Aletto v. Aletto

• Decision Date: 10 February 1988
• Citation: 371 Pa.Super. 230,537 A.2d 1383
• Parties: Mary Alice ALETTO, Appellee, v. Harold E. ALETTO, Appellant.
• Court: Pennsylvania Superior Court

Page 1383

537 A.2d 1383

371 Pa.Super. 230

Mary Alice ALETTO, Appellee, v. Harold E. ALETTO, Appellant.

Superior Court of Pennsylvania.

Argued Sept. 1, 1987.

Filed Feb. 10, 1988.

Frederick N. Frank, Pittsburgh, for appellant.

Chris F. Gillotti, Pittsburgh, for appellee.

Before BROSKY, TAMILIA and KELLY, JJ.

KELLY, Judge:

This case involves an appeal by appellant/husband from an order equitably distributing the parties' marital property. Because we find that the trial court improperly excluded from marital property the increase in value of certain premarital assets, we reverse and remand.

The parties were married in 1961 and separated in 1977. On July 23, 1981, appellee/wife filed the instant divorce proceedings, requesting equitable distribution under Section 401 of the Divorce Code, alimony, and counsel fees. Following a hearing, the trial court entered an order distributing the marital property and dismissing wife's claims for alimony and counsel fees. Both parties filed exceptions; except for a slight modification of its previous order, the trial court dismissed the exceptions and entered a final order. This timely appeal followed. ¹

On appeal, husband raises six issues: (1) whether the court erred in excluding from marital property the increase in value of stock owned by wife; (2) whether the court erred in valuing husband's business interests as of the trial date, rather than the separation date; (3) whether the court erred in calculating the value of husband's business interests; (4) whether the court erred in awarding wife fifty percent (50%) of husband's business interests; (5) whether the court erred in formulating the structured equitable distribution award; and (6) whether the court erred in fixing the marital assets and liabilities. We find that the opinions of the trial court, dated March 27, 1986 and July 18, 1986, thoroughly address and properly dispose of the third issue. We shall address the remaining issues raised on appeal seriatim.

I.

In 1959, two years before her marriage to husband, wife received a 7.1 percent share in a Coca-Cola bottling company owned by her father and located in the Federal Republic of Germany. At the time the stock was given to wife, it was valued at $15,000; wife sold the stock in 1979, two years after the parties separated, for $100,000. The trial court held that the increase in the value of the stock which occurred during the marriage did not constitute marital property. The court reasoned that the stock was acquired before the marriage and that the increase in value did not occur as a result of any contributions by husband.

This Court recently held in Anthony v. Anthony, 355 Pa.Super. 589, 591, 514 A.2d 91, 92 (1986), that "the entire increase, during the parties' marriage, in the value of premarital assets is marital property, and ... the increase is not reduced to reflect inflation." In reaching this holding, we rejected the appellants' assertions that an increase in the value of a spouse's premarital property should not be regarded as marital property unless the appreciation of value is attributable to the joint efforts and/or financial contributions of both spouses. The court in Anthony reasoned:

Pursuant to section 401 of the Divorce Code, marital property includes all property, real or personal, acquired during the parties' marriage by either spouse, whether titled individually or jointly. 23 P.S. § 401(e)-(f). Thus, the time, rather than the method, of property acquisition determines if an item of property constitutes marital property under the Code.

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* * *

...[I]f accrued during the period of the parties' marriage, an appreciation in the value of property belonging to either spouse represents, in and of itself, property acquired during the parties' marriage, i.e., marital property. See 23 P.S. § 401(e)(1) and (3).

514 A.2d at 92-3 (emphasis in original). Accord Johnson v. Johnson, 365 Pa.Super. 409, 529 A.2d 1123 (1987); Sutliff v. Sutliff, 361 Pa.Super. 504, 522 A.2d 1144 (1987).

In the instant case, the trial court did not have the benefit of our decision in Anthony, supra. ² However, it is well-settled that changes in decisional law which occur during litigation will generally be applied to cases pending on appeal. McCloskey v. WCAB, 501 Pa. 93, 460 A.2d 237 (1983); Fairbanks v. Travelers Insurance Company, 337 Pa.Super. 39, 486 A.2d 469 (1984). As stated in Fairbanks, supra:

In Pennsylvania, decisions changing the law are usually applied to cases pending on appeal. If such decisions rely upon statutory interpretations, they relate back to the date the particular statute became effective, because they merely interpret existing legislation.

