Paul W. Newcomb v. Kathryn S. Newcomb

• Court: Court of Appeals of Virginia
• Decided: July 25, 1995
• Docket: 1195943
• Status: Unpublished

Opinion

COURT OF APPEALS OF VIRGINIA

Present: Judges Coleman, Koontz and Senior Judge Hodges

KATHRYN S. NEWCOMB

v. Record No. 0636-94-3

PAUL W. NEWCOMB MEMORANDUM OPINION * AND BY JUDGE SAM W. COLEMAN III JULY 25, 1995 PAUL W. NEWCOMB v. Record No. 1195-94-3

FROM THE CIRCUIT COURT OF ROCKBRIDGE COUNTY George E. Honts, III, Judge

Ellen M. Arthur (McClung & Arthur, on briefs), for Kathryn S. Newcomb.

J. Lloyd Snook, III (Snook & Haughey, P.C., on briefs), for Paul W. Newcomb.

Paul Newcomb and Kathryn Newcomb appeal from an order in

which the circuit court determined that the amount Paul Newcomb

is to pay Kathryn Newcomb "in lieu of alimony" in accordance with

the terms of their court approved property settlement agreement

is $14,000. Both parties contend that the circuit court's

computation of the amount owed, which was computed from a

mathematical formula contained in the property settlement

agreement, was incorrect. We hold that because the trial court

correctly determined the "gross sale price" of Paul Newcomb's * Pursuant to Code § 17-116.010 this opinion is not designated for publication. interest in their bed and breakfast property, which amount is the

contested and controlling component of the formula, the court did

not err in computing the amount to which Kathryn Newcomb is

entitled. Therefore, we affirm the trial court's judgment order

awarding her $14,000 "in lieu of alimony."

FACTS

In 1991, the Circuit Court of Rockbridge County entered an

agreed divorce decree, incorporating the Newcombs' property

settlement agreement. The agreement and decree ordered that Paul

Newcomb pay Kathryn Newcomb $100,000 in consideration for certain

of her property interests and Kathryn Newcomb was ordered to

convey "all her right, title, and interest" in their real

property, which included a bed and breakfast inn, and listed

personal property. The decree also specifically provided that

Kathryn Newcomb would convey her interest in the inn "according

to Paul Newcomb's right to "assign . . . or convey [Kathryn's]

interest to a partner." The provision of the agreement that creates the controversy

in this case states: "In lieu of alimony, [Paul] will pay to Kathryn according to the following schedule: Should [Paul] sell, transfer or dispose of the one-half interest he currently holds . . . at any time within fifteen years of the date of this order he shall pay to [Kathryn] the amount determined as follows: "If within five years hereof, 20 percent of the difference between the gross sale price of [Paul's] interest in the said property and $250,000.00."

(Emphasis added).

-2- In order to obtain funds to pay Kathryn Newcomb $100,000 as

per the agreement, Paul Newcomb borrowed $150,000 from Philip

Clayton. Paul used the remaining $50,000 to pay debts. At Paul

Newcomb's direction, and in accordance with the terms of their

agreement, Kathryn conveyed her undivided one-half interest in

the bed and breakfast property to Philip Clayton, Paul Newcomb's

assignee, by deed dated December 20, 1991. On July 6, 1993, Paul Newcomb and Philip Clayton entered

into a Lease Purchase Agreement in which Clayton agreed to

purchase the bed and breakfast property for $411,900, "payable in

cash upon closing," and the assumption of an outstanding $186,000

indebtedness. Clayton also agreed to pay Paul Newcomb an

additional $58,100 for the furnishings and personalty in the inn.

Thus, on the face of the Lease Purchase Agreement it appeared

that Clayton was paying Paul Newcomb $470,000 in cash

consideration for the entire property plus the assumption of

indebtedness, even though Clayton already owned a one-half

undivided interest in the property, which he had acquired by deed

from Kathryn Newcomb.

On November 22, 1993, Paul Newcomb and Philip Clayton

entered into an Amended Lease Purchase Agreement, because the

"June, 1993 [agreement] did not clearly set forth the terms of

the payments and the total purchase price for the property." In

the amended agreement Clayton agreed to purchase "Paul W.

