Gooselaw v. Gooselaw, 10122

• Decision Date: 13 May 1982
• Docket Number: No. 10122,10122
• Citation: 320 N.W.2d 490
• Parties: Donald W. GOOSELAW, Plaintiff and Appellant, v. Dolores M. GOOSELAW, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 490

320 N.W.2d 490

Donald W. GOOSELAW, Plaintiff and Appellant, v. Dolores M. GOOSELAW, Defendant and Appellee.

Civ. No. 10122.

Supreme Court of North Dakota.

May 13, 1982.

George E. Duis and Steven Kaldor, Fargo, for plaintiff and appellant.

Pancratz, Kruger, Wold, Yuill & Johnson, Fargo, for defendant and appellee; argued by William D. Yuill, Fargo.

ERICKSTAD, Chief Justice.

Donald W. Gooselaw appeals from a judgment of divorce entered in the District Court of Cass County. He argues that the trial court's property division, award of alimony for life, and award of attorney's fees to Dolores M. Gooselaw are all clearly erroneous. We affirm the award of alimony and attorney's fees. We reverse the trial court's property award and remand for modification.

At the time of the trial, Donald was 48 years old and Dolores was 47 years old. They were married 23 years earlier on September 9, 1958, in Hunter, North Dakota. Three children were born of the marriage. One child is a minor, but there is no issue over custody on this appeal.

Donald has a high school education and served with the United States Navy. After his discharge from the Navy, he became a hairdresser and operated beauty salons until 1970. In 1970 he started Mr. Don's State College of Beauty in Fargo.

Dolores is a high school graduate and has a few months of business college training. She worked as a service representative for a telephone company in California prior to their marriage. During the marriage she worked as a bookkeeper for all of the couple's business ventures.

Donald and Dolores began their marriage with little property. Upon divorce, however, they had accumulated substantial property.

The trial court, using the Ruff-Fischer guidelines, Fischer v. Fischer, 139 N.W.2d 845 (N.D.1966); Ruff v. Ruff, 78 N.D. 775, 52 N.W.2d 107 (1952), valued and divided the property owned by Donald and Dolores as follows:

                 Awarded to Dolores
                Home located at 2818 2nd
                  Street North, Fargo, valued
                  at $70,000.00, less mortgage
                  of $13,272.31, less home
                  improvement loan of
                  $4,711.85, for a net value of   $52,015.84
                Furniture, fixtures, household
                  goods and appliances in said
                  home                            $ 8,000.00
                1977 Chrysler automobile
                  valued at $1,000.00 less
                  encumbrance of $441.00, for a
                  net value of                    $   559.00
                1973 Pinto, used primarily by
                  children, a gift from Dolores'
                  parents, valued at $300.00
                  but not considered in
                  distribution
                One half interest as tenant in
                  common in Fashion Villa
                  property located at 102 South
                  University Drive in Fargo       $20,000.00
                TOTAL                             $80,574.84
                Awarded to Donald
                1973 Oldsmobile automobile        $   250.00
                One-half interest as tenant in
                  common in Fashion Villa
                  property located at 102 South
                  University Drive in Fargo       $20,000.00
                Don's State College of Beauty     $50,000.00
                Arlene's Beauty Shop              $10,000.00
                Life insurance policies on
                  Donald's life having cash
                  surrender value of              $   542.27
                Investment in apartment
                  complex in West Fargo, ND       $ 5,000.00
                Federal and state income tax
                  liability                      ($ 7,000.00)
                TOTAL                             $78,792.27
                

Donald's first argument is that the trial court erroneously valued Mr. Don's State College of Beauty, an investment in an apartment complex in West Fargo, and Arlene's Beauty Shop.

