Opinion
No. 9016-7-III.
August 13, 1991.
[1] Divorce — Disposition of Property — Discretion of Court. The disposition of property in a marriage dissolution under RCW 26.09.080 is addressed to the discretion of the trial court. A disposition which is manifestly unreasonable or exercised on untenable grounds or for untenable reasons is an abuse of that discretion.
[2] Appeal — Findings of Fact — Review — In General. Findings of fact which are supported by substantial evidence in the record will be accepted as verities on appeal.
Divorce — Disposition of Property — Valuation — Precision.
[4] Divorce — Disposition of Property — Review — Record — Adequacy. A trial court's distribution of property in a marriage dissolution proceeding cannot be reviewed for an abuse of discretion in the absence of an adequate record.
[5] Divorce — Disposition of Property — Property Not Disposed of by Decree — Accumulation During Pendency of Action. The failure of a trial court to determine and equitably dispose of community property accumulated during the pendency of a marriage dissolution action is an abuse of discretion.
[6] Divorce — Disposition of Property — Valuation — Prematurely Valued Liability. Assigning responsibility for a community liability before it can be accurately valued is an abuse of discretion.
Nature of Action: Divorce proceeding.
Superior Court: The Superior Court for Chelan County, No. 85-3-00433-5, Charles W. Cone, J., on November 17, 1987, entered a decree of dissolution including a division of property.
Court of Appeals: Holding that the property division was largely supported by the record but that the court had abused its discretion by failing to account for and distribute rent accrued during the pendency of the action and by prematurely assigning responsibility for a liability, the court affirms the decree and the distribution of most of the property, reverses that portion of the decree dealing with three real estate contracts pending resolution of other legal actions and an accounting regarding the three properties, and remands for an accounting of rents collected during the pendency of the action, adjustment to property taxes, and entry of a judgment for overdue attorney fees.
David M. Bohr, for appellant.
Fred O. Montoya, for respondent.
[As amended by order of the Court of Appeals December 31, 1991.]
This case (as presented to the court by at least the seventh attorney for Mrs. Thomas and the fourth attorney for Mr. Thomas) involves the distribution of community property and liabilities in a dissolution proceeding commenced in August 1985. The matter was tried to the court in July 1987. Mrs. Thomas appealed; however, the appeal was delayed when she filed two bankruptcy petitions. Mrs. Thomas contends the trial court abused its discretion by (1) making an unfair and inequitable property distribution and (2) failing to award her attorney fees. We affirm in part and remand.
Before oral argument but after briefs were filed Mrs. Thomas died; her estate was substituted as appellant. For convenience, we refer simply to Mrs. Thomas as appellant.
Eunice and Marvin Thomas were married October 12, 1940, and separated August 30, 1985. At the time of trial she was 67; he was 68. They accumulated community property worth more than a million dollars during the course of their marriage.
First, Mrs. Thomas contends the court manifestly abused its discretion by departing from its stated goal: to divide the property and liabilities equally. She specifically challenges four matters: (1) Mr. Thomas' receipt of a disproportionate share of the real property, a greater share of the parties' liquid assets, and a monthly income more than three times hers; (2) the court's failure to award her part of the approximately $60,000 in net rental proceeds Mr. Thomas received during separation, for which it found he failed to account; (3) a disproportionate distribution of liabilities; and (4) a ruling the property located at 419 Fourth Street was not fraudulently conveyed to Mr. Thomas' brother in lieu of forfeiture.
Second, Mrs. Thomas contends the trial court should have awarded her attorney fees because she was forced on numerous occasions to institute contempt proceedings to enforce the parties' agreements and the court's orders.
[1] The trial court is charged with making a just and equitable disposition of the parties' property and liabilities after considering all relevant factors, including: the nature and extent of community and separate property, the duration of the marriage, and the economic circumstances of each spouse. RCW 26.09.080. Its discretion is broad:
The trial court's considerable discretion in making a property division will not be disturbed on appeal absent a manifest abuse of that discretion. A manifest abuse of discretion is a decision manifestly unreasonable or exercised on untenable grounds or for untenable reasons.
(Citations omitted.) In re Marriage of Tower, 55 Wn. App. 697, 700, 780 P.2d 863 (1989), review denied, 114 Wn.2d 1002 (1990).
[2] The law is well established that factual issues will not be retried on appeal. The court's findings of fact will be accepted as verities on appeal as long as they are supported by substantial evidence in the record. In re Marriage of Nicholson, 17 Wn. App. 110, 114, 561 P.2d 1116 (1977).
