Muller v. Muller

• Decision Date: 16 June 1982
• Citation: 116 Misc.2d 660,456 N.Y.S.2d 918
• Parties: Catherine MULLER, Plaintiff, v. Gunter MULLER, Defendant.
• Court: New York Supreme Court

Page 918

456 N.Y.S.2d 918

116 Misc.2d 660

Catherine MULLER, Plaintiff, v. Gunter MULLER, Defendant.

Supreme Court, Special Term,

Nassau County, Part V.

June 16, 1982.

Thomas J. Connelly, North Babylon, for plaintiff.

Joseph A. D'Addario, New York City, for defendant.

CONDENSED FOR PUBLICATION PURPOSES

BERNARD F. McCAFFREY, Justice.

This case involves three points arising under the Equitable Distribution Law in which there is little or no precedence. The court has been called upon in this litigation to evaluate the business interests of one of the parties; establish a valuation date for same; and determine a constitutional challenge to the so-called "catch-all" factor set forth in Domestic Relations Law Section 236(B)(5) and (6)(a) subparagraph (10). There is a dearth of New York case law dealing with evaluation of closely held or family owned businesses. Of course, there have been some cases dealing with medical or law practices; there have even been cases wherein Internal Revenue Services Ruling 59-60 has been applied. However, in none of these cases were the courts required to, as here, set forth as detailed a formula or graphics in the application of its ruling.

The question of evaluation of a business is indeed a very practical problem which will be fore the bench and bar in many matrimonial matters for some time to come. In this case, a formula for evaluation of a business making metal, plastic and glass etchings was adopted and utilized by the court in an effort to fix valuation.

By service of a summons on February 8, 1979, plaintiff-husband in Action No. 1 (hereinafter husband) commenced an action for divorce against the defendant-wife (hereinafter wife) on the ground of abandonment. An answer was interposed denying the essential allegations of the complai insofar as the relief for a divorce was concerned, and the wife in that action interposed a counterclaim to impress a trust on the plaintiff's interest in a closed corporation k/a C.A.M. Graphics, Inc. (hereinafter CAM), which interest consisted of 42 1/2 shares of an outstanding issued stock of 95 shares, or 44.736% of the outstanding issued stock of the corporation. No counterclaim for divorce (or any other relief affecting the marital status) was interposed by the wife in Action No. 1.

On August 2, 1980, or two weeks after the legislature modified § 236 of the Domestic Relations Law and created what is commonly known as the Equitable Distribution Law, the wife commenced Action No. 2, in which she seeks a divorce and dissolution of the marriage, and the equitable distribution relief set forth in the statute. Involved in this aspect of the case, and of paramount importance herein, is the fixing of a valuation date and, of course, valuation of the husband's business, CAM. In this By order of this court dated October 16, 1980, it was directed that both actions be tried jointly.

respect, the decision herein ventures into new grounds under the equitable distribution law, grounds for the most part heretofore uncharted.

At the trial, the husband withdrew his action for divorce (Action No. 1) and the wife in that action continued her counterclaim to impress a trust. The husband in Action No. 2 withdrew his defense to that portion of the wife's action for divorce insofar as the divorce was concerned, and the wife proceeded on that aspect of her action on the grounds of abandonment. The wife sustained her burden of proof on that ground, and the court having proper jurisdiction herein, finds that the wife is entitled to a judgment of divorce dissolving the marriage.

In view of the aforesaid, the only contests herein are the question of the wife's counterclaim in Action No. 1, the economic aspects of the equitable distribution law as it applies herein in Action No. 2, and counsel fees. The trial of the first two issues encompassed fourteen days.

The parties were married on May 29, 1966 and were separated on or about November 1976. The husband is 41 years of age and the wife is 45 years of age. There are two children of the marriage, James Muller (14) born May 23, 1967, and Elizabeth Muller (12) born April 18, 1969.

When the parties were first married they lived in a house in Locust Valley, New York, rent free, the rent being part of the payment to the wife by the homeowner for the wife's services as a domestic. The husband worked in a metal etching firm and earned approximately $160-$170 per week.

