Zisblatt v. Zisblatt

• Decision Date: 17 July 1985
• Docket Number: No. 2-84-110-CV,2-84-110-CV
• Citation: 693 S.W.2d 944
• Parties: Irene ZISBLATT, Appellant, v. Jack ZISBLATT, Appellee.
• Court: Texas Court of Appeals

Page 944

693 S.W.2d 944

Irene ZISBLATT, Appellant, v. Jack ZISBLATT, Appellee.

No. 2-84-110-CV.

Court of Appeals of Texas Fort Worth.

July 17, 1985.

Cribbs & McFarland, P.C., James A. Cribbs and Paul F. Wieneskie, Arlington, for appellant.

Hill, Heard, Oneal, Gilstrap & Goetz, Frank M. Gilstrap and Scott Curry, Arlington, for appellee.

Before FENDER, C.J., and ASHWORTH and JOE SPURLOCK, II JJ.

OPINION

JOE SPURLOCK II, Justice.

This case is an appeal from the property division ordered in a divorce case. Appellee, Jack Zisblatt, petitioned for divorce from his wife, appellant, Irene Zisblatt. Irene cross-petitioned against Jack for divorce and filed a third party action against Dispo Sales and Service Corporation (hereinafter Dispo), a corporation owned by Jack at the time the parties were married. Irene's third party action against Dispo was on the theories of alter ego, transfers of community property to the corporation in fraud of Irene's rights, and for a reimbursement of the community for community labor and services provided to Dispo. Trial was to the court, which granted the petition for divorce but denied Irene's third party action against Dispo, and divided the property among the parties, holding there was no fraudulent transfer of community property, that Dispo was not the alter ego of Jack, and that the community was not entitled to any reimbursement from Dispo. The court filed findings of fact and conclusions of law. From the judgment dividing the community property, Irene has appealed.

We reverse and remand.

Jack and Irene Zisblatt were married in 1971. No children were born of the marriage. Jack filed a petition for divorce in November of 1981, and trial began on August 16, 1983, and continued into September of 1983. On January 30, 1984, the trial judge signed the decree of divorce. He signed findings of fact and conclusions of law on May 23, 1984.

Irene has raised fifteen points of error on appeal. Her points of error one through seven challenge the legal and factual sufficiency of the evidence to support the trial court's findings of fact and conclusions of law concerning the contractual relationship between Jack, Dispo and Lermer GmbH (hereinafter Lermer) and the trial court's disposition of Dispo's assets. Points of error eight through fourteen challenge the factual sufficiency of the evidence to support the trial court's findings of fact and conclusions of law which support the trial court's refusal to pierce the corporate veil of Dispo. Point of error fifteen, contained in appellant's second supplemental brief, challenges the legal and factual sufficiency of the evidence to support the trial court's findings concerning the abandonment of a 1979 contract between Lermer, Jack and Dispo.

Irene's entire appeal centers around the business relationship between Jack and Dispo and the contractual relationship between Jack, Dispo and Lermer. The majority of the trial involved testimony and documentary evidence concerning these business and contractual relationships. Irene attempted to show that the assets of Dispo were in fact community assets because almost every asset normally associated with a community estate was claimed by Jack to be owned by Dispo.

Jack earns his living as a manufacturer's representative and during the marriage sold products manufactured by Lermer, Best Textile, Gamco, Gallo, AFC, Inter Mountain Design, American Business Group and B & H Container. These products are used primarily in the transportation industry, mostly by airlines and railroads. He also sold products used in the packaging industry and manufactured by Berles, V & F Foam, and Enterprise Corrugated.

At the time of trial, Jack had worked for Berles for about 30 years and he had been selling Berles products on a commission basis for over twenty years. He estimated that, at the time of his marriage, his income was 95% from Berles sales and only 5% from sales associated with Dispo. At the time of separation, Jack estimated that such division of income had balanced out to approximately 50% from each source.

All of the commission for sales of these various products were received by virtue of either written or oral contracts between the manufacturer and either Jack or Dispo. With the exception of those paid by Berles, all commissions paid directly to Jack were deposited into the account of Dispo regardless of the identity of the party to the contract. Dispo then paid a salary to Jack. As of June 30, 1983, the cash assets of Dispo amounted to $542,633.00.

