Robert Charles Holden v Jena Taetz Holden

COURT OF APPEALS OF VIRGINIA
Present: 	Chief Judge Fitzpatrick, Judges Coleman and Bumgardner
Argued at Salem, Virginia
ROBERT CHARLES HOLDEN
OPINION BY
v. 	Record No. 2614-98-3 	CHIEF JUDGE JOHANNA L. FITZPATRICK
NOVEMBER 16, 1999
JENA TAETZ HOLDEN
FROM THE CIRCUIT COURT OF ROANOKE COUNTY
Diane McQ. Strickland, Judge
Charles B. Phillips (Phillips & Swanson, on
brief), for appellant.
Frank K. Friedman (John P. Grove; Woods,
Rogers & Hazlegrove, P.L.C., on brief), for
appellee.
In this domestic appeal, Robert Charles Holden (husband)
contends the trial court erroneously classified a parcel of real
estate purchased during the marriage. 	Husband argues that the
property was "hybrid property" from which he was entitled to
receive $17,000 as his separate property before the net value
was divided between the parties.1 For the following reasons, we
reverse the trial court's order and remand for the entry of an
order consistent with this opinion.
1 Husband also appealed the trial court's award of spousal
support. 	However, he withdrew that assignment of error and
spousal support is no longer a subject of this appeal.

I.
We view the evidence in the light most favorable to wife,
the prevailing party below. 	See Barker v. Barker, 27 Va. App.
519, 528, 500 S.E.2d 240, 244 (1998); Cook v. Cook, 18 Va. App.
726, 731, 446 S.E.2d 894, 896 (1994). 	So viewed, the evidence
established that during the marriage the parties agreed to
purchase a parcel of real estate in Bedford County. 	Husband
sold approximately 300 comic books for $17,000 in order to raise
funds necessary for the purchase of this property. 	Husband
testified that these comic books were his separate property
acquired prior to the marriage. 	Additionally, he presented
copies of two checks payable to him for the comic books, as well
as the bank records of the parties' joint checking account
showing $9,000 deposited February 4, 1992, and $8,000 deposited
February 14, 1992.
On April 13, 1992, the parties withdrew approximately
$21,114 from this joint checking account to buy the Bedford
County property. 	Both parties testified that they refinanced
the marital residence to provide additional funds for the
purchase of the Bedford property and it is uncontested that at
least $13,000 in marital funds were used to fund the $30,000
purchase.2
2 Husband also presented evidence that he sold a 1985 truck
for $4,000 or $5,000, which was applied to the purchase price of
the real estate. 	In this appeal, however, husband does not
claim a separate interest in that amount.
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The trial court found that husband's contribution from the
sale of comic books acquired prior to marriage was transmuted
into marital property. 	The trial court stated:
While there has been a showing that $17,000
was derived from the sale of comic books
that may have been acquired by [husband]
prior to the marriage, the Court finds that
under 20.107.3(d) (sic) that that property
has been commingled by contributing it into
the category of marital property both by
depositing it in an account with joint
marital funds, but then commingling it with
other funds that were derived from other
sources and ultimately the property which
was jointly titled.
Accordingly, the trial court concluded that husband had not met
his burden to retrace the $17,000 as his separate property.
II.
A decision regarding equitable distribution rests within
the sound discretion of the trial court and will not be
disturbed unless it is plainly wrong or without evidence to
support it. 	See McDavid v. McDavid, 19 Va. App. 406, 407-08,
451 S.E.2d 713, 715 (1994) (citing Srinivasan v. Srinivasan, 10
Va. App. 728, 732, 396 S.E.2d 675, 678 (1990)). 	"Unless it
appears from the record that the trial judge has not considered
or has misapplied one of the statutory mandates, this Court will
not reverse on appeal." 	Ellington v. Ellington, 8 Va. App. 48,
56, 378 S.E.2d 626, 630 (1989).
At the time of the equitable distribution hearing, the
parties jointly owned a parcel of real estate with an agreed
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value of $30,000. 	Husband claimed $17,000 of that $30,000 as
his separate, retraceable property.
Pursuant to the provisions of Code § 20-107.3(A)(3),
property may be classified as part marital and part separate.
Under subsection (e), "when marital property and separate
property are commingled into newly acquired property resulting
in the loss of identity of the contributing properties, the
commingled property shall be deemed transmuted to marital
property," unless the contributed property is retraceable and
not a gift. 	Code § 20-107.3(A)(3)(e). 	We have explained the
requirements of tracing under that section:
In order to trace the separate portion of
hybrid property, a party must prove that
the claimed separate portion is identifiably
derived from a separate asset. 	This
process involves two steps: 	a party must
(1) establish the identity of a portion of
hybrid property and (2) directly trace that
portion to a separate asset.
