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Interspousal Transfer of Voting Rights
© 2004 National Legal Research Group, Inc.
OREGON: In re Marriage of Kollman, 195 Or. App. 108, 96 P.3d 884 (2004).
The husband's right to vote certain shares of stock owned by the wife constituted divisible property for purposes of equitable distribution. On the facts, the voting rights were property awarded to the wife despite the existence of a formal document in which the wife had given the rights to the husband during the marriage.
The husband and the wife incorporated and operated a business which harvested and sold algae. The wife signed a document by which she gave to the husband her rights, if any, to any voting stock in any corporation in which both were involved. With regard to the business, the husband and the wife each had different responsibilities. Following the husband's conviction for tax evasion, however, the husband's formal official association with the operation of the business ceased. A reverse merger with another corporation allowed the husband and the wife to receive publicly traded stock in the new corporation. The wife continued her employment with the company. Together, the husband and the wife held 80% of the stock. When the parties divorced, the court divided the marital assets equally, including the shares of stock in the business. Moreover, the court allowed the wife to retain her voting rights, refusing to grant them to the husband. Both had separate plans for the continued operation of the business. The husband appealed.
He first argued that the court below had erred in not awarding him the voting rights to the wife's shares pursuant to the document which she previously had signed, alleging that it was a voting agreement which had transferred the voting rights to him. The wife argued that it was a proxy statement that had expired. Regardless of how the document was characterized, however, the appeals court upheld the trial court's decision on the basis that voting rights are marital property. The right to vote the wife's shares was recognized as an asset that was discrete from the stock itself and was to be treated as a marital asset subject to the court's equitable power to distribute.
The husband also argued that the trial court had erred in allowing the wife to maintain the voting rights in the stock as that decision was an inequitable division of the property under all of the circumstances. Because the husband did not contend that the document signed by the wife rebutted the presumption under Oregon law that an equitable division is an equal one, the court treated the voting rights as subject to equal distribution. The court went on to consider whether a "just and proper under all the circumstances" distribution, as was required under the governing statute, Or. Rev. Stat. Ann. 107.105(1)(f), had been made. Such an inquiry, stated the court, takes into consideration the social and financial objectives of the dissolution as well as other factors, such as the preservation of assets, the achievement of economic self-sufficiency of the parties, and the particular needs of the parties and the children. The court looked to the plans each party had for the continuation of the corporation, the future of which was uncertain. In affirming the lower court's determination, the appellate court agreed that it was just and proper to award the wife her voting shares in the stock; otherwise, she would not receive an equal division of the marital assets. Such a division avoided an inequitable windfall or substantial loss that one of the parties would have to bear due to the uncertain future of the business.
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