Brandenburg v. Brandenburg

• Decision Date: 03 April 1979
• Citation: 167 N.J.Super. 256,400 A.2d 823
• Parties: William A. BRANDENBURG, Plaintiff-Appellant, v. Barbara BRANDENBURG, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 256

167 N.J.Super. 256

400 A.2d 823

William A. BRANDENBURG, Plaintiff-Appellant, v. Barbara BRANDENBURG, Defendant-Respondent.

Superior Court of New Jersey, Appellate Division.

Argued Feb. 21, 1979.

Decided April 3, 1979.

Donald R. Conway, Hackensack, for plaintiff-appellant.

James C. Orr, Newark, for defendant-respondent (Lum, Biunno & Tompkins, Newark, attorneys; Claire T. Barile, Newark, on the brief).

Before Judges LORA, MICHELS and LARNER.

The opinion of the court was delivered by

LARNER, J. A. D.

Plaintiff husband appeals from several aspects of the order for equitable distribution entered in conjunction with a judgment of divorce in favor of both parties pursuant to N.J.S.A. 2A:34-2(d) and 2A:34-7. One facet of plaintiff's appeal asserts error in the inclusion in the assets available for distribution of his stock interest in a business acquired after the separation of husband and wife. The other contentions are focused upon the propriety of the valuation of certain marital assets for the purpose of equitable distribution.

I

A brief review of the undisputed facts dealing with the marital relationship is essential for the consideration of the eligibility of the stock interest as property subject to equitable distribution.

The parties were married in 1944 and two children were born of the marriage. Sometime in 1965 or 1966 they separated pursuant to a mutual understanding. The husband moved to an apartment in Hawthorne, New Jersey, located in the building where his business was conducted, and the wife remained in the marital home in Montclair with their two daughters. In 1974 the Montclair home was sold and a condominium was purchased for the wife and children in Clifton with funds derived from the sale of the Montclair property and a $15,000 loan made by the husband. Title was taken in the wife's name alone.

They continued to live separate and apart from each other since 1966 and did not cohabit as husband and wife up to the time of trial a period of approximately ten years. The husband continued nevertheless to support his wife and children and returned to the marital home from time to time to visit with his children. On a few occasions when the daughters were home for holidays he would stay overnight, and would also attend special parties or other occasions in which the children were involved. The wife did nothing to discourage the continuance of this close relationship between father and daughters.

The husband had started a business known as Norris Manufacturing Company in Hawthorne in the early 1960s. Apparently it prospered until it became involved in a trade secret litigation, as a result of which a substantial judgment was recovered against the company, forcing it to go out of business. The business was then liquidated in late 1965 or early 1966, with most of the assets taken in satisfaction of the judgment. The wife, who held stock in the company in her name, received $37,500 as her share of the liquidation, and two trusts were set up for the children from the same source. Norris Manufacturing Company was dissolved and thus was no longer a viable business enterprise.

Thereafter the husband became employed as general manager for a newly formed company, known as J. B. L. Corporation. Concededly, at that time he had no proprietary interest in that company, and there is no suggestion that J. B. L. Corporation was created by funds or other assets of Norris Manufacturing Company. It was truly a new enterprise and not identifiable with or traceable to Norris Manufacturing Company or its assets.

Plaintiff continued as an employee of this company, and commencing in 1969 or 1970 he started to exercise stock options in J. B. L. and purchased shares of stock through the years so that as of the time of the hearing below he held a 59% Stock interest in the corporation, having an estimated value of approximately $470,000.

It is this stock interest acquired after the separation which is the subject matter of the controversy on this issue. The trial judge found that the J. B. L. stock is a marital asset subject to equitable distribution because it was acquired by the husband "during the marriage." In including its value in the computation of distribution, he relied upon the literal language of Painter v. Painter, 65 N.J. 196, 320 A.2d 484 (1974), which holds that property acquired prior to the filing of the divorce complaint is includable for the purpose of equitable distribution. ¹

Subsequent to the decision below the Supreme Court, in Smith v. Smith, 72 N.J. 350, 371 A.2d 1 (1977), modified the rule enunciated in Painter. Recognizing that the formulation of Painter was but a pragmatic solution in "an attempt to avoid promulgating an unworkable rule," the court held that the termination date for identification of distributable assets could be determined by the date of a separation agreement, accompanied by a separation in fact.

