Opinion
No. 08-692.
Filed April 21, 2009.
Appeal from the Iredell (04CVD3190).
Appeal by Plaintiff from judgment entered 13 November 2007 by Judge Mary Covington in Iredell County District Court. Heard in the Court of Appeals 27 January 2009.
Pope, McMillan, Kutteh, Privetee, Edwards Schieck P.A., by Charles A. Schieck for plaintiff-appellant. Homesley, Gaines Dudley, by Edmund L. Gaines for defendant-appellee.
Hilda Williams ("Plaintiff") appeals an order characterizing certain property as either marital or non-marital, directing an equal distribution of the parties' marital and divisible property, and requiring a distributive award. We affirm in part and reverse and remand in part.
I. Background
Plaintiff and Thomas Clyde Williams ("Defendant") were married on 14 December 1949 and separated on 25 November 2004. Four children were born of the marriage, all of whom had obtained the age of majority by the time this action commenced. During their marriage, Plaintiff and Defendant were involved in the ownership and operation of a dairy farm, which resulted in the accumulation of substantial marital assets. The parties also owned a substantial amount of real estate in addition to the tract of property on which the dairy farm was operated.
On 16 December 2004, Plaintiff filed a complaint against Defendant for post-separation support, alimony, divorce from bed and board, and equitable distribution. In response, Defendant filed an answer denying the material allegations of the complaint and seeking a writ of possession for the parties' marital residence and an interim distribution of marital property. On 27 April 2005, the parties entered into a consent order, the terms of which delineated the amount of funds each party was entitled to withdraw from various bank accounts.
The parties were divorced on 16 May 2006. A four-day equitable distribution hearing commenced on 10 July 2007. The trial court entered its order on 13 November 2007. After making extensive findings of fact, the trial court identified various assets as either marital or non-marital property and concluded that the parties were entitled to "the entry of an Order effecting and [sic] equitable distribution of their marital property in [sic] an equal basis pursuant to the provisions of [N.C. Gen. Stat.] § 50-20 [et seq.]." As a result, the trial court determined that each party should be awarded a total of $1,227,417.00 in marital assets, including a distributive award in the amount of $740,417.00 to be made by the Defendant to the Plaintiff. Plaintiff appeals.
II. Issues
Plaintiff argues on appeal that the trial court erred by: (1) failing to determine the value of and distribute the income derived from the operation of the dairy farm; (2) concluding that an equal distribution would be equitable without considering the factors set forth in N.C. Gen. Stat. § 50-20(c); (3) ordering Defendant to pay a distributive award to Plaintiff without determining that he had sufficient liquid assets to pay the award; (4) classifying the property known as the "Mayberry Place" as Defendant's separate property and failing to make findings of fact regarding the timber located on that tract of property; and (5) making erroneous findings of fact regarding issues relating to the ownership of T.C. Williams Farms, Inc., the corporate entity through which the dairy farming operation was conducted.
III. Standard of Review
N.C. Gen. Stat. § 50-20 "requires the trial judge to follow a three-step procedure in deciding equitable distribution matters: (1) all property must be classified as marital or separate; . . . (2) the net value of marital property must be determined; and (3) marital property must then be distributed equally or, if equal division would be inequitable, distributed according to the equitable factors set out in N.C. Gen. Stat. 50-20(c)." McIver v. McIver, 92 N.C. App. 116, 123-124, 374 S.E.2d 144, 149 (1988). N.C. Gen. Stat. § 50-20(j) "mandates that written findings of fact be made in any order for the equitable distribution of marital property made pursuant to" N.C. Gen. Stat. § 50-20. Armstrong v. Armstrong, 322 N.C. 396, 403, 368 S.E.2d 595, 599 (1988) (emphasis in original). "The purpose for the requirement of specific findings of fact that support the court's conclusion of law is to permit the appellate court on review `to determine from the record whether the judgment — and the legal conclusions that underlie it — represent a correct application of the law.'" Patton v. Patton, 318 N.C. 404, 406, 348 S.E.2d 593, 595 (1986) ( quoting Coble v. Coble, 300 N.C. 708, 712, 268 S.E.2d 185, 189 (1980). "Findings of fact by the trial court are upheld on appeal as long as they are supported by competent evidence." Gum v. Gum, 107 N.C. App. 734, 738, 421 S.E.2d 788, 791 (1992). Failure to make findings of fact which are adequate to allow sufficient appellate review requires that the case be remanded to the trial court for further findings of fact. See Gowing v. Gowing, 111 N.C. App. 613, 619, 432 S.E.2d 911, 913 (1993). The trial court's conclusions of law are reviewed de novo. Renner v. Hawk, 125 N.C. App. 483, 491, 481 S.E.2d 370, 375 (1997). Assuming that the trial court's findings of fact and conclusions of law have the requisite evidentiary support, embody a proper understanding of the applicable law, and are adequate to permit proper appellate review, the Supreme Court has stated a relaxed standard of review for the trial court's actual distribution decision, which is discretionary in nature:
Historically our trial courts have been granted wide discretionary powers concerning domestic law cases. The legislature also clearly intended to vest trial courts with discretion in distributing marital property under N.C.G.S. 50-20, but guided always by the public policy expressed therein favoring an equal division. . . .
It is well established that where matters are left to the discretion of the trial court, appellate review is limited to a determination of whether there was a clear abuse of discretion. A trial court may be reversed for abuse of discretion only upon a showing that its actions are manifestly unsupported by reason.
White v. White, 312 N.C. 770, 777, 324 S.E.2d 829, 833 (1985) (internal citations omitted).
IV. Income Derived from the Dairy Farm Operation
The trial court made the following findings of fact pertaining to the income derived from the operation of the dairy farm:
27. That since the date of separation, the Defendant has had the sole custody and control of the income generated from said business, and has dealt with the income generated from said business since the date of the separation as he saw it fit.
28. That portions of said income was [sic]generated from T.C. Williams Farms, Inc., was [sic] owned jointly by T.C. Williams and Hilda Williams during the course of the marriage.
29. That this Court finds as a fact that a portion of the income is a "Divisible Asset" that term is defined by N.C. Gen. Stat. 50-20 et seq.
30. That at no time has the Plaintiff received any funds from the Dairy Business since the date of separation, despite repeated requests for the same.
Plaintiff argues that, because the trial court characterized the income from the dairy farm as "divisible property," it was reversible error to fail to determine the value of the property and distribute it equitably. In Edwards v. Edwards, this Court remanded an equitable distribution case to the trial court because of its failure "to identify and determine the value of the divisible property, i.e., the amount of appreciation or diminution in value, if any, of the marital property from the date of separation to the date of distribution." 152 N.C. App. 185, 189, 566 S.E.2d 847, 850, cert. denied, 356 N.C. 611, 574 S.E.2d 679 (2002). In the absence of such findings, this Court concluded that "the trial court could not properly and equitably distribute the divisible property." Id. Plaintiff contends that we should reach the same result here.
The only "divisible property" argument that Plaintiff has advanced on appeal relates to income that Defendant allegedly earned from the dairy farming operation after the date of separation. As a result, our analysis focuses exclusively on this "income" issue and does not address the extent to which there might have been other types of "divisible property" associated with the dairy farm or any other asset.
In evaluating this argument, we must first examine the trial court's findings concerning the income derived from the dairy operation after the date of separation:
66. That T.C. Williams testified that he had retired from the operation of the Dairy Farm, and that he had not received any income from said corporation since January 1, 2005.
67. That this Court finds as a fact that the Defendant has not received income from the farming operations since the date of separation.
(emphasis added). Assuming that these findings of fact have adequate evidentiary support, they purport to establish that, because Defendant had retired from the dairy farm operation and had not received any income from the dairy farm since the date of separation, there was no income-based divisible property that needed to be evaluated, valued, and distributed.