Rahbaran v. Rahbaran, 26 Va. App. 195, 208, 494 S.E.2d 135, 141
(1997) (citing Code §§ 20-107.3(A)(3)(d)-(f)). 	"[T]he party
claiming a separate interest in transmuted property bears the
burden of proving retraceability." 	Von Raab v. Von Raab, 26 Va.
App. 239, 248, 494 S.E.2d 156, 160 (1997).
Here, it is uncontroverted that husband deposited $17,000
of the proceeds from the sale of his separate property, the
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comic books, in the parties' joint checking account.3 He
concedes that these proceeds were "commingled" with marital
funds; the $17,000 was deposited into the joint account two
months before the funds were paid out for the land purchase.
Husband argues that consistent with the rule in Rahbaran, he
sufficiently established "the identity of a portion of hybrid
property" (i.e., $17,000 from the sale of his comic books) and
"directly trace[d] that portion to a separate asset." 	Rahbaran,
26 Va. App. at 207, 494 S.E.2d at 141. 	We agree and hold that
husband adequately retraced his contribution of discrete,
identifiable funds that were in the account and which were used
to purchase the Bedford County property.
We have previously held that where separate property is
used for a down payment on property that becomes marital
property, the trial court does not abuse its discretion in
making an award that restores the down payment to the
contributing spouse. 	See, e.g., Rowe v. Rowe, 24 Va. App. 123,
136, 480 S.E.2d 760, 766 (1997) (holding that husband's evidence
that he had invested $82,000 into a new home was sufficient to
3 We note that wife never contested husband's claim that the
comic books sold for $17,000 were his separate property. 	In
addition to husband's testimony that the comic books were
acquired prior to the parties' marriage, James Payette, the
dealer who purchased the collectibles, testified that they were
published in the 1940s and 1950s, which corroborated husband's
position that the books were separate property. 	Therefore, the
only question before us is whether husband carried his burden of
retraceability under Code § 20-107.3(A)(3).
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retrace the property claimed as separate by husband); Pommerenke
v. Pommerenke, 7 Va. App. 241, 247-50, 372 S.E.2d 630, 634
(1988) (holding that under the prior Code § 20-107.3(A)(3) the
"court does not abuse its discretion by making an award that
restores the down payment to the contributing spouse, if the
court finds that equity dictates such a result").
Additionally, husband was not required to have segregated
the $17,000 from all other marital funds in order to claim a
separate interest in that amount. 	See Rahbaran, 26 Va. App. at
207, 494 S.E.2d at 141 ("[T]racing of the separate portion of
hybrid property does not require the segregation of the separate
portion."). 	Because husband commingled separate funds and
marital funds in a jointly-owned bank account, which was then
used for the purchase of marital property, he was only required
to trace those separate funds to the account and to prove that
those discrete funds could be identified as being in the
account. 	See id. at 209, 494 S.E.2d at 141-42 ("[S]eparate
property does not become untraceable merely because it is mixed
with marital property in the same asset. 	As long as the
respective marital and separate contribution to the new asset
can be identified, the court can compute the ratio and trace
both interests.") (emphasis added) (citing Brett R. Turner,
Equitable Distribution of Property 266 n.591 (1994)).
The trial court's conclusion that husband failed to retrace
$17,000 in separate property commingled with other marital funds
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is not supported by the evidence. 	To the contrary, the record
established that $17,000 was an identifiable portion of the
value of the hybrid Bedford County property and husband directly
traced that portion to a separate asset (i.e., proceeds derived
from the sale of the comic books). 	Husband introduced into
evidence copies of two checks payable to him for the comic
books, as well as the bank records of the parties' joint
checking account showing $9,000 and $8,000 deposited on
February 4, 1992, and February 14, 1992, respectively. 	While
other deposits and withdrawals occurred within this time period,
it is uncontested that the $17,000 deposited to the account from
husband's separate property was to be part of the down payment
on the Bedford property. 	Absent the $17,000 deposited into the
joint account by husband, the parties would have had
insufficient funds to make the withdrawal of $21,114 on
April 13, 1992 for the purchase price of the land. 	We conclude
that the $17,000 contributed to acquire the Bedford property was
directly traced to the sale of husband’s separate property, the
comic books, and should have been allocated to husband.4
4 Wife argues for the first time on appeal that husband's
contribution of $17,000 to the down payment of the Bedford
property constituted a gift, which would result in the loss of
identity of the separate property under Code
§§ 20-107.2(A)(3)(d)-(e). 	However, no evidence was presented
that husband's contribution was intended as a gift and the trial
court never addressed this issue.
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Accordingly, we reverse the equitable distribution award and
remand for an order consistent with this opinion.
Reversed and remanded.
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