IN THE SUPREME COURT OF MISSISSIPPI
NO. 94-CA-01022-SCT
KEVIN WESTON MacDONALD
v.
DIANE MacDONALD
DATE OF JUDGMENT: 09/29/94
TRIAL JUDGE: HON. ROGER C. CLAPP
COURT FROM WHICH APPEALED: RANKIN COUNTY CHANCERY COURT
ATTORNEY FOR APPELLANT: STEPHEN L. BEACH, III
ATTORNEY FOR APPELLEE: THOMAS T. BUCHANAN
NATURE OF THE CASE: CIVIL - DOMESTIC RELATIONS
DISPOSITION: AFFIRMED - 7/24/97
MOTION FOR REHEARING FILED:
MANDATE ISSUED: 8/14/97
BEFORE DAN LEE, C.J., BANKS AND MILLS, JJ.
MILLS, JUSTICE, FOR THE COURT:
¶1. On September 14, 1994 Kevin Weston MacDonald and Diane MacDonald filed in the Chancery
Court of Rankin County a Consent Motion for divorce on the ground of irreconcilable differences.
The parties agreed that Diane MacDonald would have physical custody of the couple's two minor
children, but left all other matters to be determined by the chancellor. The main issue at trial was
what equitable interest, if any, Diane MacDonald had in her husband's business, the Terry Road Pawn
Shop in Jackson. After hearing the evidence, the chancellor granted the parties a divorce and, among
other things, found that Diane MacDonald had an equitable interest in the pawn shop. The chancellor
ordered Kevin MacDonald to pay to Diane MacDonald, for her interest in the business, lump sum
alimony in the amount of $12,000 per year for a ten year period. Aggrieved by the judgment, Kevin
MacDonald appeals to this Court, assigning as error the following issue.
WHETHER THE CHANCELLOR ERRED IN ORDERING KEVIN MACDONALD TO
PAY TO DIANE MACDONALD, FOR HER EQUITABLE INTEREST IN THE TERRY
ROAD PAWN SHOP, LUMP SUM ALIMONY IN THE AMOUNT OF $12,000 PER
YEAR FOR A TEN YEAR PERIOD.
FACTS
¶2. Kevin Weston MacDonald and Diane MacDonald were married on June 18, 1983. The couple
lived in Laurel, Mississippi, and had two children, Christian, age ten at the time of trial, and Weston,
age seven. From the time of the marriage until 1990, Kevin, who had a high school diploma and two
years of junior college, moved among approximately five different jobs involving sales. His employers
included Southern Beverage Company, Jones County Building Supply, B-95 radio station and
Headrick Sign Company. He also did odd jobs on the weekends such as selling bar stools and
fireworks to supplement his income of about $12,000 to $15,000 per year.
¶3. Diane, who had a high school education, moved among various jobs involving secretarial work,
sales, customer service, accounts payable and receivable, permits, and dispatch. Her employers
included the Jones County Youth Court, Kemlube Corporation, Laurel Brick and Tile, Howard
Industries and Howard Transportation. Diane took time off from work when she had her children,
and she also performed the domestic duties of cooking, cleaning and caring for the children.
¶4. In late 1989, Kevin was presented with the opportunity to purchase the Terry Road Pawn Shop in
Jackson. The purchase price was $15,000, which the MacDonalds did not have. Kevin made
arrangements to borrow $10,000 from the First National Bank of Picayune, but the bank insisted on a
co-signor. Kevin's father, Fred MacDonald, co-signed the note to borrow the money, and Kevin
purchased the pawn shop in January of 1990. According to Kevin, his father wanted to obtain a
vested interest in the pawn shop until such time as the note was paid off, so on January 15, 1990
Kevin and his father entered into a partnership agreement assigning 75% interest in the pawn shop to
Kevin and 25% interest to his father. Although Kevin testified that under the partnership agreement
his father was a "silent partner," the agreement provided that each partner would have an equal voice
in the management of the business and that each partner would devote time to the conduct of the
business.