The corporate tax return for the dairy farming operation for 2004 and associated Form K-1s indicate that the corporation earned ordinary business income during that year of $124,811 and that both Defendant and his son, Charlie Williams, earned ordinary business income of $62,405 associated with the corporation's operations. At the equitable distribution hearing, Defendant testified that he stopped working at the dairy farm on 1 January 2005 because he thought he "was old enough to retire." Defendant admitted that he did drive the tractor when it was necessary, but he "[d]idn't get any money out of it." Defendant further stated that he did not take a distribution from the farm account at the end of 2004. Similarly, Charlie Williams testified that he had essentially taken over the farm operation since Defendant retired in 2005 and that his salary from the dairy farm had dramatically increased since that time due to the Defendant's health and inability to perform the necessary physical labor.
The Defendant received a distribution from the dairy farm in the amount of $122,395 in 2005. However, Jean Lunsford, a certified public accountant who performed tax and accounting work for the dairy farming operation, testified that this amount did not constitute taxable income and, instead, consisted of money earned and taxed in prior years which was not actually taken out of the corporation during the year in which it was earned. As a result, the record clearly supports the trial court's finding that Defendant did not receive any income from the corporation in 2005. Unfortunately, however, the existing record does not adequately support the trial court's further determination that Defendant received no income from the dairy farming operation after the date of separation, 25 November 2004, given the lapse of approximately a month between the date of separation and the beginning of 2005. Thus, the trial court's findings do not support its apparent determination that there was no post-date of separation income to distribute between the parties.
The essential argument advanced at trial and on appeal with respect to the "divisible property" issue by Plaintiff is that the $122,395 distribution received by Defendant in 2005 constitutes post-separation farm-related income that should have been distributed between the parties pursuant to N.C. Gen. Stat. § 50-20(a). Given that Plaintiff had a marital interest in the dairy farm, she could conceivably have been entitled to a share of this distribution. As noted above, the trial court's findings and conclusions addressing this claim are inadequate and fail to address the extent, if any, to which the Plaintiff was entitled to receive some portion of this $122,395 distribution received by the Defendant in 2005.In the absence of properly-supported findings to the effect that the entire $122,395 amount distributed to the Defendant in 2005 either (1) consisted of retained earnings accumulated prior to the date of separation and accounted for in the valuation of the dairy farming operation as of the date of separation or (2) was divided among the parties by the trial court's 27 April 2005 interim distribution order, we cannot determine that none of this $122,395 amount constituted "divisible property" that must be distributed equitably between the parties pursuant to N.C. Gen. Stat. § 50-20(a). As a result, we conclude that this case should be remanded to the trial court for the making of further findings and conclusions addressing the issue of whether any portion of the $122,395 distribution received by Defendant in 2005 constituted "divisible property" and, if so, how that property should be divided among the parties.
V. N.C. Gen. Stat. § 50-20 Factors
At trial, Plaintiff contended that the trial court should make an unequal distribution of marital assets in her favor. On appeal, Plaintiff contends that, despite the presence of evidence relating to the factors set out in N.C. Gen. Stat. § 50-20(c), the trial court failed to properly address the "unequal distribution" issue in her order and that the trial court's broad finding of fact to the effect that "an equal distribution of the parties' marital property is equitable" was insufficient to establish proper consideration of the applicable statutory factors.
Our Supreme Court has held:
[A]n equal division of marital property is mandatory unless the trial court determines that an equal division would be inequitable. The party seeking an unequal division bears the burden of showing, by a preponderance of evidence, that an equal division would not be equitable. Therefore, if no evidence is admitted tending to show that an equal division would be inequitable, the trial court must divide the marital property equally. When, however, evidence is presented from which a reasonable finder of fact could determine that an equal division would be inequitable, the trial court is required to consider the factors set forth in N.C.G.S. § 50-20(c) , but guided always by the public policy expressed . . . in the Act favoring an equal division. The trial court then must make findings and conclusions which support its division of marital property.
