Lien v. Lien

• Decision Date: 25 May 1979
• Docket Number: 12494 and 12698,Nos. 12487,s. 12487
• Citation: 278 N.W.2d 436
• Parties: Barbara J. LIEN, Plaintiff, Respondent and Appellant on Cross-Appeal, v. Bruce H. LIEN, Defendant, Appellant and Respondent on Cross-Appeal.
• Court: South Dakota Supreme Court

Page 436

278 N.W.2d 436

Barbara J. LIEN, Plaintiff, Respondent and Appellant on Cross-Appeal, v. Bruce H. LIEN, Defendant, Appellant and Respondent on Cross-Appeal.

Nos. 12487, 12494 and 12698.

Supreme Court of South Dakota.

Argued Feb. 15, 1979.

Decided April 19, 1979.

Rehearing Denied May 25, 1979.

William G. Porter of Costello, Porter, Hill, Nelson, Heisterkamp & Bushnell, Rapid City, for plaintiff, respondent and appellant on cross-appeal.

Robert W. Gunderson and Wayne F. Gilbert of Gunderson, Farrar, Aldrich, Warder & DeMersseman, Rapid City, for defendant, appellant and respondent on cross-appeal.

JONES, Circuit Judge.

Barbara J. Lien was granted a divorce from Bruce H. Lien on the grounds of extreme cruelty. The primary issues in these appeals are (1) whether an award of $876,000 in cash and installments as a property division and an award of $366,200 payable over 13 years as an allowance for support to Mrs. Lien are excessive and an abuse of the trial court's discretion; (2) whether the allowance for Mrs. Lien's attorneys' fee of $52,735.65 which Mr. Lien was ordered to pay was excessive; and (3) whether deferred payments required by the property division may properly bear interest at 6% Per annum as ordered by the trial court rather than the higher "going rate."

GENERAL PRINCIPLES

The trial court has broad discretion in making a division of property and awarding support to a wife in a divorce action, and this court will not set aside or modify its decision unless it clearly appears that the trial court abused its discretion in entering its judgment. SDCL 25-4-41; SDCL 25-4-44; Kittelson v. Kittelson (S.D.1978), 272 N.W.2d 86; Wipf v. Wipf (S.D.1978), 273 N.W.2d 124; Hansen v. Hansen (S.D.1979), 273 N.W.2d 749.

SDCL 25-4-41 permits the trial court to compel one party to pay support to the other, in an amount which is suitable for such period as may be just, having regard for the circumstances of the parties. SDCL 25-4-44 requires the trial court to make an equitable division of the property of the parties with due regard for equity and the circumstances of the parties. We have held that in carrying out these legislative mandates, the trial court should consider as principal factors: the duration of the marriage, the ages of the parties, their state of health and competency to earn a living, the value and income producing capacity of the property of each, and the contribution of each to the accumulation of the property. Hansen v. Hansen, supra; Kittelson v. Kittelson, supra.

In this opinion, "husband" and "wife" are used solely in the context of the facts in this particular case. The South Dakota statutes relating to division of property, support allowances, and allowing attorneys' fees as costs make no classification by gender such as the statutes held unconstitutional in Orr v. Orr (1979), --- U.S. ----, 99 S.Ct. 1102, 59 L.Ed.2d 306.

FACTS

The Liens were married in November, 1953 following their graduation from college, and they have had no children. They separated in March, 1976 and this divorce action was commenced in May, 1976. Mr. Lien was 51 years old and Mrs. Lien was 46 At the time of the marriage, Mr. Lien was a partner with his father and brother in the Pete Lien & Sons business. Pete Lien retired shortly thereafter, and for most of this period, Pete Lien & Sons and allied businesses were owned in a 50-50 partnership by Mr. Lien and his brother. The businesses prospered greatly due to the industry and business acumen of Mr. Lien and his brother. Mrs. Lien was a full-time homemaker and assisted her husband by entertaining their friends and business associates, traveling with him, and engaging in social and charitable activities in Rapid City. She did not participate in the business decisions.

years old at the time of trial in November, 1977.

At the time of the marriage, Mr. Lien had assets worth $400,000 and he thereafter inherited $85,000 from his father. Mrs. Lien had just finished partially working her way through college and had no monetary assets. During the course of the marriage, all assets were acquired in Mr. Lien's name only. The only property in Mrs. Lien's name was $50,000 in jewelry which she had received as gifts over the years. Shortly before their separation, Mr. Lien transferred to his wife at her request cash and securities worth $100,000, and he gave her a $26,000 diamond ring for Christmas.

