|
|
|
Goodwill of Business, Dissipation Personal Property, and Removal from Marital Home
© 2005 National Legal Research Group, Inc.
INDIANA: DeSalle v. Gentry, 818 N.E.2d 40 (Ind. Ct. App. 2004).
Where both spouses participated in operating toy shows, the toy show venues were part of the enterprise goodwill of the business, and not part of the personal goodwill of the parties. Their division was nevertheless error because it amounted to an injunction against the husband's future earnings. In affirming an equal division of the marital estate and awarding the wife her entire pension, the court gave particular weight to the fact that the husband had removed personal property from the marital home without sufficiently accounting for it.
The husband appealed the denial of his motion to correct error in the trial court's entry of a dissolution and property distribution order.
The husband and wife held substantial personal assets accumulated during the marriage. They operated a business in which they sold antique toys at various toy show venues throughout a portion of the country. They formed a corporation in which the husband owned 49% of the stock and the wife held 51% of the stock. Following their separation, the husband removed items of personal property from the marital residence. Even during the proceedings that followed, both parties removed assets. After a hearing, the trial court entered an order of dissolution and distribution of marital assets. The husband appealed the distribution order that equally divided the parties' marital property.
The husband first challenged the lower court's award of specific items of property as being indicative of an inequitable distribution. The court on appeal pointed out that under Indiana law the trial court's disposition is to be considered as a whole, not item by item. The court is required to balance a number of different considerations. It may allocate some items of property or debt to one spouse because of its disposition of other items. If the appellate court reviews any of the dispositions in isolation and apart from the total mix, it may upset the balance ultimately struck by the trial court. In reviewing the individual allocations of assets, it was found that the trial court had given careful consideration to the various contributions made by both parties to the acquisition of the marital estate. It paid particular attention to the fact that the husband had removed items of property from the family residence. Noting that even though both parties had removed such property prior to the appraisal, the husband contributed to the difficulties in dividing the property by not presenting the removed items for appraisal. It was found, therefore, that the lower court did not err in dividing the marital estate equally, which included an award to the wife of her pension and pension rights.
The husband next complained of the trial court's dividing the toy show venues between the parties. The husband asserted that he alone represented their corporation as he was the party well known in the toy show industry and, therefore, he should have received all of the venues. By alleging that only he could represent the corporation at the industry shows, he sought to characterize the venues as personal goodwill of the corporation. The appellate court acknowledged that, in valuing the corporation, a trial court must consider whether goodwill that is included within the total value of a business enterprise is personal to one spouse. Therefore, it is necessary to distinguish between enterprise goodwill, which is divisible property, and personal goodwill, which is excluded from the marital estate. Enterprise goodwill is based on the intangible, but generally marketable, existence in a business of established relations with employees, customers, and suppliers, and may include factors such as a business location, its name recognition, and its business reputation. Ultimately, these factors must contribute to the anticipated profitability of the business. On the other hand, personal goodwill is goodwill that is based on the personal attributes of the individual.
The court rejected the husband's contention regarding the personal goodwill of the toy venues. The record reflected that both the husband and the wife met with the dealers and bought and sold toys. Attendance at the venues by both parties contributed to the name recognition of the corporation, its reputation, and, consequently, its profitability. Based upon these elements, the toy show venues were part of the enterprise goodwill of the business and, therefore, could be divided by the trial court during the dissolution proceeding. However, while subject to division, such venues are material to the husband's ability to earn a future income. The absence of a permanent physical location for the business means that such venues are the sole place where the toys are bought and sold and, consequently, are the sole source of his income. It is established that the rights to future earnings are not considered marital property and thus are not subject to division in a dissolution of marriage proceeding. Accordingly, the trial court's division of the toy show venues effectively resulted in an injunction against the husband's future income and, therefore, amounted to an abuse of discretion by the lower court.
The husband finally complained that the trial court erred in not dividing the wife's pension. He asserted that since he worked exclusively for the parties' toy show business he did not have an established retirement account and that the trial court, by awarding the wife her entire pension benefits, discriminated against him because he was a "house husband" and that if he had been a female homemaker who supplied the same duties during the marriage he would have been awarded an equitable portion of the retirement account or would have been compensated for it in the division of assets. The trial court had concluded that the wife, as a school teacher for 29 years, had pension rights worth approximately $147,000 and that for the 12« years of the marriage the value was $63,000. It nevertheless awarded all of the pension to the wife. The appellate court found no abuse of discretion in doing so. The husband's removal of personal assets and his failure to account for their value justified the lower court's equitable division of marital property. Moreover, the record showed that the husband was already compensated by a distribution of other assets. No abuse of discretion, therefore, had been committed by the lower court.
Go to: Goodwill Category
Go to: Cases of Interest by Category
Go to: Previous Page
| Featured Services | |
|
| The Research Center: ( Cases of Interest by Category ) | Research Home | ||||
Find Case Law, Case Analysis, and Divorce Related Information...
| |||||
 How to Hire The Right Divorce Lawyer - You must have the right lawyer to have a successful divorce! provides a road map for finding an effective lawyer and then helps you to monitor his or her performance and fees. |
Comments & Suggestions? or Recommend This Page to a Friend!