As to the first challenge, to the distribution of property, Mrs. Thomas neglects to factor in two substantial debts associated with Mr. Thomas' award of property: the Manry mortgages ($118,864) and mortgages on the "other rentals" ($61,780). Mr. Thomas' net real property award thus equals $494,821 while Mrs. Thomas' equals $424,235.
Mr. Thomas:
1. Orchard west of Okanogan Ave. (including $223,300 Conard house orchard, Johnson orchard, Van Selus orchard, Van Valkenberg orchard, Westerberg lot) 2. Johnson house 45,900 3. Van Selus house 24,000 4. Van Valkenberg house 38,000 mobile home 9,100 5. Manry rentals 210,000 6. "Other rentals" 106,000 7. Three real estate contracts (net equity) 71,203 8. Kansas mineral interest 200 ________ Total $727,703 Less Manry mortgages -118,864 Less "other rentals" mortgages -61,780 Less Land Bank loan -52,238 ________ Net real property $494,821
Mrs. Thomas:
1. Orchard east of Okanogan Ave. (including $152,580 Home Place orchard, Gambill Acre, Manning orchard Hammil orchard) 2. Home Place house 119,500 3. Manning house 43,900 4. Clipp house 44,900 5. Hammil house 46,000 6. Two real estate contracts (net equity): 823 Methow 18,995 619 Third 8,800 ________ Total $434,675 Less Ethyl Moles note on Manning house -10,440 ________ Net real property $424,235
The court's use of Okanogan Street as a dividing line between real property awarded to the parties resulted in a viable allocation of the Thomas Orchards property: Mrs. Thomas received her family home along with the 17.28 acres lying east of the street and Mr. Thomas received the 25.4 acres lying west of the street. The distribution in fact resulted in a difference in value of $70,586 (adjusted to reflect the mortgages), a difference which is not inappropriately disparate under these circumstances. [3] Contrary to her assertion regarding the distribution of personal property, Mrs. Thomas was awarded the greater share of the property, with a value which exceeded that awarded to Mr. Thomas by more than $20,000, substantially offsetting the $70,586 difference in real property awards. The relative liquidity of the personal assets is essentially irrelevant here since Mrs. Thomas was awarded the 1987 crop net cash proceeds. Mathematical precision in the distribution of property is not necessary; the awards of real and personal property are substantially proportionate.
Mrs. Thomas:
1. Orchard equipment $44,250.00 2. Bank accounts 2,682.69 3. Insurance policies 4,913.00 4. All 1987 crop proceeds less expenses 21,812.00[*] __________ Total $73,657.69
[*] This figure is derived from appellant's reply brief, at page 5. No documentation appears of record.
Mr. Thomas:
1. Bank accounts $1,372.58 2. Keogh account ($5,100 less $325 appraisal 4,775.00 fees reimbursed to Mrs. Thomas) 3. Insurance policies 37,923.00 4. Federal Land Bank stock 3,250.00 5. Eastern Washington SL stock 170.00 6. Rent in arrears up to July 1, 1987 6,097.00 _________ Total $53,587.58
[4] In determining the parties' respective monthly incomes, the court and Mrs. Thomas neglected to factor in Mr. Thomas' monthly obligation of $725 on the Federal Land Bank mortgage. Based on the orchard distribution, Mrs. Thomas argues on appeal Mr. Thomas would receive an additional $675 per month and she would receive only an additional $450. However, the record does not permit us to speculate regarding possible future orchard income. The record also does not provide sufficient information from which a determination of the parties' monthly expenses may be determined. While we acknowledge a disparity between Mr. Thomas' monthly income of $3,105 (adjusted for the Land Bank mortgage) and Mrs. Thomas' monthly income of $1,042, the record is not sufficient to allow us to determine whether the court abused its discretion.
Mr. Thomas:
1. Social security $559 2. Manry rentals 950 3. Rentals ("other rentals" and farmhouse rentals) 1,604 4. Real estate contracts 717 ______ Total monthly income $3,830
Mrs. Thomas:
1. Social security $227 2. Rentals 625 3. Real estate contracts 190 ______ Total monthly income $1,042
Testimony established $8,700 was due annually on the debt. The record does not contain the terms of the mortgage.
Her projections are based on the court's finding that the entire orchard generated an annual income of $12,000 to $15,000. With an average annual income of $13,500, and a 60/40 orchard property division (25.4 acres/17.28 acres), Mr. Thomas could anticipate $675 monthly and Mrs. Thomas $450.
