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Anderson v. Anderson

Court of Appeals of Tennessee, Nashville

August 16, 2019

MARILYN KAY ANDERSON
v.
JAMES CEPHAS ANDERSON

          Session April 2, 2019

          Appeal from the Circuit Court for Robertson County No. 74CC2-2015-CV-233 Ross H. Hicks, Judge

         This appeal arises from a divorce. All the issues pertain to the classification, valuation, and equitable division of three large tracts of land. Husband acquired two of the tracts before the marriage: a 197-acre tract and a 103-acre tract. Both of these tracts were used in Husband's farming operation before and during the marriage. During the marriage, Husband and Wife built their marital residence on a portion of the 197-acre tract. Husband acquired the third tract during the marriage but after the parties separated. Wife's name is not on any of the deeds. Wife contends that the tracts Husband owned prior to the marriage transmuted into marital property. Alternatively, she contends their appreciation in value during the marriage was marital property. Wife also contends the third tract was marital property because Husband purchased it with marital funds from their joint bank account during the marriage. The trial court classified the 197-acre tract and the 103-acre tract as Husband's separate property and held that none of the land transmuted into marital property. The trial court also concluded that Wife was not entitled to an interest in the appreciation of the properties because she did not substantially contribute to their maintenance or increase in value. The trial court classified the marital residence—that being the improvement but not any of the land associated with the marital residence—as marital property. As for the tract Husband acquired during the marriage, the court ruled that it was Husband's separate property because Husband purchased it with his separate funds. This appeal followed. Based on the parties' treatment and use of some of the 197-acre tract on Highland Road as their marital residence, it is evident that the parties intended for some portion of the land to transmute into marital property. Therefore, we reverse the trial court's determination that the entire 197-acre tract remained Husband's separate property and remand for the trial court to identify that portion of the land the parties treated and used as part of their marital residence, classify that land as marital property, and determine its value. Based on this change of classification, the trial court should also consider whether the change in value necessitates a revision of the equitable division of the marital estate and, if so, enter judgment accordingly. In all other respects, we affirm the judgment of the trial court.

         Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in Part, Reversed in Part, and Remanded.

          Elizabeth A. Garrett and Trudy L. Bloodworth, Nashville, Tennessee, for the appellant, Marilyn Kay Anderson.

          Christopher J. Pittmans and Hollie L. Smith, Clarksville, Tennessee, for the appellee, James Cephas Anderson.

          Frank G. Clement Jr., P.J., M.S., delivered the opinion of the Court, in which D. Michael Swiney, C.J. and W. Neal McBrayer, J., joined.

          OPINION

          FRANK G. CLEMENT JR., P.J., M.S.

         Marilyn Kay Anderson ("Wife") and James Cephas Anderson ("Husband") met in 1988. Husband lived in Robertson County, Tennessee, where he operated a farm on Duer's Mill Road. Husband owned the 103-acre tract of land jointly with his brother. In 1990, Husband expanded his farming operation by purchasing a 197-acre tract of land on Highland Road. During this time, Wife lived in the Nashville area and spent her weekends on the farm with Husband.

         When the parties married in 1995, they moved into a trailer located on the 197-acre tract of land on Highland Road. Husband added Wife to the farm's credit line and his previously separate checking account; however, he did not add Wife's name to either deed.

         Wife worked as a medical project manager throughout the marriage and deposited all her income into the joint account. Likewise, Husband deposited all his farming income into the same joint account. The parties paid all their personal and business expenses from the account, including payments for Husband's $160, 000 mortgage on the Highland Road property.

         In 2002, Husband and Wife purchased a tract of land on Eubanks Road, the deed for which was titled to them jointly. In 2007, the parties moved into a house on the Eubanks Road property while they built their marital residence on the Highland Road property. The parties financed the new home with $250, 000 in loans secured by the jointly-owned Eubanks Road property. When construction was completed, the parties moved into their new marital residence on the 197-acre Highland Road property.

         In March 2015, the parties separated. That same month, the State of Tennessee initiated an eminent domain action to condemn a portion of the Eubanks Road property the parties owned jointly. In April 2015, the parties received an initial disbursement of $320, 000 from the State of which $158, 000 was remitted to the mortgage company to pay off the loans for the construction of the marital residence. The balance of $162, 000 was deposited into the parties' joint checking account on April 15, 2015.

