Summary
In Donahue v. Donahue, 134 Mich.App. 696, 705, 352 N.W.2d 705 (1984), the trial court determined that the husband and his parents actively concealed assets from the wife.
Summary of this case from Cassidy v. CassidyOpinion
Docket No. 71130.
Decided May 15, 1984. Leave to appeal applied for.
Braun, Kendrick, Finkbeiner, Schafer Murphy (by Ralph J. Isackson), for plaintiff.
Weisman, Trogan, Young Schloss, P.C. (by Martin C. Weisman and John A. Ruemenapp), for defendant.
Defendant husband appeals as of right from a judgment of divorce entered April 15, 1983, which divides the marital estate in accordance with the findings of fact and conclusions of law contained in the trial court's written opinion entered March 22, 1983. The principal issues raised on appeal concern: (1) an award of $14,000 to plaintiff wife to be used by her to pay towards her attorney fees; (2) the equitableness of the division of the marital estate; and (3) the trial court's finding that a $20,000 certificate of deposit and $175,000 in bearer bonds had been given to defendant as a gift by his father, Dr. Harold T. Donahue, and thus were a part of the marital estate.
The parties were married on December 15, 1961, and lived together until their separation in April, 1976. During this time two children were born of the marriage. Defendant worked as an electrician, automobile mechanic, carpenter and plumber, and managed drive-in theaters. Plaintiff was never employed, and at the time of trial was taking courses to become a dental assistant. During the marriage the parties accumulated a substantial marital estate, mostly through gifts from their parents. Plaintiff acquired some $53,000 by gift from her father. Defendant's father, Dr. Donahue, gave as gifts to the parties shares of stock in a number of corporations, some of which became quite valuable.
Depending upon whether the $195,000 in bearer bonds (BB) and certificate of deposit (CD) are included or excluded from the marital estate and depending upon whether one accepts the plaintiff's or the defendant's computation, the marital estate as valued at the time of trial was divided as follows:
ACCORDING TO PLAINTIFF
Total value of estate $758,500 (includes CD and BB) Awarded wife 357,750 Awarded husband 400,750 (includes CD and BB)
ACCORDING TO DEFENDANT
Total value of estate $517,000 (excludes CD and BB) Awarded wife 400,000 Awarded husband 117,000 (after deduction for wife's attorney fees) Retained by Dr. Donahue 195,000 (CD and BB)
Subsequent to the trial, Dr. Donahue cashed the CD. Mrs. Donahue, defendant's mother, removed the BB from the safe deposit box at the People's Bank, to which defendant had access, and placed them in a box controlled exclusively by her. Thus, although the trial court awarded the CD and BB to defendant, defendant has never received the same, and, according to defendant, the court should not have considered them part of the marital estate.
From testimony taken at trial, it clearly appeared that the principal fault lay with the defendant. During the marriage defendant was away from home many nights. After defendant separated from his wife, he carried on a relationship with another woman and that woman had a child by him. Defendant acknowledged paternity and pays for the child's support. Defendant conceded that he was having sex with plaintiff at the same time he was having sex with this other woman. After defendant left in April, 1976, he did not inform plaintiff or his children where he was living for some two and one-half years.
It also became obvious during the pretrial period that defendant and his parents attempted to conceal from plaintiff the nature and value of the marital estate. Defendant testified during pretrial discovery that he had no interest in any municipal bonds but later admitted that his testimony to that effect was untrue. The first attempt at concealment discovered by the court was during the first day of trial. Defendant told the court that a safe in his apartment contained approximately $1,000 in cash and some income tax forms. An inventory of the contents of the safe revealed that defendant had various valuable undisclosed assets in the safe.
