Reeves v. Reeves

Wife entered the marriage with a house

THE STATE OF SOUTH CAROLINA

In The Court of Appeals

Julius B. Reeves,       
Appellant,

v.

Joan M. Reeves,       
Respondent.

Appeal From Lexington County

Richard W. Chewning, III, Family Court
Judge

Unpublished Opinion No. 2003-UP-337

Submitted March 10, 2003 – Filed May
15, 2003

REVERSED and REMANDED

Lori D. Hall, of West Columbia, for Appellant.

F. Glenn Smith, of Columbia,
for Respondent.

PER CURIAM:
In this domestic action, Julius B. Reeves (“Husband”) appeals the family court’s
order granting him a limited equitable interest in the marital residence and
awarding his wife, Joan M. Reeves (“Wife”), $5,000 in attorney’s fees.  We reverse
and remand.

FACTS

After twenty-one years of marriage,
Husband and Wife separated in July of 2000.  Wife entered the marriage with
a minor son from a previous marriage.  During the marriage, one child was born. 
Both of these children were emancipated at the time of the parties’ separation.

Throughout most of the marriage, Husband worked
outside the home as the primary wage-earner.  At the time of trial, Husband
was sixty-two years old.  He was employed at the South Carolina Department of
Transportation, and earned a gross monthly income of $3,041.00.  At the time
of trial, Husband did not suffer from any serious or debilitating medical problems. 

Wife was forty-eight years old
at the time of trial.  She is a high school graduate.  With Husband’s approval,
Wife worked mainly as a homemaker during much of the marriage.  She began working
outside the home on a regular basis approximately five years before the parties
separated.  Her work experience has been limited to secretarial positions. 
At the time of trial, she was employed as a legal secretary and earned a gross
monthly income of $2,568.00.

It is undisputed that Wife suffers from a number
of medical ailments, including seizure disorder, miscognitive tissue disorder,
and recurrent bursitis.  She has also been diagnosed with possible Multiple
Sclerosis, severe depression, anxiety disorder, chronic insomnia, chronic ulcerative
dermatitis, chronic diffuse pain syndrome, and severe iron deficiency.

During the marriage, Wife received Social Security
payments for the benefit of her son from a previous marriage, who was entitled
to the benefits due to his father’s death.  The payments averaged $900.00 per
month for 146 months, totaling $131,400.00.  The checks were made payable to
Wife, but Husband admittedly forged her signature and cashed them without her
knowledge or approval.

During the marriage, Wife borrowed funds to purchase
a car for the parties’ son.  Husband later sold the vehicle and spent the proceeds
but did not satisfy the $1,267.34 balance due on the car loan. 

The controversy on appeal centers on the
residence owned by Wife prior to the marriage.  The house was valued at $30,000.00
at the time of the marriage and was encumbered by a first mortgage.  In 1983
or 1984, Wife conveyed the house to Husband so that he could obtain a credit
rating sufficient to allow the parties to jointly purchase another home.  However,
this never occurred, and according to Wife, Husband subsequently refused to
transfer the house back to her.

During the marriage, Husband placed a second mortgage
on the house to pay the college expenses of the parties’ son.  Prior to the
separation of the parties, Wife paid off this second mortgage to avoid foreclosure
of the property.  At the time marital litigation was commenced, the house was
valued at $63,000.00 and was subject to a first mortgage of $8,619.00.

Husband filed this action in August of 2000.  By final
order dated May 8, 2001, the family court reserved Wife’s right to claim alimony
and split the parties’ personal property approximately 50/50.  As to the residence,
the court ordered Husband to convey it to Wife by general warranty deed, free
and clear of all liens except the original mortgage.  The court found the home
had an appraised value of $63,000.00 and was subject to an $8,619.00 outstanding
first mortgage balance.  The court determined the net equity in the house was
$18,352.00.  This amount represented the value of the home at the time of trial,
less the premarital value of the home, the outstanding balance of the first
mortgage, and the amount Wife had paid to satisfy the second mortgage.  The
court awarded Husband a one-half interest in this adjusted net equity, equaling
$9,176.00.  The family court also ordered Husband to contribute $5,000.00 toward
Wife’s attorney’s fees and costs.  Husband appeals the disposition of the residence
and the award of attorney’s fees.

STANDARD OF REVIEW

An appellate court reviewing
a family court order has the authority to correct errors of law and may find
facts in accordance with its own view of the preponderance of the evidence.
See Sharps v. Sharps, 342 S.C. 71, 79, 535 S.E.2d 913, 917 (2000)
(holding an appellate court may find facts in accordance with its view of the
preponderance of the evidence); McCuen v. McCuen, 348 S.C. 179, 181-82,
558 S.E.2d 926, 928 (Ct. App. 2002) (holding this Court “has the authority to
correct errors of law and find facts in accordance with its own view of the
preponderance of the evidence”); see also S.C. Code Ann. § 14-3-320 (Supp.
1983) (stating the Supreme Court’s scope of review in equity cases is to “review
the findings of fact as well as the law”); S.C. Code Ann. § 14-8-200(a) (Supp.
1999) (stating this Court “shall apply the same scope of review that the Supreme
Court would apply in a similar case”).

LAW/ANALYSIS

Husband argues the residence should have been
declared marital property and the full equity divided equally between the parties. 

