COURT OF APPEALS OF VIRGINIA
Present: Judges Fitzpatrick, Overton and Senior Judge Duff Argued at Alexandria, Virginia
JAMES H. MANVELL MEMORANDUM OPINION * BY v. Record No. 2023-96-4 JUDGE CHARLES H. DUFF JUNE 10, 1997 KATHLEEN M. MANVELL
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY J. Howe Brown, Judge William F. Wall for appellant.
James A. Watson II (Surovell, Jackson, Colten & Dugan, P.C., on brief), for appellee.
James H. Manvell (husband) appeals the decision of the
circuit court classifying as marital property an investment
account titled in husband's name. Husband contends that an
agreement signed by Kathleen M. Manvell (wife) converted the
account to his separate property. In the alternative, husband
argues that the account contained funds which he received as an
inheritance from his mother and, thus, over half the account was
traceable as his separate property. Finally, husband contends
that the trial court erred in dividing the parties' investment
accounts in such a way that husband received the riskier
investments while wife received the more conservative ones. Wife
appeals the trial court's failure to find waste in husband's
transfer of $56,000 of the parties' funds to the parties' son and * Pursuant to Code § 17-116.010 this opinion is not designated for publication. withdrawal of $16,500 of the parties' funds, made within days of
the parties' separation. Wife also appeals the trial court's
denial of attorney's fees. We now affirm.
Background
The parties were married in 1967 and separated in June 1995
when wife left the marital residence. Husband worked throughout
the marriage until he lost his job in 1989. Husband had managed
the family's finances throughout the marriage, but became
increasingly active in managing the family's investments after
1989. By agreement, wife did not work outside the home for most
of the marriage, but she returned to work after husband lost his
employment. The parties experienced increasing marital difficulties
beginning in 1990, in part because wife refused to support
husband's plan to buy a business. In 1994, husband proposed that
he and wife should start separating their finances. On July 14,
1994, wife signed a statement authorizing Paine Webber to
"journal all assets and monies in my joint account . . . to an
account titled in my husband's name only" and providing "I
realize I will be giving up all ownership and control of these
assets." Subsequently, on July 21, 1994, both parties signed a
statement authorizing Paine Webber to "journal all assets and
monies from my joint account . . . to a single account in my
husband's name only . . . ," and providing "I realize I will no
longer have an interest in the assets held in my husband's name
2 only." On July 21, 1994, Paine Webber transferred $377,660.20
from the parties' joint account into an account in husband's
name. This money subsequently was transferred to a Smith Barney
account and had a balance of $398,220 at the time of trial.
Wife testified that she had little understanding of or
access to the investment information and that she trusted husband
who told her that this document would make his handling of the
investments easier and more "flexible" so he could better support
the family. She did not understand this document to strip her of
any claim to the funds. Wife testified that husband agreed to
transfer other assets to wife to "equalize" their holdings,
although that never happened. Husband testified that the parties
talked about transferring an account to wife's name. However,
husband also testified that wife knew enough about the funds to
know their value and to know that separate title was not
necessary to flexibly manage the joint assets. Husband testified that he received over $88,000 in gifts and
inheritance from his mother between 1986 and 1991, which he
assumed he deposited into the existing joint investment accounts,
although he could not recall specifically which accounts received
his inherited funds.
Between May 29 and May 31, 1995, husband transferred $56,000
from the Smith Barney account to the parties' eldest child to
equalize money previously spent on the other children. Husband
characterized the payment as one from marital funds. Husband
3 admitted that the impending separation influenced him to transfer
the funds sooner. While wife testified at trial that she
objected to the transfer, she indicated that she was concerned by
the fact that husband did not consult with her prior to
transferring the funds because she wanted to be sure each of
their three children received an equal amount.
On June 1 and June 4, 1995, husband wrote checks to himself
from joint accounts totalling $16,500, which he lost gambling in
Atlantic City. The trial court ruled that the July 1994 agreement was
intended only to change the name on the brokerage firm's records
and not to transfer ownership solely to husband. Therefore,
funds held in the Smith Barney account remained marital property.
The trial court rejected husband's alternative claim that at
least half of the Smith Barney account was his separate property
inherited from his mother, finding that "there was not sufficient
proof of the amount [of inheritance] received, or what happened
to the funds after they were commingled with the marital
funds . . . ."
In dividing the Smith Barney investments, the court awarded
wife the more conservative and stable accounts and husband the
high-risk investments. In its order denying husband's motion for
reconsideration, the trial court indicated it awarded the
high-risk investments to husband because of his greater
investment skill.
