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District Court of Appeal, Third District, California.

Fern T. DALLMAN, Plaintiff, Respondent and Cross-Appellant, v. Lloyd H. DALLMAN, Defendant, Appellant and Cross-Respondent.

Lloyd H. DALLMAN, Cross-Complainant, Appellant and Cross-Respondent, v. Fern T. DALLMAN, Cross-Defendant, Respondent and Cross-Appellant.*

Civ. 9158.

Decided: May 23, 1958

John L. Brannely, Sacramento, and Roy A. Sharff, San Francisco, for plaintiff. David Livingston, San Francisco, and Desmond, McLaughlin & Russell, Sacramento, for defendant.

These are cross appeals. Plaintiff was granted an interlocutory decree of divorce upon the grounds of extreme cruelty and adultery. The decree, in so far as material to defendant's appeal, provides that plaintiff shall have judgment against the defendant for the sum of $396,651.25 in lieu of her interest in the community property to be paid as follows: $50,000 upon the entry of the interlocutory decree; the further sum of $50,000 on or before 90 days from the entry of the interlocutory decree; the further sum of $75,000 on or before 180 days after the last payment of $50,000; the further sum of $75,000 on or before 180 days after the date of the last preceding payment; the balance, if any remaining, to be paid on or before 180 days after the date of the last preceding payment; that if any of said payments be not paid at the time specified, such payments shall bear interest at the rate of five per cent per annum compounded semiannually; also, that on the payment of $396,651.25, defendant shall hold as his sole and separate property all of the community property not awarded to plaintiff by the judgment in this case. The property awarded to plaintiff consisted of an interest in the contract of purchase covering two lots of land at Apple Valley, California; a 1951 Buick Roadmaster automobile; and certain jewelry, clothing, furs, and other articles of a personal nature worn or used by plaintiff and in her possession and under her control. The court found the value of the community property to be $800,000. The principal asset consisted of a 22 per cent interest in a partnership, the Dallman Supply Company, which in turn owned all of the capital stock of a corporation known as the Dallman Company. A lien was imposed upon the partnership interest in the Dallman Supply Company and all other community property of the parties to secure the payment of the $396,651.25.

On motion of the defendant an order was made supplementing and implementing the interlocutory decree whereby defendant was permitted and authorized to transfer, by mortgage or deed of trust, all of the community right, title and interest in the partnership, and the real property was subject to the interlocutory decree lien as security for a loan not to exceed $150,000 on condition that of said amount $100,000 be paid to plaintiff on account of the cash award of $396,651.25. Additional conditions contained in the order are: ‘(b) That without regard to the outcome of defendant's appeal herein he shall have no right to recover said One Hundred Thousand Dollars ($100,000.00); (c) That in the event of affirmance of said provision of said decree, said payment shall constitute partial satisfaction thereof; (d) That in the event that the interlocutory decree herein should, as the result of further proceedings, be modified, or if a different decree is made herein which is inconsistent with respect to any of its terms with the interlocutory decree heretofore made, defendant shall be given credit for said payment against, and the same shall be deemed an advance with respect to, any obligation on the part of defendant under any decree entered herein; and if such decree is modified, or such different decree contains provisions for division of community property, then said payment of One Hundred Thousand Dollars ($100,000.00) shall be deemed a charge against the share of plaintiff in the community property * * *.’ (At argument the court was told Mrs. Dallman had received the said sum of $100,000.)

There is no appeal from that portion of the interlocutory decree granting the wife a divorce.

Defendant first contends that the trial court exceeded its jurisdiction in entering a judgment requiring him to pay cash for his wife's share of the community property; and second, that aside from the lack of power to award a money judgment, the trial court's action in so doing constituted an abuse of discretion. Although we have concluded to make a different disposition of the community property for reasons hereinafter stated, we do not agree with either contention. An award of money in lieu of a specific interest in community property is a proper method of distribution of the property and is a matter to be determined by the sound discretion of the trial court. Webster v. Webster, 216 Cal. 485, 488, 14 P.2d 522; Bailey v. Bailey, 60 Cal.App.2d 291, 140 P.2d 693; Pope v. Pope, 102 Cal.App.2d 353, 227 P.2d 867; Clark v. Clark, 130 Cal.App.2d 685, 279 P.2d 822; Phillips v. Phillips, 152 Cal.App.2d 582, 587, 313 P.2d 630; Wuest v. Wuest, 72 Cal.App.2d 101, 109, 164 P.2d 32.

