                   IN THE COURT OF APPEALS OF TENNESSEE
                        WESTERN SECTION AT JACKSON
______________________________________________________________________________

GEORGEANNE M. HOFER                              Shelby Chancery No. 23216-1
                                                 C.A. No. 02A01-9510-CH-00210
      Plaintiff,

v.
                                                 Hon. Neal Small
                                                                   FILED
                                                                      Feb. 3, 1997
JAMES PATRICK HOFER
                                                                   Cecil Crowson, Jr.
      Defendant.                                                    Appellate Court Clerk


DAVID E. CAYWOOD and DARRELL D. BLANTON, Memphis, Attorneys for Plaintiff.

ROSCOE A. FEILD, JR., Memphis, Attorney for Defendant.


AFFIRMED

Opinion filed:
______________________________________________________________________________

TOMLIN, Sr. J.

      Georgeanne M. Hofer (“Wife”) filed suit for divorce in the Chancery Court of

Shelby County against James P. Hofer (“Husband”) seeking a divorce, division of

marital property and alimony. Following a bench trial the chancellor awarded Wife a

divorce on the ground of inappropriate marital conduct. In addition, he awarded W ife

rehabilitative alimony for three years, ordered Husband to pay a portion of Wife’s fees

and expenses as alimony in solido and divided the m arital property between the parties.


      Both Husband and Wife have appealed. Husband has set forth some seven

issues for our consideration. They are as follows:


      I. Whether the trial court erred in finding two investment accounts owned
      by the Husband prior to the marriage, were marital property when the
      Husband exclusively controlled the accounts and the only deposits to the
      accounts were proceeds from his other separately owned properties also
      held by the Husband prior to the marriage.

      II. In the alternative, even if the trial court correctly determined the
      accounts to be m arital property, w hether the trial court erred in failing to
      subtract the original values in the accounts and the deposit from the
      Huckleberry sale before dividing the remainder as marital property.

      III. In the alternative, whether the trial court’s division of the investment
      accounts was erroneous even if the court correctly determined the
      accounts to be marital property.
      IV. The trial court erred in holding that proceeds from the sale of
      property ow ned by Husband prior to m arriage became marital property
      when the proceeds were placed in an investment account titled to and
      controlled only by the husband.

      V. W hether the trial court erred in failing to apply the law of contracts to
      a reconciliation agreement and determined that the property owned by
      Husband prior to the marriage was marital property when both parties
      testified that an reconciliation agreement had been entered into by the
      parties in which Wife agreed to stop smoking marijuana in exchange for
      Husband adding Wife’s name to his house and both parties testified that
      Wife did not stop smoking marijuana after H usband added W ife’s name to
      his property.

      VI. W hether trial court erred in aw arding rehabilitative alimony to Wife
      when m arriage had been of relatively short duration; W ife had previously
      removed more than $10,000.00 in cash from joint accounts and removed
      most of the family furniture when the parties separated; and at the time of
      the divorce, Wife was gainfully employed in same profession as she had
      been at the time of the marriages and was living on her lover’s property.

      VII. W hether an award of attorney fees was appropriate when Wife
      received substantial pendente lite support during the separation and was
      gainfully employed in her profession and living on her lover’s property at
      the time of the divorce.


      Wife has presented two issues for our consideration: W hether the trial court

erred by finding that (1)Husband’s business was entirely the separate property of

Husband and by not finding that the increase in value during marriage was marital

property; and (2)the automobiles of Husband were his sole and separate property not

withstanding his admission that the majority of same were marital property. For the

reasons hereinafter stated, we find no error and affirm.


      The basic facts are undisputed. The parties were married in 1987 and separated

in September 1993. No children were born of the marriage. At the time of the

marriage Wife was 29 and H usband was 41. Husband worked at Piling and Repair

Corporation (“P and R”), which was a family-owned business that Husband had

purchased from his parents prior to the marriage. Wife held several jobs during the

marriage, including working for Husband at P & R.


       Prior to the marriage Husband had purchased a house in Memphis located at

1705 Autumn A venue, (hereafter the “Autumn” property). Husband took title to the

house in his own name. In 1989, subsequent to the marriage, Husband transferred

ownership of the house to the parties jointly. At about this time the parties had



                                            2
experienced marital difficulties, to the extent that W ife had filed for divorce. While

there is a dispute as to the exact nature of what transpired, Husband agreed to and did

transfer title of the house into both their names. As we shall see, the circumstances

surrounding this transaction make up one of the issues on appeal.


