Finn v. Finn

STEPHENS, Justice,

dissenting.

I respectfully dissent to the majority’s conclusion that the property division must be reversed for a new trial. I believe the decision results in an impermissible application of our standard of review in a divorce case.

On motion for rehearing, an application for en banc consideration was granted, eleven justices of this court participating. A majority of the court, as is evidenced by their opinion, concluded that the trial judge erred in denying the wife adequate discovery of the husband’s partnership interest in the law firm of Thompson & Knight, and that such error mandates reversal of the property division award of the court. My review of the record and my analysis of the applicable law leads me to a different conclusion.

This case, bitterly contested, was tried to a jury for some eight weeks. At the trial’s conclusion fifty-two special issues were submitted to the jury. After the verdict was returned, a fifty-four page judgment was entered granting the divorce, awarding cus *751 tody of the four minor children to the father, charging no child support to the mother, and dividing the property of the parties.

The mother makes no complaint of the custody award, only of the property division. To place matters in their proper perspective, I first address our standard of review and responsibility, in light of the relief sought.

STANDARD OF REVIEW

On January 1, 1970, Title I of the Texas Family Code became effective. It was intended to be a comprehensive guide with respect to all family matters which it encompassed. Article 3.63 of the Code directs the trial judge, in a divorce action, to order a division of the estate of the parties in a manner that the court deems just and right, having due regard for the rights of each party and any children of the marriage. By its very language it is readily seen that the legislature intended to grant wide latitude to the trial judge when exercising his duty of dividing the estate. The court’s discretion extends to division even to the extent of disregarding advisory answers of a jury. Cockerham v. Cockerham, 527 S.W.2d 162 (Tex.1975); Merrell v. Merrell, 527 S.W.2d 250 (Tex.Civ.App.—Tyler 1975, writ ref’d n.r.e.); Roye v. Roye, 531 S.W.2d 242 (Tex.Civ.App.—Tyler 1975, no writ); Williams v. Williams, 537 S.W.2d 107 (Tex.Civ.App.— Tyler 1976, no writ).

This court’s role, once the trial judge has made his division, is only to determine if that division, under all of the facts, constitutes an abuse of discretion. We are not empowered, nor did the legislature intend for an appellate court to substitute its judgment for that of a trial judge.

Furthermore, we are confronted with a presumption that the trial court exercised its discretion properly, and a clear abuse of discretion must be demonstrated before we may reverse the trial court’s decision. Duke v. Duke, 605 S.W.2d 408 (Tex.Civ.App.—El Paso 1980, writ dism’d); Maben v. Maben, 574 S.W.2d 229 (Tex.Civ.App.—Fort Worth 1978, no writ); Wilkerson v. Wilkerson, 515 S.W.2d 52 (Tex.Civ.App.—Tyler 1974, no writ).

Thus it is readily seen that errors committed during trial require reversal only when the error causes a manifestly unjust division of property. Smith v. Smith, 620 S.W.2d 619 (Tex.Civ.App.—Dallas 1981, no writ).

PROPERTY DIVISION

The parties stipulated to the values of substantially all of the community assets. As to those values not stipulated, the jury found the value of a Keough retirement plan in Thompson & Knight to be $81,-244.27, and in response to a special issue found the husband’s interest in the firm of Thompson & Knight to be zero. The trial judge cured the error, as to the husband’s interest in Thompson & Knight, by entering the judgment NOV as to that jury issue, and substituting his own finding of $76,-489.00, which figure was supported in the evidence from the testimony of the managing partner of the firm. Additionally, four automobiles were divided between the parties, without values being assigned. Using these figures, I compute the net value of the parties’ assets to be $869,065.73. The wife was awarded various properties valued at $416,290.60, representing 48% of the total estate, and the husband was awarded $452,-775.13, representing 52% of the total estate. This results in a larger award to the husband by the sum of $36,848.53.

Four special issues were submitted to the jury, in which they found that the husband had been damaged by certain acts of the wife in withdrawing community funds from bank accounts and by pledging assets to secure personal loans for her sole benefit, and without the consent or knowledge of the husband. The jury awarded one half of the damage found for those acts to the husband, in the sum of $39,761.00. When the division of property is adjusted by this sum, it results in the wife being awarded $416,290.60 by the court, plus the $39,761.00 previously received from the secret withdrawal of community funds, totaling the sum of $456,605.16, and the husband being *752 awarded $452,775.13, with the corresponding difference of $3,276.47 now favoring the wife. The percentages shift to 50.19% of the estate being awarded to the wife and 49.81% to the husband.