Armstrong, 322 N.C. at 404, 368 S.E.2d at 599(internal citation, quotation, and alteration omitted) (emphasis supplied). "This requirement exists regardless [of] whether the trial court ultimately decides to divide the property equally or unequally." Warren v. Warren, 175 N.C. App. 509, 518, 623 S.E.2d 800, 806 (2006) (citation omitted). If the trial court's order is devoid of sufficient findings and conclusions to indicate adequate consideration of the factors specified in N.C. Gen. Stat. § 50-20(c), appellate review is "effectively precluded." Armstrong, 322 N.C. at 405, 368 S.E.2d at 600.
In the parties' pre-trial equitable distribution order, Plaintiff recited six factors under N.C. Gen. Stat. § 50-20(c)(1), (3), (6), (10), (11a) and (12) in support of her contention that an unequal distribution was appropriate and forecast the evidence that she contended supported these factors. Plaintiff also presented evidence pertaining to these factors at the equitable distribution hearing. In addition, Defendant contended that an equal division of the parties' marital property would not be equitable given the value of the "Mayberry Tract," property he asserted should be categorized as separate property. Despite the submission of this evidence, the trial court's only finding pertaining to the factors contained in N.C. Gen. Stat. § 50-20(c) was as follows: "After considering all of the factors set forth in [N.C. Gen. Stat. §] 50-20[(c)] and the various contentions of the parties, the Court finds that an equal distribution is equitable."
North Carolina appellate courts have repeatedly found such a finding to be insufficient to provide the court with the information necessary for adequate appellate review. See Armstrong, 322 N.C. at 406, 368 S.E.2d at 600 ("Although the trial court specifically stated in its conclusions that it had considered evidence presented and the factors enumerated in North Carolina General Statute 50-20 in ordering an equal division, this conclusion, even taken in conjunction with the trial court's findings of fact, does not provide this Court with the information necessary for appellate review." (Emphasis supplied)); Warren, 175 N.C. App. at 518, 623 S.E.2d at 806 ("Because the trial court made no findings regarding [the N.C. Gen. Stat. § 50-20] factors and instead concluded only that `an equal distribution of the property . . . is equitable,' we must remand for further findings of fact on this issue as well."); Rosario v. Rosario, 139 N.C. App. 258, 267, 533 S.E.2d 274, 279 (2000) ("The finding that `due regard [was given] to the contentions of the parties and all the factors set forth in G.S. § 50-20(c)' is not sufficient."); Daetwyler v. Daetwyler, 130 N.C. App. 246, 249 — 50, 502 S.E.2d 662, 665 (1998) ("[A] finding which merely states that `due regard' has been given to the section 50-20(c) factors, without supporting findings as to the ultimate evidence presented on these factors, is insufficient as a matter of law, because such a general finding does not present enough information to allow an appellate court to determine whether evidence presented on each of the section 50-20(c) factors was duly considered by the trial court." (internal citations omitted)), aff'd per curiam, 350 N.C. 375, 514 S.E.2d 89 (1999). Accordingly, this case must be remanded to the trial court for the entry of sufficient findings of fact regarding the factors enumerated under N.C. Gen. Stat. § 50-20(c) about which evidence was presented at the equitable distribution hearing.
VI. Liquidity of Assets
Plaintiff argues the trial court erred in ordering Defendant to pay a distributive award in the amount of $740,417.00 without determining that he had sufficient liquid assets to pay the award. We agree.
An initial matter, we must address whether the trial court made sufficient findings of fact to rebut the presumption in favor of an in-kind distribution in order to appropriately order Defendant to pay a distributive award. In Urciolo v. Urciolo, this Court acknowledged that, prior to 1997, a trial court could order a distributive award instead of an in-kind distribution when the in-kind distribution was found to be impracticable. 166 N.C. App. 504, 506, 601 S.E.2d 905, 908 (2004). However, N.C. Gen. Stat. § 50-20(e) was amended that year to provide that "it shall be presumed in every action that an in-kind distribution of marital or divisible property is equitable. This presumption may be rebutted by the greater weight of the evidence, or by evidence that the property is a closely held business entity or is otherwise not susceptible of division in-kind." N.C. Gen. Stat. § 50-20(e) (1997). In Urciolo, this Court held that, "in equitable distribution cases, if the trial court determines that the presumption of an in-kind distribution has been rebutted, it must make findings of fact and conclusions of law in support of that determination." 166 N.C. App. at 507, 601 S.E.2d at 908 (citation omitted). Here, the trial court's order is completely devoid of any finding or conclusion relating to the presumption of in-kind distribution and whether this presumption had been rebutted. For this reason alone, the trial court's order lacks adequate findings and conclusions concerning the required distributive award.
Further, N.C. Gen. Stat. § 50-20(c)(9) (2007) requires the trial court to consider "the liquid or nonliquid character of all marital property and divisible property." In Embler v. Embler, the defendant was ordered to pay his spouse a distributive award in the amount of $24,876.00. 159 N.C. App. 186, 187, 582 S.E.2d 628, 630 (2003). On appeal, the defendant challenged the award on the basis that he had no liquid assets from which to pay the award and would incur penalties if he withdrew the funds from his personal retirement account. Id. This Court held that, although the defendant may have been able to pay the distributive award, the evidence was "sufficient to raise the question of where defendant will obtain the funds to fulfill this obligation" and remanded the case to the trial court to enter further findings of fact regarding whether the defendant had other nonliquid assets from which he could pay the distributive award. Id. at 188 — 189, 582 S.E.2d at 630.
This Court recently revisited this issue in Pellom v. Pellom, ___ N.C. App. ___, 669 S.E.2d 323 (2008). In Pellom, this Court reviewed Embler and other decisions in order to articulate the test which is applicable when the issue of a spouse's ability to pay a distributive award is raised:
[i]f a party's ability to pay an award with liquid assets can be ascertained from the record, then the distributive award must be affirmed. Conversely, . . . if a question is raised as to the ability of the payor spouse to pay the award with liquid assets, then the trial court must make findings regarding the spouse's liquid and non-liquid assets and adjust the award for any financial ramifications.
Pellom, ___ N.C. App. at ___, 669 S.E.2d at 329-30. This Court ultimately held that "the trial court did not abuse its discretion in its distributive award order where [the] plaintiff had obvious liquid assets from which to pay the award and he was allowed to do so on a reasonable payment schedule per his request." Id. at ___, 669 S.E.2d at 330.
Here, the trial court ordered Defendant to pay Plaintiff a distributive award in the amount of $740,417.00. Defendant was directed to pay Plaintiff $350,000.00 within thirty days of the entry of the judgment and the remaining balance of $390,417.00 no later than a year after the entry of the order. As Defendant noted during oral argument, this case is distinguishable from the preceding cases in that the payee rather than the payor is expressing concern about the payor's ability to pay the distributive award. We find this distinction of no consequence given that both the payor and payee are affected by the payor's ability or inability to pay the distributive award.
In his brief, Defendant concedes that the "trial court did not make a finding of the specific liquid asset from which Defendant-Appellee was to pay the award" but argues that Defendant has substantial assets from which he could pay the award. However, the only significant liquid asset we can identify from an examination of the record on appeal is the funds contained in the parties' personal bank accounts, which were distributed in the pre-trial consent order. Defendant's share of those funds totaled approximately $196,000.00. Defendant's other assets are nonliquid in nature and consist of real property and a fifty percent interest in a corporate entity. As a result, we conclude that the evidence presented at the equitable distribution hearing raised a question regarding "the ability of the payor spouse to pay the award with liquid assets," Pellom, ___ N.C. App. at ___, 669 S.E.2d at 330 (emphasis supplied), and that the trial court failed to make findings of fact identifying the assets from which the required distributive award was to be paid.