       Prior to Husband marrying Wife in the case before us, Husband and his former

wife had purchased a hom e in M emphis on Huckleberry Street (“Huckleberry”).

Pursuant to the terms of the divorce decree entered in this former marriage, the

Huckleberry property was sold. This took place during the m arriage of Husband to

Wife. The funds from the sale of the Huckleberry property were paid over to Husband

in February 1994, shortly after separation of Husband and Wife. The ramifications of

this transaction will be examined further in this opinion.


       On appeal our scope of review is de novo upon the record in the trial court. All

findings of fact made by that court come to this court accompanied by the presumption

of correctness, and, absent an error of law, unless we find that the evidence

preponderates against these findings, we must affirm. T.R.A.P. 13(d).


              I. The Classification and Distribution of the Marital Property.


       For the sake of convenience and judicial economy, inasmuch as the first four

issues on appeal presented by Husband and the two issues presented on appeal by W ife

deal w ith the classification and division of the parties’ marital property, w e will

consolidate them into one major issue and treat each part separately.


       This state is a dual property state, distinguishing betw een m arital and separate

property. Barnhill v. Barnhill, 826 S.W.2d 443, 456 (Tenn. App. 1991). T.C.A. § 36-4-

121(a) provides only for the division of marital property, thus it is incumbent upon the

trial court to first classify the property of the parties. McClellan v. McClellan, 873 S.W.2d

350 (Tenn. App. 1993)(Citing Batson v. Batson, 769 S.W.2d 849, 856 (Tenn. App.

1988)).


       In the context of this case the parties’ property is either “marital” or “separate.”

                                              3
“Separate property” is defined in T.C.A. § 36-4-121(b)(2)(A-D) as follows:


       (2) “Separate property” means:
              (A) All real and personal property ow ned by a spouse before
              the marriage;
              (B) Property acquired in exchange for property acquired
              before the marriage;
              (C) Income from and appreciation of property owned by
              spouse before marriage except when characterized as marital property under subd
              (D) Property acquired by a spouse at any time by gift,
              bequest, devise or descent.


       We begin our consideration of this issue by addressing the first two sub-issues,

dealing with the classification by the court of two investment accounts owned by

Husband as marital property rather than as separate property. Husband contends that as

he owned these accounts prior to marrying Wife, they constitute separate property.


       One we shall identify as the A.G. Edw ards account and the other as the Hilliard

Lyons account. At the time of the marriage the A.G. Edwards account had a balance of

$56,801.52. By the same token, the Hilliard Lyons account had a balance of

$39,800.00.


       During the course of the marriage, Husband deposited in excess of $209,000.00

into the Edw ards’ account. These deposits cam e from his income earned in his

employment at P and R. During the same period, he withdrew $183,000.00 from the

A.G. Edwards account. This income earned by Husband as a direct result of his own

efforts constituted m arital property as it was acquired during the m arriage, pursuant to

T.C.A. § 36-4-121(b)(1)(A). Once Husband commingled these m arital assets with his

separate assets, the entire account became a marital asset in our opinion. Furthermore,

during the marriage Husband withdrew funds previously deposited from these accounts,

with these w ithdraw als being used for the benefit of both parties. There is nothing in

the record to show that Husband treated any of the funds in these accounts as though he

considered them to be separate.


       In Pope v. Pope, 1988 WL 74615 (Tenn. App. 1988), the middle section of this

court dealt with issues similar to those before us. In affirming the trial court’s



                                             4
judgment that certain property owned by Husband prior to the marriage had become

marital property as a result of comm ingling and/or transmutation, the court stated:


       [t]wo related doctrines of community property have made their
       appearance in the marital property cases. The first of these is
       comm ingling, according to which separate property becomes marital
       property if inextricably mingled with marital property or with the separate
       property of the other spouse. If the separate property continues to be
       segregated or can be traced into its product, com mingling does not occur.
       The second doctrine is that of transm utation. This occurs when separate
       property is treated in such a w ay as to give evidence of an intention that it
       become marital property. O ne m ethod of causing transm utation is to
       purchase property with separate funds but to take title in joint tenancy.
       This may also be done by placing separate property in the nam es of both
       spouses. The rationale underlying both of these doctrines is that dealing
       with property in these ways creates a rebuttable presum ption of a gift to
       the m arital estate. This presum ption is based also upon the provision in
       many m arital property statutes that property acquired during the marriage
       is presumed m arital. The presumption can be rebutted by evidence of
       circumstances or communications clearly indicating an intent that the
       property remain separate.