The trial court's valuation and division of property is treated as a finding of fact and is thus fortified by Rule 52(a), N.D.R.Civ.P. Therefore, we will set aside these findings only if we determine they are clearly erroneous. A finding of fact is deemed clearly erroneous when we are left with the definite and firm conviction that a mistake has been made. Bender v. Bender, 276 N.W.2d 695, 697 (N.D.1979); Haugeberg v. Haugeberg, 258 N.W.2d 657, 659 (N.D.1977). Our review of the trial court's record in this case has left us with the firm conviction that a mistake has been made as to the value placed on Mr. Don's State College of Beauty and Arlene's Beauty Shop. We are unable to find any evidence to support the value attached by the court to those two businesses. We have not, however, disturbed the trial court's finding regarding the value of Donald's interest in an apartment complex in West Fargo, there being sufficient evidence in the record to support a finding of $5,000 value. In fact, Donald himself testified that the market value of his interest in the apartment complex was $5,000.

The trial court valued Mr. Don's State College of Beauty at $50,000. The only evidence in the record regarding the value of the college was Donald's testimony that it was worth $26,000 less $7,000 owed for audio equipment, for a net value of $19,000. The school is located in a rented building in downtown Fargo which the record discloses consists of property of questionable salable or marketable value. Donald testified that the market value of beauty colleges is typically determined by multiplying $1,000 times the average number of students enrolled in the school. The testimony indicates that Don's State College of Beauty had an approximate average enrollment of 20 students. Additionally, Donald testified that the college owned equipment valued at $6,000. Using Donald's uncontroverted testimony, the net value of the college appears to be as follows:

                Value through enrollment
                  $1,000 X 20 students    $20,000.00
                Equipment                   6,000.00
                                          ----------
                Gross Value               $26,000.00
                Less:
                Debt for audio equipment    7,000.00
                                          ----------
                Net Value                 $19,000.00
                                          ----------
                

There being no other evidence, we ascribe a value of $19,000.00 to Don's State College of Beauty.

Dolores argued that the trial court's finding is supported by the income tax returns received into evidence. The income tax returns were offered to establish the couple's income and source of income. The returns did not disclose other evidence of the value of the business. Dolores argues that Fraase v. Fraase, 315 N.W.2d 271, 275 (N.D.1982), is analogous to this case. In Fraase, we affirmed the trial court's finding that a law office had an increase in value from 1970 to 1982 of at least $35,000 for purposes of property distribution in a divorce. Dolores argues that Fraase stands for the proposition that the income-producing ability of the principal in a service business may be used in valuing that business. That is not the holding of Fraase. In Fraase we held that the trial court's conclusion that Fraase's interest in the office equipment, furniture, fixtures, and accounts receivable of the law office of $35,000 accumulated over 12 years was not clearly erroneous. In light of the evidence, we conclude that the trial court's finding that Mr. Don's State College of Beauty had a value of $50,000.00 is clearly erroneous. As previously discussed, we believe $19,000 to be a more accurate evaluation of that property.

We next must determine whether or not the trial court's finding valuing Arlene's Beauty Shop at $10,000 is clearly erroneous. The testimony regarding Arlene's Beauty Shop reflects a value of $3,000, not $10,000 as ascribed to it by the trial court. Again, the only evidence other than that presented by Donald indicating a value of between $3,000 and $4,000 was the evidence from the income tax returns showing the shops net income to be about $6,000 annually. From this fact the court valued the business at $10,000 for distribution purposes. That finding is not supported by the evidence.

Our conclusion that the trial court's finding is clearly erroneous is based on three factors. First, the business owns virtually no property. It is located in the same rented building as Mr. Don's State College of Beauty, has three chairs and little other equipment. Secondly, the evidence shows that the business is dependent on the college for supplies. Without those supplies it is questionable whether or not it would be profitable. Thirdly, the business is dependent upon a long-time clientele. That clientele, although not large, has been built up over many years through the diligent efforts of the beauty operators employed by the shop. The senior operator, upon whom the business is greatly dependent, is nearing retirement age. Accordingly, we find the trial court's valuation clearly erroneous. Consistent with the only testimony of the value of Arlene's Beauty Shop, we attach a value of $3,000 to that business.

Because of our determination that the trial court's findings regarding the values of Mr. Don's State College of Beauty and Arlene's Beauty Shop are clearly erroneous, it is necessary to modify the property distribution. Our reduction of the values placed on the college and Arlene's Beauty Shop concomitantly reduces the trial court's distribution to Donald by $38,000. ¹ We t...