Marriage of Rosan, In re

• Decision Date: 13 April 1972
• Court: California Court of Appeals Court of Appeals
• Parties: In re the Marriage of Harold L. ROSAN, Respondent, and Sally J. ROSAN, Appellant. Civ. 11758.

Page 295

101 Cal.Rptr. 295

24 Cal.App.3d 885

In re the Marriage of Harold L. ROSAN, Respondent and

Sally J. ROSAN, Appellant.

Civ. 11758.

Court of Appeal, Fourth District, Division 2, California.

April 13, 1972.

Martin B. Weinberg, Santa Ana, for appellant.

Cochran, Dickerson & Shepphird and John D. Cochran, Newport Beach, for respondent.

OPINION

KAUFMAN, Associate Justice.

Wife, who was the respondent in the court below, appeals from an interlocutory judgment of dissolution of marriage contending that the trial court failed to divide the community assets and liabilities equally and abused its discretion in the award of spousal and child support and attorney fees and in refusing to make an award for the cost of accounting services rendered to Wife in connection with the litigation.

Factual Background

Certain of the specific facts are more appropriately set forth in connection with the several contentions. The general factual background is as follows. The parties were married some 17 years. There are two children of the marriage, both boys, the older born November 6, 1953 and the younger November 8, 1955.

Approximately one year after the marriage of the parties, Husband commenced employment with Hudson Jewelers and has been employed by that firm continuously for the past 16 years. He is, and for the past several years has been, sales manager and supervisor of the business' two stores in Whittier and Santa Ana. During the marriage he has acquired 15 percent of the capital stock of his corporate employer and is vice president of the corporation. His compensation from this employment consists of a gross salary of $1,050 per month plus commissions based upon gross profits of the company paid on a quarterly basis plus a bonus, optional with the employer, paid at about Christmas time each year. ¹ In addition, as an expense allowance, Husband receives the sum of $150 per month from his employer. His earnings from employment, after deduction of taxes and exclusive of the expense allowance, totaled $25,400 for calendar year 1967, $25,600 for calendar year 1968 and $22,400 for calendar year 1969. ²

The parties were accustomed to living in a style commensurate with the substantial earnings of Husband. They lived in a home valued by the parties at the time of trial at $56,000. They took frequent trips to Las Vegas and dined out frequently. As testified by Husband: 'We would live quite well. We always have.'

Wife was not employed during the marriage. At one time in 1965 or 1966 she undertook a course of study in real estate and was employed for a short time in a department store, but gave up these activities because of some behavioral or emotional problems of the older child. At the time of trial Wife was not employed. She testified, however, that it was her intention to commence a course of instruction in real estate as well as some college courses to prepare her for employment.

Division of Assets and Liabilities

The community liabilities amounted to some $3,280 of which Husband was ordered to pay $2,080 and Wife $1,200. As valued by the trial court, the community assets amounted to $53,897 of which $26,949 was awarded to Wife and $26,948 awarded to Husband. The assets awarded to Husband consisted of the Hudson Jewelers stock valued at $30,711 and $500 insurance proceeds from the wreck of a 1963 Cadillac. Wife was awarded all of the remaining community property which included a $1,000 equity in a 1966 Buick, $6,790 cash proceeds from the sale of the family residence prior to judgment, $412 in a trust account, household furniture and furnishings valued at $3,000, stocks valued at $1,304, an undivided one-half interest in several rental properties producing no income but valued at $8,000, and an undivided one-half interest in two second deeds of trust valued at $2,180 and producing cash receipts of $25.50 per month including principal and interest. To equalize the division of the property Husband was ordered to execute and deliver to Wife his promissory note in the amount of $4,263 payable principal and interest at eight percent at the end of 48 months. ³

The parties stipulated to the value of most of the assets except the Hudson Jewelers stock. Wife's contention that the property was not equally divided as required by Civil Code, section 4800 is based on her assertion that the court grossly undervalued the Hudson Jewelers stock.

