Spector v. Spector

• Decision Date: 05 June 1963
• Docket Number: No. 7183,7183
• Citation: 382 P.2d 659,94 Ariz. 175
• Parties: Eleanor W. SPECTOR, Appellant and Cross-Appellee, v. Albert B. SPECTOR, Appellee and Cross-Appellant.
• Court: Arizona Supreme Court

Page 659

382 P.2d 659

94 Ariz. 175

Eleanor W. SPECTOR, Appellant and Cross-Appellee, v. Albert B. SPECTOR, Appellee and Cross-Appellant.

No. 7183.

Supreme Court of Arizona, In Banc.

June 5, 1963.

Rehearing Denied July 2, 1963.

Moore & Romley, Phoenix, for appellant and cross-appellee.

Lewis, Roca, Scoville, Beauchamp & Linton, Phoenix, for appellee and cross-appellant.

JOHN F. MOLLOY, Superior Court Judge.

This case originated as an action for divorce by appellee husband, with the cross complaint by appellant wife. The trial court terminated the marriage without specifying in whose favor the issue as to the grounds for divorce was decided. Custody of the two children was awarded to the husband with reasonable rights of visitation granted to the wife. The trial judge also made a distribution of community property between the parties, and made allowance for alimony, attorney's fees, and costs in favor of the wife. From the judgment the wife appeals and husband cross-appeals.

This Court must view the evidence and all reasonable inferences to be drawn from the evidence in the light most favorable to upholding the decree of the trial judge. Todaro v. Gardner, 72 Ariz. 87, 231 P.2d 435. Viewed in that light, the evidence is as follows: The parties have been married more than eighteen years. They had two children, fourteen and sixteen years old. The children testified they preferred to be with their father and there was testimony from which the trial judge could have found that it would be in their best interest to be with him. At the beginning of the marriage, the husband's earnings were meager, and at the time of the trial all of the property of the couple was community property. The husband is a practicing lawyer and the wife has little experience other than as a housewife. Starting from a modest beginning the couple developed a relatively luxurious standard of living. The house in which they lived was worth between $65,000 and $96,000 according to the testimony of the husband and an inventory filed by him. There was no independent testimony as to its worth.

The bulk of the community property was not liquid. As its cost basis is considerably less than its worth at the time of trial, a liquidation of the property would make necessary the payment of a considerable amount of income taxes. Also, all of the property, including stock in closely held corporations, was heavily encumbered and a forced sale would realize less than its actual value. After the complaint was filed, the husband continued to manage the community property, invested substantial sums in various enterprises, and incurred substantial community debts in the process. The community owned 1,200 shares of stock in the Foothills Development Company. This stock was one-half of the outstanding stock of the company. The principal asset of the company was 240 acres of land in the Squaw Peak area north of Phoenix. The land had been purchased by the Spectors, placed in the corporation, and one-half interest in the stock sold to third parties for $240,000 with the condition that the Spectors loan the corporation $100,000 at 3% interest to develop the land. The agreement also provided that the third persons were to be repaid for their full investment before the Spectors received anything from the corporation and that the loan was to be repaid only with the approval of the third persons. The husband variously testified that the stock owned by the couple was worth somewhere between $24,850 (its unrecovered cost basis) and $120,000. The land itself was worth $3,000 an acre at the time of trial, and there was testimony that its value would increase by $500 per acre when a public street was opened. (According to statements contained in appellant's brief, the street opened subsequent to the decree.)

A payment of $16,077.07 had been made by the husband to a woman with whom he had had financial dealings over a period of years. These dealings were mostly partnership transactions, were financially successful, and the profit from them formed a considerable part of the community property accumulated by the couple. Both the husband, the husband's law partner, and the woman testified that the payment was in furtherance of a joint venture in which profits and losses would be shared three ways by the husband, the woman and the husband's law partner.

Between January of 1958 and April of 1960, the husband gave a daughter by a previous marriage $11,000. The wife agrees that it was the duty of the husband to support the daughter but contends that the payment could not be made without her consent. The daughter had been supported by the husband at a cost of approximately $3,000 per year prior to his leaving his wife in January of 1958 and filing a complaint for divorce.

Both the husband and the wife submitted accountings as to the financial standing between the husband and his law partner. The husband's accounting shows his equity in the law partnership to be $2,730.94 less a debt of $391.77, or $2,339.17. The accounting by the wife's accountant shows this interest as $54,108.17.

The trial judge allowed the wife $450 per month alimony for the first year after the divorce and $350 per month thereafter until her death or remarriage. He also decreed that title to the community property, valued at $483,100 remain in the husband, but that the wife be paid $142,000 payable in five annual installments without interest. The husband took title with the obligation to pay community property debts of $165,275 in addition to the encumbrances on the property and to satisfy any income tax liabilities of the parties. The husband also was obligated to pay the wife's attorneys' fees of $15,000, and costs of $5,197.33.

The wife has made numerous assignments of error, one of which attacks the granting of custody of the minor children. These children are both of an age 'requiring education and preparation for labor or business' and under applicable statute (A.R.S. § 14-846) the father is to be given preference over the mother, other facts being equal. The trial court's discretion in this regrad will not be disturbed except for a clear abuse. Grimditch v. Grimditch, 71 Ariz. 198, 225 P.2d 489 (modified on rehearing, 71 Ariz. 237, 226 P.2d 142). Considering the intent of the statute, the ages of these children, their stated preference to be with the father, and the trial judge's finding that it would be in their best interest to be with their father, we find no abuse.

The amount of alimony given the wife is also within the sound discretion of the trial court, Cummings v. Lockwood, 84 Ariz. 335, 327 P.2d 1012, and the use of the words 'until her death or remarriage' cannot be considered a restriction upon the power of the trial court to modify the decree as is contended. The words merely establish the two conditions subsequent, the occurrence of which would terminate the payment of alimony and do not limit the jurisdiction of the court in any respect.

The trial judge's finding that the payment of $16,077.07 to the woman with whom the husband had had financial dealings was pursuant to a joint venture in furtherance of the community property was supported by credible evidence, and it will not be set aside. cf. Patzman v. Marshall, 90 Ariz. 1, 363 P.2d 599. It was within his discretion to accept the testimony of the husband, as owner of the house, that its value at the time of trial was $65,000. Board of Regents v. Cannon, 86 Ariz. 176, 342 P.2d 207.

The trial court did not err in failing to make a specific finding as to the value of each major item of community property, as his findings are sufficient for this court to determine the total value of the community property, the total amount of community liabilities and the amount given the husband and the wife. Gilliland v. Rodriquiz, 77 Ariz. 163, 268 P.2d 334. The trial court was also acting within its discretion in leaving title to the property in the husband and awarding the wife a cash amount, considering the delicate business problems involved in maintaining the value of the property and the prospective losses which would result from its liquidation. A.R.S. § 25-318, subd. (A). $The major contentions made by the wife are that the total value of the community property was in excess of that found by the trial judge. The wife contends that all debts incurred by the husband on account of management of the community business after the filing of the divorce should be charged to the husband personally. She relies on A.R.S. § 25-314 which reads:

'After an action for divorce is filed, the husband shall not contract any debts on account of the community property nor dispose of such property. Any alienation made by the husband after The action is filed shall be null and void if made with a fraudulent intent to injure the rights of the wife.'

There was testimony that the community debts contracted by the husband after the filing of the divorce complaint were for the benefit of the community property. Pursuant to A.R.S. § 25-211, the husband is in charge of the business affairs of the community. See, e. g., Mortensen v. Knight, 81 Ariz. 325, 305 P.2d 463. His position is analogous to that of a trustee. Vai v. Bank of America National Trust & Savings Ass'n, 56 Cal.2d 329, 15 Cal.Rptr. 71, 364 P.2d 247; Linton v. Linton, 78 Idaho 355, 303 P.2d 905; Keller v. Keller (Tex.Civ.App.), 122 S.W.2d 270 (Modified in 135 Tex. 260, 141 S.W.2d 308, 309). A construction of the statute which would result in a flat prohibition against the contracting of debts by the statutory manager of the business affairs of the community property during the pendency of a divorce could result in destruction of the property itself. The burden, is, of course, upon the husband to justify his management of the business, and any debts incurred. If the husband has justified his management to the trial court's satisfaction, as it appears was the case here, he has shouldered his...