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    "judges": [
      "Judges EAGLES and McGEE concur."
    ],
    "parties": [
      "WILLIAM WORNOM, Plaintiff v. NORMA F. WORNOM, Defendant"
    ],
    "opinions": [
      {
        "text": "SMITH, Judge.\nPlaintiff and defendant were married on 5 August 1974 and separated on 20 June 1988. On 29 September 1994 plaintiff filed an action for absolute divorce from defendant, and defendant answered and counterclaimed seeking equitable distribution of the parties\u2019 marital property under N.C. Gen. Stat. \u00a7 50-20 (1995).\nThe evidence offered at the equitable distribution trial in January 1995 was as follows: In July 1984, plaintiff and defendant formed a corporation, Super Saver, to own and operate a chain of five convenience stores. To fund Super Saver, the parties personally borrowed $450,000.00 from BB&T using their marital home as collateral. Plaintiff\u2019s brother, Sam Wornom, guaranteed $150,000.00 to secure the loan. Plaintiff managed Super Saver and its five convenience stores. Defendant worked as the accounts payable clerk and was responsible for payroll. Until the date of their separation, Super Saver was the sole source of employment and income for plaintiff and defendant.\nFrom 2 January 1987 through 13 May 1988 defendant took approximately $151,000.00 from the Super Saver accounts without plaintiff\u2019s knowledge or consent. At trial, defendant admitted that she \u201cbasically threw $150,000 of funds generated by Super Saver out the window and can\u2019t account for it.\u201d Defendant also allowed Lula Jane Venable, the corporation\u2019s bookkeeper, to take approximately $70,000.00 from Super Saver. By 1 March 1987 Super Saver began to experience significant financial difficulties, and plaintiff loaned Super Saver $60,000.00 to quell the cash flow problems. He discussed his cash flow concerns with both defendant and Venable, but neither revealed that they had been taking funds from the Super Saver accounts.\nBecause of continuing cash flow problems, plaintiff and defendant borrowed an additional $61,000.00 from Mid-South Bank on 28 May 1987, secured by a deed of trust on their marital home. In addition, Sam Wornom loaned $200,000.00 to Super Saver on 12 August 1987. Super Saver signed a $200,000.00 note to Sam Wornom, guaranteed by plaintiff and defendant individually. Conditions of the transaction also provided that the parties would pay $5,000.00 to Sam Wornom on any outstanding indebtedness he guaranteed. On 28 August 1987 the original $450,000.00 note was renegotiated, and plaintiff and defendant signed a new note for $385,000.00 payable to BB&T. This note covered the remaining balance on the original $450,000.00 loan and was also used to repay the $200,000.00 loan from Sam Wornom. Sam Wornom guaranteed the new note to an amount of $350,000.00.\nOn 31 December 1987 Super Saver assumed the $385,000.00 note, and plaintiff and defendant gave unconditional joint and several guarantees for the full amount of the loan. Sam Wornom again guaranteed it to the amount of $350,000.00. On 1 February 1988 Sam Wornom paid BB&T $375,000.00, which was used to reduce the balance on the $385,000.00 BB&T note.\nNevertheless, the financial condition of Super Saver worsened as defendant continued to take funds, and ultimately it was sold to Li\u2019l Thrift Food Marts on 25 May 1988: From the proceeds of the sale, Super Saver\u2019s secured debts to BB&T were paid, and Sam Wornom was paid a total of $275,072.49. Sam Wornom also paid off several of Super Saver\u2019s vendors in the amount of $25,000.00. At the time Super Saver finally failed and was sold, plaintiff was hospitalized with back problems, and he learned defendant and Venable had been taking Super Saver funds. Defendant and plaintiff separated on 20 June 1988. Super Saver was dissolved on 1 July 1988.\nBecause he had loaned a total of $421,000.00 of his own money to Super Saver, $296,000.00 of which was not repaid after the sale of the business, Sam Wornom was anxious to seek criminal prosecution against defendant, but plaintiff convinced him to refrain. During their separation, plaintiff maintained and improved the marital home and paid to defendant a total of $54,347.51, either in direct cash payments or to pay for health insurance, motor vehicle, auto insurance, life insurance, and utilities.\nAfter trial, the court entered an equitable distribution judgment, ordering that plaintiff receive 47% and defendant receive 53% of the net marital estate. The court ordered plaintiff to pay a distributive award of $57,765.00 to create the 53% to 47% division. Defendant appeals.