Nardini v. Nardini
Decision Date | 23 October 1987 |
Docket Number | No. C1-85-1421,C1-85-1421 |
Citation | 414 N.W.2d 184 |
Parties | In re the Marriage of Marguerite I. NARDINI, petitioner, Appellant, v. Ralph E. NARDINI, Respondent. |
Court | Minnesota Supreme Court |
Syllabus by the Court
1. The trial court abused its discretion in its valuation of the closely held corporation, the principal asset of the marriage, by failure to adequately consider relevant facts and fundamental elements of valuation.
2. While the trial court erred in characterizing one-half the present value of the business as a nonmarital asset, it correctly concluded that any marital interest should, under the facts here presented, be distributed to the parties in equal shares.
3. The trial court erred in failing, under the circumstances of record including but not limited to the traditional nature of this marriage, to award the wife permanent spousal maintenance in an amount to be determined in further proceedings.
Cort C. Holten, Karl L. Cambronne, Minneapolis, for appellant.
Robert J. Tansey, Jr., E. Anne McKinsey, Minneapolis, for respondent.
Heard, considered and decided by the court en banc.
Marguerite Nardini has obtained further review of a decision of the court of appeals affirming the trial court's valuation of a business owned by the parties to this marital dissolution proceeding, its characterization of one-half the value as nonmarital property belonging to Ralph Nardini, and its award to Marguerite of temporary spousal maintenance in the amount of $1,200 per month for a 5-year period. Nardini v. Nardini, 385 N.W.2d 339 (Minn.App.1986). We affirm in part, reverse in part, and remand for further proceedings in conformity with this opinion.
Marguerite, presently 56 years of age, and Ralph, now 58 years of age, were married in 1953, with dissolution after 31 years of marriage by judgment and decree entered on June 28, 1985. The marriage produced two children, both of whom are adults who have established their own homes.
Critical to the appropriate distribution of property owned at the time of the dissolution of the parties' marriage are the valuation of the primary business of the parties and its characterization as marital or nonmarital. The record discloses that both prior to and during the marriage, Ralph was engaged in the sale and maintenance of fire protection equipment. He claims that in 1949, prior to his marriage, he purchased a 50% interest in the whole of Chemical Sales & Service, a sole proprietorship, from Peter Dietsch for $2,500 and that he continued in the employ of the business for several years servicing equipment. Marguerite disputes the fact that Ralph's purchase was as extensive as he claimed, contending instead that he bought an interest only in that portion of the business which was engaged in servicing fire extinguishers. Despite this dispute, the record is devoid of any evidence offered by either party of the value of the business, its sales or assets at the time of either the claimed purchase or the marriage.
At the time of the marriage in 1953 Ralph was a uniformed service employee who worked for a salary. Periodically, Marguerite assisted in keeping the books of the business. In 1956, the Nardinis purchased Dietsch's remaining interest for $12,500 and incorporated the business. Several years later the name of the corporation was changed to Nardini Fire Equipment Company of Minnesota (Nardini of Minnesota). During the ensuing years, the parties incorporated Nardini Fire Equipment Company of North Dakota, and finally formed Nardini Development Company to purchase the land in Shoreview and construct the building that Nardini of Minnesota has leased since 1973. While Ralph manages the business and continues to call on customers, the business now has 12 full-time employees and engages 3 independent contractors. At the time of dissolution of the marriage, Ralph held 60% of the shares of Nardini of Minnesota, and Marguerite held the other 40% of the shares.
While the parties were able to stipulate that Nardini of North Dakota had a net value at dissolution of $25,000 and Nardini Development a net value of $165,924, they were unable to agree on either the value of Nardini of Minnesota or its character as marital or nonmarital property. Moreover, while Ralph attributes the great financial success of the businesses to his "key man" effort alone, Marguerite asserts that she too contributed greatly by her years of periodic employment with the company, her extensive civic and social involvements, and her provision of a traditional marital home during the years of growth. We therefore scrutinize the record for evidence on these claims and disputes.
To determine the value of Nardini of Minnesota, Marguerite's expert, Steven Thorp, employed a comparison analysis, examining specific characteristics and financial information of similar companies. In comparing the Nardini business to publicly-traded companies and taking into account factors unique to the Nardini operation, he valued Nardini of Minnesota at $725,213.
John Hawthorne, Ralph's expert witness, estimated value by both a comparison analysis and an examination of similarly structured small fire equipment dealers operating in the metropolitan area. He, too, noted and factored the unique Nardini characteristics, but he estimated the total value of Nardini of Minnesota at $350,000. He then assumed that one-half the value was excepted nonmarital property and reduced the remaining one-half value to reflect a lack of operational control in a one-half interest. He ultimately opined that a one-half interest had a value of $135,135. Separately, Hawthorne estimated liquidation value of the corporation at $391,456. While he acknowledged that this valuation exceeded the sale valuation, he reasoned that the risks and expenses attendant on liquidation must be considered in estimating the market value of the company as a going business.
The record clearly demonstrates Ralph's contributions to the growth of the business. Working within the company since 1949 and functioning as its president and salesperson, Ralph has developed the business contacts and personally claims responsibility for 50% to 60% of the sales based upon his personal relationships with customers and his hard work. Marguerite's contributions were less tangible, taking the form of sporadic bookkeeping services and substantial community involvement, including active volunteer work and service on the Little Canada City Council. Moreover, as indicated, she provided a stable home and family life which permitted Ralph to devote his efforts to business achievements.
The trial court found that Ralph owned a one-half interest in the common stock of Nardini of Minnesota as nonmarital property and assigned a market value of $135,135 to that one-half interest. The trial court found that the other one-half interest in the common stock of Nardini of Minnesota was marital property, which the court also valued at $135,135. The trial court divided the marital property as follows:
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Marguerite Ralph Homestead Pratt carriage home Market 197,500 Market 75,000 Less: Less 1st mortgage 17,663 Mortgage 75,000 0 ________ 2nd mortgage 5,200 174,637 ________ Lot 38, Woodbury, Double Bungalow Lot 37, Woodbury, Double Bungalow Market 39,500 Market 39,500 Less: Less Mortgage 39,500 0 Mortgage 39,500 0 ________ ________ Two vacant lots Market 79,682 Less 1st mortgage 35,682 2nd mortgage 14,000 30,000 ________ Limited partnership 14,338 one-half interest IRA account 2,200 IRA account 2,200 Personal property 25,850 Personal property 5,000 Kidde Company, 162 5,285 shares Nardini of Minn. Pension 55,859 Nardini of Minn. Pension plan, present 1/2 interest 55,859 plan, present value 1/2 interest ________ 308,169 Nardini of Minn. 1/2 interest 135,135...
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