568 N.W.2d 728 (N.D. 1997), 960211, Fisher v. Fisher

Docket NºCivil No. 960211.
Citation568 N.W.2d 728, 1997 ND 176
Opinion JudgeMESCHKE
Party NameGene FISHER, Plaintiff and Appellee, v. Sheila FISHER, Defendant and Appellant.
AttorneyHowe, Hardy, Galloway & Maus, PC, Dickinson, for plaintiff and appellee; argued by Mary E. Nordsven., Smith, Bakke, Hovland & Oppegard, Bismarck, for defendant and appellant; argued by Randall J. Bakke. Appearance by Scott K. Porsborg.
Case DateSeptember 08, 1997
CourtSupreme Court of North Dakota

Page 728

568 N.W.2d 728 (N.D. 1997)

1997 ND 176

Gene FISHER, Plaintiff and Appellee,

v.

Sheila FISHER, Defendant and Appellant.

Civil No. 960211.

Supreme Court of North Dakota.

September 8, 1997

Page 729

Howe, Hardy, Galloway & Maus, PC, Dickinson, for plaintiff and appellee; argued by Mary E. Nordsven.

Smith, Bakke, Hovland & Oppegard, Bismarck, for defendant and appellant; argued by Randall J. Bakke. Appearance by Scott K. Porsborg.

MESCHKE, Justice.

¶1 Sheila Fisher appealed a decree of divorce from Gene Fisher that divided the marital estate equally after a $500,000 credit to Gene for premarital property, but distributed controlling stock in their major asset, Fisher Industries, to Gene. We affirm the credit and the refusal to discount the value of Sheila's minority stock, but remand the split of stock ownership for disentanglement of their ownership of Fisher Industries, if possible.

¶2 Gene and Sheila were married December 26, 1968, when Gene was age forty, and Sheila was twenty-five. Sheila brought no significant property to the marriage. When they married, Gene owned real estate and interests in several businesses including one-fourth of the family business, Fisher Sand & Gravel.

¶3 Early in the marriage, Gene inherited his father's interest in Fisher Sand & Gravel and bought the remaining interests from his brothers. For tax planning, Gene gifted stock to Sheila and to their four children over the years. In 1983, Gene gave controlling stock to Sheila so the company could take advantage of contracting preferences for a minority-owned business.

¶4 At first, Sheila played only a minor role in Fisher Sand & Gravel, but later became more involved. Although Sheila held controlling stock after 1983, Gene principally ran the company until June 1992. Then, Sheila took control by electing three directors, including herself, to the five-member board. Gene soon sued Sheila for divorce, but they reconciled. In November, Sheila had the company pay large bonuses to Gene and herself and used them to pay back accumulated loans from the company. In December, the board ousted Gene from the company presidency and demoted him to field consultant.

¶5 After twenty-five years of marriage, Gene again sued for divorce in 1994 and sought an equitable division of property. According to Gene, he did so as soon as he found out about the bonuses and their potentially adverse tax consequences. Sheila resisted the divorce.

¶6 The combined business, known by the trade name of Fisher Industries, is their major marital asset. It consists of Fisher Sand & Gravel, a corporation, and its two subsidiaries, General Steel and Supply Company and Green Acres Farm. Fisher Sand & Gravel mainly processes sand, gravel, and aggregate for highway construction. General Steel designs, fabricates, and assembles equipment for mining, supplies equipment to Fisher Sand & Gravel, and also sells equipment at retail. Green Acres is a Kentucky farm that Gene and Sheila transferred to Fisher Industries in 1989 to pay back some loans from the company.

¶7 Before trial, the trial court entered an Amended Interim and Extended Temporary Protection Order that gave Sheila exclusive use of the family home, prohibited Gene from coming within 150 feet of Sheila, and ordered Gene not to communicate with company employees. Gene violated this order by contacting employees and by showing up at the company's annual Christmas party when Sheila was there.

¶8 At trial, they stipulated to Sheila's adultery and to Gene's spousal abuse. Gene testified Sheila was economically at fault, and Sheila testified Gene was emotionally and physically abusive. Gene testified about the property he owned before the marriage that

Page 730

he valued at $1,910,000. Sheila disputed Gene's testimony about the value of his pre-marital property with cross-examination and her own testimony. Each claimed to be most responsible for the great success of Fisher Industries.