¶5. The evidence showed that virtually none of the terms of the partnership agreement were ever
adhered to. For example, the agreement provided for separate capital accounts for each partner, for
the division of profits and losses, and for separate income accounts for each partner, none of which
provisions were ever observed. Furthermore, the agreement provided for the termination of the
partnership upon the death of either partner, at which time the surviving partner could either
purchase the deceased partner's interest or liquidate the business. Kevin's father died in 1992, but
Kevin never paid his father's estate for his father's partnership interest nor did he liquidate the pawn
shop.
¶6. Paul Shelton, Kevin's Certified Public Accountant, testified that Kevin never told him of the
existence of a partnership agreement regarding the Terry Road Pawn Shop, and that Kevin, on his
and Diane's joint tax returns, indicated that the pawn shop was a sole proprietorship. Diane testified
that she was led to believe that the partnership agreement was necessary only for the purchase of the
pawn shop, and that Kevin told her that she and Kevin would be partners in the store -- that it was
their store and they would run it together.
¶7. After the purchase of the pawn shop, neither Kevin nor Diane held other employment. The parties
commuted from Laurel to the pawn shop during the period from January to April 1990, when they
moved in with Diane's father in Brandon, Mississippi for a month, after which they moved into an
apartment in Pearl, Mississippi. Diane testified that in addition to her domestic duties, she worked in
the pawn shop three to four days per week, during which time she handled paperwork and police
reports for loans, purchases and sales, handled the pawn shop's banking matters and the couple's joint
checking account, and ran errands such as cashing in "scrap" gold. Also, for three weeks in July of
1990 and during the Christmas holidays, Diane managed the store alone while Kevin was out of town
selling fireworks.
¶8. In September of 1992, the parties got into a dispute over the management and ownership of the
Terry Road Pawn Shop. The couple separated, after which Diane, at Kevin's request, no longer
worked at the pawn shop or contributed to its management. Although the record is unclear, the
parties apparently initiated divorce proceedings for which a temporary hearing was held on December
11, 1992. At the hearing, the chancellor ordered Kevin to pay to Diane $880 per month in temporary
child support and $700 per month in temporary alimony. From January 1993 until the time of trial,
Diane received $2000 per month from Kevin.
¶9. On September 14, 1994 the parties withdrew their fault grounds for divorce and filed a Consent
Motion for divorce on the ground of irreconcilable differences. The parties agreed Diane would have
physical custody of the two minor children and left all other matters to the discretion of the
chancellor. The main issue at trial was what equitable interest, if any, Diane had in the Terry Road
Pawn Shop.
¶10. At trial it was shown that the profits of the Terry Road Pawn Shop had increased significantly
since 1990. The pawn shop had adjusted gross incomes of $15,542 in 1990, $73,422 in 1991, $100,
142 in 1992 and $112,098 in 1993. The store had a 1994 profit of $56,396 as of July 31, and the year
was expected to finish well since the pawn shop did most of its business around the Christmas
holidays. The accountant Paul Shelton calculated the net worth of the pawn shop as of December 31,
1993 to be $87,920. He testified that he arrived at this figure simply by subtracting the liabilities of
the business from its assets, and that the figure did not represent the fair market value of the business.
At the time of trial, Diane was working as an office manager at ADT Security Company, where she
was earning $1,400 per month.
¶11. In his judgment, the chancellor granted the parties a divorce and set a schedule of child visitation
rights for Kevin. The chancellor awarded to Diane child support in the amount of $1,400 per month
and ordered Kevin to maintain major medical insurance for the benefit of the minor children and
Diane. The chancellor ordered that Diane be allowed to claim the two minor children for purposes of
state and federal income tax exemptions. He also provided for the division of personal property. The
chancellor found that Diane was entitled to an equitable interest in the Terry Road Pawn Shop and
ordered Kevin to pay her, for her interest in the store, lump sum alimony in the amount of $12,000
per year for a period of ten years, unless the parties could determine a current cash value and agree to
a different method of payment. To secure payment, the chancellor ordered an equitable lien on all of
Kevin's assets. The chancellor ordered that any claims which may be made by Kevin's family pursuant
to the partnership agreement shall be the responsibility of Kevin. The chancellor found that Diane
was not entitled to periodic alimony. Finally, the chancellor ruled that each party should pay his/her
own attorney fees.
