Endres v. Endres, No. 18812

CourtSupreme Court of South Dakota
Writing for the CourtMILLER; GILBERTSON
Citation532 N.W.2d 65
PartiesJoan S. ENDRES, Plaintiff and Appellee, v. Robert L. ENDRES, Defendant and Appellant.
Decision Date26 June 1995
Docket NumberNo. 18812

Page 65

532 N.W.2d 65
Joan S. ENDRES, Plaintiff and Appellee,
v.
Robert L. ENDRES, Defendant and Appellant.
No. 18812.
Supreme Court of South Dakota.
Argued March 20, 1995.
Decided May 17, 1995.
Rehearing Denied June 26, 1995.

Lee R. Burd, Sioux Falls, for plaintiff and appellee.

Linda Lea M. Viken of Viken, Viken, Pechota, Leach & Dewell, Rapid City, for defendant and appellant.

MILLER, Chief Justice.

Husband appeals division of marital property, claiming errors in valuation, consideration of tax consequences, and in the division itself. We affirm in part, reverse in part, and remand.

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FACTS

Husband and Wife were married thirty-two years and, at the time of trial, were ages 55 and 51, respectively, with two adult children. Both parties sought divorce based on irreconcilable differences. The trial court granted a divorce to each party, finding Husband and Wife had equally contributed to the dissolution of the marriage.

The parties began their marriage in 1961 with few assets. Husband had started farming; he owned four cows and shared some farm equipment with his brother. During their marriage, the couple commenced and successfully operated a dairy farm and a concrete business. Husband primarily was involved with these two ventures, as well as other business interests. Husband testified at trial he was the president of the couple's dairy operation and concrete business. Until 1974, Wife worked full-time, and then part-time after the birth of their two children, as a secretary at the local hospital. Wife primarily cared for the home and the parties' two children. She worked from time to time as a bookkeeper, at no salary, at both the concrete business and the dairy, as well as other of Husband's business ventures. Wife also had responsibilities involving the farm and some housekeeping duties for the hired men who lived first in the couple's home and later in trailers on the couple's property.

By the time of the parties' divorce, they had accumulated a substantial marital estate. The marital property included Watertown Concrete, Willow Creek Dairy, securities, a partnership interest in the Pierre Governor's Inn, commercial buildings, rental property, and other real estate, as well as personal property, investment, checking, and savings accounts, the marital residence, some adjoining farmland, and six vehicles. Each party called two certified public accountants, as well as several appraisers and persons involved in businesses similar to the parties', to testify regarding the value of the marital assets. The court heard testimony on the value of this property from the parties and their experts for four days. The trial court found the net value of the marital estate to be in excess of $5.3 million and, finding both parties had contributed equally in the accumulation of said property, attempted a 50/50 division. Following the trial court's issuance of its memorandum decision, but prior to its entering a final judgment and divorce decree, Husband motioned to reopen to consider additional evidence regarding tax consequences and the state of Husband's health; such motion was denied. The trial court then issued its final judgment and decree.

Husband appeals the trial court's final judgment claiming errors in valuation, failure to consider tax consequences, and the division of the property itself.

STANDARD OF REVIEW

I. Division of Property

Our standard of review of a trial court's division of marital property is well established. "This court will not disturb a division of property unless it clearly appears the trial court abused its discretion." Vander Pol v. Vander Pol, 484 N.W.2d 522, 524 (S.D.1992); Kanta v. Kanta, 479 N.W.2d 505 (S.D.1991); Johnson v. Johnson, 471 N.W.2d 156 (S.D.1991); Fox v. Fox, 467 N.W.2d 762 (S.D.1991). While this discretion is broad, it is not uncontrolled and must be soundly and substantially based on the evidence. Gibson v. Gibson, 437 N.W.2d 170, 171 (S.D.1989); Goehry v. Goehry, 354 N.W.2d 192 (S.D.1984); Owen v. Owen, 351 N.W.2d 139 (S.D.1984). The omission of assets which should properly be included as marital property is an abuse of discretion. Gibson, 437 N.W.2d at 171; Prentice v. Prentice, 322 N.W.2d 880 (S.D.1982); Guindon v. Guindon, 256 N.W.2d 894 (S.D.1977).

This Court has consistently recognized the principal factors to be considered in making an equitable property division as: (1) the duration of the marriage; (2) the value of the property; (3) the age of the parties; (4) the health of the parties; (5) the parties' competency to earn a living; (6) the contribution of each party to the accumulation of the property; and (7) the income-producing capacity of the parties' assets. Kanta, 479 N.W.2d at 508; Ryken v. Ryken, 461 N.W.2d 122, 126 (S.D.1990) (Ryken II ); Baltzer v. Baltzer, 422 N.W.2d 584 (S.D.1988).