Because of the large number of separate businesses and extensive real estate holdings involved in the case, the appraisal of the property and determination of Mr. Lien's net worth was a complex undertaking, and therefore, those figures were determined as of May 31, 1977. Neither party objected to using the valuations and net worth statement as of that date, rather than the date the divorce was commenced.

The trial judge found Mr. Lien's net worth as of May 31, 1977 to be almost $4,000,000. ¹ He found Mrs. Lien's net worth to be $200,000. ² Mr. Lien's adjusted gross income for 1976 was $585,843, and his adjusted gross income for 1977 was estimated by his accountant at $657,689. These figures include substantial income taxable under Subchapter S of the Internal Revenue Code which was not actually received by Mr. Lien. He also testified that his 1976 and 1977 income was much higher than normal because of favorable long-term natural gas contracts held by Pete Lien & Sons, Inc., which were expiring. Mr. Lien is in the 70% Income tax bracket.

TRIAL COURT'S DECISION

The learned trial judge entered his first memorandum opinion fixing the property division to Mrs. Lien at $1,200,000 ³ and Counsel for Mr. Lien moved immediately that the opinion be reconsidered by the court, and made a showing that Mr. Lien would have to liquidate more than $2,000,000 in property to secure $1,200,000 after federal income taxes, and that such a liquidation would be a catastrophe to the Lien business interests. Counsel also requested that the property division or support be ordered under conditions which would make a substantial part of it tax-deductible to Mr. Lien and taxable to Mrs. Lien.

requested counsel for the parties to work out the details under the guidelines that the court fixed, namely, that the division was to be paid in cash if possible, and if not, the court would consider deferred payments over a reasonable period of time with a reasonable rate of interest and the unpaid balance to be secured. No support was allowed.

In response to the showings made, the trial judge entered a second memorandum opinion, in which the property division to Mrs. Lien was fixed at $1,096,333, ⁴ payable in a $110,000 installment at time of judgment, an additional $110,000 three months thereafter, and the balance in monthly installments of $70,000 for twenty years, which figure included interest on the unpaid balances at 6% Per annum, and Mr. Lien was ordered to pay an additional $20,000 per year in monthly installments as an income tax assistance payment. Except for the initial $220,000, the payments would be tax-deductible to Mr. Lien and taxable to Mrs. Lien. The deferred payments were to be secured by a first lien on Mr. Lien's one-half interest in Pete Lien & Sons, Inc., Lien Industries, and Nemo Ore Company, which were Mr. Lien's most valuable assets.

Counsel for Mrs. Lien objected that after allowance for income taxes, she would get significantly less net money than the principal allowed her in the opinion, and that the payments were deferred over too long a period of time at too low a rate of interest. Counsel for Mr. Lien objected that the amount allowed as a property division was excessive, and to making the deferred payments a lien on the Pete Lien & Sons, Inc. stock.

In response to these objections, the trial judge entered a third memorandum opinion in which the property division to Mrs. Lien remained at $1,096,333 and was payable in three groups of payments: (1) $396,000 was to be paid over a five month period, (2) $480,000 was to be paid in monthly installments over an eight year period ending August 1, 1986, and (3) $220,333 was to be paid in monthly installments over a five year period commencing September 1, 1986 and ending August 1, 1991. All deferred payments were to bear interest at 6% Per annum and be secured by a first lien on certain of Mr. Lien's property but not on the Pete Lien & Sons, Inc., stock.

Following this, each party proposed findings of fact and conclusions of law which varied from the third memorandum opinion. The trial judge signed those proposed by Mrs. Lien which provided for a property division to Mrs. Lien of $896,000 payable in the same manner as the first two groups of payments in the third memorandum opinion. All of these payments would be tax-free to Mrs. Lien and not deductible by Mr. Lien. In addition, Mrs. Lien was given support of $1,100 per month for 100 months ending August 1, 1986 and $4,270 per month for 60 months commencing September 1,

1986 and ending August 1, 1991. The support payments were to be tax-deductible to Mr. Lien and taxable to Mrs. Lien, were to be terminated on Mrs. Lien's death, but were to remain an obligation to Mr. Lien's estate in the event of his death. Judgment was entered in accordance with these findings of fact.

PROPERTY DIVISION AND SUPPORT

Mr. Lien, as appellant, attacks the property division and support allowances as excessive and an abuse of the trial judge's discretion on the following grounds:

a. because it fails to fully consider the federal income tax consequences,

b. because Mrs. Lien did not contribute to the accumulation of the property except through socialization and business entertainment,

c. because Mrs. Lien does not have experience in handling the large sums of money and support awarded her,

d. because the award fails to take into account all of Mrs. Lien's property,

e. because compliance with the award will work a catastrophe on Mr. Lien's personal and business financial status, and

f....