Quoting H.Clark, The Law of Domestic Relations § 16.2 (2d ed. 1987). See also Sturgis v.
Sturgis, 663 S.W.2d 375, 379 (Mo.App.1983)


       The chancellor found that the A.G. Edwards account was marital property and

divided it 50/50 between the parties. The court also found that the Hilliard Lyons

account was marital property, but divided it 60% to Husband and 40% to W ife. At the

time of the divorce, the balance of the A .G. Edwards account was approximately

$85,000.00 and the Hilliard Lyons account some $136,000.00. It is clear from the

record that there was extensive commingling of funds by Husband during the course of

the marriage and that funds were withdrawn from these accounts to be used for the

benefit of the parties. This issue is accordingly without merit.


       Next, Husband contends that even if the trial court was correct in treating these

two investment accounts as marital property, nonetheless the court erred in treating the

proceeds from the sale of what is known as the Huckleberry property as a marital asset,

and not treating it as Husband’s sole and separate property. The facts surrounding

Huckleberry are these: Husband had been married and divorced prior to m arrying Wife.

The divorce decree in Husband’s former marriage had certain provisions pertaining to

the disposition of what was the marital residence in that marriage. After the marriage


                                             5
of Husband and Wife, the parties lived in the Huckleberry property for a short time.

Circumstances developed relative to the prior divorce that called for a sale of the

Huckleberry property, with Husband and his former wife dividing the proceeds equally.

This was done. Half the proceeds were paid to Husband, who deposited these funds in

the H illiard-Lyons account.


       At this time, although Husband and Wife were separated, they were still “man

and wife.” Husband’s contention here is that inasmuch as the parties were separated

pending a hearing and divorce, that marital rights had terminated as of the date of

separation. This is not the law as we know it. When Husband deposited these proceeds

in an investment account which had been utilized for all intent and purposes by the

parties during their marriage for the depositing of income earned by Husband and for

the funding of expenses and other activities of the parties, the Huckleberry proceeds

becom e marital property by virtue of this commingling, and the chancellor so found. In

our opinion the evidence does not preponderate against this finding and thus we hold

that this issue is without m erit.


       Husband contends in the alternative that even if the trial court correctly

determined that the two investment accounts were marital property, nonetheless the

court erred in its manner of dividing these two accounts as part of the overall division

of the marital property to the parties. The record reflects that the A.G. Edwards

account was divided equally and the Hilliard Lyons account was awarded 60% to

Husband and 40% to W ife.


       Our statutes provide that in divorce cases the court shall equitably divide the

marital property of the parties. T.C.A. § 36-4-121(a)(1991). An equitable division

how ever is not necessarily an equal one. Barnhill v. Barnhill, 826 S.W.2d 443, 456

(Tenn. App. 1991). In that regard this court in Barnhill stated:


       Trial courts are afforded wide discretion in dividing the interests of parties
       in jointly owned property. Accordingly, the trial court’s distribution will
       be given great weight on appeal, and will be presumed to be correct unless
       we find the preponderance of the evidence is otherwise.



                                             6
Id. At 449.


       The appellate courts are generally disinclined to disturb a trial court’s division of

marital property unless the distribution lacks proper evidentiary support or results from

an error of law or a misapplication of the statutory requirem ents and procedures.

Thompson v. Thompson, 797 S.W .2d 599, 604 (Tenn. App. 1990).


       In stating his case, Husband relies in good measure on Batson v. Batson, 769

S.W.2d 849, 858 (Tenn. App. 1988), contending that inasmuch as this was a marriage

of short duration the marital property should not have been divided equally and the

parties should have been restored to their pre-marriage financial condition. In our

opinion, Batson is distinguishable for at least two reasons. First, the majority of the

marital estate in Batson consisted of an increase in the value of H usband’s separate

property during the course of the marriage. Secondly, Batson did not involve the issues

of transm utation or commingling.


