IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE FILED July 9, 1998
PHYLLIS ANN FRAZIER HAMBY, Cecil Crowson, Jr. ) C/A NO. 03A01-9708-CV-00346 Appellate C ourt Clerk ) Plaintiff-A ppellant, ) POLK CIRCU IT ) v. ) HON . JOH N B. H AGL ER, ) JUDGE JOSEPH DEW IGHT HAM BY and ) ANTHONY HAMBY, ) AFFIRMED ) AND Defendants-Appellees. ) REMANDED
GRA CE E. D ANIE LL, ST ARR & DA NIELL , Chattano oga, for P laintiff-Ap pellant.
CHARLES B. BURNS, JR., VARNEL L, BURNS & SH ARP, P.C., Cleveland, for Def endant-App ellee Anthony Ham by.
ROGER E. JENN E, JENNE, SCOTT & JENNE, Cleveland, for Defendant-Appellee Jose ph D ewight H amb y.
O P I N IO N
Franks, J.
In this divorce action, the wife appeals from the Trial Court’s Order of
child support and the evaluation of the marital estate and its distribution.
Husb and an d wife were m arried in 1976 a nd hav e two m inor ch ildren.
They separated in August 1994, and at the time of trial the husband was 43 and the
wife was age 40.
The husband holds an associate degree in respiratory therapy, while the
wife has an associate degree in nursing. The wife worked full time until the birth of
their first child. A fter terminatin g her emp loyment in 19 87, she beg an work ing part- time in 1988. The husband works as a respiratory therapist at Copper Basin Medical
Center in Cleveland. He also owned a one-half interest in Cleveland Home
Respiratory Care Inc., which he co-owned with his brother, defendant Anthony
Hamby. This business provides and services respiratory care equipment for patients’
use in their own homes.
The wife filed this action on September 16, 1994, and on November 16,
1994, effective as of October 31, 1994, the husband sold his 50% interest in Cleveland
Home Respiratory Care, Inc., to his brother for $100,000.00. The wife then amended
her comp laint to add the brother as a defenda nt.
After trial, the T rial Court aw arded cus tody of the tw o minor ch ildren to
the wife and ord ered the husband to pay $600.00 per mo nth child support. The C ourt
also held that the husband was to serve as custodian for investment accounts for the
children. The Court also valued husband’s interest in Cleveland Home Respiratory at
the am ount he was p aid for h is stock.
The wife co ntends that the Trial Cou rt erred in setting the child support
at $600.00 per month. First, she contends that the Trial Court should have based
payments on an annual income in excess of $200,000.00, rather than the $32,914.00
that the husband earn ed as a respiratory therapist, and further, even if the husband’s
income was only the amount of his salary, the Trial Court erred because it made a
downward deviation from the Child Support Guidelines without giving written
reasons for the deviation.
The husband earned a much larger income when he was part owner of
the business, but he testified that he sold his share of the business because of long
hours and his desire to spend more time with his children, and at the time of the
divorce his only income was his salary as a respiratory therapist. Additionally, he
offered m edical testimo ny that he wa s depressed before the sale and w as advised to
2 reduce his workload. The Trial Court determined that “Mr. Hamby certainly was
depressed clinically, as the medical evidence shows, that he was overworked when he
sold his share of the business.” The Child Support Guidelines provide that if an
obligor is “willfully and voluntarily” underemployed, child support is to be calculated
based on a determination of potential income. Tenn.Comp.R.& Regs. 1240-2-4-.03
(3)(d). The Trial Court did not consider the sale of the business as a “willfully and
voluntarily” move to become under-employed. The Trial Judge credited the reasons
given by the husband, as well as the medical testimony, as a basis for his actions, and
we cannot say the evidence preponderates against these findings.
The wife argu es that the Trial Court mad e no written findings to su pport
his variance from the g uidelines as re quired by T.C .A. § 36-5 -101. The transcript,
however, shows that the Trial Court was aware of the deviation. The Court noted that
although the child supp ort amount deviated sligh tly from the guidelines, “that’s
justified con sidering the a mount o f time that the non-custo dial parent is sp ending w ith
the children.”
The parties offered differing estimates of the time that the husband spent
with the children. The wife estimated that it was only a third of the time, while the
husba nd testif ied that it w as close r to one -half. T he guid elines, in pertinen t part,
provide that they are:
designed to apply in situation s where c hildren are liv ing primarily with one parent but stay overnight with the other parent at least as often as every other weekend from Friday to Sunday, two weeks in the summer and two weeks during holidays throughout the year . . . In situations where overnight time is divided more equally between the parents, the courts will have to make a case- by-case determ ination as to th e approp riate amou nt of supp ort. 1240- 2-4-.02 (6).
Thus, “[d]eviation from the guidelines may be appropriate . . . where physical custody
of the child(ren) is more eq ually divided . . .” 1240-2-4-.04(2). Wh ile the Trial Court
did not make a written finding on this issue, the transcribed record shows the reason
3 for the deviation. This C ourt has held that an “oral pro nouncemen t by the court
subsequently transcribed” ma y suffice to avoid sending a case back to the trial court
“solely for the purpose of written findings.” Koch v. Koch., 874 S.W.2d 571, 578
(Tenn.App. 19 93). The evidence does not prepond erate against the Trial Court’s
determination, T.R.A .P. Rule 13(d).
Appellant argues that the Trial Court erred in establishing the value of
Cleveland Home Respiratory Care, and argues that the transfer was a fraudulent
conveyance. A conveyance is fraudulent if it is made without fair consideration,
leaving the grantor inso lvent or if the conveyanc e was m ade with th e actual inten t to
hinder, delay or defraud creditors. Macon Bank and Trust Co. v. Holland, 715 S.W.2d
347, 349 (Tenn.A pp. 1996 ); See also T.C.A. §§ 66-3 -305, 66-3-308. W hether a
transfer is fraudulent is determined by the particular facts and circumstances of each
case. Macon Bank, at p. 349 .
The v alue of marital p roperty is a fact qu estion. Wallace v. Wallace, 733
S.W.2d 102,107. (Tenn.App. 1987). The burden is on the parties to produce
comp etent ev idence of valu e, and th ey are bo und by th e evide nce the y present. Id. The
trial court is free to place a value on a marital asset that is within the range of evidence
submitted.
In this case, the parties prese nted testimo ny from three experts
concerning the value of the business. The wife offered the testimony of an
accountant, who testified that the fair market value of the company was
$1,189,860.00 on the date of sale. The hu sband offered the testimony of Harry
Trewhitt, who served as accountant for the corporation and Ronald Arnett, who made
an independent evaluation. Trewhitt valued the corporation at $181,987.00, and
Arnett valued the corporation at $288,000.00.
This Co urt has note d that “[d]e termining th e value of a closely held
Free access — add to your briefcase to read the full text and ask questions with AI
IN THE COURT OF APPEALS OF TENNESSEE
AT KNOXVILLE FILED July 9, 1998
PHYLLIS ANN FRAZIER HAMBY, Cecil Crowson, Jr. ) C/A NO. 03A01-9708-CV-00346 Appellate C ourt Clerk ) Plaintiff-A ppellant, ) POLK CIRCU IT ) v. ) HON . JOH N B. H AGL ER, ) JUDGE JOSEPH DEW IGHT HAM BY and ) ANTHONY HAMBY, ) AFFIRMED ) AND Defendants-Appellees. ) REMANDED
GRA CE E. D ANIE LL, ST ARR & DA NIELL , Chattano oga, for P laintiff-Ap pellant.
CHARLES B. BURNS, JR., VARNEL L, BURNS & SH ARP, P.C., Cleveland, for Def endant-App ellee Anthony Ham by.
ROGER E. JENN E, JENNE, SCOTT & JENNE, Cleveland, for Defendant-Appellee Jose ph D ewight H amb y.
O P I N IO N
Franks, J.
In this divorce action, the wife appeals from the Trial Court’s Order of
child support and the evaluation of the marital estate and its distribution.
Husb and an d wife were m arried in 1976 a nd hav e two m inor ch ildren.
They separated in August 1994, and at the time of trial the husband was 43 and the
wife was age 40.
The husband holds an associate degree in respiratory therapy, while the
wife has an associate degree in nursing. The wife worked full time until the birth of
their first child. A fter terminatin g her emp loyment in 19 87, she beg an work ing part- time in 1988. The husband works as a respiratory therapist at Copper Basin Medical
Center in Cleveland. He also owned a one-half interest in Cleveland Home
Respiratory Care Inc., which he co-owned with his brother, defendant Anthony
Hamby. This business provides and services respiratory care equipment for patients’
use in their own homes.
The wife filed this action on September 16, 1994, and on November 16,
1994, effective as of October 31, 1994, the husband sold his 50% interest in Cleveland
Home Respiratory Care, Inc., to his brother for $100,000.00. The wife then amended
her comp laint to add the brother as a defenda nt.
