Sprick v. Sprick

25 S.W.3d 7, 1999 Tex. App. LEXIS 4693, 1999 WL 420987

• Court: Court of Appeals of Texas
• Decided: June 24, 1999
• Docket: 08-98-00035-CV
• Status: Published

Opinions

OPINION

DAVID WELLINGTON CHEW, Justice.

This is an appeal from the division of the community property estate by the trial court in a divorce proceeding. We affirm.

Michael A. Sprick (“Michael”) sued Linda Diane Sprick (“Linda”) for divorce in September 1996 alleging that Linda had committed adultery and emotional abuse. In December 1997, the trial court entered a final decree of divorce. The trial court awarded Michael the following property and indebtedness:

Value fl2R478.95 $108,500.00

3. A stock portfolio $ 33,204.00

Total: $263,182.95

Liabilities Value

1. Equitable lien to Linda $ 60,000.00

2. Various credit card debts $ 26,241.98

3. Debt to Maurita Johnson 4. Debt to A.W. Newman $118,900.00 $ 6,000.00

5. Debt to Ed Handley $ 30,000.00

Total: $241,141.98

Michael’s Net Award: $ 22,040.97²

Linda was awarded:

Assets Value

1. A judgment/lien against Michael $ 60,000.00

2. Linda’s retirement benefits $ 33,000.00

Total: $ 93,000.00

1. Various credit card debts $ 20,850.56

Total: $ 20,850.56

Linda’s Net Award: $ 72,149.44 ²

Linda filed a motion for new trial on the grounds that the debt owed to Maurita Johnson, an eighty-one-year-old friend of Michael’s family and client of Southwest Financial Services, was fraudulent and that the resulting division of the community property was unjust. During the hearing on the motion for new trial, Linda introduced transcripts of telephone conversations she had with Maurita Johnson in which Ms. Johnson denied loaning Michael any sum of money. Ms. Johnson testified at the hearing by deposition. In her deposition, Ms. Johnson stated that she was unaware of the loan at the time that Linda called. However, she stated that she had previously made the money available to Michael to use for either business or personal purposes even though she was unaware that he had actually used any of the money. After Linda’s telephone conversation with Ms. Johnson, Michael, who had a general power of attorney over Ms. John-

son’s estate, informed Ms. Johnson that he had used the sums to cover some of his business and personal expenses. Ms. Johnson further stated that she would seek repayment of the debt when Michael was able to return to work at Southwest Financial Services. The trial court believed the deposition testimony of Ms. Johnson, stating that eighty-one-year-old people tend to tell the truth, and denied Linda’s motion for new trial. Linda did not request, and the trial court did not file, findings of fact and conclusions of law. Linda appeals.

In three points of error, Linda challenges the division of the community property estate by the trial court. All three points of error concern the trial court’s implied finding that the debt owed to Ms. Johnson was a community debt. In her first point of error, Linda argues that the trial court’s failure to find a fraud upon the community estate was against the great weight and preponderance of the evidence. In her second point of error, Linda argues that the trial court erred by finding that the loan from Ms. Johnson was a community debt. In her final point of error, Linda asserts that the trial court abused its discretion in the division of the community estate.

In a non-jury trial, where no findings of fact or conclusions of law are filed or requested, it is implied that the trial court made all the necessary findings of fact to support its judgment. Roberson v. Robinson, 768 S.W.2d 280, 281 (Tex. 1989). These necessary findings will be implied provided that: “(1) the proposition is one raised by the pleadings and supported by the evidence; and (2) the trial judge’s decision can be sustained on any reasonable theory that is consistent with the evidence and the applicable law, considering only the evidence favorable to the decision.” Brodhead v. Dodgin, 824 S.W.2d 616, 620 (Tex.App. — Austin 1991, writ denied), quoting Franklin v. Donoho, 774 S.W.2d 808, 311 (Tex.App. — Austin 1989, no writ). The appellant will prevail in such a situation only when either the undisputed evidence negates one or more of the elements essential to the decision; or the appellee’s pleadings omit one or more of the essential elements, and the trial was confined to the pleadings. Id. When, as in this case, a statement of facts is brought forward, these implied findings may be challenged by factual sufficiency and legal sufficiency points the same as jury findings or a trial court’s finding of fact. Roberson, 768 S.W.2d at 281. When the implied findings are supported by the evidence, we must uphold the judgment of the trial court on any theory of law applicable to the case. Point Lookout West, Inc. v. Whorton, 742 S.W.2d 277, 278 (Tex. 1987). In this final determination, we will consider only the evidence most favorable to the implied findings and will disregard all opposing or contradictory evidence. Renfro Drug Co. v. Lewis, 149 Tex. 507, 235 S.W.2d 609, 613 (1950); see generally, W. Wendell Hall, Standards of Review in Texas, 29 St.MaRy’s L.J. 351, 497-8 (1998).