DISCUSSION
WHETHER THE CHANCELLOR ERRED IN ORDERING KEVIN MACDONALD TO
PAY TO DIANE MACDONALD, FOR HER EQUITABLE INTEREST IN THE TERRY
ROAD PAWN SHOP, LUMP SUM ALIMONY IN THE AMOUNT OF $12,000 PER
YEAR FOR A TEN YEAR PERIOD.
¶12. Kevin MacDonald puts forth several arguments as to why the chancellor erred in ordering this
award to Diane.
Applicable Law and Standard of Review
¶13. In Hemsley v. Hemsley, 639 So. 2d 909, 915 (Miss. 1994), this Court determined that marital
assets subject to equitable distribution by the chancellor are any and all assets "acquired or
accumulated during the marriage." A spouse who has made a material contribution toward the
acquisition of an asset titled in the other spouse's name may claim an equitable interest in such jointly
accumulated property. Hemsley, 639 So. 2d at 913; Jones v. Jones, 532 So. 2d 574, 580-81 (Miss.
1988). Assets are not subject to distribution where it can be shown that such assets "are attributable
to one of the parties' separate estates prior to the marriage or outside the marriage." Hemsley, 639
So. 2d at 914.
¶14. This Court has for several years recognized that in making equitable divisions of marital
property upon divorce, chancellors are not limited to considering only the earning and cash
contributions of each party to the accumulation of the property, but rather "[i]t is sufficient
contribution if one party renders services generally regarded as domestic in nature." Draper v.
Draper, 627 So. 2d 302, 306 (Miss. 1993) (citing White v. White, 557 So. 2d 480, 485 (Miss. 1989)
). "We assume for divorce purposes that the contributions and efforts of the marital partners, whether
economic, domestic or otherwise are of equal value." Hemsley, 639 So. 2d at 915.
¶15. In Ferguson v. Ferguson, 639 So. 2d 921, 928 (Miss. 1994), we set forth the factors to be
considered by chancellors when making equitable divisions of marital property:
1. Substantial contribution to the accumulation of the property. Factors to be considered in
determining contribution are as follows:
a. Direct or indirect economic contribution to the acquisition of the property;
b. Contribution to the stability and harmony of the marital and family relationships as measured
by quality, quantity of time spent on family duties and duration of the marriage; and
c. Contribution to the education, training or other accomplishment bearing on the earning
power of the spouse accumulating the assets.
2. The degree to which each spouse has expended, withdrawn or otherwise disposed of marital
assets and any prior distribution of such assets by agreement, decree or otherwise.
3. The market value and the emotional value of the assets subject to distribution.
4. The value of assets not ordinarily, absent equitable factors to the contrary, subject to such
distribution, such as property brought to the marriage by the parties and property acquired by
inheritance or inter vivos gift by or to an individual spouse;
5. Tax and other economic consequences, and contractual or legal consequences to third
parties, of the proposed distribution;
6. The extent to which property division may, with equity to both parties, be utilized to
eliminate periodic payments and other potential sources of future friction between the parties;
7. The needs of the parties for financial security with due regard to the combination of assets,
income and earning capacity; and,
8. Any other factor which in equity should be considered.
¶16. "In the final analysis, all awards should be considered together to determine that they are
equitable and fair." Ferguson, 639 So. 2d at 929. The equitable distribution of marital assets is
committed to the discretion of the chancellor, whose findings will not be disturbed by this Court
unless the chancellor was manifestly wrong, clearly erroneous or an erroneous legal standard was
applied. Ferguson, 639 So. 2d at 928, 930.
A. Whether the chancellor failed to make proper and specific findings of fact and
conclusions of law as required by this Court in Ferguson.
¶17. In setting out the Ferguson guidelines to be followed by chancellors when evaluating equitable
distributions of marital property, we directed chancellors "to support their decisions with findings of
fact and conclusions of law for purposes of appellate review." 639 So. 2d at 928. Kevin argues that
the chancellor below failed to make findings of fact and conclusions of law when evaluating the
equitable distribution of interests in the Terry Road Pawn Shop. The chancellor's ruling, however,
reveals that he did in fact make findings of fact regarding virtually every Ferguson factor and drew
legal conclusions from those findings. Those findings and conclusions are discussed below.
