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Smith v. Smith8/17/1993
at during the marriage the parties acquired 800 shares of stock in First Westwood. In September 1986, this stock was redeemed by the issuing corporation. In October 1986, defendant received a check for $499,895.25 marked "Redemption" along with a letter stating, in pertinent part:
Enclosed please find the settlement checks in connection with the redemption of your First Westwood National Stock. It is my understanding that you are still writing with us at the present time and any business written by your two Dealerships after June 30, 1986 will automatically be credited to your ongoing (runoff) account. In other words, your account is still growing as you continue to produce business.
In July 1989, over one year after the date of separation, defendant received an additional payment of $300,000 from First Westwood in the form of a check marked "Final Redemption of Stock". The court found that no other First Westwood stock owned by defendant was redeemed between September 1986 and July 1989, that there was no credible evidence that the July 1989 redemption payment arose from any activity occurring after the date of separation, and that defendant declared the $300,000 in his 1989 U.S. Individual Income Tax Return as a long term capital gain received by him from the sale of stocks, bonds, and other securities. Based on these findings, the court found that although part of the payment for the redemption of the stock was made after the date of separation, the proceeds received in July 1989 were nevertheless marital property because they were from the sale of stock acquired during the marriage, and sold prior to the date of separation, and were received in exchange for marital property. Since neither party presented evidence that the cash proceeds received in July 1989 had a value different than that on the date of their receipt, the court found the proceeds had a net value as of the date of separation of $300,000.
Defendant contends the court erred both in its classification and valuation of the proceeds received in July 1989. Relying on Becker v. Becker, 88 N.C. App. 606, 364 S.E.2d 175 (1988), defendant contends that since the proceeds were received after the date of separation, they are neither marital, nor separate property, and may not be included in the marital estate. In Becker, this Court held that the trial court erred by classifying as marital property the rental value of the marital residence for the period after the date of separation and before distribution. In so holding, this Court noted that for purposes of classification, the marital estate is frozen as of the date of separation, and thus no new property may be added to the marital estate after that date. Id. In other decisions as well, this Court has reaffirmed the proposition that the marital estate is limited to property that is owned by the parties on the date of separation and may not be augmented by property acquired after that date. See Chandler v. Chandler, 108 N.C. App. 66, 422 S.E.2d 587 (1992); Truesdale v. Truesdale, 89 N.C. App. 445, 366 S.E.2d 512 (1988).
Certain exceptions to this general rule, however, have been recognized. For example, this Court has recognized that when there has been an exchange or conversion of marital assets after the
date of separation, the new property acquired as a result of the exchange or conversion may properly be classified as marital property. See, e.g., Mauser v. Mauser, 75 N.C. App. 115, 330 S.E.2d 63 (1985); Phillips v. Phillips, 73 N.C. App. 68, 3
Page 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 North Carolina Personal Injury Attorneys
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