Rusk v. Rusk

FOWLER, Justice,

dissenting.

I respectfully dissent. I would affirm the trial court’s judgment because (1) Byron failed to satisfy his burden of proof in establishing that the corporate stock is his separate property, (2) the trial court acted within its broad discretion in appointing a receiver, (3) the trial court’s judgment does not divest Byron of any separate property, and (4) Sheila’s reimbursement claim is supported by the evidence.

I discuss first the evidence in the record, and the trial court’s findings about the evidence, concerning the characterization of the RMS stock. The majority holds that the trial court’s characterization of the RMS stock as community property is “so against the great weight and preponderance of the evidence as to be manifestly unjust.” This holding is based solely on the testimonies of interested witnesses, Byron and Mr. Rusk.

The Finding Of Community Property

Byron and Mr. Rusk attempted to show that Byron acquired the stock by gift or, alternatively, as the beneficiary of a resulting trust. They each testified that no consideration was exchanged when Mr. Rusk transferred the 1,000 shares of RMS stock to Byron after his marriage to Sheila. In concluding that this testimony established the stock is Byron’s separate property, the majority states that “this testimony was not disputed or controverted by Sheila.” It contends that “we cannot ignore undisputed testimony.” However, the majority’s holding ignores this Court’s standard of review and misallo-cates the burden of proof.

The trial court’s findings of fact have the same force and dignity as a jury verdict. Ellebracht v. Ellebracht, 735 S.W.2d 658, 662 (Tex.App.-Austin 1987, no writ). If supported by some competent evidence, they will not be disturbed on appeal unless they are so against the overwhelming weight of the evidence as to be clearly and manifestly wrong. Id. A court of appeals may not pass upon the credibility of the witnesses or substitute its findings for those made by the trial judge, nor may it substitute its judgment for that of the trier of fact, regardless of whether it may have *311reached a different conclusion after reviewing the evidence. Id. The trial court is the sole arbitrator of the credibility of the witnesses and the weight to be accorded their testimony. Id.

In his brief, Byron argues that the RMS stock was his separate property because he produced clear and convincing evidence that it was transferred to him from Mr. Rusk by (1) gift, or (2) as the beneficiary of a resulting trust. I first consider Byron’s claim that the property was transferred as a gift.

A gift is defined as a transfer of property made voluntarily and gratuitously, without consideration. Ellebracht, 735 S.W.2d at 659. The burden of proving a gift is on the party claiming the gift was made. Id. The majority contends that the testimonial evidence in this case was sufficient to find that Byron satisfied his burden of proof to establish that the RMS stock was his separate property because Sheila failed to dispute or controvert Byron’s evidence. That contention misallocates the burden of proof. Because the stock was acquired after the marriage, the law presumes it community property. See Tex. Fam.Code Ajnn. § 3.002 (Vernon 1998). Therefore, Sheila did not have the burden to prove the stock was community property; rather, Byron had the burden to prove by “clear and convincing evidence”1 that the stock was his separate property. See Tex. Fam.Code Ann. § 3.003(b) (Vernon 1998).

In determining whether a party has met its burden on its claim of a gift, one controlling factor is the donative intent of the grantor at the time of the conveyance. Id. It has been held that a conveyance from a parent to a child can give rise to a presumption of gift. Id. At the same time, however, exchange of consideration precludes a gift. Id. “ ‘Gift’ and ‘onerous consideration’ are exact antitheses. The idea of their [co-existence] involves a paradox.” Ellebracht, 735 S.W.2d at 659. A recital of onerous consideration in a deed “negatives the idea of a gift.” Id.

As the majority notes, Byron and Mr. Rusk testified that no consideration was exchanged when Mr. Rusk transferred the 1,000 shares of stock to Byron. However, in a marriage dissolution action, “where the only evidence produced by a party [to establish the character of property] is such party’s own testimony, such testimony of an interested witness only raises a fact issue for the finder of fact.” Gonzalez v. Guajardo de Gonzalez, 541 S.W.2d 865, 868 (Tex.Civ.App.-Waco 1976, no writ). “This is true though the testimony not be contradicted.” Id. The trial judge is authorized by law to reject this testimony if it is not credible and therefore to accord it no weight. See id.

Here, we cannot rely on the testimony of Byron and Mr. Rusk because, in its findings of fact, the trial court found that neither Byron nor Mr. Rusk were credible witnesses. That finding is not eligible for appellate review.2 See Ellebracht, 735 S.W.2d at 662.