Accordingly, this case must be remanded to the trial court to enter findings of fact relating to the presumption in favor of in-kind distribution and whether this presumption had been rebutted so as to permit the making of a distributive award. If the trial court continues to find that a distributive award is appropriate, it must "make findings regarding the spouse's liquid and non-liquid assets and adjust the award for any financial ramifications." Id.
VII. "Mayberry Place"
Plaintiff argues the trial court erred by classifying real property known as "Mayberry Place" as Defendant's separate property. We conclude that the trial court adequately addressed this issue in the order entered below.
The trial court made the following findings of fact regarding the "Mayberry Place":
71. On May 21, 1973 the Defendant's mother and father Clyde and Florence Williams conveyed to him one-half (½) undivided interest in a tract of land situated in Alexander County, North Carolina consisting of approximately 635 acres. This deed recorded in Deed Book 170, Page 733, Alexander County Register of Deeds Office. This one (½) interest in this tract (known as the Mayberry Place) was a gift to the Defendant from his parents as no consideration was paid and constitutes his separate property.
72. Pursuant to the Will of Paul Augustus Williams the Defendant was granted the right to purchase the other one-half (½) interest in the "Mayberry Place" at "the appraisal price[.]" Subsequent to the death of Paul Augustus Williams, the Plaintiff and the Defendant had a discussion with their son, Eddie Williams regarding this property and it was agreed between them that the Plaintiff and the Defendant would purchase the other one-half (½) interest in the "Mayberry Place" for the same price they paid for the other one-half (½) interest.
73. Pursuant to their agreement with the son Eddie Williams, the Plaintiff and the Defendant purchased the other one-half (½) interest in the "Mayberry Place" for $60,000.00 by deed dated January 7, 1979 and recorded in Deed Book 214 Page 155, Alexander County Register of Deeds and deeded to the sole name of the Defendant.
74. Upon purchasing the other one-half (½) of the "Mayberry Place", the Plaintiff and the Defendant were advised by their son Eddie Williams as to where he would like for the one-half (½) of the tract he was to receive to be laid off and the Defendant proceeded to survey a tract of land constituting one-half (½) of the "Mayberry Place" for their son Eddie Williams.
75. Upon completing the survey, the Plaintiff and the Defendant pursuant to their agreement, conveyed to their son Eddie Williams a 317.5 acre tract of land being deed dated December 28, 1979 and recorded in Deed Book 217 Page 618 Alexander County Register of Deeds. This acreage constituted exactly one-half (½) of the total acreage of the Mayberry tract. Eddie Williams paid the Plaintiff and the Defendant $60,000.00 for said conveyance pursuant to their agreement.
76. This conveyance for Eddie Williams left in the Defendant's name 317.5 acres which also constitutes exactly one-half (½) of the total "Mayberry tract."
77. The Defendant purchased the remaining one-half (½) interest in the "Mayberry Tract" for the sole purpose of then conveying one-half (½) of the "Mayberry Tract" to the parties' son Eddie Williams for the same price ($60,000.00) pursuant to his agreement with the Plaintiff and, therefore, the Court finds that the remaining 317.5 acres of the "Mayberry Tract" represents that one-half (½) interest conveyed to him by gift from his parents in 1973 and, therefore, is the Defendant's separate property.
At the outset, we note that, although Plaintiff assigned error to these findings, she failed to bring those assignments forward in her brief. "Assignments of error not set out in the appellant's brief . . . will be taken as abandoned." N.C. R. App. P. 28(b)(6)(2008). "Where no exception is taken to a finding of fact by the trial court, the finding is presumed to be supported by competent evidence and is binding on appeal. Furthermore, the scope of review on appeal is limited to those issues presented by assignment of error in the record on appeal." Koufman v. Koufman, 330 N.C. 93, 97 — 98, 408 S.E.2d 729, 731 (1991). Thus, the findings of fact recited above are binding on appeal. Even so, Plaintiff argues there was "a clear marital interest component in that property[.]"
