                       I N THE COURT OF APPEALS OF TENNESSEE

                                        EASTERN SECTI ON




PAULA RUTH SHEFFI ELD HARTMAN                    )    HAM LTON COUNTY
                                                         I
                                                 )    03A01- 9608- CV- 00249
       Pl a i nt i f f - Appe l l e e            )
                                                 )
                                                 )
       v.                                        )    HON. SAMUEL H. PAYNE,
                                                 )    J UDGE
                                                 )
MELVI N THOMAS HARTMAN, J R.                     )
                                                 )    VACATED I N PART
       De f e nda nt - Appe l l a nt             )    a nd REMANDED




BARRY L. GOLD OF CHATTANOOGA FOR APPELLANT

CHARLES D. PATY OF CHATTANOOGA FOR APPELLEE




                                   O P I N I O N




                                                                       Godda r d, P. J .




               M l vi n Thoma s Ha r t ma n, J r . , a ppe a l s a di vor c e j udgme n t
                e

r e n d e r e d by t he Ci r c ui t Cour t f or Ha mi l t on Count y.         On a ppe a l h e

i ns i s t s t ha t t he Tr i a l Cour t e r r e d i n i t s a wa r d of c e r t a i n

j e we l r y t o h i s wi f e , Pa ul a Rut h She f f i e l d Ha r t ma n, a s s e pa r a t e

p r o p e r t y whi c h wa s i n f a c t ma r i t a l pr ope r t y.   M . Ha r t ma n a l s o
                                                                       r

i ns i s t s t ha t t he Tr i a l Cour t ma de a n i ne qui t a bl e di vi s i on of t he

ma r i t a l e s t a t e s i nc e t he Tr i a l Cour t r e f us e d t o c ons i de r t he t a x
c on s e qu e nc e s o f a wa r di ng M . Ha r t ma n c e r t a i n r e t i r e me nt f unds i n
                                       r

e x c h a n g e f or M . Ha r t ma n r e c e i vi ng t he e qui t y i n t he i r home a nd
                      s

o t h e r r e a l pr ope r t y.



                   The pa r t i e s we r e ma r r i e d on M r c h 9, 1979.
                                                            a                                           Bot h ha d

b e e n p r e vi ous l y ma r r i e d.          The y ha d one c hi l d, who wa s a mi nor a t

t he t i me o f t he h e a r i ng.              At t he t i me of t he ma r r i a ge , M .
                                                                                        s

Ha r t ma n owne d a Si gna l Mount a i n hous e wi t h $5, 000 i n e qui t y.                                       At

t h e t i me of t he di vor c e , t he i r e qui t y ha d i nc r e a s e d t o

a p p r o x i ma t e l y $48, 500, i nc l udi ng t he e qui t y i n a n a dj a c e nt l ot o f

a p p r o x i ma t e l y $19, 750.             M . Ha r t ma n f i l e d f or di vor c e i n J ul y o f
                                                s

1 9 9 4 a l l e gi ng i na ppr opr i a t e ma r i t a l c onduc t a nd i r r e c onc i l a bl e

d i f f e r e nc e s .    M . Ha r t ma n c ount e r c l a i me d f or di vor c e , a l l e gi ng
                           r

t ha t M . Ha r t ma n c ommi t t e d a dul t e r y.
        s                                                              The Tr i a l Cour t r e nde r e d a

j u d g me n t on Oc t obe r 24, 1995, a wa r di ng M . Ha r t ma n t he di vor c e
                                                     r

b a s e d o n M . Ha r t ma n’ s s t i pul a t i on of he r i na ppr opr i a t e ma r i t a l
               s

c onduc t .        The Tr i a l Cour t or de r e d t ha t t he t wo pa r t i e s woul d b e

g r a n t e d j oi nt l e ga l a nd phys i c a l c us t ody of t he i r mi nor da ught e r

a n d o r d e r e d a pa yme nt s c he dul e f or he r e xpe ns e s a nd i ns ur a nc e .