[5] As to the second challenge, to the court's failure to award a portion of the net rental proceeds received during separation, the record is sufficient to determine the court abused its discretion. In spite of at least two court orders to provide a complete accounting of all rental income received and applied by Mr. Thomas between the filing of the dissolution petition and the trial, the court acknowledged in its letter decision that no accounting had been provided. It found, as of April 1987, Mr. Thomas
had received $110,046.10 from rental receipts from the parties' rental properties since the date of separation of the parties and has not shared this money with [Mrs. Thomas] except through the payment of Court ordered temporary maintenance, mortgages, maintenance and repairs of the rental properties, some taxes and insurance.[]
The $110,046.10 figure was provided by Mr. Thomas' certified public accountant and consisted of $32,838.93 from contract purchasers and $77,207.17 from renters. It is unknown whether the property at 419 Fourth Street, which was sold in lieu of forfeiture while the suit was pending, was included. Assuming it covers the period from September 1985 through April 1987, corresponding payments of approximately $61,320 would have been made, leaving proceeds of about $48,726.10 unaccounted for. Proceeds for May and June 1987 must also be calculated, taking into account the $6,097 in back rent the court found was outstanding at the time of trial.
Because no testimony was presented about the actual expenses associated with the rental properties, the court found net income is rental income less mortgage payments. The record before us is not sufficient to determine the exact amount of net rental and contract proceeds. We note, however, Mrs. Thomas neglects to factor in monthly payments on the real estate contracts; thus, the amount unaccounted for is nearer $47,000 than $60,000. Since Mr. Thomas had total control of the real estate income, he should have been required to account for it; any uncertainties resulting from his failure to account should have been resolved against him. The record reveals the court offset the net rental proceeds Mr. Thomas retained against the proceeds from the sale of "495" ounces of silver Mrs. Thomas retained. The court abused its discretion by failing to determine the amount of net rental proceeds and divide them equitably. They constitute an additional fund that should have been awarded.
Testimony established Mr. Thomas sold approximately 3,000 ounces of the couple's 3,467 ounces of silver for $17,354.45. He later gave Mrs. Thomas one-half of the proceeds pursuant to a court order. Mrs. Thomas testified she sold the remaining silver a few ounces at a time during a 6-month period when Mr. Thomas did not make court-ordered monthly maintenance payments. At $5.78 an ounce, which is what Mr. Thomas received, the remaining silver was worth about $2,700.
[6] As to the third challenge, to the disposition of liabilities, Mrs. Thomas was indeed assigned a larger portion of the other community liabilities. On June 10, 1986, a joint stipulation and order was entered which provided for management of the 1986 fruit crop on the parties' orchards. Subsequent to that order, the sum of not less than $37,332.52 was borrowed from the parties' daughter, as court appointed custodian of the Thomas Orchards account and 1985 crop proceeds, to bring in the 1986 crop. The order authorized Mr. and Mrs. Thomas to execute a promissory note and secure the loan with the equity in the three properties located at 614 Okanogan, 823 Methow and 619 Third. The debt was a community obligation, incurred by court order during the dissolution proceedings. Settlement or final judgment of the Thomas Orchards lawsuit between Ms. Van Houten and the Thomases, under cause 85-2-00450-1 in Chelan County Superior Court, must necessarily address this debt. An accounting of the 1986 crop proceeds is also required to determine the residual amount of the obligation. On this record, the court abused its discretion by assigning that loan liability to Mrs. Thomas.
Mr. Thomas:
1. Cashmere Valley Bank loan $20,000.00
Mrs. Thomas:
1. Anita Van Houten (daughter) debt $37,332.52 2. Delinquent property taxes 3,710.97 __________ $41,043.49
Anita Van Houten, as lessee of the Thomas Orchards for the years 1982 through 1985, instituted a lawsuit against her parents for an accounting of the Thomas Orchards earnings and finances for the lease period. The court in the Thomas Orchards lawsuit approved use of up to $50,000 from the Thomas Orchards account to pay the newly appointed orchard manager for expenses incurred in the management of the 1986 crop. The court in the dissolution proceeding ratified the agreement.
Further complicating matters, the property securing the debt was split between the Thomases: Mr. Thomas was awarded the Okanogan Street property, while Mrs. Thomas was awarded the Methow and Third Street properties. A postdecree judgment for $25,287.89 was entered against Mr. and Mrs. Thomas after they defaulted on a note secured by the Third Street property. The intricacies of this matter require a detailed explanation of pre- and postdefault events:
Extensive supplementation of the record occurred in conjunction with both parties' motions for reconsideration. The court also has before it an appeal arising out of the judgment creditor's efforts to collect from Mr. Thomas. That appeal, cause 11642-5-III, has been examined for details relating to the present case.
The court's award to Mrs. Thomas of $8,800 net equity in the Third Street property was illusory, as there was no equity to be awarded. Likewise, the award of the Methow Street property to Mrs. Thomas and the Okanogan Street property to Mr. Thomas did not reflect the secured interest of Ms. Van Houten as custodian of the Thomas Orchards accounts, taken pursuant to court order. All three awards must be set aside pending resolution of Chelan County Superior Court cause 85-2-00450-1.
