Marriage of Rives, In re

• Decision Date: 26 February 1982
• Citation: 181 Cal.Rptr. 572,130 Cal.App.3d 138
• Court: California Court of Appeals Court of Appeals
• Parties: In re the MARRIAGE OF J. C. RIVES and Jessie E. Rives. J. C. RIVES, Appellant, v. Jessie E. RIVES, Respondent. Civ. 20173.

Page 572

181 Cal.Rptr. 572

130 Cal.App.3d 138

In re the MARRIAGE OF J. C. RIVES and Jessie E. Rives.

J. C. RIVES, Appellant, v. Jessie E. RIVES, Respondent.

Civ. 20173.

Court of Appeal, Third District, California.

Feb. 26, 1982.

As Modified March 26, 1982.

[130 Cal.App.3d 144] Carol E. Hawes, Anderson, for appellant Husband.

Desmond, Miller, Desmond & Bartholomew and Stephen James Wagner, Sacramento, for appellant Wife.

REYNOSO, Associate Justice. ^*

J. C. Rives (husband) appeals from an interlocutory judgment of dissolution of marriage entered after protracted dissolution proceedings. Jessie E. Rives (wife) cross-appeals from the judgment. Among other things, the interlocutory judgment awarded the parties' community property queen bee business, known as "Rives Queens," to husband, and awarded the parties' community property queen bee cage business, known as "Rives Cages," to wife. The judgment ordered that the real property upon which the parties' residence and both businesses were located be partitioned into three parcels, two of which were awarded husband and one of which was awarded wife. The judgment further held that a parcel of residential property acquired during the marriage in wife's name alone was in fact community property, and awarded that property to wife.

On appeal husband makes several contentions regarding the queen bee business. He contends that the court used an improper method in valuing the business, that the court erred in determining that there was goodwill in the business, that since he did not want the business it should have been sold and the proceeds divided, that the court erred in refusing to reopen after submission but prior to entry of the judgment to consider the devaluation of the business due to wife's neglect, and that since wife asked for and received a pretrial order granting her the exclusive right to operate the business and barring him therefrom she should be charged with the loss of value of the business due to her failure to feed the bees and their resulting death. Husband also contends that the trial court erred in setting a value on the cage business and in refusing to reopen to revalue the real property when it appeared that the county would not permit a partition in kind.

In the cross-appeal wife contends that the trial court erred in failing to retain jurisdiction to make an award of spousal support, and in finding that certain residential property was not her separate property.

We hold that the trial court failed to consider proper factors in valuing the queen bee and queen bee cage businesses and in refusing to reopen the case to consider the damage to the bee business which occurred before the interlocutory judgment was issued. We find that in view of the inordinately high valuation of the queen bee business the court's award of that business to the husband created an unequal and unfair division of the community property. We reverse and remand for reconsideration of the value of the businesses and the division of the community property. We find no other error and affirm the judgment in all other respects.

THE RIVES QUEENS

Since 1931, in addition to his job as a county agricultural inspector, husband has been involved in the business of bee keeping. His specialty is raising queen bees, and he is recognized as a leading specialist in the industry. Husband retired from county service in 1970, and since that time his sole employment has been in the Rives Queens and Rives Cages businesses. Prior to the parties' marriage in 1971, husband acquired six acres of property known as the Oregon Trail property. He made certain improvements and placed a trailer home on the property prior to marriage. After marriage the parties further improved the property and built a "Butler building" on the premises to house the cage business.

For a number of years prior to their marriage wife worked in the bee and cage business for husband as an employee. In the late 1960's husband went through a dissolution proceeding, and as an indirect result declared bankruptcy. At that time he transferred the cage business to wife. After the parties were married in 1971 wife ceased to receive wages or other benefits. The parties continued to operate both businesses, with wife's primary responsibility being the cages and husband's primary responsibility being the bees, although each assisted the other to an extent.