¶18. Substantial Contribution to the Accumulation of the Property. The chancellor found that
although Kevin was the primary economic contributor to the business, Diane's spousal, motherly and
domestic efforts and her small economic and business contributions were significant and substantial.
More specifically, the chancellor found that Diane's efforts, although a small economic contribution
to the business, constituted a large contribution to the stability and harmony of the family and marital
relationship. The chancellor also found that since neither party had any knowledge of how to run a
pawn shop before Kevin bought the store and since the parties learned how to run the business
together, Diane's efforts contributed to Kevin's training, accomplishments and earning power.
¶19. Degree to Which Each Spouse Has Expended, Withdrawn or Otherwise Disposed of Marital
Assets. The chancellor found that neither party had significantly disposed of marital assets.
¶20. The Value of the Assets Subject to Distribution. The chancellor found the relevant value of the
business to be $87,000 and that, as a matter of equity and because of her contributions, Diane should
not be penalized for the success of the pawn shop without her during the previous couple of years.
The chancellor also found as a matter of equity that the evidence justified no reduction in the value of
the business because of the partnership agreement which showed "that at least at one point his father
had an interest." The chancellor determined that any effect of that interest would be Kevin's
responsibility.
¶21. Tax and Other Consequences, and Contractual or Legal Consequences to Third Parties, of the
Proposed Distribution. The chancellor found that his ruling would not disturb Kevin's favorable tax
benefits under business law. The chancellor also determined that any claim made by Kevin's family
pursuant to the partnership agreement would be Kevin's burden to bear.
¶22. The Extent to Which Property Division May Be Utililized to Eliminate Periodic Payments and
Other Potential Sources of Future Friction Between the Parties. The chancellor declined to award
periodic alimony to Diane, stating that the adjustment of the equities in this case was best
accomplished with a lump sum.
¶23. The Needs of the Parties for Financial Security with Due Regard to the Combination of Assets,
Income and Earning Capacity. The chancellor found that there was no evidence of any assets other
than the pawn shop and the personalty that was divided. The chancellor found that Diane's adjusted
gross income was $1,100 per month, that Kevin's adjusted gross income was $6,000 per month and
that his earning power far exceeded Diane's.
¶24. Any Other Factor Which in Equity Should Be Considered. The chancellor found that any
adjustment of the equities in this marital property should consider the "admirable" support payments
made by Kevin to Diane during the separation, but not as a numerical setoff per se. The chancellor
stated that he could not find, for example, that it would be fair to consider Diane as having already
received her equity in the business. He stated that he considered this in arriving at what he believed to
be a fair lump sum alimony.
¶25. The chancellor concluded that Diane was entitled to an equitable interest in the Terry Road
Pawn Shop and ordered lump sum alimony accordingly. Clearly, the chancellor made sufficient
findings of fact and conclusions of law to provide an adequate basis for appellate review. This
argument therefore is without merit.
B. Whether the chancellor applied a clearly erroneous legal standard in misinterpreting
this Court's decision in Hemsley and Ferguson and in failing to apply the Ferguson
guidelines to the facts of this case.
¶26. Kevin points out that this Court in Hemsley clearly and succinctly defined marital assets subject
to equitable distribution upon divorce as "any and all property acquired or accumulated during the
marriage." 639 So. 2d at 915. Kevin argues that the chancellor failed to follow this definition of
marital assets and thus created "a decidedly inequitable result" and "a disastrous scenario." We fail to
see, however, how the chancellor misapplied Hemsley.
¶27. Kevin and Diane were married in 1983 and the pawn shop was purchased in 1990. Clearly, the
business was acquired "during the marriage," and thus was subject to equitable distribution by the
chancellor upon evaluation of the Ferguson guidelines. Kevin also contends that the chancellor failed
to apply the Ferguson factors when considering his adjustment of the equities. As discussed above,
however, the chancellor carefully considered and made extensive findings of fact regarding every
applicable Ferguson factor before making his ruling. This argument also is without merit.
