Holm v. Holm, 20160299

Decision Date25 April 2017
Docket NumberNo. 20160299,20160299
Citation893 N.W.2d 492
Parties Dianna L. HOLM, Plaintiff and Appellant v. Thomas J. HOLM, Defendant and Appellee
CourtNorth Dakota Supreme Court

Rachel Gehrig (argued) and Jessica L. Busse (appeared), P.O. Box 1817, Fargo, N.D. 58107–1817, for plaintiff and appellant.

Leslie J. Aldrich, 1018 First Avenue North, Fargo, N.D. 58102–4602, for defendant and appellee.

VandeWalle, Chief Justice.

[¶ 1] Dianna Holm appealed from a judgment granting her a divorce from Thomas Holm and dividing their marital property. We conclude the district court's treatment as compensation of dividends received from stock purchased from Thomas Holm's employer, and the court's valuation and award of the stock, are not clearly erroneous. We affirm the judgment.


[¶ 2] The parties were divorced in June 2016 after a 24–year marriage. One of the parties' major assets was stock they purchased from Thomas Holm's employer which amounted to a ten percent ownership interest in the closely-held company. The district court found the annual stock dividends were part of Thomas Holm's compensation from the business. The court valued the stock at $25,000, the amount the parties had paid for it, and awarded the stock to Thomas Holm. This resulted in a net property distribution to Thomas Holm of $76,240.07 and a net property distribution to Dianna Holm of $77,440.07. The court denied Dianna Holm's subsequent motion for amended findings and for a new trial.


[¶ 3] The issues raised by Dianna Holm in this appeal concern the district court's treatment, valuation, and award of the stock purchased from Thomas Holm's employer.

[¶ 4] In Adams v. Adams , 2015 ND 112, ¶ 13, 863 N.W.2d 232, we said:

When a divorce is granted, the district court makes an equitable distribution of the parties' property and debts. N.D.C.C. § 14–05–24(1). This Court reviews a district court's distribution of marital property as a finding of fact, and will not reverse unless the findings are clearly erroneous. McCarthy v. McCarthy , 2014 ND 234, ¶ 8, 856 N.W.2d 762. "A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to support it, or if, after reviewing all the evidence, we are left with a definite and firm conviction a mistake has been made."Id. (quoting Hoverson v. Hoverson , 2013 ND 48, ¶ 8, 828 N.W.2d 510 ). We view the evidence in the light most favorable to the findings, and the district court's factual findings are presumptively correct. McCarthy , at ¶ 8. Valuations of marital property within the range of the evidence presented are not clearly erroneous. Dvorak v. Dvorak , 2005 ND 66, ¶ 20, 693 N.W.2d 646. A choice between two permissible views of the evidence is not clearly erroneous if the district court's findings are based either on physical or documentary evidence, or inferences from other facts, or on credibility determinations. Fox v. Fox , 2001 ND 88, ¶ 14, 626 N.W.2d 660.

[¶ 5] Dianna Holm argues the district court erred in finding that the annual dividends received from the stock constituted additional compensation for Thomas Holm's employment.

[¶ 6] In 2001 Thomas Holm was hired as sales manager at B & F Fastener Supply in Fargo. The employment agreement detailed his $36,000 base wage, his commissions from sales, and his option to purchase up to ten percent of the company's stock. It is undisputed that the company is a closely-held corporation. Thomas Holm began exercising the stock option in 2002, and purchased $5,000 per year of the stock using marital funds for five consecutive years to reach the ten percent maximum ownership interest allowed under the agreement. Thomas Holm was required to be employed by the company to own the stock, and the agreement contained numerous limitations on the voluntary and involuntary transfers of stock ownership. The annual dividend in 2014 was approximately $38,693 and in 2015 was approximately $28,686. Thomas Holm testified he would not have accepted his position with the company without the stock option and he considered the stock dividends as part of his compensation from employment.

[¶ 7] Dianna Holm argues the dividends cannot be considered additional compensation under Thomas Holm's employment contract because the provision for the option to purchase company stock does not appear under the "Compensation" section of the agreement. She argues that the dividends are therefore marital property subject to division, and the distributions should have been divided between the parties. The district court, in its post-trial order, noted that Thomas Holm considered the dividends to be part of his compensation, and in interpreting the employment contract as a whole, see N.D.C.C. § 9–07–06, reasoned:

As this Court stated, the employment agreement, entitled Employment Stock Option and Noncompete Agreement, had to be construed as a single document. Contracts need to be interpreted as a whole to give effect to each of its provisions. Egeland v. Cont'l Res., Inc. , 2000 ND 169, ¶ 10, 616 N.W.2d 861. In construing this document as one, it is clear that the stock option was restricted to full-time employees. It is clear that the stock could not be for investment or for distribution. The distributions are tied to how well the company does. And how the company does is tied to some extent how Defendant performs.

