Johnson v. Johnson

 NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
 as well as formal revision before publication in the Vermont Reports.
 Readers are requested to notify the Reporter of Decisions, Vermont Supreme
 Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
 that corrections may be made before this opinion goes to press.


                                 No. 90-571


 Diana K. Johnson                             Supreme Court

                                              On Appeal from
      v.                                      Lamoille Family Court

 Alan Barry Johnson                           September Term, 1991


 Shireen Avis Fisher, J.

 Robert P. Davison, Jr., Stowe, for plaintiff-appellant

 Oreste V. Valsangiacomo, Jr., of Valsangiacomo, Detora, McQuesten, Rose &
   Grearson, Barre, for defendant-appellee and cross-appellant


 PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.


      JOHNSON, J.   Plaintiff wife appeals from provisions of a divorce
 decree of the Lamoille Family Court dividing the marital estate and awarding
 defendant husband maintenance.  Defendant cross-appeals the division of
 marital assets and the limitation of maintenance to the life of plaintiff.
 The portion of the decree granting the divorce is affirmed, but we reverse
 and vacate the remainder of the judgment based on grounds raised in the
 cross-appeal, and remand for reconsideration of the valuation of certain
 marital assets.
      The parties were married in 1957 and separated in 1988.  Plaintiff
 brought into the marriage a considerable portfolio of securities derived
 from her parents, the income from which was reinvested in part and used in
 part to enhance the family's already secure circumstances.  Plaintiff later
 inherited more securities and interests in two family partnerships, giving
 her an individual net worth in excess of $3,000,000 in 1988.  Defendant has
 an electronic engineering degree and was successfully employed through most
 of the marriage.  The court found that his retirement after 1982 resulted
 from a joint decision of the parties.
      The court did not assign specific fault for the breakdown of the
 marriage, finding that the actions of each were contributing factors and
 that after a move to Stowe they "ceased to share the same interests."
      Plaintiff filed for divorce in 1988, and a final hearing was held in
 April and May 1990.  The court found that certain stocks "held at the
 beginning of the marriage" and carried in plaintiff's name were "joint
 property," to be divided equally between the parties, including IBM stock
 valued at $765,000.  Also divided equally were certain bonds totalling
 $135,000 in value, $81,534 in notes receivable, $12,000 in cash, and a
 house in Stowe, valued at $655,000.  The aggregate value of the assets
 divided equally was $1,661,125.
      Plaintiff was the sole recipient of other assets that included stocks,
 bonds, two limited partnership interests (Drexelbrook and Dominion), cash,
 and personalty, valued at $2,479,220.  Defendant was the sole recipient of
 bonds, cash, separate real estate, and personalty with a total value of
 $222,300.
      The trial court awarded defendant maintenance as follows:
         Annual maintenance in the amount of $52,725 to be paid
         to the defendant in four quarterly payments will assure
         equal distribution of the income at its present rate of
         return.  As the plaintiff is receiving the greater share
         of the assets, it is her responsibility to pay this
         amount even if the actual income decreases and even if
         it requires liquidation of capital.

      Plaintiff appeals principally over the grant of maintenance, although
 she raises numerous other issues.  Defendant concedes that he made no
 request for maintenance and argues on cross-appeal that the court awarded
 maintenance to redress a disparity in the division of marital assets.  He
 also contends that the valuation of the closely held partnerships was
 erroneous.
      In awarding maintenance under these circumstances, a trial court
 should consider the distribution of marital assets.  Cleverly v. Cleverly,
 151 Vt. 351, 357, 561 A.2d 99, 103 (1989).  The court may award maintenance
 upon evidence that the receiving spouse meets both criteria under 15 V.S.A.
 { 752(a), which states:
           (a)  In an action under this chapter, the court may
         order either spouse to make maintenance payments, either
         rehabilitative or permanent in nature, to the other
         spouse if it finds that the spouse seeking maintenance:

                          (1)  lacks sufficient income, property, or both,
                        including property apportioned in accordance with
                        section 751 of this title, to provide for his or
                        her reasonable needs, and

                          (2)  is unable to support himself or herself
                        through appropriate employment at the standard of
                        living established during the marriage or is the
                        custodian of a child of the parties.