Finally, Mrs. Thomas was assigned the delinquent property taxes on real property awarded to her. She asserts Mr. Thomas was ordered to bring all property taxes current, but this is somewhat inaccurate. On March 30, 1987, the court entered a show cause order allowing, but not requiring, use of Keogh account funds for payment of real property taxes if the dissolution matter was not resolved before the taxes became delinquent. At the time of the order, 1985 and 1986 taxes were already delinquent on those parts of the orchard Mr. Thomas wanted the court to award to Mrs. Thomas. On June 3, 1987, the court specifically held the delinquent 1985 and 1986 taxes, totaling $3,711, were to be held in abeyance; Mr. Thomas was ordered to pay the first half of 1987 taxes on all properties. This was one of the few orders Mr. Thomas followed. Upon dissolution, the court entered a specific finding that Mr. Thomas paid the real property taxes and assessments on all of the real property except that property lying east of Okanogan Street with community funds. Under these circumstances, it was an abuse of discretion to require Mrs. Thomas to assume the back taxes on property awarded to her. The court should have required Mr. Thomas to pay one-half of her taxes, just as she, in effect, paid one-half of his.
As to the fourth challenge, to the ruling the property located at 419 Fourth Street was not a fraudulent conveyance, the court found both parties deeded that property to Mr. Thomas' brother in lieu of foreclosure in the normal course of business. This finding is supported in the record by the court's order authorizing the parties to forfeit if they agreed to do so, but indicating the court would otherwise award the asset at trial. Mrs. Thomas testified she quitclaimed her interest, as did Mr. Thomas. There was no error.
As to her second contention, regarding attorney fees, Mrs. Thomas asserts the trial court should have made an award because a large portion of her attorney fees was necessitated by Mr. Thomas' intransigence; however, Mrs. Thomas neglects to factor in the numerous awards of attorney fees revealed in the record. Before trial, Mr. Thomas was found in contempt three times, never made a maintenance payment without being forced, and refused to provide a court-ordered accounting of rental income. From the court's orders, we discern Mr. Thomas was ordered to pay $14,000 in attorney fees. After trial, Mrs. Thomas was again forced to obtain court orders twice compelling Mr. Thomas to pay rents and mortgage obligations mandated by the decree of dissolution and was awarded an additional $500 in attorney fees. We are unable to determine whether any of the court-ordered fees were in fact paid. Mrs. Thomas is entitled to judgment in the amount of any unpaid attorney fees.
In its letter decision, the court gave its reason for denying an award of additional attorney fees and costs:
Both parties have been less than faithful in following the orders of the Court resulting from their frequent show cause hearings. Since both parties are receiving relatively equal portions of the community [property] in this dissolution, the Court finds that they have equal ability to pay attorney's fees, and attorney's fees will be the obligation of the party that incurred the same.
The decision is discretionary; we find no abuse as to additional attorney fees.
Both parties request attorney fees on appeal pursuant to RCW 26.09.140. However, neither party submitted an affidavit supporting current need as required by RCW 26.09.140 and RAP 18.1(c); see also In re Marriage of Sanborn, 55 Wn. App. 124, 130-31, 777 P.2d 4 (1989). Attorney fees are denied.
The property distribution of the Superior Court is affirmed, except for the three real estate contracts. The case is remanded for: an accounting and entry of judgment on behalf of the estate of Mrs. Thomas for one-half of the net rental proceeds collected by Mr. Thomas during separation, plus interest; entry of an equalizing judgment on behalf of the estate of Mrs. Thomas for one-half of the back property taxes she was required to pay on her property award, plus interest; and entry of judgment on behalf of the estate of Mrs. Thomas in the amount of any unpaid court-ordered attorney fees. Distribution of the two real estate contracts, the sale proceeds from the third, and reallocation of the Lowers judgment must be held in abeyance pending an accounting of the Van Houten custodial advance of $37,332.52. Following resolution of Chelan County Superior Court cause 85-2-00450-1 and an accounting of the advance secured by the Thomases' interests in all three real estate contracts, to the extent any amount is owed by the Thomases, it is to be allocated to the parties equally. Sale proceeds from the Third Street property and the associated Lowers judgment, and the Thomases' actual equity in the Methow and Okanogan real estate contracts can then be reallocated between Mr. Thomas and the estate of Mrs. Thomas to effectuate the court's goal of an equal division of assets and liabilities.
GREEN, C.J., and MUNSON, J., concur.
After modification, further reconsideration denied December 31, 1991.