Opinion
Record No. 1022-98-1 Record No. 1037-98-1
MARCH 2, 1999
FROM THE CIRCUIT COURT OF YORK COUNTY N. Prentis Smiley, Jr., Judge
Lawrence D. Diehl for Betty M. McPherson.
Scott L. Reichle (Donald J. Reichle; Reichle Reichle, P.C., on briefs), for John P. McPherson.
Present: Chief Judge Fitzpatrick, Judge Bray and Senior Judge Overton
Judge Overton participated in the hearing and decision of this case prior to the effective date of his retirement on January 31, 1999 and thereafter by his designation as a senior judge pursuant to Code § 17.1-401, recodifying Code § 17-116.01:1.
Pursuant to Code § 17.1-413, recodifying Code § 17-116.010, this opinion is not designated for publication.
The instant cause was initiated in the trial court by Betty M. McPherson (wife), praying for a divorce and related relief from John P. McPherson (husband). The matter was referred to a commissioner in chancery (commissioner), and an extensive report was lodged with the court following several evidentiary hearings. Both parties excepted to specific findings and recommendations of the commissioner, ore tenus arguments were heard by the court and the final decree, which aggrieved both parties, was entered on April 8, 1998.
Wife complains on appeal that the court erroneously (1) classified her separate property, Bethel Manor Dairy Queen (Dairy Queen) and related realty, as hybrid property and incorrectly determined and valued the resulting separate and marital shares, (2) failed to classify Yorktown Industries (Yorktown) as marital property either by transmutation or agreement of the parties, and (3) fixed the monetary award. Husband, on cross-appeal, contends that the court improperly (1) awarded wife spousal support, (2) failed to hold wife accountable for waste of marital assets, (3) classified the "marital home," 226 Bacon Street (Bacon Street), as wife's separate property, (4) determined wife's separate property interests in Dairy Queen, (5) classified monies in certain business accounts of the parties, and (6) awarded wife a portion of her attorney's fees.
Finding substantial error in the court's classification and valuation of significant assets in issue, we reverse the decree and remand the proceedings. The parties are fully conversant with the voluminous record, and a recitation of the facts is unnecessary to this memorandum opinion.
Guided by familiar principles, we view [the] evidence and all reasonable inferences in the light most favorable to the prevailing party on an issue below. Although a decree based upon depositions is " 'not as strong and conclusive as one based on evidence heard ore tenus, [it] is presumed to be correct . . . [and] will not be reversed if . . . reasonably supported by substantial, competent and credible evidence.' "Martin v. Martin, 202 Va. 769, 773, 120 S.E.2d 471, 474 (1961) (citations omitted). Thus, we defer to the chancellor's " 'resolution of the conflict in the equities' " in adjudicating equitable distribution and will disturb a decree only when the court has abused its discretion, departed from statutory mandate or acted without support in the evidence. Banagan v. Banagan, 17 Va. App. 321, 326, 437 S.E.2d 229, 231-32 (1993) (citation omitted). "[T]he burden is on him who seeks to overturn [a decree] to show that it is manifestly wrong."Canavos v. Canavos, 200 Va. 861, 866, 108 S.E.2d 359, 363 (1959).
I.
There are three stages to making an equitable distribution of property. The court first must classify the property as either separate or marital. The court then must assign a value to the property based upon evidence presented by both parties. Finally, the court distributes the property to the parties, taking into consideration the factors presented in Code § 20-107.3(E).
Marion v. Marion, 11 Va. App. 659, 665, 401 S.E.2d 432, 436 (1991); see Code § 20-107.3.
Code § 20-107.3(A) defines both separate and marital property, expressly designating increases in the value of separate property during marriage as separate property, unless attributable either to marital property or substantial and resulting from the "significant" "personal efforts" of either party. Code § 20-107.3(A)(1). Property appreciated by marital effort or assets becomes "part marital . . . and part separate," with the marital portion comprised of the marital contributions to enhancement. Code § 20-107.3(A)(3); see Code § 20-107.3(A)(1). The burden is upon the "nonowning spouse" to prove marital interest enhanced separate property, but, once established, the "owning spouse" must show that such increase is attributable neither to marital property nor effort.