4 The trial court found that husband's expenditures within
days of the parties' final separation were not waste, as they
were not made in contemplation of divorce.
Equitable Distribution
The evidence was received by the trial court ore tenus. "In
reviewing an equitable distribution award on appeal, we recognize
that the trial court's job is a difficult one. Accordingly, we
rely heavily on the discretion of the trial judge in weighing the
many considerations and circumstances that are presented in each
case." Artis v. Artis, 4 Va. App. 132, 137, 354 S.E.2d 812, 815
(1987). The judgment of a trial court sitting in equity, "when
based upon an ore tenus hearing, is entitled to great weight and
will not be disturbed on appeal unless plainly wrong or without
evidence to support it." Simmons v. Simmons, 1 Va. App. 358,
361, 339 S.E.2d 198, 199 (1986).
Husband contends that the July 21, 1994 statement signed by
wife and husband constituted a valid agreement transferring to
him as his separate property the funds held in the Paine Webber
account. The trial court ruled the writing did no more than
change the title of the account in the records of the investment
brokerage firm, but did not convert the marital funds into
husband's separate property.
While husband testified that wife clearly knew that the
Free access — add to your briefcase to read the full text and ask questions with AI
COURT OF APPEALS OF VIRGINIA
Present: Judges Fitzpatrick, Overton and Senior Judge Duff Argued at Alexandria, Virginia
JAMES H. MANVELL MEMORANDUM OPINION * BY v. Record No. 2023-96-4 JUDGE CHARLES H. DUFF JUNE 10, 1997 KATHLEEN M. MANVELL
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY J. Howe Brown, Judge William F. Wall for appellant.
James A. Watson II (Surovell, Jackson, Colten & Dugan, P.C., on brief), for appellee.
James H. Manvell (husband) appeals the decision of the
circuit court classifying as marital property an investment
account titled in husband's name. Husband contends that an
agreement signed by Kathleen M. Manvell (wife) converted the
account to his separate property. In the alternative, husband
argues that the account contained funds which he received as an
inheritance from his mother and, thus, over half the account was
traceable as his separate property. Finally, husband contends
that the trial court erred in dividing the parties' investment
accounts in such a way that husband received the riskier
investments while wife received the more conservative ones. Wife
appeals the trial court's failure to find waste in husband's
transfer of $56,000 of the parties' funds to the parties' son and * Pursuant to Code § 17-116.010 this opinion is not designated for publication. withdrawal of $16,500 of the parties' funds, made within days of
the parties' separation. Wife also appeals the trial court's
denial of attorney's fees. We now affirm.
Background
The parties were married in 1967 and separated in June 1995
when wife left the marital residence. Husband worked throughout
the marriage until he lost his job in 1989. Husband had managed
the family's finances throughout the marriage, but became
increasingly active in managing the family's investments after
1989. By agreement, wife did not work outside the home for most
of the marriage, but she returned to work after husband lost his
employment. The parties experienced increasing marital difficulties
beginning in 1990, in part because wife refused to support
husband's plan to buy a business. In 1994, husband proposed that
he and wife should start separating their finances. On July 14,
1994, wife signed a statement authorizing Paine Webber to
"journal all assets and monies in my joint account . . . to an
account titled in my husband's name only" and providing "I
realize I will be giving up all ownership and control of these
assets." Subsequently, on July 21, 1994, both parties signed a
statement authorizing Paine Webber to "journal all assets and
monies from my joint account . . . to a single account in my
husband's name only . . . ," and providing "I realize I will no
longer have an interest in the assets held in my husband's name
2 only." On July 21, 1994, Paine Webber transferred $377,660.20
from the parties' joint account into an account in husband's
name. This money subsequently was transferred to a Smith Barney
account and had a balance of $398,220 at the time of trial.
Wife testified that she had little understanding of or
access to the investment information and that she trusted husband
who told her that this document would make his handling of the
investments easier and more "flexible" so he could better support
the family. She did not understand this document to strip her of
any claim to the funds. Wife testified that husband agreed to
transfer other assets to wife to "equalize" their holdings,
although that never happened. Husband testified that the parties
talked about transferring an account to wife's name. However,
husband also testified that wife knew enough about the funds to
know their value and to know that separate title was not
necessary to flexibly manage the joint assets. Husband testified that he received over $88,000 in gifts and
inheritance from his mother between 1986 and 1991, which he
assumed he deposited into the existing joint investment accounts,
although he could not recall specifically which accounts received
his inherited funds.