During trial defendant admitted that he knowingly failed to include taxable interest income he had received from his savings accounts on his income tax returns, that he purchased bank money orders payable to himself in an effort to conceal money from his wife, and that he left the money orders with his girlfriend, and that his purpose in obtaining them was to conceal the assets from his wife. The record also reveals that defendant's parents aided him in the concealment of his assets. Defendant's mother stated at her pretrial deposition that she had never made a gift to defendant which she had not entered on a gift tax return. She also stated that she had made no gifts to defendant after 1976 as she and her husband "ran out of money". At trial defendant's mother admitted that they had made gifts to him in 1977, 1978, and 1979, and did not file gift tax returns including the gifts. She admitted that they were making an effort to conceal the gifts to defendant. The trial court warned defendant regarding the penalties which could come to bear upon him if he gave perjured testimony.
I
AWARD OF ATTORNEY FEES
The trial court awarded plaintiff some $147,500 in cash. Because of this award, defendant argues that the trial court erred in ordering defendant to pay $14,000 toward plaintiff's attorney fees. The court rule governing the payment of attorney fees is GCR 1963, 726.1. At the time of the proceedings in this case, the court rule read:
".1 Attorney Fees and Expenses.
"(1) In an action for divorce, separate maintenance, annulment, or affirmation of marriage, and in subsequent petitions to modify the judgment, either party may request that the court order the other spouse to pay an attorney the sum specified as necessary to enable that party to carry on or defend the suit.
"(2) The moving party shall allege facts showing that he or she is unable to bear the expense of the action without this aid. The trial judge may require the disclosure of what attorney fees have been paid.
"(3) The court may order, in the judgment or in a separate order, that whatever sum it finds necessary and reasonable be paid to the wife's attorney, either by the husband or out of the assets of the husband over which the court has jurisdiction."
This Court has generally followed the rule that "`attorney fees are not awarded as a matter of right but only if necessary to enable a party to carry on or defend the litigation'". Gove v Gove, 71 Mich. App. 431, 435; 248 N.W.2d 573 (1976), quoting Mixon v Mixon, 51 Mich. App. 696, 700; 216 N.W.2d 625 (1974); Vaclav v Vaclav, 96 Mich. App. 584, 593; 293 N.W.2d 613 (1980).
Nevertheless, the rule is not hard and fast and under special circumstances may not be followed. The allowance of attorney fees basically rests in the sound discretion of the court. Abadi v Abadi, 78 Mich. App. 73, 78-80; 259 N.W.2d 244 (1977), and will be overturned only where manifest abuse of discretion can be shown. Schilleman v Schilleman, 61 Mich. App. 446, 450; 232 N.W.2d 737 (1975). We think special circumstances existed here. The trial court explained that its reason for granting attorney fees was because "[a]lmost all of these legal fees and expenses are directly attributable to the defendant's efforts to conceal the assets of the parties". The court noted that but for the unusual skill and diligence of plaintiff's counsel, defendant would have been successful in perpetrating a fraud upon the court and would have succeeded in causing a serious miscarriage of justice. Thus, even though the court acknowledged that plaintiff had some funds from which she could pay her attorney fees, the court was satisfied that the costs of the litigation should be borne by defendant. The court's decision was based on its view of the division of property and the fact that defendant's actions caused plaintiff to incur those costs.
We agree with the trial court. Defendant's actions were reprehensible and disclosed a total lack of respect for the judicial proceedings below. His efforts at concealment of assets caused plaintiff's counsel to go to great lengths in order to ferret out all distributable marital property. It would be inequitable to require plaintiff to pay for expenses which never would have occurred if defendant had conducted himself in an honest and conscientious manner. For these reasons, we find no abuse of discretion and affirm the award of attorney fees.