-3- Newcomb's interest" in the inn for $411,900 "less the sum of

. . . $150,000 . . . which amount has previously been paid when

the purchaser herein purchased the undivided one-half (1/2)

interest of Kathryn S. Newcomb." The amended agreement further

provided that Clayton was to pay Paul Newcomb $58,100 for the

furnishings, personalty, bank deposits in the business account,

and the assumption of certain debt. In addition to the Lease

Purchase and Amended Lease Purchase Agreements setting forth the

terms of the sale, a statement submitted in support of Philip

Clayton's application for a federal Housing and Urban Development

(HUD) loan showed the total purchase price for the realty to be

$411,900, and the purchase price for the personalty to be

$58,100. The HUD draft closing statement showed $150,000 as a

"credit" to Clayton against the total purchase price "for the

previous purchase of one-half interest in mill." TRIAL COURT RULING

The dispositive question before the trial court, and before

this Court, is the amount of the "gross sale price" paid by

Philip Clayton for "Paul W. Newcomb's interest in the property."

Kathryn Newcomb argues that according to the July, 1993 Lease

Purchase Agreement, the gross sale price of Paul Newcomb's

interest in the property was $461,900, and, thus, after deducting

$250,000 according to the terms of the agreement, she was

entitled to 20 percent of the difference, or $42,380. 1 Paul 1 In footnote 8 on p.5 of Appellant Kathryn Newcomb's brief she computes the amount she claims to be due at $43,820, but it

-4- Newcomb argues, on the other hand, that Kathryn Newcomb is

entitled to nothing "in lieu of alimony" because, according to

his computation, in which he deducts the amounts owing against

the property for deeds of trusts and other liens, the gross sale

price of Paul Newcomb's interest in the property is $125,900.

Therefore, after deducting $250,000, nothing remains from which

Kathryn is to be paid 20 percent.

The trial judge determined, based upon the terms of the

Amended Lease Purchase Agreement, that $470,000 was the stated

total gross purchase price that Clayton would be paying for both

Paul's and Kathryn's interests in the realty and the furnishings

and personalty associated with the inn. The trial court found,

relying upon the terms of the Amended Lease Purchase Agreement,

that the "gross sale price" which Philip Clayton paid for "Paul

W. Newcomb's interest in the property" was the total gross sale

price of $470,000, less the amount of $150,000 that Clayton had

loaned to Paul Newcomb, and which indebtedness was forgiven as

consideration for Paul's assigning Kathryn's interest in the

property to Clayton. Thus, by applying the formula from the

property settlement agreement for determining the amount to be

paid Kathryn Newcomb "in lieu of alimony" to the "gross sale

price" for "Paul W. Newcomb's interest in the property," as

determined from the Amended Lease Purchase Agreement, the trial

appears that she based this computation on "a gross total sales price for the Inn" by transposing figures and using the figure $469,100, rather than $461,900.

-5- court determined that the gross sale price for Paul Newcomb's

one-half undivided interest in the inn, including furnishings and

personalty, was $320,000, of which, after deducting $250,000,

Kathryn Newcomb was entitled to 20 percent of the balance, or

$14,000. 2 ANALYSIS PROPERTY SETTLEMENT AGREEMENTS

Property settlement agreements are subject to the same rules

of interpretation as are other contracts. Smith v. Smith, 15 Va.

App. 371, 374, 423 S.E.2d 851, 853 (1992); Tiffany v. Tiffany, 1 Va. App. 11, 15, 332 S.E.2d 796, 799 (1985). In construing the

terms of a property settlement agreement, just as in construing

the terms of any contract, we are not bound by the trial court's

conclusions as to the construction of the disputed provisions.

Smith v. Smith, 3 Va. App. 452, 455, 350 S.E.2d 526, 528 (1986)

(citations omitted). "If all the evidence necessary to construe

a contract was presented to the trial court . . . the meaning and

effect of the contract is a question of law which can be readily

ascertained by this Court." Fay v. Schwarting, 4 Va. App. 173,

180, 355 S.E.2d 342, 346 (1987) (citing Wilson v. Holyfield, 227

Va. 184, 187, 313 S.E.2d 396, 398 (1984)). When examining the

instrument, we discern the intent of the parties and the meaning

of the language from the examination of the entire document,

giving full effect to the words actually used. Layne v.

2 20% x (470,000 - 150,000 - 250,000) = 14,000

-6- Henderson, 232 Va. 332, 337-38, 351 S.E.2d 18, 22 (1986).

