Opinion
Record No. 1425-92-2
July 6, 1993
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND THEODORE J. MARKOW, JUDGE.
Stephen E. Baril (Curtis M. Hairston, Jr.; Williams, Mullen, Christian Dobbins, P.C., on briefs), for appellant.
Murray J. Janus (Deanna L. Dworakowski; Bremner, Baber Janus, on brief), for appellee.
Present: Judges Coleman, Willis and Elder.
Argued at Richmond, Virginia.
Pursuant to Code § 17-116.010 this opinion is not designated for publication.
Paul O. Lanier, II, appeals from the trial court's ruling that the marital residence should be sold and the net proceeds should be divided equally. On appeal, he argues that the trial court erred (1) in not classifying the marital residence as part separate property, pursuant to Code § 107.3(A)(3)(d), to the extent that a portion of the payments were made by his father for his benefit only; and (2) in equally dividing the equity in the marital residence under Code § 107.3(E) in light of the evidence that appellant's father intended his payment of the loan to be a gift to son only. For the reasons set forth below, we affirm the trial court's equitable distribution award.
I.
Following their marriage in February of 1986, husband and wife jointly purchased a home. Husband made the $4,000 down payment, and they both signed a note with Crestar for the balance of $125,000, which required the payment of monthly interest and five $25,000 annual principal payments. Husband made the monthly interest payments, and husband's father and mother made the annual $25,000 principal payments directly to the bank. In exchange for each payment, husband executed a note for $25,000, and later in the year, father and mother forgave $20,000 of the note and filed a gift tax return for $20,000. The notes were executed by husband only, and the gift tax returns designated husband as the only donee. Father testified that their intent was to make gifts only to husband, even though they knew that they could make a similar gift to wife. Wife had no knowledge of these transactions until after the separation.
At the time of the Commissioner's hearing, the loan from Crestar had been paid in full. In addition, father had forgiven four of the five notes, and husband hoped that he would also forgive the final $25,000 note. Although the notes provided for interest payments, father and mother never attempted to collect any interest.
II. A.
Appellant argues first that payment of the parties' joint loan obligation by his father was a gift to him alone and was, therefore, separate property under Code § 20-107.3(A)(1), which was retraceable under § (A)(3)(d), even though commingled with marital property. We disagree.
We agree that the commissioner erred in finding that appellant's father (hereinafter Mr. Lanier) made payments to appellant, who then applied the money toward his joint obligation to the bank. The evidence clearly shows that Mr. Lanier made the payments directly to the bank and that appellant never had physical possession of the money. However, we conclude that this is a distinction without a difference, and that the bulk of the commissioner's legal analysis is sound.
Code § 20-107.3(A)(1)(ii) defines separate property to include "all property acquired during the marriage by bequest, devise, descent, survivorship or gift from a source other than the other party." It does not, however, include property acquired by loan, and such property is classified as marital by default under the catch-all provision of Code § 20-107.3(A) (2)(iii). Subsection (A)(3)(d) provides that, under certain circumstances, separate property may retain its original classification even if commingled with marital property:
When marital property and separate property are commingled by contributing one category of property to another, resulting in the loss of identity of the contributed property, the classification of the contributed property shall be transmuted to the category of property receiving the contribution. However, to the extent the contributed property is retraceable by a preponderance of the evidence and was not a gift, such contributed property shall retain its original classification.
Code § 20-107.3(A)(3)(d). Unless it is classified as separate property prior to being commingled, however, this subsection is inapplicable.
The critical issue here is whether Mr. Lanier's payments to the bank constituted a loan or a gift at the time they were made. If each payment was a gift at the time it was made, Code § 20-107.3(A) (1)(ii) classifies it as separate property. In this case, however, the facts clearly show that each annual transaction by which Mr. Lanier made $25,000 payments directly to the bank was initially a loan to appellant. Although appellant never had actual physical possession of the money, he executed a note payable to his father in that same amount. In so doing, he relieved appellee of a portion of her obligation to the bank, for which the parties were jointly and severally liable, by assuming full personal liability on a note to Mr. Lanier. This two-tiered transaction — involving both a loan from Mr. Lanier to appellant and relief of appellee from her obligation to the bank — clearly requires that we classify the funds received as marital property. Mr. Lanier's subsequent forgiveness six months later of a portion of each annual loan, which constituted a gift, came too late to convert the funds into separate property. The fact that appellee had no knowledge of these transactions until after the separation is not relevant under the statute.
B.
Appellant argues next that, even if the trial court found Mr. Lanier's contributions to be marital property, it abused its discretion under Code § 20-107.3(E) by equally dividing the equity in the marital residence without first giving him credit for the $125,000, given that the evidence showed Mr. Lanier's intent to make a gift of that amount to appellant only. Although appellant acknowledges that he is not entitled to an automatic credit in this amount, he argues that, "when the uncontroverted facts demonstrate that this was the parties' intent, the trial court should be required to make specific findings under § 20-107.3(E) as to why such a credit would be unjust or inequitable." He also points to what he considers clearly erroneous findings of fact and conclusions of law which, he argues, affected the determination.
In deciding whether to make a monetary award, the chancellor must consider all ten factors enumerated in Code § 20-107.3(E), but he is not required to consider all factors equally or to reveal what weight he gives each factor. See Marion v. Marion, 11 Va. App. 659, 663-64, 401 S.E.2d 432, 435-36 (1991). Unless it appears from the record that the chancellor has abused his discretion, that he has not considered or has misapplied one of the statutory mandates, or that no credible evidence supports the findings of fact underlying his resolution of the conflict in the equities, the chancellor's equitable distribution award will not be reversed on appeal. Smoot v. Smoot, 233 Va. 435, 443, 357 S.E.2d 728, 732 (1987); see also Aster v. Gross, 7 Va. App. 1, 7-8, 371 S.E.2d 833, 836 (1988); Taylor v. Taylor, 5 Va. App. 436, 444, 364 S.E.2d 244, 249 (1988).
The record in this case clearly reveals that the commissioner considered all the statutory factors; his report contains a separate subheading for and discussion of each factor. Among those factors, he discussed the evidence of Mr. Lanier's intent in paying off the parties' joint debt to Crestar. Nevertheless, he recommended that the marital residence be sold and the proceeds divided equally. The trial court approved this result. Although the commissioner clearly erred in finding that appellant physically received the money and then used it to make the payments to the bank, we noted above that this is a distinction without a difference. The commissioner is entitled to give any weight he wishes to each of the factors and, contrary to appellant's assertion, is not required to specify why he reached a particular result, as long as the record contains credible evidence to support that result. Appellant would have us (1) create a rebuttable presumption that his father's intent in paying the loan entitled him to a credit for that amount in the equitable distribution, and (2) require the trial court to make certain findings of fact as to why application of the presumption would be inequitable before deviating from it. We conclude that the trial court did not abuse its discretion in affirming the commissioner's report.
For the aforementioned reasons, we affirm the judgment of the trial court.
Affirmed.