After trial, the T rial Court aw arded cus tody of the tw o minor ch ildren to
the wife and ord ered the husband to pay $600.00 per mo nth child support. The C ourt
also held that the husband was to serve as custodian for investment accounts for the
children. The Court also valued husband’s interest in Cleveland Home Respiratory at
the am ount he was p aid for h is stock.
The wife co ntends that the Trial Cou rt erred in setting the child support
at $600.00 per month. First, she contends that the Trial Court should have based
payments on an annual income in excess of $200,000.00, rather than the $32,914.00
that the husband earn ed as a respiratory therapist, and further, even if the husband’s
income was only the amount of his salary, the Trial Court erred because it made a
downward deviation from the Child Support Guidelines without giving written
reasons for the deviation.
The husband earned a much larger income when he was part owner of
the business, but he testified that he sold his share of the business because of long
hours and his desire to spend more time with his children, and at the time of the
divorce his only income was his salary as a respiratory therapist. Additionally, he
offered m edical testimo ny that he wa s depressed before the sale and w as advised to
2 reduce his workload. The Trial Court determined that “Mr. Hamby certainly was
depressed clinically, as the medical evidence shows, that he was overworked when he
sold his share of the business.” The Child Support Guidelines provide that if an
obligor is “willfully and voluntarily” underemployed, child support is to be calculated
based on a determination of potential income. Tenn.Comp.R.& Regs. 1240-2-4-.03
(3)(d). The Trial Court did not consider the sale of the business as a “willfully and
voluntarily” move to become under-employed. The Trial Judge credited the reasons
given by the husband, as well as the medical testimony, as a basis for his actions, and
we cannot say the evidence preponderates against these findings.
The wife argu es that the Trial Court mad e no written findings to su pport
his variance from the g uidelines as re quired by T.C .A. § 36-5 -101. The transcript,
however, shows that the Trial Court was aware of the deviation. The Court noted that
although the child supp ort amount deviated sligh tly from the guidelines, “that’s
justified con sidering the a mount o f time that the non-custo dial parent is sp ending w ith
the children.”
The parties offered differing estimates of the time that the husband spent
with the children. The wife estimated that it was only a third of the time, while the
husba nd testif ied that it w as close r to one -half. T he guid elines, in pertinen t part,
provide that they are:
designed to apply in situation s where c hildren are liv ing primarily with one parent but stay overnight with the other parent at least as often as every other weekend from Friday to Sunday, two weeks in the summer and two weeks during holidays throughout the year . . . In situations where overnight time is divided more equally between the parents, the courts will have to make a case- by-case determ ination as to th e approp riate amou nt of supp ort. 1240- 2-4-.02 (6).
Thus, “[d]eviation from the guidelines may be appropriate . . . where physical custody
of the child(ren) is more eq ually divided . . .” 1240-2-4-.04(2). Wh ile the Trial Court
did not make a written finding on this issue, the transcribed record shows the reason
3 for the deviation. This C ourt has held that an “oral pro nouncemen t by the court
subsequently transcribed” ma y suffice to avoid sending a case back to the trial court
“solely for the purpose of written findings.” Koch v. Koch., 874 S.W.2d 571, 578
(Tenn.App. 19 93). The evidence does not prepond erate against the Trial Court’s
determination, T.R.A .P. Rule 13(d).
Appellant argues that the Trial Court erred in establishing the value of
Cleveland Home Respiratory Care, and argues that the transfer was a fraudulent
conveyance. A conveyance is fraudulent if it is made without fair consideration,
leaving the grantor inso lvent or if the conveyanc e was m ade with th e actual inten t to
hinder, delay or defraud creditors. Macon Bank and Trust Co. v. Holland, 715 S.W.2d
347, 349 (Tenn.A pp. 1996 ); See also T.C.A. §§ 66-3 -305, 66-3-308. W hether a
transfer is fraudulent is determined by the particular facts and circumstances of each
case. Macon Bank, at p. 349 .
The v alue of marital p roperty is a fact qu estion. Wallace v. Wallace, 733
S.W.2d 102,107. (Tenn.App. 1987). The burden is on the parties to produce
comp etent ev idence of valu e, and th ey are bo und by th e evide nce the y present. Id. The
trial court is free to place a value on a marital asset that is within the range of evidence
submitted.
In this case, the parties prese nted testimo ny from three experts
concerning the value of the business. The wife offered the testimony of an
accountant, who testified that the fair market value of the company was
$1,189,860.00 on the date of sale. The hu sband offered the testimony of Harry
Trewhitt, who served as accountant for the corporation and Ronald Arnett, who made
an independent evaluation. Trewhitt valued the corporation at $181,987.00, and
Arnett valued the corporation at $288,000.00.
