Borodinsky v. Borodinsky

• Citation: 162 N.J.Super. 437,393 A.2d 583
• Parties: Nathan BORODINSKY, Plaintiff-Appellant, v. Sylvia BORODINSKY, Defendant-Respondent.
• Decision Date: 27 September 1978
• Court: New Jersey Superior Court — Appellate Division

Page 437

162 N.J.Super. 437

393 A.2d 583

Nathan BORODINSKY, Plaintiff-Appellant, v. Sylvia BORODINSKY, Defendant-Respondent.

Superior Court of New Jersey, Appellate Division.

Argued Sept. 12, 1978.

Decided Sept. 27, 1978.

Paul N. Silverman, Newark, for plaintiff-appellant (Silverman, Elwell & Denstman, Newark, attorneys; Sam Denstman, Newark, on the brief)

Morris M. Schnitzer, Newark, for defendant-respondent (Schnitzer & Schnitzer, Newark, attorneys).

Before Judges LYNCH, CRANE and HORN.

The opinion of the court was delivered by

HORN, J. A. D.

Plaintiff Nathan Borodinsky appeals from a final judgment embodying, among others, provisions for equitable distribution and support for defendant and two of the parties' three children. Said judgment followed an earlier judgment of divorce granted to defendant wife on her counterclaim charging a marital offense on the part of the husband.

Plaintiff challenges the provisions of the said judgment which (1) awarded as equitable distribution "(o)ne half of all of the issued and outstanding capital stock of Belmont Brake System, Inc., and 531 Central Corporation * * * " to defendant wife and requiring plaintiff to forthwith deliver to her stock certificates of said corporations; (2) awarded the sum of $900 monthly for the support of defendant and the support of Louis, the youngest of the three children born of the marriage, and certain additional items of support.

For the reasons later apparent, we need not relate the factual background in detail. That which is pertinent is that the parties were married in 1954. Three children were born of the marriage, whose ages in 1977 were Karen, 20; Linda, 18, and Louis, 15. The marriage of the parties apparently had been deteriorating for several years prior to the present action. Thus, in April 1971, after plaintiff allegedly beat defendant, the parties signed a separation agreement. However, the parties reconciled their differences within one week thereafter and continued to reside together, disregarding their agreement. They continued to live together until the end of December 1973, at which time plaintiff left the house. He presently lives in an apartment with another person in New York City, where he shares the living expenses.

On November 11, 1971 plaintiff formed Belmont Brake Systems, Inc. (Belmont Brake), of which he is sole stockholder, and through that corporation purchased an automobile repair business on Central Avenue in Newark.

Belmont Brake is primarily concerned with brake repairs, although since its inception it has engaged in transmission work and other types of automotive repairs. At some point in 1972 the company began to expand its operation under the trade name of Belmont Transmission Company, apparently in an attempt to attract more business. However, Belmont Transmission Company is not a separate entity and plaintiff maintains no records or employees other than those of Belmont Brake. But in 1974 Belmont Brake leased another building and tract of land at 531 Central Avenue to accommodate the expanded business.

On January 16, 1976 plaintiff purchased the land and building at 531 Central Avenue through a corporation which he apparently organized shortly before and of which he is the sole stockholder the 531 Central Realty Corp. Although acquired under the name of 531 Central Realty Corp., the property was devoted exclusively to the business of Belmont Brake. It is not apparent from the record what the financial arrangements between the two corporations were The purchase price of 531 Central Avenue was $12,500 and was financed entirely through a $15,000 loan. To secure the loan plaintiff or 531 Central gave a mortgage on the property acquired. The record does not indicate the maturity date of the loan, the payment schedule or the present outstanding balance.

--whether or not rent or other form of payment to Belmont Brake is made by 531 Central. However, it is clear that 531 Central Realty Corp. (531 Central) owns only the building and tract of land, whereas the automobile-repair business operated on that location is operated solely by Belmont Brake.

Plaintiff raises no objection to the judgment provision awarding to defendant a 50% Interest in the outstanding stock of Belmont Brake. His objection is directed to the manner of disposition that is, in kind. He asserts that that form of disposition will inexorably lead to a deadlock and further proceedings under the New Jersey Business Corporations Act, N.J.S.A. 14A:1-1 Et seq., which will redound to the disadvantage of the parties. The spectre of dissolution, N.J.S.A. 14A:12-7, and forced liquidation, N.J.S.A. 14A:12-9, is envisioned by him, especially since he contends the corporations are in a "marginal" financial condition. This would effectively choke off the prime source of plaintiff's income. The award of one-half of the stock in 531 Central is challenged not only for the same reason as the challenge to the disposition of the Belmont Brake stock but also because plaintiff claims that the 531 Central stock is not, under the law, eligible for equitable distribution. This is discussed Infra.