486 A.2d at 470-71. The Anthony decision relied upon interpretation of Section 401 of the Divorce Code; we therefore find that our holding in Anthony relates back to the date Section 401 became effective. Applying Anthony, we conclude that the trial court erred in excluding from marital property the increase in value of the stock held by wife.

Wife argues that the reasoning set forth in the trial court opinion requires us to find that the error in excluding the increase is harmless error. The trial court stated in its opinion:

... [E]ven if the increase in the value of the stock were marital property, we would award the increases in the value of the stock to the wife and would divide the remaining marital property evenly in the manner described in part II of this opinion. None of the parties' activities during the marriage enhanced the value of the stock. The parties did not rely extensively on this asset during their marriage. This court's decision to treat this asset as the wife's separate property was a significant factor in this court's decision to divide evenly the marital property and to deny the wife's claims for alimony and counsel fees. Finally, since the husband has accumulated significant separate property, since he can without receiving any portion of this asset easily meet his present and future needs as defined by the standard of living that he had maintained during the marriage, and since the marriage benefited his economic position and capacity to acquire future assets, there is no reason why he should receive a share of an asset that the wife's family gave to the wife for her benefit.

(Trial Court Opinion at 17). Wife asserts that, because the trial court stated that, assuming the increase to be marital property, the trial court would still award the increase to wife, and would make no changes in the distribution of the remaining assets, any remand would amount to an unnecessary judicial exercise. We disagree.

Husband presented evidence at trial that the actual increase in value of wife's stock totaled over one million dollars ($1,000,000). Husband's evidence tended to show that wife sold the stock for $100,000 in 1979, two years after the separation, to a Panamanian corporation, which was controlled by the wife's father. Husband attempted to show that the Panamanian corporation resold the stock within weeks to a German corporation for one million, eighty-four thousand dollars ($1,084,000). ³

The trial court did not include the increase in value of the stock as marital property. It was therefore unnecessary for the court to make any fact-finding regarding the value of the increase. However, as indicated, supra, the court erred in excluding the increase from the marital estate; further, if the increase is as significant as husband claims, the exclusion of this increase from marital property (and, consequentially, awarding the entire increase to wife) would in fact warrant reapportionment of the assets. If the increase does in fact total over one million dollars, this asset would be worth more than all the remaining marital assets of the parties combined. ⁴ We cannot accept the trial court's statement that, even if the increase were included as marital property, it would continue to reach the same distribution, for if the trial court were to ignore such a substantial asset in shaping an equitable distribution plan, it would clearly constitute an abuse of discretion.

We conclude that the trial court erred in excluding from the marital estate the increase in value of the wife's stock; we remand for the trial court to determine the value of the increase and direct the court to exercise its discretion by making adjustments to the entire equitable distribution scheme, if necessary. ⁵

II.

Husband next asserts that the trial court erred in valuing the parties' business interests as of the trial date; husband claims that the date of separation should have been used. In Sergi v. Sergi, 351 Pa.Super. 588, 506 A.2d 928 (1986), this Court held that, absent a specific benchmark for valuation, the trial court is free to select the date which best serves to provide for economic justice between the parties. The date chosen by the trial court is reviewed under an abuse of discretion standard. Accord Sutliff v. Sutliff, supra; Morschhauser v. Morschhauser, 357 Pa.Super. 339, 516 A.2d 10 (1986); Winters v. Winters, 355 Pa.Super. 64, 512 A.2d 1211 (1986). In its opinion, the trial court explained in detail its reasons for valuing the business interests as of the trial date, rather than the date of separation. We find no abuse of discretion.

III.

In his next two arguments, husband contends that: (1) the trial court erred in awarding the wife fifty percent of the business assets; and (2) the court erred in framing the structured equitable distribution award. We find that, when dividing the business assets, the trial court erred in utilizing a fifty-fifty presumption; the court further erred in failing to consider all the factors set forth in Section 401(d) of the Divorce Code. Accordingly, we are compelled to set aside the equitable distribution plan and remand to the trial court with proper instructions. ⁶

In Fratangelo v. Fratangelo, 360 Pa.Super. 487, 520 A.2d 1195 (1987), this...