Richard Pallmer Jahn, Jr. v. Sheryl June Jahn

IN THE COURT OF APPEALS OF TENNESSEE

AT KNOXVILLE FILED February 4, 2000 E1999-01098-COA-R3-CV RICH ARD PAL LME R JAH N, JR., Cecil Crowson, Jr. ) C/A NO. 03A01-9903-CH-00097Court Clerk Appellate ) Plaintiff-A ppellant, ) HAMILTON CHANCERY ) vs. ) HON. DOUGLAS A. MEYER, ) SITTING BY INTERCHANGE SHERYL JUNE JAHN, ) ) AFFIRMED AND Defendant-Appellee. ) REMANDED

J. W. DIE TZEN , DIETZ EN & ATC HLEY , Chattano oga, for P laintiff-Ap pellant.

E. BLAKE M OORE, SPEAR S, MOORE, REB MAN & WILLIAMS, Chattanooga, for Defendant-Appellee.

O P I N IO N

Franks, J.

This is a third appeal in this divorce action which was filed more than six years a go betw een pla intiff (“h usban d”) and defen dant (“w ife”).

The pertinent facts from the previous appeals are that from the first appeal, this Court mandated that the Trial Court identify the marital assets of the parties, establish the value of those assets, and equitably divide the same. The Trial Court w as further d irected to valu e the husb and’s law practice at $1 80,065.00 , and to catego rize the la w prac tice as a m arital asse t. Jahn v. Jahn, 932 S.W.2d 939 (Tenn. Ct. App. 1996).

An Order was subsequently entered by the Trial Court on July 29, 1997, which did identify and value the parties’ marital assets, and divided the same. The Order expressly recites that the Court’s intent was to divide the marital property 55% to the husband and 45% to the wife. However, if the stated values are added and percentag es figured based up on wha t each party w as award ed, husban d actually receive d 62% of the m arital esta te and th e wife receive d 38% .

The wife’s attorney attempted to file an appeal from the July 1997 Order, but the Notice of Appeal was not timely filed, and the appeal was dismissed.

On August 27, 1998, the wife’s attorney filed a Motion for Relief from Judgment of Order in the trial court, pursuant to Tenn. R. Civ. P. 60.02 due to the “mistake, inadvertence, and/or excusable neglect by the trial court in the calculation of assets which the Court awarded to the Defendant in this action.” Subsequently, the Trial Court hearing the matter, acknowledged that he had made an error in his addition of the asse ts awarde d to husba nd, such th at an addition al payment fro m the hus band to the wife was necessary in order to effectuate the court’s intended 55/45 split. The Trial Judge thus vacated the prior Order, and entered an Order on March 1, 1999, which corrected the mathematical error contained in the previous order by awarding an additional $31,646 .19 to the wife. This app eal resulted from the Trial C ourt’s action.

The wife’s motion sought correction of the July 29, 1997 Order pursuant to Tenn. R. Civ. P. 60.02. The Trial Court, however, stated at the motion hearing that pursuant to Tenn. R. Civ. P. 60.01, he could, at any time and on his own initiative correct a mathematical error such as the one under consideration. The Order entered *3 to vacate the July Order does not specifically cite Rule 60.01 as the basis for relief, but it is clear from the transcript of the hearing that this subsection of the rule was relied upon b y the judg e to justif y changi ng his p revious order.

The hus band con tends that the wife’s R ule 60 mo tion was im properly granted, but Rule 60.01 plainly provides that “clerical mistakes in judgments” or “errors therein arising from ov ersight” can be corrected a t any time and on the court’s own initiative. The July Order showed on its face that it contained a mathematical error, and as such, the Trial Court did not err in correcting the same.

The husband further argues that the Trial Court’s error was not clerical error, but it is apparent from the transcript that the Court was referring to clerical error as in an error m ade by th e clerk, a s oppo sed to a n error m ade by th e Judg e himse lf. The C ourt qu oted fro m Ru le 60.01 and ass erted tha t this wa s the ba sis for h is ruling . The cases interpreting Tenn. R. Civ. P. 60.01 instruct that the term “clerical mistake” does not just apply to the actions of a court clerk. In the case of Zeitlin v. Zeitlin, 544 S.W.2d 103, 108 (Tenn. Ct. App. 1976), this Court interpreted the term “clerical mistake” contained in Rule 60.01 as “mechanical errors of computation or copying by any person, Clerk or otherwise.” The Trial Court’s correction falls within the stated definitio n. Accord, Pennington v. Pennington, 592 S.W.2d 576 (Tenn. Ct. App. 1979).