The trial judge arrived at the conclusion to distribute the stock in kind because "(he could not) put a value on the business" because, in his opinion, the witnesses, including accountants, could not or did not supply sufficient information so that the judge's determination as to value would constitute more than conjecture. At the same time he recognized the alternative procedure under such circumstances of "(allocating) a money amount to the divorced wife Defendant suggests that the judge's decision was practical and expedient and would provide the parties "with an opportunity and the incentive to negotiate their own solution through a sale to one another * * *." Only as a last resort, she says, and failing all other efforts, will the court then direct a public or private sale of the corporations or their assets. We fear that defendant's view lacks pragmatism and a realistic interpretation of empirical events between the parties. The solution most certainly lays the seeds for further disputations and litigation which should and may be avoided.

(adjudicating) a judgment against the husband in that amount, and (giving) him an opportunity to finance the payment of that judgment."

It seems almost doctrinal that the elimination of the source of strife and friction is to be sought by the judge in devising the scheme of distribution, and the financial affairs of the parties should be separated as far as possible. If the parties cannot get along as husband and wife, it is not likely they will get along as business partners. Wetzel v. Wetzel, 35 Wis.2d 103, 150 N.W.2d 482, 485 (Sup.Ct.1967). See also, Gemignani v. Gemignani, 146 N.J.Super. 278, 282, 369 A.2d 942 (App.Div.1977).

Equitable distribution following divorce is governed by N.J.S.A. 2A:34-23. This statute authorizes the court to determine not only which assets are eligible for distribution and their respective values, but also how the allocation of the assets is to be made. Rothman v. Rothman, 65 N.J. 219, 232, 320 A.2d 496 (1974). There is no restriction on the court with regard to ordering distribution in kind of the eligible assets or awarding a monetary equivalent thereof. But, nonetheless, the judge should consider the former relationship of the parties and the fact that post-divorce peace is more conducive to the welfare of the parties. Cf. Gemignani, supra, 146 N.J.Super. at 282, 369 A.2d 942.

Where the issue on appeal concerns which assets are available for distribution or the valuation of those assets, it The instant case is not one where the determination to distribute in kind may be said to have rested upon sufficient credible evidence. The reverse is true; the solution offered was rested on an asserted lack of sufficient credible evidence. The method of distribution, we hold, was an arbitrary and capricious one in the light of the situation of the parties and the distribution techniques which are available in order to achieve a reasonable result. Gemignani, supra 146 N.J.Super. at 282, 369 A.2d 942; 11 N.J.Practice (Finnerty, Marriage, Divorce and Separation) (3 ed. Supp. 1978), § 1338 at 237.

is apparent that the standard of review is whether the trial judge's findings are supported by adequate credible evidence in the record. Rothman, supra 65 N.J. at 233. See also, Perkins v. Perkins, 159 N.J.Super. 243, 247, 387 A.2d 1211 (App.Div.1978). However, where the issue on appeal concerns the manner in which allocation of the eligible assets is made, the standard of review is not so clearly established. In such cases it would seem reasonable to conclude that, as in alimony matters, an appellate court may determine whether the amount and manner of the award constituted an abuse of the trial judge's discretion. Esposito v. Esposito, 158 N.J.Super. 285, 291, 385 A.2d 1266 (App.Div.1978); Salmon v. Salmon, 88 N.J.Super. 291, 310, 212 A.2d 171 (App.Div.1965).

Although we have recognized the difficulty of evaluating interests in close corporations, Lavene v. Lavene, 148 N.J.Super. 267, 275, 372 A.2d 629 (App.Div.1977), cert. den. 75 N.J. 28, 379 A.2d 259 (1977), such difficulty must not be equated with impossibility. As stated by Judge Pressler in Lavene v. Lavene :

The parties, of course, have the primary obligation of adducing those proofs which will enable the judge to make sound and rational valuations. As enjoined by Rothman v. Rothman, supra, 65 N.J. 219, at 233, 320 A.2d 496, the parties must fully cooperate in the court's difficult valuation task and, where necessary, must secure the assistance of appropriate experts to appraise business interests. Plaintiff here did not obtain expert assistance, and this is at least partially the cause of the problem here. An accounting expert experienced in the type of business here involved should have been produced by her to test See also ...