Ho we v e r , t he Tr i a l Cour t di d not e nt i r e l y r e s ol ve t hi s c a s e i n

t h e Oc t obe r 1995 j udgme nt ; i t i ns t e a d r e f e r r e d t he i s s ue of t he
                                                                                               1
d i vi s i on o f t he ma r i t a l a s s e t s t o a Spe c i a l M s t e r .
                                                                   a



                   Af t e r a h e a r i ng wi t h t he t wo pa r t i e s , t h e Spe c i a l

M s t e r i s s ue d a l e ngt hy r e por t whi c h r e s ol ve d t he di vi s i on of t h e
 a

ma r i t a l a s s e t s .     M . Ha r t ma n f i l e d a numbe r of obj e c t i ons t o t he
                                r

         1
                   M . Ha r t ma n f i l e d a mo t i o n f o r r e f e r e n c e t o a S p e c i a l
                     r                                                                                   M st er
                                                                                                          a        due
t o t h e “ c o mp l e x v a l u a t i o n a n d c a t e g o r i z a t i o n i s s u e s . ”

                                                            2
Sp e c i a l M s t e r ’ s r e por t , a nd r e que s t e d a he a r i ng on t he s e
              a

o b j e c t i ons wi t h t he Tr i a l Cour t .                  Af t e r a he a r i ng i n t he Tr i a l

Co u r t o n Fe br ua r y 19, 1996, on t he Spe c i a l M s t e r ’ s r e por t , t h e
                                                         a

Tr i a l Cour t a dopt e d t he Spe c i a l M s t e r ’ s r e por t a nd or de r e d t h a t
                                             a

t h e p r o pos e d di vi s i on of a s s e t s a nd l i a bi l i t i e s be a dopt e d a s

p a r t o f t he pr e vi ous j udgme nt , i nc l udi ng a n a wa r d of c e r t a i n

j e we l r y t o t he wi f e a s s e pa r a t e pr ope r t y.                     The or de r a l s o

i n c l u d e d a n a wa r d of t he e qui t y i n t he hous e a nd a dj a c e nt l ot t o

M . Ha r t ma n a nd a n a wa r d of a l mos t e qua l va l ue i n t he f or m of
 s

r e t i r e me nt mone y t o M . Ha r t ma n t o a c c ount f or M . Ha r t ma n’ s
                              r                                   s

r e t a i n i ng t he e qui t y i n t he hous e .



                   M . Ha r t ma n’ s f i r s t i s s ue on a ppe a l i s t ha t t he Tr i a l
                    r

Co u r t i nc or r e c t l y c ha r a c t e r i z e d c e r t a i n i t e ms of t he j e we l r y a s

g i f t s , a nd t hus a s s e pa r a t e pr ope r t y a nd i nc or r e c t l y a wa r de d t h e m

t o M . Ha r t ma n.
     s                          M . Ha r t ma n ba s e s hi s i ns i s t e nc e on t he f a c t
                                 r

t h a t M . Ha r t ma n di d not c a r r y he r bur de n of pr ovi ng t ha t t he
         s

i t e ms o f j e we l r y we r e g i f t s .             M . Ha r t ma n r e l i e s on t he ma r i t a l
                                                          r

a s s e t a nd l i a bi l i t y l i s t s t ha t e a c h pa r t y s ubmi t t e d t o t he

Sp e c i a l M s t e r .
              a                 M . Ha r t ma n’ s l i s t c l a s s i f i e d $33, 0 00 wor t h o f
                                 r
                                    2
j e we l r y a s ma r i t a l ,         whi l e M . Ha r t ma n’ s l i s t of " St a t e me nt of
                                                 s

As s e t s a nd Li a bi l i t i e s " i t e mi z e d e a c h i t e m of j e we l r y a nd va l u e d

t h e j e we l r y a t a ppr oxi ma t e l y $16, 000, wi t hout i ndi c a t i ng whe t h e r

t h e j e we l r y wa s ma r i t a l o r s e pa r a t e pr ope r t y.                     M . Ha r t ma n a l s o
                                                                                           s

f i l e d a n e xhi bi t whi c h wa s t i t l e d " W f e ’ s Se pa r a t e Pr ope r t y, "
                                                     i

wh i c h d i d not i nc l ude a ny of t he j e we l r y a t i s s ue on a ppe a l ,