\nDefendant first argues the trial court erred by classifying and distributing marital assets and liabilities that existed at the time of separation but no longer existed at the time of trial. Her argument is entirely without support. Under N.C. Gen. Stat. \u00a7 50-20 (b)(1) (1995), marital property is defined as \u201call real and personal property acquired by either spouse or both spouses during the course of the marriage and before the date of the separation of the parties, and presently owned, except property determined to be separate property . . . .\u201d\nDefendant contends that \u201cpresently owned\u201d under this statute refers to the date of trial. This Court has clearly held, however, that \u201cpresently owned\u201d under G.S. \u00a7 50-20(b)(l) refers to the date of separation. See Lilly v. Lilly, 107 N.C. App. 484, 486, 420 S.E.2d 492, 493 (1992); Talent v. Talent, 76 N.C. App. 545, 552-53, 334 S.E.2d 256, 261 (1985). Defendant\u2019s first argument, therefore, is without merit.\nDefendant next argues there was insufficient evidence for the trial court to find the parties were indebted to Sam Wornom in the amount of $275,000.00. She asserts $275,000.00 is a loss on Sam ffomom\u2019s personal investment in Super Saver, which does not increase the parties\u2019 marital debt. We disagree.\nThis Court has held that G.S. \u00a7 50-20(c)(l)\nrequires the court to consider all debts of the parties, whether a debt is one for which the parties are legally, jointly liable or one for which only one party is legally, individually liable. Regardless of who is legally obligated for the debt, for the purpose of an equitable distribution, a marital debt is defined as a debt incurred during the marriage for the joint benefit of the parties.\nGeer v. Geer, 84 N.C. App. 471, 475, 353 S.E.2d 427, 429 (1987) (emphasis added).\nThere is competent evidence, in both the testimony of plaintiff and Sam Wornom, that Sam Wornom never intended his funds to be investments in Super Saver but instead used his funds to assist the parties, for their joint benefit, in sustaining their failing business. The evidence shows that in addition to owing $5,000.00 as part of a guarantee agreement and $21,000.00 under a promissory note executed on 19 May 1988, the parties owe Sam Wornom a balance of $274,927.51 on additional loans he made to Super Saver. On 1 February 1988 Sam Wornom paid $375,000.00 to BB&T under his guarantee for the $385,000.00 loan to Super Saver, and on 9 June 1988 he paid $25,000.00 to several of Super Saver\u2019s vendors when it was sold. From the proceeds of the sale of Super Saver, Sam Wornom received a total of $125,072.49, leaving a balance due of $274,927.51, which the trial court rounded up to $275,000.00.\nAlthough Sam Wornom acquired ownership of Super Saver stock in February 1988 as security for his $375,000.00 payment to BB&T, the trial court found\nthis activity by Sam Wornom was a loan for the benefit of the parties and not an investment or other entrepreneurial activity as contended for by the Defendant. All of Sam Wornom\u2019s activities as they relate to Super Saver were done to assist his family members in a time of financial crisis.\nWe find competent evidence in the record of this transaction and the circumstances surrounding it necessary to support this finding. Likewise, the evidence indicates that Sam Wornom\u2019s $25,000.00 payment to Super Saver\u2019s vendors was not an investment but rather was made only to assist the parties in paying off their business debts.\nThe evidence clearly shows that debts owed to Sam Wornom arose prior to the date of separation and inured to the benefit of both parties. See Geer, 84 N.C. App. at 475, 353 S.E.2d at 430. Furthermore, because we find competent evidence to support the trial court\u2019s finding that the parties are indebted to Sam Wornom in the amount of $275,000.00, we do not address defendant\u2019s alternative argument that the amount of indebtedness is actually $201,928.00, based solely upon losses reported in Sam Wornom\u2019s 1988 tax returns.\nDefendant next argues there was insufficient evidence to support the trial court\u2019s finding that her pre-separation withdrawal of funds from Super Saver dissipated marital property for nonmarital purposes. We disagree.\nThe general rule is \u201cmarital fault or misconduct of the parties which is not related to the economic condition of the marriage is not germane to a division of marital property under [G.S.] 50-20(c) and should not be considered.\u201d However, fault which is related to the economic condition of the marriage may be considered. Fault or misconduct \u201cwhich dissipates or reduces marital property for nonmarital purposes\u201d is \u201c \u2018just and proper\u2019 under N.C.G.S. sec. 50-20(c)(12).\u201d\nSpence v. Jones, 83 N.C. App. 8, 11, 348 S.E.2d 819, 821 (1986) (quoting Smith v. Smith, 314 N.C. 80, 87-88, 331 S.E.2d 682, 687 (1985)).