C. Whether the chancellor was clearly erroneous and manifestly wrong when the
partnership agreement between Kevin and his father was, for all intents and purposes,
dissolved without notice to the estate and heirs of Kevin's father.
¶28. Kevin argues that the chancellor erred in awarding to Diane an equitable interest in the Terry
Road Pawn Shop without notice to the estate and heirs of Kevin's father, who had a partnership
interest in the business. Kevin cites as authority the case of Skinner v. Skinner, 509 So. 2d 867, 870
(Miss. 1987), wherein this Court held that it was error for the chancellor to award corporate property
to the wife in divorce proceedings where the corporation was not made a party to the proceedings.
We find that this argument must fail.
¶29. In the case sub judice, the chancellor did not award to Diane any pawn shop property or assets,
but rather awarded to her lump sum alimony to be paid by Kevin for her interest in the pawn shop.
To secure payment, the chancellor awarded an equitable lien on all of Kevin's assets, which included
his interest in the pawn shop. In Lindsey v. Lindsey, 612 So. 2d 376, 380 (Miss. 1992), this Court
explained equitable liens as follows:
Characteristic of equitable liens is that they are not estates or property in the thing itself, nor are
they rights to recover the thing, that is they are not rights which may be the basis of a
possessory action. They are merely a charge on property for the purpose of security, and are
ancillary to and separate from the debt. They are neither debts nor rights of property, but merely
remedies for a debt. Of extreme importance is the fact that such liens do not divest the debtor
of title or possession.
¶30. The chancellor did not adjudicate the rights of Kevin's father's estate to an interest in the pawn
shop, but rather specifically provided that any claim made by the estate pursuant to the partnership
agreement would be the responsibility of Kevin, which we find was not an abuse of discretion since
the evidence showed overwhelmingly that Kevin had operated and likely would continue to operate
the store as a sole proprietorship.
¶31. Kevin complains that the chancellor's ruling, "for all intents and purposes," dissolved the
partnership. To use Kevin's own language, however, it can be argued that the partnership was for all
intents and purposes dissolved anyway, since the evidence showed that not a single provision of the
partnership agreement was ever observed by either of the two alleged partners. Also, Mississippi's
Uniform Partnership Act provides for the dissolution of partnerships "by the death of any partner
unless the agreement provides otherwise." Miss. Code Ann. § 79-12-61(4) (1972). The partnership
agreement in this case provided for the continuation of the partnership business in the event of a
partner's death only if the surviving partner purchased the deceased partner's interest, which Kevin
did not do. In any event, the chancellor below made no determination as to the status of the
partnership. Although the chancellor found that "said partnership agreement is of no effect pursuant
to the evidence before the Court," we believe that the chancellor meant only that the evidence of the
agreement was insufficient in this case for him to consider it in making his award. The chancellor did
not dissolve or rule on the status of the partnership, but instead ruled that if and when such
determination is made, any claim made by Kevin's father's estate shall be the responsibility of Kevin.
¶32. Kevin also complains that the chancellor ignored the tax consequences and effects which the
ruling would have on the partnership. On all of his joint tax returns with Diane, however, Kevin listed
the income of the pawn shop as that of a sole proprietorship. It is therefore difficult to see what effect
the chancellor's ruling would have on the tax situation of the alleged partnership.
¶33. We find that notice to Kevin's father's estate was not required in this case, and thus this
argument is without merit. For the sake of clarity, we reserve the right of Kevin's father's estate to
claim an interest in the Terry Road Pawn Shop.
D. Whether the chancellor's award to Diane of lump sum alimony in the amount of $12,
000 per year over a ten year period for her equitable interest in a business with a net
worth of only $87,000 was clearly erroneous and manifestly wrong.
¶34. Kevin first argues that the chancellor erred in determining the relevant value of the pawn shop to
be $87,000. Kevin points out that although this figure represented the net worth of the business at
the time of the divorce, the net worth of the business as of December 31, 1992 -- just after the
separation -- was only about $47,000. Kevin argues that because Diane contributed no efforts to the
management of the pawn shop after the separation, the chancellor should not have considered the
increase in the store's value since that time.
¶35. Kevin cites no authority for the proposition that chancellors, when equitably dividing marital
property upon divorce, may consider the value of the property only as of the time of the separation.