Between May 29 and May 31, 1995, husband transferred $56,000
from the Smith Barney account to the parties' eldest child to
equalize money previously spent on the other children. Husband
characterized the payment as one from marital funds. Husband
3 admitted that the impending separation influenced him to transfer
the funds sooner. While wife testified at trial that she
objected to the transfer, she indicated that she was concerned by
the fact that husband did not consult with her prior to
transferring the funds because she wanted to be sure each of
their three children received an equal amount.
On June 1 and June 4, 1995, husband wrote checks to himself
from joint accounts totalling $16,500, which he lost gambling in
Atlantic City. The trial court ruled that the July 1994 agreement was
intended only to change the name on the brokerage firm's records
and not to transfer ownership solely to husband. Therefore,
funds held in the Smith Barney account remained marital property.
The trial court rejected husband's alternative claim that at
least half of the Smith Barney account was his separate property
inherited from his mother, finding that "there was not sufficient
proof of the amount [of inheritance] received, or what happened
to the funds after they were commingled with the marital
funds . . . ."
In dividing the Smith Barney investments, the court awarded
wife the more conservative and stable accounts and husband the
high-risk investments. In its order denying husband's motion for
reconsideration, the trial court indicated it awarded the
high-risk investments to husband because of his greater
investment skill.
4 The trial court found that husband's expenditures within
days of the parties' final separation were not waste, as they
were not made in contemplation of divorce.
Equitable Distribution
The evidence was received by the trial court ore tenus. "In
reviewing an equitable distribution award on appeal, we recognize
that the trial court's job is a difficult one. Accordingly, we
rely heavily on the discretion of the trial judge in weighing the
many considerations and circumstances that are presented in each
case." Artis v. Artis, 4 Va. App. 132, 137, 354 S.E.2d 812, 815
(1987). The judgment of a trial court sitting in equity, "when
based upon an ore tenus hearing, is entitled to great weight and
will not be disturbed on appeal unless plainly wrong or without
evidence to support it." Simmons v. Simmons, 1 Va. App. 358,
361, 339 S.E.2d 198, 199 (1986).
Husband contends that the July 21, 1994 statement signed by
wife and husband constituted a valid agreement transferring to
him as his separate property the funds held in the Paine Webber
account. The trial court ruled the writing did no more than
change the title of the account in the records of the investment
brokerage firm, but did not convert the marital funds into
husband's separate property.
While husband testified that wife clearly knew that the
funds were to be his alone, he acknowledged that he had managed
the family's finances throughout the marriage, that he had the
5 greater knowledge and sophistication about the finances in
general and the investments in particular, and that wife trusted
him. Husband testified that he intended to use the funds in this
account now titled only in his name for family purposes: I made it very clear to her that that would become my account and I could do anything I wanted with it and that my intentions were to continue to contribute and work it to the benefit of the family to pay the college education and major costs and our mortgage.
* * * * * * * I said that as long as we're working together as family -- like anything else for the benefit of the family. And the itemizations that were mentioned were the major expenses that she could not cover with her salary -- mortgage, college educations, large items. I also informed her I could lose it.
The parties admitted that husband solely controlled the financial
transactions. There was evidence that with husband's
increasingly more active stock transactions, he had needed to
obtain wife's signature more often. Wife testified that she was
relinquishing control to increase husband's flexibility in making
the stock transactions, but denied that she intended to forego
her marital interest to approximately one-half million dollars.
In the alternative, husband contends that he deposited over
$88,000 in separate funds inherited from his mother which, with
investment earnings over the years, account for over half the
value in the Smith Barney account. Separate property includes
"all property acquired during the marriage by bequest, devise,
descent, survivorship or gift from a source other than the other
6 party." Code § 20-107.3(A)(1)(ii). Nevertheless, [w]hen marital property and separate property are commingled by contributing one category of property to another, resulting in the loss of identity of the contributed property, the classification of the contributed property shall be transmuted to the category of property receiving the contribution. However, to the extent the contributed property is retraceable by a preponderance of the evidence and was not a gift, such contributed property shall retain its original classification.
Code § 20-107.3(A)(3)(d). Husband could not recall into which
funds he deposited these amounts and admitted that "at that time
I felt it not necessary to segregate" these funds from the
parties' marital property. The trial court found that husband
failed to provide sufficient evidence to identify any separate
property received from his mother or her estate. That finding is
not clearly wrong. Finally, husband contends that the trial court violated Code
§ 20-107.3 because it did not divide the current value of the
parties' marital assets but instead relied on husband's future
ability to invest the stocks attributed to him. Code
§ 20-107.3(C) provides that, "[e]xcept as provided in subsection
G, the court shall have no authority to order the division or
transfer of separate property or marital property which is not
jointly owned." The account containing the riskier investments
was marital property not jointly owned. Thus, the court lacked
authority to order the division of that account. Working with
these limitations, the court's equitable distribution award gave
7 the parties approximately equal shares of the marital assets.