I. Division of the Marital Home

Before addressing equitable distribution, the family
court must first identify the marital property. Johnson v. Johnson, 296
S.C. 289, 293, 372 S.E.2d 107, 110 (Ct. App. 1988) (holding the first step for
the family court to take in making an equitable distribution is to “identify
the marital property, both real and personal, to be divided between the parties”);
see also S.C. Code Ann. § 20-7-473 (Supp. 1986) (stating the family court
has no jurisdiction as to the division of nonmarital property); S.C. Code Ann.
§ 20-7-420(2) (Supp. 2002) (stating the family court has jurisdiction to divide
marital property); S.C. Code Ann. § 20-7-473(5) (Supp. 1986) (stating the increase
in the value of nonmarital property during the marriage, “to the extent that
the increase resulted directly or indirectly from efforts of the other spouse
during marriage,” is marital property); Calhoun v. Calhoun, 339 S.C.
96, 106, 529 S.E.2d 14, 20 (2000) (holding nonmarital property may be transmuted
into marital property if it is utilized by the parties in a manner that indicates
“an intent by the parties to make it marital property”).  In this case the final
order does not address this issue, and we are unable to properly review the
distribution for this reason.

The final order of the family court does not explain
whether the house was considered marital property, with the disparate division
based upon Husband’s financial misconduct, or nonmarital property in which Husband
held a special equity.

The court seems to have treated Husband’s interest
as a special equity by the manner in which it calculated the distribution because
the court deducted the pre-marital value of the home, the first mortgage balance,
and the second mortgage payout from the current value of the home, dividing
the remaining equity between the parties. See S.C. Code Ann. § 20-7-473(5)
(Supp. 1986) (providing for a special equity in any increase in the value of
nonmarital property “to the extent that the increase resulted directly or indirectly
from efforts of the other spouse during marriage”); Murray v. Murray,
312 S.C. 154, 159, 439 S.E.2d 312, 316 (Ct. App. 1993) (“A spouse has an equitable
interest in appreciation of property to which she contributed during the marriage,
even if the property is nonmarital.”).

However, under the facts of this case, the family court
could have alternatively considered the property transmuted.

Nonmarital property may be transmuted into marital
property if it is utilized by the parties in a manner that indicates “an intent
by the parties to make it marital property.” Calhoun, 339 S.C. at 106,
529 S.E.2d at 20.  Transferring the title of property from one spouse to the
other spouse is generally considered evidence of transmutation of property.
Johnson, 296 S.C. at 295, 372 S.E.2d at 110-11; see also S.C.
Code Ann. § 20-7-473 (Supp. 1986) (“Interspousal gifts of property, including
gifts of property from one spouse to the other . . . , are marital property
which is subject to division.”). 

During the marriage, Wife conveyed the house to Husband. 
Although she states she did not really understand what she was signing, she
undeniably conveyed the property to Husband in an effort to improve his credit. 
Wife claims Husband defrauded her by devising the plan shortly after she received
shock therapy and by convincing her to transfer the house to him without ever
intending to buy another house.  However, Wife acknowledged she understood the
nature of the plan and intended to hold out to third parties, presumably financial
institutions, that the property was owned by Husband.  Thus, at least as to
third parties, she intended to convey ownership to Husband.

Because the family court did not declare whether the
residence was marital property and failed to adequately support its treatment
of the residence, we are unable to discern the reasons for the court’s division
of the residence.  We are reluctant to review the award because the issues may
turn to some degree on credibility, a matter best left to the family court. 
If the family court intended to limit Husband to a special equity, we must review
this determination in light of the conveyance to Husband and the circumstances
surrounding it.  On the other hand, if the court considered the house transmuted,
but adjusted the award to reflect the court’s view of Husband’s financial misconduct,
we must consider different issues on appeal.  In this regard, we note the family
court found that Husband forged Wife’s name to checks totaling $131,400.00,
and “utilized the checks.”  It is unclear from this language whether the court
believed Husband’s testimony that he spent the money in support of the marriage
or decided he misappropriated the funds for his own use.

Because we conclude the family court erred in dividing
the residence without first finding the property to be marital or nonmarital,
we reverse the division of the residence and remand the issue to the family
court.  On remand, the family court should decide whether the residence was
transmuted, and if so, apportion this asset in accordance with South Carolina
Code Annotated section 20-7-472.  See S.C. Code Ann. § 20-7-472 (Supp.
1986) (detailing fifteen factors for the family court to consider in making
an equitable distribution of marital property); Calhoun, 339 S.C. at
106, 529 S.E.2d at 20 (“When property is determined to have been transmuted,
the entire property, not just a portion of the property, is included in the
parties’ marital property which is thereafter apportioned by the family court
using the criteria set forth in S.C. Code Ann. § 20-7-472.”).  The court should
set forth its findings of fact and legal conclusions in support of its final
determination.

II. Award of Attorney’s Fees

Husband next argues Wife should not have been awarded
attorney’s fees.  In view of our disposition of the first issue, we remand this
issue for further determination by the family court. See Donahue v.
Donahue, 299 S.C. 353, 365, 384 S.E.2d 741, 748 (1989) (holding one of the
factors for the family court to consider in making an award of attorney’s fees
is the beneficial result obtained); see also S.C. Code Ann. § 20-3-130(H)
(Supp. 1990) (stating in divorce proceedings, “the court, . . . after considering
the financial resources and marital fault of both parties, may order one party
to pay a reasonable amount to the other for attorney fees”).

CONCLUSION

For the foregoing reasons,
the family court’s decision is

REVERSED and REMANDED.
[1]

CURETON, STILWELL, and HOWARD, JJ., concur.

[1] Because oral argument would not aid the Court in resolving any issue
on appeal, we decide this case without oral argument pursuant to Rule 215,
SCACR.