Bollenbach v. Bollenbach

• Court: Minnesota Supreme Court
• Writing for the Court: SHERAN; Ronald E. Hachey; ROGOSHESKE
• Citation: Bollenbach v. Bollenbach, 285 Minn. 418, 175 N.W.2d 148 (Minn. 1970)
• Decision Date: 02 January 1970
• Docket Number: No. 41694,41694
• Parties: Jean C. BOLLENBACH, Respondent, v. Willard Marshall BOLLENBACH Jr., Appellant.

Page 148

175 N.W.2d 148

285 Minn. 418

Jean C. BOLLENBACH, Respondent, v. Willard Marshall BOLLENBACH Jr., Appellant.

No. 41694.

Supreme Court of Minnesota.

Jan. 2, 1970.

Syllabus by the Court

Upon review of an order of the district court making a division of the husband's property and awarding a substantial part of it to the wife in an action for divorce, the essential facts were these:

The parties, married in 1949, have three children, ages 13 to 16. The wife, 41, a college graduate, but never remuneratively employed, performed her duties as spouse and mother in an exemplary way. The husband, 44, well-educated and experienced in business affairs, enjoys good health and has a present earning capacity of at least $45,000 annually. Assets received from the husband's parents and grandmother, with growth, gave the husband a net worth of approximately $3,000,000, the wife a net worth of approximately $250,000, and the children a net worth as trust beneficiaries of approximately $1,000,000 collectively. The divorce came about because the husband, infatuated with another woman, informed his wife of the situation and requested her to institute divorce proceedings. The wife's health has been impaired. It is held:

1a. An allowance to the wife of one-half of the husband's net assets is within the permissible limits of the trial court's discretion.

1b. Except for the homestead and its furnishings, the allowance to the wife of amounts exceeding one-half of the husband's estate, particularly if market losses pending execution of the decree were intended to be shouldered by the husband only, would be beyond discretionary limits.

2. While ordinarily the wife's separate assets should be considered where a division of the husband's property is decreed, the trial court was justified in excluding these assets from the total divided in the present case in light of his ruling that the wife should pay the taxes resulting from the transfer to her of one-half of her husband's estate.

3. Where a property division is made in lieu of alimony and support money, so much of the proposed division as is intended to be for the benefit of the minor children should be designated and protected for their benefit.

4. Where a division of a husband's property is made in divorce proceedings, a plan should be adopted, wherever possible, to limit the impact of Federal and state taxes resulting from taxable transfers and to reduce any adverse effects consequent upon forced liquidation. This is particularly the case where the assets involved are pledged or otherwise encumbered.

5. In a situation where the allowance of attorneys' fees and expenses to the wife will not result in any curtailment of the ability of the parties to the divorce to make adequate provision for their future needs and the needs of their children, the rules, applicable in the ordinary case, requiring stringent limitations upon such allowance have but limited application.

6. Where a division of substantial assets has been directed, any party adversely affected by immediate division should be afforded an opportunity to propose a plan for putting the division into effect which will keep the losses resulting from the transfer at a minimum. If the plan proposed, or any alternative method suggested, can be adopted in whole or in part without significantly endangering the basic objectives of the property division, this will be done in such a way as will be just and equitable under all the circumstances.

Briggs & Morgan, Richard E. Kyle, B. C. Hart, Bernard P. Friel, and Samuel L. Hanson, St. Paul, for appellant.

Altman, Geraghty, Leonard & Mulally and Terence O'Loughlin, St. Paul, for respondent.

OPINION

SHERAN, Justice.

Appeal from a divorce decree and from an order denying defendant's motion for a new trial. The issue is whether the division of property decreed by the district court can be sustained. Subject to the modifications hereinafter noted, we affirm.

FACTS

The parties were married in 1949. They have three children, Lesley Jean, born November 24, 1953, and twins, Willard III and Ann, born January 29, 1956. Plaintiff has not been employed since her marriage. She has, however, performed her duties as wife and mother in an exemplary way. Between 1949 and 1963, the family relationship was apparently a pleasant one. In 1963 defendant began to show signs of being dissatisfied with the routines of his situation in life. In 1964 plaintiff suffered an illness requiring hospitalization and she appears not to have fully recovered from the effects of this experience. In July 1966, plaintiff learned that her husband was emotionally involved with Mrs. Otto (Nancy) Christensen, their neighbor. Although defendant then declared that this affair was at an end, in March 1967 he requested that plaintiff divorce him so that he could marry Mr. Christensen. Separation and this divorce action resulted. Disruption of the marriage caused plaintiff to suffer a reactive depression requiring medical care. While the divorce action was pending in the district court, defendant commenced, and borrowed funds for, the construction of a new home which was to serve as the domicile for himself, his contemplated wife, and her children after completion of divorce proceedings. The anticipated cost of this structure: $300,000.