The court noted that it considered the tax consequences when
reaching its decision. Moreover, while husband complains that he
received the riskier investments, the court's decision to award
him these investments can hardly be described as an abuse of
discretion in light of husband's admittedly greater knowledge and
past practice.
Waste Wife contends that the trial court erred when it failed to
find waste in husband's transfer of $56,000 to their son and
withdrawal of $16,500 in cash made shortly before she left the
marital residence. "'[W]aste' may be generally characterized as
the dissipation of marital funds in anticipation of divorce or
separation for a purpose unrelated to the marriage and in
derogation of the marital relationship at a time when the
marriage is in jeopardy." Booth v. Booth, 7 Va. App. 22, 27, 371
S.E.2d 569, 572 (1988). The trial court found that the transfers
were not made in contemplation of separation. That finding is
supported by the evidence. While husband admitted he withdrew
the cash and lost it gambling in Atlantic City, there was no
evidence that he intended to spend those funds in a way harmful
to the marriage or in anticipation of a possible divorce.
Moreover, wife's testimony demonstrated that she did not
object to the fact of the transfer to the parties' son, but was
concerned whether each of the parties' children received an equal
8 amount. Therefore, the evidence indicated that that transfer was
not for a purpose unrelated to, or in derogation of, the
marriage.
Attorney's Fees
"An award of attorney's fees is a matter submitted to the
trial court's sound discretion and is reviewable on appeal only
for an abuse of discretion." Graves v. Graves, 4 Va. App. 326,
333, 357 S.E.2d 554, 558 (1987). The trial court noted that, as
husband was unemployed while wife was employed, wife had the
greater earning potential. Wife also received a fair share of
the marital assets. We find no abuse of discretion in the
court's denial of wife's request for attorney's fees. Accordingly, the decision of the circuit court is affirmed.
Affirmed.
9 Fitzpatrick, J., concurring in part and dissenting in part.
I agree with the majority's holdings on all issues except
that of the dissipation of marital funds. I respectfully
disagree with the majority's conclusion that husband's withdrawal
of $16,500 in cash days before the parties' separation was not a
dissipation of marital assets.
Parties are "free to spend marital funds" at least until
they contemplate divorce. Booth v. Booth, 7 Va. App. 22, 27, 317
S.E.2d 569, 572 (1988). The record establishes that husband
acknowledged that the pending separation of the parties was an
impetus to the withdrawal of the marital funds. Waste is often
"characterized as the dissipation of marital funds in anticipation of divorce or separation for a purpose unrelated to
the marriage and in derogation of the marital relationship at a
time when the marriage is in jeopardy." Booth, 7 Va. App. at 27,
371 S.E.2d at 571 (emphasis added). Additionally, we have found
as follows: Dissipation occurs "where one spouse uses marital property for his own benefit and for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown." Once the aggrieved spouse shows that marital funds were either withdrawn or used after the breakdown, the burden rests with the party charged with dissipation to prove that the money was spent for a proper purpose.
Smith v. Smith, 18 Va. App. 427, 430, 444 S.E.2d 269, 272 (1994)
(quoting Clements v. Clements, 10 Va. App. 580, 586, 397 S.E.2d 257, 261 (1990)); see also Alphin v. Alphin, 15 Va. App. 395,
10 403-04, 424 S.E.2d 572, 576 (1992) (no dissipation where party
establishes that expenditures were for a proper purpose, e.g.,
"living expenses, medical bills and other necessities of life").
There are few, if any, clearer ways to squander marital
resources than to gamble them away. Specifically, I disagree
with the majority's finding that "there was no evidence that
[husband] intended to spend those funds in a way harmful to the
marriage or in anticipation of a possible divorce." In the
instant case, husband knew that the marriage was irrevocably
"broken down" at the time he withdrew the marital funds and
incurred the gambling debt of $16,500. He knew that the parties'
separation was imminent. It is undisputed that the funds at
issue were not used in furtherance of a proper purpose or to
promote the success of the marital relationship. Thus, I would
hold that, following the breakdown of the marital relationship,
in gambling away $16,500, husband committed a waste of marital
assets.