Sutliff v. Sutliff

• Decision Date: 01 June 1988
• Citation: 518 Pa. 378,543 A.2d 534
• Parties: , 57 USLW 2011 Gregory L. SUTLIFF, Appellant, v. Carlene SUTLIFF, Appellee.
• Court: Pennsylvania Supreme Court

Page 534

543 A.2d 534

518 Pa. 378, 57 USLW 2011

Gregory L. SUTLIFF, Appellant, v. Carlene SUTLIFF, Appellee.

Supreme Court of Pennsylvania.

Argued Jan. 20, 1988.

Decided June 1, 1988.

[518 Pa. 380] Bonnie D. Menaker, for appellant.

Ronald M. Katzman, for appellee.

Before NIX, and LARSEN, FLAHERTY, McDERMOTT, ZAPPALA, PAPADAKOS and STOUT, JJ.

OPINION OF THE COURT

FLAHERTY, Justice.

This is an appeal from an order of the Superior Court which affirmed in part, and remanded for further proceedings, with respect to an order of the Court of Common Pleas of Cumberland County determining equitable distribution of certain property following a divorce. 361 Pa.Super. 504, 522 A.2d 1144. The action for equitable distribution arose from the divorce of appellant, Gregory L. Sutliff, and appellee, Carlene Sutliff, after their marriage of nearly 25 years. Appellant filed a complaint in divorce in 1982, and, after numerous hearings were held before a master, a report was filed in 1984. Subsequently, in December, 1984, the parties filed a stipulation providing for, inter alia, a bifurcated divorce. A final divorce decree was then immediately entered. On May 7, 1985, the Court of Common Pleas filed an order providing for equitable distribution. An appeal and cross appeal were taken to the Superior Court, whereupon certain elements of tbe equitable distribution scheme were affirmed and others were remanded for further determinations and/or modifications to be made. The instant appeal ensued.

The first issue to be addressed is whether the Superior Court erred in its selection of a valuation date for the marital assets. The Court of Common Pleas utilized October 21, 1981, the date when the parties separated, as the valuation date. The Superior Court concluded, however, that valuation of marital assets should reflect values as of the distribution date rather than the separation date, and, accordingly, the case was remanded for revaluation of certain business interests, including automobile dealerships, that were subject to distribution. The basis for the Superior Court's action was that, because there had been a considerable passage of time between separation of the parties and distribution of their marital assets, substantial fluctuations in the values of those assets may have occurred, which, from an equitable standpoint, should be reflected in the distribution order. We agree.

The Divorce Code contains no express provision governing the selection of a date to be used for valuation of marital property, where equitable distribution is concerned. While the Code clearly states that property acquired after separation is not to be considered marital property, 23 P.S. § 401(e), the question presented here is not whether particular assets are to be deemed marital, as opposed to individually owned, but rather whether assets given to be marital in nature are to be valued at one level or another. It is implicit, however, in the statutory provisions governing equitable distribution that a valuation date reasonably proximate to the date of distribution must, in the usual case, be utilized. Specifically, 23 P.S. § 401(d) provides:

In a proceeding for divorce or annulment, the court shall, upon request of either party, equitably divide, distribute or assign the marital property between the parties without regard to marital misconduct in such proportions as the court deems just after considering all relevant factors including:

(1) The length of the marriage.

(2) Any prior marriage of either party.

(3) The age, health, station, amount and sources of income, vocational skills, employability, estate, liabilities and needs of each of the parties.

(4) The contribution by one party to the education, training, or increased earning power of the other party.

(5) The opportunity of each party for future acquisitions of capital assets and income.

(6) The sources of income of both parties, including but not limited to medical, retirement, insurance or other benefits.

(7) The contribution or dissipation of each party in the acquisition, preservation, depreciation or appreciation of the marital property, including the contribution of a party as a homemaker.

(8) The value of the property set apart to each party.

(9) The standard of living of the parties established during the marriage.

(10) The economic circumstances of each party at the time the division of property is to become effective.

Examination of this statutory provision reveals numerous grounds for an inference that marital property must be distributed with reference to its value at the date of distribution. Indeed, it is inconceivable that the requirement that the distribution be made in such proportions as the court deems "just" could be satisfied without reference to the current values of the assets. The statute, in its enumeration of factors to be considered in making a distribution of marital property, sets forth a number of factors which focus on the present needs and financial situations of the parties, including their "amount and sources of income," "employability," "estate, liabilities and needs," chances for "future acquisitions of capital assets and income," "sources of income," the "value of the property set apart" as non-marital property, "standard of living," and the "economic circumstances of each party at the time the division of property is to become effective." In view of these factors, and with particular reference to the last one which encompasses generally all of the former, and which expressly focuses on the parties' financial circumstances at the time when marital property is to be distributed, it is inconceivable that the legislature intended marital property to be valued at some other time. Granted, there may be situations where marital assets have been consumed or disposed of by one of the parties, thus rendering a current valuation impossible and making it necessary to rely on data that would otherwise be considered stale, but such is not the case here. See generally Sergi v. Sergi, 351 Pa.Super. 588, 594, 506 A.2d 928, 931-932 (1986) (discussion of valuation where marital property is no longer in existence). In the usual case, however, given that the parties' present needs and circumstances are to be a major factor in distributing marital assets, it would be impossible to construct a distribution scheme that would be fully responsive to those needs and circumstances if the court were to act without taking cognizance of the current values of the assets being distributed.

As stated in Bacchetta v. Bacchetta, 498 Pa. 227, 232, 445 A.2d 1194, 1197 (1982), "By providing for the distribution of property acquired during the marriage, the Divorce Code permits the correction of ... economic injustices...." See also 23 P.S. § 102(a)(6) (legislative intent of the Divorce Code is to "[e]ffectuate economic justice between parties who are divorced ... and insure a fair and just determination and settlement of their property rights.") Yet, one can readily imagine the economic injustices that would be inflicted by distributing property without regard to its value. It cannot be said that distributions based upon stale valuations are based on value, for value is by no means a constant.

If, as has been suggested, marital property values were to be fixed as of the date of the parties' separation, or as of the date of filing a complaint in divorce, severe injustices would at times be inflicted upon the parties concerned. Volatile market conditions and changing economic circumstances can render assets that had been valuable months or years earlier virtually worthless in the present, and vice versa. Publicly traded securities may be worth a fortune one day, and a pittance the next. Privately owned business interests may be valued as a gold mine, or as a scrimption, depending on the times. Automobiles that were once of considerable worth may, through abuse or neglect, rapidly become valueless. Other examples too numerous to mention scarcely require enumeration. In view of these commonly recognized aspects of valuation, it is difficult to conceive justification for the view that stale valuation data, i.e., data that does not reflect values reasonably proximate to the date of distribution, should be used by the court in setting a distribution scheme. See Sergi v. Sergi, 351 Pa.Super. at 594, 506 A.2d at 932 ("[E]quitable results will most likely flow from providing the court with the most recent information available....").

The present case presents a prime example of circumstances where reliance upon stale valuation data could lead to an unjust distribution of property. The parties separated in October of 1981, a complaint in divorce was filed in February of 1982, and distribution of marital assets was ordered by the Court of Common Pleas in May of 1985. Clearly, the time lapse between the former dates and the latter date, when distribution was ordered, is such that highly significant value fluctuations may have occurred. To distribute property without regard to those fluctuations would be illogical, and would undermine the legislative intent of making the equitable distribution process responsive to the contemporaneous needs and financial situations of the parties. We conclude, therefore, that the Superior Court properly remanded this case for determination of revised asset valuations, thereby negating the Court of Common Pleas' reliance upon values fixed as of the date of separation.

The next issue presented concerns the classification of property as marital, or non-marital, under provisions set forth in 23 P.S. § 401. A statutory presumption is established in favor of classifying property as marital when it was acquired during marriage:

All property, whether real or personal, acquired by either party during the marriage is presumed to be marital property regardless of whether title is held individually or by the parties in some form of co-ownership such as...