Such consideration, as are all others in this context, is within the discretion of the chancellor. The
chancellor below found that as a matter of equity and because of her contributions which enabled the
business to improve and prosper, Diane should not be penalized for the success of the business
without her after the separation. We find that such determination did not amount to an abuse of
discretion.
¶36. Kevin argues that even considering the value of the business to be $87,000, it was clearly
erroneous and manifestly wrong to award to Diane lump sum alimony in the amount of $12,000 per
year over a ten year period, for a total of $120,000. We find that this argument must fail for several
reasons.
¶37. First, the $120,000 awarded to Diane does not represent a present cash value, but rather
represents her interest in the business amortized over a period of ten years. The chancellor gave the
parties the option of agreeing upon a current cash value and a different method of payment. Also, as
the accountant Paul Shelton testified, the net worth of the store did not represent its fair market
value, but rather simply constituted its assets minus its liabilities. In its last full year of business prior
to the divorce, the pawn shop earned a net profit of about $112,000, which constituted another in a
series of steady increases over the years since the store was purchased, and which by all indicators
was likely to continue to increase in the following years. We find that it was not manifestly unfair for
the chancellor to award to Diane, for her interest in the store, ten annual payments of only about 10%
of its 1993 adjusted gross income. Furthermore, under the guidelines laid out in Ferguson, the value
of the marital property is only one of several factors which the chancellor must consider.
¶38. In accordance with Ferguson, the chancellor also considered the needs of the parties for
financial security with due regard to the combination of assets, income and earning capicty, and the
extent to which property division may be utilized to eliminate periodic payments and other potential
sources of future friction between the parties. Finding that there were no marital assets other than the
pawn shop and personal property, the chancellor noted that Kevin enjoyed an income almost six
times greater than Diane's meager income of $1,100 per month, and that Kevin's earning power far
exceeded Diane's. Also, in light of his lump sum award, the chancellor declined to award periodic
alimony to Diane. Since "fairness is the prevailing guideline in marital division," we find that the
chancellor's lump sum award to Diane for her interest in the pawn shop was not an abuse of
discretion or manifestly wrong.
¶39. Kevin also complains that he was given no credit for his $2,000 monthly payments to Diane
from the time of the temporary hearing to the time of the divorce. However, $1,580 of each $2,000
payment was paid pursuant to a chancery court order of temporary child support and alimony.
Regarding the extra $420 paid each month, "a party making an extra-judicial modification does so at
his own peril." Crow v. Crow, 622 So. 2d 1226, 1231 (Miss. 1993). The chancellor stated that he
considered Kevin's "admirable" support payments during the separation in arriving at a fair lump sum
award, but that the payments were not considered as a numerical setoff against Diane's interest in the
pawn shop. Such determination was not an abuse of discretion.
E. Whether the chancellor committed error in calculating Diane's material contributions
to the business and to the marital relationship as a whole.
¶40. The chancellor's findings regarding this Ferguson factor, discussed above in argument "A," are
set out again here. The chancellor found that although Kevin was the primary economic contributor
to the business, Diane's spousal, motherly and domestic efforts and her small economic and business
contributions were significant and substantial. More specifically, the chancellor found that Diane's
efforts, although a small economic contribution to the business, constituted a large contribution to the
stability and harmony of the family and marital relationship. The chancellor also found that since
neither party had any knowledge of how to run a pawn shop before Kevin bought the store and since
the parties learned how to run the business together, Diane's efforts contributed to Kevin's training,
accomplishments and earning power. In light of the evidence before this Court, these findings were
not manifestly wrong or substantially erroneous, and thus this argument is without merit.
CONCLUSION
¶41. Finding no merit among Kevin's arguments under his assignment of error, we affirm the
chancery court judgment below.
¶42. AFFIRMED.
PRATHER AND SULLIVAN, P.JJ., PITTMAN, BANKS AND SMITH, JJ., CONCUR. DAN
LEE, C.J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY McRAE AND
ROBERTS, JJ. McRAE, J., DISSENTS WITH SEPARATE WRITTEN OPINION JOINED BY
LEE, C.J., AND ROBERTS, J.