         Shortly thereafter, while separated and in anticipation of the divorce, although neither party had filed a complaint for a divorce, Wife "equally divide[d]" the funds on deposit in the joint account by withdrawing "her half"-approximately $96, 000-and depositing it in a separate account titled to her name only.

         Husband's mother died in March of 2015. In her will, she granted Husband an option to purchase the J. B. Anderson family farm for $150, 000.[1] Pursuant to the will, Husband had only 90 days to exercise his option. Husband timely exercised his option and purchased the J. B. Anderson family farm with $80, 000 he withdrew from the parties' joint checking account on April 21, 2015, and a $70, 000 loan he obtained in his name only. The deed to the property was in Husband's name only.

         Wife filed her complaint for divorce on April 29, 2015, and Husband filed a counter-complaint on June 26, 2015.

         In September 2017, the State of Tennessee remitted an additional $489, 000 payable to Husband and Wife in furtherance of the condemnation of the jointly owned Eubanks Road property. In October 2017, the trial court entered an agreed order dividing the award equally between the parties and stating that the funds "shall be deemed to be each part[y]s' separate property."

         The parties' only daughter was an adult at the time of trial, and neither party sought alimony. Thus, the issues at trial were limited to the classification, valuation, and equitable division of the marital estate.[2] Wife contended that Husband's interests in the Highland Road and Duer's Mill Road tracts transformed into marital property during the marriage under the doctrine of transmutation. In the alternative, Wife claimed the properties' increase in value during the marriage was marital property due to her personal and financial contributions to the properties' preservation and appreciation. As for the Anderson Road tract, Wife argued that it was a marital asset because Husband purchased it during the marriage with funds from the joint account. For his part, Husband contended all three tracts were his separate property. But Husband conceded that the marital residence, which was located on the 197-acre Highland Road tract, was marital property.

         Each party testified on their separate contributions, or lack thereof, to the marriage and the farming operation. In addition, each presented an expert witness to testify on the properties' values and the reasons for their appreciation. Wife's appraiser, Ben Bolinger, attributed the land's increase in value to the successful farming operation and soil quality. He reasoned that soil productivity was important for buyers because the highest-and-best use of the property was farming. Husband's appraiser, Luther Bratton, attributed the appreciation primarily to the passage of time.

         In the final order entered on June 8, 2018, the court classified the marital residence and a machine shed on the Highland Road tract as marital property, but it found the underlying 197 acres of land remained Husband's separate property. The court also classified Husband's interest in the 103 acres of land on Duer's Mill Road as Husband's separate property. As for both tracts, the court reasoned, inter alia, that Husband used the land primarily for his farming operation and Wife's financial contributions were unnecessary because the farming operation was successful. Additionally, the court found that the properties' increase in value during the marriage remained Husband's separate property. The court found that Wife's testimony about her personal contributions to the day-to-day farming operations was "substantially exaggerated or fabricated," and the primary factor in the properties' appreciation was the passage of time. As for the Anderson Road property, the court classified it as Husband's separate property because Husband purchased it with his share of the recently and equally divided bank account.

         In valuing the properties, the court found Husband's expert, Mr. Bratton, more credible than Wife's expert, Mr. Bolinger. The court noted that Mr. Bolinger valued one property without visiting it and included a building on the Duer's Mill tract where other evidence suggested there was none. Using Mr. Bratton's property values, the court valued Husband's separate property at $2.1 million and Wife's separate property-which comprised only her share from the condemnation proceeds-was worth $160, 000.[3]

         Considering the factors for equitable division of marital property under Tenn. Code Ann. § 36-4-121(c), the court found both parties were in good physical and mental health and had substantial income earning capacity. Because Husband's separate property was worth substantially more than Wife's, the court found it was equitable to award Wife a larger portion of marital property, including the majority of the liquid assets. Accordingly, the court awarded 59% of the marital estate to Wife, valued at $866, 950, and awarded 41% of the marital estate to Husband, valued at $605, 976. This appeal followed.

         Wife raises four issues on appeal, which we restate as follows:

(1) Whether the trial court erred in classifying the Highland Road tract as Husband's separate property;
(2) Whether the trial court erred in classifying the appreciation of the Highland Road tract and the Duer's Mill tract as Husband's separate property;
(3) Whether the trial court erred in adopting Mr. Bratton's values for the Highland Road, Duer's Mill, ...

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