\nIn Spence, this Court noted that there is a presumption of consent by each spouse to the other spouse\u2019s use of funds from a spousal joint account for the purpose of sustaining the family. Id. Under the facts in Spence, the wife offered no evidence that the husband made non-marital use of the funds, but merely showed that the funds withdrawn exceeded the family\u2019s expenses. In addition, both spouses had equal access to the funds, and the record of withdrawals did not indicate which one of them made particular withdrawals. In turn, the Spence Court found insufficient evidence that the husband alone withdrew funds from a spousal joint account without his wife\u2019s consent and used the funds for nonmarital purposes. Id. at 12, 348 S.E.2d at 821-22.\nThe facts in the case sub judice are distinguishable. In this case, there was competent evidence to support the trial court\u2019s findings that (1) the parties formed Super Saver in 1984 to own and operate a chain of five convenience stores; (2) Super Saver was the sole source of employment and income for the parties from August 1984 through June 1988; (3) the parties were the sole shareholders of Super Saver from August 1984 until February 1988; (4) between 2 January 1987 and 13 May 1988 defendant converted $151,389.47 of Super Saver\u2019s funds and allowed Super Saver\u2019s bookkeeper to convert $70,838.47 of Super Saver\u2019s funds; (5) as a result of defendant\u2019s acts Super Saver began experiencing financial problems in early 1987; (6) when Super Saver was losing money, plaintiff did not know defendant was converting Super Saver funds; (7) after being told of Super Saver\u2019s financial problems, defendant should have been aware that her conversion of funds was \u201cdestroying the corporation which was the parties\u2019 livelihood and to which their economic well-being was tied\u201d; and (8) defendant\u2019s acts \u201cprior to the date of separation . . . had a severe economic impact on the marital estate shortly prior to the date of separation[,] and Defendant\u2019s conduct dissipated or reduced marital property for primarily non-marital purposes.\u201d\nThese findings, along with plaintiff\u2019s testimony that he was unaware defendant was converting funds from Super Saver until June 1988, and defendant\u2019s own acknowledgement that she \u201cbasically threw $150,000 of funds generated by Super Saver out the window and can\u2019t account for it,\u201d are sufficient to overcome the presumption that defendant\u2019s withdrawal of funds from Super Saver was with plaintiff\u2019s consent and for marital purposes. See Spence, 83 N.C. App. at 11, 348 S.E.2d at 821.\nMoreover, the evidence also shows defendant\u2019s conversion of Super Saver funds dissipated the parties\u2019 marital property. From Super Saver\u2019s inception until February 1988, the parties were the sole shareholders in the close corporation, and Super Saver was their sole source of employment and income. Accordingly, defendant\u2019s acts in converting funds from Super Saver from 2 January 1987 to 13 May 1988, ultimately precipitating Super Saver\u2019s demise, clearly dissipated marital property.\nFinally, defendant argues the trial court erred by considering as distributional factors (1) defendant\u2019s pre-separation misconduct with regard to Super Saver and (2) plaintiff\u2019s dissuading his brother from seeking a possible criminal prosecution against defendant for such misconduct.\nFirst, defendant contends the trial court should not have considered defendant\u2019s misconduct with respect to Super Saver in reaching a decision on the division of the marital estate. In light of our conclusion above that the evidence supports the finding that defendant dissipated the marital estate by converting Super Saver funds for non-marital purposes, this argument necessarily fails.\nWe agree with defendant, however, that plaintiff\u2019s actions in dissuading his brother from seeking criminal charges against defendant does not affect the marital economy and therefore is not a proper distributional factor under G.S. \u00a7 50-20(c)(12). See Smith v. Smith, 314 N.C. 80, 87, 331 S.E.2d 682, 687 (1985); Spence, 83 N.C. App. at 11, 348 S.E.2d at 821. At most, this conduct affects only the separate property of defendant, as it mitigates her potential post-separation personal legal expenses. However, such potential mitigation is speculative at best. The trial court therefore abused its discretion in considering plaintiff\u2019s efforts to deflect criminal charges against defendant as a distributional factor. Nevertheless, because we find the distribution is otherwise supported by competent evidence, and the judgment reflects a \u201crational basis\u201d for the distribution, we find the error harmless and affirm the judgment. See Munn v. Munn, 112 N.C. App. 151, 157, 435 S.E.2d 74, 78 (1993); see also McIver v. McIver, 92 N.C. App. 116, 124, 374 S.E.2d 144, 149 (1988) (although trial court improperly considered fault in making distribution, no prejudice was shown, and error, if any, was harmless).\nAffirmed.\nJudges EAGLES and McGEE concur.",
        "type": "majority",
        "author": "SMITH, Judge."
