Price v. Price

• Decision Date: 09 December 1985
• Citation: 496 N.Y.S.2d 455,113 A.D.2d 299
• Parties: Jacklynn Naomi PRICE, Respondent-Appellant, v. Harold PRICE, Appellant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 455

496 N.Y.S.2d 455

113 A.D.2d 299

Jacklynn Naomi PRICE, Respondent-Appellant, v. Harold PRICE, Appellant-Respondent.

Supreme Court, Appellate Division,

Second Department.

Dec. 9, 1985.

Tenzer, Greenblatt, Fallon & Kaplan, New York City (James H. Goodfriend, of counsel), for appellant-respondent.

Barry Leibowicz, New York City, for respondent-appellant.

Before MOLLEN, P.J., and MANGANO, O'CONNOR and WEINSTEIN, JJ.

MOLLEN, Presiding Judge.

The instant appeals present an issue which has been the subject of considerable debate, to wit, under what circumstances and to what extent will a nontitled spouse be entitled to share in the appreciation in value of separate property which appreciation occurred from the inception of the marriage to the date of the commencement of the divorce action (see, Domestic Relations Law § 236 [B] [1][d][3] ). More specifically, the appeals raise the question of whether a nontitled spouse's contributions as a homemaker and parent are entitled to recognition by the court in awarding said spouse a share of the appreciated value of the other spouse's separate property.

The parties were married on November 15, 1969 in the State of New York. For several years prior to the marriage defendant had been involved in a family owned corporation entitled Unity Stove Company (Unity), which was engaged in the wholesale supply of kitchen parts and appliances. Defendant had received 25% of the outstanding stock of Unity in 1957 as a gift from his father and another 25% in 1972, during the parties' marriage, also as a gift. In 1982, after the initiation of the instant divorce proceeding, defendant became Unity's sole shareholder by reason of the corporation's redemption of the outstanding shares held by defendant's brother. Defendant also possesses an interest in H & SP Realty, Inc. which holds title to the real estate holdings of Unity.

Prior to the parties' marriage, plaintiff had been working as a registered nurse at Mount Sinai Hospital for approximately one year but terminated her employment upon her marriage to defendant. For the first six months of their marriage plaintiff worked full time in defendant's business. For six months thereafter plaintiff worked part time as a private duty nurse at Doctor's Hospital. Upon the birth of the parties' first of two children in 1972, plaintiff ceased working outside the home and concentrated her efforts on being a homemaker and parent. In addition to her contributions as a homemaker and parent, however, plaintiff conferred with Unity's customers on several occasions, entertained her husband's business associates, attended business conventions with her husband and assisted in other business-related social events.

Plaintiff commenced the instant divorce proceeding in 1981. As part of her equitable distribution award, plaintiff sought a percentage of defendant's interest in Unity and related companies. Special Term denied plaintiff's request, finding that defendant's business interests constituted "separate property" since defendant had acquired his shares in Unity and its related companies as gifts (see, Domestic Relations Law § 236 [B] [1][d][1] ). Special Term also concluded that plaintiff was not entitled, under Domestic Relations Law § 236 (B) (1)(d)(3), to share in the appreciation in value of defendant's separate property business interests which occurred during the parties' marriage since the services she rendered to Unity were "minimal and inconsequential". The court noted further, "[plaintiff's] indirect contributions were likewise insignificant. The business was firmly established by the time she came on the scene and if, indeed, the value of the company did appreciate during the years of the marriage herein, there is little or nothing in the record to support her claim that she was in any way responsible for that success. Any claim that an occasional dinner with business associates, attendance at conventions and trade shows, and occasional entertainment of business acquaintances in the marital home resulted in increased profits for the corporation is purely speculative".

While we agree with Special Term insofar as it determined that defendant's interests in Unity and related companies constituted "separate property" (see, Wegman v. Wegman, (N.Y.Sup.), 494 N.Y.S.2d 933; cf. Roffman v. Roffman, 124 Misc.2d 636, 476 N.Y.S.2d 713), we disagree with the court's conclusion that plaintiff is not entitled to share to some extent in the appreciation of defendant's business interests which occurred during the parties' marriage.

At the outset it is significant to note that the provisions of the equitable distribution statute permit a nontitled spouse, in certain instances, to share in the value appreciation of separate property which occurred during the marriage. This principle is reflected in one of the statute's definitions of separate property contained in Domestic Relations Law § 236(B) (1)(d)(3), which provides:

"property acquired in exchange for or the increase in value of separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse" (emphasis added).