The parties’ liabilities were assessed by charging all existing debts and mortgages on specific properties to the party receiving that property. Additionally, the husband was charged with a $5,000.00 debt due to an individual. The unpaid federal income taxes, if any, for 1978 were charged to wife insofar as her separate earnings had generated the liability. The husband was charged with the payment of all taxes due from joint earnings for 1979 and 1980. For the year 1981, the parties were to file a joint return for the period of the year during which they were married, and a separate one for the period of time after the divorce. The tax liability was to be determined by certified public accountants. Additionally, the wife was ordered to reimburse the husband in the sum of $7,962.43, which he had been required to pay as capital gain taxes resulting in the forced sale by a creditor of assets pledged by the wife on a loan made for her benefit and without the husband’s knowledge or consent.

Finally, the judgment awarded one life insurance policy to the husband and one to the wife. There were ten other policies, found to be owned by the wife, yet set aside to the husband as his separate property. The court’s reasoning for this award was set forth in detail in the judgment which, recites the bitterness and animosity of the parties, recognizes the discretion vested in him, and finds this award to be proper, having due regard for the rights of each party and the children. As a condition precedent to the vesting of ownership of the insurance policies in the husband, he was required to pay the wife the cash surrender value of each policy.

From these facts, I conclude that the property was fairly and evenly divided. However, two questions must be addressed before a final determination may be made.

First, was the denial of discovery of certain records of the law firm error, and if so did it likely result in an unfair and unjust division, or perhaps more fairly stated, did the denial of discovery preclude the wife from presenting evidence of substantially more assets than were revealed, thus precluding the trial court from having before it the extent of the estate necessary to effect a just and fair division? Second, was the allocation of certain gold coins to the wife improper, in light of her contention that the husband had taken them?

DENIAL OF DISCOVERY

The wife argues that the trial court denied her access to the financial books and records of the firm during pre-trial; that it precluded her from introducing evidence, during the trial phase, of Thompson & Knight’s gross receipts and net revenues which directly related to the parties’ interest in the firm; that it precluded her, during the trial phase, from introducing evidence of retirement benefits granted to senior partners; and further, that the trial court erred by permitting one of the senior partners of the firm to testify as to values contained in partnership records, from records not admitted in evidence or subject to pre-trial discovery.

Prior to trial the wife sought to take the deposition of the husband. She served him with a subpoena duces tecum commanding him to produce a comprehensive list of documents which encompassed all of the financial matters of the firm. The documents were not produced in compliance with the subpoena, which resulted in the wife filing a motion, under Rule 167, TEX.R.CIV.P., to compel their production.

On December 8, 1980, the trial court heard evidence on the wife’s motion from Mr. Lane McDaniel, an attorney, called by the wife as her witness. Mr. McDaniel testified that he held a Ph.D. degree, and a B.B.A. degree in accounting. He stated that he was professionally trained in dividing closely held business interests. During the hearing the trial judge asked Mr. McDaniel what records he needed to ade-' quately determine Finn’s interest in the partnership. He replied that he needed the *753 partnership agreement, the forms 1065 for a five-year period, and the forms K-l that are associated with the business. He defined a K-l as the “partner’s distributive shares of earnings and other information which goes along....” However, he agreed on cross-examination, that since the terms of the partnership agreement would be controlling in the sale of Finn’s interest, he needed only the forms K-l of Finn, and not of all the partners, to determine Finn’s interest. Additionally, he agreed that if the partnership agreement denied Finn any interest in specific partnership assets, in the event of a sale of his partnership interest (which it did), that he could determine Finn’s interest in the firm from his forms K-l, and that he would not need the firm’s forms 1065. At the conclusion of this hearing, the court ordered production of the partnership agreement, Finn’s K-l forms, and the current retirement plan.

TEX.R.CIV.P.RULE 167 is designed to provide a party showing good cause the right of inspection of documents and evidence material to that party’s cause of action or defense. The documents sought must contain material evidence. Furthermore, a showing of good cause is required. This rule was not designed, nor should it be permitted to be used, to further a fishing expedition. The burden is on the moving party to both allege and prove a good cause for the production of the documents requested. This, of course, requires allegation and proof of facts, and not mere conclusions. Bryan v. General Electric Credit Corporation, 553 S.W.2d 415 (Tex.Civ.App.—Houston [1st Dist.] 1977, no writ); Lueg v. Tewell, 572 S.W.2d 97 (Tex.Civ.App.—Corpus Christi 1978, no writ). Additionally, the trial judge is vested with the discretion of deciding whether to order production of documents requested, and his action will not be reversed on appeal, unless it be shown that he has abused that discretion. City of Houston v. Autrey, 351 S.W.2d 948 (Tex.Civ.App.—Waco 1961, writ ref’d n.r.0e.).