Defendant next contends that the trial court had no power to require the payment of any sum of money nor to determine the value of the community property prior to the final decree.

The case of Wilson v. Wilson, 76 Cal.App.2d 119, 132, 172 P.2d 568, 576, is an answer to defendant's contention and a solution of the problem. We quote therefrom: ‘In the present case we are faced with the problem expressly left open in the Leupe case [Leupe v. Leupe, 21 Cal.2d 145, 130 P.2d 697]. Here the appeal is from the interlocutory decree. In Remley v. Remley, 49 Cal.App. 489, 193 P. 604, and Strupelle v. Strupelle, 59 Cal.App. 526, 211 P. 248, and by implication in other cases (see Peis v. Mohr, 126 Cal.App. 300, 14 P.2d 878; Abbott v. Superior Court, 69 Cal.App. 660, 232 P. 154; Webster v. Webster, 216 Cal. 485, 14 P.2d 522), it has been held to be error to make a present and absolute disposition in the interlocutory. It would appear that a proper solution of this problem would be to hold that the interlocutory may make a present disposition of the community property, but that the title thus conveyed is limited and conditional until the entry of the final decree * * * In the present case it was, of course, proper for the trial court to determine in its interlocutory the status of the property and how it ought to be assigned upon the entering of the final decree.’ In the present case justice will be best served by amending the decree so as to provide that the disposition of the property and the judgment relating thereto shall become effective upon the entry of the final decree.

Defendant next contends that the trial court erred in finding that all of the property involved in the case was community property, and that its value immediately prior to the date of trial was $800,000. The findings concerning these matters were based upon conflicting evidence, and the factual issues have been determined adversely to the defendant. The record in the case is a lengthy one, consisting of over 3,000 pages of transcript, and 256 exhibits. No good purpose would be served by detailed statements of the evidence. Suffice it to say we have carefully examined the record and find that there is substantial evidence to sustain the trial court's determination respecting the character and value of the property. Where the defendant argues as a ground for reversal of the judgment the insufficiency of the evidence to sustain the findings, such contention requires him to demonstrate that there is no substantial evidence to support the general findings. As stated in the oft-cited case of Crawford v. Southern Pacific Co., 3 Cal.2d 427, 429, 45 P.2d 183, 184: ‘* * * the power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the conclusion reached by the jury. When two or more inferences can be reasonably deduced from the facts, the reviewing court is without power to substitute its deductions for those of the trial court.’ See, also, Raggio v. Mallory, 10 Cal.2d 723, 725, 76 P.2d 660; Fischer v. Keen, 43 Cal.App.2d 244, 248, 110 P.2d 693; Laherty v. Connell, 64 Cal.App.2d 355, 357, 148 P.2d 895; Wuest v. Wuest, supra.

Although the record herein amply supports the conclusion of the trial court as to the character and value of the property, we cannot approve of the manner of disposition thereof as set forth in the decree. Under the provisions of Civil Code, section 148, ‘* * * this court has the power to revise the trial court's disposition of community property upon the granting of a divorce, even in cases where the trial court's action does not amount to an abuse of discretion.’ Nelson v. Nelson, 100 Cal.App.2d 348, 351, 223 P.2d 636, 638; Hill v. Hill, 150 Cal.App.2d 34, 35, 36, 309 P.2d 44.