         2
                     M . Ha r t ma n ’ s l i s t i n d i c a t e d t h a t $ 8 , 0 0 0 o f t h e j e we l r y wa s i n h i s
                       r
p o s s e s s i o n wh i l e $ 2 5 , 0 0 0 wa s i n M . Ha r t ma n ’ s p o s s e s s i o n .
                                                     s

                                                             3
wh i l e i t di d i nc l ude ot he r j e we l r y whi c h wa s r e f e r r e d t o a s be i n g

a c qu i r e d " b e f or e " t he ma r r i a ge .       Bot h pa r t i e s a dmi t t ha t t he r e

wa s n o t e s t i mony a t t he Sp e c i a l M s t e r he a r i ng or i n t he Tr i a l
                                               a

Co u r t o n t he i s s ue of whe t he r t he i t e ms of j e we l r y we r e gi f t s .

Th e Tr i a l J udge s umma r i l y a f f i r me d t he Spe c i a l M s t e r ’ s f i ndi ng
                                                                     a

t h a t t h e j e we l r y wa s s e pa r a t e pr ope r t y.



                  The Tr i a l Cour t mus t e qui t a bl y di vi de a l l of t he

" ma r i t a l pr ope r t y. "     T. C. A. 36- 4- 121.          M r i t a l pr ope r t y i s
                                                                  a

d e f i n e d a s " a l l r e a l a nd pe r s ona l pr ope r t y, bot h t a ngi bl e a nd

i n t a n g i bl e , a c qui r e d by e i t he r or bot h s pous e s dur i ng t he c our s e

o f t h e ma r r i a ge . "      T. C. A. 36- 4- 121.         Se pa r a t e pr ope r t y, on t he

o t h e r h a nd, i s de f i ne d i n T. C. A. 36- 4- 121( b) ( 2) ( d) a s pr ope r t y

" a c q u i 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 or

de s c e nt . "    The r e f or e , a gi f t gi ve n by one s pous e t o t he ot he r

d u r i n g ma r r i a ge i s c ons i de r e d s e pa r a t e pr ope r t y.      Ba t s on v.

Ba t s o n, 769 S. W 2d 849 ( Te nn. App. 1988) .
                    .                                               Howe ve r , i t mus t be

p r o v e n t ha t a gi f t a c t ua l l y oc c ur r e d.        Thi s Cour t s t a t e d i n

Ha n o v e r v. Ha nove r , 775 S. W 2d 612, 617 ( Te nn. App. 1989) , t ha t :
                                    .



       Th e ma t t e r t o b e       de t e r mi ne d whe r e t he r e a r e
       i n t e r s pous a l gi f t   s i s whe t he r a gi f t a c t ua l l y oc c ur r e d.
       Ea c h c a s e mus t s t      a nd on i t s own f a c t s .     A c ompl e t e d
       g i f t r e qui r e s a n     i nt e nt i on t o ma ke a gi f t , de l i ve r y,
       a nd a c c e pt a nc e .
Th e b u r de n of pr ovi ng         t he e l e me nt s of a gi f t l i e s wi t h t he don e e .

Pa mp l i n v . Sa t t e r f i e l d, 196 Te nn. 297, 265 S. W 2d 886 ( 1954) .
                                                              .                                       In

o r d e r t o pr ove t ha t t he i t e ms of j e we l r y we r e gi f t s f r om he r

h u s b a n d , M . Ha r t ma n bor e t he bur de n of pr ovi ng t ha t t he e l e me n t s
                 s

o f a gi f t we r e pr e s e nt .

                                                     4
                Our de novo r e vi e w pe r s ua de s us t ha t t he r e i s

i n s u f f i c i e nt e vi de nc e t o f i nd t he j e we l r y i n que s t i on t o be

s e p a r a t e pr ope r t y.   M . Ha r t ma n di d not put on a ny pr oof t ha t
                                 s

s u g g e s t e d t ha t t he i t e ms of j e we l r y we r e gi f t s .      To t he c ont r a r y ,

M . Ha r t ma n i mpl i e d i n h e r f i l e d e xhi bi t s of " As s e t s a nd
 s

Li a b i l i t i e s " a nd " W f e ’ s Pr ope r t y" t ha t t he i t e ms of j e we l r y i n
                               i

q u e s t i o n we r e ma r i t a l pr ope r t y, not s e pa r a t e pr ope r t y.



