COURT OF APPEALS OF VIRGINIA
Present: Judges Coleman, Elder and Senior Judge Cole
Argued at Salem, Virginia
NANCY LEE KELKER
OPINION BY
v. Record No. 1734-99-3 JUDGE MARVIN F. COLE
DECEMBER 19, 2000
JOHN WARREN SCHMIDT
FROM THE CIRCUIT COURT OF GRAYSON COUNTY
Duane E. Mink, Judge
Dennis P. Brumberg (Brumberg, Mackey & Wall,
P.L.C., on briefs), for appellant.
Alan K. Caudell (Caudell & Bedsaul, on
brief), for appellee.
Appellant, Nancy Lee Kelker ("wife"), contends the trial
court committed reversible error in disregarding the
recommendations of the commissioner in chancery regarding
alleged marital debts. For the reasons that follow, we affirm
the trial court.
BACKGROUND
The parties married on October 6, 1988. The trial court
granted wife a divorce from appellee, John Warren Schmidt
("husband"), on December 30, 1996, but retained jurisdiction
over issues of spousal support and equitable distribution. On
August 25, 1997, the chancellor referred the case to a
commissioner in chancery to determine, inter alia, the "marital
and non-marital debts of the parties and who is legally
obligated upon such debts and in what proportions."
On June 30, 1998, the commissioner conducted an evidentiary
hearing. The second page of Exhibit 3 listed "Personal Property
(remaining to be divided)." Part (c) of the personal property
listing contained the following entry:
(c) Wife's indebtedness for bills
Up to 1993 $11,000.00
1993 to 1995 28,500.00
$39,500.00
Wife testified that between 1988 and 1993, she borrowed
$11,000 from Dr. Nancy Troike for "[l]iving expenses." Wife
averred that, in 1993, she received approximately $100,000 for
services she rendered relating to "the San Saba painting case,"
which began in 1981. Wife said she repaid the $11,000 loan
"[f]rom the moiety money that [she] finally received for the San
Saba painting."
Wife claimed that husband made no contribution toward
repaying this $11,000 debt and added that "[h]e didn't feel I
should repay it at all." Wife also testified that she borrowed
an additional $28,500 from Troike between 1993 and 1995 "for
living expenses and for expenses to try to start a small catalog
business." According to wife, $4,000 was used to purchase a
computer for the business. After the first year, the catalog
business lost $1,000. Wife said that some of the borrowed funds
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were used "[f]or various expenses that were needed . . . to
maintain the house and property" and to "buy groceries, [and]
pay electric." Wife claims the money is still owed and that
husband never paid or offered to help pay any portion of the
$28,500 debt. Wife testified that she and husband had a joint
account "for a period of time and then [they] had separate
accounts."
When asked on cross-examination whether there was a
"promissory note" for the $11,000 loan from Dr. Troike, wife
replied, "There is a letter where she verifies the borrowing it,
but, no, there's not a note." The letter was not produced.
Wife acknowledged that she did not sign anything for the loan.
When asked if there were any documents on which "you would post
the payments on the bottom," wife responded, "No. That's not
the way you have to do business in Texas." The following
exchange took place:
Q: And does that go for the larger amount
that you borrowed later, the twenty-eight
thousand (28,000.00)?
A: Yeah. She [Dr. Troike] would send me
checks as I needed them. It wasn't
twenty-eight thousand ($28,000.00) all at
one time.
Q: O.K. Is it true that the eleven
thousand dollars ($11,000.00) you testified
to was borrowed and repaid without Mr.
Schmidt's knowledge?
A: No. He knew I was repaying it.
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Q: Did he know you were borrowing it?
A: Yes. Because he had been with me when I
picked up her checks at the mail box and on
one time he made a comment about it being my
monthly allowance.
Husband testified at the June 1998 hearing that he learned
about the wife's claim of an $11,000 loan from Dr. Troike "a
little over a year ago when we received copies of . . . our tax
returns from [wife's] previous attorney." Husband testified
that he was never aware of the $28,500 loan. In explaining why
he was not aware of the debts, husband stated, "I didn't have
access to what she did with her money. That was her business."