In the present case, the defendant is faced with a money judgment of more than $395,000, which, according to the provisions of the decree, he must pay in less than two years. In view of the record, the question immediately arises as to how the defendant can satisfy such a judgment, under the provisions set forth in the decree, from any source indicated by the record. The judgment in effect requires him to buy his wife's community interest in the partnership which in turn owns the corporation. Hence, he has no shares of stock to sell. For all practical purpose his only means of satisfying the judgment is to obtain money from the partnership, but again it appears from the record that this cannot be done. The record in this regard shows that the corporation has, from time to time, since 1950, been heavily indebted to the Wells Fargo Bank, and at the time of the hearing the indebtedness amounted to $850,000. It also appears as pointed out by counsel for defendant, that in 1950, the partnership executed a written guarantee of the company's debt; that this was superseded by a similar guarantee dated February 24, 1954; that the partnership had advanced $500,000 to the corporation and that by an agreement executed by the partnership, its claim is subordinate to that of the bank. Additionally, there was testimony by a bank official that there was no way in which the Dallman organization, i. e., both the corporation and the partnership, could obtain the sum of $400,000 in cash (the amount of the judgment); that for this purpose the bank would not permit the sale of any real estate belonging to the partnership unless it could be satisfied that funds in an equivalent amount could be accumulated by the organization, and that on the basis of its current operating record, which shows large losses, there was no way in which the money could be so accumulated. There was also proof that the Dallman share of the partnership cannot be liquidated. Defendant's interest therein is 22 per cent. The remainder is owned by a brother and a sister, and four trusts which were created by defendant's mother for the benefit of her grandchildren and to which she transferred her 25 per cent of the partnership. Such being the state of the record, it appears obvious that the defendant cannot satisfy this judgment as ordered. Further, if the judgment is permitted to stand, and a levy and execution were to issue, it might well wreck the business, leaving the defendant with no assets whatsoever. It is not the intent of the law, even though defendant be guilty of extreme cruelty and adultery, that he be punished in the division of property. Under the facts in this case, it seems far better that there be a division in kind so that the financial difficulties may in the long run work out for the betterment of all concerned.

Before attempting to revise the decree previously entered, it should be noted that we accept the various values as found by the trial court, since such were all questions of fact presented for the court's determination upon conflicting testimony. In other words, we have accepted the $800,000 valuation placed upon the community property. We have also taken into consideration the $71,231.63 appraised value of the real property (the ranch home) awarded to the defendant; the $5,698.94 cash surrender value of certain life insurance policies upon the life of defendant; the value of the defendant's 22 per cent interest in the partnership as determined by the trial court; the $11,000 bank deposit which the defendant received; the property of the value of $12,348.75 which the plaintiff has received; and the $100,000 which has been paid to her and the fact that she is receiving no alimony. Here it should also be noted that the conclusions of law and the decree purport to deduct the sum of $12,348.75 from $408,000, and show a balance of $396,651.25. However, the correct balance should be $395,561.25.

It should further be noted that in revising this award, we are not too concerned if the award to plaintiff exceeds the 49–51 per cent division attempted by the trial court. The rule is too well established to warrant citation of authority that when a divorce is granted on the grounds of extreme cruelty or adultery the innocent spouse must be awarded more than one-half of the community property. What the percentage may be is left to the sound discretion of the trial court in the first instance, and when on appeal the award is changed by the reviewing court, the division likewise rests in its sound discretion.

Since the award in this case has been revised by this court, the question raised concerning the rate of interest to be allowed on the judgment as entered by the trial court now becomes moot.

It is therefore ordered that the decree and judgment in so far as it makes an award of $395,651.25 to the plaintiff, and the provisions for the payments of said amount in installments, together with interest on any delinquent amounts, be vacated and set aside. In lieu thereof, this court orders that the community property be awarded as follows: To the plaintiff: (a) All interest of any of said parties under a contract of purchase covering two lots located at Apple Valley, California; (b) a 1951 Buick Roadmaster automobile; (c) all jewelry, clothing, furs and other articles of a personal nature worn or used by plaintiff; (d) a 40 per cent interest in the 22 per cent of the community partnership interest in the copartnership known as the Dallman Supply Company; (e) and that plaintiff shall have judgment against the defendant for the further sum of $30,000 to be paid by defendant to plaintiff in lieu of her remaining one-half of the said copartnership interest; that said sum be paid within 30 days from the date of entry of judgment, and if not then paid, to bear interest at the legal rate of seven per cent per annum; that the defendant's partnership interest in the Dallman Supply Company be charged with the payment of said $30,000, and a lien is hereby impressed upon said partnership interest and all other community property of the parties to secure the payment of said $30,000. It is further ordered that the defendant be awarded the remaining 60 per cent of the 22 per cent community interest in the copartnership known as the Dallman Supply Company, and all other community property of the parties not awarded to the plaintiff by the judgment in this case. This division of community property is to become effective on the entry of the final decree herein.

Defendant's application for leave to produce additional evidence is denied.

As modified, the judgment is affirmed.

WARNE, Justice pro tem.

VAN DYKE, P. J., and PEEK, J., concur.