Moore v. Moore

• Decision Date: 21 March 2006
• Docket Number: No. WD 64015.,No. WD 64055.,WD 64015.,WD 64055.
• Citation: 189 S.W.3d 627
• Court: Missouri Court of Appeals
• Parties: Linda Ellen MOORE, Appellant-Respondent, v. Jaclyn Kathleen MOORE and Jaime M. Eichelkraut, Personal Representatives of the Estate of Jackie Ray Moore, Deceased, Respondents-Appellants.

189 S.W.3d 627

Linda Ellen MOORE, Appellant-Respondent, v. Jaclyn Kathleen MOORE and Jaime M. Eichelkraut, Personal Representatives of the Estate of Jackie Ray Moore, Deceased, Respondents-Appellants.

No. WD 64015.

No. WD 64055.

Missouri Court of Appeals, Western District.

March 21, 2006.

Motion for Rehearing and/or Transfer to Supreme Court Denied May 2, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Alvin D. Shapiro, Overland Park, KS, for Appellant/Respondent.

Anita I. Rodarte, Kansas City, for Respondents/Appellants.

Before HARDWICK, C.J., BRECKENRIDGE and SPINDEN, JJ.

PER CURIAM.

This appeal arises from a judgment dissolving the thirty-five year marriage of Linda Moore (Wife) and Jackie Ray Moore¹ (Husband). Both parties contend the circuit court erred in the classification and division of property. We reverse and remand.

FACTUAL AND PROCEDURAL HISTORY

The parties were married in November 1967. In 1970, Husband began working as a sales engineer for Stahl Specialty Company (SSC), a foundry business of which Wife's father, Glen Stahl, was the co-founder and majority shareholder.² Husband was promoted through the management ranks of SSC and became president of the company in 1987.

Wife stayed at home during most of the marriage, raising the parties' four children.³ After the last child went to college, Wife started working part-time in SSC's accounting department in 1994.

Husband and Wife each began receiving gifts of SSC stock from Wife's parents in 1982. In addition to her stock ownership, Wife was the trustee and sole income beneficiary of two trusts created by her parents: Glen Stahl's "Descendant's Trust" and Blanche Stahl's "Exempt Trust." Both of the trusts held stock ownership in SSC.

Husband and Wife separated in 1998. Wife filed a petition for dissolution of the marriage in June 2000. During that same year, SSC was sold to The Budd Company at a net sales price of $95,408,305. At the time of the sale, Wife individually owned 484 shares of company stock and Husband individually owned 164 shares.⁴ Husband agreed to remain as company president after the sale was completed.

On December 12, 2002, after a three-day trial, the circuit court dissolved the marriage by interlocutory judgment and took the property matters under advisement. On April 7, 2004, the court entered an Amended Judgment setting apart the non-marital property and then equally dividing the marital estate valued at $6,913,150. Wife was awarded marital property valued at $5,038,859, and Husband was awarded $1,874,291 in marital property. Wife was ordered to pay Husband $1,582,284 to equalize the marital property division. Wife appeals the Amended Judgment, and Husband cross-appeals.

STANDARD OF REVIEW

The judgment in a marital dissolution must be affirmed unless it is unsupported by substantial evidence, against the weight of the evidence, or erroneously declares or applies the law. McCoy v. McCoy, 159 S.W.3d 473, 475 (Mo.App.2005). We must defer to the circuit court's determinations of credibility and view the evidence in a light most favorable to the judgment, disregarding all contrary evidence and inferences. Alongi v. Alongi, 72 S.W.3d 592, 594 (Mo.App.2002).

WIFE'S APPEAL

Wife raises two points concerning the circuit court's classification of the increased value of SSC stock individually owned by Wife and Husband. Although the court determined the shares of stock separately gifted to the parties by Wife's parents were non-marital property, the court further found that the net stock value had increased from $6,791 to $15,148 per share during the marriage, while Husband was president of SSC from 1987 through 2000. The court determined that the increased value of Wife's 484 shares was marital property because Husband's labor and low salary as company president directly contributed to the rising stock value. However, the court characterized the increased value of Husband's 164 shares as non-marital because Wife's work in SSC's Accounting Department did not directly contribute to the higher stock value. In Point I of this appeal, Wife contends the court misapplied Section 452.330.2,⁵ by classifying all of the increased value of her stock as marital property. In Point II, Wife contends the court inconsistently applied the law by including her stock appreciation in the marital estate while setting apart the increased value of Husband's stock as his separate property.