                Be c a us e we f i nd t ha t t he r e i s i ns uf f i c i e nt e vi de nc e i n

t h e r e c or d t o s uppor t t he Tr i a l Cour t ' s de t e r mi na t i on of t he

j e we l r y a s s e pa r a t e pr ope r t y, we r e ma nd t hi s i s s ue t o t he Tr i a l

Co u r t t o c ons i de r a ddi t i ona l e vi de nc e t o de t e r mi ne whe t he r M .
                                                                                      s

Ha r t ma n c a r r i e d he r bur de n of pr ovi ng t he e l e me nt s of a gi f t , a n d

wh e t h e r t he j e we l r y s houl d be c ons i de r e d ma r i t a l pr ope r t y a nd b e

e q u i t a b l y di vi de d i n a c c or da nc e wi t h T. C. A. 36- 4- 121.



                M . Ha r t ma n’ s s e c ond i s s ue on a ppe a l i s pr e di c a t e d o n
                 r

t h e a r g ume nt t ha t t he Tr i a l Cour t a bus e d i t s di s c r e t i on by

f a i l i n g t o c ons i de r t he t a x e f f e c t s of a n a wa r d of pe ns i on

b e n e f i t s t o M . Ha r t ma n, a nd t hus r e nde r i ng a n i ne qui t a bl e
                     r

d i vi s i on o f t he ma r i t a l a s s e t s .       On M . Ha r t ma n’ s a t t e mpt t o
                                                            r

o f f e r a wi t ne s s , a Ce r t i f i e d Publ i c Ac c ount a nt pr e pa r e d t o

t e s t i f y a s t o t he t a x c ons e que nc e s of t he a wa r d t o M . Ha r t ma n o f
                                                                          r

t h e p e n s i on f unds , t he Tr i a l J udge de ni e d M . Ha r t ma n’ s r e que s t :
                                                            r



                  THE COURT:      I don’ t wa nt t o he a r pr oof , you know,
        t h a t ’ s wha t we ’ r e he r e - - i f you wa nt t o a r gue a bout
        t he o bj e c t i ons t o t hi s , t h a t ’ s f i ne , b ut j us t t e l l me
        wh a t you’ d l i ke - - t e l l me wha t you woul d l i ke .

                                                    5
               M R. GOLD:          W l l , we c e r t a i nl y do, Your Honor ,
                                    e
         but - -

                 THE COURT:       I don’ t c a r e t o he a r a ny pr oof on i t .
         I n f a c t , I ’ ve ne ve r he a r d pr oof on t hi s one be f or e ,
         n e ve r ha d a ny of f e r e d be f or e t o be hone s t wi t h you.

                 M R. GOLD:     W c e r t a i nl y do of f e r he r f or t he
                                 e
         p u r pos e s of - - i f I ma y j us t s t a t e f or t he r e c or d, Your
         Ho nor .

                 THE COURT:            W l l , why di dn’ t you
                                        e                            of f e r he r t o hi m
         [ Spe c i a l M s t e r ] ,
                        a               now he ’ s t he one t o      do t ha t .    You s e e
         t h a t wa s hi s j ob.          Tha t ’ s why I s e nt i   t ove r t he r e .    I
         wo ul d ha ve ke pt i         t mys e l f i f I wa nt e d   t o he a r a l l t he
         p r oof .    I di dn’ t       ha ve t i me s o I s e nt i   t t o hi m.



Th e Tr i a l Cour t i ns i s t e d t ha t i t wa s not r e qui r e d t o he a r

a d d i t i o na l pr oof on t he i s s ue , s i nc e t he pr oof s houl d ha ve be e n

o f f e r e d t o t he Spe c i a l M s t e r .
                                    a



                  M . Ha r t ma n f i r s t a r gue d i n or a l a r gume nt t ha t dur i n g a
                   r

Tr i a l Cour t he a r i ng on t he Spe c i a l ma s t e r ’ s Re por t , t he Tr i a l