DAN LEE, CHIEF JUSTICE, DISSENTING:
¶43. The parties to this case obtained a divorce on the ground of irreconcilable differences, and came
to an agreement as to the custody of their two children. The main issue which they left for the
chancellor concerned the amount of equitable interest, if any, that Diane held in the Terry Road Pawn
Shop. The pawn shop was purchased by Kevin three years prior to the divorce proceedings for $15,
000 dollars, and testimony suggested that Diane had since that time assisted both in the pawn shop
and with the domestic requirements of the family. The chancellor determined that Diane was entitled
to an equitable interest in the pawn shop, and as a result ordered that Kevin pay her for this interest.
It was determined in the lower court that the device of lump-sum alimony was appropriate to
compensate Diane for her interest in the property, and the chancellor ordered that Kevin make
payments totaling $120,000 over a period of a decade, payable at the rate of $12,000 each year,
despite the fact that the total net worth of the business was determined to be only $87,920.
Aggrieved, Kevin filed timely notice of appeal and raises the assignment of error discussed below.
The majority would affirm. I respectfully dissent.
WHETHER THE CHANCELLOR ERRED IN ORDERING KEVIN MacDONALD TO
PAY DIANE MacDONALD FOR HER EQUITABLE INTEREST IN THE TERRY
ROAD PAWN SHOP, LUMP SUM ALIMONY IN THE AMOUNT OF $12,000 PER
YEAR FOR A TEN-YEAR PERIOD.
DISCUSSION
¶44. The majority, citing Ferguson v. Ferguson, 639 So. 2d 921, 928 (Miss. 1994), correctly sets
out the factors to be considered by chancellors when making equitable divisions of marital property.
However, in its discussion of the Ferguson factors in the chancellor's findings of fact, the majority
overlooks a very important one: "3. The market value and the emotional value of the assets subject
to distribution." Id. at 928 (emphasis added). Ferguson goes on to say that the "property division
should be based upon a determination of fair market value of the assets . . . . " Id. at 929 (emphasis
added). The chancellor stated in his findings that the relevant value for purposes of the distribution,
the total net worth of the property, was $87,920. Then, without explanation or reference to his earlier
finding, the chancellor found that Diane's interest in the shop was worth $120,000.
¶45. When the Ferguson factors are applied properly, it is simply not possible that a spouse's
equitable interest in a single piece of property is greater than the value of the entire property. The
majority blithely glosses over such inequity, opining that the $120,000 represents the amortized value
of Diane's present interest in the shop over a period of ten years with annual payments of $12,000. In
other words, in the view of the majority, the chancellor is simply charging Kevin interest for the time
it takes to pay back Diane's equitable share. Even assuming that this is what the chancellor intended,
the majority's argument ignores the fact that Ferguson requires more than the mere speculation of
the appellate court to substantiate an equitable division of property.
¶46. It is axiomatic that the chancellor has broad discretion to divide real property and to award
alimony where such division does not accomplish the overall goals of equitable distribution,
Ferguson, 639 So. 2d at 926. It is also established that chancellors may assign interest to such
awards, Overstreet v. Overstreet, 692 So. 2d 88, 91 (Miss. 1997); Abshire v. Abshire, 459 So. 2d
802, 805 (Miss. 1984); Horton v. Horton, 301 So. 2d 305, 307 (Miss. 1974); Aldridge v. Aldridge,
27 So. 2d 884, 886 (Miss. 1946). However, neither of these general precepts abrogate the mandate in
Ferguson that the chancellor provide "findings of fact . . . together with the legal conclusions drawn
from those findings." Ferguson, 639 So. 2d at 929.
¶47. Under Ferguson, if the chancellor intended to award an amortized amount, then this Court is
entitled to findings as to the principal amount that the chancellor relied on in determining the ultimate
liability of the payor spouse, or at the very least, a statement, on the record, of what interest rate the
chancellor intends to charge against the payor spouse. In the instant case there is simply no indication
whatsoever what the chancellor intended when the award was made, only a finding of $120,000 due,
despite the fact that Diane's equitable share of the value of the business is only $43,960. This is error
under Ferguson.
