Hertz v. Hertz

657 P.2d 1169, 99 N.M. 320
CourtNew Mexico Supreme Court
DecidedJanuary 11, 1983
Docket13837
StatusPublished
Cited by68 cases

This text of 657 P.2d 1169 (Hertz v. Hertz) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hertz v. Hertz, 657 P.2d 1169, 99 N.M. 320 (N.M. 1983).

Opinion

OPINION

RIORDAN, Justice.

This is an appeal following a division of community property between Petitioner, Jay D. Hertz (husband), and Respondent, Kathryn Weil [Hertz] (wife). Husband appeals and wife cross-appeals. We affirm in part and reverse in part.

The issues on appeal are:

I. Whether the district court erred in determining that the parties had a $49,-357.35 interest in the law firm in which husband was a stockholder and employee.

II. Whether the district court abused its discretion in awarding alimony to wife.

III. Whether the district court erred in its valuation of husband’s separate property interest in the community residence.

IV. Whether the district court erred in finding that a $2,000.00 payment by husband to wife prior to the entry of the final judgment constituted child support rather than an advance payment on community property distribution.

V. Whether the district court erred in its valuation of husband’s interest in his profit sharing plan.

VI. Whether the district court acted beyond its authority in awarding $3,500.00 to wife for her “costs and expenses”.

The issues on cross-appeal are:

VII. Whether the district court erred in failing to award wife any share of the rental value of the parties’ community residence occupied by husband pendente lite.

VIII. Whether the district court erred in allowing husband to pay wife payments rather than a lump sum amount, thereby denying wife complete and immediate control over her share of the division of the community residence.

IX. Whether wife’s $3,500.00 attorney’s fees award was so inadequate as to constitute an abuse of discretion.

FACTS

Husband and wife were married in June 1970. One child was born of the marriage. On December 20, 1979, husband petitioned the district court for a dissolution of marriage. On December 31, 1979, the district court entered a divorce decree, reserving the questions of property division, alimony, child support and custody of their child. Eighteen months later, after several hearings, the district court entered a judgment resolving the remaining issues in the case.

I. COMMUNITY INTEREST IN LAW FIRM

The district court found that the parties owned a $49,357.95 community interest in the business (law firm). Each party was awarded one-half. The district court specifically found:

13. The value of the business, including good will, and including the deferred compensation plan, but not including the profit sharing plan, is $23.81 per share. To be deducted from that is the deferred compensation plan ($3,666) and the $4.28 per share, which the corporation and the shareholders have fixed by agreement as to the value of the shares. The balance is $49,357.95, which is the remainder of the community interest in the business after deducting the [$4.28 per share] of stock and after deducting $3,666 for the deferred compensation plan. To put it another way, the [total] community interest in the business is worth $64,644.15. That is what it is worth to the husband to be where he is and have the relationship and opportunities that he has with the law firm. This is something that is the result of community labor of 8 years. However, the only way that the husband can realize these benefits is to stay with the firm. That restricts his right to practice and makes it less valuable so some adjustments should be made. It would not be fair to require the husband to pay the wife % of the $49,357.95 in a lump sum. He should pay her over a period of eight (8) years at Vs per year, at the rate of $250 per month with no interest. These payments are to continue only so long as the husband remains with the firm. If he quits, or is discharged, or dies, the obligation is terminated and nothing further is due the wife in connection with this portion of the community property. She will have received her portion in such event. [Emphasis added.]

Husband claims that the $49,357.95 “which is the remainder of the community interest in the business”, in fact represents the district court’s determination of community goodwill and nothing else, because no other asset or property right exists which was not already considered by the court in valuing and dividing the shares of stock, profit sharing plan, and deferred compensation plan. Husband argues, therefore, that the district court erred in determining that the parties had a $49,357.95 community interest in the law firm, and erred in awarding wife one-half of that amount because the district court disregarded a controlling stock restriction agreement that binds husband as to the valuation of “goodwill”, and because the district court’s finding that the community owned “goodwill” in the law firm is not supported by substantial evidence.

On the other hand, wife claims that the district court did not determine that the parties had a $49,357.95 “goodwill” interest in the law firm. Wife claims that the district court recognized that the tangible assets of the business cannot rationally be measured by the cash basis book value ($4.28 per share) because that measurement omits more than one million dollars of tangible assets, including accounts receivable and work in progress, which was owned by the law firm as a professional corporation on the date of the divorce.

The dispute over the value of the stock results because of the methods used by the experts in calculating the stock. Husband’s expert valued the stock on a cash basis pursuant to the stock transfer agreement requiring that it be done in that manner. The cash basis excludes work in progress and intangible assets such as accounts receivable. Those items are accounted for by the law firm in their deferred compensation fund. Furthermore, “goodwill” is accounted for in this cash basis valuation. The testimony is uncontradicted that all previous sales and purchases of the law firm’s stock have been on a cash basis and that no value is ever attributed to “goodwill” other than the $1.00 amount provided for in the stock subscription agreement.

Wife’s expert, on the other hand, valued the stock on an accrual basis, including work in progress and accounts receivable, and determined that on an accrual basis, the stock is valued at $17.32 per share. Based upon a capitalization of “excess” earnings, wife’s expert then determined that there was a value of $6.49 per share in “goodwill”.

The district court did not specify the components of its valuation of the parties’ $49,-357.95 interest in the law firm, nor did the district court explain why the husband’s payments to wife on the $49,357.95 amount were to continue only so long as the husband remains with the law firm. However, in arriving at this total, the district court apparently accepted the testimony of wife’s expert. Wife’s expert testified that the value of the law firm’s stock was $17.32 per share, plus $6.49 for “goodwill” per share for a total of $23.81 per share, on an accrual valuation basis.

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Cite This Page — Counsel Stack

Bluebook (online)
657 P.2d 1169, 99 N.M. 320, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hertz-v-hertz-nm-1983.