In his report, the commissioner explained:
[Wife] testified that there were a number of
debts incurred by her for marital purposes
to which [husband] has made no contribution.
She testified that she borrowed money on
several occasions from Nancy Troike.
Between 1988 and 1993 she borrowed Eleven
Thousand ($11,000) Dollars. Later, between
1993 and 1995 [wife] borrowed an additional
Twenty Eight Thousand ($28,000) Dollars from
Ms. Troike. All of this, except for Four
Thousand ($4,000.00) Dollars used in the
catalogue business, she testified were for
household expenses such as maintaining the
house, groceries, and to pay the electric
bill. There is no evidence that [husband]
offered to pay the money back. These
marital debts would be in the total amount
of Forty Thousand Five Hundred Twenty
($40,520) from which it appears that
[husband] benefited equally and should be
responsible for ½ or Twenty Thousand, Two
Hundred Sixty ($20,260.00) Dollars.
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In recommending an award, the commissioner apportioned
husband's "portion of the marital debt which totals Forty
Thousand, Five Hundred Twenty-Two ($40,522) Dollars, 1/2 of
which is Twenty Thousand, Two Hundred and Sixty ($20,260)
Dollars."
Excepting to the commissioner's report, husband contended
the commissioner erred in determining the marital debts.
Husband asserted that the "debts were not bona fide, were not
sufficiently verified or proven, and . . . were not existing
debts of the parties."
By letter opinion dated May 3, 1999, the trial court
sustained husband's exception. Explaining that it was
"incumbent upon the party requesting apportionment [of marital
debt] to prove by a preponderance of the evidence the amount of
outstanding debts for which apportionment is requested," the
trial court explained:
Of course, it is up to the Commissioner to
judge the credibility of the witnesses,
however, there is no corroboration at all to
[wife's] testimony that she had borrowed
$28,000.00 from Dr. Troike over a three year
period. She indicated there were letters
requesting money, but that they would be in
Dr. Troike's possession. There are no
promissory notes, deposit slips indicating
deposit of funds from Dr. Troike to
individual or joint accounts of the parties
to this proceeding.
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The trial court also noted that wife admitted that in 1993
she received a large amount of money from the "San Saba case,"
perhaps as much as $100,000, thus calling into question her need
to incur marital debts by borrowing money for household
expenses. Accordingly, the trial court sustained husband's
exceptions to the commissioner's report.
DISCUSSION
Code § 20-107.3(E) authorizes the court to make an
"apportionment of marital debts." Furthermore,
Code § 20-107.3(E)(7) provides that the
debts of each spouse shall be considered as
a factor when determining how to distribute
jointly owned marital property or to fashion
a monetary award. The purpose and nature of
the debt, and for and by whom any funds were
used, should be considered in deciding
whether and how to credit or allot debt.
Gamer v. Gamer, 16 Va. App. 335, 341, 429 S.E.2d 618, 623
(1993).
In cases involving the equitable distribution of property,
"'[t]he burden is always on the parties to present sufficient
evidence to provide the basis on which a proper determination
can be made.'" Bowers v. Bowers, 4 Va. App. 610, 617, 359
S.E.2d 546, 550 (1987) (quoting Hodges v. Hodges, 2 Va. App.
508, 517, 347 S.E.2d 134, 139 (1986)).
The Supreme Court has defined the authority of a
commissioner in chancery in an equity proceeding as "an officer
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appointed by the chancellor to aid him [or her] in the proper
and expeditious performance of his [or her] duties." Raiford v.