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II. Valuation of Property

Our standard of review of a trial court's valuation of marital property is also well established. This Court may disturb a trial court's property valuation only if such valuation is clearly erroneous. DeVries v. DeVries, 519 N.W.2d 73, 75 (S.D.1994); Vander Pol, 484 N.W.2d at 524; Clarke v. Clarke, 478 N.W.2d 834 (S.D.1991); Johnson, 471 N.W.2d at 162; Herrboldt v. Herrboldt, 303 N.W.2d 571 (S.D.1981). The trial court is required to place a value on all of the property held by the parties and to make an equitable distribution of that property. Caughron v. Caughron, 418 N.W.2d 791, 792 (S.D.1988); Guindon, 256 N.W.2d at 897. Failure to place a value on the property of the parties for purposes of equitable distribution is reversible error. Caughron, 418 N.W.2d at 792; Johnson v. Johnson, 300 N.W.2d 865, 868 (S.D.1980). Where valuations are not agreed upon, the parties should be prepared to proceed with hard evidence and the court need only find a value within a reasonable range. Vander Pol, 484 N.W.2d at 524; Clarke, 478 N.W.2d at 837; Hanks v. Hanks, 296 N.W.2d 523, 526 (S.D.1980). The trial court is not required to accept either party's proposed valuation. Strickland v. Strickland, 470 N.W.2d 832, 837 (S.D.1991); Hanks, 296 N.W.2d at 526.

ANALYSIS AND DECISION

I. Property Valuation

Husband claims the trial court erred in both recognizing and valuing goodwill assigned to the concrete business. Husband's specific claim is that the goodwill, if any, of the parties' concrete business is due to his individual efforts and dependent on his continuing to operate the business and, therefore, should not attach to the business entity.

SDCL 25-4-44 authorizes the court to "make an equitable division of the property belonging to either or both, whether the title to such property is in the name of the husband or the wife." South Dakota is considered an "all property state," in that "all property of either or both divorcing parties is subject to equitable division by the court, regardless of title or origin." Radigan v. Radigan, 465 N.W.2d 483, 486 (S.D.1991).

Our statutes define the goodwill of a business as property and, thus, it is subject to division in a marital dissolution proceeding. SDCL 43-35-6 provides: "The good will of a business is the expectation of continued public patronage, but it does not include a right to use the name of any person from whom it was acquired. The good will of a business is property, transferable like any other." This Court has previously recognized the goodwill of a business as property. See Chamberlain Livestock Auction, Inc. v. Penner, 462 N.W.2d 479 (S.D.1990); Quick v. Bakke, Kopp, Ballou & McFarlin, Inc., 380 N.W.2d 364 (S.D.1986); GMS, Inc. v. Deadwood Social Club, Inc., 333 N.W.2d 442 (S.D.1983); Kohlman v. Cahill, 301 N.W.2d 664 (S.D.1981).

This Court has not, however, previously considered the question of goodwill in a marital property division. The prevailing view of courts that have considered the question is that goodwill of a professional practice or business is a business asset with a determinable value and is marital property subject to division in a divorce proceeding. See Wisner v. Wisner, 129 Ariz. 333, 631 P.2d 115 (App.1981); In re Foster, 42 Cal.App.3d 577, 117 Cal.Rptr. 49 (1974); 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); Heller v. Heller, 672 S.W.2d 945 (Ky.Ct.App.1984); Hanson v. Hanson, 738 S.W.2d 429 (Mo.1987); In re Marriage of Hull, 219 Mont. 480, 712 P.2d 1317 (1986); Poore v. Poore, 75 N.C.App. 414, 331 S.E.2d 266 (1985); Weaver v. Weaver, 72 N.C.App. 409, 324 S.E.2d 915 (1985); Dugan v. Dugan, 92 N.J. 423, 457 A.2d 1 (1983); Hurley v. Hurley, 94 N.M. 641, 615 P.2d 256 (1980) (overruled, on other grounds by Ellsworth v. Ellsworth, 97 N.M. 133, 637 P.2d 564 (1981)); In re Marriage of Fleege, 91 Wash.2d 324, 588 P.2d 1136 (1979). See also Annot., 52 A.L.R.3d 1344 (1973); 76 A.L.R.4th 125 (1990); 79 A.L.R.4th 171 (1990); 24 Am.Jur.2d Divorce and Separation § 899 (1983).

