Heller v. Heller

• Decision Date: 20 July 1984
• Parties: Sue B. HELLER, Appellant, v. Frank A. HELLER, Jr., Appellee. Frank A. HELLER, Jr., Cross-Appellant, v. Sue B. HELLER, Cross-Appellee.
• Court: Kentucky Court of Appeals

Page 945

672 S.W.2d 945

Sue B. HELLER, Appellant, v. Frank A. HELLER, Jr., Appellee.

Frank A. HELLER, Jr., Cross-Appellant, v. Sue B. HELLER, Cross-Appellee.

Court of Appeals of Kentucky.

July 20, 1984.

William P. Mulloy, B. Mark Mulloy, Louisville, for appellant.

J. Ben Cress, Louisville, for appellee.

Before COOPER, MILLER and WILHOIT, JJ.

COOPER, Judge.

This is an appeal and cross-appeal from findings of fact, conclusions of law and a judgment settling the respective property rights between the parties in a divorce action. On appeal, the principal issue is whether the trial court erred, as a matter of law, in ruling that the appellee's accounting business--including its "good-will"--was not a marital asset as defined in KRS 403.190(3). Reviewing the record below, we affirm in part, reverse in part and remand.

The facts relative to this action are as follows: In April of 1982, a decree of dissolution of marriage was entered dissolving the marriage between the appellant, Sue B. Heller, and the appellee, Frank A. Heller, Jr. The parties were married in July of 1953 and had three children, all emancipated at the time this action was filed. At the time the divorce decree was entered, the appellee had remarried and was employed as a certified public accountant. The appellant has not remarried and is presently pursuing a degree in nursing.

Subsequent to the entry of the divorce decree, the trial court referred the question of the parties' respective property rights to a commissioner. As part of his determination, the commissioner issued findings of fact, including the following:

Respondent received his college degree in 1953 prior to the marriage and after some time in the Navy he began working in 1955 as an accountant. In 1968 he became a CPA and was engaged in practice part time until 1974 at which time he purchased an accounting practice from the estate of James L. Kortz for $22,474.00. The practice was valued and paid for on the basis of 20% of the gross income produced by the practice over a five year period. At the time of purchase the Kortz practice was generating fees in an annual gross amount of $22,000.00.

Since the purchase of the Kortz practice the Respondent's practice has doubled and according to his testimony his practice had a value of $39,278.59 as of December 31, 1971.

Respondent's gross (taxable) income for 1979 was $55,617.04, for 1980, $54,835.54 and for 1981 the gross was $66,911.88. He estimates his 1982 gross taxable income to be $65,000.00. He testified that the average for his practice over the past five years was $50,000.00.

Mr. Joseph Chalfant an expert qualified to value the interest of Respondent's practice, by stipulation of the parties, agreed that if he testified, he would value the practice at $50,000.00.

Respondent argues that the value of his practice is not a divisible marital asset. KRS 403.190(3) states in effect that all property acquired by either spouse after the marriage and before dissolution is presumed to be marital subject to the exceptions listed in subsection (2). Respondent's business asset value does not fall within the exceptions. Your Commissioner finds the marital value of Respondent's practice to be $50,000.00 based on the valuation placed by Joseph Chalfant, and the testimony of Respondent that he paid an equivalent of one years gross income for the practice he purchased in 1974 from the Kortz estate, and that his practice has doubled since that purchase.

Accordingly, the commissioner included the existing value of appellee's accounting business in the marital estate. Additionally, he recommended that the appellant be awarded maintenance in the amount of $1,200 per month for a two-year period subject to review on the basis of changed circumstances.

In an order adopting the findings of fact and conclusions of law of the commissioner, the trial court denied the appellee's exceptions as to the award of maintenance. Nevertheless, it held that under the language of the Courts in Moss v. Moss, Ky.App., 639 S.W.2d 370 (1982), and Inman v. Inman, Ky., 648 S.W.2d 847 (1982), the appellee's accounting practice was not a marital asset. Specifically, the trial court held as follows:

Accordingly, the Court concludes that respondent's license to practice accounting, and his practice, is not marital property within the meaning of KRS 403.190(3).

It is from such order and judgment that the appellant appeals. The appellee cross-appeals with respect to the award of maintenance.

On appeal, the principal issue is whether the trial court erred, as a matter of law, in ruling that the appellee's accounting practice, including its goodwill, was not a marital asset as defined in KRS 403.190(3). Section (3) of the statute states as follows:

(3) All property acquired by either spouse after the marriage and before a decree of legal separation is presumed to be marital property, regardless of whether title is held individually or by the spouses in some form of coownership such as joint tenancy, tenancy in common, tenancy by the entirety, and community property. The presumption of marital property is overcome by a showing that the property was acquired by a method listed in subsection (2) of this section ...

Here, the question is whether the appellee's existing business, as distinguished from his license to practice accounting--cf. Moss, supra, and Inman, supra,--is marital property under the statute. In the evidence presented to the trial court, it was established that beginning in 1960, the appellee began developing a small accounting business on his own. In 1968, he formed an association with another accountant and continued his practice while employed by the City of Louisville. In 1974, the appellee purchased an established accounting practice from the estate of James L. Kortz. As part of the purchase agreement, the appellee agreed to pay the Kortz estate 20% of any sums collected from existing clients for a period of five years, and 10% of any sums received from any client...