Casey v. Casey

Decision Date25 March 1986
Docket NumberNo. 0746,0746
CourtSouth Carolina Court of Appeals
PartiesJoyce M. CASEY, Respondent, v. John William CASEY, Appellant. . Heard

Isadore E. Lourie and Randall M. Chastain, Columbia, for appellant.

Harvey L. Golden and Douglas R. Kotti, Columbia, for respondent.

CURETON, Judge.

Respondent Joyce M. Casey was granted a divorce on March 16, 1981 on the ground of one year's continuous separation. On May 26 and 27, 1983 the family court conducted a hearing concerning all the incidents of divorce except attorneys' fees. Appellant John William Casey appeals from the order of the family court which divided the marital estate, awarded One Thousand Dollars ($1,000) per month alimony and Five Hundred Dollars ($500) per month as child support and made findings concerning attorneys' fees. We affirm in part, reverse in part, and remand.

The parties married in February 1960. At that time, Mrs. Casey was employed as a cosmetologist. She remained employed contributing her income to household expenses until 1968 when the parties' third child was born. At that time, the parties agreed that she would no longer work full-time outside the home. Thereafter, she maintained the parties' rental property on Brennan Road in Columbia and collected rents. She also worked in her husband's fireworks business from 1976 to 1980. Mr. Casey admitted that for sixteen years of their marriage Mrs. Casey was a good wife and mother.

Mr. Casey has three businesses. In 1976 he acquired Jim Casey's Fireworks from his father. In 1979 he incorporated Election Services Corporation, a voting machine rental business. Another one of his businesses, Mercedes Finders, Inc., is a licensed car dealership used primarily to obtain less expensive insurance coverage for his four Mercedes. He also has rental and investment properties.

During the marriage Mr. Casey provided his family with a well-to-do lifestyle which allowed his family members to drive luxury cars, take vacations, eat in restaurants at least twice a week and to shop for clothing in better stores. He has agreed both to support his oldest child while he attends college and to meet his daughter's college expenses not covered by scholarships, grants and loans. His youngest child was fourteen at the time of the final hearing and in Mrs. Casey's custody.

Both parties have inherited property. Mrs. Casey inherited farmlands and Twenty-six Thousand Dollars ($26,000) upon her father's death. She has invested this money, using interest from it for family expenses and as collateral to refinance commercial property owned by the parties. She also inherited Twenty-two Thousand Dollars ($22,000) from her great aunt. Mr. Casey inherited Twenty-five Thousand Dollars ($25,000) from his parents' estate.

The issues on appeal are: (1) whether the trial judge equitably divided the marital estate; (2) whether the trial judge abused his discretion by awarding alimony and child support; and (3) whether the trial judge's findings regarding attorneys' fees were improper.

I.

Mr. Casey argues that the trial judge made an improper equitable distribution award. He cites as error: (1) the amount distributed to Mrs. Casey; (2) the fact that the good will of Jim Casey's Fireworks was found to be an asset subject to distribution; (3) that Mrs. Casey's inheritance was not properly considered in making the award; (4) that the figure determined to be his annual business income was reached by speculation; (5) that complying with the trial judge's distribution scheme will have grave tax consequences for him; and (6) that the order distributes coins and sterling even though the record is devoid of testimony about these items.

With one exception, we find Mr. Casey's arguments to be either unpersuasive or without merit. Determinations regarding the equitable distribution of marital assets rest within the sound discretion of the family court. Smith v. Smith, 280 S.C. 257, 261, 312 S.E.2d 560, 563 (Ct.App.1984). We find that the trial judge clearly considered the factors listed in Shaluly v. Shaluly, 284 S.C. 71, 325 S.E.2d 66 (1985) in making the equitable distribution award.

The trial judge made a Ten Thousand, Five Hundred Dollar ($10,500) award to Mrs. Casey which purports to represent a 21% interest in the goodwill of Jim Casey's Fireworks. 1 Ostensibly relying upon expert testimony, he found that "a minimum figure for goodwill of a business can be established by multiplying two times the annual profits after subtracting compensation for management." The trial judge determined that Jim Casey's Fireworks "may have a goodwill value of at least One Hundred Thousand Dollars ($100,000), but due to the nature of this business [he preferred] to conservatively estimate at the considerably lower figure of Fifty Thousand Dollars ($50,000) for purposes of equitable distribution." This was error.