My review of the motion reveals that no facts were pled; only conclusions as to the need for the requested documents. Furthermore, not only was the evidence presented on the motion insufficient to show that all documents requested were material to prove Finn’s interest in the partnership, but also the converse was shown by the wife’s own witness testifying that only certain documents were necessary for him to determine Finn’s interest in the partnership. Those documents were ordered produced by the trial judge; i.e. the forms K-l of Finn, the partnership agreement, and the retirement plan.

During the trial, both Mr. McDaniel, the same witness who testified on the wife’s motion to compel, and Mr. Jimmy Simpson, testified for the wife as her expert witnesses. Neither stated that they had been denied access to documents necessary to make a determination of Finn’s interest in the partnership. In fact, Mr. Simpson testified that he had been permitted to review two years and eight months of 1978, of Thompson & Knight’s financial records, the Finns’ personal financial statements for the last five years, and the partnership agreement, and that from this data he was able to calculate Finn’s interest in Thompson & Knight.

In light of the evidence presented on the wife’s motion to compel, the trial judge’s ruling, and the evidence presented at trial, I conclude that the wife was not denied discovery of evidence material to her case, and that no abuse of discretion has been shown.

HEARSAY TESTIMONY

The wife complains that the testimony of Harold Kleinman, the managing partner of Thompson & Knight, was inadmissible hearsay. She contends that his testimony constituted a summary of books and records of the firm, which were not in evidence, and thus such testimony was hearsay. I agree that his testimony was hearsay, but it met a well established exception to the hearsay rule, and thus was admissible evidence.

Mr. Kleinman was shown not only to be a senior partner in the firm, but was shown *754 to be the managing partner. He testified that the firm was composed of 20 senior partners, 22 junior partners, approximately 50 associate lawyers, and approximately 130 other salaried employees. He testified in detail as to the operations of the partnership, the detail of the accounting procedures, his role as custodian of the records, the fact that the records were on computers, and the fact that he had examined the records and brought to court his notes of their contents insofar as Finn’s interest was concerned. After this preliminary qualification, he was asked to state the amount of Finn’s capital account on December 31, 1980. The objection was voiced that such testimony would constitute a summary, and that such summary would not be admissible unless the underlying details were provided for examination. After considerable colloquy between the lawyers and the court, the evidence was admitted.

It has long been established that business records may be received into evidence as an exception to the hearsay rule. TEX.REV. CIV.STAT.ANN. art. 3737e. Computer printouts are recognized as business records. See Rosenberg v. Collins, 624 F.2d 659 (5th Cir.1980); Voss v. Southwestern Bell Telephone Company, 610 S.W.2d 537 (Tex.Civ.App.—Houston [1st Dist.] 1980, writ ref’d n.r.e.).

The wife relies on Black Lake Pipe Line Co. v. Union Construction Co., 538 S.W.2d 80 (Tex.1976), for the proposition that Kleinman’s testimony should not have been admitted because his testimony consisted of summaries of business records and thus constituted hearsay. The' wife misplaces her reliance on Black Lake. Black Lake holds that when underlying records are admissible under art. 3737e, and when those records and their supporting data are shown to be voluminous to the extent that it would be impracticable to require the production of the entire mass to be perused by the jury or read aloud to them, the best evidence rule should be relaxed by allowing written summaries or testimony by a qualified witness summarily. stating the results of an examination of the records, citing Cooper Petroleum Co. v. LaGloria Oil & Gas Co., 436 S.W.2d 889, 891 (Tex.1969). The court further required, as a condition for admission of the summary evidence, that the underlying data be either brought into court or made available to the opposing party, in order that the correctness of the evidence may be tested by inspection or that the material may be available for cross-examination. Lewis v. Southmore Savings Association, 480 S.W.2d 180 (Tex.1972); Dallas Railway & Terminal Co. v. Guthrie, 146 Tex. 585 , 210 S.W.2d 550 (1948); 4 Wigmore, Evidence Sec. 1230 at 535 (Chadbourn rev. 1972). Furthermore, Texas case law has recognized that trial courts have wide discretion in determining whether summaries are necessary to expedite the trial. Texas Warehouse Co. of Dallas, Inc. v. Springs Mills, Inc., 511 S.W.2d 735 (Tex.Civ.App.—Waco 1974, writ ref’d n.r.e.); Moore v. Moore, 430 S.W.2d 247 (Tex.Civ.App.—Dallas 1968, writ ref’d n.r.e.); Shelby County v. O’Banion, 188 S.W.2d 195 (Tex.Civ.App.—Beaumont 1945, no writ). Finally the court holds that it is for the trial court to determine whether the opposing party has had an adequate opportunity to examine the records. It should here be noted that when Kleinman’s testimony as to the value of Finn’s capital account was solicited and the objection made, Thompson & Knight offered to make the records available to the wife for her examination. Her counsel refused, stating that he did not want to look at the records, and that he did not have time then to examine them. In my opinion this constituted a waiver of the wife’s further right of examination, in the absence of seeking and being denied a continuance for that purpose.