Co u r t mus t c ons i de r a ny ne w e vi de nc e t ha t a pa r t y of f e r s , a nd

t h a t b y de nyi ng hi s of f e r of pr oof , t he Tr i a l Cour t a bus e d i t s

d i s c r e t i on.   The Tr i a l Cour t i s not r e qui r e d t o he a r ne w e vi de n c e

t o a Sp e c i a l M s t e r ’ s r e por t , a c c or di ng t o Rul e 53. 04( 2) of t h e
                    a

Te nn e s s e e Rul e s o f Ci vi l Pr oc e dur e , whi c h s t a t e s :



         I n a n a c t i on t o be t r i e d wi t hout a j ur y t he c our t s ha l l
         a c t upon t he r e por t o f t he ma s t e r .      W t hi n t e n ( 10)
                                                                i
         d a ys a f t e r be i ng s e r ve d wi t h not i c e of t he f i l i ng of
         t h e r e por t , a ny pa r t y ma y s e r ve wr i t t e n obj e c t i ons
         t h e r e t o upon t he ot he r pa r t i e s .   Appl i c a t i on t o t he
         c o ur t f or a c t i on upon t he r e por t a nd upon obj e c t i ons
         t h e r e t o s ha l l be by mot i on a nd upon not i c e a s
         p r e s c r i be d i n Rul e 6. 04.     The c our t a f t e r he a r i ng ma y
         a d opt t he r e por t or ma y modi f y i t or ma y r e j e c t i t i n
         wh ol e or i n pa r t or ma y r e c e i ve f ur t he r e vi de nc e or ma y
         r e c ommi t i t wi t h i ns t r uc t i ons .

                                                    6
Th e r e f o r e , t he Te nne s s e e Rul e s of Ci vi l Pr oc e dur e do not r e qui r e

t h e Tr i a l J udge t o he a r a d di t i ona l pr oof t o t he Spe c i a l M s t e r ’ s
                                                                               a

Re p o r t .   M . Ha r t ma n f ur t he r i ns i s t s t ha t i n t hi s pa r t i c ul a r
                r

s i t u a t i on, t he Tr i a l J udge s houl d be r e qui r e d t o he a r hi s of f e r e d

p r o o f i n or de r t o c ompl y wi t h T. C. A. 36- 4- 121( c ) , whi c h s t a t e s

t h a t " [ I ] n ma ki ng e qui t a bl e di vi s i on of ma r i t a l pr ope r t y, t he

c o u r t s ha l l c ons i de r a l l r e l e va nt f a c t or s i nc l udi ng . . . ( 9) Th e

t a x c on s e que nc e s t o e a c h pa r t y. "



                M . Ha r t ma n c ont e nds t ha t t he Tr i a l Cour t a bus e d i t s
                 r

d i s c r e t i on by f a i l i ng t o c ons i de r t he t a x c ons e que nc e s of hi s

r e c e i p t of t he pe ns i on f un d t o a c c ount f or hi s i nt e r e s t i n t he

e q u i t y of t he hous e .      M . Ha r t ma n a r gue s t ha t t he di vi s i on of t h e
                                   r

ma r i t a l a s s e t s wa s n ot a n e qui t a bl e one s i nc e M . Ha r t ma n
                                                                    s

r e c e i v e d t he e qui t y of t he hous e a nd r e ma i ne d l i vi ng i n t he 38 0 0

s q u a r e f oot home , whi l e he wa s gi ve n a n i nt e r e s t i n a pe ns i on

f u n d wh i c h woul d not be wo r t h ne a r l y t he a mount of t he home

e q u i t y i f i t we r e l i qui da t e d.    M . Ha r t ma n a r gue s t ha t t he
                                                 r

p e n s i o n f und, i f l i qui da t e d, woul d be s ubj e c t t o a 10% pe na l t y

f o r e a r l y wi t hdr a wa l a nd s ubj e c t t o f e de r a l i nc ome t a xe s .

Th e r e f o r e , he a r gue s t ha t t he pe ns i on f und woul d onl y be wor t h 5 9

c e n t s o n t he d ol l a r i f l i qui da t e d.     He i ns i s t s t ha t i n or de r f o r

t h e d i v i s i on t o be e qui t a bl e , he s houl d be gi ve n a l i qui d a s s e t

o f e q u a l va l ue t o t he e qui t y i n t he home s o t ha t he ma y us e t h a t

a s s e t t o pur c ha s e a home a nd be i n a n e qua l pos i t i on t o M .
                                                                            s

Ha r t ma n.