*312In addition, the record shows that the stock was valued at $175,000, and the stock certificate expressly recites that the stock was indeed sold to Byron. This is some evidence that the stock was exchanged for consideration, supporting the trial judge’s finding that the RMS stock was community property. See id. at 659. Moreover, since the trial judge, who was the sole arbiter of the witnesses’ credibility, found that Byron and Mr. Rusk were not credible,3 no evidence remains to contradict the judge’s findings. Thus, I would hold that Byron failed to meet his burden of proving that the stock was transferred to him by gift. See id.

The question then becomes whether Byron proved the existence of a “resulting trust.” Clearly, he did not. When title to property is taken in the name of someone other than the person who advances the purchase price, a “resulting trust” is created in favor of the payor. Tricentrol Oil Trading, Inc. v. Annesley, 809 S.W.2d 218, 220 (Tex.1991). It is an “intent trust” employed when trust property had been used for a special purpose which has terminated or become frustrated so that the law implies a trust for the equitable owner of the property. Id. Generally, however, the law is suspicious of resulting trusts, and, consequently, a heavy burden is placed upon the party attempting to establish the existence of one. Saveli v. Saveli, 887 S.W.2d 886, 839 (Tex.App.-Houston [14th Dist.] 1992, writ denied).

There is no evidence in the record of this matter to support a finding that Byron provided any financing to form RMS eor-poration in 1984. Indeed, the evidence supports the converse conclusion. Mr. Rusk testified that the stock was placed in his name when the corporation was formed because Byron lacked financial resources. To the extent that Byron’s and Mr. Rusk’s respective testimonies indicated that Byron owned the stock from its inception, it was within the province of the trial court to reject that testimony.. See Ellebracht, 735 S.W.2d at 662. I would hold that Byron failed to meet his burden of establishing a “resulting trust.” See Saveli, 837 S.W.2d at 839.

Accordingly, under this Court’s applicable standard of review, I would affirm the trial court’s finding that the RMS stock is community property by holding that Byron failed to meet his burden of proving by “clear and convincing evidence” that the stock is his separate property. See Robles v. Robles, 965 S.W.2d 605, 614 (Tex.App.Houston [1st Dist.] 1998, pet. denied); see also In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660, 661-62 (1951).

The Receivership

Next, the majority holds that the trial court exceeded its discretion in appointing a receiver in this case because (1) the appointment of the receiver is governed by section 64.001 of the Civil Practice and Remedies Code, but did not meet the requisites of that section, (2) a receiver may not be appointed over separate property, and (3) Sheila failed to comply with the notice provision of Rule of Civil Procedure 695.

*313Section 7.001 of the Family Code grants a trial court broad authority to divide marital property in a manner it deems just and right upon the dissolution of marriage. Tex. Fam.Code Ann. § 7.001 (Vernon 1998); Vannerson v. Vannerson, 857 S.W.2d 659, 673 (Tex.App.-Houston [1st Dist.] 1993, writ denied); Young v. Young, 765 S.W.2d 440, 444 (TexApp.-Dallas 1988, no writ). That broad authority includes the power to enlist the aid of a receiver to effectuate the trial court’s orders and judgments. Walston v. Walston, 971 S.W.2d 687, 692-93 (Tex.App.-Waco 1998, pet. denied); Vannerson, 857 S.W.2d at 673; Young, 765 S.W.2d at 444. The appointment of a receiver is an equitable action, left to the sound discretion of the trial court. Vannerson, 857 S.W.2d at 673; Young, 765 S.W.2d at 444.

Byron contends — and the majority agrees — that section 64.001 of the Civil Practice and Remedies Code governs the appointment of receivers in marriage dissolution cases. But, when third parties or companies do not have an interest in the property subject to a receivership, Texas courts have not applied the receivership rules contained in section 64.001 to marriage dissolution cases; rather, the courts have held that section 7.001 of the Family Code governs. See Walston, 971 S.W.2d at 692-693 (holding that section 7.001’s predecessor authorizes a trial court to appoint a receiver for selling property as necessary to carry out the trial court’s orders and judgments); Vannerson, 857 S.W.2d at 673 (holding that section 64.001 of the Civil Practice and Remedies Code does not govern the appointment of a receiver over property when it is divided upon divorce, the predecessor of section 7.001 of the Family Code controls); Young, 765 S.W.2d at 444 (holding that section 64.001 of the Civil Practice and Remedies Code does not govern the appointment of a receiver over property when it is divided upon divorce, the predecessor of section 7.001 of the Family Code controls); North Side Bank v. Wachendorfer, 585 S.W.2d 789, 792 (Tex.Civ.App.-Houston [1st Dist.] 1979, no writ) (holding that under the statutes governing family courts, a family court has broad power to appoint a receiver where it is necessary, but that this power is limited by section 64.001 of the Civil Practice and Remedies Code when a receiver is sought by the owner of marital property against a third party creditor); Elliott v. Elliott, 422 S.W.2d 757, 758-759 (Tex.Civ.App.-Fort Worth 1967, writ dism’d w.o.j.) (stating that, under the statutory provisions governing family courts, where a court has full knowledge concerning the parties and their property, it may appoint a receiver, even without any application therefor, and without notice or hearing). Thus, in this case, which involves only property of the parties and does not involve the interests of creditors or mortgagors, section 7.001 of the Family Code governs.