The evidence shows that Kleinman was the managing partner of the firm with the responsibility for its operation; he was custodian of its records; the court was shown the impracticality of bringing the entire mass of underlying documents into court, constituted of thousands of entries over eleven years or more of purchases, sales depreciation schedules and other data that made up the capital account; the immateriality of the records as they relate to other partners and employees; that all entries *755 were made at or about the time of the transaction; and finally, the records were made available for the wife’s counsel to examine. It seems to me that the test set out in Black Lake has been met.

From this evidence, and from the wife’s counsel’s refusal to inspect the documents when offered for inspection, I conclude that Kleinman’s testimony was admissible as an exception to the hearsay rule.

THE MISSING GOLD COINS

Our record reveals that the wife first filed suit for divorce September 22, 1978. Before that time, and in contemplation of filing for divorce, she removed all of the gold coins from a jointly controlled safe deposit box at one bank in Dallas, to another, in her name alone, without the knowledge of the husband. Later when the husband learned of this transfer, she moved them to a third bank and again established a safe deposit box in her name alone.

The first divorce suit, to which the husband had filed no cross-action, was scheduled for trial on July 14, 1980, before a visiting judge. On that morning the wife dismissed her suit. On that same morning, she and her sister drove to the bank where she emptied her safe deposit box of all gold coins, consisting of 275 Austrian four ducats, 55 gold Krugerrands, 50 Mexican peso gold coins, and 175 Austrian one hundred coronas. While at the bank, her sister rented a safe deposit box in her name, making the wife a co-signatory on the box. The wife testified that her sister rented the box because she had a book which she wished to keep in it, and denied that she transferred any of the gold coins into her sister’s box. The wife also took possession of five buckets of silver coins, each containing $1,000.00 face value, which had pledged as collateral on a loan at that bank, made for her personal benefit, without the knowledge of the husband.

The wife and her sister left the bank, drove to her home on Harvest Hill, took the coins into the house, and the sister left. The wife agrees that the market value of the gold coins in her exclusive possession could have been in excess of $500,000.00 during this interval of time.

After her sister left the Harvest Hill address on the morning of July 14,1980, the wife hid the gold and silver coins in various places in the house. She testified that she did not spend the night or the next three nights at that house, although she did stay there some of the time during those days. On July 18, 1980, the wife left Dallas and was gone for one month. During this time her whereabouts were unknown to the husband. When she returned to Dallas, she accused her husband of removing the 175 gold Austrian Coronas and 50 Mexican pesos, but made no accusation as to the other coins. She testified that upon her discovery of the missing coins she notified neither the police nor any insurance company of their disappearance. In answer to special issue, the jury found that neither the husband nor anyone acting in his behalf removed these coins from the Harvest Hill address.

On October 7, 1980, long after the wife returned to Dallas, she negotiated a loan from a Dallas Bank in the amount of $120,-000.00, securing it with the remaining gold and silver coins, valued by the bank at $190,475.00.

This evidence shows that the wife, on July 14, 1980, was in possession of the gold coins in question. The jury absolved her husband from later taking them. It is highly unlikely that burglars removed only these specific coins, leaving all the remaining ones, as well as other valuables in the house, during the wife’s absence. Under these facts, the trial judge was clearly justified in charging the wife, the last party in possession, with the gold coins. See Arrington v. Arrington, 613 S.W.2d 565 (Tex.Civ.App.—Fort Worth 1981, no writ); Baxla v. Baxla, 522 S.W.2d 736 (Tex.Civ.App.—Dallas 1975, no writ); Grothe v. Grothe, 590 S.W.2d 238 (Tex.Civ.App—Austin 1979, no writ).

In summary, I must challenge the wisdom of the majority’s reversal and remand this case for a new trial as to the property division. First, the law is clear that unless error in the trial results in a manifestly *756 unfair division of the property, the error is harmless. Second, the majority agree that no part of the good-will of Thompson & Knight is a divisible asset in this case, so good-will is not in issue. All of the other values having been stipulated by the parties, this leaves only the capital account of the husband in the firm of Thompson & Knight disputed. Perhaps a new trial as to property will produce a more precise proffer of evidence as to this computer printout figure, yet the figure will unquestionably be the same. The result then will be not a more fair and just division of the parties’ estate between the parties; instead, it will be a dissipation of the capital account, and perhaps more, to pay the additional lawyer fees, accounting fees, witness fees, and other expense of litigation, resulting, finally, in a lesser sum to be realized by the parties. This litigation has been long, tedious, expensive, and emotional for the parties and their children. It should be ended. The trial court’s judgment should in all things be affirmed.

CARVER, STOREY, WHITHAM and ROWE, JJ., join in this dissenting opinion.