Raiford, 193 Va. 221, 226, 68 S.E.2d 888, 891 (1952); see also
Haase v. Haase, 20 Va. App. 671, 678-79, 460 S.E.2d 585, 588
(1995). When a trial court refers a cause to a commissioner in
chancery, it does not delegate its judicial functions to the
commissioner in chancery. Lawrence v. Lawrence, 212 Va. 44, 47,
181 S.E.2d 640, 643 (1971).
In Haase, we said:
the commissioner, while functioning as an
independent judicial officer, is a surrogate
for the chancellor and is subject to the
chancellor's control. Conversely, the
actions of the commissioner are not binding
on the chancellor, who must exercise
independent judicial judgment over the
evidence presented in the commissioner's
report. Once adopted by the chancellor,
however, the actions, findings and
recommendations of the commissioner become
those of the supervising court and are due
considerable deference on appeal.
20 Va. App. at 679, 460 S.E.2d at 588 (citing Brawand v.
Brawand, 1 Va. App. 305, 308, 338 S.E.2d 651, 652 (1986)).
"While the report of a commissioner in
chancery does not carry the weight of a
jury's verdict, Code § 8.01-610, it should
be sustained unless the trial court
concludes that the commissioner's findings
are not supported by the evidence. This
rule applies with particular force to a
commissioner's findings of fact based upon
evidence taken in his presence . . . .
[W]here the chancellor has disapproved the
commissioner's findings, this Court must
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review the evidence and ascertain whether,
under the correct application of the law,
the evidence supports the findings of the
commissioner or the conclusions of the trial
court. Even where the commissioner's
findings of fact have been disapproved, an
appellate court must give due regard to the
commissioner's ability, not shared by the
chancellor, to see, hear, and evaluate the
witnesses at first hand."
Jones v. Jones, 26 Va. App. 689, 694, 496 S.E.2d 150, 153 (1998)
(quoting Hill v. Hill, 227 Va. 569, 576-77, 318 S.E.2d 292,
296-97 (1984)).
In Jones, the trial court referred certain matters,
including issues of custody and attorney's fees, to a
commissioner in chancery. In his report, the commissioner
recommended, inter alia, "that the parties have joint legal and
physical custody of the children and [he] detailed precisely how
the physical custody was to occur. He also recommended that
husband pay $2,500 of wife's attorney's fees." Id. at 693, 496
S.E.2d at 152. The "[h]usband filed exceptions to the custody
and attorney's fee recommendations, and both were sustained
without comment by the trial court." Id. Specifically, the
trial court "granted husband primary physical custody of the
children with 'liberal visitation' to wife" and "reduced the
attorney's fees to be paid by husband from $2,500 to $1,000."
Id. We found "nothing in th[e] record showing the trial court
found insufficient evidence to support the commissioner's
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recommendation" regarding joint custody. Id. at 695, 496 S.E.2d
at 153. Concluding from "our review of the record that the
trial court, for reasons not disclosed, simply preferred to make
a different ruling" and "made no finding that the commissioner's
report was unsupported by the evidence," we reversed and
remanded the issues of custody and attorney's fees. Id.
(emphases added).
Here, unlike the situation in Jones, the trial court made
detailed findings regarding the quality and quantity of evidence
about the alleged loans from Dr. Troike. Specifically, the
trial court noted the lack of any documentation regarding two
purported substantial loans to wife. Also, having found that
wife could have earned as much as $100,000 in 1993, the trial
court was skeptical of wife's claim that she obtained the
personal loans to pay household expenses. Moreover, wife
provided no evidence to support her oral assertions that she
borrowed money from Dr. Troike and that such funds were used to
pay household expenses; she offered no statements, receipts, or
checks. Furthermore, the record contains no evidence of
specific household debts that wife claimed she paid with the
borrowed money, nor did she prove such expenditures by way of
cancelled checks, receipts or invoices. Without proof that the
debts were marital and that the money was, in fact, used to pay
marital debts or expenses, the trial judge was not required to
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accept the commissioner's unexplained finding that the alleged
loans were marital debts. The chancellor clearly stated that it
was incumbent upon the party requesting apportionment to
establish by a preponderance of the evidence the amount of
outstanding debts for which apportionment is requested, and
appellant failed to do so.
