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Taylor v. Taylor

Court of Appeals of Missouri, Southern District, Second Division

October 7, 2019

TABITHA ANN TAYLOR, Appellant/Respondent,
RICKY DEAN TAYLOR, LIN-J FARMS I, LLC, and LIN-J FARMS, II, LLC, Respondents/Cross-Appellants.

          APPEAL FROM THE CIRCUIT COURT OF CEDAR COUNTY Honorable James V. Nichols, Judge.


          DANIEL E. SCOTT, J.

         This appeal and cross-appeal follow a marriage dissolution case that was consolidated with a civil action over commingled business and personal affairs related to a family farming operation. Tabitha[1] appeals the determination that she was not a partner in the operation. Respondents cross-appeal several property and debt determinations. We deny all complaints and affirm the judgment.


         Ricky began farming with his father in 2003. In 2007, Ricky's parents formed Lin-J Farms I, LLC ("LLC-I") to own equipment and operate the farming operations, and Lin-J Farms II, LLC ("LLC-II") to hold the farm real estate.

         Ricky's full-time efforts and management grew the farming operation significantly after his father died in 2009, but personal and business funds and expenses were commingled with little or no attention to details of proper accounting. Whoever had money at the time paid the farming expenses. The LLCs paid personal debts of Tabitha, Ricky, and Ricky's mother and bought cars, motorcycles, and boats for their personal use. Ricky received no set salary, but, without objection, frequently wrote LLC checks for personal living expenses. Ricky and Tabitha were named as borrowers or guarantors for millions of dollars of LLC debts and were named as lessees or co-lessees on 658 acres farmed by LLC-I.

         In 2015, Tabitha and Ricky initiated proceedings to dissolve their 20-year marriage. Tabitha also filed a separate declaratory judgment action seeking to be declared a partner in the family farming operations. The LLCs filed counterclaims and cross-claims seeking (1) to quiet title to certain farms; (2) judgment against Ricky on a promissory note; and (3) a declaration that LLC-I owned certain farm equipment. The dissolution and declaratory judgment cases were consolidated.

         The declaratory issues were tried first. After hearing three days of evidence and testimony, the court denied every pleaded claim, counterclaim, or cross-claim. In ruling that Tabitha had not proved her claim, LLC-I had not proved either of its claims, and LLC-II had not proved any of its seven claims, the court specifically found:

• Written documents directly contradicted the existence of the partnership alleged by Tabitha, whose testimony on that subject was "unclear, imprecise and sometimes contradictory."
• Although there was no partnership, the court was "clearly and unequivocally convinced" that the parties understood and intended Ricky and Tabitha to have an equitable ownership in certain farm equipment and irrigation systems. "Given the history of the parties['] conduct of the farming business, commingling of funds, and joint liability on indebtedness that has financed the entire farming operation," it would be "grossly inequitable" to deny Tabitha and Ricky any marital interest in those assets.
• No credible evidence supported LLC-II's claims for equitable contribution, which the court characterized as a "strategic afterthought as a result of the pending dissolution of marriage action."
• Equitable interests in three farms mirrored the legal interests reflected on the vesting deeds: Ricky and Tabitha 50% and LLC-II 50% as tenants in common. Purchase-money and tax payments made by LLC-II or Ricky's parents with commingled funds were intended as gifts or as compensation for Ricky's farming work, with no expectation of repayment expressed until after the dissolution case was filed.
• Ricky's promissory note was executed to avoid the appearance of a taxable gift, with the maker, payee, and current holder of the note having no intention or expectation that Ricky would pay the note, and the current demand that he do so was another "strategic afterthought made as a consequence of the pending dissolution of marriage."

         That judgment remained interlocutory until the court could hear the dissolution case and determine the extent and value of the marital interest in the farm assets.

         At that dissolution trial, again spanning three days, the court found that Ricky and his mother "clearly manipulated the farm's financial affairs and distributions to reduce and understate [Ricky's] actual income in the past 2 years." The court's task of classifying and dividing farm assets was further complicated by "careless and unsystematic ad hoc accounting practices" and the parties' "equally unreasonable" claims of ownership and equity in the farming operation. Nonetheless, the court declared property-ownership interests consistent with its prior rulings and, as relevant here, entered a final judgment apportioning marital and separate property and debts, leading to this appeal and cross-appeal.[2]

         Tabitha's ...

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