The wife argues that it was improper for the Trial Court to allow the parties to appea l the July O rder “as modif ied by the Order entered Marc h 1, 199 9". The M arch Ord er recites, how ever, is that “[t]h e final orde r entered Ju ly 29, 1997 is hereby vacated, and this order shall constitute a modification and re-entry of said final *4 order. The parties are allowed thirty (30) days from the date of the entry of this order to file an appropriate notice of appeal.” Accordingly, the March Order, as with any other order , entitled the pa rties to appea l the substan ce of the M arch Ord er timely perfec ted.

The issue thus becomes whether the division of marital property was equitable. T.C.A. § 36-4-121(c) provides that certain factors must be considered when distributing the marital estate, p ursuant to d ivorce, and the law is w ell settled that a proper ty distributio n does not hav e to be m athem atically equ al to be e quitable . Ellis v. Ellis, 748 S.W.2d 42 4 (Tenn. 1988.)

Our review of a trial court’s property valuation/distribution is de novo with a pres umption o f correctne ss, unless the p reponde rance of th e evidenc e is otherw ise. Tenn. R. App. P. 13(d); Mondelli v. Howard, 780 S.W .2d 769 (T enn. Ct. App. 1 989).

This Court has already addressed certain property valuation and distribution issues in Jahn v. Jahn, 932 S.W .2d 939 (T enn. Ct. A pp. 1996 ). This Court specifically found in that appeal that the husband’s law practice is a marital asset and was properly valued at $180,065.00, which holding is the law of the case on this issue on this appeal. In that appeal, this Court also stated that the wife had made substantial contributions as a wage-earner, wife and mother, and that the husband had made a contribution o f separate property to the marital estate and tha t these factors should be con sidered by the Tr ial Cou rt in equ itably divid ing the p roperty. Id. at 944-945. This C ourt specific ally ruled, how ever, that the h usband w ould not b e able to offset the value of his interest in the law firm assets at the time of the marriage against *5 the valu e of the same a t the time of the d ivorce. Id. at 944.

The husband argues that wife should have an additional 5% deducted from her share of th e marital estate due to her u nclean ha nds, becau se she attem pted to hide marital funds by placing them into a bank account which she held jointly with her boyfriend, and then tried to cover up this fact in court. We have been cited to no reported cases where the unclean hands of a party affected the ultimate division of marital property. The statute which deals with property division pursuant to divorce expres sly provid es that f ault is no t to be co nsidere d whe n divid ing ma rital asset s. See Tenn. Code Ann. §36-4-12 1(a)(1).

The Trial Court did consider the wife’s actions as far as weighing her credibility, by assessing her with the value of that account as well as other cash which she did not account for. The total attributed to this account and other monies not accounted for was some $35,000.00 which was awarded to the wife as a part of her equitable sh are of the m arital estate. Alth ough ther e was no proof that s he actually had these funds at the time of the divorce, the Trial Court felt that she had control of the funds and shou ld be assess ed with the ir value. W e hold that n o action by this Court is warranted regarding these assets, and that the Trial Court made a proper allocation.

Next, the husband argues that the Trial Court erred in not considering the tax consequences applicable to the Court’s award to the husband of his law practice. The husband asserts that, because $165,000.00 of the value of the practice was for accounts receivable, and because the husband is in the 28% tax bracket for incom e tax, a re duction of $46 ,000.00 in the va lue of th e law p ractice w as war ranted. *6 He relies on Tenn. Code Ann. §36-4-121(c)(9) which mandates that tax consequences must be considered in a property division.

Husband raised this issue before the Trial Judge, but the Trial Judge held that he was constrained by this Court’s ruling in Jahn v. Jahn, 932 S.W.2d 939, that he must consider the full value of the law practice at $180,065.00. The husband also argued to the Trial Court that after tax values should be used not only for the law practice , but also for hu sband ’s IRA , wife’s IRA, a nd the w ife’s bu siness in terest. The Judge ruled that the tax issue was a wash, because both parties were in the same tax bracket, and the Judge elected to use all pre-tax values in dividing the marital assets.

While tax consequ ences are to be consid ered as a rele vant facto r in making an equ itable division of marital property, we con clude that the Trial Court took this into account. (By concluding that the taxes would equal out, he simply used pre-tax values on all assets.) There is no proof that the parties were in different tax brackets, or that either party was significantly disadvantag ed by the Trial Court’s ruling. The evidence does not p reponde rate against th e Trial Judg e’s ruling on this issue. T.R.A.P. Rule 1 3(d).

