Wald v. Wald

• Decision Date: 04 December 1996
• Docket Number: No. 960031,960031
• Citation: 556 N.W.2d 291
• Parties: Marion E. WALD, Plaintiff and Appellant, v. Roger J. WALD, Defendant and Appellee. Civil
• Court: North Dakota Supreme Court

Page 291

556 N.W.2d 291

Marion E. WALD, Plaintiff and Appellant, v. Roger J. WALD, Defendant and Appellee.

Civil No. 960031.

Supreme Court of North Dakota.

Dec. 4, 1996.

Carol Ronning Kapsner, of Kapsner & Kapsner, Bismarck, for plaintiff and appellant.

Orell D. Schmitz, of Schmitz, Moench & Schmidt, Bismarck, for defendant and appellee. Appearance by appellee Roger J. Wald.

SANDSTROM, Justice.

Marion E. Wald appeals from a judgment granting her a divorce from Roger J. Wald, distributing their marital property, and awarding her temporary spousal support. We affirm in part, but we conclude the trial court's method of distributing a major item of marital property and failure to award Marion Wald adequate, permanent spousal support are clearly erroneous, and we reverse and remand for further proceedings.

I

Marion and Roger Wald married in Bismarck in 1968 and had two children who, at the time of this divorce proceeding, were adults. The couple was divorced earlier, in 1981, but remarried each other in 1983. They separated in July 1993, after Marion Wald discovered Roger Wald was having an affair with another woman.

At the time of trial, Marion Wald was 47 years old and employed as a secretary for Dakota Fence Company. She had worked there for 15 years and was earning $9.25 per hour, but received no employer-paid health or life insurance. She is regularly laid off during the early months of each year and receives unemployment compensation during those times. She has a high school education and never desired any formal post-high school education. Between 1992 and 1994, her annual income ranged from $16,492.18 to $18,733.74 in wages and unemployment compensation.

In 1986, Marion Wald was diagnosed with breast cancer and had a lumpectomy and 36 radiation treatments. In June 1986, she also had open heart surgery to replace an aortic valve. In July 1986, because of blocked arteries in her legs, she had an aortic femoral bypass. In 1990, her breast cancer reappeared and she had a mastectomy. Although she has not had cancer problems since the mastectomy, she has recently been experiencing soreness in her legs when she walks and believes her legs are "blocking up" again. Because of her medical history, she purchases her insurance through the program of the Comprehensive Health Association of North Dakota with Blue Cross Blue Shield.

At the time of trial, Roger Wald was 48 years old and was self employed as an independent contractor who sells business forms for American Business Forms (ABF). He and Marion Wald were joint owners of 30 shares of stock in Ames Computer Forms, Inc. (Ames), a manufacturer of business forms that Roger Wald sells through ABF. Roger Wald is employed by and on the board of directors of Ames, a closely held corporation with ten principal shareholders. The 30 shares of stock represent approximately 8.5 percent of the company's outstanding shares. Roger Wald has a bachelor of science degree with a major in physical education and a minor in industrial arts. Between 1992 and 1994, his annual net income from ABF and Ames ranged from $76,708.54 to $81,677.65.

In 1993, Roger Wald suffered a heart attack. He has high cholesterol and receives checkups and stress tests every six months. Roger Wald testified he feels well and believes he has recovered from the heart attack.

The parties' major assets were their home in Bismarck, which the trial court valued at $120,000, but which was also subject to two mortgages totaling $75,000, and their jointly-owned Ames stock, which the trial court valued at $82,080. The trial court found the net value of the marital estate, including IRAs, mutual funds, debentures, profit sharing accounts, annuities, and passbook savings accounts, was $283,919. The trial court awarded Marion Wald property that had a net value of $162,310, and awarded Roger Wald property that had a net value of $121,609. In addition, the trial court awarded Marion Wald a vehicle valued at $15,000 and awarded Roger Wald a vehicle valued at $26,000 "together with any indebtedness." The trial court made no specific findings on the possible debt remaining, but noted the evidence "is quite unclear as to the indebtedness of these vehicles."

The trial court awarded Marion Wald the parties' home subject to the two mortgages, and awarded Roger Wald sole ownership of their jointly-owned Ames stock. However, Roger Wald was ordered to pay Marion Wald one-half of the stock value, $41,040, over a seven-year period at seven percent interest, resulting in a monthly payment to Marion Wald of $619.40. The liquid assets were essentially split evenly between them. Because of the "great disparity between the parties' income, earning capacity, and future needs," the trial court also ordered Roger Wald to pay Marion Wald $600 per month in spousal support for 10 years, or until either party dies or Marion Wald remarries. Furthermore, because Roger Wald "admitted adultery," the trial court found the " 'fault' for the breakup of this marriage rests with the husband."

