Marriage of Suarez, In re, 2-85-0847
| Decision Date | 20 October 1986 |
| Docket Number | No. 2-85-0847,2-85-0847 |
| Citation | 148 Ill.App.3d 849,499 N.E.2d 642,102 Ill.Dec. 85 |
| Parties | , 102 Ill.Dec. 85 In re the MARRIAGE OF Humberto SUAREZ, Petitioner-Appellant, and Alina A. Suarez, Respondent-Appellant. |
| Court | United States Appellate Court of Illinois |
Beermann, Swerdlove, Woloshin, Barezky & Berkson, Howard A. London, Miles N. Beermann, Chicago, for petitioner-appellant.
Mammas & Goldberg, Evan James Mammas, Chicago, for respondent-appellant.
The petitioner, Humberto Suarez (Humberto), appeals from the judgment of the circuit court of Lake County dissolving his marriage to the respondent, Alina Font Suarez (Alina), and awarding certain property, maintenance, child support, and child custody to the parties. He also appeals from the trial court's denial of his motion to reopen proofs and denial of his post-trial motion. He contends the trial court abused its discretion in its division of marital assets between the parties; that the awards of maintenance and child support are unwarranted and should be reversed; and that the trial court's overvaluation of the primary marital asset, the Diesel Radiator Company, amounted to reversible error which requires remand for revaluation of that asset, and, necessarily, reconsideration of the awards of property, maintenance and child support. Because we agree with the latter contention, we address only that issue.
The trial court heard evidence on February 13, 14, and 15, 1985. It found there were irreconcilable differences, that there was an irretrievable breakdown of the marriage, and that further attempts at reconciliation would be impracticable. It further found there was an agreement between the parties as to child custody. The court then proceeded to hear evidence concerning the division of property. After hearing the evidence, the court asked the parties to submit various written appraisals along with a memorandum indicating the value of the marital assets and their proposed distribution of them, and it would decide the case.
The trial court's judgment dissolving the marriage was entered on June 20, 1985. It included the following awards and property division:
Child custody. By agreement, the parties were awarded joint custody of the minor children. Lisa, age 14, will reside with Humberto; Alina, age 10, will reside with Alina.
Maintenance and child support. Humberto was ordered to pay Alina rehabilitative maintenance of $4,000 per month for five years. He was also ordered to pay child support for the daughter, Alina, of $1,500 per month.
Property disposition.
ASSET WIFE HUSBAND
----- ---- -------
Wife's bank account $ 4,000
Wife's IRA account 8,000
Wife's pension 177,000
Florida condominium 160,000
Florida home 51,000
Oak Brook home 226,000
Melrose Park Building 181,000
One-half of stock Dreyfus fund 55,000 55,000
Cash value of wife's life insurance 7,000
Mercedes Benz automobile 30,000
Gold 28,500
Husband's pension 193,000
Husband's IRA accounts 6,000
Note receivable 10,000
Boat 32,000
Bank accounts 12,000
Cash value of life insurance 15,000
Stock in Diesel Radiator 2,000,000
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$927,500 $2,323,000
"In order to make a fairly even property distribution," the trial court ordered Humberto to pay Alina an additional $697,750 payable as follows: (a) cash in the sum of $397,750 upon entry of the judgment for dissolution of marriage; (b) a note for the balance of $300,000 to bear interest at the rate of 9% per annum with interest payments due monthly and a principal payment in the sum of $100,000 due on December 31 of each year commencing in 1985 until paid in full.
As noted, Humberto challenges the trial court's division of property, its awards of maintenance and child support and its valuation of the Diesel Radiator Company in the amount of $2,000,000. Because the valuation of Diesel is integral to the remainder of the court's judgment, we proceed to examine the errors Humberto asserts cumulated to produce what he contends is an excessive valuation. Specifically, he contends that the court erred in (1) basing its valuation on evidence that was almost a year old and in refusing to reopen the proofs to consider new evidence that the company had lost a substantial percentage of its sales; (2) basing the valuation almost entirely on the present value of income to be generated by Humberto's post-dissolution labor; (3) relying on excessive projections of the company's future earnings; and (4) disregarding numerous other factors which depressed the value of the company.
Humberto and Alina Suarez, both 40 years old, each testified at trial concerning the inception of Diesel Radiator. The company now sells and repairs diesel radiators and filters for locomotives. The parties secured a $17,000 small business loan and started the business as an equal partnership in 1970. Alina continued to work full-time at a printing company and worked part-time for Diesel doing paperwork, typing letters, and so forth. Humberto trained the men in the shop and used his mechanical engineering background to set up the operations of the business. The parties' children were born in 1971 and 1975. Diesel Radiator was incorporated in 1975. Since about 1977, Alina worked full-time at Diesel and was involved mostly with customer contacts; she also took care of the company's finances: check writing, accounts payable and receivable, deposits and transfers in the bank. Humberto was in charge of the repairmen and running the repair facilities, he designed equipment and processes, and was responsible for the development of new accounts. According to the record, Humberto and Alina comprised the management of the company and served as its board of directors. They are assisted by a woman who does company bookkeeping, answers the phone, and handles customer inquiries in the Suarez' absence. The company also employs a plant superintendent and 18 shop employees.
Humberto testified the most important function of the company was the repair of locomotive radiators because in order to get the new radiator business "[y]ou first have to become established as a repairman." The company also sells filters which he invented for radiators, but he testified that filter sales were "down to nothing right now." When he and Alina had disagreements concerning the operation of the business in 1984, they agreed to submit their disputes to an arbitrator. One of the decisions made by the arbitrator was that Diesel should proceed to contract with the New York and New Jersey Transit Authorities in connection with a new aspect of the business which Humberto testified involves supplying the radiators and manufacturing and designing the structure where the radiators are going to be contained to be applied to the locomotive. He testified the prototype unit had been supplied to New Jersey and the New York prototype was being produced.
The record shows Humberto and Alina each received substantial salaries and benefits from Diesel for the fiscal years March 31, 1980, through March 31, 1984; respectively, $54,000, $42,000, $77,000, $78,000 and $140,000. The total salary of each for the 1984 calendar year amounted to $173,000.
Two expert witnesses testified as to the value of the stock of Diesel Radiator. Humberto presented the testimony of Hugh B. McCulloch who had valued the stock at the request of Humberto's attorney and Alina's former attorney with the view that it might serve as the basis for discussions leading toward one party's acquisition of the interest of the other. In McCulloch's opinion, the fair market value of the stock was $600,000. Alina's expert, Patrick M. Dutcher, testified that the stock was worth $2,832,532. The trial court's judgment valued the company at $2,000,000.
Mr. McCulloch, a business appraiser for over 20 years, prepared a 13-page written valuation report, dated April 27, 1984, which was admitted in evidence. It showed McCulloch's opinion included consideration of a number of factors such as the nature and history of the business, the products and services it offers, the economic outlook, the outlook for the company and the industries served by the company, its financial condition, competition, management and earnings capacity. In developing his opinion he also reviewed Diesel Radiator's unaudited financial statements and Federal income tax returns for the fiscal years which ended on March 31, 1979, through March 31, 1983, inclusive, and the unaudited interim financial statements covering the accounting periods which ended on November 30, 1983, and on February 29, 1984. In addition, he visited the company facilities in Melrose Park, Illinois, observed its operations, and met separately with both the Suarezes. McCulloch testified at trial that in evaluating a business
Alina presented the testimony of Patrick Dutcher, a certified public accountant specializing in the valuation of businesses. He testified he began his valuation of the company in late January 1985. He reviewed five years' past corporate income tax returns and associated financial...
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