       In this case the record reflects that Husband has a much greater earning capacity

and ability to accumulate assets in the future. Furthermore, Wife was shown to have

made some contribution to the marriage, which included general homemaking duties

such as cooking, cleaning, and caring for two step-children as well as taking part in

various activities with Husband. Husband paid tribute to her, stating that she was “the

CEO of a major household.” In our opinion the evidence does not preponderate against

the trial court’s findings in this regard. This issue is accordingly without merit.


       In regard to the distribution of marital property by the trial court, Wife contends,

that the trial court erred in finding that Husband’s business, P and R, was entirely his

separate property and, in failing to find that the increase in value of the business during

the marriage was marital property, thus subject to equitable division. The first aspect of

this issue is a non-issue inasm uch as W ife concedes in her brief and there is nothing to

the contrary that the business, P and R, was owned solely by Husband. The only issue

we have to consider is whether or not the increase in value of the business during the

marriage, determined to be $45,010.00, would be subject to a marital division if the


                                             7
record would reflect that Wife had substantially contributed to the increase in value

pursuant to T.C.A. § 36-4-121(c)(5). After review ing the record in this regard, we are

of the opinion that the evidence does not preponderate against the trial court’s finding.

This issue is w ithout m erit.


       Finally, Wife complains that the chancellor erred in finding that the collection of

Austin-Healey autom obiles was Husband’s separate property although in Husband’s

Local Rule 15 Affidavit or Proposal of Settlement, Husband stated that they were

marital property. We find this to be a non-issue, for the final decree of the chancellor

did not as W ife contends, find these automobiles to Husband’s separate property, but to

the contrary awarded them to Husband as a further division of marital property.

Furthermore, in the division of marital property, we note that the chancellor awarded

the 1988 Celica to Wife. This issue is resolved in favor of Husband.


                         II. The Alleged Reconciliation Agreement.

       By way of background, the parties marital residence, known as the “Autumn

property” w as found by the chancellor to be marital property. H e awarded 50% to

Husband and 50% to W ife. Husband contends that under the circumstances then and

there existing at the tim e W ife’s name was put on the title, the entire interest in this

property should have been awarded to him .


     The record reflects that the Autum n property w as purchased by Husband prior to

the marriage. Title was taken in his name alone. In 1989, Husband had Wife’s name

added to the title. Husband contends that his w illingness to convey one half interest in

this property to Wife was because of a “reconciliation agreement” entered into between

the parties during their marriage. He further contends that Wife subsequently breached

this agreement and that under contract law as a result of this breach he should be

awarded outright title to this property. The nature of the “breach” that Husband

contends took place was Wife promising, prior to the conveyance, to stop smoking

marijuana and her subsequent failure to stop. Here follows Husband’s testimony about

the circumstances surrounding the transfer of title to the Autumn property:



                                              8
       Q: (by opposing counsel) And the house stayed in your name until August
       of 19 and 89?

       A: (by defendant) That’s correct.

       Q: And then what happened then?

       A: Well, when Georgeanne wanted something, she would deny me, even
       speaking to me, let alone sex, and she wanted that house in her name
       badly, and she went six weeks without, here again, even speaking to me,
       and she knew I was going to buy that W est Range [W est Raines] property.
       So, here again, just to try to bring some peace back in that house, I finally
       relented and put a quitclaim deed when I signed the paper on the W est
       Range [West Raines] property.


       On the other hand, W ife’s version of this real estate transaction is as follows:


       Q: (by opposing counsel) Tell me what you told him or tell me what you
       told him why he must transfer the title of that house to you in ‘89,
       whenever it was transferred.

       A: (by M rs. Hofer) I wasn’t treated as a wife and I would like this
       marriage to work, and I wasn’t a joint at that point on any accounts except
       for the marital joint account, and I didn’t think that was fair. I took care
       of him. I took care of his children. I would drop the charges [of divorce]
       if he would learn to m ake this a com plete marriage and control his temper,
       watch his drinking, start counseling, we’d go together, and to make joint
       on the house and to ease up on m e a little bit.

       Q: Did you offer to stop smoking marijuana at this point?

       A: Yes, I did.

       Q: But you didn’t?

       A: No, sir.

       Q: Okay, now, he did not know, though, you had been to an attorney and
       had not--you had filed for divorce, but you told him that you would drop
       the charges, but he didn’t know it. How did that happen?