This Co urt has note d that “[d]e termining th e value of a closely held
4 corporation is not an exact science.” Wallace, 733 S.W.2d at 107. In Wallace, the
Court cited factors for th e court to co nsider wh en determ ining a close ly held
corporation ’s value. Th e Trial Co urt took the re levant facto rs into accou nt in
assigning a value to the husband’s interest in the corporation. The experts had
differing views concerning the nature of the business, the proper method of valuation
and ho w imp ortant th e individ ual skill a nd con tacts of the hus band w ere to its s uccess .
Moreover, the experts differed on their projections for the future stability of the
industry. The Trial Court made an extensive analysis and assigned a value that was
within the range of evidence submitted. The evidence does not preponderate against
this dete rminatio n. T.R.A .P. Rule 13(d).
The Court concluded the transaction was not fraudulent and determined
that Anthony Ham by had paid fair consideration o f $100,000.00 f or his brother’s
interest. The h usband a lso retained a storage fac ility that had been built with
corporate funds.
The Trial Court noted that “[t]here’s no doubt there’s some red flags
here.” He noted that th e transaction involved a sale to a fam ily member w ithout a
noncompete agreement and must be “carefully scrutinized.” The Trial Court found
Anthony Hamby “to be a very credible witness.” “The weight, faith and credit to be
given the witnesses’ testimony lies in the first instance with the trier of fact, and the
credibility accorded will be given great weight by the appellate court.” Whitaker v.
Whitaker, 957 S.W.2d 834, 837 (Tenn.App. 1997. The trial court found that “[t]he
wife has shown no evidence of fraud . . . except for those red flags, but other than that
there’s no evidence whatsoever that there was any fraud involved in this transaction or
that $100,000 was not a fair consideration for this business.” The weight to be given
to any particular “ badges o f fraud” is g enerally a ques tion for the trial c ourt. Macon
Bank , 715 S.W.2d at 349-50. The evidence does not preponderate against the trial
5 court’s decision.
Next, the wife contends that the Trial Court erred in dividing the parties’
estate. T rial cour ts have broad d iscretion in divid ing ma rital estate s. Kincaid v.
Kinca id, 912 S.W.2d 140, 142 (Tenn.App. 1995). We generally do not disturb a trial
court’s divisio n unless “th e distribution la cks prope r evidentiary sup port or results
from an error of law or a misapplication of statutory requirements and procedures.”
Thompson v. Thompson, 797 S .W.2d 599, 60 4 (Ten n.App . 1990) .
T.C.A. § 36-4-121(a)(1) provides that marital property shall be divided
equitably, witho ut regard to f ault. An eq uitable divisio n, howe ver, is not nec essarily
an equ al one. Batson v. Batson, 769 S.W.2d 849 (Tenn.App. 1988). In reaching a
decision, a trial court should not mechanically apply the factors listed in § 36-4-121
but rather consider the most relevant factors in light of the unique facts of each case.
Id. In this case, the Trial Court basically adopted the husband’s Proposed Distribution
of Marital Assets, with some modifications. In their briefs, the parties provide
differing totals for each share. Based on the values set forth, and the other items
included in the trial court’s order, the wife’s share totaled approximately $276,893.50
while th e husb and’s s hare w as appr oxima tely $320 ,686.50 .
As the Trial Court found, both parties are of similar age and educational
level. The T rial Court also found th at the parties’ ea rning capa cities were re latively
equal. The record shows that Joseph Hamby was a founder of Cleveland Home
Respiratory Care, and worked diligently to make the company a success. He also
worked at Copper Basin Medical Center as a respiratory therapist. While the wife was
not directly involved in running the company, the trial court found that she made
“great tangible and intangible contributions to this marriage over the years.” The Trial
Court considered the factors in T.C.A. § 36-4-121 in reaching its decision, and we
6 conclu de that th e Trial C ourt ma de an e quitable distribu tion of th e marita l prope rty.
Finally, the wife argues that the Trial Court erred in allowing the
husband to continue to serve as custodian for accounts which he set up for the minor
children. The record contains no evidence that the husband was guilty of any
misconduct in managing these accounts. Additionally, the Trial Court provided
safeguards for distributions f rom the accoun ts. We find no basis to d isturb the Court’s
ruling on this issue, as we ll.
The judg ment of th e Trial Co urt is affirme d and the c ost of the ap peal is
assessed to the appellant, and the cause remanded.
__________________________ Herschel P. Franks, J.
CONCUR:
___________________________ Charles D. Susano, Jr., J.
___________________________ William H. Inman, Sr.J.