The hus band fur ther argues that his incom e tax debt f or 1994 sh ould have been divide d between the p arties instead of being assessed solely to him. It appears the parties filed separately for that year, and each party made estimated payments throughout the year. The wife ultimately overpaid her taxes by $5000.00, and the overpa yment w as awa rded to her as p art of he r divisio n of the marital e state. The husband had not paid enough in estimated taxes for 1994, so that he still owed *7 $13,14 4.00 at th e time o f the ori ginal div orce he aring.

Our case law instructs that trial courts should divide marital debts, and defines marital debts as those incurred during the marriage for the joint benefit of the parties, o r those d irectly trace able to th e acqu isition of marital p roperty. Mondelli v. Howard, 780 S.W .2d 769 (T enn. Ct. A pp. 1989 ). Further, trial cou rts should apportion debt equitably as they would marital assets, and when practicable, debt should follow the asse t it is related to. Id.

The Mond elli court further explained that courts should consider the following factors when dividing marital debt: (1) which party incurred the debt and the debt’s purpose, (2) which party benefitted from incurring the debt, and (3) which party is be st able to assum e and re pay the d ebt. Id.

In this case, the tax debt was a marital debt, just as the wife’ tax overpayme nt was a m arital asset, beca use it related to f unds that w ere earned and paid during the m arriage. Bo th parties ben efitted from the husba nd’s salary just as b oth parties benefitted from the wife’s salary. Thus, the issue becomes which party is best able to assume and repay the debt. In this case, as the Trial Court found, the husband is, since he received a larger share of the marital estate than the wife. Since the parties were paying their incom e taxes sepa rately, the Court’s ruling on this issue is appropriate under the circumstances.

Finally, the husband argues that the Trial Court erred in not weighing the husband’s monetary contributions to the marriage more heavily, because, at the time of the parties’ marriage, husband owned a law practice which he testified was worth $218,000.00, and he had a house with an equity valued at $24,500.00. In Jahn *8 932 S.W.2d 945, f.n.4, it was observed:

To the extent Husband contributed the proceeds from the liquidation of these assets to the marriage, his interest at the time of the ma rriage can b e considere d as a “con tribution” by him when the court makes an equitable division of the now-existing marital e state. See T.C.A. § 36-4-1 21(c)(5).

Clearly, this Court held that the husband was not entitled to a dollar-for-dollar offset of the v alue of those a ssets ag ainst the marital e state. Id. at 944. Rather, it was appropriate under the statute to consider the husband’s monetary contribution of these assets as one of the many contributions a party can make, along with contributions as a wage earner, h omem aker, pa rent, etc. See Tenn . Code Ann. § 36-4-1 21(c)(5 ).

In this case, the Trial Court considered the contribution that the husband had brought into the marriage, and awarded him 10% more of the marital assets than he awarded wife, which amounted to approximately $58,000.00. The Court followed the reasoning of Brock v. Brock, 941 S.W .2d 896 (T enn. Ct. A pp. 1996 ), where this Court held that an unequal division was appropriate because the husband had accumulated a substantial amount of property prior to the marriage which he contributed to the marital estate, and which was “seed” wealth for the large marital estate w hich ha d to be d ivided.

Hus band ins ists th at a d iffe rent resu lt is m andated by Batson v. Batson, 769 S .W.2d 849 (T enn. C t. App. 1 988). Batson does not m andate a d ifferent resu lt, contrar y to the hu sband ’s conte ntion. Batson dealt with a marriage of only five years where the husband came into the marriage with more than ten times the property that his wife had, and the wife did not w ork at all during the marriage, at hu sband’s request. In Batson, this Court he ld:

When relatively short marriages a re involved, each spou se’s contribution s to the accu mulation o f assets durin g the marria ge is an important factor. When a marriage is short, the significance and value of a spou se’s non-m onetary contrib utions is diminished, and claims b y one spouse to another sp ouse’s separate pro perty are minim al at best.

Batson at 859.

In this case, the marriage lasted for ten years, which is a relatively short period, so it was proper for the court to consider each spouse’s contributions to the accumulation of assets, as Batson instructs. Both parties made contributions as wage earners, earning substantial wages during the marriage, as well as contributions as homem aker and p arent. Hus band ma de a signific ant initial contrib ution of pro perty to the marriage, and the Trial Court properly considered the same in awarding husband a larger share of the marital estate. The evidence does not preponderate against the Trial Court’s division of property, and we affirm.

The judgment of the Trial Court is affirmed and the cause remanded with the co st of the app eal assessed to the appe llant.

__________________________ Herschel P. Franks, J.

CONCUR:

___________________________ Houston M. Godd ard, P.J.

___________________________ D. Michael Swiney, J.