The Supreme Court, in interpreting the statute which preceded section 7.001 of the Family Code, held that in making a “just and right” division, the trial court should first decide whether the parties’ community property is “subject to partition in kind” and if it is not, then the property may be sold by a receiver. Walston, 971 S.W.2d at 693 (citing Hailey v. Hailey, 160 Tex. 372, 331 S.W.2d 299, 303 (I960)). In determining if property is subject to division in kind the trial court should consider the “nature and type of particular property involved and the relative conditions, circumstances, capabilities and experience of the parties.” Id. These factors are also considered when the trial court must decide whether to divide community property by awarding a money judgment to one party and community assets to the other party, instead of dividing the community property in kind. Id.; see also Finch v. Finch, 825 S.W.2d 218, 224 (Tex.App.Houston [1st Dist.] 1992, no writ); Hanson v. Hanson, 672 S.W.2d 274, 278 (Tex.App.Houston [14th Dist.] 1984, writ dism’d).

In this case, the trial court did not make an in kind division of the parties’ most *314valuable community assets.4 Instead, it awarded a cash judgment of $150,000 to Sheila as equitable owelty, recoupment, and reimbursement, and it awarded the bulk of the tangible community assets to Byron. Thus, the trial court possessed authority to appoint a receiver. See id.; Hailey, 331 S.W.2d at 302-03. To effectuate its judgment, the trial court .appointed a receiver to take charge of certain tangible properties in possession or subject to the control of Byron. The trial court ordered that the property in receivership shall remain in the custody of the court until Sheila’s equitable owelty, recoupment and reimbursement is paid by Byron. I believe the record supports the trial court’s decision. Byron testified that the financial condition of RMS was in “bad shape.” Byron testified that one of RMS’s locations was losing money and that it was unable to timely make its bank note payments. Byron also testified that his separate estate was “seriously in trouble” and that the community estate was “upside down.” The trial court’s decision to appoint a receiver reflects its concern that Byron would not comply with its order and judgment.

It is true that the trial court’s receivership order and equitable lien affects separate property owned by Byron. However, contrary to the majority’s holding, the trial court’s action in this regard does not divest Byron of any separate property.5

Trial courts possess authority to appoint receivers over separate property in marriage dissolution cases. Gunther v. Gunther, 283 S.W.2d 826, 827-28 (Tex.Civ.App.-Dallas 1955, writ dism’d); Hursey v. Hursey, 147 S.W.2d 968, 970 (Tex.Civ.App.-Dallas 1940, no writ). Trial courts are also vested with authority to impose equitable hens on one spouse’s separate property to secure the other spouse’s right of reimbursement for community improvements to that property. Heggen v. Pemelton, 836 S.W.2d 145, 146 (Tex.1992); Kimsey v. Kimsey, 965 S.W.2d 690, 697-98 (Tex.App.-El Paso 1998, pet. denied); Magill v. Magill, 816 S.W.2d 530, 535 (Tex.App.-Houston [1st Dist.] 1991, writ denied); Cook v. Cook, 665 S.W.2d 161, 165 (Tex.App.-Fort Worth 1983, writ ref'd n.r.e.); see also note 4, supra.

Such orders by the trial court affecting one spouse’s separate property does not, however, automatically operate as a divestiture of that property. Magill, 816 S.W.2d at 536; Cook, 665 S.W.2d at 165. While a trial court may not divest an owner of his separate property, loss of title may result if the property is ultimately sold under execution. Id.; Cook, 665 S.W.2d at 165. However, the divestiture by foreclosure is essentially voluntary because the owner possesses the option to prevent this action by complying with the court’s order to pay. Id.; Cook, 665 S.W.2d at 165; see also Kimsey, 965 S.W.2d at 697-98. Therefore, contrary to the majority’s holding, the trial court’s final decree of divorce and judgment does not divest Byron of any separate property.