In her first point of error, Linda has challenged the factual sufficiency of the evidence supporting the implied finding that the indebtedness owed to Ms. Johnson did not constitute a fraud on the community. Because Linda is challenging an adverse finding concerning an issue upon which she had the burden of proof, she must show that the implied finding is against the great weight and preponderance of the evidence. Croucher v. Crouch-er, 660 S.W.2d 55, 58 (Tex.1983). We evaluate such a challenge by first determining whether the record contains some evidence to support the finding. If evidence exists which supports the finding, then we must examine the entire record to determine whether the finding is so contrary to the overwhelming weight and preponderance of the evidence as to be clearly wrong and manifestly unjust. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986); Capellen v. Capellen, 888 S.W.2d 539, 542 (Tex.App.— El Paso 1994, writ denied). We may reverse and remand this case for a new trial only if we conclude that the trial court’s failure to find that a fraud had been committed against the community is against the great weight and preponderance of the evidence. See Ames v. Ames, 776 S.W.2d 154, 158 (Tex.1989), citing Cropper v. Caterpillar Tractor Co., 754 S.W.2d 646, 651 (Tex.1988). Mindful of the fact that the trial court was not convinced by a preponderance of the evidence, we will not reverse simply because we conclude that the evidence preponderates toward an affirmative answer. Herbert v. Herbert, 754 S.W.2d 141, 144 (Tex.1988). In this case, we will only reverse and remand if the great weight of the evidence supports an affirmative finding of fraud. See id.

In the case at bar, Linda contends that the loan from Ms. Johnson was fraudulent, if not nonexistent, and that Michael had falsely reported the indebtedness in order to offset the value of his business and to manipulate the division of the community assets. In support of this allegation, she points to the transcript of her telephone conversations with Ms. Johnson in which, Ms. Johnson adamantly denied making a loan to Michael. Also, in her deposition testimony, Ms. Johnson testified that even though she had offered to loan Michael some funds, she was unaware that he had used any of the funds until after the call from Linda. According to Ms. Johnson, Michael used the money to defray some of his business and personal expenses. Further, Michael had not paid any of the money back and Ms. Johnson testified that she would not seek repayment until after the divorce was settled and Michael was able to go back to work. Ms. Johnson is an elderly woman, almost blind, and she testified that Michael was not only a family friend but that she had to rely on him to handle her finances because of her disabilities.

Accountants testified at the final hearing for both Linda and Michael. Michael’s accountant testified that he could not rule out the possibility that the unsecured loan from Ms. Johnson was taken by Michael for the purpose of devaluing the business as a community asset. He also testified that it was very unusual for large sums of money to be loaned to an individual without security. Linda’s accountant testified that she did not think the loans were valid. After reviewing Michael’s financial records, she was unable to account for the money that had been loaned to Michael. She also testified that in her opinion, some of the loan documents had been back-dated to make them appear to have been executed before the divorce proceedings commenced. Accordingly, we find that there is some evidence of probative value which would support a finding that the loan from Ms. Johnson was fraudulent.

Examining the record as a whole, there is also evidence supporting a finding that the loan was valid and necessary, but not fraudulent. Michael testified that during the period when he realized that his marriage was failing, he was unable to concentrate on his business and he began to borrow money to cover personal and business expenses. According to Michael, the funds were necessary to sustain his business and his family’s lifestyle. He testified that the source of the funds were personal loans, including the loan from Ms. Johnson. He deposited the funds in the business’s account and applied them to outstanding debts.