At trial the wife's attorney sought to prove that the fireworks business had a goodwill value in excess of the value of its inventory and fixtures. The expert testified that because the profits of the business far exceeded a reasonable sum to compensate Mr. Casey as manager of the business, it was his opinion that the business had goodwill. He also testified that a business which has good will as a major component of its value, goodwill may be accounted for by utilizing the capitalization of earnings approach to ascertain value. The expert further testified that while a capitalization factor of two and a half times the net earnings of the fireworks business may be appropriate to ascertain value in this case, he could not arrive at a value of the business based upon the capitalization of earnings method because of inadequate earnings data. 2

Mr. Casey argues on appeal that good will should not be considered as a component of value in dividing the fireworks business. We disagree. The question of how to handle the goodwill of a sole proprietorship is a troublesome one. The fact that the success of such businesses depends heavily on the skills and efforts of the owner has led some courts to conclude that attributing a value to the goodwill of the business would improperly treat the proprietor's entrepreneurial skills or future income as marital property. See e.g., Nail v. Nail, 486 S.W.2d 761 (Tex.1972). On the other hand, the weight of authority appears to favor valuing goodwill as a component of the overall value of a growing concern. See Heller v. Heller, 672 S.W.2d 945 (Ky.App.1984) (goodwill in husband's accounting practice); Weaver v. Weaver, 72 N.C.App. 409, 324 S.E.2d 915 (1985) (partner's interest in accounting firm's goodwill) Jondahl v. Jondahl, 344 N.W.2d 63 (N.D.1984) (goodwill of husband's solely owned tax service); In re Marriage of Hall, 103 Wash.2d 236, 692 P.2d 175 (1984) (goodwill in medical practice); See also Rostel v. Rostel, 622 P.2d 429 (Alaska 1981); Golden v. Golden, 270 Cal.App.2d 401, 75 Cal.Rptr. 735 (1969); In re Marriage of Nichols, 43 Colo.App. 383, 606 P.2d 1314 (1979); In re Marriage of White, 98 Ill.App.3d 380, 53 Ill.Dec. 786, 424 N.E.2d 421 (1981); Dugan v. Dugan, 92 N.J. 423, 457 A.2d 1 (1983); Stern v. Stern, 66 N.J. 340, 331 A.2d 257 (1975); Nastrom v. Nastrom, 262 N.W.2d 487 (N.D.1978). We hold that the goodwill of a sole proprietorship may constitute a marital asset subject to division.

A sole proprietorship, like the stock of a closely held corporation cannot be valued by any inflexible standard. See Dibble v. Sumter Ice and Fuel Co., 283 S.C. 278, 322 S.E.2d 674 (Ct.App.1984). While a court may determine the value of a sole proprietorship by considering its earnings value, courts should be meticulous to distinguish between the entrepreneurial skills or potential future earnings of a spouse and the goodwill of the spouse's business. In re Marriage of Bateman, 382 N.W.2d 240 (Minn.Ct.App.1986); Jondahl v. Jondahl, 344 N.W.2d 63 (N.D.1984). 3

Like the wife's expert witness, we are unable to ascertain the value of the fireworks business because the record does not contain sufficient data concerning the income and expenses of the business that would permit a determination of net earnings. Further, the record is also devoid of any evidence of an appropriate managerial fee for Mr. Casey which must be deducted from the net earnings prior to applying a capitalization of earnings factor.

For the foregoing reasons, we reverse and remand the fireworks business valuation. We direct the trial judge to take additional evidence to ascertain the value of the business prior to awarding Mrs. Casey an...

To continue reading

Request your trial
7 cases
  • Moore v. Moore, Appellate Case No. 2013–001359.
    • United States
    • South Carolina Supreme Court
    • October 7, 2015
    ...the court of appeals ultimately concluded goodwill "may constitute a marital asset subject to division." Casey v. Casey (Casey I ), 289 S.C. 462, 466, 346 S.E.2d 726, 729 (Ct.App.1986). On certiorari, this Court reversed, finding "[w]hen the goodwill in a business is dependent upon the owne......
  • Woodside v. Woodside
    • United States
    • South Carolina Court of Appeals
    • September 17, 1986
    ...to award, the court should consider both parent's ability to support the children and the needs of the children. Casey v. Casey, 289 S.C. 462, 346 S.E.2d 726 (Ct.App.1986). Further, the amount of the award should, to the extent possible, permit the children to continue to live at the standa......
  • Weinberg v. Wallace
    • United States
    • South Carolina Court of Appeals
    • February 8, 1994
    ...name; (2) the business' location; and (3) the business' fixtures, inventory and other tangible assets. Casey v. Casey, 289 S.C. 462, 466 n. 2, 346 S.E.2d 726, 729 n. 2 (Ct.App.1986), rev'd on other grounds, 293 S.C. 503, 362 S.E.2d 6 (1987); see Karageorge, 565 So.2d at 510 ("Good will incl......
  • Wood v. Wood
    • United States
    • South Carolina Court of Appeals
    • February 23, 1987
    ... ... this Court held that in a business of this sort, which relies heavily on the skills and efforts of a sole owner, goodwill may be divisible, Casey v. Casey, 289 S.C. 462, 346 S.E.2d 726 ... (Ct.App.1986), cert. granted, [292 S.C. 47] Order of The Supreme Court of South Carolina February 17, ... ...
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT