Marcum v. Marcum

779 S.W.2d 209, 1989 Ky. LEXIS 96, 1989 WL 134430

• Court: Kentucky Supreme Court
• Decided: November 9, 1989
• Docket: 88-SC-488-DG
• Status: Published

Opinions

WINTERSHEIMER, Justice.

This appeal is from a decision of the Court of Appeals which affirmed in part and reversed in part the decision of the circuit court in a divorce action.

The principal issue is whether the trial court correctly awarded one-half of the present value of the electric business to the husband as nonmarital property. Other issues are whether the trial judge correctly found that a portion of the Mt. Zion real estate tract was nonmarital property; whether there was sufficient evidence to find that the husband had traced a cash inheritance for a certificate of deposit; whether the trial judge abused his discretion in refusing to award maintenance and in refusing to require the husband to pay the wife’s attorney fees.

At the time of the filing of the action, the wife, a homemaker, was 49 years of age and the husband, a self-employed owner and operator of an appliance store, was 54. They had been married for 29 years.

K.R.S. 403.190(3) provides that all property acquired by either spouse during marriage is presumed to be marital property unless there is proof that the property was acquired pursuant to an exception listed in subsection 2 of the statute.

The assignment to the husband as nonmarital property of one-half of the present value of the appliance business was of critical importance. Both parties testified that the husband owned a one-half interest in the business before the marriage and purchased his brother’s interest immediately after the marriage. There was no dispute that the business that existed prior to the marriage was not the same business entity that it had become after 29 years of marriage. The agreed present value was $136,841.57. The business was originally a plumbing and house wiring service which developed into a retail appliance store in which the profits were reinvested in larger inventories and purchases of fixtures and equipment. It is uncontradicted that the husband paid the sum of $1,600 for the one-half interest of the husband’s brother immediately after marriage. The assets purchased for the business grew to a value of $136,841.57, which came from income and must be viewed as marital property. Sousley v. Sousley, Ky. 614 S.W.2d 942 (1981) considered a similar problem and determined that the profit from nonmarital property was income, particularly if it was the parties’ livelihood and was therefore marital property. There is a distinction between an increase in value of property which occurs without effort on the part of the owners and the increase in the value of property that occurs as a result of the efforts of the parties. This business was the principal employment of the husband and pursuant to Sousley, supra, the income produced from the business is marital property and must be divided accordingly.

The husband was able to establish the purchase price of $1,600 for the interest he purchased from his brother immediately after the marriage. He did not offer proof as to the value of his own interest prior to the marriage. This matter should be remanded to allow the husband to prove if possible the value of the business at the time of the marriage.

In regard to the Mt. Zion tract, the husband did not produce sufficient proof to overcome the presumption that property acquired during the marriage shall be considered marital property. K.R.S. 403.-190(3). The husband claimed he had paid $1,250 for the property prior to marriage. However, the wife produced a certified copy of a deed showing that the property was conveyed to the husband six years after marriage for $750. The husband offered no evidence to rebut the presumption that he acquired the real estate after marriage. In view of the evidence regarding the deed, the trial court was clearly erroneous in holding that any portion of this property was the husband’s nonmarital property. The Mt. Zion tract should be considered marital property and divided accordingly.

The husband did not sufficiently prove that the funds he used to purchase a $10,000 certificate of deposit were from an inheritance from his father’s estate. The husband argued that the sum was nonmari-tal property and had been intact since he had received it. The wife introduced probate proceedings which showed unequivocally that the husband could have received no more than $7,250 including his fee as executor. The probate papers of the husband’s father indicate that the father’s estate had a total value of $45,000. The father’s will divided the estate into eight equal shares. The evidence produced in the dissolution proceeding does not overcome the requirements of K.R.S. 403.-190(3). This matter should be remanded to determine what, if any, portion of the certificate of deposit should be considered non-marital property.

The issues of maintenance and attorney’s fees should be remanded to the circuit court to let the trial judge reconsider in accord with the increased property settlement.

The decision of the Court of Appeals is affirmed and this matter is remanded to the circuit court for an entry of judgment consistent therewith.

STEPHENS, C.J., and GANT and COMBS, JJ., concur. VANCE, J., concurs in result only. LEIBSON, J., files a separate opinion concurring in part/dissenting in part. LAMBERT, J., files a separate opinion dissenting in part, in which LEIBSON, J., joins.