That leaves, finally, the notice issue. During oral argument before this court, Byron contended, for the first time, that the trial court’s receivership order should be vacated because he did not receive notice of Sheila’s intention to seek a receiver. Although, technically, we are not required to review this contention because it was not briefed and not raised before the trial court, I will address it because the majority chose to address the merits of the complaint. See Montemayor v. City of San Antonio Fire Dep’t, 985 S.W.2d 549, 550-51 (Tex.App.-San Antonio 1998, pet. de*315nied); Francis v. Cogdell, 803 S.W.2d 868, 871 (Tex.App.-Houston [1st Dist.] 1991, no writ); Tex.R.App. P. 38.1(h); Tex.R.App. P. 33.1(a).

The majority concludes that Sheila’s failure to comply with Rule 695 dooms the trial court’s order appointing a receiver. See Tex.R. Civ. P. 695. This holding is in contrast to a line of authority in Texas, holding that in marriage dissolution cases, it is well-settled that a court has broad powers and, upon proper showing, a receiver may be appointed with or without notice or application. See Gunther, 283 S.W.2d at 828; Hursey, 147 S.W.2d at 970; Kinsey v. Kinsey, 77 S.W.2d 881, 882 (Tex.Civ.App.-Dallas 1934, no writ); Crawford v. Crawford, 163 S.W. 115, 116 (Tex.Civ.App.-Texarkana 1913, no writ).

That notwithstanding, the record in this case shows that before the conclusion of trial, Sheila’s counsel sought leave from the trial court to file a trial amendment to provide notice to Byron of Sheila’s intention to seek a receiver. The trial court granted counsel’s oral request and a trial amendment was filed in which Sheila requested the appointment of a receiver. A copy of the trial amendment was not made part of the original clerk’s record filed in this case. However, this Court granted Sheila’s motion to supplement the record so that the trial amendment could be considered. See TexRApp. P. 34.5(c)(3). Therefore, the trial amendment is properly before this Court, and it clearly shows that Byron had notice of Sheila’s intention to seek a receiver before the receiver was appointed.

In sum, on the receivership issue, I would affirm the trial court’s order appointing a receiver and imposing an equitable lien over Byron’s separate property.

The Reimbursement Claim

The next issue is the trial court’s computation of the amount of Sheila’s reimbursement claim, relative to mortgage payments made during the marriage on Byron’s Trail Hollow town house. A claim for reimbursement of funds expended by an estate for improvements to another estate is to be measured by the enhancement value to the benefitted estate. Anderson v. Gilliland, 684 S.W.2d 673, 675 (Tex.1985); Kimsey, 965 S.W.2d at 700. This measurement is to be applied whether the claim for reimbursement is based upon funds expended for payment of a purchase money debt or for a capital improvement to another estate. Penick v. Penick, 783 S.W.2d 194, 197 (Tex.1988). Off-setting benefits to the paying estate must be considered. Id. The party claiming the right of reimbursement has the burden of proof. Jensen v. Jensen, 665 S.W.2d 107, 110 (Tex.1984); Vallone v. Vallone, 644 S.W.2d 455, 459 (Tex.1982); Kimsey, 965 S.W.2d at 700.

Reimbursement is an equitable claim. Penick, 783 S.W.2d at 197; Magill, 816 S.W.2d at 530. As such, a court of equity is bound to look at all facts and circumstances to determine what is fair, just, and equitable. Penick, 783 S.W.2d at 198; Magill, 816 S.W.2d at 535. The equitable nature of a claim for reimbursement allows for consideration of off-setting benefits. Jensen, 665 S.W.2d at 109; Magill, 816 S.W.2d at 535. However, great latitude must be accorded to the trial court in applying equitable principles to value such a claim, for it is not just a balancing of the ledgers between competing marital estates. Penick, 783 S.W.2d at 198; Magill, 816 S.W.2d at 535. The discretion to be exercised in evaluating a claim for reimbursement is equally as broad as the discretion exercised by a trial court in making a just and proper division of the community estate. Penick, 783 S.W.2d at 198; Kimsey, 965 S.W.2d at 701.