While the parties lived in the Locust Valley house the husband arranged with the homeowner to do certain "side work" of non-metal etching and etching silkscreen processing, which was done in the basement of that house for a short time, and also in a rented garage in Hewlett, until the parties moved into the marital residence in North Babylon in July 1968. Side jobs were done for a short period of time in the basement of the marital residence in North Babylon, after which space was rented elsewhere. At the latter time, around June 30, 1969, husband and a co-worker, Emanuel Cardinale, formed a partnership (C.A.M. Graphics Co.) placing the name of the business in their respective wives' names to avoid a possible conflict of interest, inasmuch as both men were employees of Metal Etching Co., Inc., which manufactured products similar to that of C.A.M. Graphics Co. A business certificate for partners was filed on or about July 14, 1969, with 42 1/2 shares in the name of Gunter Muller, and 52 1/2 shares in the name of Emanuel Cardinale. (Note: 5 shares were issued to the attorneys who then represented the corporation; thereafter said 5 shares were redeemed by the corporation)

According to its Certificate of Incorporation the purpose of C.A.M. Graphics Co. is to conduct the business of precision services and processes specializing in metal, plastic and glass in all its phases, including screen printing, artwork, fabrication screen making and glass and metal etching for signs, decals, scales and escutheons. (Exh. 42)

THE CONSTRUCTIVE TRUST CLAIM

In Action No. 1, the wife seeks in her counterclaim to impress a trust on the husband's interest in a closed corporation k/a C.A.M. Graphics Inc.

In the case at bar there does not appear to be a promise, or any testimony of a reliance on any promise implied, or otherwise; (Markland v. Markland, 67 A.D.2d 940, 413 N.Y.S.2d 202) and the marriage of the wife and husband does not by itself provide a basis for an implied promise which would support a constructive trust. (Moftiz v. Moftiz, 50 A.D.2d 901, 377 N.Y.S.2d 931)

It appears to this court that the wife is unable to sustain her burden of proof to establish her rights to a constructive trust, here.

Furthermore, the action is barred by the six year statute of limitations pursuant to Section 213 of the CPLR.

It has been held that as to a constructive trust action the statute runs from the commission, rather than the discovery of the alleged fraud. (Scheuer v. Scheuer, 308 N.Y. 447, 126 N.E.2d 555; Motyl v. Motyl, 35 A.D.2d 1051, 317 N.Y.S.2d 73)

Even if the wife were to get over the threshold question involving statute of limitations, she falls short in her proof required to find a constructive trust, here.

THE CONSTITUTIONAL QUESTIONS

Specifically, the husband attacks subparagraph 10 both in Section 236(B)(5) and (6)(a) of the Domestic Relations Law, which has been characterized in various decisions as the "catch-all" or "wildcard" factor. Both Section 236(B)(5) and (6)(a) enumerate 10 factors which the court is required to consider in making awards for equitable distribution of marital property and for maintenance of the wife. In each case nine specific areas of consideration are enumerated; in each case the tenth factor states as follows:

"(10) any other factor which the court shall expressly find to be just and proper"

The husband challenges the constitutionality of this tenth factor on grounds that it fails to meet the requirements of a "Due Process Clause" as it is so vague and standardless that it leaves the public uncertain as to the conduct it prohibits, or leaves judges free to decide, without any legally fixed standards, what is proper, or what is not proper in each particular case. The husband claims that the so-called tenth factor makes the "any other factor" a "matter of definitive absolute determination by the court", since the statute continues to say that it is to be taken into consideration by the court, "which the court shall expressly find to be just and proper". Therefore, according to the husband, whatever that particular judge, who is then sitting at that particular time and place, finds in the case and states that it is just and proper becomes the law of the case.

Statutes are presumed valid and constitutional, and the one challenging the statute has the burden of showing the contrary (Statutes § 150[b] ). Duly enacted legislation is endowed with a strong presumption of constitutionality (People v. DiCarlo, 62 Misc.2d 638, 309 N.Y.S.2d 791), and any doubts should be resolved in favor of the constitutionality or legality of a statute. (Johnson v. City of New York, 274 N.Y. 411, 9 N.E.2d 30). In addition, a statute should be construed, if possible, to uphold its constitutionality and in case of doubt, a statute should be given such construction as will, if possible, make it conform to constitutional requirements. (see § 150[c] Statutes; People v. Ryan, 230 App.Div. 252, 243 N.Y.S. 644)

The "10th factors" are not unlike the provision in Domestic Relations Law § 236 as it existed prior to July 19, 1980, wherein it permitted awards of alimony as "in the court's discretion justice requires". Said terminology withstood a challenge to its alleged vagueness in Vanderbilt v. Vanderbilt, 1 N.Y.2d 342, 153 N.Y.S.2d 1, 135 N.E.2d 553, affd. 354 U.S. 416, 77 S.Ct. 1360, 1 L.Ed.2d 1456, where the court found that said term merely means that there are no "as matter of law" requirements, one way or the other, as to those matters which are to be...