Applicable Law

Section 452.330 provides the procedure for disposition of property in a marital dissolution. The circuit court must first set apart each party's non-marital property and then equitably divide the marital property based on relevant factors, including:

(1) The economic circumstances of each spouse at the time the division of property is to become effective, including the desirability of awarding the family home or the right to live therein for reasonable periods to the spouse having custody of any children;

(2) The contribution of each spouse to the acquisition of the marital property, including the contribution of a spouse as homemaker;

(3) The value of the nonmarital property set apart to each spouse;

(4) The conduct of the parties during the marriage; and

(5) Custodial arrangements for minor children.

§ 452.330.1.

An equitable division of property is predicated on the proper classification of the parties' property as either non-marital or marital. Waldon v. Waldon, 114 S.W.3d 428, 431 (Mo.App.2003). All property acquired by either party during the marriage is presumed to be marital property. § 452.330.3. This presumption can be overcome by a showing that the property was acquired by one party as a gift. § 452.330.2(1). Gifted property is excluded from the marital estate. However, to the extent that marital assets or labor contribute to any increase in the value of the gifted property, that portion of increased value is marital property. § 452.330.2(5). The marital share of the increase in value must be "proportionate" to the amount of marital effort devoted to its acquisition. Meservey v. Meservey, 841 S.W.2d 240, 245 (Mo.App.1992).

The circuit court has broad discretion in classifying and dividing marital property. McCoy, 159 S.W.3d at 475. We must presume the court's division of property is correct, and the party challenging the division has the burden of overcoming the presumption. Bohon v. Bohon, 102 S.W.3d 107, 109 (Mo.App.2003).

Increased Value of Wife's SSC Stock

In Point I, Wife argues the court erroneously applied Section 452.330.2(5) by classifying the entire increased value of her stock as marital property. Wife contends there was no evidence to show how much of the stock appreciation was due to Husband's corporate leadership at SSC and how much he was undercompensated by salary. Without specific evidence in this regard, Wife asserts Husband was not entitled to a marital share of the increased stock value because he failed to satisfy the requirements of Section 452.330.2(5).

To the extent the trial court determined that the increased stock value resulted from Husband's corporate leadership of SSC, we must first consider whether Husband's efforts constituted "marital labor" within the meaning of Section 452.330.2(5). As Stahl's president, Husband had a fiduciary obligation to grow and maintain the company to the maximum of his ability for the stockholders' benefit. The Supreme Court has declared, "`The officers and directors of a corporation occupy a fiduciary relation to the corporation and to the stockholders; their position is one of trust and they are bound to act with fidelity[.]'" Johnson v. Duensing, 351 S.W.2d 27, 32 (Mo. banc 1961) (citation omitted). The Supreme Court has also declared that this fiduciary duty requires corporate directors and officers "`to exercise the utmost good faith in the discharge of the duties arising out of their trust, and to act for the corporation and its stockholders, giving all the benefit of their best judgment.'" Bromschwig v. Carthage Marble & White Lime Co., 334 Mo. 319, 66 S.W.2d 889, 892 (1933) (quoting Barker v. Montana Gold, Silver, Platinum & Tellurium Mining Co., 35 Mont. 351, 89 P. 66, 70 (1907)). Moreover, officers of a closely-held corporation owe a higher degree of fiduciary duty to shareholders than do their counterparts at public corporations. Forinash v. Daugherty, 697 S.W.2d 294, 302-03 (Mo.App.1985). Indeed, Husband acknowledged that he had a fiduciary duty to use his best efforts to grow and to maintain the company for the stockholders' benefit.⁶

In light of his fiduciary duty as a corporate officer, classifying all of Husband's labor and efforts in growing the company as marital efforts and labor ignores his obligations as Stahl's president. Even had he not been married to Wife, Husband would have been obligated to do all that he did for Stahl's stockholders. The mere coincidence of his marriage to Wife did not convert his obligations to the company's stockholders to marital labor. Accordingly, the trial court erred in determining that Husband's successful corporate leadership transformed the increased value of Wife's SSC stock into marital property.

Regarding the issue of Husband's undercompensation, the trial court made the following findings:

The philosophy and practice of Glen Stahl and [Husband] was to maintain their compensation at levels that were significantly lower than customary in the industry, in order to help promote more rapid growth of the company. Their efforts were successful; however a result is that [Husband] received inadequate compensation for at least the period of his presidency, from 1987 until the sale of the company. This is clearly evidenced by the more than fifty percent increase in Respondent's salary from July 1998 to July 1999, the period coinciding with the decision ... to sell the company. The logical inference [drawn] from these facts is that the large increase was intended to correct for inadequate...