Some courts have held, however, that professional goodwill, as distinguished from the goodwill of a business, does not constitute

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property and should not be considered as marital property subject to division in such proceedings. See Powell v. Powell, 231 Kan. 456, 648 P.2d 218 (1982); Nail v. Nail, 486 S.W.2d 761 (Tex.1972); Holbrook v. Holbrook, 103 Wis.2d 327, 309 N.W.2d 343 (1981). Finally, we note some courts have taken a third approach in which they recognize goodwill as marital property, but only to the extent it exists independently of the individual professional's reputation. See Wilson v. Wilson, 294 Ark. 194, 741 S.W.2d 640 (1987); Prahinski v. Prahinski, 75 Md.App. 113, 540 A.2d 833 (1988); Taylor v. Taylor, 222 Neb....

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22 practice notes
  • Grode v. Grode, No. 19013
    • United States
    • Supreme Court of South Dakota
    • October 16, 1995
    ...¶17 Trial courts are required to assess how marital assets are acquired prior to dividing same. See SDCL 25-4-44; Endres v. Endres, 532 N.W.2d 65, 68 (S.D.1995). This testimony was appropriate for such a decision. The trial court did not abuse its discretion by admitting this evidence. Pete......
  • May v. May, No. 31123.
    • United States
    • Supreme Court of West Virginia
    • November 10, 2003
    ...property. See Goswami v. Goswami, 152 Ohio App.3d 151, 787 N.E.2d 26 (2003) (medical practice). Additionally, in Endres v. Endres, 532 N.W.2d 65 (S.D.1995), the South Dakota Supreme Court found that enterprise goodwill in a professional practice is marital property, but expressly declined t......
  • Halbersma v. Halbersma, No. 25115.
    • United States
    • Supreme Court of South Dakota
    • November 10, 2009
    ...v. Johnson, 2007 SD 56, ¶44, 734 N.W.2d 801, 812 (quoting Grode v. Grode, 1996 SD 15, ¶ 9, 543 N.W.2d 795, 800). See Endres v. Endres, 532 N.W.2d 65, 71 (S.D.1995); Kost v. Kost, 515 N.W.2d 209, 213 (S.D.1994); Kappenmann v. Kappenmann, 479 N.W.2d 520, 524 (S.D.1992); Hanson v. Hanson, 252 ......
  • Billion v. Billion, No. 19290
    • United States
    • Supreme Court of South Dakota
    • September 19, 1996
    ...of both of the divorcing parties being subject to equitable division by the trial court, regardless of title or origin. Endres v. Endres, 532 N.W.2d 65, 68 (S.D.1995); Radigan v. Radigan, 465 N.W.2d 483, 486 (S.D.1991). This is in accord with the dictates of SDCL 25-4-44 which authorizes di......
  • Request a trial to view additional results
22 cases
  • Grode v. Grode, No. 19013
    • United States
    • Supreme Court of South Dakota
    • October 16, 1995
    ...¶17 Trial courts are required to assess how marital assets are acquired prior to dividing same. See SDCL 25-4-44; Endres v. Endres, 532 N.W.2d 65, 68 (S.D.1995). This testimony was appropriate for such a decision. The trial court did not abuse its discretion by admitting this evidence. Pete......
  • May v. May, No. 31123.
    • United States
    • Supreme Court of West Virginia
    • November 10, 2003
    ...property. See Goswami v. Goswami, 152 Ohio App.3d 151, 787 N.E.2d 26 (2003) (medical practice). Additionally, in Endres v. Endres, 532 N.W.2d 65 (S.D.1995), the South Dakota Supreme Court found that enterprise goodwill in a professional practice is marital property, but expressly declined t......
  • Halbersma v. Halbersma, No. 25115.
    • United States
    • Supreme Court of South Dakota
    • November 10, 2009
    ...v. Johnson, 2007 SD 56, ¶44, 734 N.W.2d 801, 812 (quoting Grode v. Grode, 1996 SD 15, ¶ 9, 543 N.W.2d 795, 800). See Endres v. Endres, 532 N.W.2d 65, 71 (S.D.1995); Kost v. Kost, 515 N.W.2d 209, 213 (S.D.1994); Kappenmann v. Kappenmann, 479 N.W.2d 520, 524 (S.D.1992); Hanson v. Hanson, 252 ......
  • Billion v. Billion, No. 19290
    • United States
    • Supreme Court of South Dakota
    • September 19, 1996
    ...of both of the divorcing parties being subject to equitable division by the trial court, regardless of title or origin. Endres v. Endres, 532 N.W.2d 65, 68 (S.D.1995); Radigan v. Radigan, 465 N.W.2d 483, 486 (S.D.1991). This is in accord with the dictates of SDCL 25-4-44 which authorizes di......
  • Request a trial to view additional results

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