N.C. Gen. Stat. § 50-20(b)(2) (2007) statutorily defines separate property as
all real and personal property acquired by a spouse before marriage or acquired by a spouse by bequest, devise, descent, or gift during the course of the marriage.
Here, it is undisputed that Defendant acquired a one-half interest in "Mayberry Place" as a gift from his parents during the parties' marriage in 1973. Furthermore, the trial court's findings establish that the purchase of the other half of the "Mayberry Place" resulted from the parties' desire to make a gift to their son, Eddie Williams. Despite the fact that the entire "Mayberry Place" was physically divided and that half of the total acreage of the "Mayberry Place" was deeded to Eddie Williams, the trial court found as a fact that the parties intended for this series of transactions to result in a situation in which the one-half of the "Mayberry Place" transferred to Eddie Williams represented the portion of the overall tract that constituted marital property and that the one-half of the "Mayberry Place" not transferred to Eddie Williams constituted Defendant's separate property. These findings of fact are binding on this Court and establish that the portion of the "Mayberry Place" titled to Defendant remained his separate property. As such, Plaintiff's challenge to the trial court's determination that the Defendant's interest in the "Mayberry Place" should be classified as marital property is without merit. Because we have found that Plaintiff has no interest in the property, her argument pertaining to the timber located on that property need not be addressed.
VIII. Ownership of T.C. Williams Farms, Inc.
Plaintiff argues that certain of the trial court's findings of fact relating to the issue of whether Charlie Williams owned one-half of T.C. Williams Farms, Inc., are not supported by the evidence received during the equitable distribution hearing. The specific findings which Plaintiff challenges in her brief are that, "[d]uring the years the dairy farm was operated as a partnership, the Plaintiff and the Defendant signed joint tax returns indicating the Defendant's 50% ownership in the dairy farm operation;" that "Jim Ashburn, the attorney who handled the incorporation in 1999 testified that was their intent to maintain the `Status Quo' as far as ownership percentages [were concerned];" and that Charlie Williams owned one-half of the corporation. Plaintiff argued at trial that the entire value of the corporation should be deemed marital property and contends on appeal that the trial court erred by making these findings preliminary to her eventual determination that, "at the time of the parties' separation, the parties' son Charlie Williams owned a 50% interest in T.C. Williams Farms, Inc., and that the Plaintiff and the Defendant owned the other 50%." We disagree.
Plaintiff also referred to the trial court's findings concerning the extent to which Defendant earned post-separation income in discussing the issue of the ownership of the dairy farming operation. The issues advanced by Plaintiff with respect to those findings were addressed in Section IV of this opinion.
According to the trial court, "the parties owned and operated a dairy operation during the course of the marriage and on the date of separation." The trial court further found that, "[p]rior to 1990, the dairy farm operation was operated under the name of the Defendant." However, "[s]ometime in 1989 or early 1990[,] the Plaintiff and the Defendant made the decision to make their son, Charlie, an equal partner in the dairy farm operation as Charlie was the only one of their children who has remained on the dairy farm and has continued to work on the dairy farm." The trial court further found that, "[f]rom 1990 through March 31, 1999, the dairy farm operation was operated and owned as an equal partnership between the Defendant and the parties' son Charlie Williams and that during this time, Charlie owned 50% of the assets of the partnership which consisted primarily of cattle, farm equipment, dairy equipment, and farm accounts." In 1999, the dairy operation was incorporated. Although "the initial corporate documents" showed that "the Plaintiff and the Defendant" were "allocated and issued 250 shares of stock" and that "no shares of stock" were "issued and allocated to their son Charlie[,]" the trial court further found that the initial issuance of shares did not reflect the intent of the parties, that the parties intended that Plaintiff and Defendant own 50% of the corporation and that Charlie Williams would own the other 50%, and that only 50% of the value of the corporation constituted marital property.