      }
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    "attorneys": [
      "Jonathan Silverman for plaintiff appellee.",
      "Richard B. Hager, P.A., by Richard B. Hager, for defendant appellant."
    ],
    "corrections": "",
    "head_matter": "WILLIAM WORNOM, Plaintiff v. NORMA F. WORNOM, Defendant\nNo. COA96-1069\n(Filed 17 June 1997)\n1. Divorce and Separation \u00a7 119 (NCI4th)\u2014 equitable distribution \u2014 marital property \u2014 \u201cpresently owned\u201d \u2014 date of separation\nThe trial court did not err by classifying and distributing marital assets and liabilities that existed at the time of separation but no longer existed at the time of trial. The words \u201cpresently owned\u201d in N.C.G.S. \u00a7 50-20(b)(l) refer to the date of separation rather than to the date of trial.\nAm Jur 2d, Divorce and Separation \u00a7\u00a7 879, 880.\nProper date for valuation of property being distributed pursuant to divorce. 34 ALR4th 63.\nDivorce: equitable distribution doctrine. 41 ALR4th 481.\n2. Divorce and Separation \u00a7 147 (NCI4th)\u2014 equitable distribution \u2014 debt owed to third party\nThe trial court did not err in determining that the parties to an equitable distribution action were indebted to the husband\u2019s brother for $275,000.00 where the evidence indicated that loans made by the brother to plaintiff and defendant were made in an effort to assist plaintiff and defendant in paying off their business debts and were not an investment in their failed convenience store business.\nAm Jur 2d, Divorce and Separation \u00a7\u00a7 536, 757.\nDivorce: equitable distribution doctrine. 41 ALR4th 481.\n3. Divorce and Separation \u00a7 159 (NCI4th)\u2014 pre-separation withdrawal \u2014 dissipated marital property \u2014 nonmarital purpose\nThere was sufficient evidence to support the trial court\u2019s findings that defendant wife\u2019s pre-separation withdrawal of funds from a corporation which was jointly owned by plaintiff and defendant dissipated marital property for nonmarital purposes where (1) the parties were the sole shareholders of the corporation, (2) the corporation was the sole source of income for plaintiff and defendant, (3) defendant converted funds from the corporation without plaintiff\u2019s knowledge, and (4) defendant\u2019s conversion of funds precipitated the demise of the corporation.\nAm Jur 2d, Divorce and Separation \u00a7\u00a7 915, 927, 929.\nSpouse\u2019s dissipation of marital assets prior to divorce as factor in divorce court\u2019s determination of property division. 41 ALR4th 416.\n4. Divorce and Separation \u00a7 158 (NCI4th)\u2014 equitable distribution \u2014 close corporation \u2014 conversion of funds \u2014 distributional factor \u2014 dissuading relative from seeking criminal charges \u2014 harmless error\nIn an equitable distribution action, the trial court committed harmless error in considering plaintiff\u2019s action of dissuading his brother from seeking criminal charges against defendant for converting funds from a jointly owned close corporation as a distributional factor pursuant to N.C.G.S. \u00a7 50-20(c)(12) where the distribution was otherwise supported by competent evidence.\nAm Jur 2d, Divorce and Separation \u00a7\u00a7 915 et seq.\nAppeal by defendant from judgment entered 25 March 1996 by Judge William A. Christian in Lee County District Court. Heard in the Court of Appeals 19 May 1997.\nJonathan Silverman for plaintiff appellee.\nRichard B. Hager, P.A., by Richard B. Hager, for defendant appellant."
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