                    I N THE COURT OF APPEALS OF TENNESSEE

                                    EASTERN SECTI ON
                                                                     FILED
                                                                        July 3, 1996

                                                                Cecil Crowson, Jr.
ERNEST W TE PATTON, I I I ,
        HI                                    )   C/ A NO. 03A01-Appellate C ourt Clerk
                                                                  9601- CH- 00001
                                              )
               Pl a i nt i f f ,              )   HAM LTON CHANCERY
                                                     I
                                              )
v.                                            )   HON. R. VANN OWENS,
                                              )   CHANCELLOR
LI NDA HARVEY PATTON,                         )
                                              )   MODI FI ED AND
               De f e nda nt .                )   REMANDED




ALBERT L. WATSON, I I I , Cha t t a nooga , f or Pl a i nt i f f - Appe l l a nt .

ARTHUR C. GRI SHAM J R. , GRI SHAM KNI GHT & HOOPER, Cha t t a noo g a ,
                         ,           ,
f o r De f e nda nt - Appe l l e e .




                                      O P I N I O N




                                                             Fr a nks . J .




               I n t hi s di vor c e a c t i on, t he hus ba nd a ppe a l s f r om t h e

Tr i a l Cour t ’ s de t e r mi na t i on of t he c l a s s i f i c a t i on of pr ope r t y

a s ma r i t a l pr ope r t y a nd t he di vi s i on of t he ma r i t a l e s t a t e .

               The pa r t i e s we r e ma r r i e d i n 1984, a nd r e s i de d

t o g e t h e r f or a ppr oxi ma t e l y ni ne ye a r s .   Pr i or t o t he i r

ma r r i a ge , t he hus ba nd ha d pur c ha s e d a hous e a nd l a nd a t 260 6

Cr e s c e nt Cl ub Dr i ve ( ?Cr e s c e nt Cl ub pr ope r t y?) , a nd t he wi f e
h a d p ur c ha s e d 2. 5 a c r e s of uni mpr ove d l a nd on Sc e ni c Hi ghwa y

i n Ha mi l t on Count y.          Ti t l e t o t he Cr e s c e nt Cl ub pr ope r t y i s

h e l d s ol e l y by t he hus ba nd, a nd t he t i t l e t o t he Sc e ni c

Hi gh wa y p r ope r t y i s t i t l e d s ol e l y t o t he wi f e .       Howe ve r , t h e

Tr i a l J udge de c l a r e d bot h pr ope r t i e s t o be ma r i t a l pr ope r t y

a n d a wa r de d t he Sc e ni c Hi ghwa y pr ope r t y t o t he hus ba nd, a nd

t h e Cr e s c e nt Cl ub pr ope r t y t o t he wi f e .         The Cour t di d not

p l a c e a va l ue on t he Cr e s c e nt Cl ub pr ope r t y, but c onc l ude d

t h e r e wa s a ppr oxi ma t e l y $74, 000. 00 i n e qui t y i n t ha t pr ope r t y ,

b u t h e di d f i nd t ha t t he Sc e ni c Hi ghwa y pr ope r t y wa s va l ue d a t

$ 3 0 , 0 00. 00.

                   W n t he hus ba nd pur c ha s e d t he Cr e s c e nt Cl ub
                    he

p r o p e r t y he ma de a downpa yme nt of $73, 000. 00, a nd bor r owe d

$ 9 , 5 0 0. 00 f r om hi s s oon- t o- be wi f e , a nd ga ve he r a pr omi s s or y

n o t e i n r e t ur n, whi c h wa s a ppl i e d a s a n a ddi t i ona l downpa yme n t

o n t h e pr ope r t y, a s we l l .        W n t he wi f e pur c ha s e d t he Sc e n i c
                                             he

Hi g h wa y pr ope r t y, whi c h wa s a l s o be f or e t he pa r t i e s ma r r i e d,

t h e h u s ba nd pa i d $10, 000. 00 t owa r d t he pur c ha s e of t ha t

p r o p e r t y.

                   Thi s c a s e i s be f or e us de nov o wi t h a pr e s umpt i on o f

c o r r e c t ne s s a s t o f a c t ua l i s s ue s .   T. R. A. P. Rul e 13.       The

e v i d e n c e e s t a bl i s he s t ha t t he hus ba nd, i n a ddi t i on t o ma ki n g

t h e d o wnpa yme nt on t he Cr e s c e nt Cl ub pr ope r t y, pa i d t he

mo n t h l y mor t ga ge pa yme nt s out of hi s moni e s , a nd t he

d o wn p a yme nt , wi t h t he e xc e pt i on of t he l oa n f r om t he wi f e ,

c a me f r om t he hus ba nd’ s i nhe r i t a nc e .

