Jolis v. Jolis

•— Judgment, Supreme Court, New York County (Leonard N. Cohen, J.), entered January 27, 1982, which granted maintenance and an equitable distribution of property on a previously granted divorce, affirmed, without costs. The facts are set forth in detail in the trial court’s careful and comprehensive opinion (111 Mise 2d 965) and need not be restated. Upon the parties’ cross appeals from the judgment entered we affirm essentially for the reasons stated in that opinion, but with the following additional comments. One of the issues presented required construction of section 236 (part B, subd 1, par d, cl [3]) of the Domestic Relations Law, which included in the definition of separate property “the increase in value of separate property, except to the extent that such appreciation is due in part to the contributions or efforts of the other spouse”. Trial Term found it significant (p 979) that this clause does not contain specific language requiring the court to consider a spouse’s “ ‘contributions and services * * * as a spouse, parent, wage earner and homemaker, * * * to the career or career potential of the other party’ ”, which are prescribed as relevant factors in determining the equitable distribution of marital property (Domestic Relations Law, § 236, part B, subd 5, par d, cl [6]) and the amount and duration of maintenance (§ 236, part B, subd 6, par a, cl [8]). From this the court concluded (111 Mise 2d, at p 979): “It would appear therefore that the Legislature intended a construction of the meaning of a spouse’s ‘contribution of efforts’ toward the appreciated value of ‘separate property’ to exclude considerations of services as a spouse, parent, wage earner, homemaker or other spousal career advancement factors.” We agree that the omission of the quoted language from section 236 (part B, subd 1, par d, cl [3]) is relevant to the construction of the section. However, we decline to foreclose the possibility that other cases may disclose circumstances in which services as a spouse, parent, wage earner, or homemaker in fact contributed to the appreciation of the other spouse’s separate property, circumstances not presented in the instant case. Another issue meriting comment arises from Trial Term’s observation that a certain parcel of undeveloped realty in Arizona, valued at $70,000, was “excludable from marital property as a gift to a third party.” (Ill 693 Mise 2d, at p 973.) It appears from a study of the record, that the husband had loaned the down payment for the property to a woman whom he thereafter married, and he made the initial mortgage payments. The funds so advanced were listed by the husband as a receivable in the amount of $30,916 in his statement of net worth; that amount was conceded by the husband to be marital property, and it was appropriately included in the equitable distribution of marital assets by the court. Accordingly this case does not present the question whether, and under what circumstances, one spouse may exclude assets from marital property, to the detriment of the other spouse, by a gift to a third party. Responding briefly to certain observations in the dissenting memorandum, we perceive no inconsistency between the trial court’s evaluation of the wife’s services as homemaker, spouse, mother and manager of the household in determining her right to a portion of the marital assets as well as to maintenance, and the trial court’s conclusion that these services had not contributed to the appreciation of her husband’s separate property. Omitted from the dissenting memorandum, but surely significant on this issue, is the striking circumstance that the major increase in the value of the husband’s Diamond Distributors, Inc. (DDI) stock occurred between December 31, 1977 and December 31, 1979, several years after the effective breakup of the marriage. As to the wife’s possible entitlement to any part of this increase in value, the record fully supports the trial court’s findings of fact and the conclusion of law specifically addressed to this issue: “the DDI stock profits and resulting increased value during marriage were attributable to market factors and to the husband, his father, uncle and others in the worldwide management of DDI as well as the husband’s own personal premarital and marital social and business associations and .relationships and those of his family. In fact, it appears that greatest increase in profits which occurred in recent years resulted from the ‘diamond fever’ of the marketplace, something beyond even the control of DDI. Some of the indirect alleged services testified to by the wife were postseparation and subsequent to her knowledge of the husband’s living with another woman and hardly can be characterized as efforts which contributed to increased DDI profits. Some of her activities interfered with her husband’s business and social relationships, rather than being supportive during this postseparation period. Although the wife undoubtedly maintained warm friendships with some of her husband’s social and business friends and spouses, the extent to which such relationships resulted in increased DDI profits is purely speculative. The value of his stock increased or declined due to management and market factors. The wife could not correlate how and in what manner her indirect spousal efforts or services led to the appreciation in the value of DDI stock during marriage. Accordingly, the court finds the wife is not entitled to a distribution of the appreciated value of her husband’s separate property of DDI stock.” (Ill Mise 2d 965, 980.) As to the observation in the dissenting memorandum that distribution of retained earnings is “normally the case” and a “customary business practice” in closely held corporations, the record and common business experience simply do not support the assertion. What the record did establish, without contradiction, is that DDI had never paid a dividend, a policy predating not only the parties’ marital problems, but predating the marriage itself. It was also undisputed that DDI needed the accumulated surplus to provide working capital for daily operations, including maintenance of a $12,000,000 diamond inventory, and to comply with banking agreement requirements. DDI’s books had been examined annually by Internal Revenue agents, and these audits had never resulted in a finding that DDI’s retained earnings account was excessive, a finding which would have resulted in a substantial tax penalty to DDI. Accordingly, the record provides no basis whatever for the suggestion that DDI’s retained earnings should 694 somehow inure to the financial benefit of the wife. Finally, regarding the dissenter’s suggestion that the Avenue Foch co-op should be given entirely to the wife, we perceive no persuasive reason why it would make sense for her to continue to live indefinitely in a very large apartment, generating over $43,000 in yearly expenses, and which formerly housed a husband, a wife, and four children who are now emancipated and self-supporting. We agree with the trial court’s observation (111 Mise 2d, at p 976) that the co-op, if not sold and the proceeds distributed, “will continue to be a bone of contention between the parties because of the heavy cost of upkeep and the husband’s deprivation of his portion of the net sales proceeds to which he would be entitled as a marital distribution.” We further observe that awarding the wife sole possession of the Avenue Foch co-op would not only be unwarranted, but would materially upset the delicate equitable distribution of assets meticulously worked out by the trial court. Concur — Sandler, J. P., Asch, Silverman and Bloom, JJ.