. This amount was based on the commissioner's recommendation that the wife be awarded twenty-five percent of the husband's vested retirement benefits, including his stock in his employer's company. The court also approved the commissioner's recommendation that the wife's five percent interest in a shopping center, valued at $225,000, was her separate property.

The commissioner found that the present value of the husband's retirement benefits was $9,000. He did not find a present value of the stock which was primarily part of the retirement plan. The court valued the 4,800 shares at $31 per share. The valuation was based on testimony presented at the commissioner's hearing concerning the value of the stock on the date of the hearing. In making its computation, the court subtracted a $31,946 debt associated with the stock.

The evidence taken before the commissioner also showed that the stock had risen in value approximately $2 per share since 1983 when the bill of complaint was filed. The court used the higher figure of $31 per share in computing the amount of the wife's award. Further, in making the award, the court apparently considered the husband's individual retirement account, certificates of deposit, and other personal property.

Also pursuant to its charge under Code § 20-107.3, the court determined that the five percent interest in a shopping center, which the wife had acquired from her father, was her separate property. Documents introduced at the hearing indicated that the acquisition was not a gift to her; however, her father eventually forgave the debt incurred to purchase the property. The wife's father testified that in accordance with a plan to reduce the size of his taxable estate, he gave each of his children an option to acquire an interest in the shopping center. Each of the children exercised this option and signed and delivered notes to their father for the full purchase price. The father forgave payment of each note by filing gift tax returns on these transactions. The commissioner concluded that, based on the evidence as a whole, the acquisition of the interest in the shopping center was a gift from a source other than the husband, and therefore, separate property as defined in Code § 20-107.3(A)(1)(ii). This finding was affirmed by the court in its final decree.

The commissioner also found that the wife's jewelry was separate property, since she had received it as gifts from sources other than the husband. The court upheld the commissioner's finding. The commissioner further recommended that the husband contribute $2,000 toward the wife's attorney's fees. The court, however, did not accept this recommendation, and ruled that the parties were responsible for their own attorney's fees.

II.

The husband first argues that the trial court erred in finding that the interest in the shopping center was the wife's separate property. He states that under former Code § 20-107.3, in effect at the time of the court's decree, all property acquired during the marriage and prior to the filing of a bill of complaint, is presumed to be marital property. The husband argues that in this case the wife presented insufficient evidence to overcome that presumption. ² The husband further argues that the evidence showed that on October 1, 1976, the date the wife acquired this interest, she purchased her share with funds she had borrowed from her father one month earlier. The husband contends that the transaction was therefore a purchase rather than a gift, and the fact that her father forgave the note in December 1976 is irrelevant.

The wife responds that the property was not "acquired" when she obtained title to it in October 1976, but rather when it was paid for in December 1976. The wife further argues that because the source of funds used to acquire the property was the note she executed to her father, which was later forgiven as a gift to her, the property should be characterized as separate. ³ We disagree.

The character of property classified pursuant to Code § 20-107.3(A) is initially ascertained as of the date that it is acquired. Although separate property, by the manner in which it is maintained, may be commuted into marital property, marital property, in the absence of a valid, express agreement by the parties, cannot become the separate property of one of the parties.

Under the facts presented here, the wife executed a purchase option on October 1, 1976, by payment of funds in the amount of $6,420. The fact that her father later forgave the note executed to secure these funds did not alter the character of the property on October 1, 1976, the date it was acquired. Furthermore, we note that had the wife's father died prior to forgiving the note in December 1976, the wife would have been liable on the note to her father's estate. This fact also mandates the conclusion that the property, on the date it was acquired, was not a gift qualifying as the separate property of the wife under Code § 20-107.3(A)(1).

In reaching this conclusion, we recognize that findings of fact made by a commissioner in chancery should be sustained unless they are not supported by the evidence. Code § 8.01-610; Hill v. Hill, 227 Va. 569, 576-77, 318 S.E.2d 292, 296 (1984). In the case before us, however, the commissioner's finding that the interest in the shopping center was a gift to the wife, and therefore her separate property, is not supported by the evidence and cannot be sustained. Therefore, we find that the trial court erred when it held that the shopping center interest was the wife's separate property,...