in the Matter of the Marriage of Susan Elaine Smith and Matthew Joseph Smith and in the Interest of Lacey Renee Smith, a Minor Child

• Court: Court of Appeals of Texas
• Decided: November 17, 2003
• Docket: 07-02-00509-CV
• Status: Published

Opinion

NO. 07-02-0509-CV

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL C

NOVEMBER 17, 2003

______________________________

IN THE MATTER OF THE MARRIAGE OF SUSAN ELAINE SMITH AND MATTHEW JOSEPH SMITH AND IN THE INTEREST OF LACEY RENEE SMITH, A CHILD

_________________________________

FROM THE 72 ND DISTRICT COURT OF LUBBOCK COUNTY;

NO. 2001-514,193; HONORABLE BLAIR CHERRY, JR., JUDGE

_______________________________

Before JOHNSON, C.J., and QUINN and REAVIS, JJ.

MEMORANDUM OPINION

Presenting seven points of error, appellant Susan Elaine Smith contends the trial

court erred in mischaracterization of certain properties and in making its division of the

property in granting her divorce from appellee Matthew Joseph Smith. By her points, Susan

contends 1) the trial court abused its discretion in its division of assets and liabilities of the

marital estate resulting in a manifestly unjust and unfair division; 2) the trial court erred in

characterizing $15,111 of Am erican Funds Account as Matthew’s separate property because there is no evidence to support the award or alternatively, such award is contrary

to the overwhelming weight of the evidence; 3) the trial court erred in characterizing $26,623

of American Funds Roth IRA Account as Matthew’s separate property because there is no

evidence to support the award or alternatively, such award is contrary to the overwhelming

weight of the evidence; 4) the trial court erred in characterizing the Morgan Stanley Dean

W itter Account having a balance of $56,043 as Matthew’s separate property because such

characterization is not supported by legally sufficient evidence or alternatively, such

characterization is contrary to the overwhelm ing weight of the evidence; 5) the trial court

erred in failing to recognize an economic contribution interest in the community estate in

proceeds from the sale of property at 2802 22nd Street which constitutes Matthew’s

separate property because the undisputed evidence or alternatively, the overwhelming

weight of the evidence supports only a conclusion that the com munity estate is entitled to

an economic contribution interest in such proceeds; 6) the trial court erred in characterizing

the Edward Jones Account having a balance of $8,717.92 as Matthew’s separate property

because such finding is without support in the evidence or alternatively, such finding and

conclusion are contrary to the overwhelming weight of the evidence; and 7) the trial court

erred in awarding a $10,000 reimbursement claim to Matthew on community real property

located at 100 Cedar Road in Ruidoso, New Mexico, effectively characterizing such property

as Matthew’s separate property. Based upon the rationale expressed, we reverse and

remand in part and affirm in part.

2 Matthew and Susan were married on December 27, 1986. Matthew had one son by

a prior marriage and one daughter during the marriage to Susan. The marriage had

problems several years prior to the divorce which prompted Matthew to move out of the

fam ily hom e in January 2000. Susan filed a petition for divorce in June 2001. At the tim e

of the marriage, Matthew had a separate estate consisting of, among other things, stock in

McKee W holesale, IRA accounts, rental property, and a residence. Following a non-jury

trial, the court made findings of fact and conclusions of law.

Findings of fact in a bench trial have the same force as a jury’s verdict upon jury

questions. City of Clute v. City of Lake Jackson, 559 S.W .2d 391, 395 (Tex.Civ.App.--

Houston [14th Dist.] 1977, writ ref’d n.r.e.). However, the findings are not conclusive when

a complete statement of facts appears in the record if the contrary is established as a

matter of law or if there is no evidence to support the findings. Middleton v. Kawasaki Steel

Corp., 687 S.W .2d 42, 44 (Tex.App.--Houston [14th Dist.] 1985), writ ref’d n.r.e., 699

S.W .2d 199 (Tex. 1985) (per curiam). Findings of fact are reviewable for factual and legal

sufficiency under the sam e standards that are applied in reviewing evidence supporting a

jury’s answer. Zieben v. Platt, 786 S.W .2d 797, 799 (Tex.App.--Houston [14th Dist.] 1990,

no writ); see also W . W endell Hall, Revisiting Standards of Review in Civil Appeals, 24 S T.

M ARY’S L.J. 1045, 1145 (1993).

Further, where an appellant challenges both legal and factual sufficiency of the

evidence, the appellate court should first review the legal sufficiency challenge. Glover v.