¶48. This Court has previously said that we will not hesitate to reverse if we determine that an
erroneous legal standard was applied. Box v. Box, 622 So. 2d 284, 287 (Miss. 1993). Because the
Ferguson factor concerning the valuation of property was not properly applied, we should reverse
and remand to the chancery court for an on-the-record application of the factors and a determination
of the market value of the pawn shop, as well as a determination of the sum necessary to compensate
Diane for her equitable interest in the shop.
¶49. Were this Court to remand, the chancellor should also closely revisit the application of the
Ferguson factor which takes into account "any other factor which in equity should be considered."
The over-payment made by Kevin to Diane during the temporary support period amounted to $420
per month more than the temporary support order required him to pay. After Kevin dutifully paid the
same amount each month for twenty months, the overpayment totaled $8,400. Despite the fact that
this overpayment was not disputed by Diane, and that the chancellor recognized the payments as
admirable, the chancellor provided Kevin with no numerical set-off. Kevin has argued that the failure
to do so constitutes an abuse of discretion. I agree.
¶50. The majority, citing Crow v. Crow, 622 So. 2d 1226 (Miss. 1993), states that "a party making
an extra-judicial modification does so at his own peril." While this is certainly true of one seeking to
reduce or modify the terms of payment of child support, Crow also made clear that "the rule is that a
father may receive credit for having paid child support where, in fact, he paid the support directly to
or for the benefit of the child, where to hold otherwise would unjustly enrich the mother." Id. at 1231
(citing Alexander v. Alexander, 494 So. 2d 365 (Miss. 1986)).
¶51. In the instant case, unlike Crow, it is undisputed that Kevin sent the money directly to Diane for
child support, and the chancellor himself recognized this. To now hold that Kevin should receive no
credit for the $8,400 paid above and beyond the court-ordered support constitutes a windfall for
Diane.
¶52. While this Court should not completely relieve a party of an alimony obligation due to alleged
earlier generosity, neither should our decisions concerning such payments be so draconian as to
discourage a spouse from any thought of sending the financially weaker party more than is required
by the court during the temporary alimony period. In light of the certainty of the payments made by
Kevin, failure of the court of equity to give some form of credit to this overly-cooperative litigant
seems particularly harsh, and in my opinion amounts to an abuse of discretion.
¶53. Because the chancellor erred in effecting the division of property by awarding Diane a lump sum
amount greater than the value of the entire property, I would reverse and remand for a determination
of the market value of the pawn shop as of the date of trial, September 14, 1994, and Diane's
equitable interest therein. Therefore, I dissent.
McRAE AND ROBERTS, JJ., JOIN THIS OPINION.
McRAE, JUSTICE, DISSENTING:
¶54. The chancellor's lump sum award to Diane MacDonald for her interest in the pawn shop was an
abuse of discretion. Therefore, I dissent.
¶55. The chancellor determined that the device of lump sum alimony was appropriate to compensate
Diane MacDonald for her equitable interest in the property. However, this should not be the case.
Alimony is separate and distinct from equitable distribution of the property. In this case, if the pawn
shop fails one year from now, the award of lump sum alimony, which cannot be modified, will have
been assessed against Kevin MacDonald because of his interest in a business that failed. While the
chancellor determined that Diane should not be penalized for the success of the business without her
after the separation, neither should Kevin be penalized for the failure of the business after separation.
¶56. Despite the partnership agreement between Kevin and his father, the majority unfairly assesses
all indemnifications and liabilities against Kevin, without giving any benefit to the agreement itself.
This case should be treated no differently from a case where a father gives money to his son, and the
son never put the money into his wife's name. The distribution would be outside of the marriage.
Since the value of the pawn shop is $87,920 and Diane would be paid $120,000, she would receive a
windfall in addition to her interest in the pawn shop. Finally, if the chancellor had ordered a true
equitable distribution of assets, neither of the parties would be taxed. However, making the
distribution a lump sum alimony makes the amounts taxable, creating a no-win situation for both
Diane and Kevin.
¶57. It is for these reasons that I dissent. I would reverse and remand this case to the chancery court.
LEE, C.J., AND ROBERTS, J., JOIN THIS OPINION.