In contrast to the specific findings made by the trial
court, the commissioner failed to state why he decided to credit
the claimed loans from Dr. Troike to wife as marital debts and
to apportion them equally to both parties. Although "we give
due regard to the commissioner's findings on those subjects that
particularly depend on the commissioner's ability to see, hear,
and evaluate the testimony of the witnesses," Clark v. Scott,
258 Va. 296, 302, 520 S.E.2d 366, 369 (1999), the commissioner
did not describe anything he heard or saw in the evidence or
proceedings that would show he was in a better position to
evaluate the evidence than the trial judge, who had a written
record of the entire proceedings.
We find that in equitable distribution cases when the trial
judge reviews a decision on the basis of witness credibility, it
should be evident from the record how the trial judge resolved
the witness credibility issues consistent with the
commissioner's observations. When the commissioner's findings
are based, in whole or in part, upon the witness' appearance and
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demeanor at the hearing, the trial judge may have difficulty
reviewing that finding without recalling the witness. On the
other hand, if the commissioner's determination is based on the
substance of the testimony and not upon the witness' demeanor
and appearance, such a finding is as determinable by the trial
judge as by the commissioner. Only when the commissioner's
finding is specifically based upon what the commissioner saw and
heard is the commissioner in a better position than the trial
judge to make factual findings on that basis. Therefore, we
hold the commissioner in equitable distribution cases must
expressly state in his or her report what he or she saw and
heard concerning witness' demeanor and appearance if the
decision is based, in whole or in part, upon witness demeanor
and appearance. If the commissioner's report is based upon
substance only, the trial judge is as competent as the
commissioner to decide the facts. The trial judge is unable to
give "due regards" to the commissioner's factual findings that
depend on the commissioner's ability to see, hear and evaluate
the testimony of the witnesses unless the commissioner describes
such observations in his or her report. 1 This procedure will add
1
For background material involving the deference that the
Workers' Compensation Commission must accord certain
determinations by deputy commissioners, see Bullion Hollow
Enters., Inc. v. Lane, 14 Va. App. 725, 729, 418 S.E.2d 904, 907
(1992), in which we examined and discussed the holding in
Goodyear Tire & Rubber Co. v. Pierce, 5 Va. App. 374, 382, 363
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uniformity in the numerous equitable distribution cases that
come before us.
Here, the commissioner in chancery arrived at a conclusion
without explaining the basis for that conclusion. Although wife
documented in detail her efforts at increasing the value of the
marital residence, submitted an invoice from an accountant
relating to a tax audit, and submitted a detailed list with
valuations of the inventory of PS Antiques, she failed to submit
any documentary evidence to prove by a preponderance of the
evidence the existence of and purpose for the alleged loans from
Dr. Troike.
CONCLUSION
Our review of the record reveals no evidence of the loans
or specific recorded observation by the commissioner in chancery
S.E.2d 433, 437 (1987), appeal after remand, 9 Va. App. 120, 384
S.E.2d 333 (1989), regarding the deference accorded express
credibility observations made by a deputy commissioner. In
Pierce, we looked at "[t]raditional principles [involving
credibility determinations] . . . both in the civil and criminal
law." Id. at 381, 363 S.E.2d at 437.
In Bullion Hollow, we held that the Workers' Compensation
Commission may disregard a deputy commissioner's express
credibility determination when it "articulates its reasons" for
doing so. 14 Va. App. at 729, 418 S.E.2d at 907. Thus, "when
[a] deputy commissioner makes an explicit finding of credibility
based upon a witness' demeanor or appearance at the hearing, the
commission may reverse that factual finding when it articulates
a basis for its different conclusion that is supported by
credible evidence." Id. Conversely, absent an express
credibility determination by the deputy commissioner, "the
commission ha[s] no duty to explain its reasons." Id. at 729,
418 S.E.2d at 906.
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concerning any witness' demeanor or appearance; instead, the
record contains mere conclusions by the commissioner that the
loans were made and that they were marital debts. On the other
hand, the trial court set forth specific reasons for
disapproving the commissioner's determination of marital debts.
In summary, we hold that, under the correct application of
the law, the evidence supports the findings of the chancellor.
Therefore, we affirm the findings of the trial court.
Affirmed.
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