Lancellotti v. Lancellotti

• Citation: 481 A.2d 7
• Decision Date: 27 July 1984
• Docket Number: Nos. 81-528-A,s. 81-528-A
• Parties: Alfred H. LANCELLOTTI v. Alma U. LANCELLOTTI. ppeal, 82-528-Appeal.
• Court: United States State Supreme Court of Rhode Island

Page 7

481 A.2d 7

Alfred H. LANCELLOTTI v. Alma U. LANCELLOTTI.

Nos. 81-528-Appeal, 82-528-Appeal.

Supreme Court of Rhode Island.

July 27, 1984.

Joseph E. Marran, Jr., Providence, for petitioner.

Howard I. Lipsey, Providence, for respondent.

OPINION

KELLEHER, Justice.

This divorce case comes before us on cross-appeals from a Family Court judgment entered on October 26, 1981 (1981 judgment), and on the husband's appeal from an order entered on October 1, 1982 (1982 order). The 1981 judgment granted both the husband's and the wife's petitions for an absolute divorce, divided the marital property, awarded alimony to the wife, and granted the husband's motion to suspend payments to the wife under a temporary support order (support order). The 1982 order granted the wife's motion to adjudge the husband in contempt for failure to pay under the support order ¹ and denied the husband's motion to modify either the support order or the 1981 judgment.

The first issue we shall consider is whether or not the term "income" as it is used in G.L. 1956 (1981 Reenactment) § 15-5-16.1 (1983 Cum.Supp.) includes the appreciation of a minority interest in a privately held corporation. The husband argues that income does not include such appreciation; and for the reasons that follow, we agree.

Section 15-5-16.1, also known as the equitable distribution statute, authorizes the trial justice to "assign to either the husband or wife a portion of the estate of the other." In dividing the property the trial justice "may not assign property or an interest therein held in the name of one of the parties if said property was held by said party prior to the marriage, but may assign income which has been derived therefrom during the term of the marriage." Section 15-5-16.1.

The husband (Alfred) owned during trial ² ten shares of common stock in Lance Paper Box, Inc. (Lance). These shares represented one-sixth of the total number of shares outstanding. The business was founded by Alfred and some of his brothers in 1952, and together they owned all the corporation's common stock. The value of the husband's shares was found to be $2,500 prior to his marriage to Alma in 1956 and $81,540 at the time of trial. When the trial justice awarded the stock to Alfred, he excluded not only the pre-wedding value of the stock but also the difference in value, $79,040, by which the stock had appreciated during the marriage.

The wife (Alma) claims the trial justice in his 1981 judgment misapplied the equitable-distribution statute by excluding the increase in value because the term "income" as it is used in the statute should be interpreted to include appreciation in common stock.

Alfred claims the trial justice correctly excluded the shares' appreciation but erred in awarding the primary marital asset, the family home, to Alma.

Rhode Island, like many other states, has modified its domestic-relations laws to reflect the changing views of marriage in our society. Gone are the days when the husband was lord of his household and master of his family. Gone also is the common-law notion that when a marriage ends, the husband has a duty to continue to support his former wife. Now a marriage is viewed as a partnership, and the assets accumulated during the marriage are viewed as belonging to both partners, regardless of how title is held. See Wordell v. Wordell, 470 A.2d 665, 667 (R.I.1984); D'Agostino v. D'Agostino, 463 A.2d 200, 202-03 (R.I.1983).

Section 15-5-16.1 permits the trial justice to consider many factors in allocating the marital assets, specifically "the length of the marriage, the conduct of the parties during the marriage, and the contribution of each of the parties in the acquisition, preservation, or appreciation in value of their respective estates, and the contribution and services of either party as a homemaker." The statute provides further that this award must precede any award of alimony as the needs and abilities of the parties will necessarily be affected thereby.

For the trial justice, equitable distribution is actually a three-step process. First, he must determine which assets are "marital property" and which are "non-marital property." Next, he must consider the factors enumerated in the statute (that is, contribution of each party). Finally, he must decide how the property will be divided (i.e., who gets the house, who gets the car).

In this case, the trial justice purportedly stopped at the first step in the process. He excluded Alfred's stock, including its appreciation, from the "marital property" pile by deciding it was "property held * * * prior to marriage" and that the word "income" in the statute included dividends but not appreciation.