II
EQUITABLENESS OF THE DIVISION OF THE MARITAL ESTATE
The relative equity, or lack thereof, of the trial court's division of the marital estate largely turns on whether $195,000, represented by the certificate of deposit and the bearer bonds, was a gift from Dr. Donahue to his son and thus was part of the marital estate. If the $195,000 was a gift to John Donahue, as earlier noted in this opinion, the total estate was approximately $758,500. Of this, the wife was awarded $357,750 and the husband $400,750, from which he was to pay $14,000 in attorney fees for his wife. On its face the property division, as so set forth, is more than fair and equitable to the defendant, particularly when defendant was the person primarily at fault. Even if the marital estate were divided according to the figures presented by defendant, viz.: wife $400,000; husband $117,000, with $195,000 being treated as a gift to the husband but retained by Dr. and Mrs. Donahue, the property division would still be equitable. Dr. Donahue and his wife would simply be holding $195,000 of defendant's share of the marital estate. If they refused to turn these sums over to defendant, defendant could proceed against them. A $400,000 — $312,000 differential is justified by many of the factors that the trial court took into consideration. Among these are the health of the parties. The facts indicate that plaintiff has had a radical mastectomy and stands a good chance of having recurring cancer in the future. Defendant is in good health. The earning abilities of the parties also mandate that plaintiff be allowed a larger share of the marital property. Plaintiff has never had a job and, despite defendant's contentions, still has not obtained one. Defendant is a "jack of all trades" and seems to be able to provide for himself very well. A factor not considered by the trial court but one we find relevant is the fact that defendant is in a position to receive gifts from his father which plaintiff will no longer be able to share with him. Another reason justifying a substantial differential is defendant's fault. He was the person who left the marital home and took up housekeeping with another woman. Testimony given at trial reveals that plaintiff made diligent efforts to reconcile their differences, such as wanting to go to a marriage counselor.
In this event the wife would receive 400,000, the husband 312,000.
The problem is that each of the above two examples assume that the trial court did not err when it determined that the certificate of deposit and bearer bonds were given as gifts to defendant. The equity is less apparent and well may not exist if (a) the CD and BB never became a part of the marital estate, or (b) the trial court was without jurisdiction to determine who was the owner thereof. For, as defendant points out, if the trial court did not have the jurisdiction to determine the ownership or had the jurisdiction and erred, the entire matter of the division of property must be remanded for a redetermination. These questions are examined in part III of this opinion.
III
JURISDICTION AND VALIDITY OF THE TRIAL COURT'S DETERMINATION THAT $195,000 WAS NOT THE PROPERTY OF DEFENDANT'S PARENTS
Defendant argues that it was beyond the power of the trial court to adjudicate the rights of third parties in a divorce action — in this case Dr. Harold Donahue and Alice Donahue. In support of this argument defendant relies on Yedinak v Yedinak, 383 Mich. 409; 175 N.W.2d 706 (1970). Additional support for this rule is found in Stock v Stock, 250 Mich. 295, 297; 230 N.W. 143 (1930), a case not cited in either party's brief. See, also, Krueger v Krueger, 88 Mich. App. 722, 724-725; 278 N.W.2d 514 (1979), and Hoffman v Hoffman, 125 Mich. App. 488, 490-491; 336 N.W.2d 34 (1983).
However, the rule is subject to an exception where it is claimed, as it is claimed here, that the third party has conspired with the husband to defraud the wife out of her rightful interest in the marital estate. Berg v Berg, 336 Mich. 284, 288; 57 N.W.2d 889 (1953); Pruitt v Pruitt, 90 Mich. App. 230, 233-234; 282 N.W.2d 785 (1979). This well-recognized exception to the general rule that third party claims may not be resolved in a divorce action is fully discussed in Anno: Propriety of consideration of, and disposition as to, third persons' property claims in divorce litigation, 63 ALR3d 373, 395-399. In the case before us, the proofs clearly showed that both defendant and his parents were concealing assets from the plaintiff. This fact was commented on more than once by the trial court.
Although Dr. and Mrs. Donahue were not made parties to the suit, they were represented by counsel at trial, they testified at length, and they were cross-examined. Likewise, their pretrial depositions were used in examination. Accordingly, we hold that the trial court was well within its jurisdiction and right to determine whether Dr. Donahue and his wife or defendant were the owners of the certificate of deposit and the bearer bonds.