Of the $150,000 awarded to Sheila in the trial court’s final decree of divorce and judgment, $37,628.16 of that amount represented her reimbursement claim on the Trail Hollow town house. Sheila testified that during the term of her marriage to Byron, ninety-six payments in the monthly *316sum of $391.96 were made on the Trail Hollow town house. She testified that the total amount of community funds expended on the Trail Hollow town house was $37,-628.16. Byron argues that in awarding that amount to Sheila for reimbursement, the trial court failed to consider significant off-sets, such as the fact that the parties resided in the town house rent-free for a period following their marriage, their subsequent receipt of rental income from the property, tax breaks, and depreciation. The trial court expressly awarded, however, “a disproportionate division of property to Sheila....” See Robles, 965 S.W.2d at 621. Such an award is within the trial court’s discretion and, in awarding a “disproportionate division,” it implicitly indicates that the court considered off-setting community benefits. See Penick, 783 S.W.2d at 198.

The record shows that Sheila satisfied her burden of proof in establishing her claim for reimbursement. See Jensen, 665 S.W.2d at 110; Kimsey, 965 S.W.2d at 700. I would hold that Byron failed to show that the trial court abused its discretion in awarding Sheila a reimbursement judgment. See Penick, 783 S.W.2d at 198.

Finally, though not addressed by the majority opinion, Byron contends that the trial court’s overall, unequal division of marital property was an abuse of discretion because the error in the trial court’s division was more than de minimis. The trial court possesses broad discretion in dividing marital property in a manner it deems just and right. Schlueter v. Schlueter, 975 S.W.2d 584, 589 (Tex.1998) (trial courts permitted to take many factors into consideration in making a just and right division of marital property); Lipsey v. Lipsey, 983 S.W.2d 345, 350 (Tex.App.-Fort Worth 1998, no pet.); Robles, 965 S.W.2d at 621; see also Tex. Fam.Code Ann. § 7.001 (Vernon 1998). The trial court also possesses the authority to order an unequal division of community property where a reasonable basis exists for doing so. Robles, 965 S.W.2d at 621. The trial court’s finding that such a reasonable basis existed in this case contains some support in the record. See id. at 622-21. No abuse of discretion has been shown. See id.

I would affirm the trial court’s judgment. Therefore, I respectfully dissent.

. The clear and convincing standard of proof falls between the preponderance standard applied in ordinary civil proceedings and the reasonable doubt standard applied in criminal proceedings. Trimble v. Texas Dep’t of Protective & Regulatory Serv., 981 S.W.2d 211, 217 (Tex.App.-Houston [14 th Dist.] 1998, no pet.). “Clear and convincing evidence” is that measure or degree of proof which will produce in the mind of the trier of fact a firm belief or conviction as to the truth of the matter sought to be established. Id.

. I cannot conceive of a case in which an appellate court could set aside a trial court’s finding that a witness was not credible. Our judicial system and our system of appellate review are based on the principle that the trier of fact is in a unique position to judge credibility. See Ellebracht, 735 S.W.2d at 662. If a trial court found a witness was not credible, as here, an appellate court would have to rely on other parts of the record-i.e., other witnesses, documents, photographs-rather than on that witness’s testimony. Of course, here, the documentary evidence supports the trial judge’s judgment, so there is nothing else for an appellaté court to rely on.

. I also feel compelled to note my strong disagreement with the majority's statement in footnote 5 that the trial judge threatened to put Byron in jail. The judge sustained an objection raised by Sheila’s counsel that Byron gave a non-responsive answer. When the judge was requested to instruct the witness to answer only the question asked, she instructed him as follows:

“Okay. You have to listen to the question and answer what he ask [sic]; not what you think you heard. And I make it an analysis [sic] to monopoly. If you throw the dice and get six, can you move five spots? You couldn’t move seven either. If you draw a card that says, "You may pasco [sic], go directly to jail,” what do you do? You go to jail.
All right. We have rules very similar to monopoly here and one of those is when an attorney ask [sic] you a question, listen very carefully. What we do in a courtroom setting is not natural. It's not a conversation type mode where you and I would sit down over a cup of coffee end table. It’s a question and answer.”

. The majority’s conclusion that the parties’ community property was "subject to an in kind distribution” is not supported by the record. See, e.g., Walston, 971 S.W.2d at 693.

. The trial court appointed a receiver and imposed an equitable lien only over Byron’s separate property upon which Sheila was awarded a reimbursement judgment. Our Supreme Court has upheld such action. See Heggen v. Pemelton, 836 S.W.2d 145, 146 (Tex.1992).