Opinion
Record No. 0385-93-3 Record No. 0399-93-3
January 18, 1994
FROM THE CIRCUIT COURT OF MONTGOMERY COUNTY DUANE E. MINK, JUDGE.
Dennis P. Brumberg (Lutins and Shapiro, on briefs), for Nancy Ellen Martin Reynolds.
Edwin C. Stone (Stone, Hamrick, Harrison Turk, on brief), for Vann Coleman Reynolds.
Present: Chief Judge Moon, Judges Coleman and Willis.
Argued at Salem, Virginia.
Pursuant to Code § 17-116.010 this opinion is not designated for publication.
The judgment of the trial court is affirmed in part and reversed in part.
I. THE MONETARY AWARD BASED ON SM CORPORATION STOCK
1. 222 shares given to Mrs. Reynolds by her father. This block of stock was plainly Mrs. Reynolds' separate property at the time she acquired it. See Code § 20-107.3(A)(1)(ii).
2. 222 shares given to Mrs. Reynolds by her brother Michael Martin. The evidence supports the trial court's determination that this was a gift to Mrs. Reynolds from Mr. Martin. Thus, at the time of the gift, this block of stock became Mrs. Reynolds' separate property. Code § 20-107.3(A)(1)(ii).
3. Transmutation. Although the block of stock from Michael Martin was a gift to Mrs. Reynolds, the parties agreed to make corresponding counter-gifts to him. This scheme of reciprocal gratuity was largely accomplished during the duration of the marriage and was accomplished out of Mr. Reynolds' earnings. Furthermore, the evidence supports the trial court's finding that SM Corporation enjoyed precarious financial prospects, and that although Mr. Reynolds was paid a modest salary for his management of the company, his efforts nonetheless prevented the company's collapse and afforded it prosperity, at least to the extent of continuing financial stability. These findings support the trial court's determination that the 444 shares of stock, owned by Mrs. Reynolds as separate property, were thereby transmuted into marital property. See Barnes v. Barnes, ___ Va. App. ___, ___, 428 S.E.2d 294, 299 (1993).
4. The Monetary Award. Each partner to a marriage should receive a fair proportion of the marital property accumulated during the marriage. Roane v. Roane, 12 Va. App. 989, 994, 407 S.E.2d 698, 701 (1991). The determination of that amount lies within the sound discretion of the trial court. Gamble v. Gamble, 14 Va. App. 558, 573, 421 S.E.2d 635, 644 (1992). That determination will not be disturbed on appeal absent a showing of abuse of discretion.
While Mr. Reynolds' efforts justified transmutation of the 444 shares of stock from separate to marital property, the capital value of those shares came initially into the marriage as Mrs. Reynolds' separate property. The trial court fully considered the economic circumstances of the corporation and its business. We find no abuse of discretion in determining the amount of marital award based on the SM Corporation stock. The judgment of the trial court in that regard is affirmed.
II. TAX CONSEQUENCES AND MANNER OF PAYMENT
1. Tax Consequences. Former Code § 20-107.3(E)(10) provided that, in determining a monetary award, the trial court shall consider "the tax consequences to each party." Mrs. Reynolds argues that the appraisal of SM Corporation was inaccurate because it failed to take into account the tax liability that would result upon liquidation of the corporation. However, no evidence established that the corporation would be liquidated. We find no error in the trial court's refusal to charge Mr. Reynolds a portion of a speculative tax liability that might never be incurred.
2. Manner of Payment. Code § 20-107.3(D) authorizes the trial court to order the payment of the monetary award "over a period of time in fixed amounts." We find no abuse of discretion in the trial court's ordering such a method of payment in this case. The evidence established that SM Corporation is essentially non-liquid and that it produces a modest cash flow. The evidence supports the finding that to require Mrs. Reynolds to pay the monetary award as a lump sum would work an inequity on her.
III. THE JUDGMENTS IN FAVOR OF MR. REYNOLDS AGAINST SM CORPORATION
SM Corporation was not a party to this litigation. Therefore, the trial court erred in entering judgment against it in favor of Mr. Reynolds.
The judgment of the trial court is affirmed as to the monetary award, its calculation and manner of payment. The judgment of the trial court is reversed as to the judgment rendered in favor of Mr. Reynolds against SM Corporation, and that judgment will be vacated.
Affirmed in part, reversed in part.