¶9 They stipulated the total value of Fisher Industries was $21,600,000, the equivalent of $9,094.74 per share, but they could not agree on how to distribute their predominant stock ownership. Sheila proposed to buy Gene's share through sale of a substantial part of their stock to an employee stock ownership plan (ESOP) that would have required Gene to covenant not to compete. Gene proposed either to buy all of Sheila's shares (but at a price discounted for her economic fault) with some of the purchase price "to be paid over time," or to receive distribution of enough stock for majority control. For these proposals, Gene asserted he could arrange enough credit for "$5,000,000 to fund any immediate equalizing payment to Sheila."

¶10 The trial court entered a divorce for irreconcilable differences and applied the Ruff-Fischer guidelines. See Ruff v. Ruff, 78 N.D. 775, 52 N.W.2d 107 (1952); Fischer v. Fischer, 139 N.W.2d 845 (N.D.1966). The court found Sheila guilty of adultery and Gene guilty of spousal abuse. The court valued the net marital estate at $23,110,302, including their combined 88 percent ownership of Fisher Industries stock valued at $18,326,000. The court accepted Gene's premarital property figures and awarded him $500,000 more in the division for assets he brought into the marriage. After the $500,000 award to Gene and $1,000 to Sheila in attorney fees for Gene's violations of the Interim Order, the court divided the rest of the marital estate equally.

¶11 The trial court rejected Sheila's proposed ESOP-sale because it would require Gene to agree not to compete, and rejected Gene's proposal to buy all of Sheila's stock because the court was unwilling to discount the value of her shares. The court valued each stock share at the $9,094.74 agreed equivalent, accepted Gene's proposed stock division of 1,212 shares to Gene (fifty-one percent) and 869 shares to Sheila (thirty-seven percent), and dissolved the interim receivership of their stock to put Gene in control of Fisher Industries. To balance the unequal split of stock, the court ordered Gene to pay $2,365,070.34 in cash to Sheila within 90 days after entry of judgment.

¶12 Sheila moved to reconsider, but the trial court denied her motion and entered the decree. Sheila appealed and moved for a stay, seeking to keep management control and to get $250,000 per year in spousal support during the appeal. Gene resisted Sheila's proposed stay and counter-moved to stay his $2,365,070.34 cash payment to Sheila during the appeal. The court denied Sheila's request to keep the status quo, stayed Gene's cash payment to Sheila pending her appeal, and ordered Gene to pay Sheila $20,000 monthly for temporary spousal support.

¶13 On appeal, Sheila mainly contests the trial court's split of their Fisher Industries stock. She asserts Gene's abuse and their mutual animosity make it impossible to continue in business together. She does not contest the decision to give Gene control of the business, but argues their business relationship should have been dissolved by distributing all of the stock to Gene and by offsetting payments to her. Unless the stock is distributed this way, she contends, Gene will have exclusive use, benefit, and control of her only income-producing assets because, as a minority stockholder, she will have no effective voice in corporate activities and thus no effective way to share in corporate income. She insists her corporate remedies will be inadequate for her income needs and for protecting her minority ownership. Sheila also contends, even if their stock ownership was correctly split, the trial court should have discounted the value of her minority shares and increased her cash payment to correctly accomplish an equal division of the marital estate.

  1. Credit For Premarital Assets

    ¶14 In seeking a completely equal division of the marital estate, Sheila also challenges the $500,000 credit to Gene for premarital property. We are not persuaded.

    Page 731

    ¶15 In a divorce, all separate property of the spouses must be included in the marital estate for distribution, but the property's origin can be a factor in making an equitable division. Gaulrapp v. Gaulrapp, 510 N.W.2d 620, 621 (N.D.1994). The division need not be equal to be equitable, but a trial court must reasonably explain a substantial disparity. van Oosting v. van Oosting, 521 N.W.2d 93, 96 (N.D.1994); Heley v. Heley, 506 N.W.2d 715, 718 (N.D.1993). In van Oosting, 521 N.W.2d at 99-100, we upheld a comparable distribution that gave one spouse a prior credit for substantial gifts received from his parents that resulted in a net distribution to the other spouse of only twenty-five percent of those gifts. Here, the trial court's relatively modest credit to Gene resulted in an effective distribution to Sheila of the equivalent of nearly thirty-five percent of the value of Gene's premarital assets.

