Zold v. Zold, No. 5D03-148

• Decision Date: 25 June 2004
• Docket Number: No. 5D03-148, No. 5D03-2117.
• Citation: 880 So.2d 779
• Parties: John F. ZOLD, Appellant, v. Sherry Palicte ZOLD, Appellee.
• Court: Florida District Court of Appeals

880 So.2d 779

John F. ZOLD, Appellant, v. Sherry Palicte ZOLD, Appellee.

Nos. 5D03-148, 5D03-2117.

District Court of Appeal of Florida, Fifth District.

June 25, 2004.

Rehearing Denied August 18, 2004.

Charles W. Willits, Orlando, for Appellant.

Norman D. Levin and Richard L. Trionfo of Norman D. Levin, P.A., Longwood, for Appellee.

PETERSON, J.

John F. Zold appeals a final judgment dissolving his marriage to Sherry Palicte Zold. He alleges that the trial court erred: (1) in determining his percentage of ownership of capital stock in Tri Tech Electronics, Inc., ("Tri Tech"), a close corporation electing to be taxed pursuant to Subchapter S of the Internal Revenue Code; (2) in attributing income to him from Tri Tech; (3) in ordering excessive support obligations which leave him without sufficient funds with which to support himself; (4) in awarding permanent alimony to Sherry, whom he alleges to be able to be self supporting; and (5) in awarding attorney's fees to her.

John, who was sixty-five years of age, and Sherry, who was fifty at the time of the trial, have one fifteen year old child. John is the chief executive officer of Tri Tech and Sherry was a full-time housewife with one year of college. She was employed as a secretary making $20,000 per year prior to the marriage.

On November 27, 2002, the trial court ordered John to pay Sherry • $172,088.50 within sixty days • 1,797.66 monthly until $200,000, plus interest @ 7% was paid • 5,000.00 monthly as permanent alimony • 520.94 monthly as child support. • ? Premiums on a $500,000 life insurance policy, the amount of which is unknown. • ? Health and dental insurance. • ? One-half of the child's clothing, schooling, entertainment, and other and uninsured medical expenses. ___________ $189,406.20 + ===========

An order dated June 4, 2003, supplemented the November 27th order and required payment of Sherry's attorney's fees at the rate of $1,000 per month on a $4,000 award, plus interest. A second order also required payment of Sherry's attorney's fees and costs at the rate of $1,000 per month on a $90,000 award. The total burden under all three orders required John to pay at least an estimated $10,000 per month plus the $172,088.50 lump sum within sixty days.

The only marital asset distributed to John, and the only source of income to satisfy the obligations imposed on him by the trial court, was his interest in Tri Tech, the capital stock of which is owned by John and one other stockholder. The percentage of ownership by the two shareholders, the value of John's shares of stock and the income available to John from this corporation form the main issues of this appeal.

PERCENTAGE OF OWNERSHIP

John disputes the trial court's finding that his portion of the capital stock is worth $890,000. He claims that this value was incorrectly determined by applying a percentage rate of 57.15428, found by the trial court to be his percentage of ownership of the Tri Tech stock. John claims he only owns forty percent. There is substantial competent evidence in the record, however, to support the trial court's finding that John owned 57.15428 percent of the Tri Tech stock. E. g., Deakyne v. Deakyne, 460 So.2d 582, 583 (Fla. 5th DCA 1984).

INCOME

The source of all John's income is from Tri Tech. Tri Tech and its two shareholders have elected to be taxed under Subchapter S of the Internal Revenue Code, which means that all corporate income is "passed through" to the shareholders in accordance with their percentage ownership of the stock of the corporation. "Pass through" income would be reported on the shareholders' individual federal income tax returns. Although all of the corporate income must be reported and taxed, the individuals do not necessarily receive distributions of cash equal in amount to the income subject to taxation. Only that amount of cash is distributed in excess of what must be retained for corporate purposes.¹

It is apparent that the final judgment includes in John's income, for purposes of establishing support and equalization of marital assets, all of John's Subchapter S share of Tri Tech's income and considers Tri Tech's cash as available to John for the payment of obligations established in the final judgment and award of attorney's fees.

When a corporation has more than one shareholder, an officer/shareholder has a fiduciary duty to all shareholders. The corporation is not the personal piggy bank for any one shareholder simply because that shareholder may have a controlling interest in the corporation and is also the chief executive officer. Financial responsibilities to creditors and employees must be satisfied before distributions to shareholders take place if a corporation is to remain viable. Once the distributions are found to be possible, the distributions must be pro-rata in accordance with the percentage...