The Newcombs' property settlement agreement provides that

the amount to be paid to Kathryn Newcomb in lieu of alimony shall

be based upon the gross sale price of Paul Newcomb's "one-half

interest he currently holds" in the inn and furnishings when he

sells the property. Thus, at the time the property settlement

was executed, the determination of the amount to be paid in lieu

of alimony was contingent upon a future event, which was the sale

of the property. While we are not bound by the trial court's construction of

the terms of a contract, the meaning and terms of the provision

for determining the amount in lieu of alimony are beyond dispute.

The meaning of the term gross sale price, despite the

contentions on brief of Paul Newcomb to the contrary, is clear

and unambiguous. Gross sale price means the total price paid for

an item without reduction for indebtedness, fees, expenses, or

costs associated with the sale.

The parties' dispute over the sale price of Paul Newcomb's

interest derives not from any ambiguity in the terms of the

contract or the meaning of the term gross sale price. Rather,

the problem arises from the fact that under the agreement the

determination of the amount due Kathryn Newcomb depends upon a

future sale where the sale amount is controlled by Paul Newcomb.

Moreover, the sale ultimately involved a complex financial

transaction between Paul Newcomb and Philip Clayton, where the

-7- terms were defined by two lease purchase agreements which

obscured the amount of the gross sale price that Paul Newcomb

received.

The amount of the gross sale price that Paul Newcomb

received is a fact that the trial court was required to determine

based upon the terms of the transaction between Paul Newcomb and

Philip Clayton. We are bound by the trial court's factual

determination of the amount of the gross sale price if it was

supported by credible evidence. See Ferguson v. Stafford County

Dep't of Social Servs., 14 Va. App. 333, 336, 417 S.E.2d 1, 2

(1992).

Kathryn Newcomb contends that the evidence on which the

trial court should have based its finding of gross sale price for

Paul Newcomb's interest was the amount of the purchase price

stated in the first Lease Purchase Agreement or $461,900, without

considering the terms of the Amended Lease Purchase Agreement or

the amounts stated in the HUD applications and closing

statements, which documents show that the amounts in the first

agreement were erroneous and the base amount pertained to the

total purchase price that Clayton was to pay, including the

amount for Kathryn's interest. On the other hand, Paul Newcomb

argues, in effect, that the trial court should have based its

finding of the amount of the gross sale price of his interest

upon one-half of the stated total amount that Clayton was paying

for the property, despite the fact that Paul Newcomb was, in

-8- fact, receiving considerably more than that amount from Clayton

for his one-half undivided interest.

The trial court, in making a factual determination of the

gross amount that Paul Newcomb was paid for his interest in the

property, was required to consider all relevant and material

evidence which showed the terms of the transaction. By accepting

the terms of the Amended Lease Purchase Agreement and the HUD

documents, the trial court necessarily found that the terms of

the Lease Purchase Agreement did not accurately define the terms

of the sale. The Amended Lease Purchase Agreement and the HUD

application and closing statements support the trial court's

finding that $470,000 was the total gross sale price that Philip

Clayton was paying for the entire property. Thus, in order to

determine the gross sale price of Paul Newcomb's undivided

interest, the trial court had to determine the value of the other

share. In doing so, it had before it evidence that Kathryn

Newcomb received $100,000 for conveying her interest in the

marital property to Paul Newcomb and evidence that Philip Clayton

had forgiven a $150,000 loan to Paul Newcomb in order to have

Paul assign to Clayton Kathryn Newcomb's interest in the inn.

Kathryn Newcomb knew at the time that she entered into the

property settlement agreement that she would be paid $100,000 for

her interest in the marital property and the balance of $50,000

that Paul Newcomb borrowed from Clayton would be used to defray

their joint indebtedness. Thus, because Kathryn Newcomb was a

-9- party to the transaction, and because she knew and understood

that $100,000 of the loan was to be paid her and the $50,000

balance was to be used partially for her benefit to pay joint

debts, the trial court did not err in finding that $150,000 was

the amount of the purchase price paid for the assignment of

Kathryn Newcomb's interest in the inn and furnishings and that

$320,000 was the gross sale price paid for Paul Newcomb's

interest. Accordingly, the evidence supports the trial court's finding

that the gross sale price paid for Paul Newcomb's undivided one-

half interest in the property was $320,000. We, therefore,

affirm the judgment of the trial court.

Affirmed.

-10-