                   I n de f e ndi ng t he Tr i a l Cour t ’ s c l a s s i f i c a t i on of t h e

p r o p e r t y, t he wi f e a r gue s t ha t t he doc t r i ne of t r a ns mut a t i o n

i s a ppl i c a bl e he r e .      W c a nnot a gr e e .
                                    e                         Bat s on v . Bat s on, 76 9

                                                   2
S. W 2 d 849 ( Te nn. App. 1988) i s i ns t r uc t i ve .
    .                                                                       The Cour t f i r s t

o b s e r ve d:

                  Te nne s s e e i s a ?dua l pr ope r t y? j ur i s di c t i on be c a us e
                  i t s d i vor c e s t a t ut e s dr a w a di s t i nc t i on be t we e n
                  ma r i t a l a nd s e pa r a t e pr ope r t y.   Si nc e Te nn. Code
                  Ann. §36- 4- 121( a ) ( Supp. 1988) pr ovi de s onl y f or t h e
                  di vi s i on o f ma r i t a l pr ope r t y, p r ope r c l a s s i f i c a t i on
                  of a c oupl e ’ s pr ope r t y i s e s s e nt i a l .      Se e 3 Fami l y
                  Law and Pr ac t i c e §37. 08[ 1] ( 1988) .             Thus , a s a f i r s t
                  or de r of bus i n e s s , i t i s i nc umbe nt on t he t r i a l
                  c our t t o c l a s s i f y t he pr ope r t y, t o gi ve e a c h pa r t y
                  t he i r s e pa r a t e pr ope r t y, a nd t he n t o di vi de t he
                  ma r i t a l pr ope r t y e qui t a bl y.    Se e 2 h. Cl a r k, The Law
                  of Dome s t i c Re l at i ons i n t he Uni t e d St at e s §16. 2, a t
                  183- 84 ( 2d e d. 1987) .


                          Te nn. Code Ann. §36- 4- 121( b) c ont a i ns t he
                  gr ound r ul e s f or c l a s s i f yi ng pr ope r t y, a nd l i t t l e
                  e l a bor a t i on i s ne e de d be yond t he s t a t ut e i t s e l f .
                  Te nn. Code Ann. §36- 4- 121( b) ( 2) de f i ne s ?s e pa r a t e
                  pr ope r t y? a s :

                          a l l r e a l a nd pe r s ona l pr ope r t y owne d by a
                          s pous e be f or e ma r r i a ge ; pr ope r t y a c qui r e d i n
                          e xc ha nge f or pr ope r t y a c qui r e d be f or e ma r r i a g e ;
                          i nc ome f r om a nd a ppr e c i a t i on of pr ope r t y own e d
                          by a s pous e be f or e ma r r i a ge e xc e pt whe n
                          c ha r a c t e r i z e d a s ma r i t a l pr ope r t y unde r
                          s ubdi vi s i on ( b) ( 1) ; a nd pr ope r t y a c qui r e d by a
                          s pous e a t a ny t i me by gi f t , be que s t , de vi s e o r
                          de s c e nt .

                  Thi s Cour t ha s c ons t r ue d t hi s s e c t i on t o me a n t ha t
                  gi f t s by one s pous e t o a not he r of pr ope r t y t ha t
                  woul d ot he r wi s e be c l a s s i f i e d a s ma r i t a l pr ope r t y
                  a r e t he s e pa r a t e pr ope r t y of t he r e c i pi e nt s pous e .
                  Thi s Cour t ha s a l s o f ound t ha t t he por t i on of a
                  s pous e ’ s pe ns i on or ot he r r e t i r e me nt be ne f i t
                  a t t r i but a bl e t o c r e di t a bl e s e r vi c e pr i or t o t he
                  ma r r i a ge i s s e pa r a t e pr ope r t y.