In 1976, the parties attempted to transfer both businesses to wife's son by a prior marriage. In 1977 the attempted sale failed and the parties reacquired the businesses. The petition for dissolution of marriage was filed on February 14, 1979. Therein husband requested that the court confirm the Rives Queens business as his separate property. In her response wife requested that the court confirm the Rives Queens business as her separate property. Apparently neither party was treating the two businesses separately at that time.

The proceedings were bifurcated. In an initial hearing the trial court held that both businesses are community property. The proceedings were then adjourned so that the parties could attempt to arrive at a settlement concerning the valuation of the property and an appropriate division thereof.

Initially during the proceedings the parties continued to live together in a mobile home they had purchased, and continued to operate the businesses. Their relationship was, however, what can mildly be described as stormy. The parties appeared numerous times in court for orders and injunctions against each other. On October 24, 1979, wife filed an order to show cause asking that she be allowed to operate the businesses pending trial or settlement, and that husband be ordered to vacate the premises. In response to the order to show cause husband stated that he is more capable of operating the businesses than wife, but that he "is willing to allow respondent to operate the businesses during the pendency of this action but on condition that she be ordered to account strictly for such operation and that any loss of value of the business during such operation by her shall be charged to her in the community property distribution." When the matter came on for hearing it was stipulated that wife would be allowed to operate the businesses and that husband could accompany his agent to examine the books of the businesses, but was otherwise to stay out of the business area.

Due to a number of continuances at wife's request, the matter did not come on for trial until March 14, 1980. Each party presented the testimony of a certified public accountant in evaluating the businesses. Each of the experts relied upon a value of the physical assets of the queen bee business of $39,185 and that figure is not disputed except as to the issues involving destruction of the business. Wife's expert witness set the value of the bee business at between $94,000 and $134,000. His valuation included physical inventory of $39,185, land worth $15,000, and goodwill between $39,815 and $79,815. He concluded that a proper evaluation of the bee business would be $112,000. His evaluation was not based upon historical income data, but was rather based upon a potential income approach, that is, he estimated what he considered the business should or could produce, and determined potential income at the highest seasonal price from that figure. He derived the value of goodwill by deducting expected expenses, return to capital, and the operator's labor from the potential income and by capitalizing the remainder as attributable to goodwill.

Husband's witness valued the queen bee business at $52,657. This consisted of physical assets of $39,185, and goodwill of $13,472. He did not add a value for the land, which was itself before the court for division. His goodwill value was lower than that of wife's witness because he based it upon actual historical production rather than estimated potential production. In 1979 Rives Queens had only produced 12,000 queen bees, while wife's witness was charging them with over 18,000 queen bees per season, a difference which would drastically increase profit and therefore goodwill. The potential production approach was criticized because it did not take into account husband's advanced age and asserted desire to retire.

Wife testified that she did not want the bee business because she had neither the strength nor the experience to operate it. She had been out to feed the bees before trial and noticed that they needed feeding and that one-third to two-thirds of the bees had died.

Husband testified that it was historically infeasible for him to produce the number of bees wife's expert insisted that he should. He had never approached that production figure. He also testified that he did not want the bee business, since he had been trying to retire since 1976. He had inspected the bee yards the day before trial and found one-third of the bees dead of starvation and some hives damaged. At the conclusion of the trial wife agreed to feed the bees provided she could use a community account to do so.

On May 28, 1980, the trial court issued its notice of intended decision. It indicated that the bee business was to be awarded to husband and that the value thereof was $90,000. No explanation of the method of arriving at this value was given. On June 12, 1980, husband filed a motion for an order for the payment of the costs of arresting a moth infestation in the bee business. He stated that since the time of trial wax moths, which attack and destroy empty hives, had infested the combs. He stated that although there was already substantial damage, prompt action at a cost of less than $1,000 could save much of the comb. Since wife had been and continued to be in control of all of the parties' monetary assets, husband sought an order releasing the funds to correct the situation.

On July 14, 1980, the court granted husband's motion for a partial distribution of community funds over...