The parties, after their marriage, lived in New Jersey in the home owned by Irene. In return for Jack's expenditure of $50,000.00 of his separate funds on Irene's home, she conveyed one-half of that property to him. They decided to move to Texas in 1979 to be near American Airlines' headquarters, since a major portion of Jack's sales were to that airline. In Arlington, the couple lived in a home which was purchased in Dispo's name at a cost of $242,780.00. The Zisblatts added 635 square feet to the Arlington home to accommodate Jack's office as well as a bathroom and another room for entertaining customers. Thereafter, Dispo made the mortgage payments and the Zisblatts paid rent to Dispo.

In 1980, the New Jersey home was sold for $98,000.00. The proceeds were used to purchase a certificate of deposit. In 1981 the Zisblatts, using the certificate as collateral, borrowed $48,000.00 and used these funds to make a loan to Dispo in the same amount, which funds were used to build another addition to the home in Arlington. When the $98,000.00 certificate matured, the $48,000.00 bank loan of the Zisblatts' was paid off and $52,000.00 of the remainder was invested in another certificate of deposit, which upon maturity and with the court's permission was divided equally between the parties. The $48,000.00 was never repaid to the Zisblatts by Dispo.

At trial, Dispo's certified public accountant, Richard Levine, testified that corporate funds from Dispo in the amount of $24,807.41 were used to purchase the furniture that went into the Arlington home. Jack testified that all of the furnishings in the Arlington home were paid for and owned by Dispo. He further testified that all of the furniture was in Irene's possession and that it had a value of "about $12,000.00".

The only automobile in the family was a 1979 Buick, however, Dispo leased two Lincoln Continentals, one of which Jack used when he was working from his home in Texas and the other was kept in the New Jersey area for his use in his frequent trips there. Levine's testimony indicates that Dispo paid all of the utilities at the Arlington home and for the home's maintenance as well. Dispo provided a medical program for employees and during their marriage Dispo paid $32,680.00 in medical expenses for Jack and Irene.

Jack and Irene literally owned nothing more than the clothes on their backs. It is obvious why Irene attempted to bring the assets of Dispo into the community estate. She alleged that Dispo's largest account, Lermer, was in fact a community asset and she attempted to get the court to pierce the corporate veil. These attempts were part of her overall attempt to either have Dispo's assets declared to be community assets or to have the community estate reimbursed by Dispo for community time and effort expended in enhancing the value of Dispo. Irene specifically pled the community estate's right to reimbursement.

In the divorce decree, Irene was awarded her personal belongings, the 1979 Buick, the furniture in her possession, $25,000.00 to be paid by Dispo on the Zisblatts' loan of $48,000.00 for additions to the home, a townhouse (subject to indebtedness acquired by Irene on a lease purchase contract after Dispo sold the parties' home) $22,000.00 from an escrow account (of which $8,000.00 had already been paid to her), a note in the amount of $51,314.97 to be executed by Jack, and attorney's fees of $22,500.00 to be paid by Dispo. The award to Jack included his personal belongings, all Dispo stock and other interests in Dispo, Jack's Dispo employment benefits, all of Berles employment benefits, all of his insurance policies, all of the parties' interest in an investment of Compu-Med, Inc., and all interest of the parties in David Associates, a partnership.

The decree of divorce further set aside to Dispo all contracts arising from or in connection with it, together with all funds, accounts and rights received or to be received from such contracts. Dispo further retained all funds and notes payable from the sale of the Arlington home. In making this disposition of property to Dispo, the trial court specifically refers to the contract(s) with Lermer.

At trial and on appeal, the agreement, under which Jack sold Lermer products primarily to American Airlines and Pan American Airlines, was vigorously contended by Irene to be a community asset and equally vigorously contended to be a separate, corporate asset by Jack. The record bears out that the bulk of the more than half-million dollar cash asset of Dispo in 1983 had accumulated from the sale of Lermer products.

The first Lermer agreement dated December 19, 1979, is designated "Agreement between Jack Zisblatt and Lermer GmbH," and is signed by Jack, without reference to Dispo or his corporate office. On January 21, 1980, there was a two paragraph instrument titled "Agreement" between the same parties, containing a minor alteration of rate of commission on 1980 sales. On March 17, 1980, the same parties signed an "Addendum to Agreement between Jack Zisblatt and Lermer GmbH dated December 19, 1979." On September 21, 1980, the same parties signed an instrument reciting "This Addendum dated September 21, 1980, to the Agreement between Jack Zisblatt and Lermer GmbH dated December 19, 1979". None of these agreements mention Dispo and it is noteworthy that the September 21, 1980, instrument contains this recital: "In case of Jack Zisblatt's death ...