       A: I told him I had filed for divorce.

       Q: Okay, that’s when you told him that if he would transfer the house to
       you, you w ould drop the divorce. Is that right?

       A: I told him after I had filed for divorce. I told him about filing for
       divorce.


     Neither Husband nor Wife testified about entering into any kind of “reconciliation

agreement,” as now claimed by Husband. Rather, Husband testified in essence that

this transaction took place in an attem pt by him to norm alize their strained relationship.



                                                9
The evidence does not preponderate against the chancellor’s finding. W e hold that this

issue is w ithout m erit.


                            III. The Issue of Rehabilitative Alimony.


       Husband contends that the chancellor erred in awarding Wife rehabilitative

alimony in the am ount of $800.00 per month for thirty-six months. Trial courts are

given w ide discretion in aw arding alim ony. Houghland v. Houghland, 844 S.W.2d 619

(Tenn. App. 1992). The appellate courts should defer to a trial court’s award of

alim ony unless the evidence in that court preponderates against it. Luna v. Luna, 718

S.W.2d 673 (Tenn. App. 1986). Need of the innocent spouse and the ability to pay of

the obligor spouse are two of the most important factors in determ ining the appropriate

amount of alimony. Barnhill v. Barnhill, 826 S.W.2d 443, 455 (Tenn. App. 1991). Fault

is also another substantive factor in determining an alim ony award. Duncan v. Duncan,

668 S.W .2d 568 (Tenn. A pp. 1984).


       The record reflects that Husband maintained a satisfactory income stream from

which he could afford to pay rehabilitative alimony in the sum awarded. In addition,

Wife’s expenses greatly exceed her average monthly net incom e. To counter this

Husband contends that the fact that Wife withdrew $10,000.00 from the parties’ joint

savings account and the relatively short nature of the marriage should preclude an

alim ony award.


       Prior to making this award, the chancellor noted that there was plenty of fault on

both sides, observing that the record reflected that Husband had on occasion beaten his

wife and on another occasion forced her to find refuge with her mother while wearing

nothing but her night clothes. He also noted that Husband drank excessively. In

addition to the withdrawing of funds as hereinabove noted, Wife smoked marijuana on

a regular basis, and after separation from Husband and prior to the divorce she “had

been living almost openly with another m an.” Nonetheless, the court saw fit to award

the divorce to Wife on the grounds of inappropriate marital conduct. There has been no

appeal taken from the awarding of the divorce to Wife on these grounds. We note that


                                               10
this finding by the court comes to us with a presumption of correctness and we cannot

say that the evidence preponderates against it. W e resolve this issue in favor of W ife.


                                  IV. Alimony In Solido


       The court below awarded W ife attorney fees in the amount of $15,000.00, plus

$1,196.00 in expenses. The award of attorney fees in a case such as this is considered

an alimony in solido award. Gilliam v. Gilliam, 776 S.W.2d 81 (Tenn. App. 1988). On

appeal the appellate courts will not interfere with the trial court’s decision to award

attorney fees except where there is a clear showing that the court reached the wrong

conclusion, with the result that manifest injustice would be done if the award was

allow ed to stand. Hanover v. Hanover, 775 S.W.2d 612, 618 (Tenn. App. 1989). The

affidavit filed in support of Wife’s claims for attorney fees demonstrates the substantial

effort that had to be expended on behalf of Wife because of the litigious conduct of

Husband. A contempt petition had to be filed because Husband failed to comply with a

court order relative to temporary support. A Motion to Compel was filed due to

Husband’s failure to properly respond to discovery requests. W ife found it necessary to

defend a Motion to Quash, which was denied. Wife’s discovery deposition lasted two,

full eight-hour days, nearly as long as the trial itself. Under these circumstances, we

are of the opinion that the trial court did not abuse its discretion in awarding the

attorney fees and costs com plained of.


       The judgment of the trial court is affirmed in all respects. Costs in this cause on

appeal are taxed to Husband, for which execution m ay issue if necessary.




                                          _________________________________________
                                          TOMLIN, Sr. J.



                                          _________________________________________
                                          CRAWFORD, P. J.         (CONCURS)



                                          _________________________________________

                                             11
FARMER, J.   (CONCURS)




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