Section 15-5-16.1 refers to "income" but does not define that term. Alma argues that the term should be interpreted broadly to include appreciation and retained earnings, thereby including the increase in value of Alfred's stock. Alfred, not surprisingly, argues that income should be interpreted narrowly, thereby including only the dividends generated from his stock.

Similar issues have arisen in other jurisdictions, but as none have statutes identical to ours, we shall look solely to our statute. It is our belief that the term "income" in § 15-5-16.1 should not be interpreted to include the appreciation of common stock representing a minority interest in a privately held corporation. If the Legislature had intended to include the "appreciation" of property acquired before marriage, it could have used that term. It obviously knew the difference between income and appreciation because it used the term "appreciation" earlier in the same section when, in referring to the numerous factors the trial justice must consider in allocating the marital property, it specifically included as one of the factors "the contribution of each of the parties in the acquisition, preservation or appreciation in value of their respective estates * * *." The Legislature did not say "appreciation" when it mentioned property acquired before marriage, however; it said "income," and we will not ascribe an intent that does not appear on the face of the statute. We give statutory terms their plain and ordinary meaning unless a contrary intent is clearly shown on the face of the statute. Little v. Conflict of Interest Commission, 121 R.I. 232, 397 A.2d 884 (1979). We think the trial justice was correct in excluding the appreciation of Alfred's stock from equitable distribution.

Alma claims that the trial justice was wrong in denying her motion to adjudge Alfred in contempt and in granting Alfred's motion to suspend payments due under the support order. In early December 1979 the trial justice amended the support order mentioned earlier. That decree had directed Alfred to pay the mortgage, taxes, utilities, and insurance on the family home and to pay Alma $100 per week for food and miscellaneous. The only change the trial justice made in December 1979 was to increase the amount payable directly to Alma to $150.

Alfred moved to modify this amended support order on March 4, 1981, alleging his circumstances had changed. Specifically, he was no longer employed by Lance and was now under a physician's care. Alma responded on March 12, 1981, by filing a motion to have Alfred adjudged in contempt for failure to make the payments due under the amended support order.

We have often said that a party seeking to modify the terms of an existing decree has the burden of proving the need for such modification by a fair preponderance of the evidence. McHenry v. McHenry, 424 A.2d 1067, 1068 (R.I.1981). Alma argues that Alfred failed to meet that burden because he did not adequately prove his changed circumstances. In viewing Alma's assertions and other similar claims made by the litigants, we would stress that this court will uphold the trial justice's findings of fact unless our review of the record indicates that he has misconceived or overlooked material evidence or was otherwise clearly wrong. Wordell v. Wordell, supra; Brierly v. Brierly, 431 A.2d 410 (R.I.1981).

Among the witnesses who testified on Alfred's behalf was a psychiatrist, who described his patient as depressed and tense. The physician attributed Alfred's psychological problems to the Family Court litigation. The trial justice, in relying on this testimony, came to the conclusion that, with the termination of the litigation, Alfred would regain his composure and return to work with his brothers, prepared to give his all. Consequently, he ordered a suspension of the support payments until the date of the first payment of alimony.

Alma also faults the trial justice for not including the value of Alfred's common stock in his consideration of Alfred's ability to pay support, under Morry v. Morry, 426 A.2d 265 (R.I.1981). We think that case supports Alfred more than it supports Alma. In Morry the husband sought to reduce his child-support payments when his income went down and his legitimate expenses went up. The reduction was granted, and the former wife claimed that one of the husband's capital assets, namely, a $5,000 note she owed him five years hence, should have been considered as a source of funds with which to pay support. The court disagreed because even though under McHenry capital assets may be considered, it did not consider the note a capital asset since it was payable by the former wife and its value was therefore, in the words of the trial justice in Morry, "speculative."

In this case Alfred's stock, while certainly a capital asset, is not, for the reasons discussed earlier, normally capable of being quickly converted into cash. Consequently, the trial justice was correct in not including the stock as an asset from which support payments could be made. Therefore, the trial justice did not err in rejecting Alma's contempt motion and in granting Alfred's motion to modify.

For his part, Alfred claims...