Carpenter v. Carpenter

689 S.W.3d 765

Ace A. CARPENTER and Sandra Carpenter, Appellants,

v.Kathleen R. CARPENTER, Respondent.

WD 86351

Missouri Court of Appeals, Western District.

OPINION FILED: April 30, 2024

Appeal from the Circuit Court of Platte County, Missouri, Honorable Thomas Fincham, Judge

Gary Steinman, Gladstone, MO, counsel for appellant.

Stephanie Kleyh, Gladstone, MO, cocounsel counsel for appellant.

Gregory Leyh, Kansas City, MO, counsel for respondent.

Andrea Knemschield, Kansas City, MO, co-counsel for respondent.

Nicholas Leyh, Kansas City, MO, cocounsel counsel for respondent.

Before Division Four: Gary D. Witt, Chief Judge Presiding, Janet Sutton, Judge, and Daniel White, Special Judge

Janet Sutton, Judge

Ace A. Carpenter and Sandra Carpenter (the Carpenters) appeal a Judgment entered by the Platte County Circuit Court (trial court) granting their petition for partition and ordering the sale of certain property in Parkville, Missouri, owned by the Carpenters and Kathleen Carpenter (Kathleen).¹ The trial court’s judgment ordered that Kathleen receive the first $496,000 from the property sale’s proceeds and the remainder of the proceeds to be split evenly between Kathleen and the Carpenters. On appeal, the Carpenters contend that there is no substantial evidence to support the trial court’s judgment awarding the first $496,000 of the property sale’s proceeds to Kathleen. We affirm in part and reverse and remand in part for entry of a judgment consistent with this opinion.

Factual and Legal Background

This appeal arises out of an April 2022 action filed by the Carpenters to partition a property with a warehouse on it located in Parkville, Missouri. The appeal focuses on the trial court’s award of the first $496,000 of the partition net sale proceeds as reimbursement to Kathleen before then dividing the balance between the parties. The following evidence was adduced at the March 2023 bench trial on the matter.

Evidence at Trial

Ace, age 81, and Sandra, age 79, are husband and wife. For many years, Ace and Sandra had an interior design and floor-covering sales and installation business known as Sandy Carpenter Interiors. Around 1994, Ace and Sandra gifted their son James Carpenter (James) this business which James then incorporated as Carpenter’s Floorcovering, Inc. (CFI). At the time, Kathleen was married to James. In August 1994, the Carpenters and Kathleen and James purchased a real estate lot in Parkville, Missouri. (The property). At this same time, the joint venture² also opened a checking account and each couple deposited $3,000 into the account. This account was to accept rents from tenants of the future warehouse and to pay out profit distributions to the four individuals.

The property was purchased in the names of Ace and Sandra as husband and wife and James and Kathleen as husband and wife, with each couple owning a one-half undivided tenancy by the entirety interest in the property. The property’s purchase price was $31,000. Kathleen testified that she and James paid for the property with a personal cashier’s check from their savings account, that Ace and Sandra did not contribute money to the property’s purchase, and that Kathleen was never reimbursed. Sandra testified that although Kathleen wrote the check for the property at the, closing, "very soon after" she reimbursed James $15,000 for the Carpenters one-half share of the property’s purchase price. Sandra testified that the source of the funds for the Carpenter’s contribution to the property purchase was a home equity loan, but she acknowledged that she did not have records showing the $15,000 payment or the home equity loan.

A $135,000 loan was taken out to construct a warehouse on the property.³ Kathleen testified that she and James paid the loan back in full. Kathleen offered, and the trial court admitted, Exhibit E, which consisted of check registers establishing that she transferred $130,000 from a personal account into the joint venture’s bank account to pay for the warehouse construction. Kathleen testified that the Carpenters did not contribute money to the warehouse’s construction or to the bank loan, and Kathleen was not reimbursed for her payment of $130,000 for the warehouse construction. ,

Sandra testified that she was the joint venture’s bookkeeper for approximately twenty-eight years, and that on December 1, 1995, James was reimbursed $130,000 for the building construction expenses. In support of this, the Carpenters introduced Exhibit 9, the "warehouse account[’s]" itemized profit and loss statement for January 1994 through December 1995, showing a December 1, 1995, entry of a $130,000 reimbursement to James. Sandra also testified that Exhibit 9 showed that the joint venture reimbursed James for the interest on the loan to construct the warehouse, and that the joint venture also paid for various work done on the property during 1994 and 1995 when the warehouse was built.⁴