The key question presented to us is whether the existence of a formal separation agreement is a Sine qua non to the application of the modified rule of Smith v. Smith.

In our view the rationale underlying the Smith opinion is that the termination date for the identification of distributable assets is the point of time when it can be said that the marriage is factually dead. Of course, it would be simpler from the viewpoint of judicial economy to utilize a termination date measured by a finite, unequivocal act, such as the filing of the divorce complaint or the execution of a separation agreement. However, in this developing field of equitable distribution law of this State we do not believe that the Supreme Court intended to set down a conclusive mandate as to date of termination and foreclose the rethinking of the application of the rule where the facts of a particular case warranted it.

The court's anticipation of problems arising in different fact patterns is found in the following footnote (n. 7) to the Painter opinion:

We are under no illusion that what we have said above will provide certain and ready answers to all questions which may arise as to whether particular property is eligible for distribution. We have sought only to implement the legislative intent, as we discern it, by setting forth what we believe should be the general governing rules. Individual problems must be solved, as they arise, within the context of particular cases. (65 N.J. at 218, 320 A.2d at 495 n. 7)

See also, Smith v. Smith, supra, 72 N.J. at 362, 371 A.2d 1.

It would appear that the essence of any rule setting the time frame for identification of marital assets should be determined by a factual complex where there is "incontrovertible evidence that the marital enterprise is no longer viable." Smith v. Smith, supra, 72 N.J. at 361, 371 A.2d at 7. If that evidence is clear and unequivocal, the inclusion of property thereafter should not depend upon the existence of a formal document designated as a separation agreement. See Ross v. Ross, 151 N.J.Super. 486, 376 A.2d 1350 (Ch.Div.1977). Conversely, where the fact of final separation and irretrievable breakdown of the marriage is in doubt and not established by clear and unequivocal evidence, the court of necessity would invoke the rules of Painter and Smith.

Where, as in this case, the parties separated under a mutual oral understanding and did not cohabit for a period of ten years, the marital enterprise is as lacking in viability as it would have been with an accompanying written agreement. ² Under such circumstances it would be "clearly irrational" to include as distributable assets property acquired by the husband years after such a continuous and final breakdown of the normal marital relationship. See Smith, supra, 72 N.J. at 361, 371 A.2d 1.

We do not conceive that the equities dictated by the facts of a particular case should be sacrificed on the altar of vindication of a simplistic and uniform rule. There is no reason why the determination of the appropriate equities in a particular case should not be entrusted to the good judgment of the judiciary. As Justice Mountain aptly stated in Painter, supra:

The judicial task may upon occasion be a difficult one but it will hardly be novel. Seeking just and equitable results is and has always been inherent in the judicial function; it has been a chief concern of the courts for many centuries. (65 N.J. at 212, 320 A.2d at 492)

The basic concept of the equitable distribution statute of 1971 contemplates that the distribution of marital assets shall be made in a manner which is fair and equitable to both parties. With that controlling principle as the polestar, it is evident that an asset acquired by either husband or wife after an unequivocal separation because of a dead marriage should not be shared as a windfall by the other spouse. Should a member of the marriage partnership be frustrated or discouraged from bettering his or her economic status after a marriage in fact no longer exists for fear of having the fruits of his or her endeavors invaded merely because a divorce proceeding has not been initiated or because the parties have been unable to reach a consensual written agreement? Or is it equitable for a spouse to share in a gift or inheritance received by the other spouse after the marriage is clearly at an end by virtue of the unequivocal act of separation?

From the record herein it is clear that after the separation in 1965 or 1966 defendant did not contribute to the husband's business activities or well-being by any supporting measures which could be construed as causally connected with the creation of the asset involved. She no longer performed the essential function of a wife in the shared enterprise of marriage. As Justice Mountain noted in Smith, supra: "Assets acquired by the joint efforts of the parties while the shared enterprise continues, should be, on its termination, eligible for equitable distribution." 72 N.J. at 361, 371 A.2d at 7. Since the...