Bowen v. Bowen – Divorce – Division of Marital Property
Bowen v. Bowen, 96 N.J. 36, 473 A.2d 73 (N.J. 1984).
NATURE OF THE CASE: This case involved a dispute over the equitable distribution of a minority stock interest in a closely held corporation within the context of a division of marital property.
FACTS: Mr. and Ms. Bowen were married in 1955 and had four children. W worked and helped H through engineering school during the early years of their marriage. In 1973, after working for Union Carbide several years, he and two other employees of a small manufacturing company formed Polycel Corporation. H owned 22% of the shares. In 1979 Polycel had gross sales of over $3,000,000 and its net income was $144,235.
The Bowens separated in 1979. W continued to live in the family home and accepted employment as a secretary. The major assets were the home and the 22% interest in Polycel. The court directed the marital assets be divided equally. The court heard testimony that the stock was worth anywhere from $70,000 to $338,000.
The court directed that H retain all the stock but that W receive an equitable one half interest in the stock. H was to retain all indicia of ownership including the right to vote at shareholder meetings but was to share with W all dividends and proceeds from the sale or transfer of the stock. The court then ordered any amount of compensation that H earned above $48,000 in a given year would be considered dividends to be divided between the parties. W also was awarded rehabilitation alimony of $300 per month for three years and $700 per month permanent alimony and $200 per month child support. This appeal resulted.
ISSUE: When faced with difficulty in the evaluation of the stock of a close corporation, may the court order one party to retain the stock and make the other party an equitable owner of half of that stock?
RULE OF LAW: No. A court faced with difficulty in evaluation of the stock of a close corporation may not order one party to retain the stock and make the other party an equitable owner of half of that stock.
HOLDING AND DECISION: The disadvantages of continuing the relationship between the parties outweigh the problems of proof that confront a court in such situations. A court must resolve the question of value in the divorce proceedings.
The court should consider the appointment of an independent expert to assist it in determining the value of the stock. The court is tasked with arriving at a value to effect equitable distribution of one asset to one spouse. The court is directed to employ experts to help it overcome disputes between the parties’ experts.
DISPOSITION: Reversed and remanded.