Linn v. Linn, 10710

• Decision Date: 27 June 1985
• Docket Number: No. 10710,10710
• Citation: 370 N.W.2d 536
• Parties: Dorothy LINN, Plaintiff and Appellant, v. Roger LINN, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 536

370 N.W.2d 536

Dorothy LINN, Plaintiff and Appellant, v. Roger LINN, Defendant and Appellee.

Civ. No. 10710.

Supreme Court of North Dakota.

June 27, 1985.

Karen Wills (argued), of Kuchera, Stenehjem & Wills, Grand Forks, and Ward D. Briggs, Fargo, for plaintiff and appellant.

Frank L. Racek, of Lanier, Knox & Olson, Fargo, for defendant and appellee.

VANDE WALLE, Justice.

Dorothy Linn appealed from a judgment of divorce issued on March 29, 1984, by the district court of Cass County. Dorothy Linn contends on appeal that the trial court's distribution of property and award of temporary alimony are clearly erroneous. We affirm.

Dorothy and Roger Linn were first married on May 14, 1953. The parties were divorced on February 16, 1975, and were remarried on September 24, 1976. Dorothy commenced an action for divorce in June of 1979; that action was dismissed in February 1981. Dorothy initiated this action for divorce in September of 1982 and, following a trial, the district court granted the parties a divorce on the ground of irreconcilable differences. At the time of the trial in the present divorce case, Dorothy's age was 57 and Roger's was 67. The parties have two adult children.

Dorothy and Roger are in good health with the exception that Dorothy has arthritis in her hands, knees, and feet, and a cartilage problem in a knee that makes walking any distance difficult.

Dorothy's educational background consists of a high school education with no other formal training. Dorothy's employment history includes various clerical, secretarial, and sales experience. She was not employed at the time of the hearing. Dorothy introduced evidence by an employment agency that indicated her chances of obtaining work were nil because of her lack of experience and her age. The trial court, while considering that evidence, determined that Dorothy was capable of working and obtaining employment, particularly in the sales or secretarial areas. The court stated that Dorothy needed employment to rehabilitate herself as a single person and that the court would consider her future income from her employment in arriving at her spousal support. ¹

Roger has extensive work experience in real estate sales, and he is the sole shareholder of First Realty, Inc. Roger started First Realty shortly after his remarriage and capitalized that business with $156,000 in stock in Fargo Insurance which he had at the time of the remarriage. The trial court found that Roger is the main principal in the management and success of First Realty, Inc. Although the corporation has approximately 20 real estate salesmen, the income to Roger as sole stockholder is largely dependent upon his role as manager. The court determined that lending institutions rely heavily upon Roger's personal integrity, abilities, management, and property investments in financially backing the corporation in its business. First Realty, Inc., has recently had a name change to Coldwell Banker First Realty, Inc., because of franchise real estate connections that did not result in a corporate ownership change.

Testimony was presented during the trial concerning the value of Roger's realty corporation, First Realty, Inc. In placing a value upon corporate property, Roger relied upon the corporate records made by an accountant. Dorothy sought to place a value upon the corporation by appraising only various properties of the corporation. The trial court determined that without an appraisal of all the corporate assets and liabilities, such individual appraisals by Dorothy were meaningless. The court held that Dorothy had failed to show by a preponderance of the evidence that the corporation valuation was not correct. The court stated that it could not rely upon isolated appraisals of one or two items as a basis to challenge corporate records, particularly when such accounting of the corporation was done by certified public accountants following usual accounting practices.

At the time of the second marriage, Dorothy and Roger had each accumulated real and personal property in the amounts as follows: Dorothy had $35,116 in assets; and Roger had a net worth of $287,179.

The trial court considered the Ruff-Fischer guidelines in making a distribution of the parties' property. ² The court awarded Roger property valued at $786,680 and ordered Roger to pay $279,200 in obligations. The court used the following formula in arriving at Roger's net property distribution: The assets given to Roger by the court ($786,680) less obligations the court ordered Roger to pay ($279,200) and less property owned by Roger at the time of remarriage ($287,179) equals a net distribution of $220,299.