The gross value of the assets of the parties and their children as of December 7, 1967, exceeded $5,000,000. Defendant's holdings were worth almost $4,000,000 including $240,000 of borrowed funds held in escrow to build the new house and the real estate on which it was to be built, which was valued at $10,000. He had fixed liabilities (principally bank loans) of about $1,000,000. Trust funds for the children amounted to about $1,000,000 and, in addition, the children owned common stock of considerable value. Property held in plaintiff's name was valued at about $250,000. Defendant, acknowledging that plaintiff is entitled to a divorce and custody of the children, contends that the trial court acted unreasonably and arbitrarily in decreeing about one-half of his net estate (approximately $1,500,000) as a lump-sum award and attorneys' fees and accountants' fees in the amount of $52,500.

TRIAL COURT DECISION

Judge Ronald E. Hachey, the trial judge, announced his intended decision of the matter by a memorandum filed February 21, 1968. In summary, he stated:

As of December 7, 1967, defendant owned assets with a value of approximately $3,755,000 exclusive of an equity interest in a Universal Oil Products incentive plan (valued at about $50,000) and the homestead (worth about $80,000, but subject to a $30,000 mortgage).

Defendant's fixed liabilities amounted to about $1,142,500, consisting principally of bank loans. He had an outstanding contingent liability in the amount of about $1,225,000, existing because of his guaranty of the obligations of a number of 'racquet clubs' then in the process of construction.

Defendant's net worth as of December 7, 1967, was found to be approximately $2,875,000. In arriving at this figure, the trial court excluded the contingent liability and declared that indebtedness incurred by defendant for the construction of the new home was to be disregarded, explaining:

'* * * (W)hat the Court has in mind is to take the total value of defendant's assets and then to deduct therefrom the amounts of money that he owed, and then proceed to make an even distribution of the balance. However, before making this distribution and division, the Court is disposed to withhold from the amounts owed by defendant those expenses and items as being connected with the 'Poison Ivy' estate, which are first deducted from his amounts owed for consideration of the division. On that basis, the Court has determined that the liabilities (for division purposes) of the defendant are as follows:

"Total amounts owed (carried forward)  $1,142,578.00
                   "Less Escrow for Building Fund         240,000.00
                   "Less Finder's Fee                      20,000.00
                   "Less Architect's Fee (paid)             2,500.00
                   "Less Value of Real Estate
                     (for 'Poison Ivy' home)               10,000.00
                                                       -------------
                                                       $  272,500.00
                                                       -------------
                   "Adjusted Liability Figure of
                      Defendant                        $  870,078.00
                   "Plaintiff's Liabilities                11,000.00
                                                       -------------
                                                       $  881,078.00
                   "Total assets of defendant
                      (Carried Forward)                $3,755,711.00
                   "Adjusted liability                    881,078.00
                                                       -------------
                                                       $2,874,633.00
                

'As pointed out in the above figures the final net worth figure to be used as representing defendant's assets was $2,874,633.00. Divided in half would mean that the plaintiff is to be awarded a lump sum settlement figure amounting to the sum of $1,437,316.50. The net figure is based on stock valuation as of December 7, 1967, and Adjustments can be made accordingly.' (Italics supplied.)

The trial judge's February 21 memorandum recognizes that a lump-sum property settlement would have significant tax consequences and urges the parties to propose a method by which the settlement could best be put into effect. The judge felt that after the procedure for effectuating the settlement was determined the tax liability arising because of the settlement should be 'assumed in equal proportions by both parties.'

Judge Hachey recognized that plaintiff had assets approximating $250,000 in her own name and that trusts established for the benefit of the children totaled about $1,000,000. Even so, expressing confidence in the ability to plaintiff to manage her financial affairs and provide a home for the children, he was disposed to 'leave her assets intact' and to award the...