    ¶16 Gene's $500,000 credit came to little more than two percent of this twenty-three-million dollar estate. This relatively small deviation from equal parts was reasonably explained and did not make the 51 percent/49 percent overall division of this relatively large net estate clearly erroneous.

    ¶17 Sheila disputes the valuation of Gene's premarital property, insisting that "any valuation of premarital assets [is] speculative at best" because "a valuation of 30-year-old property necessitates a complex analysis of inflation and other economic influences to determine the value of the property in 1968 dollars," which was not done. However, the evidence sufficiently supported the trial court's finding of the value of Gene's premarital property to justify a $500,000 credit to Gene. As we explained in Wald v. Wald, 556 N.W.2d 291, 295 (N.D.1996), "Marital property valuations within the range of the evidence are not clearly erroneous."

  2. Discounting Minority Stock

    ¶18 Sheila asserts her only real alternatives are either to sell her stock or to...

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19 practice notes
  • 792 A.2d 463 (N.J.Super.A.D. 2002), Brown v. Brown
    • United States
    • New Jersey Superior Court of New Jersey
    • 28 Febrero 2002
    ...spouses together are the sole shareholders in a closely-held corporation subject to equitable distribution. See, e.g., Fisher v. Fisher, 568 N.W.2d 728, 731 (N.D.1997). In Fisher, the North Dakota Supreme Court rejected a wife's contention that the value of her minority interest in a family......
  • Brown v. Brown, 022802 NJCA, a-985
    • United States
    • 20 Septiembre 2001
    ...spouses together are the sole shareholders in a closely-held corporation subject to equitable distribution. See, e.g., Fisher v. Fisher, 568 N.W.2d 728, 731 (N.D. 1997). In Fisher, the North Dakota Supreme Court rejected a wife's contention that the value of her minority interest in a famil......
  • Orwig v. Orwig, 021821 NDSC, 20200123
    • United States
    • North Dakota United States State Supreme Court of North Dakota
    • 18 Febrero 2021
    ...to keep former spouses together in a business relationship that will inevitably lead to more litigation. Fisher v. Fisher, 1997 ND 176, ¶ 27, 568 N.W.2d 728. We acknowledged courts have "generally avoided splitting stock in a closely held corporation between co......
  • Smithberg v. Smithberg, 071119 NDSC, 20180420
    • United States
    • North Dakota United States State Supreme Court of North Dakota
    • 11 Julio 2019
    ...Ault's application of a 25 percent discount for lack of marketability and control violates our holding in Fisher v. Fisher, 1997 ND 176, ¶ 23, 568 N.W.2d 728, that a court ascertaining "'fair value' of minority shares under the Business Corporation Act should not......
  • Request a trial to view additional results
19 cases
  • 792 A.2d 463 (N.J.Super.A.D. 2002), Brown v. Brown
    • United States
    • New Jersey Superior Court of New Jersey
    • 28 Febrero 2002
    ...spouses together are the sole shareholders in a closely-held corporation subject to equitable distribution. See, e.g., Fisher v. Fisher, 568 N.W.2d 728, 731 (N.D.1997). In Fisher, the North Dakota Supreme Court rejected a wife's contention that the value of her minority interest in a family......
  • Brown v. Brown, 022802 NJCA, a-985
    • United States
    • 20 Septiembre 2001
    ...spouses together are the sole shareholders in a closely-held corporation subject to equitable distribution. See, e.g., Fisher v. Fisher, 568 N.W.2d 728, 731 (N.D. 1997). In Fisher, the North Dakota Supreme Court rejected a wife's contention that the value of her minority interest in a famil......
  • Orwig v. Orwig, 021821 NDSC, 20200123
    • United States
    • North Dakota United States State Supreme Court of North Dakota
    • 18 Febrero 2021
    ...to keep former spouses together in a business relationship that will inevitably lead to more litigation. Fisher v. Fisher, 1997 ND 176, ¶ 27, 568 N.W.2d 728. We acknowledged courts have "generally avoided splitting stock in a closely held corporation between co......
  • Smithberg v. Smithberg, 071119 NDSC, 20180420
    • United States
    • North Dakota United States State Supreme Court of North Dakota
    • 11 Julio 2019
    ...Ault's application of a 25 percent discount for lack of marketability and control violates our holding in Fisher v. Fisher, 1997 ND 176, ¶ 23, 568 N.W.2d 728, that a court ascertaining "'fair value' of minority shares under the Business Corporation Act should not......
  • Request a trial to view additional results