                                                    7
                The Tr i a l J udge r e f us e d t o he a r M . Ha r t ma n’ s wi t ne s s ,
                                                             r

t h e Ce r t i f i e d Publ i c Ac c ou nt a nt , pr e pa r e d t o t e s t i f y a bout t he

t a x c o n s e que nc e s of t he a wa r d of t he r e t i r e me nt be ne f i t s , on t h e

b a s i s t ha t M . Ha r t ma n s ho ul d ha ve of f e r e d t he pr oof t o t he
                  r

Sp e c i a l M s t e r .
              a            Howe ve r , t he i s s ue of t he t a x c ons e que nc e s of

t he r e t i r e me nt be ne f i t s d i d not a r i s e unt i l t he Spe c i a l M s t e r
                                                                                   a

f i n a l i z e d hi s pr opos e d di v i s i on of a s s e t s , whi c h i nc l ude d

a wa r d i n g t he e qui t y of t he hous e t o M . Ha r t ma n a nd t he
                                                  s

r e t i r e me nt be ne f i t s t o M . Ha r t ma n.
                                     r                 Thi s Cour t , i n St e phe ns on v .

St e p h e n s on, a n unpubl i s he d opi ni on f i l e d i n Na s hvi l l e Fe br ua r y 7 ,

1 9 9 6 , d i s c us s e d t he i mpor t a nc e of t he Tr i a l Cour t c ons i de r i ng t h e

t a x c o n s e que nc e s of a ma r i t a l di vi s i on, a nd s t a t e d, " The r i ght t o

r e c e i v e t a xa bl e i nc ome , s uc h a s a r e t i r e me nt , i s not a s va l ua bl e

a s t h e r i ght t o c ol l e c t non- t a xa bl e i nc ome . "     The Tr i a l Cour t i n

t h i s c a s e di d not a f f or d M . Ha r t ma n t he oppor t uni t y of
                                     r

c o n s i d e r i ng t he t a x c ons e que nc e s of t he di vi s i on of a s s e t s .

Th e r e f o r e , we hol d, ba s e d on our de novo r e vi e w of t he r e c or d,

t h a t t h e Tr i a l Cour t wa s i n e r r or i n r e f us i ng t o he a r M .
                                                                              r

Ha r t ma n ’ s pr oof on t he t a x c ons e que nc e s of t he pr opos e d di vi s i o n

s i n c e t he r e f us a l wa s a f a i l ur e on t he Tr i a l Cour t ’ s pa r t t o

c o n s i d e r t he t a x c ons e que nc e s of t he di vi s i on a s r e qui r e d by

T. C. A. 36- 4- 121( c ) .



                For t he f or e goi ng r e a s ons , t he j udgme nt of t he Tr i a l

Co u r t a s t o t he di s pos i t i on of t he j e we l r y a nd t he di vi s i on of

o t h e r ma r i t a l pr ope r t y i s va c a t e d a nd t he c a us e r e ma nde d t o t h e




                                                8
Ci r c u i t Cour t f or a d e t e r mi na t i on a s t o whe t he r t he j e we l r y i s

M . Ha r t ma n' s s e pa r a t e pr ope r t y or ma r i t a l pr ope r t y, wi t h
 s

a p p r o p r i a t e di s pos i t i on a f t e r s uc h de t e r mi na t i on.   W a l s o r e ma n d
                                                                                   e

f o r c o n s i de r a t i on of t he t a x c ons e que nc e s of t he a wa r d t o M .
                                                                                     r

Ha r t ma n of t he r e t i r e me nt f unds i n e xc ha nge f or t he e qui t y i n t h e

r e a l p r ope r t y.    The Tr i a l Cour t ma y, of c our s e , r e - r e f e r t he

q u e s t i o ns t o a Spe c i a l M s t e r .
                                    a               Cos t s of a ppe a l a r e a dj udge d

a g a i ns t M . Ha r t ma n.
              s



                                                 _______________________________
                                                 Hous t on M Godda r d, P. J .
                                                            .


CONCUR:



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



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




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