The principal witnesses testifying at trial on the issue of the ownership of the corporation were Jim Ashburn, an attorney who incorporated the dairy operation ("Ashburn"), and Lunsford. Before the trial court, Ashburn testified that he "recommended that Mr. and Mrs. Williams simply incorporate their existing partnership or the partnership that existed at that time and that no change be made to the identity of the ownership shares in the business. Although Plaintiff correctly notes that the trial court's finding that Asburn "testified that it was [the parties'] intent to maintain the `Status Quo' as far as ownership percentages" incorrectly restates Ashburn's recommendation as the intent of the parties, other record evidence supports the trial court's specific findings of fact concerning the "intent" issue and renders this error harmless. Adams v. Adams, 167 N.C.App. 806, 606 S.E.2d 458 (2005). Ashburn testified that he prepared all of the corporate documents to reflect that Plaintiff and Defendant were equal owners in the corporation, but this was "obviously" a mistake. An amended corporate document which showed Charlie Williams as a fifty percent owner in the corporation was admitted into evidence, although no one ever explained who prepared or signed this particular document. The fact that the manner in which this document was prepared remained unexplained does not, however, detract from the fact that it was admitted into evidence, thereby making it available for use by the trial court in resolving the ownership issue to the extent that she deemed it to have probative value. Quick v. Insurance Co., 287 N.C. 47, 213 S.E.2d 563 (1975).
Although Plaintiff argues that Lunsford's testimony "was extremely illuminating to the fact" that Plaintiff was never issued nor signed a corporate tax return and that Defendant had received funds from the corporation after the date of separation, Lunsford's testimony, taken as a whole, clearly supports the trial court's findings as to the ownership of the corporation. The tax returns alluded to in Finding of Fact No. 37 are clearly the parties' joint personal tax returns rather than partnership or corporate returns; the record clearly supports a finding that the parties' personal tax returns establish that Plaintiff and Defendant did not own the entire dairy farming operation after the formation of the partnership. When asked if she knew who owned T.C. Williams Farm, Inc., Lunsford stated, "[f]rom the meeting that we had after they had incorporated at the attorney's office, I was under the impression that it was just like the partnership, it was 50/50. Charlie 50 and T.C. 50. And that's what I went with all the time that I filed these tax returns." The tax returns filed from 1999, the first year T.C. Williams Farms, Inc. was incorporated, through the year 2004 showed Defendant as a fifty percent owner and Charlie Williams as fifty percent owner and that the annual income was equally divided between the two of them. Attached to the 1999 tax return was a transfer of assets from the partnership to the corporation. This form indicated that the assets of the partnership, which was owned in part by Charlie Williams and in part by Defendant, were transferred to T.C. Williams Farms, Inc.
Lunsford further testified that, until 2004, Plaintiff "was actively involved in giving [her] the information [she] needed to do the returns. . . ." During re-cross examination, Lunsford was asked whether "it was clear to [her] during all this time that [Plaintiff] had significant knowledge about the workings of the business and the corporation including the finances of the business and the corporation?" Lunsford responded, "Absolutely." Lunsford was "shocked" that Plaintiff was now contending that Charlie Williams did not have an interest in T.C. Williams Farms, Inc.
Both Defendant and Charlie Williams testified that Charlie currently owns a fifty percent interest in T.C. Williams Farms, Inc. Defendant specifically testified that he and Charlie had a joint checking account entitled "T.C. Williams and Charlie Williams Partners" and that Plaintiff wrote checks on the account. Defendant testified that Plaintiff knew his intent and consented to the incorporation of the partnership with Charlie owning a one-half interest and Defendant and Plaintiff owning the other half. Based on the preceding evidence, the trial court correctly found that Charlie Williams owned a fifty percent interest in the corporation and that the remaining fifty percent of the dairy farming operation constituted marital property. These assignments of error should be overruled.
IX. Conclusion
For the foregoing reasons, this case is affirmed in part and remanded to the trial court for further proceedings not inconsistent with this opinion in part, with those portions of the trial court's order that are affirmed to remain undisturbed on remand.
Affirmed in part, remanded in part.
Judges WYNN and HUNTER, Robert C. concur.
Report per Rule 30(e).