Having found that the trial court had jurisdiction to determine the third parties' interests in the securities, we next inquire whether the trial court erred in determining that the securities did not belong to Dr. and Mrs. Donahue but instead were part of the marital estate. It is defendant's claim that the record is barren of evidence demonstrating that the securities had been given as gifts or otherwise were the "sole and separate" property of the defendant. We disagree.
The $20,000 certificate of deposit at the Mutual Savings Loan Association had been purchased by Dr. Donahue. It bore the inscription "John Donahue or Harold Donahue" but it had John's social security number on it. It did not bear Dr. Donahue's social security number. Dr. Donahue testified that John collects the interest from the account. John reported the interest received on the certificate in his tax returns. In our opinion sufficient indicia of John's ownership was found to justify the trial court's finding that the certificate of deposit belonged to defendant.
The bearer bonds bore no name or serial number. The safe deposit box in which the bonds were originally kept was in the joint name of John Donahue and his mother. That box was taken out in 1971 and closed in March, 1978. All entries during that period were made by John. The second box, in the same branch of the bank, was taken out in March, 1978. Again it was in the joint name of John and his mother, and again all entries were made by John. That box was closed in April, 1979, and a new box was taken out in a different branch of the bank. This time the box was in the name of John alone, but his mother was authorized to enter the box as a "deputy". John's mother entered the box as deputy three times between April, 1979, and January 27, 1981. After trial commenced on December 30, 1980, she removed $175,000 of the bonds from the box but left $25,000 of bonds issued by the St. Joseph School District. She placed the bonds so removed in a box in the Manufacturer's Bank in Bay City in her name alone.
We find the issue close. Some testimony and evidence supports the conclusion that the parents never intended to make a gift of the bonds. This was the testimony of the parents who explained that they only placed them in a safe deposit box with John having joint access on the advice of legal counsel in order to minimize problems of the administration of their estate. Dr. Donahue's federal income tax returns disclosed that gifts of the St. Joseph School District bonds had been made to John, but that the bonds which John's mother removed and placed in a box in her own name had not been given to him.
On the other hand, there is testimony supporting the trial court's finding. The box from which the bonds were removed was in the name of John alone. It was John who collected the interest and reported it on his tax returns. Plaintiff testified that in late 1969 or early 1970 she was present at a conversation between John and his mother, at which time the mother said they were giving bonds to John to equalize a gift of farm land made to another son and John wouldn't have to pay taxes on the bonds and the amount would be comparable to a gift made to another son.
The gift tax returns filed by the senior Donahues for 1970 showed that they indeed gave John's brother and his wife a gift of farm property having a value then of $105,000. John and his mother deny that any conversation regarding such gifts took place.
Given the sharp conflict in testimony, we cannot say that the trial judge abused his discretion or made findings of fact totally unsupported by the record. The trial judge observes the witnesses and is the best judge of their credibility. Eglash v Detroit Institute of Technology, 375 Mich. 592, 595; 134 N.W.2d 710 (1965). The transcript is replete with instances where John and his parents were untruthful. The senior Donahues made gifts to John in 1977, 1978, and 1979, and did not file gift tax returns in an effort to conceal gifts to their son. Other instances of the lack of credibility of defendant and his parents have been referred to earlier in this opinion.
Absent a showing of abuse of discretion or unless it is clear that the reviewing court would have reached a different result had it occupied the position of trial judge, this Court does not substitute its judgment for that of the trial judge. McLain v McLain, 108 Mich. App. 166; 310 N.W.2d 316 (1981); York v York, 113 Mich. App. 306; 317 N.W.2d 604 (1982). Where the trier of fact finds a witness has testified falsely, it may disregard all of the witness's testimony or believe such parts as are corroborated by other testimony, Hillman v Schwenk, 68 Mich. 293; 36 N.W. 77 (1888). Given the conflicting testimony in this case and the lack of credibility on material issues with respect to some of defendant's witnesses, we are not persuaded that the trial court abused its discretion or that we would have found differently had we occupied the position of the trial judge.
Affirmed. Costs to plaintiff.