The district court had jurisdiction of this divorce action under N.D.C.C. § 27-05-06. Marion Wald's appeal from the judgment is timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. Art. VI, § 6, and N.D.C.C. § 28-27-01.

II

The trial court has discretion, after hearing the testimony and applying the Ruff-Fischer guidelines, see Ruff v. Ruff, 78 N.D. 775, 52 N.W.2d 107 (1952) and Fischer v. Fischer, 139 N.W.2d 845 (N.D.1966), to equitably distribute marital property based on the facts and circumstances in each case. Zander v. Zander, 470 N.W.2d 603, 605 (N.D.1991); N.D.C.C. § 14-05-24. A property division need not be equal to be equitable, but a substantial disparity should be explained. Spooner v. Spooner, 471 N.W.2d 487, 491 (N.D.1991). A trial court's findings on matters of property division will not be set aside on appeal unless they are clearly erroneous under N.D.R.Civ.P. 52(a), or they are induced by an erroneous view of the law. Heley v. Heley, 506 N.W.2d 715, 718 (N.D.1993).

Marion Wald challenges several aspects of the trial court's division of marital property.

A

She asserts the trial court's award to her of the parties' home is clearly erroneous because its value is substantially less than the net value found by the court and because it amounts to a distribution of a non-income producing asset to the spouse with the least earning potential. She contends the court should have ordered the home sold and the net proceeds divided equally between the parties after payment of the two mortgages encumbering the property.

Although the parties agreed the home had a value of $120,000 subject to mortgages totaling $75,000, Marion Wald asserts the actual net value of the home is substantially less than the $45,000 net value assigned to it by the trial court because she will incur adverse tax consequences when the home is sold. This Court has recognized matters of taxation are part of the pragmatic effects of property division and spousal support and should be considered by the trial court in making those findings. See, e.g., Kostelecky v. Kostelecky, 537 N.W.2d 551, 554 (N.D.1995); Neubauer v. Neubauer, 524 N.W.2d 593, 595 (N.D.1994). But a trial court should do so only "when it is properly informed, ..." Stoelting v. Stoelting, 412 N.W.2d 861, 865 (N.D.1987). This Court said in Kaiser v. Kaiser, 474 N.W.2d 63, 69-70 (N.D.1991):

"[A] trial court in a divorce action should consider potential taxes in valuing marital assets only if (1) the recognition of a tax liability is required by the dissolution or will occur within a short time; (2) the court need not speculate about a party's future dealing with the asset; (3) the court need not speculate about possible future tax consequences; and (4) the tax liability can be reasonably predicted."

In this case, even if the trial court was convinced Marion Wald was going to sell the home, she presented no evidence to support her claim she would suffer an adverse tax consequence upon its sale. Without any evidence Marion Wald would receive a taxable gain on the sale of the property, or if so, the amount of gain, the trial court's finding $45,000 to be the net value of the home is not clearly erroneous.

Although Marion Wald complains the home is a nonproducing asset, she did receive more than one-half, approximately 57 percent, of the parties' marital property. Most of those assets are liquid. We cannot say the trial court's award of the home to Marion Wald is clearly erroneous.

B

Marion Wald asserts the distribution of the 30 shares of Ames stock to Roger Wald was clearly erroneous because the stock was substantially undervalued by the trial court and because more equitable methods of distributing the stock existed.

Ames' corporate accountant testified the book value of the stock was $81,930. The accountant explained book value is arrived at by subtracting a corporation's liabilities from its assets and then dividing the result by the number of outstanding shares of stock. Use of this method resulted in a per share value of $2,731. The accountant testified the fair market value of the parties' 30 shares of Ames stock was "indeterminable." Although acknowledging book value and fair market value are not the same, the accountant testified one sale of stock had occurred during the corporation's existence and the corporation paid 80 percent of book value for redeeming those shares. The accountant further testified because the 30 shares constitute only 8.5 percent of the stock in the closely held corporation, Roger Wald would have difficulty receiving book value if he sold the shares.

Marion Wald presented no evidence to dispute the corporate accountant's testimony about the book value of the stock. Nor did she attempt to value the stock by other recognized accounting methods. Instead, she proposed taking the average income distributed from the Ames stock during 1992 and 1993,...