[¶ 8] The district court's decision is supported by Wald v. Wald , 556 N.W.2d 291 (N.D. 1996). In Wald the parties were joint owners of stock in the closely-held corporation that employed the husband. Id. at 293. As part of the marital property division, the wife sought to acquire one-half of all stock distributions because "this method would preserve the stock's value as an income-producing asset for both parties." Id. at 295. We rejected her argument:

This Court has acknowledged the authority of trial courts to structure an appropriate form of payment in lieu of dividing shares of stock. See, e.g. , Klitzke v. Klitzke , 308 N.W.2d 385, 388 (N.D. 1981). But Marion Wald's argument ignores that she would in effect be receiving Roger Wald's salary from Ames as part of her property distribution. Roger originally received dividends from Ames as compensation for his work as its employee and as profits from the investment. The distribution was later changed to the form of wages based on the corporate accountant's advice. We decline to sanction a method that seeks as an unmodifiable property distribution 50 percent of a spouse's salary from employment. We conclude the trial court did not err in refusing to award Marion Wald 50 percent of the distributions from the Ames stock as part of the property distribution.

Id. at 295–96.

[¶ 9] In Wald the dividends were always viewed as compensation for the husband's work, but the written description of the distributions was changed to wages, presumably for tax reasons. The purpose of the distributions remained the same however they were characterized. Wald demonstrates that the written description of stock dividends in an employment agreement is not necessarily determinative of their nature, but the underlying purpose of the dividends is the primary consideration in marital property cases.

[¶ 10] We conclude the district court's finding that the stock dividends were part of Thomas Holm's compensation is not clearly erroneous and the court did not err in refusing to order that the dividends be shared in some manner by the parties.


[¶ 11] Dianna Holm argues the district court erred in valuing the stock at $25,000, the amount the parties paid for it. She contends the court should have valued the stock under the method set forth in a section of the employment agreement which outlines "Stipulated" or "Calculated Value" alternatives for valuation.

[¶ 12] Section 6.7.3 of the employment agreement set forth options for determining the purchase price of stock upon the employee's death or disability, or termination from employment, or "a proposed voluntary or involuntary transfer" occurring after December 31, 2009. If the company and the employee could not agree on a "Stipulated Value," the agreement set forth methods for determining the "Calculated Value" of the stock:

The Calculated Value shall be determined by the Company's regularly retained public accountant, or if no such accountant is regularly retained, by an independent public accountant satisfactory to the Company and Employee, or his legal representative, or if the Company has no regularly retained public accountant, and if a single independent accountant cannot be agreed upon within sixty (60) days of the first written proposal served upon the other party suggesting an accountant, then the accountant shall be chosen by the Company's attorney.... The Calculated Value shall equal the Company's liquidation value ("Liquidation Value") plus the value of the Company's good will ("Good Will") as such terms are defined in Sections and below, multiplied by the percentage of the Company's stock then being sold.

[¶ 13] The value given to marital property by the district court depends on the evidence presented by the parties. See, e.g. , Kostelecky v. Kostelecky , 2006 ND 120, ¶ 8, 714 N.W.2d 845 ; Amsbaugh v. Amsbaugh , 2004 ND 11, ¶ 12, 673 N.W.2d 601 ; Olson v. Olson , 2002 ND 30, ¶ 7, 639 N.W.2d 701. Thomas Holm and his employer did not stipulate to the value of the stock in this case, and the "Calculated Value" method in the agreement contemplates a calculation by a public accountant. Dianna Holm offered no expert evidence from an accountant about calculated value. After the close of evidence at trial, Dianna Holm requested that the court apply section 6.7.3 of the agreement in valuing the stock, but the court explained it could only rely on evidence in the record. Dianna Holm offered no evidence of the value of the stock or any evidence to allow the court to apply section 6.7.3 of the employment agreement. Although Thomas Holm testified the value of the stock was much more than...

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