Texas Gen. Indem. Co., 619 S.W .2d 400, 401 (Tex. 1981); Koch Oil Co. v. W ilber, 895

3 S.W .2d 854, 862 (Tex.App.--Beaumont 1995, writ denied). If an appellant is attacking the

legal sufficiency of an adverse finding on which he did not have the burden of proof, he

must show on appeal that there is no evidence to support the adverse finding. Croucher

v. Croucher, 660 S.W .2d 55, 58 (Tex. 1983). The reviewing court considers the evidence

in the light most favorable to the finding to determine if there is any probative evidence or

reasonable inferences therefrom which supports the finding. Glover, 619 S.W .2d at 401.

The court disregards all evidence and inferences to the contrary. Weirich v. W eirich, 833

S.W .2d 942, 945 (Tex. 1992).

Our review of trial court conclusions of law is de novo. In re Humphreys, 880 S.W .2d

402, 403 (Tex. 1994), cert. denied, 513 U.S. 964, 115 S. Ct. 427, 130 L. Ed. 2d 340 (1994).

However, as noted above, although findings of fact are reviewable for legal and factual

sufficiency, an attack on the sufficiency of the evidence must be directed at specific findings

of fact rather than at the judgm ent as a whole. In re M.W ., 959 S.W .2d 661, 664 (Tex.App.-

-Tyler 1997, writ denied). Further, the rule has often been otherwise stated that if the trial

court’s findings of fact are not challenged by a point of error on appeal, they are binding

upon the appellate court. Northwest Park Homeowners Ass’n, Inc. v. Brundrett, 970 S.W .2d

700, 704 (Tex.App.--Amarillo 1998, pet. denied); Carter v. Carter, 736 S.W .2d 775, 777

(Tex.App.--Houston [14th Dist.] 1987, no writ).

W e address Susan’s points in a logical rather than sequential order. By her second

and third points, she contends there is no evidence or alternatively insufficient evidence to

support findings of fact 13 and 14 and conclusions of law 5(c) and (d) that $15,111 out of

4 the American Funds Account and $26,623 out of the American Funds IRA Account

constituted Michael’s separate property.1 W e agree in part.

According to section 3.003(a) of the Texas Family Code, property possessed by

either spouse during or on dissolution of marriage is presumed to be com munity property.

Also, under subsection (b) the degree of proof required to establish that property is separate

property is clear and convincing. As applicable here, clear and convincing is the degree of

evidence necessary to “produce in the mind of the trier of fact a firm belief or conviction

about the allegations sought to be established.” See Tarver v. Tarver, 394 S.W .2d 780, 783

(Tex. 1965). To overcome the statutory presumption, Matthew had the burden to trace and

clearly identify the property claimed to be separate. Tracing involves establishing the

separate origin of the property through evidence showing the time and means by which the

spouse originally obtained possession of the property. Ganesan v. Vallabhaneni, 96 S.W .3d

345, 354 (Tex.App.--Austin 2002, pet. denied). In Tarver, 394 S.W .2d at 783, the Court

held:

and that when the evidence shows that separate and com munity property have been commingled as to defy resegregation and identification, the burden is not discharged and the statutory presumption that the entire m ass is comm unity controls its disposition.

1 The points were alternatively denominated as contrary to the overwhelming weight of the evidence points. However, because Michael had the burden to establish the separate character of the funds, they will be reviewed as insufficient evidence points. See Raw Hide Oil & Gas v. Maxus Exploration Co., 766 S.W .2d 264, 275-76 (Tex.App.--Amarillo 1988, writ denied).

5 Further, testimony of the spouse claiming that the property was acquired with separate

property funds, without any tracing of the funds, is generally insufficient to rebut the

presumption. McElwee v. McElwee, 911 S.W .2d 182,188 (Tex.App.--Houston [1st Dist.]

1995, writ denied). Moreover, in In Matter of Marriage of Moore, 890 S.W .2d 821, 827

(Tex.App.--Amarillo 1994, no writ), we held that a fiduciary relationship exists between a

husband and a wife as to the community property controlled by each spouse.

Analysis

Because the evidence concerning the American Funds Account and the American

Funds Roth IRA Account is somewhat similar, we will consider Susan’s two “no evidence”

challenges together. The documentation and testimony of Matthew demonstrated that at

the time of the marriage, he brought separate property into the marriage, including real and

personal property. Also, his testimony shows that during the marriage, he received

numerous gifts from his parents. Because the clear and convincing test of the evidence is

not applicable to a “no evidence challenge,” we conclude there is m ore than a scintilla of

evidence that $15,111 and $26,623 were Matthew’s separate property.