The italicized statutory language has presented the courts with the task of ascertaining the legislative intent behind the phrase "contributions or efforts". As a general rule, the courts have uniformly agreed that where the nontitled spouse makes "direct" contributions such as actively managing the separate property and/or making financial contributions towards the enhancement of such property, that spouse is entitled to share in the appreciation of that asset to the extent attributable to his or her efforts (see, Nolan v. Nolan, 107 A.D.2d 190, 486 N.Y.S.2d 415; Brennan v. Brennan, 103 A.D.2d 48, 53, 479 N.Y.S.2d 877; Jolis v. Jolis, 111 Misc.2d 965, 446 N.Y.S.2d 138, affd. 98 A.D.2d 692, 470 N.Y.S.2d 584; Wood v. Wood, 119 Misc.2d 1076, 465 N.Y.S.2d 475). Divergent views, however, have been expressed by the courts on the question of whether the nontitled spouse's "indirect" contributions as a homemaker, parent and spouse are entitled to similar recognition under Domestic Relations Law § 236 (B) (1)(d)(3). For example in Jolis v. Jolis (supra) the First Department concluded that the homemaking and parenting efforts of the plaintiff wife did not entitle her to a percentage of the appreciation of her husband's separate property interest in a family-owned diamond business. The parties in Jolis had been married for approximately 38 years. Upon the parties' marriage in 1939, plaintiff wife gave up a promising acting and singing career to become a full time wife, homemaker and mother of four sons. At the time of the marriage, the defendant husband had been involved in the family business, which had been formed one year prior. During the marriage, the defendant concentrated his efforts on the diamond business which had achieved extraordinary success. The trial court in Jolis determined that while plaintiff's services as a homemaker and parent were substantial, the effect such contributions had on the success of the defendant's business was primarily "indirect and speculative" (Jolis v. Jolis, supra, 111 Misc.2d at p. 979, 446 N.Y.S.2d 138) and that these indirect contributions did not entitle the plaintiff to share in the appreciation in value of her husband's business. In construing Domestic Relations Law § 236 (B) (1)(d)(3), the trial court in Jolis found it significant that the clause did not contain the specific language of Domestic Relations Law § 236 (B) (5)(d)(6) requiring the court in calculating a distributive award of marital property to consider a spouse's "contributions and services as a spouse, parent, wage earner and homemaker, and to the career or career potential of the other [spouse]". Thus, the court reasoned that the Legislature apparently intended a construction of the phrase "contributions or efforts" toward the appreciation in value of separate property to exclude these types of indirect contributions (Jolis v. Jolis, supra, at p. 979, 446 N.Y.S.2d 138).

On appeal, the First Department in Jolis, with a lone justice dissenting, agreed that the omission of the quoted language from Domestic Relations Law § 236 (B) (1)(d)(3) was relevant to the construction of the phrase "contributions or efforts" found in that section. Interestingly, however, the court limited the scope of its holding in Jolis by stating;

"[W]e decline to foreclose the possibility that other cases may disclose circumstances in which services as a spouse, parent, wage earner or homemaker in fact contributed to the appreciation of the other spouse's separate property, circumstances not present in the instant case" (Jolis v. Jolis, supra, 98 A.D.2d at p. 692, 470 N.Y.S.2d 584).

In recent cases, trial and appellate courts have expressed a more liberal interpretation of Domestic Relations Law § 236 (B) (1)(d)(3). In Wood v. Wood, 119 Misc.2d 1076, 465 N.Y.S.2d 475, supra, for example, Justice Geiler, disagreeing with the holding in Jolis, expressed the view that a spouse's indirect contributions as a homemaker and/or parent may be considered by the court in awarding a percentage of the appreciation of the other spouse's separate property. Justice Geiler, relying on the legislative intent inherent in the equitable distribution statute, reasoned that the institution of marriage is a joint enterprise whose success is dependent on a variety of factors, financial and otherwise. "The nonremunerated efforts of raising children, making a home, performing a myriad of personal services and providing physical and emotional support are, among other noneconomic ingredients of the marital relationship, at least as essential to its nature and maintenance as are the economic factors, and their worth is consequently entitled to substantial recognition" (Wood v. Wood, supra, at p. 1079, 465 N.Y.S.2d 475). With this premise, Justice Geiler construed ...