Ms. Johnson testified in her deposition that she had loaned the money to Michael and that she was unaware of the loan at the time that she had a telephone conversation with Linda. She stated that she expected to be repaid and that she had a promissory note evidencing Michael’s indebtedness. Further, it was Ms. Johnson’s understanding that the proceeds of the loan were to be used by Michael to cover personal and business expenses and that he would begin repaying her as soon as the divorce was settled and he could put more energy into his business.

Michael’s accountant testified that in his opinion, the loan was valid and that he was able to trace the funds. According to the accountant, the loan was a personal loan and was not a business loan. He testified that during 1996, prior to the commencement of the divorce proceedings, Michael was unable to operate his business on an acceptable level because of his state of mind. Because the business was a sole proprietorship, the income generated was directly related to Michael’s state of mind and his ability to perform. The accountant testified that Michael began taking personal loans to cover expenses as early as seven months prior to the filing of his divorce petition. Finally, Michael’s accountant testified that in the year since Michael filed for divorce, his business performance had improved.

Finally, Linda’s accountant testified that the business records from Southwest Financial Services indicated a correlation between the dollar amounts of the loan from Ms. Johnson and the deposits in the business’s account. While Linda’s accountant stated that she could not find where the proceeds of the loan had been used for the benefit of the community, she later admitted when she reviewed the business’s financial information, she was not trying to determine whether the funds were used to benefit the community.

Reviewing the evidence as a whole, we are unable to say that the trial court’s failure to find that the loan was fraudulent is so contrary to the overwhelming weight and preponderance of the evidence as to be clearly wrong and manifestly unjust. The evidence is conflicting and the determination of whether the loan was fraudulent rests heavily upon the credibility of the witnesses, especially Michael and Ms. Johnson. The trial court believed Ms. Johnson when she said that she had loaned Michael the money and that she expected to be repaid. It is not within the province of this Court to interfere with the fact finder’s resolution of conflicts in the evidence or to pass on the weight or credibility of the witnesses’ testimony. Capellen, 888 S.W.2d at 542, citing Benoit v. Wilson, 150 Tex. 273, 239 S.W.2d 792, 797 (1951). In other words, we are unable to say that the great weight of the evidence supports an affirmative finding of fraud. Linda’s first point of error on appeal is overruled.

In her second point of error on appeal, Linda argues that even if the loan from Ms. Johnson was valid the trial court erred when it found that the loan was a community debt. All property on hand at the dissolution of marriage is presumed to be community property. Tex.Fam.Code Ann. § 3.003(a)(Vernon 1998); Kimsey v. Kimsey, 965 S.W.2d 690, 702 (Tex.App.— El Paso 1998, pet. denied). It is well established that debts contracted during the marriage are presumed to be on the credit of the community and thus are community obligations, unless it is shown that the creditor agreed to look solely to the separate estate of the contracting spouse for satisfaction. Id., citing Cockerham v. Cockerham, 527 S.W.2d 162, 171 (Tex. 1975); Morris v. Morris, 894 S.W.2d 859, 863 (Tex.App. — Fort Worth 1995, no writ); and Jones v. Jones, 890 S.W.2d 471, 475 (Tex.App. — Corpus Christi 1994, writ denied). It follows that if debts contracted during the marriage are presumed to be on the credit of the community and thus are community obligations under Section 3.003(a), then the degree of proof needed to rebut the presumption is clear and convincing evidence as provided in Section 3.003(b). Tex.Fam.Code Ann. § 3.003(b).

When the burden of proof at trial is by clear and convincing evidence, we will apply the higher standard of factual sufficiency review first articulated in Neiswander v. Bailey, 645 S.W.2d 835, 835-36 (Tex.App.' — Dallas 1982, no writ). In Interest of G.B. R., 953 S.W.2d 391, 396 (Tex.App. — El Paso 1997, no writ). After considering all of the evidence, we must determine not whether the trier of fact could reasonably conclude that the existence of a fact is more probable than not, as in cases where the burden of proof is by a preponderance of the evidence, but whether the trier of fact could reasonably conclude that the existence of the fact is highly probable. Id. Under this standard, we must consider whether the evidence was sufficient to produce in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established. Id. at 396, citing Mezick v. State, 920 S.W.2d 427, 430 (Tex.App.— Houston [1st Dist.] 1996, no writ); In the Interest of P.S. and L. S., 766 S.W.2d 833, 835 (Tex.App. — Houston [1st Dist.] 1989, no writ). This case presents a unique situation in that an appellant is challenging a non-finding where the appellant bore the burden of proof by clear and convincing evidence. In a case such as this, we will only sustain the challenge if the trial court’s failure to find that the loan was a separate obligation of Michael is against the clear and convincing evidence. In other words, Linda’s challenge will fail if the evidence is insufficient to produce in the mind of the trier of fact a firm belief or conviction as to the debt’s separate property character.