Ownership of the Hudson Jewelers stock was subject to a written agreement dated April 1, 1965 between Husband, the corporation and Mr. Klein, the owner of the other 85 percent of the corporation's stock. The agreement provided that Husband's shares could not be sold, assigned, transferred or hypothecated to anyone other than the corporation or Mr. Klein without their prior written consent. If Husband desired to sell the stock, the corporation, first, and then Mr. Klein had the right to purchase the stock for its 'computed value' or the price offered to Husband by any third party, whichever was Lower. Upon Husband's death, permanent disability or discharge from employment without just cause, the corporation, first and then Mr. Klein had the right to purchase the stock for its full 'computed value.' If Husband voluntarily quit his employment or was terminated for just cause, the corporation, first, and then Mr. Klein had the right to purchase the stock for 70 percent of its 'computed value.' In the event of sale under any circumstances, the purchase price was payable by the corporation or Mr. Klein 25 percent cash on consummation of sale and 15 percent per year thereafter. 'Computed value' was to be determined by a formula based primarily on the book asset value of the corporation with certain adjustments but excluding goodwill. At the time of trial the 'computed value' of the stock was $43,873. The court fixed its value at 70 percent of its 'computed value,' $30,711.

First, it is argued that the court erred in failing to give consideration to goodwill. It is suggested that, should Hudson Jewelers be acquired by a substantial corporation, the stock would have a far greater value than that fixed by the agreement. This argument is unmeritorious. There was no evidence of any planned merger or acquisition of Hudson Jewelers by any other corporation, and, in the absence thereof, the corporation or Mr. Klein had the right to purchase the stock at not more than 'computed value' should it be offered for sale.

Next, it is argued that, at least, the stock was worth its 'computed value' of $43,873. In order to realize that potential value, Husband would have to die, become permanently disabled, be discharged from his employment without cause or be offered at least 'computed value' by a third person. There is no evidence that the stock paid dividends, and the corporation was closely held. An offer from a third person to purchase a minority interest in a closely held corporation paying no dividends for full 'computed value' would be an unlikely prospect. Discharge of Husband from the employment without just cause after 16 years' continuous employment was also unlikely. There was no evidence of any serious illness of Husband portending his death or permanent disability, and the prediction of such fortuitous events would have been purely specutative.

Under the circumstances disclosed by the evidence, and particularly in view of the restrictive conditions on the disposition of the stock and its resulting illiquidity, factors substantially affecting its value, the trial court was justified in assessing the value of the stock at 70 percent of its 'computed value.' Although that was its lowest value except in the event of a sale to a third person for less, it was the only value that was relatively certain. Moreover, while technically it does not go to the valuation of the stock, we are also mindful of the fact, as the trial court must have been, that the assets awarded to Wife were significantly more liquid than the stock awarded to Husband. Wife received in excess of $7,000 in cash and trust funds, stock valued at $1,304 as well as an undivided one-half interest in deeds of trust valued at $2,180 and producing a small amount of income. We conclude that the community assets and liabilities were equally divided in compliance with the mandate of Civil Code, section 4800.

Spousal and Child Support

The decree orders Husband to pay to Wife $150 per month for the support of the 15-year-old child placed in her custody. ⁴ For support of Wife, Husband was ordered to pay $400 per month for one year commencing January 1, 1971, $300 per month for the succeeding year and $200 per month for the next year. Thereupon it was ordered that spousal support terminate. Wife contends that the award is grossly inadequate in amount and that the trial court further abused its discretion in providing for automatic termination of all spousal support at the end of three years. Although not all of Wife's arguments are well founded, we have concluded that these contentions have merit and that the trial court abused its discretion in the award of spousal support in several respects.

Initially, Wife points to evidence that Husband did a considerable amount of gambling; that he was either very lucky or very skillful; and that his winnings substantially exceeded his losses. She argues that the trial court should have considered Husband's gambling winnings in addition to his compensation from employment. Although findings of fact and conclusions of law were apparently not requested and we do not know, therefore, whether or not the court took into consideration the alleged winnings, we may assume, as has Wife, that it did not. Contrary to Wife's assertion, the evidence does not establish as a matter of law any longstanding pattern of winnings in excess of losses. Moreover, the Husband testified that he had ceased any significant gambling after the separation of the parties in September 1969 because of the the unavailability...