Th e Co ur t t he n we nt a he a d t o di s c us s t he doc t r i ne of

t r a n s mut a t i on a nd s a i d:

                  [ s ] e pa r a t e   pr ope r t y ma y be c ome pa r t of t he ma r i t a l
                  es t at e i f i      t s owne r t r e a t s i t a s i f i t we r e ma r i t a l
                  pr ope r t y.        Pr of e s s or Cl a r k de s c r i be s t he doc t r i ne o f
                  t r a ns mut a t i   on a s f ol l ows :

                          [ Tr a ns mut a t i on] oc c ur s whe n s e pa r a t e pr ope r t y
                          i s t r e a t e d i n s uc h a wa y a s t o gi ve e vi de nc e of
                          a n i nt e nt i on t ha t i t be c ome ma r i t a l pr ope r t y.
                          One me t hod of c a us i ng t r a ns mut a t i on i s t o

                                                     3
                          pur c ha s e pr ope r t y wi t h s e pa r a t e f unds but t o
                          t a ke t i t l e i n j oi nt t e na nc y.       Thi s ma y a l s o b e
                          done by pl a c i ng s e pa r a t e pr ope r t y i n t he na me s
                          of bot h s pous e s .         The r a t i ona l e unde r l yi ng bo t h
                          t he s e doc t r i ne s i s t ha t de a l i ng wi t h pr ope r t y
                          i n t he s e wa ys c r e a t e s a r e but t a bl e pr e s umpt i o n
                          of a g i f t t o t he ma r i t a l e s t a t e .     Thi s
                          pr e s umpt i on i s ba s e d a l s o upon t he pr ovi s i on i n
                          ma ny ma r i t a l pr ope r t y s t a t ut e s t ha t pr ope r t y
                          a c qui r e d dur i ng t he ma r r i a ge i s pr e s ume d
                          ma r i t a l .   The pr e s umpt i on c a n be r e but t e d by
                          e vi de nc e of c i r c ums t a nc e s or c ommuni c a t i ons
                          c l e a r l y i ndi c a t i ng a n i nt e nt t ha t t he pr ope r t y
                          r e ma i n s e pa r a t e .

                   1 H. Cl a r k, The Law of Dome s t i c Re l at i ons i n t he
                   Uni t e d St at e s §16. 2, a t 185 ( 1987) .

                   Se ve r a l r e por t e d a nd unr e por t e d c a s e s ha ve di s c us s e d

a n d a ppl i e d t he doc t r i ne of t r a ns mut a t i on i n pr ope r t y

s e t t l e me nt s i t ua t i ons , b ut none i s a ppl i c a bl e t o t he f a c t s of

t hi s c a s e .

                   Dur i ng t he c our s e of t he t r i a l , t he hus ba nd

e x p l a i ne d why he he l d t i t l e s ol e l y t o t he Cr e s c e nt Cl ub

p r o p e r t y.    He s a i d:

                   Q.     M . Pa t t o n, wa s t he r e a ny r e a s on why you di d
                           r
                          not pur c ha s e t hi s pr ope r t y a t Cr e s c e nt Cl ub
                          wi t h M s . Pa t t on pr i or t o t he ma r r i a ge ?
                                  r

                   A.     Ye s , s i r , t h e r e i s .

                   Q.     W t i s t ha t r e a s on?
                           ha

                   A.     W l l , M s . Pa t t on, Be t s y ha d be e n ma r r i e d t hr e e
                            e         r
                          t i me s pr e vi ous t o our ma r r i a ge , t hr e e t i me s
                          pr e vi ous l y.    I woul d be put t i ng mys e l f I
                          t hought a t gr e a t r i s k t o pur c ha s e a nyt hi ng
                          j oi nt l y wi t h he r .  I r e a l l y di dn’ t know wha t
                          woul d ha ppe n, wha t woul d t r a ns pi r e i n t he
                          ma r r i a ge , but t he hi s t or y pr e t t y muc h s pe a ks
                          f or i t s e l f s o I wa s t r yi ng t o pr ot e c t my a s s e t s
                          a nd my pr ope r t y.

                   Q.     Di d you e ve r t r a ns f e r a ny i nt e r e s t of t he
                          Cr e s c e nt Cl ub pr ope r t y t o M s . Pa t t on?
                                                                r

                   A.     No, s i r .

Th e p a r t i e s r e s i de d i n t he Cr e s c e nt Cl ub pr ope r t y, but t hi s


                                                   4
f a c t a l one doe s not t r i gge r t he doc t r i ne of t r a ns mut a t i on.