   We have held that a property settlement may be supplemented by an award of
   maintenance, given one spouse's greater capacity to acquire future capital
   assets and income.  Bancroft v. Bancroft, 154 Vt. 442, 445, 578 A.2d 114,
   116 (1990).  In Downs v. Downs, 154 Vt. 161, 574 A.2d 156 (1990) we held
   that there was insufficient property to fairly compensate the supporting
   spouse for contributions toward the other spouse's attainment of a degree,
   and we allowed the maintenance award to make up for the dearth in existing
   property from which to distribute.  Id. at 166-67, 574 A.2d  at 159
   ("'maintenance is not just a means of providing bare necessities, but
   rather a flexible tool by which the parties' standard of living may be
   equalized for an appropriate period of time'" (quoting Washburn v.
   Washburn, 101 Wash. 2d 168, 179, 677 P.2d 152, 158 (1984)).
        The trial court has broad discretion in dividing property in a divorce
   action.  Myott v. Myott, 149 Vt. 573, 579, 547 A.2d 1336, 1340 (1988).  The
   court is not compelled to equalize the parties' assets in the property
   division, but is free to do so.  Id.
        The court clearly decided in the present case that defendant's
   "reasonable needs" under { 752(a)(1) would be most adequately met if he and
   plaintiff received about the same income, at least during plaintiff's
   lifetime.  But the court at the same time sought to give due weight to {
   751(b)(10)("the party through whom the property was acquired").  Plaintiff
   has not shown why reconciling such goals by computing maintenance to
   equalize the parties' incomes for her lifetime was beyond the discretion of
   the court, nor has she demonstrated that the court's calculations were
   erroneous or unreasonable. (FN1)
        Moreover, defendant cannot fault the court's use of maintenance to
   equalize incomes to acknowledge the "party through whom the property was
   acquired" in assigning title to the income-producing assets themselves.  In
   any event, the balance of defendant's assets is significant under the
   decree and his income-earning potential is clear from the court's findings.
   We cannot say that the court abused its broad discretion in assigning to
   plaintiff significant assets acquired through her family, particularly in
   light of the maintenance award.
        On his cross-appeal, defendant also raises the question of the court's
   findings with respect to the valuation of the Drexelbrook and Dominion
   limited partnerships.
        The trial court accepted plaintiff's valuation of each of the limited
   partnerships.  Plaintiff testified that the capital gains tax that would
   become due upon her sale of these assets would reduce their value by forty
   percent.  Defendant argues that plaintiff had no expertise with the Internal
   Revenue Code, did not know the tax basis under the Code for either limited
   partnership, and did not testify to any events that would trigger the
   taxation of either of these assets.
        The court was correct to allow plaintiff to testify about the value of
   the partnerships.  12 V.S.A. { 1604; Jackson v. Jackson, 139 Vt. 548, 550,
   432 A.2d 1181, 1182 (1981).  But part of her testimony relating to federal
   taxation was not testimony about the value "of real or personal property,"
   but rather opinions or inferences about the possible impact of tax law upon
   the sale of property, a subject on which she was not an expert.  See V.R.E.
   701 (nonexpert witness's testimony "limited to those opinions or inferences
   which are . . . (b) helpful to a clear understanding of . . .  [her]
   testimony or the determination of a fact in issue").
        Moreover, "potential income taxes do not alter the value of an asset
   for purposes of determining the value of either marital or non-marital
   property," though they "may be another factor to consider in establishing
   the amount and method of payment of any monetary award."  Rosenberg v.
   Rosenberg, 64 Md. App. 487, 523, 497 A.2d 485, 503 (1985).  In this case,
   the assets were both varied and substantial in value.  Adequate findings
   concerning the value of each asset were essential to a fair and adequate
   disposition.  See Hendrick v. Hendrick, 142 Vt. 357, 360-61, 454 A.2d 1251, 1253 (1982).  It is clear from our cases that valuation should reflect a
   reasonably current fair market value.  See, e.g., Cleverly, 151 Vt. at 354-
   55, 561 A.2d  at 101.  Including vague and theoretical transactional tax
   consequences as routine factors in determining fair market value would add
   unnecessary complexity to an evidentiary problem that is already difficult,
   especially where the assets to be valued are closely held business
   interests.
        It may be, on remand, that specific, relevant, and material evidence
   about the transactional taxation of some of these assets will come before
   the court. If so, the court may weigh such evidence in considering the
   value, division, and method of allocation of the parties' assets in the
   interests of fairness and consistency.  But the tax status of assets in the
   hands of one of the parties should not affect their fair market valuation,
   unless the decree necessitates their sale.
        The court's findings as to the fair market value of the limited
   partnerships are stricken as unsupported by the evidence.  The matter will
   be remanded for further proceedings, limited to the question of the fair and
   reasonable value of these assets.  In light of this holding, we must vacate
   the entire decree, except the granting of the divorce itself, because a
   change in the valuation of these assets may well affect the relative
   positions of the parties in the property distribution.  The property
   division and maintenance awards are closely related under our statutory
   scheme, Klein v. Klein, 150 Vt. 466, 475, 555 A.2d 382, 388 (1988), and any
   change in the property division may require reconsideration of the
   maintenance award as well.
        The portion of the decree granting the parties' divorce is affirmed,
   but the remainder of the judgment is reversed and remanded for further
   proceedings relating to the valuation of the Drexelbrook and Dominion
   limited partnerships and for issuance of an appropriate decree in light of
   the court's valuation of these assets.


                                           FOR THE COURT:




                                           Associate Justice


FN1.      Plaintiff's brief raises numerous other issues, but her
 contentions were so inadequately briefed as to fail to meet the standard of
 V.R.A.P.  28(a)(4), and we will not consider them.