In considering the factual sufficiency challenges, applying the clear and convincing

degree of proof requirement, we review all the evidence and reverse only if the challenged

findings are so against the great weight and preponderance of the evidence as to be

manifestly unjust. Pool v. Ford Motor Co., 715 S.W .2d 629, 635 (Tex. 1986). Documentary

evidence provided by Michael to support his separate property claim of $15,111 of the

6 American Funds Account and $26,623 of the American Funds Roth IRA Account consisted

of (a) an account statement dated December 18, 1992, (b) account application dated

5/27/92, (c) request for transfer of assets dated 5/27/92, and (d) retirement statements from

Van Eck Funds marked “closed out 6/11/92." However, all of the documents are dated

almost six years after the marriage and do not provide any information identifying the origin

or source of the property or when it was originally obtained, as required by Ganesan. 96

S.W .3d at 354. Indeed, Matthew now candidly acknowledges that the finding and

conclusion that the entire $15,111 of the American Funds account is his separate property

is incorrect; however, he does not propose a rem ittitur of the am ount according to his

calculations. Considering that Matthew m aintained complete control of the separate and

com munity property of the parties, that he had duties as a fiduciary, that separate character

cannot be established by his testimony without tracing and documentary support, and the

absence or inadequacy of the documents to demonstrate the date and source of the

acquisition of the funds which were commingled into the two accounts, we conclude the

evidence was factually insufficient to establish that $15,111 and $26,623 of the two

accounts were the separate funds of Matthew by clear and convincing evidence.

Accordingly, we sustain Susan’s factual insufficiency challenges presented in points two and

three.

By her fourth point, Susan contends the trial court erred in characterizing the balance

of $56,043 in the Morgan Stanley Dean W itter Account 313029197 as Matthew’s separate

property because there was legally insufficient evidence or the characterization was contrary

7 to the overwhelming weight of the evidence.2 Applying the standard of review and the

authorities referenced in the foregoing analysis, and for the reasons expressed herein,

although we agree there was more than a scintilla of evidence that the funds were

Matthew’s separate property, we conclude the evidence was factually insufficient to

establish that the balance was his separate property by clear and convincing evidence.

By finding of fact 17, the trial court found that the remaining balance of the account

represented a gift from his mother and the proceeds of insurance covering a cabin in New

Mexico. Then, by conclusion of law 5(a), the trial court concluded the account was

Matthew’s separate property. Counsel for both parties agree the document designated as

Matthew’s exhibit 30 presents a summ ary of the account. According to the documentation,

the account was not opened until February 1997 and appears to be styled Matthew’s “Sole

and Separate Property.” However, because Matthew’s appendix 3 document demonstrates

that comm unity funds were indeed funneled into the account, he m aintained exclusive

control of the separate and community property and the fiduciary relationship, the style “sole

and separate property” is not controlling for purposes of our analysis.

Although Matthew acknowledged that community funds had been deposited into the

account, in his brief, he bases his support of the findings of the trial court on Sibley v.

Sibley, 286 S.W .2d 657 (Tex.Civ.App.-- Dallas 1955, writ dism’d), which held that where an

account contains comm unity and separate funds, it is presumed the community funds are

2 See footnote 1.

8 drawn first so that the balance in the account is presum ed to be separate property.

Although Sibley was a divorce case, it is not controlling here because it involved a “joint

account,” which is not presented here. Accordingly, because Matthew’s testimony standing

alone is insufficient to trace the separate nature of the funds, McElwee, 911 S.W .2d at 188,

the documentation does not show the origin or source of the funds, the referenced real

estate transactions were not independently docum ented and community funds were

admittedly deposited into the account, the evidence is insufficient to overcome the

com munity property presumption by clear and convincing evidence. See Tarver, 394

S.W .2d at 783. Accordingly, we sustain Susan’s contention in her fourth point that the

evidence was factually insufficient to support a finding by clear and convincing evidence that

the balance of the Morgan Stanley Dean W itter Account was Matthew’s separate property.

Our disposition of points of error two, three, and four pretermits our consideration of

her remaining points. W e reverse that portion of the trial court’s judgment that

characterizes property as com munity and separate and divides the community estate and

remand those issues to the trial court for further proceedings. In all other aspects, the

judgment of the trial court is affirmed.

Don H. Reavis Justice