The trial court awarded the marital home worth $160,000 to Roger because he brought it into the second marriage and because it was Roger's "pride and joy in life and fits into his life style as a golfer." Roger testified at trial that the marital home and adjoining country club facilities were used extensively for business purposes.

The court awarded Dorothy property as follows: (1) a condominium valued at $74,000; (2) personal property valued at $64,740 ; and (3) a cash obligation to her from Roger valued at $116,500. The court used the following formula to determine Dorothy's net distribution: the assets awarded Dorothy by the court ($255,240) less the property she brought into the second marriage ($35,116) equals a net distribution of $220,124.

The trial court made the following statements concerning its decision to award Dorothy alimony:

"... this Court will give spousal support on a calculated certain amount largely derived from present corporate assets and income rather than from the dependency of Roger continuing to work even after 67 years of age....

* * *

"The problem of alimony is made more acute when there is an age difference of about 9 years. Roger is in retirement age. Should the Court order alimony on the premise that Roger continue working for the next 10 or 15 years? His solely owned corporation is apt to have less income if he should not actively participate in its affairs. Mortality tables give a man of 67 years an age expectancy of about 13 years. This Court believes that the establishment of an annuity would be the best solution to the problem. It will give security to Dorothy in that it is not terminated upon the death or retirement of Roger. It must be recognized that when Roger because of age is forced into retirement, his obligation for alimony is based on ability to pay."

In awarding Dorothy the $116,500 cash obligation to be paid to her by Roger as part of the property settlement the trial court stated:

"Roger shall pay to Dorothy the sum of $116,500.00 plus interest compounded yearly on the unpaid principal balance at the rate of 10 percent per annum and shall be paid in installments for 60 monthly payments of $1,000.00 each. The principal amount of $116,500.00 shall be considered as a property splitting and not alimony or spousal support. After 5 years, the entire balance of principal and interest shall be due and payable in a balloon payment....

"The monthly payments shall be applied one-half to principal and one-half to interest accrued. The interest payments shall be construed as alimony. The alimony over a 5 year period would approximate $845.00 monthly during the 5 year period....

"The 5 years of alimony are considered by this Court in the nature of rehabilitative spousal support...."

In its findings of fact the trial court explained its reasoning for structuring the $116,500 cash obligation the way it did:

"... In 5 years Dorothy will have income from Social Security, accumulated interest, her condominium and a cash reserve, with no debts or mortgages....

"... This Court finds that the investments of the marriage have no substantial cash flow income in that income is put back into payments on principal. The home used by the daughter likewise produces no income due to a family commitment. During the 5 year period after which time Roger will be 72 years of age, he will be burdened with the payments not now existing such as the mortgage on Dorothy's condominium and Cadillac automobile. These payments together with the cash payments are necessarily paid from earnings after income taxes. Except for the interest earnings, the payments in cash and payments on the condominium and Cadillac automobile are not subject to income taxes to her. The benefit of the distribution of property to Dorothy is postponed for 5 years (with interest) and this is true also of the distribution of property to Roger. To make an equitable distribution in cash to Dorothy at this time is impossible in that no such cash exists. To give Dorothy an interest in the revenue producing real estate would not result in cash flow to her instantly. The arrangement decided by this Court is dependent on earnings of Roger in the future years. Because of the hostility between the parties this Court deems it inappropriate to vest real estate interests in the income producing property to Dorothy. It would according to the evidence also result in the reduction of income to Coldwell Bankers and ultimately to Roger."

The trial court also ordered Roger to pay $1,500 to Dorothy to assist her in paying her legal fees.

On appeal Dorothy challenges that portion of the divorce judgment concerning property division and alimony. Dorothy argues that the trial court's division of the marital property was inequitable and clearly erroneous and that the limitations on the award of alimony are likewise clearly erroneous.

In Graves v. Graves, 340 N.W.2d 903, 906 (N.D.1983), this court summarized the rules of law applicable in reaching an equitable division of marital property:

"Section 14-05-24, N.D.C.C., requires a trial court to distribute the parties' property 'as may seem just and proper.' Winter v. Winter, 338 N.W.2d 819 (N.D.1983). The ultimate objective is to make an equitable division. Fraase v. Fraase, 315...