Ace testified that he cleared the land and got it ready for the warehouse construction and acted as the contractor. He stated, "Our agreement with my son [James] was that he would put up the finances and I would do the work and get it done because he had to work, he had to lay carpet to make a living, and I did so." Ace also testified that he paid for and completed many repairs and other work on the warehouse and that he was not reimbursed for those expenses. Ace agreed that he did not personally contribute cash for the original warehouse construction, but that he was the contractor for the project which acted as an "equal trade-out" for the work Ace did with the capital James provided. Ace acknowledged that he did not have any corroborating receipts for the work and money he contributed to the warehouse.

In November 2006, CFI took out a $150,000 business loan to construct an addition to the warehouse. Kathleen testified that she and James paid back the loan out of their personal resources and it was paid in full by 2010. The Carpenters did not pay any money toward the $150,000 loan. The Carpenters did not testify about any contributions to this business loan, although Ace testified generally that he did repairs and other work on the property. Exhibit K contained pages from CFI’s 2006 check register and also invoices for materials, labor, and other expenses incurred for the warehouse’s addition. The various invoices were billed to CFI, James, Kathleen, Ace, and Sandra. Kathleen testified that the expenses in Exhibit K were paid by CFI.

In December 2012, Kathleen and James Carpenter’s marriage was dissolved. After the dissolution, each owned a one-quarter interest in the property separately as set out in the dissolution judgment. James also executed a beneficiary deed at that time granting Kathleen his interest in the property upon his death. Also, as part of the dissolution, Kathleen was divested of her interest in CFI leaving James as the sole shareholder. James and Kathleen continued to work together professionally after their divorce and Kathleen incorporated a new business named Designer’s Showroom, Inc., (DSI). Kathleen was the sole shareholder of DSI and was listed as the president.

In January 2012, DSI entered into a lease agreement with the joint venture where DSI agreed to pay monthly rent to lease space in the warehouse built on the property. CFI, as another tenant in the warehouse from the time it was built going forward to 2022, also paid rent to the joint venture’s bank account and James operated his carpet business out of the warehouse. All four parties, Kathleen, James, Ace, and Sandra, received profit distributions from this joint venture account.

James passed away on January 1, 2022. James’ one-fourth tenancy in the property transferred to Kathleen by operation of the beneficiary deed, giving her a one-half interest in the property with the Carpenters having the other one-half interest. In early February 2022, Kathleen changed the locks to the warehouse on the property and the Carpenters did not receive new keys to the warehouse and were locked out. Sandra testified that DSI did not pay its February rent payment, although Kathleen testified that she mailed the February rent check.

Petition for Partition, Counterclaims, Trial, and Judgment

In April 2022, the Carpenters filed a petition seeking partition of the property. The Carpenters requested that the trial court either order the property sold, or, if appropriate, its partition in kind. The Carpenters also requested that if the property was sold, that the net sale proceeds be divided equally between the Carpenters and Kathleen. Kathleen filed an answer asserting various affirmative defenses and counterclaims. Kathleen sought a declaratory judgment that she has full and sole interest related to the property, a partition in kind granting her 100% of the property, a quiet title claim, and a claim for reimbursement of costs and expenditures from any sale of the property.

In November 2022, an appraisal was completed listing the value of the property with the warehouse and its addition to be $1,160,000. In the report, the appraiser stated that the building and its addition increased the overall market value of the property.

At trial, Kathleen requested the court partition the property in kind, granting her sole title to the property, so that she could continue to operate her business there. If the property was instead ordered sold and the proceeds divided, Kathleen sought reimbursement for the lot’s cost, $31,000, the original warehouse construction cost, $130,000, and the warehouse addition cost, $150,000. Kathleen also stated that she had "additional expenditures" that she personally paid to improve the property and that these were listed in Exhibit J and K. She stated that the total of the "non-lot/non-building/non-addition" unreimbursed expenses was $185,063, that most of the expenses were from before 2012, and that she personally paid them.

The Carpenters requested that the property be sold and...