Th e e v i de nc e i s c l e a r t ha t t he hus ba nd i nt e nde d t ha t t hi s

p r o p e r t y be hi s s e pa r a t e pr ope r t y, a s e vi de nc e d by t he l e ga l

t i t l e a nd hi s pa yi ng t he mor t ga ge pa yme nt s , t a xe s a nd

ma i n t e na nc e out of hi s i nc ome .             M e ove r , t he e vi de nc e
                                                       or

p r e p o n de r a t e s a ga i ns t t he f i ndi ng t ha t t he Sc e ni c Hi ghwa y

p r o p e r t y wa s ma r i t a l pr ope r t y.

                Fr om t he pa r t i e s ’ t e s t i mony, bot h a r e of t he opi ni o n

t h a t t he Cr e s c e nt Cl ub p r ope r t y ha s mor e e qui t y t ha n f ound b y

t h e Tr i a l Cour t .      The wi f e woul d be e nt i t l e d t o a ny i nc r e a s e

i n t h e va l ue of t he Cr e s c e nt Cl ub pr ope r t y dur i ng t he ma r r i a g e

b e c a u s e s he s ubs t a nt i a l l y c ont r i but e d t o t he a ppr e c i a t i on a n d

p r e s e r va t i on of t he pr ope r t y.       Har r i s on v . Har r i s on, 912

S. W 2 d 124 ( Te nn. 1996) .
    .                                    W c onc l ude t ha t t he Cr e s c e nt Cl u b
                                          e

p r o p e r t y s houl d be s ol d, t he ba l a nc e of t he i nde bt e dne s s be

p a i d , a nd t he hus ba nd be t he n gi ve n t he $73, 000. 00 downpa yme n t

wh i c h he pa i d, wi t h a ny r e ma i ni ng mone y di vi de d e qua l l y

b e t we e n t he pa r t i e s .   The Sc e ni c Hi ghwa y pr ope r t y we f i nd i s

t h e wi f e ’ s s e pa r a t e pr ope r t y, a nd s he i s a wa r de d t ha t t r a c t .

Th e $ 9 , 500. 00 not e t o t he wi f e wi l l be s e t of f a ga i ns t t he

h u s b a nd’ s $10, 000. 00 pa yme nt t owa r d t he pur c ha s e of t he Sc e n i c

Hi g h wa y pr ope r t y.      The He mphi l l pr ope r t y whi c h wa s a l s o t he

wi f e ’ s s e pa r a t e pr ope r t y, i s l i ke wi s e a wa r de d t o t he wi f e .

                The hus ba nd a l s o c ompl a i ns a bout t he a wa r d of

p e r s o n a l pr ope r t y t o t h e wi f e .       At t he t i me of s e pa r a t i on, t h e

h u s b a nd t ook pe r s ona l p r ope r t y f r om t he hous e , but c ont e nds

t h a t t he r e i s a ddi t i ona l pr ope r t y t ha t he i nhe r i t e d f r om hi s

mo t h e r whi c h he s houl d be a wa r de d, a nd i s now i n t he

p o s s e s s i on of t he wi f e .     The hus ba nd r a i s e d t hi s i s s ue be f o r e

                                                  5
t h e Tr i a l J udge i n t he mot i on f or a ne w t r i a l , a nd t he Tr i a l

J u d g e a ppoi nt e d a me di a t or t o r e s ol ve t he di s put e , but

a p p a r e nt l y t he hus ba nd di d not me e t wi t h t he me di a t or a l t ho u g h

s e v e r a l oppor t uni t i e s we r e gi ve n.      W do not gr a nt t he hus ba n d
                                                        e

r e l i e f o n t hi s i s s ue be c a us e he f a i l e d t o t a ke a c t i on

a v a i l a bl e t o h i m t o p r e v e nt t he a l l e ge d e r r or .   T. R. A. P. Ru l e

36( a ) .

                The j udgme nt of t he Tr i a l Cour t i s a f f i r me d a s

mo d i f i e d, a nd t he c a us e r e ma nde d wi t h t he c os t s a s s e s s e d on e -

h a l f t o e a c h p a r t y.




                                               ________________________
                                               He r s c he l P. Fr a nks , J .


CONCUR:




_ _ _ _ _ ______________________
Ho u s t o n M Godda r d, P. J .
              .




_ _ _ _ _ _ _____________________
Ch a r l e s D. Sus a no, J r . , J .




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