In the case at bar, the evidence establishes that the loan was created during the existence of the marriage, albeit in close proximity to the commencement of the divorce action. Thus, the debt is presumed to be on community credit and a community obligation. To rebut this presumption, Linda had the burden of showing by clear and convincing evidence that the creditor, Ms. Johnson, agreed to look solely to the separate estate of the contracting spouse, Michael, for satisfaction. Linda failed to meet this burden of proof. Linda’s second point of error on appeal is overruled.

In her final point of error on appeal, Linda argues that the trial court abused its discretion in the division of the community estate. She argues that the trial court’s award of Southwest Financial Services to Michael without adequate compensation to her rendered the division of the community estate so manifestly unjust and unfair as to constitute an abuse of discretion. We disagree.

The trial court has wide discretion in dividing the marital estate of the parties. Tex.Fam.Code Ann. § 7.001; Jacobs v. Jacobs, 687 S.W.2d 731, 733 (Tex. 1985); Kimsey, 965 S.W.2d at 704; Capel-len, 888 S.W.2d at 543. It is presumed that the trial court exercised its discretion properly, and the division will not be disturbed on appeal unless a clear abuse of discretion is shown. Murff v. Murff, 615 S.W.2d 696, 698 (Tex.1981); Bell v. Bell, 513 S.W.2d 20, 22 (Tex.1974); Kimsey, 965 S.W.2d at 704. The trial court’s ultimate division need not be equal as long as it is equitable and the circumstances justify a disproportionate division. Kimsey, 965 S.W.2d at 704; Thomas v. Thomas, 525 S.W.2d 200, 202 (Tex.Civ.App. — Houston [1st Dist.] 1975, no writ). In exercising its discretion, the trial court may consider many factors, including a disparity of incomes or of earning capacities, the spouses’ capacities and abilities, benefits which the party not at fault would have derived from continuation of the marriage, business opportunities, education, relative physical conditions, relative financial condition and obligations, disparity of ages, size of separate estates, and the nature of the property. Murff, 615 S.W.2d at 699; Kimsey, 965 S.W.2d at 704.

In light of our rulings on Linda’s first two points of error, it is apparent that the trial court’s division of the community estate favored her. Linda received approximately 76.6 percent of the net assets of the community property estate while Michael received only 23.4 percent of the net assets. Further, the trial court clearly considered Linda’s infidelity to be the reason for the dissolution of the marriage and the trial court indicated that Linda’s fault would consider highly in his division of the community estate. Because the circumstances of the divorce would have justified a disproportionate division of the community estate in favor of Michael, we fail to see how a division favorable to Linda could constitute an abuse of discretion. See Conroy v. Conroy, 706 S.W.2d 745, 748 (Tex.App. — El Paso 1986, no writ)(disproportionate division of community estate in favor of wife was not abuse of discretion where wife was forty-seven years old and had not worked outside of the home at any time during the twenty-four-year marriage, husband had income in excess of $3,000 per month, wife had no income and poor prospects for any immediate alleviation of debt, wife assumed responsibility of child and mortgage on family home, and husband was at fault in dissolution of the marriage). We hold that the trial court did not abuse its discretion. Linda’s third point of error is overruled.

Having overruled each of Linda’s points of error on appeal, we affirm the judgment of the trial court.

2 . The asset, liability, and net award figures for both Michael and Linda do not include the two vehicles and the corresponding indebtedness. Michael was awarded the 1996 Nissan Pathfinder subject to the debt owed to GMAC Financial Services. Linda was awarded the 1996 Honda Accord subject to the debt owed to American Honda Finance Corporation.